[Graphic]
Federated Investors
Tax-Free Instruments Trust
16TH SEMI-ANNUAL REPORT
SEPTEMBER 30, 1998
ESTABLISHED 1981
PRESIDENT'S MESSAGE
[Graphic]
Dear Shareholder:
Tax-Free Instruments Trust was created in 1981, and I am pleased to present its
16th Semi-Annual Report. This report covers the first half of the trust's fiscal
year, which is the six-month reporting period from April 1, 1998 through
September 30, 1998. It begins with a discussion with the trust's portfolio
manager, Jeff A. Kozemchak, Vice President of Federated Management. Following
his discussion are two additional items of shareholder interest. First is a
complete listing of the trust's holdings, and second is the publication of the
trust's financial statements.
Tax-Free Instruments Trust pursues daily tax-free income* from a portfolio of
more than 200 short-term money market securities issued by municipalities across
the U.S. 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
ended September 30, 1998, totaled $0.02 per share for both Investment Shares and
Institutional Service Shares. Net assets reached $1.9 billion on September 30,
1998.
Thank you for participating in the daily, tax-free earning power of Tax-Free
Instruments Trust. We will 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, 1998
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** An investment in the trust is neither insured not guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the trust
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the trust.
INVESTMENT REVIEW
[Graphic]
Jeff A. Kozemchak, CFA
Vice President
Federated Management
[Graphic]
WHAT IS YOUR ANALYSIS OF THE ECONOMIC ENVIRONMENT DURING THE
REPORTING PERIOD, AND ITS EFFECT ON THE SHORT-TERM
MARKETPLACE?
Early in the reporting period, economic fundamentals were still the driving
factor behind movements in short-term interest rates. With economic growth still
strong, albeit slowing from its torrid 5.50% pace of growth in the first quarter
of 1998, market participants were content with the idea that the Federal Reserve
Board (the "Fed") would remain on the sidelines. The anticipated drag on the
U.S. economy resulting from the economic crises in Asia became
apparent--particularly in the manufacturing sector--over the second quarter.
This slowdown lent comfort to investors that economic growth would not be so
robust as to ignite inflationary pressures.
By the third quarter of 1998, however, a dramatic shift in market sentiment was
evident. Uncertainty in the world economies resulted in vulnerability in our
domestic equity market, and led to a substantial flight to quality to U.S.
Treasury securities across the yield curve. Economic trouble spread to include
Russia and Latin America, and what had been perceived to have been a fairly
modest drag on the U.S. economy, as a result of the remote Asian crisis, now
became an overpowering influence on the market and expectations regarding future
U.S. growth. Although economic fundamentals still remained fairly positive in
this environment, fear dominated market sentiment over this period.
[Graphic]
HOW DID THIS ENVIRONMENT INFLUENCE THE FED'S POLICY ON RATES?
Expectations regarding the direction of monetary policy did an abrupt about-face
over the reporting period. The Fed adopted a tightening bias in March, a
reflection of their underlying concern about inflationary pressures. By August,
the Fed had removed its tightening bias as Fed officials perceived that the
risks to the economy had become more balanced. By late August, however, market
expectations that the Fed might eventually need to ease monetary policy to help
the U.S. economy had begun to grow.
This expectation intensified throughout September, and at the September 29,
1998, Federal Open Market Committee meeting, the Fed voted to ease monetary
policy by a modest 25 basis points. The Fed followed that move with another 25
basis points ease on October 15, 1998, which brought the Fed Funds Target Rate
down to 5.00%. The Fed also voted to
cut the discount rate from 5.00% to 4.75%.
The flight to quality resulting from investors, both abroad and at home, seeking
a safe haven from all of the uncertainty was most evident in the Treasury bill
market. The yield on the one-year Treasury bill opened the period at 5.40% in
early April, and then traded within a range of 5.30% to 5.40% for a number of
months. By late July, however, the market concerns became overwhelming, and the
yield declined sharply over the ensuing weeks. By the time of the Fed's action
in late September, the yield on this security was trading at 4.40%, about 100
basis points lower than at the start of the period. A general shortage in the
supply of Treasury bills because of improvement in the overall budget picture
exacerbated the decline in rates.
The tax-free note market was more influenced by supply and demand imbalances
over the period, particularly over the summer months, as both note maturities
and new issuance occurred. However, strong demand for fixed-rate, one-year notes
and lower supply compared to previous years resulted in higher note prices than
anticipated. The yield on one-year, fixed-rate municipal notes began the period
at 3.65%, reached a high of 3.75% in late May, fell to 3.60% in mid-summer, and
continued to fall throughout August and September to end the period at a low of
3.22%.
[Graphic]
WHAT STRATEGIES GUIDED TAX-FREE INSTRUMENTS TRUST DURING THE
PERIOD?
We maintained our 40-55 day average maturity target range, which was consistent
with our expectations for stable monetary policy for most of the period. In June
and July, new issuance of fixed-rate notes allowed us to extend the average
maturity to 55 days from a low of 38 days in June and lock-in some very
attractive one-year yields. We continue to emphasize a barbelled structure for
the portfolio, combining a significant position in seven-day variable rate
demand notes and commercial paper with purchases of longer term securities with
maturities between six and twelve months.
[Graphic]
HOW HAS THE TRUST PERFORMED FROM A YIELD PERSPECTIVE?
The seven-day net yield* for the trust's Institutional Service Shares on
September 30, 1998 was 3.42% compared to 3.12% six months earlier. The latest
yield was the equivalent of a 5.66% taxable yield for investors in the highest
federal tax bracket. For the trust's Investment Shares, the seven-day net yield
on September 30, 1998 was 3.27% compared to 2.97% six months earlier. The latest
yield was equivalent to a 5.41% taxable yield for investors in the highest
federal tax bracket.**
[Graphic]
AS WE MOVE TOWARD THE END OF 1998, WE HAVE RECENTLY EXPERIENCED
TWO EASINGS, OR CUTS IN RATES, BY THE FED. WHAT DO YOU SEE AHEAD
FOR SHORT-TERM RATES?
Looking forward, although such a quick turnaround in monetary policy is highly
unusual and very difficult to have foreseen, the significant uncertainty
regarding the outlook for our own and other economies warranted the sudden
shift. If consumer confidence continues to slide and employment growth is
restricted, we would expect the Fed to take more easing steps before the end of
the year. In spite of our expectations for a lower Fed Funds Target Rate, the
municipal one-year note market remains expensive relative to the taxable
corporate market and to short-term municipal instruments, such as variable rate
demand notes. Nonetheless, we remain biased to slightly extend or at least
maintain the average maturity of the trust in the 55-60 day range in order to
take advantage of potential lower interest rates. We will continue to watch,
with great interest, market developments in order to best serve our municipal
clients.
* 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 results. Yield will vary. Yields quoted for money market funds most
closely reflect the trust's current earnings.
