[Graphic]
Tax-Free Instruments Trust
15TH SEMI-ANNUAL REPORT
SEPTEMBER 30, 1997
ESTABLISHED 1981
President's Message
[Graphic]
Dear Shareholder:
Tax-Free Instruments Trust was established in 1981, and I am pleased to
present the 15th Semi-Annual Report to Shareholders. This report covers the
first half of the trust's fiscal year, which is the six-month reporting
period from April 1, 1997, through September 30, 1997. The report begins
with an interview with the trust's portfolio manager, Jeff A. Kozemchak,
Vice President, Federated Management, and follows with a complete list of
the trust's holdings and its financial statements.
Tax-Free Instruments Trust keeps your cash pursuing daily tax-free income*
from a portfolio of more than 200 short-term money market securities issued
by municipalities across the United States. In addition, this trust is
managed to keep the value of your principal stable, while giving you daily
access to your invested cash.** It has done so since its inception.
Tax-free dividends paid to shareholders during the six-month reporting
period totaled $0.02 per share for both share classes. Net assets reached
$1.7 billion on September 30, 1997.
Thank you for participating in the daily, tax-free earning power of Tax-Free
Instruments Trust. We'll continue to keep you up-to-date on your investment,
and, as always, we welcome your comments and suggestions.
Sincerely, [Graphic]
Glen R. Johnson
President
November 15, 1997
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in this trust is neither insured nor guaranteed by the U.S. government.
Investment Review
[Graphic]
Jeff A. Kozemchak, CFA
Vice President
Federated Management
[Graphic]
WHAT IS YOUR ANALYSIS OF THE ECONOMIC ENVIRONMENT DURING THE REPORTING
PERIOD FROM APRIL 1, 1997, THROUGH SEPTEMBER 30, 1997, AND ITS EFFECT ON THE
SHORT-TERM MARKETPLACE?
The economy remained robust over the reporting period, posting a rate of
growth of 3.60% for the second quarter and is expected to have continued at
this above-trend pace in the third quarter. At the same time, however,
inflationary pressures have remained quite benign over the reporting period,
in spite of the impressive performance of the economy and what has generally
been thought to be tight labor market conditions. Early in the reporting
period, in the wake of the Federal Reserve Board's (the "Fed") 0.25%
increase in the federal funds target rate on March 25, 1997, short-term
interest rates remained relatively high as market participants were
uncertain about whether another move was soon to follow. As inflationary
pressures remained mild, however, fears of a near-term tightening by the Fed
gradually receded, and all but vanished by late June 1997. For the remainder
of the reporting period, short-term interest rates traded within a rather
narrow range. Movements in the 1-year Treasury bill over the reporting
period best reveal the market's shifting sentiment. The 1-year Treasury bill
traded as high as 6.00% in late April 1997, but then fell to as low as 5.40%
before closing the reporting period at 5.45%.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over this reporting period, most
notably tax payments in April 1997 and the summer note issuance season.
Variable rate demand notes (VRDNs), which comprise more than 50% of the
fund's assets, started the reporting period at a yield of 3.25%, but spiked
upward to as high as 4.50% in late April 1997 due to tax payment-related
redemptions in the market. VRDN yields fell in May 1997, but moved sharply
higher in June 1997 to above 4.00% as supply and demand imbalances occurred.
Yields then fell again in July 1997 and August 1997 before rising once again
in September 1997 to close the reporting period at 4.08%. Over the reporting
period, VRDN yields averaged 70% or more of taxable rates making them
attractive for investors at the 31% or higher federal tax brackets.
[Graphic]
WHAT WERE YOUR STRATEGIES FOR TAX-FREE INSTRUMENTS TRUST DURING THE
REPORTING PERIOD?
The trust remained in a 45- to 55-day average maturity target range over the
reporting period, a neutral stance, and moved within that range according to
relative value opportunities. While the average maturity for the trust was
in the lower half of the target range prior to the tightening move by the
Fed, the reporting period ended with the average maturity at the top of that
range. During the first half of the reporting period, fixed-rate notes as a
percentage of Treasuries were fairly expensive, so we held off on purchasing
these notes and locking-in those yields. As the market cheapened in the
third quarter, we began to take advantage of attractive buying opportunities
and extended the trust's average maturity. We continue to emphasize a
barbelled structure for the portfolio, combining a significant position in
seven-day VRDNs with purchases of longer term securities with maturities
between six and twelve months.
[Graphic]
HOW HAS THE TRUST PERFORMED?
The seven-day net yield* for the trust's Institutional Service Shares on
September 30, 1997 was 3.43% compared to 3.05% six months earlier. The
latest yield was the equivalent of a 5.68% taxable yield for investors in
the highest federal tax bracket. Over the six-month period, the tax-exempt
yield averaged 3.26%, which equals a taxable equivalent yield of 5.40% for
those same investors.**
For the Investment Shares, the seven-day net yield* on September 30, 1997
was 3.28% compared to 2.90% six months earlier. The latest yield was
equivalent to a 5.43% taxable yield for investors in the highest federal tax
bracket. The average tax-exempt yield over the period was 3.11%, which
equals a taxable equivalent yield of 5.15% for those investors in the
highest federal tax bracket.**
* The seven-day net yield is calculated daily based on the income dividends
for the seven days ending on the date of calculation, and then compounded
and annualized.
** Performance quoted represents past performance and is not indicative of
future returns. Yield will vary.
[Graphic]
AS WE APPROACH THE CLOSE OF 1997, WHAT IS YOUR OUTLOOK FOR RATES?
With one preemptive tightening under their belt, Fed officials now appear to
be debating, both publicly and privately, whether the conditions at hand --
strong growth yet little to no price inflation -- would indicate that the
non-inflationary potential of the economy is actually greater than
previously thought. Real growth of 2.00% to 2.50% has generally been
embraced as this non-inflationary potential. As the Fed continues to analyze
the situation, the front end of the taxable and tax-exempt municipal markets
are destined to be range-bound, absent any signs of upward pressures on
prices. We will continue to watch, with great interest, market developments
in order to best serve our municipal clients.
TAX-FREE INSTRUMENTS TRUST
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--99.4%
ALABAMA--1.4%
$ 3,500,000 Birmingham, AL Medical Clinic Board, Medical Clinic Revenue