TAX-FREE INSTRUMENTS TRUST
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--99.5%
<C> <S> <C>
ALABAMA--1.6%
$ 6,000,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn (Homewood
AL))/(SouthTrust Bank of Alabama, Birmingham LOC) $ 6,000,000
12,000,000 Jefferson County, AL, (Series A), 3.45% Bonds (Bayerische
Landesbank Girozentrale LOC), 10/1/1999 12,000,000
6,400,000(a)Jefferson County, AL, Trust Receipts (Series 1998 FR/RI-7)
Weekly VRDNs (FGIC INS)/(Bank of New York, New York LIQ) 6,400,000
785,000(a)Madison, AL IDA, (Series A) Weekly VRDNs (Executive Inn)/
(Amsouth Bank N.A., Birmingham LOC) 785,000
4,500,000 Stevenson, AL IDB, Industrial Revenue Bonds (Series 1996-A)
Weekly VRDNs (Unitog Co.)/(UMB Bank, N.A. LOC) 4,500,000
Total 29,685,000
ARIZONA--5.1%
15,000,000 Arizona Agricultural Improvement & Power District, 3.50% CP
(Salt River Project, AZ Agricultural Improvement & Power
District), Mandatory Tender 12/17/1998 15,000,000
24,439,000 Arizona Agricultural Improvement & Power District, 3.60% CP
(Salt River Project, AZ Agricultural Improvement & Power
District), Mandatory Tender 11/12/1998 24,439,000
23,850,000 Arizona Agricultural Improvement & Power District, 3.60% CP
(Salt River Project, AZ Agricultural Improvement & Power
District), Mandatory Tender 11/13/1998 23,850,000
1,165,000 Arizona State Transportation Board, 5.90% Bonds, 7/1/1999 1,184,265
850,000 Arizona State Transportation Board, 6.90% Bonds (Maricopa
County, AZ Regional Area Road Fund)/(MBIA INS), 7/1/1999 869,786
6,200 Gilbert, AZ IDA Weekly VRDNs (Foxworth-Galbraith Lumber
Co.)/(Bank One, Arizona N.A. LOC) 6,200
700,000 Maricopa County, AZ Pollution Control Corp., (Series 1984)
Weekly VRDNs (El Paso Electric Co.)/(Barclays Bank PLC,
London LOC) 700,000
500,000 Maricopa County, AZ Unified School District No. 48, 6.00%
Bonds, 7/1/1999 508,077
8,285,000 Maricopa County, AZ, IDA (Series 1984) Weekly VRDNs
(Gannett Co., Inc.) 8,285,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
ARIZONA--CONTINUED
$ 1,920,000(a)Phoenix, AZ Civic Improvement Corp., PA-405 (Series 1998A)
Weekly VRDNs (FSA INS)/(Merrill Lynch Capital Services, Inc.
LIQ) $ 1,920,000
600,000 Phoenix, AZ IDA, (Series 1984) Weekly VRDNs (Del Mar Terrace
Apartments)/(Bank of America NT and SA, San Francisco LOC) 600,000
1,950,000 Phoenix, AZ IDA, (Series 1997) Weekly VRDNs (Interface Data
Systems, Inc.)/(Bank One, Arizona N.A. LOC) 1,950,000
2,000,000(a)Phoenix, AZ IDA, PT-1082 Weekly VRDNs (GNMA COL)/(Merrill
Lynch Capital Services, Inc. LIQ) 2,000,000
905,000(a)Phoenix, AZ, PA-236 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 905,000
1,295,000 Pima County, AZ IDA Weekly VRDNs (A & P Investments)/(Bank
One, Arizona N.A. LOC) 1,295,000
5,203,000 Pima County, AZ IDA Weekly VRDNs (BJR Investments, Inc.)/
(Bank One, Arizona N.A. LOC) 5,203,000
4,400,000 Pinal County, AZ IDA, PCR Bonds Daily VRDNs (Magma Copper
Co.)/(National Westminster Bank, PLC, London LOC) 4,400,000
850,000 Scottsdale, AZ IDA Weekly VRDNs (Scottsdale (Memorial
Hospitals))/(AMBAC INS)/(Credit Local de France LIQ) 850,000
1,800,000 Yavapai, AZ IDA, (Series 1997B) Weekly VRDNs (Yavapai
Regional Medical Center)/(FSA INS)/(Credit Local de France
LIQ) 1,800,000
Total 95,765,328
ARKANSAS--0.7%
5,000,000 Arkansas Development Finance Authority, Home Mortgage
Revenue Bonds (Series C), 3.65% BANs, 3/1/1999 5,000,000
5,500,000 Hope, AR, Solid Waste Disposal Revenue Bonds (Series 1994),
4.10% CP (Temple-Inland Forest Products Corp.)/(Temple-
Inland, Inc. GTD), Mandatory Tender 11/10/1998 5,500,000
2,500,000 Pocahontas, AR, IDRB (Series 1995) Weekly VRDNs (MacLean
ESNA L.P. Project)/(Northern Trust Co., Chicago, IL LOC) 2,500,000
Total 13,000,000
CALIFORNIA--10.5%
30,000,000(a)California Community College Financing Authority, Trust
Receipts (Series 1998 FR/RI-A24), 3.60% TOBs (FSA INS)/(Bank
of New York, New York LIQ), Optional Tender 12/9/1998 30,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
CALIFORNIA--CONTINUED
$ 31,000,000(a)California Public Capital Improvements Financing Authority,
Trust Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA INS)/
(Bank of New York, New York LIQ) $ 31,000,000
38,300,000(a)Contra Costa County, CA, Trust Receipts (1998 A-27), 3.60% TOBs
(Bank of New York, New York LIQ), Mandatory Tender 12/9/ 1998
38,300,000
20,000,000 Los Angeles County, CA, (Series A), 4.50% TRANs, 6/30/1999 20,119,112
4,000,000(a)Northern California Transmission Agency, Trust Receipts
(Series 1998 FR/RI-16) Weekly VRDNs (California-Oregon
Transmission Project)/(MBIA INS)/(Bank of New York, New York LIQ)
4,000,000
2,000,000 Orange County, CA IDA, (Series 1991A) Weekly VRDNs (The
Lakes)/(Chase Manhattan Bank N.A., New York LOC) 2,000,000
9,950,000(a)Orange County, CA Local Transportation Authority, Trust
Receipts (Series 1998 FR/RI-A15) Weekly VRDNs (MBIA INS)/
(Commerzbank AG, Frankfurt LIQ) 9,950,000
12,498,000(a)PBCC LeaseTOPS Trust (California Non-AMT) Series 1998-1
Weekly VRDNs (AMBAC INS)/(Pitney Bowes Credit Corp. LIQ) 12,498,000
37,325,000(a)San Diego, CA Area Local Governments, Trust Receipts (Series
FR/RI-A25) Weekly VRDNs (Bank of New York, New York LIQ) 37,325,000
12,600,000 San Francisco, CA Redevelopment Finance Agency, (Series B1)
Weekly VRDNs (Fillmore Center)/(Bank of Nova Scotia, Toronto