Bonds (Series 1996) Weekly VRDNs (St. Martin's In The Pines)/
(Regions Bank, Alabama LOC) $ 3,500,000
6,000,000 Homewood, AL IDA Weekly VRDNs
(Mountain Brook Inn (Homewood, AL))/
(SouthTrust Bank of Alabama, Birmingham LOC) 6,000,000
900,000 Madison, AL IDA, (Series A) Weekly VRDNs (Executive Inn)/
(Amsouth Bank N.A., Birmingham LOC) 900,000
4,000,000 Montgomery, AL BMC Special Care Facilities Finance Authority,
(Series 94A) Weekly VRDNs (Baptist Medical Center, AL)/
(Amsouth Bank N.A., Birmingham LOC) 4,000,000
4,500,000 Stevenson, AL IDB, Industrial Revenue Bonds (Series 1996-A)
Weekly VRDNs (Unitog Co.)/(UMB Bank, N.A. LOC) 4,500,000
5,070,000 Vincent, AL IDB Weekly VRDNs (Headquarters Partnership
Project)/(National Australia Bank, Ltd., Melbourne LOC) 5,070,000
Total 23,970,000
ARIZONA--1.0%
202,200 Gilbert, AZ IDA Weekly VRDNs
(Foxworth-Galbraith Lumber Co.)/(Bank One, Arizona N.A. LOC) 202,200
9,725,000 Maricopa County, AZ, IDA (Series 1984)
Weekly VRDNs (Gannett Co., Inc.) 9,725,000
1,359,000 Maricopa County, AZ, IDA Weekly VRDNs
(Chaparral City Water Services)/(Bank One, Arizona N.A. LOC) 1,359,000
1,475,000 Pima County, AZ, IDA Weekly VRDNs
(A & P Investments)/(Bank One, Arizona N.A. LOC) 1,475,000
5,203,000 Pima County, AZ, IDA Weekly VRDNs
(BJR Investments, Inc.)/(Bank One, Arizona N.A. LOC) 5,203,000
Total 17,964,200
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
ARKANSAS--0.1%
$ 2,500,000 Pocahontas, AR, IDRB (Series 1995) Weekly VRDNs (MacLean
ESNA L.P. Project)/(Northern Trust Co., Chicago, IL LOC) $ 2,500,000
CALIFORNIA--7.6%
10,650,000 (a) California Public Capital Improvements Financing Authority,
Trust Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA INS)/
(Bank of New York, New York LIQ) 10,650,000
5,000,000 California School Cash Reserve Program Authority, (Series B),
4.50% TRANs (MBIA INS), 12/19/1997 5,009,399
10,000,000 California State, 4.50% RANs, 6/30/1998 10,049,410
8,800,000 California State, GO Tax Exempt Notes, 3.80% CP
(Bayerische Landesbank Girozentrale, Credit Suisse, Zurich,
Landesbank Hessen-Thueringen, Frankfurt, Morgan Guaranty
Trust Co., New York and Westdeutsche Landesbank Girozentrale
LIQs), Mandatory Tender 12/15/1997 8,800,000
10,000,000 California State, GO Tax Exempt Notes, 3.80% CP (Bayerische
Landesbank Girozentrale, Credit Suisse, Zurich, Landesbank
Hessen-Thueringen, Frankfurt, Morgan Guaranty Trust Co.,
New York and Westdeutsche Landesbank Girozentrale LIQs),
Mandatory Tender 12/22/1997 10,000,000
7,000,000 California State, GO Tax Exempt Notes, 3.90% CP (Bayerische
Landesbank Girozentrale, Credit Suisse, Zurich, Landesbank
Hessen-Thueringen, Frankfurt, Morgan Guaranty Trust Co.,
New York and Westdeutsche Landesbank Girozentrale LIQs),
Mandatory Tender 10/7/1997 7,000,000
26,000,000 California State, Trust Receipts (Series 1997) Daily VRDNs
(Bank of New York, New York LIQ) 26,000,000
9,200,000 California Student Loan, (Series 1992 D), 3.80% TOBs
(Dresdner Bank Ag, Frankfurt LOC), Optional Tender 8/1/1998 9,200,000
11,000,000 Los Angeles County, CA, 4.50% TRANs, 6/30/1998 11,051,291
3,000,000 Moreno Valley Unified School District, CA, 4.50% TRANs,
6/30/1998 3,012,890
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
CALIFORNIA--CONTINUED
$ 500,000 Riverside County, CA, (Series A) Weekly VRDNs
(Riverside, CA Public Facility Finance)/(Commerzbank AG,
Frankfurt and National Westminster Bank, PLC, London LOCs) $ 500,000
5,000,000 Riverside County, CA, 4.50% TRANs, 6/30/1998 5,019,690
5,000,000 San Francisco, CA Redevelopment Finance Agency, (Series B1)
Weekly VRDNs (Fillmore Center)/
(Bank of Nova Scotia, Toronto LOC) 5,000,000
20,000,000 Ventura County, CA, 4.50% TRANs, 7/1/1998 20,086,313
2,500,000 Yucaipa-Calimesa, CA Joint Unified School District, 4.25% TRANs,
6/30/1998 2,507,174
Total 133,886,167
COLORADO--1.3%
3,000,000 (a) Colorado Municipal Securities Trust, Series 1996A Weekly VRDNs
(Arapahoe County, CO School District 005)/(Norwest Bank
Minnesota, Minneapolis LIQ) 3,000,000
3,375,000 (a) Colorado Municipal Securities Trust, Series 1996B Weekly VRDNs
(Colorado Health Facilities Authority)/(MBIA INS)/(Norwest
Bank Minnesota, Minneapolis LIQ) 3,375,000
2,500,000 Colorado Postsecondary Educational Facilities, (Series 1997)
Weekly VRDNs (Waldorf School Association of Boulder, Inc. -
Shining Mountain Waldorf School)/(KeyBank, N.A. LOC) 2,500,000
3,800,000 Colorado Springs, CO Utility System, IDRB's (Series 1996)
Weekly VRDNs (Micro Metals, Inc.)/(U.S. Bank, N.A.,
Minneapolis LOC) 3,800,000
4,800,000 Mesa County, CO, (Series 1996) Weekly VRDNs (3D Systems
Corp.) /(Norwest Bank Minnesota, Minneapolis LOC) 4,800,000
5,365,000 (a) Thornton, CO, Multifamily Housing Refunding Revenue Bonds
(1989 Series A) Weekly VRDNs (Quail Ridge Project)/
(General Electric Capital Corp. LOC) 5,365,000
Total 22,840,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
CONNECTICUT--4.2%
$ 7,000,000 Connecticut Development Authority, PCR (Series 1993A)
Weekly VRDNs (Connecticut Light & Power Co.)/
(Deutsche Bank, AG LOC) $ 7,000,000
7,000,000 Connecticut Development Authority, PCR (Series 1993A) Weekly
VRDNs (Western Mass Electric Co.)/(Union Bank of Switzerland,
Zurich LOC) 7,000,000
6,500,000 Connecticut Development Health Care Facilities Weekly VRDNs
(Independence Living)/(Chase Manhattan Bank N.A.,
New York LOC) 6,500,000
3,600,000 Connecticut Development Health Care Facilities Weekly VRDNs
(Independence Living)/(Credit Local de France LOC) 3,600,000
20,000,000 Connecticut State HEFA, (Series B) Weekly VRDNs (Edgehill)/
(Banque Paribas, Paris LOC) 20,000,000
5,000,000 (a) Connecticut State HFA, PT-1003 Weekly VRDNs (Merrill Lynch
Capital Services, Inc. LIQ) 5,000,000
16,230,000 Connecticut State Transportation Infrastructure Authority Weekly
VRDNs (Connecticut State)/(Commerzbank AG, Frankfurt LOC) 16,230,000
9,500,000 Hartford, CT Redevelopment Authority Weekly VRDNs
(Underwood Towers)/(FSA INS)/(Barclays Bank PLC,
London LIQ) 9,500,000
Total 74,830,000
DELAWARE--0.6%
10,000,000 Delaware EDA, (Series 1997C) Weekly VRDNs (Star Enterprise)/
(Canadian Imperial Bank of Commerce, Toronto LOC) 10,000,000
DISTRICT OF COLUMBIA--1.4%
12,000,000 District of Columbia Housing Finance Agency, (Series 1996B),
3.75% TOBs (Trinity Funding Company INV), Mandatory Tender
12/1/1997 12,000,000
6,000,000 District of Columbia Housing Finance Agency, (Series 1996C),
3.90% TOBs (Trinity Funding Company INV), Mandatory Tender
12/1/1997 6,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
DISTRICT OF COLUMBIA--CONTINUED
$ 7,740,000 District of Columbia, (Series A) Weekly VRDNs (American
University)/(National Westminster Bank, PLC, London LOC) $ 7,740,000
Total 25,740,000
FLORIDA--3.4%
1,500,000 Dade County, FL Water & Sewer System Weekly VRDNs (FGIC INS)/
(Commerzbank AG, Frankfurt LIQ) 1,500,000
9,730,000 Eustis Health Facilities Authority, FL, Health Facilities Revenue
Bonds, (Series 1992) Weekly VRDNs (Florida Hospital/
Waterman, Inc. Project)/(SunTrust Bank, Central Florida LOC) 9,730,000