LOC) 12,600,000
Total 197,792,112
COLORADO--2.0%
785,000 Colorado HFA, (Series 1998H) Weekly VRDNs (Community
Partnership for Child Development)/(U.S. Bank, N.A.,
Minneapolis LOC) 785,000
1,870,000 Colorado Health Facilities Authority, (Series 1998 F) Weekly
VRDNs (Developmental Disabilities Center)/(Bank One,
Colorado LOC) 1,870,000
3,050,000 Colorado Health Facilities Authority, (Series 1998B), 3.70%
TOBs (Developmental Pathways, Inc.)/(Bank One, Colorado
LOC), Optional Tender 12/1/1998 3,050,000
3,000,000 Colorado Health Facilities Authority, (Series 1998D) Weekly
VRDNs (North Metro Community Servies, Inc.)/(Bank One,
Colorado LOC) 3,000,000
335,000 Colorado Health Facilities Authority, (Series 1998E), 3.70%
TOBs (Arkansas Valley)/(Bank One, Colorado LOC), Optional
Tender 12/1/1998 335,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
COLORADO--CONTINUED
$ 2,300,000 Colorado Postsecondary Educational Facilities, (Series 1997)
Weekly VRDNs (Waldorf School Association of Boulder, Inc. -
Shining Mountain Waldorf School)/(KeyBank, N.A. LOC) $ 2,300,000
3,400,000 Colorado Springs, CO Utility System, IDRB's (Series 1996)
Weekly VRDNs (Micro Metals, Inc.)/(U.S. Bank, N.A.,
Minneapolis LOC) 3,400,000
12,645,000(a)Denver (City & County), CO, Trust Reciepts, Series 1998 FR/ RI-13
Weekly VRDNs (MBIA INS)/(Bank of New York, New York LIQ)
12,645,000
4,705,000 Mesa County, CO, (Series 1996) Weekly VRDNs (3D Systems
Corp.)/(Norwest Bank Minnesota, N.A. LOC) 4,705,000
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 37,455,000
CONNECTICUT--1.2%
485,145(a)Clipper Connecticut Tax Exempt Trust, (Series 1994-1) Weekly
VRDNs (State Street Bank and Trust Co. LIQ) 485,145
9,300,000 Connecticut Development Authority, (Series A) Weekly VRDNs
(Exeter Energy)/(Sanwa Bank Ltd., Osaka LOC) 9,300,000
1,800,000 Connecticut Development Authority, (Series C) Weekly VRDNs
(Exeter Energy)/(Sanwa Bank Ltd., Osaka LOC) 1,800,000
700,000 Connecticut Development Health Care Facilities Weekly VRDNs
(Independence Living)/(Credit Local de France LOC) 700,000
6,000,000 Connecticut State HEFA, (Series B) Weekly VRDNs (Edgehill)/
(Paribas, Paris LOC) 6,000,000
3,930,000 Connecticut State Transportation Infrastructure Authority
Weekly VRDNs (Connecticut State)/(Commerzbank AG, Frankfurt
LOC) 3,930,000
Total 22,215,145
DISTRICT OF COLUMBIA--0.7%
6,000,000 District of Columbia Housing Finance Agency, (1998 Series
B), 3.80% TOBs (AIG Funding, Inc.), Mandatory Tender 6/23/
1999 6,000,000
7,740,000 District of Columbia, (Series A) Weekly VRDNs (American
University)/(National Westminster Bank, PLC, London LOC) 7,740,000
Total 13,740,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
FLORIDA--1.9%
$ 7,750,000(a)Escambia County, FL HFA, PT 1017 Weekly VRDNs (GNMA COL)/
(Merrill Lynch Capital Services, Inc. LIQ) $ 7,750,000
9,950,000(a)Escambia County, FL HFA, Variable Rate Certificates, (Series
1997D) Weekly VRDNs (GNMA COL)/(Bank of America NT and SA,
San Francisco LIQ) 9,950,000
2,000,000 Florida HFA, Multifamily Housing Revenue Bonds (1995 Series
M) Weekly VRDNs (Bainbridge Club Apartments Project)/(PNC
Bank, Kentucky LOC) 2,000,000
2,900,000 Highlands County, FL Health Facilities, (Series 1996A
Accounts Receivable) Weekly VRDNs (Adventist Health System)/
(CapMAC Holdings, Inc. INS)/(First National Bank of Chicago
LIQ) 2,900,000
7,400,000 Osceola County, FL HFA, Multifamily Housing Revenue Bonds
(Series 1998A) Weekly VRDNs (Arrow Ridge Apartments)/
(Amsouth Bank N.A., Birmingham LOC) 7,400,000
5,800,000 Titusville, FL, Multi-Purpose Revenue Bonds, Installment
1995A Weekly VRDNs (Nationsbank, N.A., Charlotte LOC) 5,800,000
Total 35,800,000
GEORGIA--6.9%
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
4,995,000 Bartow County School District, GA, 4.00% TANs, 12/31/1998 4,999,451
1,900,000 Burke County, GA Development Authority, Pollution Control
Revenue Bonds (Series 1995) Daily VRDNs (Georgia Power Co.) 1,900,000
2,670,000 Cartersville, GA, 4.00% TANs, 12/31/1998 2,671,944
11,000,000 Cherokee County, GA School System, 3.875% TANs, 12/31/1998 11,003,301
9,675,000 Cobb County, GA IDA, (Series 1997) Weekly VRDNs (Wyndham
Gardens)/(Bankers Trust Co., New York LOC) 9,675,000
5,000,000 Cobb-Marietta, GA Coliseum & Exhibit Hall Authority, Junior
Lien Revenue Bonds (Series 1996A) Weekly VRDNs (MBIA INS)/
(Canadian Imperial Bank of Commerce, Toronto LIQ) 5,000,000
1,905,000 Columbus, GA IDA Industrial & Port Development Commission,
(Series 1992) Weekly VRDNs (Maine Street Village
Partnership)/(Columbus Bank and Trust Co., GA LOC) 1,905,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
GEORGIA--CONTINUED
$ 7,000,000 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)/
(Paribas, Paris LOC) $ 7,000,000
5,000,000 Crisp County, GA Development Authority, Solid Waste Disposal
Revenue Bonds (Series A), 3.85% TOBs (International Paper
Co.), Optional Tender 3/1/1999 5,000,000
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
926,437 Georgia Municipal Association Weekly VRDNs (Credit Suisse
First Boston LIQ)/(MBIA LOC) 926,437
10,200,000 Glynn County, GA Schools, 3.82% TANs, 12/31/1998 10,202,942
8,000,000 Hall County, GA School District, 3.875% TANs, 12/31/1998 8,005,387
1,280,000 Macon-Bibb County, GA Urban Development Authority, Refunding
Revenue Bonds (Series 1995) Weekly VRDNs (Macon Hotel
Investors Project)/(NBD Bank, Michigan LOC) 1,280,000
5,435,000 Municipal Electric Authority of Georgia, (Series 1985A),
3.60% CP (Morgan Guaranty Trust Co., New York LOC),
Mandatory Tender 10/14/1998 5,435,000
19,650,000 Municipal Electric Authority of Georgia, (Series 1985A),
3.65% CP (Landesbank Hessen-Thueringen, Frankfurt LOC),
Mandatory Tender 10/13/1998 19,650,000
7,740,000 Rockdale County, GA Hospital Authority, Revenue Anticipation
Certificates (Series 1994) Weekly VRDNs (Rockdale Hospital)/
(SunTrust Bank, Atlanta LOC) 7,740,000
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
4,000,000 Savannah, GA EDA, (Series 1995A) Weekly VRDNs (Home Depot,
Inc.) 4,000,000
5,000,000 Summerville, GA Development Authority, (Series 1997) Weekly
VRDNs (Image Industries, Inc.)/(First Union National Bank,
Charlotte, N.C. LOC) 5,000,000
8,988,000 Troup County, GA Board of Education, (Series 1998), 3.77%
TANs, 12/31/1998 8,989,511
Total 129,643,973
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
IDAHO--1.6%
$ 29,500,000 Idaho Health Facilities Authority, (Series 1995), 3.60% CP
(Holy Cross Health System Corp.)/(Morgan Guaranty Trust Co.,
New York LIQ), Mandatory Tender 11/13/1998 $ 29,500,000
ILLINOIS--7.5%
1,250,000 Champaign, IL, IDRB Weekly VRDNs (Christie Clinic)/(National City
Bank, Indiana LOC) 1,250,000
33,000,000(a)Chicago, IL Board of Education, Trust Receipts (Series 1998
FR/RI-A53) Daily VRDNs (AMBAC INS)/(National Westminster Bank,
PLC, London LIQ) 33,000,000
7,100,000(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) 7,100,000
10,000,000(a)Chicago, IL, Variable Rate Certificates (Series 1998M), 3.70%
TOBs (FGIC INS)/(Bank of America NT and SA, San
Francisco LIQ), Optional Tender 8/4/1999 10,000,000
1,033,000 Illinois Development Finance Authority Weekly VRDNs
(Newlywed Food)/(Mellon Bank N.A., Pittsburgh LOC) 1,033,000
2,200,000 Illinois Development Finance Authority, EDRB (Series 1995)
Weekly VRDNs (Evapco, Inc. Project)/(Nationsbank, N.A.,
Charlotte LOC) 2,200,000
3,400,000 Illinois Development Finance Authority, IDRB (Series 1995)
Weekly VRDNs (Dickson Weatherproof Nail Co. Project)/
(LaSalle National Bank, Chicago LOC) 3,400,000
16,700,000 Illinois Development Finance Authority, PCR Daily VRDNs
(Diamond Star Motors Corp.)/(Bank of Tokyo-Mitsubishi Ltd.
LOC) 16,700,000
40,000,000 Illinois Health Facilities Authority, Revenue Bonds (Series
1985B) Weekly VRDNs (OSF Health Care Systems)/(Bank of
America, IL and Rabobank Nederland, Utrecht LIQs) 40,000,000
17,135,000(a)Illinois Housing Development Authority, PT-7, 3.80% TOBs
(AMBAC INS)/(Commerzbank AG, Frankfurt LIQ), Optional Tender
5/13/1999 17,135,000
1,910,000 Martinsville, IL, IDRB (Series 1995) Weekly VRDNs (PAP-R
Products Company Project)/(Bank One, Illinois, N.A. LOC) 1,910,000
3,250,000 Mendota, IL, IDRB (Series 1995) Weekly VRDNs (Minnesota
Diversified Products, Inc. Project)/(Norwest Bank Minnesota,
N.A. LOC) 3,250,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
ILLINOIS--CONTINUED
$ 1,700,000 Naperville, IL, Economic Development Revenue Refunding Bonds
(Series 1994) Weekly VRDNs (Independence Village Associates,
Ltd. Project)/(U.S. Bank, N.A., Minneapolis LOC) $ 1,700,000
1,300,000 Oakbrook Terrace, IL, IDR (Series 1993) Weekly VRDNs (La
Quinta Inns, Inc.)/(Nationsbank, N.A., Charlotte LOC) 1,300,000
2,359,000 Peoria, IL, (Series 1996) Weekly VRDNs (J.T. Fennell
Company, Inc. Project)/(Bank One, Illinois, N.A. LOC) 2,359,000
Total 142,337,000
INDIANA--1.2%
2,200,000 Bluffton, IN, Economic Development Refunding Revenue Bonds
Weekly VRDNs (Blount, Inc.)/(Morgan Guaranty Trust Co., New
York LOC) 2,200,000
2,400,000 Gary, IN, Environment Improvement Refunding Bonds (Series
1986), 3.65% CP (USX Corp.)/(Bank of New York, New York LOC),
Mandatory Tender 10/14/1998 2,400,000
2,835,000 Hamilton County, IN, EDRB (Series 1995) Weekly VRDNs (Fabcon
L.L.C. Project)/(Norwest Bank Minnesota, N.A. LOC) 2,835,000
4,500,000 Jasper County, IN, (Series 1998A) Weekly VRDNs (Oak Grove
Christian Retirement Village, Inc.)/(First of America Bank,
N.A. LOC) 4,500,000
2,280,000 Kendallville, IN, IDRB (Series 1995) Weekly VRDNs (Rivnut
Real Estate, Ltd. Project)/(National City Bank, Ohio LOC) 2,280,000
7,000,000 Richmond, IN EDA Weekly VRDNs (Gannett Co., Inc.) 7,000,000
2,130,000 Winamac, IN, (Series 1997) Weekly VRDNs (Pulaski Health
Foundation, Inc.)/(KeyBank, N.A. LOC) 2,130,000
Total 23,345,000
IOWA--1.0%
2,800,000 Des Moines, IA, IDR Bonds (Series 1994) Weekly VRDNs
(Printer, Inc.)/(Norwest Bank Minnesota, N.A. LOC) 2,800,000
4,400,000 Iowa Finance Authority, (Series 1996) Weekly VRDNs (Wittern
Realty, Inc. Project)/(Norwest Bank Minnesota, N.A. LOC) 4,400,000
12,000,000 Iowa School Corporations, (1998-99 Series A), 4.50% TRANs
(FSA INS), 6/25/1999 12,071,980
Total 19,271,980
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
KANSAS--0.4%
$ 6,000,000 Kansas Development Finance Authority, Multifamily Housing
Revenue Bonds (Series 1995) Weekly VRDNs (First Kansas State
Partnership, L.P.)/(Nationsbank, N.A., Charlotte LOC) $ 6,000,000
1,900,000 Olathe, KS, Industrial Revenue Bonds (Series 1995) Weekly
VRDNs (Garmin International, Inc. Project)/(Nationsbank,
N.A., Charlotte LOC) 1,900,000