3,000,000 Highlands County, FL Health Facilities, (Series 1996A Accounts
Receivable) Weekly VRDNs (Adventist Health System)/
(Capital Markets Assurance Corp. INS)/(First National Bank of
Chicago LIQ) 3,000,000
7,340,000 Jacksonville, FL HFDC Daily VRDNs (River Garden Project)/
(Banque Paribas, Paris LOC) 7,340,000
15,000,000 Sarasota County, FL Public Hospital District, Variable Rate
Demand Hospital Revenue Bonds (Series 1996A), 3.80% CP
(Sarasota Memorial Hospital)/(SunTrust Bank, Central Florida
LIQ), Mandatory Tender 12/9/1997 15,000,000
24,000,000 Sunshine State Governmental Finance Commission, FL, 3.85% CP
(Florida State Board of Administration LIQ), Mandatory Tender
12/17/1997 24,000,000
Total 60,570,000
GEORGIA--6.2%
3,000,000 Albany-Dougherty, GA Payroll Development Authority Weekly
VRDNs (Flint River Services, Inc.)/(Columbus Bank and Trust Co.,
GA LOC) 3,000,000
11,000,000 Atlanta, GA, Urban Residential Finance Authority, Multifamily
Rental Housing Revenue Refunding Bonds (Series 1988A)
Weekly VRDNs (West Paces Club Towers Project)/(Societe
Generale, Paris LOC) 11,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--CONTINUED
$ 7,000,000 Clayton County, GA Development Authority, (Series 1994) Weekly
VRDNs (Lear Seating Corp.)/(Chase Manhattan Bank N.A.,
New York LOC) $ 7,000,000
7,000,000 Clayton County, GA Housing Authority, Multifamily Housing
Revenue Bonds (Series 1997) Weekly VRDNs (Hyde Park Club Apartments)
/(KeyBank, N.A. LOC) 7,000,000
3,000,000 Columbus, GA IDA Industrial & Port Development Commission,
(Series 1992) Weekly VRDNs (Maine Street Village Partnership)/
(Columbus Bank and Trust Co., GA LOC) 3,000,000
5,100,000 Coweta County, GA Residential Care Facilities for the Elderly,
First Lien Revenue Bonds (Series 1996B) Weekly VRDNs
(Wesley Woods of Newman-Peachtree City, Inc. Project)/
(Banque Paribas, Paris LOC) 5,100,000
5,000,000 Crisp County, GA Development Authority, Solid Waste Disposal
Revenue Bonds (Series A), 3.90% TOBs (International Paper Co.)/
(International Paper Co. GTD), Optional Tender 3/1/1998 5,000,000
4,950,000 Douglas County, GA School District, 4.00% TANs, 12/31/1997 4,953,573
7,500,000 Floyd County, GA, 3.80% TANs, 12/31/1997 7,501,796
4,300,000 Fulco, GA Hospital Authority, (Series 1989), 3.80% CP
(St. Joseph's Hospital of Atlanta)/(SunTrust Bank, Atlanta LOC),
Mandatory Tender 10/15/1997 4,300,000
1,660,000 Fulton County, GA Housing Authority, (Series 1996) Weekly
VRDNs (Champions Green Apartments Project)/
(SouthTrust Bank of Alabama, Birmingham LOC) 1,660,000
4,000,000 Fulton County, GA Housing Authority, Multifamily Housing
Revenue Refunding Bonds (Series 1994) Weekly VRDNs
(Spring Creek Crossing Project)/(Wachovia Bank of Georgia N.A.,
Atlanta LOC) 4,000,000
2,200,000 Fulton County, GA IDA Weekly VRDNs
(Automatic Data Processing, Inc.) 2,200,000
3,015,000 Gainesville, GA Redevelopment Authority, Downtown
Developments, Ltd (Series 1987) Weekly VRDNs (Regions Bank,
Alabama LOC) 3,015,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--CONTINUED
$ 19,650,000 Municipal Electric Authority of Georgia, (Series 1985A), 3.80% CP
(Bayerische Landesbank Girozentrale, Credit Suisse, Zurich and
Morgan Guaranty Trust Co., New York LOCs),
Mandatory Tender 10/17/1997 $ 19,650,000
6,300,000 Rockdale County, GA Hospital Authority, Revenue Anticipation
Certificates (Series 1994) Weekly VRDNs (Rockdale Hospital)/
(SunTrust Bank, Atlanta LOC) 6,300,000
4,600,000 Roswell, GA Housing Authority, Multifamily Housing Refunding
Revenue Bonds (Series 1988A) Weekly VRDNs
(Belcourt Ltd. Project)/(Northern Trust Co., Chicago, IL LOC) 4,600,000
6,000,000 Screven County, GA IDA, (Series 1995) Weekly VRDNs
(Sylvania Yarn Systems, Inc. Project)/(SunTrust Bank, Atlanta LOC) 6,000,000
4,000,000 Upper Oconee Basin, GA Water Authority, 4.15% BANs, 3/1/1998 4,000,000
Total 109,280,369
ILLINOIS--6.7%
1,400,000 Champaign, IL, IDRB Weekly VRDNs (Christie Clinic)/
(National City Bank, Indiana LOC) 1,400,000
17,100,000 (a) Chicago, IL Public Building Commission, (Series 1997) Lehman
TR/FR-15 Weekly VRDNs (Chicago, IL Board of Education)/
(MBIA INS)/(Bank of New York, New York LIQ) 17,100,000
1,033,000 Illinois Development Finance Authority Weekly VRDNs
(Newlywed Food)/(Mellon Bank NA, Pittsburgh LOC) 1,033,000
2,300,000 Illinois Development Finance Authority, EDRB (Series 1995)
Weekly VRDNs (Evapco, Inc. Project)/(Nationsbank, N.A.,
Charlotte LOC) 2,300,000
3,600,000 Illinois Development Finance Authority, IDRB (Series 1995)
Weekly VRDNs (Dickson Weatherproof Nail Co. Project)/
(Lasalle National Bank, Chicago LOC) 3,600,000
10,100,000 Illinois Development Finance Authority, PCR Daily VRDNs
(Diamond Star Motors Corp.)/
(Bank of Tokyo-Mitsubishi Ltd. LOC) 10,100,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
ILLINOIS--CONTINUED
$ 7,500,000 Illinois Educational Facilities Authority, 3.90% CP (Field Museum
of Natural History)/(Northern Trust Co., Chicago, IL LOC),
Mandatory Tender 11/19/1997 $ 7,500,000
40,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series 1985B)
Weekly VRDNs (OSF Health Care Systems)/(Bank of America
Illinois and Rabobank Nederland, Utrecht LIQs) 40,000,000
19,100,000 Illinois Health Facilities Authority, Revenue Refunding Bonds
(Series 1997B) Weekly VRDNs (Advocate Health Care Network)/
(First National Bank of Chicago, Harris Trust & Savings Bank,
Chicago and Northern Trust Co., Chicago, IL LIQs) 19,100,000
4,817,285 (a) LaSalle National Bank Leasetops Trust, Series 1995A Leasetops
Certificates Weekly VRDNs (Lasalle National Bank, Chicago LIQ)/
(Lasalle National Bank, Chicago LOC) 4,817,285
2,055,000 Martinsville, IL, IDRB (Series 1995) Weekly VRDNs
(PAP-R Products Company Project)/(Bank One, Chicago LOC) 2,055,000
3,750,000 Mendota, IL, IDRB (Series 1995) Weekly VRDNs (Minnesota
Diversified Products, Inc. Project)/(Norwest Bank Minnesota,
Minneapolis LOC) 3,750,000
1,800,000 Naperville, IL, Economic Development Revenue Refunding Bonds
(Series 1994) Weekly VRDNs (Independence Village Associates,
Ltd Project)/(U.S. Bank, NA, Minneapolis LOC) 1,800,000
1,900,000 Oakbrook Terrace, IL, IDR (Series 1993) Weekly VRDNs
(La Quinta Inns, Inc.)/(Nationsbank of Texas, N.A. LOC) 1,900,000
2,859,000 Peoria, IL, (Series 1996) Weekly VRDNs
(J.T. Fennell Company, Inc. Project)/(Bank One, Chicago LOC) 2,859,000
Total 119,314,285
INDIANA--2.5%
11,175,000 Banc One Capital Higher Education Tax-Exempt Income Trust,
(Series 1) Weekly VRDNs (Bank One, Indianapolis, IN LOC) 11,175,000
2,200,000 Bluffton, IN, Economic Development Refunding Revenue Bonds
Weekly VRDNs (Blount, Inc.)/(Morgan Guaranty Trust Co.,
New York LOC) 2,200,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
INDIANA--CONTINUED
$ 3,000,000 Hamilton County, IN, EDRB (Series 1995) Weekly VRDNs (Fabcon
L.L.C. Project)/(Norwest Bank Minnesota, Minneapolis LOC) $ 3,000,000
6,500,000 Jeffersonville, IN, (Series 1997A) Weekly VRDNs
(Wayne Steel, Inc.)/(Bank One, Ohio, N.A. LOC) 6,500,000