Total 7,900,000
KENTUCKY--3.0%
1,440,000 Boone County, KY, (Series 1996) Weekly VRDNs (Western States
Envelope Co.)/(Bank One, Wisconsin, N.A. LOC) 1,440,000
5,540,000 Henderson County, KY, (Series 1996) Weekly VRDNs (Audubon
Metals LLC Project)/(Harris Trust & Savings Bank, Chicago
LOC) 5,540,000
1,845,000 Jefferson County, KY, Industrial Building Revenue Bonds
(Series 1995) Weekly VRDNs (Derby Industries, Inc. Project)/
(Bank One, Kentucky LOC) 1,845,000
11,995,000(a)Kenton County, KY Airport Board, Trust Receipts (Series F-
1), 3.8% TOBs (MBIA INS)/(Bank of America NT and SA, San
Francisco LIQ), Optional Tender 5/12/1999 11,995,000
34,000,000 Owensboro, KY, (Series 1996) Weekly VRDNs (Owensboro Mercy
Health System, Inc. Project)/(Bank of America, IL LOC) 34,000,000
1,800,000 Owensboro, KY, Limited Obligation Revenue Bonds, 3.60% TOBs
(Dart Polymers)/(NBD Bank, Michigan LOC), Optional Tender
12/1/1998 1,800,000
Total 56,620,000
MAINE--0.4%
6,900,000 Jay, ME, Solid Waste Disposal Revenue Bonds, 4.00% TOBs
(International Paper Co.), Optional Tender 6/1/1999 6,900,000
MARYLAND--0.3%
2,468,000 Frederick County, MD, Series 1998A Weekly VRDNs (Thogar,
LLC)/(First National Bank of Maryland, Baltimore LOC) 2,468,000
1,900,000 Maryland State Energy Financing Administration, Annual
Tender Solid Waste Disposal Revenue Refunding Bonds, 4.20%
TOBs (Nevamar Corp.)/(International Paper Co. GTD), Optional
Tender 9/1/1999 1,900,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
MARYLAND--CONTINUED
$ 1,630,000 Maryland State IDFA, (Series 1991) Weekly VRDNs (Maryland
Academy of Sciences Facility)/(Nationsbank, N.A., Charlotte
LOC) $ 1,630,000
Total 5,998,000
MASSACHUSETTS--4.7%
6,097,000 Attleboro, MA, 3.90% BANs, 9/10/1999 6,119,180
16,000,000(a)Clipper, Tax Exempt Trust (Series 1994-2) Weekly VRDNs
(State Street Bank and Trust Co. LIQ) 16,000,000
7,000,000 Massachusetts HEFA, (Series A) Weekly VRDNs (Brigham &
Women's Hospital)/(Landesbank Hessen-Thueringen, Frankfurt
LOC) 7,000,000
4,000,000 Massachusetts IFA Weekly VRDNs (Kendall Square Entity)/
(State Street Bank and Trust Co. LOC) 4,000,000
4,000,000 Massachusetts IFA, (Series 1995) Weekly VRDNs (Goddard
House)/(Fleet Bank N.A. LOC) 4,000,000
16,200,000 Massachusetts Municipal Wholesale Electric Company, Power
Supply System Revenue Bonds (Series 1994 C) Weekly VRDNs
(Canadian Imperial Bank of Commerce, Toronto LOC) 16,200,000
2,500,000(a)Massachusetts Port Authority, PT-1073 (Series 1998-D) Weekly
VRDNs (Merrill Lynch Capital Services, Inc. LIQ) 2,500,000
4,500,000 Massachusetts State HFA, Multi-Family Refunding Revenue
Bonds (Series 1995 A) Weekly VRDNs (Republic National Bank
of New York LIQ) 4,500,000
23,670,000(a)Massachusetts Water Resources Authority, PT-1078 Weekly
VRDNs (MBIA INS)/(Merrill Lynch Capital Services, Inc. LIQ) 23,670,000
4,600,000 Springfield, MA, 4.00% BANs (Fleet National Bank,
Springfield, MA LOC), 9/2/1999 4,618,394
Total 88,607,574
MICHIGAN--0.6%
650,000 Dearborn, MI Economic Development Corp., (Series 1990)
Weekly VRDNs (Exhibit Productions, Inc. Project)/(First of
America Bank, N.A. LOC) 650,000
10,000,000 Michigan State Building Authority, (Series 1), 3.70% CP
(Canadian Imperial Bank of Commerce, Toronto LOC), Mandatory
Tender
10/1/1998 10,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
MICHIGAN--CONTINUED
$ 710,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1991) Weekly VRDNs (Martin Luther Memorial Home,
Inc.)/(Bank One, Indianapolis, N.A. LOC) $ 710,000
Total 11,360,000
MINNESOTA--1.4%
9,600,000 Brooklyn Park, MN EDA, Brooks Landing and Brooks Gardens
(Series 1997), 5.015% TOBs (Bayerische Landesbank
Girozentrale), Mandatory Tender 3/1/1999 9,600,000
1,850,000 Coon Rapids, MN, (Series 1998) Weekly VRDNs (Gerald R.
Sizer)/(Norwest Bank Minnesota, N.A. LOC) 1,850,000
1,485,000(a)Dakota County, MN Housing & Redevelopment Authority,
(Custodial Receipts), 3.80% TOBs (GNMA COL)/(Corestates Bank
N.A., Philadelphia, PA LIQ), Optional Tender 12/1/1998 1,485,000
11,735,000 Minneapolis CDA, Revenue Refunding Bonds (Series 1995) Weekly
VRDNs (Walker Methodist Health Center, Inc.
Project)/(U.S. Bank, N.A., Minneapolis LOC) 11,735,000
806,000(a)Minneapolis/St. Paul MN Housing Finance Board, SFM Revenue
Bonds, 4.10% TOBs (GNMA COL)/(Corestates Bank N.A.,
Philadelphia, PA LIQ), Optional Tender 11/1/1998 806,000
Total 25,476,000
MISSISSIPPI--0.7%
4,130,000 Mississippi Business Finance Corp., (Series 1995) Weekly
VRDNs (Mississippi Baking Company L.L.C. Project)/(First
National Bank of Maryland, Baltimore LOC) 4,130,000
5,400,000 Mississippi Business Finance Corp., Series 1995 Weekly VRDNs
(Schuller International, Inc.)/(Bank of New York, New York
LOC) 5,400,000
4,000,000 Warren County, MS IDA Weekly VRDNs (Vesper Corp.)/
(PNC Bank, N.A. LOC) 4,000,000
Total 13,530,000
MISSOURI--0.2%
4,060,000 Missouri Development Finance Board, (Series 1995) Weekly
VRDNs (Wilson Trailer Sales, Inc. Project)/(Norwest Bank
Minnesota, N.A. LOC) 4,060,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
NEBRASKA--0.4%
$ 1,640,000 Douglas County, NE Weekly VRDNs (Majors Plastics, Inc.)/
(Norwest Bank Minnesota, N.A. LOC) $ 1,640,000
4,900,000 Douglas County, NE, IDRB (Series 1997) Weekly VRDNs
(American Laboratories, Inc.)/(Norwest Bank Minnesota, N.A.