2,360,000 Kendallville, IN, IDRB (Series 1995) Weekly VRDNs
(Rivnut Real Estate, Ltd. Project)/(National City, Northeast LOC) 2,360,000
7,000,000 Richmond, IN EDA Weekly VRDNs (Gannett Co., Inc.) 7,000,000
10,000,000 Rockport, IN, (Series 1985A) Weekly VRDNs
(Indiana Michigan Power Company Project)/(Swiss Bank Corp.,
Basle LOC) 10,000,000
2,130,000 Winamac, IN, (Series 1997) Weekly VRDNs
(Pulaski Health Foundation, Inc.)/(KeyBank, N.A. LOC) 2,130,000
Total 44,365,000
IOWA--0.5%
3,075,000 Des Moines, IA, IDR Bonds (Series 1994) Weekly VRDNs
(Printer, Inc.)/(Norwest Bank Minnesota, Minneapolis LOC) 3,075,000
4,950,000 Iowa Finance Authority, (Series 1996) Weekly VRDNs (Wittern
Realty, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 4,950,000
Total 8,025,000
KANSAS--0.4%
6,000,000 Kansas Development Finance Authority, Multifamily Housing
Revenue Bonds (Series 1995) Weekly VRDNs (First Kansas State
Partnership, L.P.)/(Boatmen's National Bank of St. Louis LOC) 6,000,000
1,900,000 Olathe, KS, Industrial Revenue Bonds (Series 1995)
Weekly VRDNs (Garmin International, Inc. Project)/
(Boatmen's National Bank of St. Louis LOC) 1,900,000
Total 7,900,000
KENTUCKY--2.5%
1,620,000 Boone County, KY, (Series 1996) Weekly VRDNs (Western States
Envelope Company)/(Bank One, Milwaukee, WI N.A. LOC) 1,620,000
5,740,000 Henderson County, KY, (Series 1996) Weekly VRDNs (Audubon
Metals LLC Project)/(Harris Trust & Savings Bank, Chicago LOC) 5,740,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
KENTUCKY--CONTINUED
$ 1,955,000 Jefferson County, KY, Industrial Building Revenue Bonds
(Series 1995) Weekly VRDNs (Derby Industries, Inc. Project)/
(Bank One, Kentucky LOC) $ 1,955,000
34,000,000 Owensboro, KY, (Series 1996) Weekly VRDNs (Owensboro Mercy
Health System, Inc. Project)/(Bank of America Illinois LOC) 34,000,000
1,800,000 Owensboro, KY, Limited Obligation Revenue Bonds, 3.75% TOBs
(Dart Polymers)/(NBD Bank, Michigan LOC), Optional Tender
12/1/1997 1,800,000
Total 45,115,000
LOUISIANA--1.1%
19,500,000 Louisiana HFA, Single Family Mortgage Revenue Bonds
(Series 1997A-3), 3.75% TOBs (Trinity Funding Company INV),
Mandatory Tender 3/1/1998 19,500,000
MAINE--0.5%
1,750,000 Gardiner, ME IDB Weekly VRDNs (Associated Grocers)/(Westpac
Banking Corp. Ltd. LOC) 1,750,000
6,900,000 Jay, ME, Solid Waste Disposal Revenue Bonds, 4.20% TOBs
(International Paper Co.), Optional Tender 6/1/1998 6,900,000
Total 8,650,000
MARYLAND--0.2%
1,900,000 Maryland State Energy Financing Administration, Annual Tender
Solid Waste Disposal Revenue Refunding Bonds, 4.10% TOBs
(Nevamar Corp.)/(International Paper Co. GTD),
Optional Tender 9/1/1998 1,900,000
1,630,000 Maryland State IDFA, (Series 1991) Weekly VRDNs (Maryland
Academy of Sciences Facility)/(Nationsbank, N.A., Charlotte LOC) 1,630,000
Total 3,530,000
MASSACHUSETTS--7.3%
8,300,000 Agawam, MA, 4.10% BANs, 9/15/1998 8,315,237
7,897,000 Attleboro, MA, 4.25% BANs, 9/10/1998 7,920,593
5,000,000 Gardner, MA, 4.15% BANs, 11/7/1997 5,001,379
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
MASSACHUSETTS--CONTINUED
$ 4,500,000 Massachusetts Bay Transit Authority, (Series C), 3.70% CP
(Westdeutsche Landesbank Girozentrale LOC),
Mandatory Tender 10/16/1997 $ 4,500,000
11,500,000 Massachusetts HEFA, (Series A) Weekly VRDNs
(Brigham & Women's Hospital)/(Sanwa Bank Ltd, Osaka LOC) 11,500,000
1,850,000 Massachusetts IFA Weekly VRDNs (Kendall Square Entity)/
(State Street Bank and Trust Co. LOC) 1,850,000
4,000,000 Massachusetts IFA, (Series 1992B), 3.80% CP
(New England Power Co.), Mandatory Tender 10/21/1997 4,000,000
3,800,000 Massachusetts IFA, IDRB (Series 1995) Weekly VRDNs
(Dunsirn Industries, Inc. Project)/
(Bank One, Milwaukee, WI N.A. LOC) 3,800,000
21,100,000 Massachusetts Water Resources Authority, (Series 1994), 3.70%
CP (Morgan Guaranty Trust Co., New York LOC),
Mandatory Tender 11/21/1997 21,100,000
11,000,000 Massachusetts Water Resources Authority, (Series 1994), 3.70%
CP (Morgan Guaranty Trust Co., New York LOC),
Mandatory Tender 12/15/1997 11,000,000
20,000,000 Massachusetts Water Resources Authority, (Series 1994), 3.80%
CP (Morgan Guaranty Trust Co., New York LOC),
Mandatory Tender 10/20/1997 20,000,000
8,500,000 Rutland, MA, 4.05% BANs, 6/26/1998 8,508,949
7,000,000 Southborough, MA, 4.00% BANs, 2/6/1998 7,007,089
5,000,000 Springfield, MA, 4.10% BANs
(Fleet National Bank, Providence, R.I. LOC), 11/21/1997 5,002,691
7,000,000 Springfield, MA, 4.40% BANs
(Fleet National Bank, Providence, R.I. LOC), 9/4/1998 7,031,135
2,250,000 Watertown, MA, 4.25% BANs, 8/28/1998 2,256,793
Total 128,793,866
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
MICHIGAN--0.9%
$ 750,000 Dearborn, MI Economic Development Corp, (Series 1990)
Weekly VRDNs (Exhibit Productions, Inc. Project)/
(First of America Bank - Illinois LOC) $ 750,000
15,000,000 Michigan State Building Authority, (Series 1), 3.70% CP
(Canadian Imperial Bank of Commerce, Toronto LOC),
Mandatory Tender 10/9/1997 15,000,000
800,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1991) Weekly VRDNs (Martin Luther Memorial Home,
Inc.)/(Bank One, Indianapolis, IN LOC) 800,000
Total 16,550,000
MINNESOTA--1.7%
9,600,000 Brooklyn Park, MN EDA, (Series 1997), 5.015% TOBs (Brooks
Landing and Brooks Gardens)/(Bayerische Landesbank
Girozentrale INV), Mandatory Tender 3/1/1998 9,600,000
1,345,000 Byron, MN IDB Weekly VRDNs (Schmidt Printing)/(Norwest
Bank Minnesota, Minneapolis LOC) 1,345,000
7,500,000 Minneapolis CDA, Refunding Revenue Bonds Weekly VRDNs
(Riverplace Project (The Pinnacle Apartments))/
(Sumitomo Bank Ltd., Osaka LOC) 7,500,000
11,000,000 Rochester, MN Health Care Facility Authority Weekly VRDNs
(Mayo Foundation) 11,000,000
Total 29,445,000
MISSISSIPPI--0.2%
4,000,000 Warren County, MS IDA Weekly VRDNs (Vesper Corp.)/
(PNC Bank, N.A. LOC) 4,000,000
MISSOURI--1.2%
4,500,000 Missouri Development Finance Board, (Series 1995)
Weekly VRDNs (Wilson Trailer Sales, Inc. Project)/
(Norwest Bank Minnesota, Minneapolis LOC) 4,500,000
6,366,000 Missouri State Environmental Improvement & Energy Authority,
3.65% CP (Kansas City Power And Light Co.),
Mandatory Tender 11/5/1997 6,366,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
MISSOURI--CONTINUED
$ 10,000,000 Missouri State HEFA, (Series 1997N), 4.50% TRANs
(St. Louis, MO School District), 9/14/1998 $ 10,054,788
Total 20,920,788
NEBRASKA--0.6%
1,820,000 Douglas County, NE Weekly VRDNs (Majors Plastics, Inc.)/
(Norwest Bank Minnesota, Minneapolis LOC) 1,820,000
5,000,000 Douglas County, NE, IDRB (Series 1997) Weekly VRDNs
(American Laboratories, Inc.)/(Norwest Bank Minnesota,
Minneapolis LOC) 5,000,000
1,160,000 Douglas County, NE, Industrial Development Revenue Refunding
Bonds (Series 1994) Weekly VRDNs (Omaha Fixture
Manufacturing Project)/(NBD Bank, Michigan LOC) 1,160,000
2,065,000 Douglas County, NE, Subordinated IDRB (Series 1995)
Weekly VRDNs (Aksarben Foods, Inc. Project)/(Norwest Bank
Minnesota, Minneapolis LOC) 2,065,000
Total 10,045,000
NEVADA--1.4%