LOC) 4,900,000
1,110,000(a)Douglas County, NE, Industrial Development Revenue Refunding
Bonds (Series 1994) Weekly VRDNs (Omaha Fixture
Manufacturing Project)/(NBD Bank, Michigan LOC) 1,110,000
Total 7,650,000
NEVADA--0.3%
3,800,000 Reno, NV, (Series 1997) Weekly VRDNs (Drill Systems, Inc.)/
(Toronto-Dominion Bank LOC) 3,800,000
2,200,000 Sparks, NV, Industrial Development Revenue Bonds (Series
1996) Weekly VRDNs (The Antioch Publishing Co. Project)/
(National City Bank, Ohio LOC) 2,200,000
Total 6,000,000
NEW JERSEY--5.4%
6,005,000 Lakewood Township, NJ, 4.00% BANs, 1/22/1999 6,010,369
2,685,546 Lavallette Borough, NJ, 4.125% BANs, 4/30/1999 2,690,403
17,000,000 New Jersey EDA Weekly VRDNs (Center-For-Aging--Applewood
Estates)/(Fleet National Bank, Springfield, MA LOC) 17,000,000
116,037(a)New Jersey EDA Weekly VRDNs (H.L. Bhasin)/(Ford Motor Credit
Corp. LIQ)/(Chase Manhattan Bank N.A., New York LOC) 116,037
7,000,000 New Jersey EDA Weekly VRDNs (YM-YWHA of Bergen County, NJ)/
(Bank of New York, New York LOC) 7,000,000
2,610,000 New Jersey EDA, (Series 1992L) Weekly VRDNs (Kent Place
School)/(Banque Nationale de Paris LOC) 2,610,000
6,400,000 New Jersey EDA, Newark Recycling & Composting Co. (Series
1997), 3.95% TOBs (Societe Generale, Paris), Mandatory
Tender 12/15/1998 6,400,000
9,995,000(a)New Jersey Housing & Mortgage Financing Authority, (PT-159),
3.70% TOBs (MBIA INS)/(Commerzbank AG, Frankfurt LIQ),
Mandatory Tender 2/18/1999 9,995,000
1,500,000(a)New Jersey State Educational Facilities Authority, (Series
1998) FR/RI-A33 Trust Receipts Weekly VRDNs (AMBAC INS)/(National
Westminster Bank, PLC, London LIQ) 1,500,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
NEW JERSEY--CONTINUED
$ 14,400,000(a)New Jersey State Transportation Trust Fund Agency, (Series
1998 FR/RI-A21) Weekly VRDNs (National Westminster Bank,
PLC, London LIQ)/(AMBAC LOC) $ 14,400,000
7,500,000(a)New Jersey State Transportation Trust Fund Agency, Trust
Receipts (Series 1996-1) Weekly VRDNs (MBIA INS)/(Bank of
New York, New York LIQ) 7,500,000
3,500,000(a)New Jersey State, PA-265 Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ) 3,500,000
3,000,000 New Jersey State, UT GO Bonds, 7.20% Bonds, 4/15/1999 3,061,665
2,800,000 Old Bridge Township, NJ, 4.25% BANs, 10/20/1998 2,800,490
4,000,000 Port Authority of New York and New Jersey, (Series 1991-4)
Weekly VRDNs 4,000,000
13,000,000 Trenton, NJ, 3.80% BANs, 3/10/1999 13,008,776
Total 101,592,740
NEW MEXICO--0.5%
2,000,000 Albuquerque, NM, (Series 1996A) Weekly VRDNs (El Encanto,
Inc. Project)/(Norwest Bank Minnesota, N.A. 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
4,700,000 Las Cruces, NM, IDRB (Series 1994A) Weekly VRDNs (F & A Dairy
Products, Inc. Project)/(Norwest Bank Minnesota, N.A. LOC)
4,700,000
Total 10,000,000
NEW YORK--7.2%
5,000,000 Allegany-Limestone, NY Central School District, 4.05% BANs,
12/30/1998 5,001,541
3,500,000 Dutchess County, NY IDA, (Series 1998-A) Weekly VRDNs
(Marist College)/(Bank of New York, New York LOC) 3,500,000
8,750,000 Lansingburgh, NY Central School District, 3.90% BANs, 6/18/
1999 8,755,984
4,500,000 Levittown Union Free School District, NY, 3.80% TANs, 6/23/
1999 4,503,121
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
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
NEW YORK--CONTINUED
$ 49,000,000(a)New York City Municipal Water Finance Authority, Trust
Receipts (Series 1997 FR/RI-5) Weekly VRDNs (MBIA INS)/(Bank
of New York, New York LIQ) $ 49,000,000
2,000,000 New York City, NY, Subseries A-10 Daily VRDNs (Morgan
Guaranty Trust Co., New York LOC) 2,000,000
10,000,000 New York City, NY, UT GO (Series F), 4.10% Bonds, 8/1/1999 10,024,253
9,555,000(a)New York State Dormitory Authority, Floater Certificates
Weekly VRDNs (Morgan Stanley, Dean Witter & Co. LIQ)/(United
States Treasury PRF) 9,555,000
4,400,000(a)New York State Energy Research & Development Authority,
Trust Receipt (Series 1998 FR/RI-9) Weekly VRDNs (Brooklyn
Union Gas Co.)/(MBIA INS)/(Bank of New York, New York LIQ) 4,400,000
5,500,000(a)Triborough Bridge & Tunnel Authority, NY, Trust Receipts
(Series 1998 FR/RI-A1) Weekly VRDNs (Bayerische Hypotheken-
Und Wechsel-Bank AG LIQ) 5,500,000
5,000,000(a)VRDC/IVRC Trust, (Series 1992A) Weekly VRDNs (New York City
Municipal Water Finance Authority)/(MBIA INS)/(Hong Kong &
Shanghai Banking Corp. LIQ) 5,000,000
10,000,000(a)VRDC/IVRC Trust, (Series 1993B) Weekly VRDNs (Metropolitan
Transportation Authority, New York)/(AMBAC INS)/(Hong Kong &
Shanghai Banking Corp. LIQ) 10,000,000
10,000,000(a)VRDC/IVRC Trust, (Series 1993G) Weekly VRDNs (St. Lukes
Roosevelt Hospital Center)/(FHA INS)/(Hong Kong & Shanghai
Banking Corp. LIQ) 10,000,000
Total 136,054,899
NORTH CAROLINA--3.0%
1,000,000 Cleveland County, NC Industrial Facilities and Pollution
Control Financing Authority Weekly VRDNs (PPG Industries,
Inc.) 1,000,000
2,500,000 Lee County, NC Industrial Facility & PCFA, (Series 1989)
Weekly VRDNs (Avondale Mills, Inc.)/(SunTrust Bank, Atlanta
LOC) 2,500,000
15,400,000(a)Martin County, NC IFA, (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) 15,400,000
500,000(a)NCNB Pooled Tax-Exempt Trust, (Series 1990A) Weekly VRDNs
(NCNB Tax Exempt Trust 1990a)/(Nationsbank, N.A., Charlotte
LOC) 500,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
NORTH CAROLINA--CONTINUED
$ 2,700,000(a)NCNB Pooled Tax-Exempt Trust, (Series 1990B) Weekly VRDNs
(NCNB Tax-Exempt Trust 1990b)/(Nationsbank, N.A.,
Charlotte LOC) $ 2,700,000
8,500,000 New Hanover County, NC PCFA, (Series 1984) Weekly VRDNs (American
Hoist & Derrick Co. Project)/(BankBoston, N.A.