19,000,000 Nevada Housing Division, Multi-Unit Housing Revenue
Refunding Bonds (1991 Series A) Weekly VRDNs (Park Vista
Apartments Project)/(Sumitomo Bank Ltd., Osaka LOC) 19,000,000
3,800,000 Reno, NV, (Series 1997) Weekly VRDNs (Drill Systems, Inc.)/
(Toronto-Dominion Bank LOC) 3,800,000
2,500,000 Sparks, NV, Industrial Development Revenue Bonds (Series 1996)
Weekly VRDNs (The Antioch Publishing Co. Project)/
(National City Bank, Dayton, OH LOC) 2,500,000
Total 25,300,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NEW HAMPSHIRE--1.1%
$15,000,000 New Hampshire Business Finance Authority, PCR Bonds
(Series A), 3.75% CP (New England Power Co.),
Mandatory Tender 11/14/1997 $ 15,000,000
5,000,000 New Hampshire Business Finance Authority, PCR Bonds
(Series A), 3.80% CP (New England Power Co.),
Mandatory Tender 10/27/1997 5,000,000
Total 20,000,000
NEW JERSEY--5.5%
3,042,500 Atlantic Highlands, NJ, 4.125% BANs, 1/28/1998 3,046,081
4,768,858 Berkeley Township, NJ, 4.25% BANs, 4/13/1998 4,776,211
2,500,000 Haddonfield, NJ, 4.45% BANs, 6/5/1998 2,507,804
2,531,000 Hamilton Township, NJ, 4.125% BANs, 1/30/1998 2,534,029
6,000,000 Hammonton, NJ, 4.00% BANs, 11/26/1997 6,002,658
3,969,000 Highland Park, NJ, 4.125% BANs, 2/6/1998 3,974,694
8,628,681 New Brunswick, NJ, 3.875% BANs, 12/23/1997 8,631,977
18,000,000 New Jersey EDA Weekly VRDNs (Center-For-Aging - Applewood
Estates)/(Banque Paribas, Paris LOC) 18,000,000
208,857 New Jersey EDA Weekly VRDNs (H.L. Bhasin)/(Ford Motor
Credit Corp. LIQ)/(Chase Manhattan Bank N.A., New York LOC) 208,857
7,350,000 New Jersey EDA Weekly VRDNs (YM-YWHA of Bergen
County, NJ)/(Bank of New York, New York LOC) 7,350,000
2,000,000 New Jersey EDA, (Series 1992L) Weekly VRDNs
(Kent Place School)/(Banque Nationale de Paris LOC) 2,000,000
6,000,000 (a) New Jersey State Transportation Trust Fund Agency,
Trust Receipts (Series 1996-1) Weekly VRDNs
(MBIA INS)/(Bank of New York, New York LIQ) 6,000,000
9,449,139 Stafford Township, NJ, 4.375% BANs, 5/15/1998 9,464,569
6,600,000 Trenton, NJ, 4.00% BANs, 12/18/1997 6,604,344
4,442,000 Trenton, NJ, 4.00% BANs, 12/18/1997 4,444,209
2,308,000 Union Beach, NJ, (Series P), 4.125% BANs, 12/23/1997 2,308,871
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NEW JERSEY--CONTINUED
$ 9,754,100 West Milford Township, NJ, (Series 1997 A), 4.00% BANs,
1/23/1998 $ 9,762,904
Total 97,617,208
NEW MEXICO--1.0%
6,140,000 Albuquerque, NM, (Series 1996) Weekly VRDNs (Rose's Southwest
Papers, Inc. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 6,140,000
2,000,000 Albuquerque, NM, (Series 1996A) Weekly VRDNs (El Encanto, Inc. Project)/
(Norwest Bank Minnesota, Minneapolis LOC) 2,000,000
3,300,000 Albuquerque, NM, Refunding Revenue Bonds (Series 1992)
Weekly VRDNs (Charter Hospital of Albuquerque, Inc.)/
(Chase Manhattan Bank N.A., New York LOC) 3,300,000
1,200,000 Farmington, NM, PCR Bonds (1994 Series C) Daily VRDNs
(Arizona Public Service Corp.)/(Union Bank of Switzerland,
Zurich LOC) 1,200,000
5,500,000 Las Cruces, NM, IDRB (Series 1994A) Weekly VRDNs
(F & A Dairy Products, Inc. Project)/(Norwest Bank Minnesota,
Minneapolis LOC) 5,500,000
Total 18,140,000
NEW YORK--3.8%
8,815,000 (a) Metropolitan Transportation Authority, New York, Commuter
Facilities Revenue Bonds (PA-168) Weekly VRDNs (FGIC INS)/
(Merrill Lynch Capital Services, Inc. LIQ) 8,815,000
13,000,000 (a) Metropolitan Transportation Authority, New York, Trust Receipts
(Series 1997 FR/RI-9) Weekly VRDNs (FGIC INS)/
(Bank of New York, New York LIQ) 13,000,000
10,000,000 (a) New York City Municipal Water Finance Authority, Trust Receipts
(Series 1997 FR/RI-6) Weekly VRDNs (MBIA INS)/
(Bank of New York, New York LIQ) 10,000,000
5,000,000 South Country Central School District, NY, 4.15% TANs,
6/25/1998 5,008,778
6,500,000 Ulster County, NY, Custodial Receipts (2nd Series 1997-A),
4.00% TANs (State Street Bank and Trust Co. LOC), 3/18/1998 6,508,337
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NEW YORK--CONTINUED
$11,000,000 (a) VRDC/IVRC Trust, (Series 1992A) Weekly VRDNs (New York City
Municipal Water Finance Authority)/(MBIA INS)/(Hongkong &
Shanghai Banking Corp. LIQ) $ 11,000,000
13,500,000 (a) VRDC/IVRC Trust, (Series 1993G) Weekly VRDNs
(St. Lukes Roosevelt Hospital Center)/(FHA INS)/
(Hongkong & Shanghai Banking Corp. LIQ) 13,500,000
Total 67,832,115
NORTH CAROLINA--2.1%
400,000 Catawba County, NC Industrial Facilities & Pollution Control
Financing Authority, (Series 1994) Weekly VRDNs (Ethan Allen Inc.
Project)/(Bankers Trust Co., New York LOC) 400,000
1,000,000 Cleveland County, NC Industrial Facilities and Pollution Control
Financing Authority Weekly VRDNs (PPG Industries, Inc.) 1,000,000
3,000,000 Iredell County, NC Industrial Facilities & Pollution Control
Financing Authority, (Series 1984), 4.05% TOBs (Rubbermaid
Specialty Products, Inc.)/(Rubbermaid, Inc. GTD),
Optional Tender 6/1/1998 3,000,000
4,700,000 (a) Martin County, NC IFA, (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) 4,700,000
3,680,000 Mecklenberg County, NC Industrial Facility & PCFA, (Series 1988)
Weekly VRDNs (Florida Steel Corp.)/(Bankers Trust Co.,
New York LOC) 3,680,000
600,000 (a) NCNB Pooled Tax-Exempt Trust, (Series 1990A) Weekly VRDNs
(NCNB Tax-Exempt Trust 1990a)/(Nationsbank, N.A.,
Charlotte LOC) 600,000
2,895,000 (a) NCNB Pooled Tax-Exempt Trust, (Series 1990B) Weekly VRDNs
(NCNB Tax-Exempt Trust 1990b)/(Nationsbank, N.A.,
Charlotte LOC) 2,895,000
5,900,000 North Carolina Educational Facilities Finance Agency, (Series 1990)
Weekly VRDNs (Bowman Gray School of Medicine)/
(Wachovia Bank of NC, NA, Winston-Salem LOC) 5,900,000
4,600,000 North Carolina Medical Care Commission Hospital, Revenue
Bonds (Series 1992B) Weekly VRDNs (North Carolina Baptist) 4,600,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NORTH CAROLINA--CONTINUED
$ 3,000,000 North Carolina Medical Care Commission Hospital,
Revenue Bonds (Series 1993) Weekly VRDNs
(Moses H. Cone Memorial) $ 3,000,000
7,000,000 Pender County, NC Industrial Facilities and Pollution Control
Financing Authority, (Series 1997) Weekly VRDNs
(Leslie-Locke, Inc.)/(Branch Banking & Trust Co, Wilson LOC) 7,000,000
Total 36,775,000
NORTH DAKOTA--0.2%
2,875,000 Fargo, ND, IDRB (Series 1994) Weekly VRDNs (Pan-O-Gold
Baking Co. Project)/(Norwest Bank Minnesota, Minneapolis LOC) 2,875,000
OHIO--0.0%
100,000 Cuyahoga County, OH IDA Weekly VRDNs (Health Hill)/
(Union Bank of Switzerland, Zurich LOC) 100,000
450,000 Oakwood Village, OH IDA Weekly VRDNs (Oak Leaf Industries)/
(First Union National Bank, Charlotte, NC LOC) 450,000
Total 550,000
OKLAHOMA--1.8%
2,000,000 Broken Arrow, OK EDA Weekly VRDNs (Blue Bell Creameries)/
(Banque Nationale de Paris LOC) 2,000,000
2,295,000 Claremore, OK IDA Weekly VRDNs (Baldor Electric Co.)/
(Wachovia Bank of Georgia N.A., Atlanta LOC) 2,295,000
2,080,000 Oklahoma County, OK Finance Authority, (Series 1996)
Weekly VRDNs (Avalon Project)/(Bank One, Texas N.A. LOC) 2,080,000
13,000,000 Oklahoma State Industrial Authority, Flexible Rate Hospital