LOC) 8,500,000
8,000,000(a)North Carolina Eastern Municipal Power Agency, PT-132 Weekly
VRDNs (MBIA INS)/(Credit Suisse First Boston LIQ) 8,000,000
1,000,000 North Carolina Medical Care Commission, (Series 1996) Weekly
VRDNs (North Carolina Baptist) 1,000,000
2,500,000 North Carolina Medical Care Commission, Revenue Bonds
(Series 1992B) Weekly VRDNs (North Carolina Baptist) 2,500,000
1,000,000 North Carolina Medical Care Commission, Revenue Bonds
(Series 1993) Weekly VRDNs (Moses H. Cone Memorial) 1,000,000
14,000,000 Wake County, NC Industrial Facilities & PCFA, (Series
1990A), 3.50% CP (Carolina Power & Light Co.)/(First
National Bank of Chicago LOC), Mandatory Tender 10/21/1998 14,000,000
Total 57,100,000
NORTH DAKOTA--0.1%
2,050,000(a)Fargo, ND, IDRB (Series 1994) Weekly VRDNs (Pan-O-Gold
Baking Co. Project)/(Norwest Bank Minnesota, N.A. LOC) 2,050,000
OHIO--0.8%
5,600,000 Miami County, OH, 3.90% BANs, 7/15/1999 5,609,342
10,000,000 Ohio HFA, Residential Mortgage Revenue Notes (1998 Series A-
2), 3.80% BANs, 3/1/1999 10,000,000
Total 15,609,342
OKLAHOMA--1.6%
2,295,000 Claremore, OK IDA Weekly VRDNs (Baldor Electric Co.)/
(Wachovia Bank of NC, N.A., Winston-Salem LOC) 2,295,000
2,020,000 Oklahoma County, OK Finance Authority, (Series 1996) Weekly
VRDNs (Avalon Project)/(Bank One, Texas N.A. LOC) 2,020,000
9,000,000 Oklahoma State Industrial Authority, Flexible Rate Hospital
Revenue Bonds (Series 1990B) Weekly VRDNs (Baptist Medical
Center, OK)/(Morgan Guaranty Trust Co., New York LIQ) 9,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
OKLAHOMA--CONTINUED
$ 11,000,000(a)Tulsa County, OK HFA, CDC Municipal Products, Inc. Class A
Certificates (Series 1996E) Weekly VRDNs (GNMA COL)/(CDC
Municipal Products, Inc. LIQ) $ 11,000,000
6,100,000(a)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 30,415,000
PENNSYLVANIA--3.5%
6,000,000 Allegheny County, PA IDA, (Series 1986) Weekly VRDNs (Dowty
Corp.)/(U.S. Bank, N.A., Minneapolis LOC) 6,000,000
1,155,000 Berks County, PA IDA Weekly VRDNs (Lutheran Home at Topton
Project)/(Corestates Bank N.A., Philadelphia, PA LOC) 1,155,000
22,000,000 Clinton County, PA IDA, Solid Waste Disposal Revenue Bonds
(Series 1992A), 3.95% TOBs (International Paper Co.),
Optional Tender 1/15/1999 22,000,000
1,840,000 Clinton County, PA Municipal Authority, (Series A) Weekly
VRDNs (Lock Haven Hospital)/(PNC Bank, N.A. LOC) 1,840,000
1,455,000 Erie County, PA IDA, Multi Mode Revenue Refunding Bonds
Weekly VRDNs (Corry Manor, Inc.)/(PNC Bank, N.A. LOC) 1,455,000
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(a)Pennsylvania EDFA, (Series 1996 E) Weekly VRDNs (Adelphoi,
Inc.)/(PNC Bank, N.A. LOC) 2,300,000
10,000,000(a)Philadelphia Authority for Industrial Development, Trust
Receipts (Series 1998 FR/RI-A45) Daily VRDNs (Philadelphia
Airport System)/(FGIC INS)/(National Westminster Bank, PLC,
London LIQ) 10,000,000
10,000,000 Philadelphia, PA School District, (Series B), 4.25% TRANs
(PNC Bank, N.A. LOC), 6/30/1999 10,044,584
7,250,000 Philadelphia, PA, 4.25% TRANs, 6/30/1999 7,282,016
Total 65,076,600
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
SOUTH CAROLINA--1.1%
$ 2,250,000 Berkeley, SC IRB, (Series 1989) Weekly VRDNs (W.W. Williams
Co. Project)/(Bank One, Ohio, N.A. LOC) $ 2,250,000
9,000,000 Georgetown County, SC, Pollution Control Facilities
Adjustable Rate Bonds (Series A), 4.10% TOBs (International
Paper Co.), Optional Tender 9/1/1999 9,000,000
9,000,000 South Carolina State Public Service Authority, 3.50% CP (Bank of
America NT and SA, San Francisco, Bank of Nova Scotia, Toronto,
Commerzbank AG, Frankfurt and Toronto-
Dominion Bank LIQs), Mandatory Tender 12/17/1998 9,000,000
Total 20,250,000
SOUTH DAKOTA--1.0%
865,000 Rapid City, SD Weekly VRDNs (Gillette Dairy Black Hills,
Inc.)/(Bank of Tokyo-Mitsubishi Ltd. LOC) 865,000
5,630,000(a)South Dakota Housing Development Authority, CDC Municipal
Products, Inc. Class A Certificates (Series 1996C) Weekly
VRDNs (CDC Municipal Products, Inc. LIQ) 5,630,000
7,970,000 South Dakota Housing Development Authority, Homeownership
Mortgage Bonds (1997 Series E) Weekly VRDNs 7,970,000
3,935,000(a)South Dakota Housing Development Authority, PT-85 (1988
Series A) Weekly VRDNs (Rabobank Nederland, Utrecht LIQ) 3,935,000
1,030,000 Watertown, SD, (Series 1991) Weekly VRDNs (Tescom Corp.)/
(Norwest Bank Minnesota, N.A. LOC) 1,030,000
Total 19,430,000
TENNESSEE--0.5%
1,447,500 Metropolitan Government Nashville & Davidson County, TN IDB,
(Series 1994) Weekly VRDNs (Shoney's Inn)/(First Union
National Bank, Charlotte, NC LOC) 1,447,500
7,995,000(a)Tennessee Housing Development Agency, (Series K) Weekly
VRDNs (Bank of America NT and SA, San Francisco LIQ) 7,995,000
225,000 Washington County, TN IDB, Revenue Refunding Bonds (Series
1996) Weekly VRDNs (Springbrook Properties Project)/
(SunTrust Bank, Nashville LOC) 225,000
Total 9,667,500
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
TEXAS--9.3%
$ 17,650,000 Angelina and Neches River Authority, Texas, Solid Waste
Disposal Revenue Bonds (Series 1993), 3.80% CP (Temple-
Eastex Inc.)/(Temple-Inland, Inc. GTD), Mandatory Tender 10/
1/1998 $ 17,650,000
3,000,000 Angelina and Neches River Authority, Texas, Waste Disposal
Revenue Bonds (Series 1998), 3.80% CP (Temple-Inland Forest
Products Corp.)/(Temple-Inland, Inc. GTD), Mandatory Tender