Revenue Bonds (Series 1990B) Weekly VRDNs (Baptist Medical
Center, OK)/(Credit Suisse, Zurich and Morgan Guaranty
Trust Co., New York LIQs) 13,000,000
6,000,000 Oklahoma State Industrial Authority, Health System Revenue
Bonds (Series 1995A) Weekly VRDNs
(Baptist Medical Center, OK)/(Credit Suisse, Zurich and Morgan
Guaranty Trust Co., New York LIQs) 6,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
OKLAHOMA--CONTINUED
$6,100,000 Tulsa, OK International Airport, Variable Rate Certificates
(Series 1997 B-1) Weekly VRDNs (MBIA INS)/
(Bank of America NT and SA, San Francisco LIQ) $ 6,100,000
Total 31,475,000
PENNSYLVANIA--3.4%
1,200,000 Berks County, PA IDA Weekly VRDNs (Lutheran Home at Topton Project)/
(Corestates Bank N.A., Philadelphia, PA LOC) 1,200,000
7,000,000 Cumberland County, PA Municipal Authority, Variable Rate
Revenue Bonds (Series 1996 B), 4.25% TOBs (Dickinson College)/
(Mellon Bank N.A., Pittsburgh LOC), Optional Tender 10/31/1997 7,003,732
1,530,000 Erie County, PA IDA, Multi Mode Revenue Refunding Bonds
Weekly VRDNs (Corry Manor, Inc.)/(PNC Bank, N.A. LOC) 1,530,000
2,000,000 Montgomery County, PA IDA Weekly VRDNs (Plymouth Woods)/
(PNC Bank, N.A. LOC) 2,000,000
1,000,000 Pennsylvania EDFA, (1995 Series E) Weekly VRDNs
(Home Nursing Agency Affiliates Project)/(PNC Bank, N.A. LOC) 1,000,000
2,300,000 Pennsylvania EDFA, (Series 1996 E) Weekly VRDNs
(Adelphoi, Inc.)/(PNC Bank, N.A. LOC) 2,300,000
7,000,000 Philadelphia, PA, (Series A), 4.50% TRANs, 6/30/1998 7,025,072
10,000,000 Philadelphia, PA, GO (Series 1990), 3.70% CP
(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender 10/29/1997 10,000,000
10,000,000 Philadelphia, PA, GO (Series 1990), 3.75% CP
(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender 10/14/1997 10,000,000
18,500,000 Philadelphia, PA, GO (Series 1990), 3.75% CP
(Fuji Bank, Ltd., Tokyo LOC), Mandatory Tender 10/30/1997 18,500,000
Total 60,558,804
RHODE ISLAND--0.3%
6,000,000 Bristol Warren, RI Regional School District, 4.25% BANs,
7/16/1998 6,011,346
SOUTH CAROLINA--1.1%
2,535,000 Berkeley, SC IRB, (Series 1989) Weekly VRDNs
(W.W. Williams Company Project)/(Bank One, Ohio, N.A. LOC) 2,535,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
SOUTH CAROLINA--CONTINUED
$ 9,500,000 Georgetown County, SC, Pollution Control Facilities Adjustable
Rate Bonds (Series A), 4.00% TOBs (International Paper Co.),
Optional Tender 9/1/1998 $ 9,500,000
2,300,000 South Carolina Education Facilities Authority, Educational
Facilities Revenue Bonds (Series 1993) Weekly VRDNs
(Presbyterian College Project) 2,300,000
5,255,000 South Carolina Job Development Authority, Hospital Facilities
Revenue Bonds, (Series 1994) Weekly VRDNs (Rolling Green
Village Project)/(Branch Banking & Trust Co, Wilson LOC) 5,255,000
Total 19,590,000
SOUTH DAKOTA--3.0%
555,000 Mitchell, SD, IDR Weekly VRDNs (Holiday Inn)/(U.S. Bank, N.A.,
Minneapolis LOC) 555,000
1,105,000 Rapid City, SD Weekly VRDNs (Gillette Dairy Black Hills, Inc.)/
(Bank of Tokyo-Mitsubishi Ltd. LOC) 1,105,000
15,555,000 South Dakota Housing Development Authority, (Series 1996E),
3.75% TOBs, Mandatory Tender 11/13/1997 15,555,000
12,465,000 (a) South Dakota Housing Development Authority, CDC Municipal
Products, Inc. Class A Certificates (Series 1996C) Weekly VRDNs
(CDC Municipal Products, Inc. LIQ) 12,465,000
14,300,000 South Dakota Housing Development Authority, Homeownership
Mortgage Bonds (1997 Series E) Weekly VRDNs 14,300,000
8,715,000 (a) South Dakota Housing Development Authority, PT-85
(1988 Series A) Weekly VRDNs
(Rabobank Nederland, Utrecht LIQ) 8,715,000
1,280,000 Watertown, SD, (Series 1991) Weekly VRDNs (Tescom Corp.)/
(Norwest Bank Minnesota, Minneapolis LOC) 1,280,000
Total 53,975,000
TENNESSEE--0.5%
7,995,000 Tennessee Housing Development Agency, (Series C)
Weekly VRDNs (Bank of America NT and SA, San Francisco LIQ) 7,995,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
TENNESSEE--CONTINUED
$ 250,000 Washington County, TN IDB, Revenue Refunding Bonds
(Series 1996) Weekly VRDNs (Springbrook Properties Project)/
(SunTrust Bank, Nashville LOC) $ 250,000
Total 8,245,000
TEXAS--7.7%
900,000 Corpus Christi, TX IDC Weekly VRDNs (Grainger (W.W.), Inc.) 900,000
1,875,000 Harris County, TX Cultural Education Facilities Finance Corp.
Weekly VRDNs (Houston Museum of Natural Sciences)/
(Bank One, Texas N.A. LOC) 1,875,000
21,700,000 Harris County, TX HFDC, (Series 1994) Daily VRDNs
(Methodist Hospital, Harris County, TX) 21,700,000
10,000,000 (a) Harris County, TX HFDC, Trust Receipts (Series 1997)
Weekly VRDNs (Hermann Hospital)/(MBIA INS)/
(Bank of New York, New York LIQ) 10,000,000
5,320,000 Harris County, TX HFDC, Unit Priced Demand Adjustable
Revenue Bonds (Series 1997B) Daily VRDNs (St. Luke's Episcopal
Hospital)/(Morgan Guaranty Trust Co., New York, Nationsbank
of Texas, N.A. and Toronto-Dominion Bank LIQs) 5,320,000
955,000 Harris County, TX IDC Weekly VRDNs (Grainger (W.W.), Inc.) 955,000
2,040,000 Liberty County, TX IDA Weekly VRDNs (Insteel Industries, Inc.)/
(First Union National Bank, Charlotte, NC LOC) 2,040,000
25,000,000 North Central Texas HFDC, Flexible Rate Hospital Revenue Bonds
(Series 1991A), 3.80% CP (Methodist Hospitals of Dallas)/
(MBIA INS)/(Rabobank Nederland, Utrecht LOC), Mandatory
Tender 11/20/1997 25,000,000
1,680,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/
(Nationsbank, N.A., Charlotte LOC) 1,680,000
28,600,000 San Antonio, TX, Electric & Gas Systems Commercial Paper Notes,
(Series A), 3.80% CP (Bank of Tokyo-Mitsubishi Ltd., Bank of
Tokyo-Mitsubishi Ltd., Credit Suisse, Zurich, Sanwa Bank Ltd.,
Osaka, Sumitomo Bank Ltd., Osaka, Texas Commerce Bank, N.A.,
Houston,Toronto-Dominion Bank and Union Bank of Switzerland,
Zurich LIQs), Mandatory Tender 12/16/1997 28,600,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$11,000,000 San Antonio, TX, Waste System (Series 1995), 3.75% CP
(Westdeutsche Landesbank Girozentrale LIQ), Mandatory Tender
12/17/1997 $ 11,000,000
6,000,000 Tarrant County, TX IDC Weekly VRDNs (Holden Business Forms)/
(Norwest Bank Minnesota, Minneapolis LOC) 6,000,000
22,000,000 Texas State, (Series A), 4.75% TRANs, 8/31/1998 22,176,312
Total 137,246,312
UTAH--3.3%
26,040,000 Emery County, UT, PCR Refunding Bonds (Series 1994) Daily
VRDNs (Pacificorp)/(AMBAC INS)/
(Bank of Nova Scotia, Toronto LIQ) 26,040,000
7,400,000 Salt Lake County, UT, Multi-Family Housing Revenue Refunding
Bonds (Series 1992) Weekly VRDNs (Santa Fe Apartments)/
(First Security Bank of Utah, N.A. LOC) 7,400,000
20,000,000 Utah State, (Series 1997A), 3.80% CP
(Toronto-Dominion Bank LIQ), Mandatory Tender 10/16/1997 20,000,000
5,000,000 Washington County, UT School District, 4.00% TANs, 6/1/1998 5,003,215
Total 58,443,215
VIRGINIA--7.4%
6,475,000 Alexandria, VA Redevelopment and Housing Authority,
(Series 1996A) Weekly VRDNs (Glebe Park Apartments Project)/
(Kredietbank N.V., Brussels LOC) 6,475,000
5,500,000 Arlington County, VA Weekly VRDNs (Ballston Public Parking)/
(Citibank N.A., New York LOC) 5,500,000
1,250,000 Carroll County, VA IDA, IDRB (Series 1995) Weekly VRDNs
(Kentucky Derby Hosiery Co, Inc Project)/
(Bank One, Kentucky LOC) 1,250,000
1,000,000 Chesapeake, VA IDA, IDRB (Series 1988) Weekly VRDNs
(Sumitomo Machinery Corp. of America Corp.)/(Sumitomo Bank
Ltd., Osaka LOC) 1,000,000
10,000,000 Chesterfield County, VA IDA, 3.80% CP
(Virginia Electric Power Co.), Mandatory Tender 11/12/1997 10,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
VIRGINIA--CONTINUED
$13,000,000 Fairfax County, VA EDA, (Series 1995) Weekly VRDNs (American
Society of Civil Engineers Foundation, Inc. Project)/(Mellon Bank
N.A., Pittsburgh LOC) $ 13,000,000
1,150,000 Fairfax County, VA EDA, Facilities Revenue Refunding Bonds
(Series 1993) Weekly VRDNs (Future Homemakers of America)/
(Nationsbank, N.A., Charlotte LOC) 1,150,000
1,900,000 Fairfax County, VA IDA Weekly VRDNs (Inova Health System)/
(Credit Suisse, Zurich LIQ) 1,900,000
4,000,000 Fairfax County, VA IDA, (Series 1993B), 3.80% CP
(Inova Health System), Mandatory Tender 10/27/1997 4,000,000
2,400,000 Fauquier County, VA IDA, Refunding Revenue Bonds Weekly
VRDNs (Warrenton Development Co.)/(Nationsbank, N.A.,
Charlotte LOC) 2,400,000
16,800,000 (a) Henrico County, VA IDA, MERLOTS (Series 1997C) Weekly
VRDNs (Bon Secours Health System)/(FSA INS)/
(Corestates Bank N.A., Philadelphia, PA LIQ) 16,800,000
23,800,000 James City County, VA IDA, (Series 1997) Weekly VRDNs
(Riverside Health System-Patriots Colony) 23,800,000
6,000,000 Richmond, VA Redevelopment & Housing Authority, (Series B-1)
Weekly VRDNs (Richmond, VA Red Tobacco Row)/
(Bayerische Landesbank Girozentrale LOC) 6,000,000
4,400,000 Richmond, VA Redevelopment & Housing Authority, (Series B-10)
Weekly VRDNs (Richmond, VA Red Tobacco Row)/
(Bayerische Landesbank Girozentrale LOC) 4,400,000
4,000,000 Richmond, VA Redevelopment & Housing Authority, (Series B-9)
Weekly VRDNs (Richmond, VA Red Tobacco Row)/
(Bayerische Landesbank Girozentrale LOC) 4,000,000
4,380,000 Suffolk, VA Redevelopment & Housing Authority Weekly VRDNs
(Terry/Peterson Development Corp.)/(Nationsbank, N.A.,
Charlotte LOC) 4,380,000
3,105,000 Suffolk, VA Redevelopment & Housing Authority, (Series 1994)
Weekly VRDNs (Terry/Peterson Associates II Project)/
(Nationsbank, N.A., Charlotte LOC) 3,105,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
VIRGINIA--CONTINUED
$ 5,000,000 Virginia Resources Authority, Water and Sewer (Series 1997)
Weekly VRDNs (Henrico County, VA)/(Crestar Bank of Virginia,
Richmond LIQ) $ 5,000,000
1,500,000 Virginia State Housing Development Authority, (Series 1987A)
Weekly VRDNs (AHC Service Center)/
(Bank of Tokyo-Mitsubishi Ltd. LOC) 1,500,000
3,400,000 Virginia State Housing Development Authority, (Series G-1), 5.70%
TOBs, Mandatory Tender 7/1/1998 3,443,629
4,000,000 Williamsburg, VA IDA, (Series 1988) Weekly VRDNs (Colonial
Williamsburg Foundation Museum)/
(Nationsbank, N.A., Charlotte LOC) 4,000,000
7,800,000 York County, VA IDA, (Series 1985), 3.75% CP
(Virginia Electric Power Co.), Mandatory Tender 11/10/1997 7,800,000
Total 130,903,629
WEST VIRGINIA--1.0%
2,875,000 Berkeley County, WV County Commission, Industrial
Development Bonds (Series 1994) Weekly VRDNs (Brentwood
Industries, Inc. Project)/(Corestates Bank N.A.,
Philadelphia, PA LOC) 2,875,000
3,500,000 Huntington, WV Municipal Development Authority, (Series 1997A)
Weekly VRDNs (Huntington Civic Arena Improvement)/
(Bank One West Virginia, N.A. LOC) 3,500,000
11,500,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs
(PPG Industries, Inc.) 11,500,000
Total 17,875,000
WISCONSIN--1.2%
2,650,000 Combined Locks, WI, Revenue Refunding Bonds, Series 1997
Weekly VRDNs (Appleton Papers)/(Bank of Nova Scotia,
Toronto LOC) 2,650,000
2,000,000 Green Bay, WI IDA, IDRB (Series 1985) Weekly VRDNs
(St. Mary's Holdings, Inc.)/(Mellon Bank NA, Pittsburgh LOC) 2,000,000
5,000,000 Mequon-Thiensville, WI School District, 4.10% TRANs, 10/1/1998 5,007,175
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
WISCONSIN--CONTINUED
$ 740,000 Spooner, WI, (Series 1994) Weekly VRDNs (Nash Finch Co.)/
(U.S. Bank, N.A., Minneapolis LOC) $ 740,000
10,000,000 Waukesha, WI School District, 4.10% TRANs, 8/21/1998 10,017,053
1,600,000 (a) Wisconsin Housing & Economic Development Authority,
(Series B), 4.15% TOBs (FSA INS)/(Corestates Bank N.A.,
Philadelphia, PA LIQ), Optional Tender 12/1/1997 1,600,000
Total 22,014,228
WYOMING--0.1%
1,830,000 Sweetwater County, WY IDA Weekly VRDNs (FMC Gold Co.)/
(Wachovia Bank of NC, N.A., Winston-Salem LOC) 1,830,000
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 1,764,991,532
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 19.7% of
the portfolio as calculated based upon total portfolio market value.
(a) Denotes a restricted security which is subject to restrictions on resale
under federal securities laws. At September 30, 1997, these securities
amounted to $169,397,285 which represents 9.5% of net assets.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,775,252,242) at September 30, 1997.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
BANs --Bond Anticipation Notes
CDA --Community Development Administration
CP --Commercial Paper
EDA --Economic Development Authority
EDFA --Economic Development Financing Authority
EDRB --Economic Development Revenue Bonds
FGIC --Financial Guaranty Insurance Company
FHA --Federal Housing Administration
FSA --Financial Security Assurance
GO --General Obligation
GTD --Guaranty
HEFA --Health and Education Facilities Authority
HFA --Housing Finance Authority
HFDC --Health Facility Development Corporation
IDA --Industrial Development Authority
IDB --Industrial Development Bond
IDC --Industrial Development Corporation
IDR --Industrial Development Revenue
IDRB --Industrial Development Revenue Bond
IDFA --Industrial Development Finance Authority
IFA --Industrial Finance Authority
INS --Insured
INV --Investment Agreement
LIQ --Liquidity Agreement
LOCs --Letter(s) of Credit
LOC --Letter of Credit
MBIA --Municipal Bond Investors Assurance
PCR --Pollution Control Revenue
PCFA --Pollution Control Finance Authority
PLC --Public Limited Company
RANs --Revenue Anticipation Notes
SA --Support Agreement
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
TRANs --Tax and Revenue Anticipation Notes
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
The Trust may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An
NRSRO's two highest rating categories are determined without regard for
sub-categories and gradations. For example, securities, rated SP-1+, SP-1,
or SP-2 by Standard & Poor's Corporation, MIG-1 or MIG-2 by Moody's
Investors Service, Inc., or F-1+, F-1, and F-2 by Fitch Investors Service,
Inc. are all considered rated in one of the two highest short-term rating
categories.
Securities rated in the highest short-term rating category (and unrated
securities of comparable quality) are identified as First Tier securities.
Securities rated in the second highest short-term rating category (and
unrated securities of comparable quality) are identified as Second Tier
securities. The Trust follows applicable regulations in determining whether
a security is rated and whether a security rated by multiple NRSROs in
different rating categories should be identified as a First or Second Tier
security. At September 30, 1997, tier rating percentages were as follows:
Tier Rating Percentages based on Total Market Value (unaudited)
FIRST TIER SECOND TIER
97.5% 2.5%
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $ 1,764,991,532
Cash 1,113,538
Income receivable 11,635,082
Total assets 1,777,740,152
LIABILITIES:
Income distribution payable $ 2,126,887
Accrued expenses 361,023
Total liabilities 2,487,910
NET ASSETS for 1,775,669,488 shares outstanding $ 1,775,252,242
NET ASSETS CONSIST OF:
Paid in capital $ 1,775,669,488
Undistributed net investment income 5,242
Accumulated net realized loss on investments (422,488)
Total Net Assets $ 1,775,252,242
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
Investment Shares $1,507,227,763 / 1,507,478,565 shares outstanding $1.00
Institutional Service Shares $268,024,479 / 268,190,923 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 33,995,369
EXPENSES:
Investment advisory fee $ 4,427,727
Administrative personnel and services fee 668,587
Custodian fees 43,721
Transfer and dividend disbursing agent fees and expenses 256,927
Directors'/Trustees' fees 13,325
Auditing fees 7,847
Legal fees 5,014
Portfolio accounting fees 76,792
Shareholder services fee--Investment Shares 1,891,318
Shareholder services fee--Institutional Service Shares 322,531
Share registration costs 36,285
Printing and postage 78,087
Insurance premiums 9,446
Taxes 20,720
Miscellaneous 7,213
Total expenses 7,865,540
Waivers --
Waiver of investment advisory fee $ (549,586)
Waiver of shareholder services fee--Investment Shares (756,527)
Waiver of shareholder services fee--
Institutional Service Shares (322,531)
Total waivers (1,628,644)
Net expenses 6,236,896
Net investment income 27,758,473
Net realized gain on investments 27,248
Change in net assets resulting from operations $ 27,785,721
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(UNAUDITED) ENDED
SEPTEMBER 30, MARCH 31,
1997 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 27,758,473 $ 51,072,941
Net realized gain (loss) on investments 27,248 228,552
Change in net assets resulting from operations 27,785,721 51,301,493
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Investment Shares (23,545,154) (41,768,570)
Institutional Service Shares (4,213,319) (9,304,371)
Change in net assets resulting from
distributions
to shareholders (27,758,473) (51,072,941)
SHARE TRANSACTIONS--
Proceeds from sale of shares 2,553,230,358 4,986,838,234
Net asset value of shares issued to shareholders
in
payment of distributions declared 23,150,854 42,372,256
Cost of shares redeemed (2,556,020,417) (5,044,423,524)
Change in net assets resulting from share 20,360,795 (15,213,034)
transactions
Change in net assets 20,388,043 (14,984,482)
NET ASSETS:
Beginning of period 1,754,864,199 1,769,848,681
End of period (including undistributed net
investment
income of $5,242 and $5,242, respectively) $ 1,775,252,242 $ 1,754,864,199
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
FINANCIAL HIGHLIGHTS -- INVESTMENT SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.03 0.03 0.03 0.02 0.02
LESS DISTRIBUTIONS
Distributions from net
investment income (0.02) (0.03) (0.03) (0.03) (0.02) (0.02)
NET ASSET VALUE, END OF $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
PERIOD
TOTAL RETURN(A) 1.58% 2.92% 3.32% 2.70% 2.01% 2.42%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.73%* 0.71% 0.71% 0.70% 0.61% 0.55%
Net investment income 3.11%* 2.88% 3.27% 2.66% 2.00% 2.38%
Expense 0.16%* 0.18% 0.24% 0.17% 0.14% 0.10%
waiver/reimbursement(b)
SUPPLEMENTAL DATA
Net assets, end of period $1,507,228 1,506,918 $1,465,333 $1,277,894 $1,327,506 $1,619,531
(000 omitted)
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
FINANCIAL HIGHLIGHTS -- INSTITUTIONAL SERVICE SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1997 1997 1996 1995 1994(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN(B) 1.65% 3.08% 3.47% 2.85% 0.92%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.58%* 0.56% 0.56% 0.55% 0.55%*
Net investment income 3.27%* 3.02% 3.43% 2.82% 1.99%*
Expense waiver/reimbursement(c) 0.31%* 0.33% 0.40% 0.17% 0.14%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $268,024 $247,946 $304,516 $358,826 $390,453
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from October 15, 1993 (date of
initial public investment) to March 31, 1994.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 (UNAUDITED)
1. ORGANIZATION
Tax-Free Instruments Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust offers two classes of shares: Investment
Shares and Institutional Service Shares. The investment objective of the
Trust is current income which is exempt from federal income tax including
the alternative minimum tax consistent with stability of principal.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS -- The Trust uses the amortized cost method to value
its portfolio securities in accordance with Rule 2a-7 under the Act.
Investments in other open-end regulated investment companies are valued at
net asset value.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS -- Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES -- It is the Trust's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At March 31, 1997, the Trust, for federal tax purposes, had a capital loss
carryforward of $450,119, which will reduce the Trust's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Trust of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 2004 ($450,119).
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Trust may engage in
when-issued or delayed delivery transactions. The Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
RESTRICTED SECURITIES -- Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. Many restricted securities may be resold in
the secondary market in transactions exempt from registration. In some
cases, the restricted securities may be resold without registration upon
exercise of a demand feature. Such restricted securities may be determined
to be liquid under criteria established by the Board of Trustees. The Trust
will not incur any registration costs upon such resales. Restricted
securities are valued at amortized cost in accordance with Rule 2a-7 under
the Act. Additional information on each restricted security held at
September 30, 1997 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <S> <C>
California Public Capital Improvements
Financing Authority 3/1/1997 - 9/1/1997 $ 10,650,000
Colorado Municipal Securities Trust,
Series 1996A 12/1/1996 3,000,000
Colorado Municipal Securities Trust,
Series 1996B 4/1/1997 3,375,000
Thornton, CO, Multifamily Housing Refunding
Revenue Bonds 9/15/1995 - 10/16/1995 5,365,000
Connecticut State HFA 7/17/1997 5,000,000
Chicago, IL Public Building Commission
(Series 1997) 6/10/1997 - 7/1/1997 17,100,000
LaSalle National Bank Leasetops Trust,
Series 1995A 10/11/1995 4,817,285
New Jersey State Transportation Trust Fund
Agency 6/15/1997 6,000,000
Metropolitan Transportation Authority, NY,
Commuter Facilities Revenue Bonds 8/29/1997 8,815,000
Metropolitan Transportation Authority, NY,
Trust Receipts 4/18/1997 13,000,000
New York City Municipal Water Finance
Authority 6/15/1997 10,000,000
VRDC/IVRC Trust (Series 1992A) 6/16/1997 11,000,000
VRDC/IVRC Trust (Series 1993G) 2/16/1997 - 8/16/1997 13,500,000
Martin County, NC Industrial Finance
Authority (Series 1993) 6/1/1997 - 9/1/1997 4,700,000
NCNB Pooled Tax-Exempt Trust, (Series 1990A) 6/15/1995 600,000
NCNB Pooled Tax-Exempt Trust, (Series 1990B) 12/4/1990 2,895,000
South Dakota Housing Development
Authority, CDC Municipal Products, Inc. 7/11/1996 12,465,000
South Dakota Housing Development
Authority, PT-85 (1988 Series A) 7/2/1996 8,715,000
Harris County, TX Health Facility
Development Corporation 4/30/1997 10,000,000
Henrico County, VA Industrial Development
Authority 5/14/1997 16,800,000
Wisconsin Housing & Economic Development
Authority, (Series B) 9/1/1997 1,600,000
</TABLE>
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value) for
each class of shares. Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
<S> <C> <C>
INVESTMENT SHARES
Shares sold 2,176,405,089 4,067,609,898
Shares issued to shareholders in payment of
distributions declared 22,715,886 40,667,650
Shares redeemed (2,198,835,046) (4,066,883,584)
Net change resulting from Investment Share
transactions 285,929 41,393,964
</TABLE>
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
September 30, 1997 March 31, 1997
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
Shares sold 376,825,269 919,228,336
Shares issued to shareholders in payment of
distributions declared 434,968 1,704,606
Shares redeemed (357,185,371) (977,539,940)
Net change resulting from Institutional Service
Share transactions 20,074,866 (56,606,998)
Net change resulting from share transactions 20,360,795 (15,213,034)
</TABLE>
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- Federated Management, the Trust's investment
adviser (the "Adviser"), receives for its services an annual investment
advisory fee equal to 0.50% of the Trust's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. The fee paid to FServ is based on the level of
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors for the period. The administrative fee received during
the period of the Administrative Services Agreement shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Trust will pay
FSS up to 0.25% of average daily net assets of the Trust for the period. The
fee paid to FSS is used to finance certain services for shareholders and to
maintain shareholder accounts. FSS may voluntarily choose to waive any
portion of its fee. FSS can modify or terminate this voluntary waiver at any
time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC") serves as
transfer and dividend disbursing agent for the Trust. The fee paid to FSSC
is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS -- During the period ended September 30, 1997, the
Trust engaged in purchase and sale transactions with funds that have a
common investment adviser (or affiliated investment advisers), common
Directors/Trustees, and/or common Officers. These purchase and sale
transactions were made at current market value pursuant to Rule 17a-7 under
the Act amounting to $1,737,975,000 and $1,836,039,000, respectively.
GENERAL -- Certain of the Officers and Trustees of the Trust are Officers
and Directors or Trustees of the above companies.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
Gregor F. Meyer
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Glen R. Johnson
President
J. Christopher Donahue
Executive Vice President
Edward C. Gonzales
Executive Vice President
John W. McGonigle
Executive Vice President, Treasurer, and Secretary
Richard B. Fisher
Vice President
Karen M. Brownlee
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including
possible loss of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance that they
will be able to do so.
This report is authorized for distribution to prospective investors only
when preceded or accompanied by the trust's prospectuses which contain facts
concerning its objective and policies, management fees, expenses and other
information.
[Graphic]
Federated Securities Corp., Distributor
Federated Investors Tower
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 876924101
Cusip 876924200
8110107 (11/97)
[Graphic]