10/13/1998 3,000,000
900,000 Corpus Christi, TX IDC Weekly VRDNs (Grainger (W.W.), Inc.) 900,000
2,500,000 Desoto TX, IDA, Inc., (Series 1989) Weekly VRDNs (Solar
Turbines, Inc.)/(Toronto-Dominion Bank LOC) 2,500,000
1,500,000 Harris County, TX Cultural Education Facilities Finance
Corp. Weekly VRDNs (Houston Museum of Natural Sciences)/
(Bank One, Texas N.A. LOC) 1,500,000
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
955,000 Harris County, TX IDC Weekly VRDNs (Grainger (W.W.), Inc.) 955,000
27,460,000(a)Irving, TX Independent School District, PT-1048 Weekly VRDNs
(Texas Permanent School Fund Guarantee Program GTD)/(Merrill
Lynch Capital Services, Inc. LIQ) 27,460,000
1,700,000 Liberty County, TX IDA Weekly VRDNs (Insteel Industries,
Inc.)/(First Union National Bank, Charlotte, NC LOC) 1,700,000
1,580,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/
(Nationsbank, N.A., Charlotte LOC) 1,580,000
10,000,000 San Antonio, TX, Waste System (Series 1995), 3.55% CP
(Westdeutsche Landesbank Girozentrale LIQ), Mandatory Tender
12/14/1998 10,000,000
10,000,000(a)Southeast Texas Housing Finance Corp., PT-165, 3.75% TOBs (GNMA
COL)/(Banque Nationale de Paris LIQ), Optional Tender 3/18/1999
10,000,000
5,500,000 Tarrant County, TX IDC, (Series 1997) Weekly VRDNs (Lear
Operations Corp.)/(Chase Manhattan Bank N.A., New York LOC) 5,500,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
TEXAS--CONTINUED
$ 17,000,000(a)Texas State, Trust Receipts (Series A58), 3.45% TOBs
(National Westminster Bank, PLC, London LIQ), Optional
Tender 12/15/1998 $ 17,000,000
65,000,000(a)Texas State, Trust Receipts (Series A59) Weekly VRDNs
(National Westminster Bank, PLC, London LIQ) 65,000,000
Total 174,745,000
UTAH--0.4%
7,400,000 Salt Lake County, UT, Multifamily Housing Revenue Refunding
Bonds (Series 1992) Weekly VRDNs (Santa Fe Apartments)/
(First Security Bank of Utah, N.A. LOC) 7,400,000
VIRGINIA--6.5%
5,250,000 Arlington County, VA Weekly VRDNs (Ballston Public Parking)/
(Citibank N.A., New York LOC) 5,250,000
9,000,000 Campbell County, VA IDA, Solid Waste Disposal Facilities
Revenue ACES Weekly VRDNs (Georgia-Pacific Corp.)/(SunTrust
Bank, Atlanta LOC) 9,000,000
9,000,000 Chesterfield County, VA IDA, 3.70% CP (Virginia Electric
Power Co.), Mandatory Tender 11/12/1998 9,000,000
12,100,000 Fairfax County, VA EDA, (Series 1995) Weekly VRDNs (American
Society of Civil Engineers Foundation, Inc. Project)/(Mellon
Bank N.A., Pittsburgh LOC) 12,100,000
1,065,000 Fairfax County, VA EDA, Facilities Revenue Refunding Bonds
(Series 1993) Weekly VRDNs (Future Homemakers of America)/
(Nationsbank, N.A., Charlotte LOC) 1,065,000
1,900,000 Fairfax County, VA IDA Weekly VRDNs (Inova Health System)/
(Credit Suisse First Boston LIQ) 1,900,000
9,445,000(a)Fairfax County, VA IDA, 1998 Trust Receipts FR/RI-A35 Weekly
VRDNs (Fairfax Hospital System)/(National Westminster Bank, PLC,
London LIQ)/(United States Treasury PRF) 9,445,000
2,400,000 Fauquier County, VA IDA, Refunding Revenue Bonds Weekly
VRDNs (Warrenton Development Co.)/(Nationsbank, N.A.,
Charlotte LOC) 2,400,000
3,500,000 Hampton, VA Redevelopment & Housing Authority, (Series 1998)
Weekly VRDNs (Township Apartments)/(Amsouth Bank N.A.,
Birmingham LOC) 3,500,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
VIRGINIA--CONTINUED
$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
30,500,000 James City County, VA IDA, (Series 1997) Weekly VRDNs
(Riverside Health System-Patriots Colony) 30,500,000
2,945,000 Richmond, VA Redevelopment & Housing Authority, (Series
1989) Weekly VRDNs (Belmont Apartment)/(First Union National
Bank, Charlotte, NC LOC) 2,945,000
4,500,000 Virginia Resources Authority, Water and Sewer (Series 1997)
Weekly VRDNs (Henrico County, VA)/(Crestar Bank of Virginia,
Richmond LIQ) 4,500,000
1,450,000 Virginia State Housing Development Authority, (Series 1987A)
Weekly VRDNs (AHC Service Center)/(Bank of Tokyo-Mitsubishi
Ltd. LOC) 1,450,000
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), 3.70% CP (Virginia
Electric Power Co.), Mandatory Tender 11/12/1998 7,800,000
Total 121,655,000
WEST VIRGINIA--0.5%
2,700,000 Berkeley County, WV County Commission, Industrial
Development Bonds (Series 1994) Weekly VRDNs (Brentwood
Industries, Inc. Project)/(Corestates Bank N.A.,
Philadelphia, PA LOC) 2,700,000
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
3,000,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs (PPG
Industries, Inc.) 3,000,000
Total 9,200,000
WISCONSIN--1.6%
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 N.A., Pittsburgh LOC) 2,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
SHORT-TERM MUNICIPALS--CONTINUED
<C> <S> <C>
WISCONSIN--CONTINUED
$ 5,000,000 Mequon-Thiensville, WI School District, 4.10% TRANs, 10/1/
1998 $ 5,000,000
4,100,000(a)Milwaukee, WI, Trust Receipts (Series 1998) Daily VRDNs
(National Westminster Bank, PLC, London LIQ) 4,100,000
640,000 Spooner, WI, (Series 1994) Weekly VRDNs (Nash Finch Co.)/
(U.S. Bank, N.A., Minneapolis LOC) 640,000
2,290,000 Wisconsin Health and Educational Facilities Authority,
(Series 1997) Weekly VRDNs (16th Street Community Health
Center, Inc.)/(Bank One, Wisconsin, N.A. LOC) 2,290,000
5,220,000 Wisconsin Health and Educational Facilities Authority,
(Series 1997) Weekly VRDNs (Cedar Crest, Inc.)/(Bank One,
Wisconsin, N.A. LOC) 5,220,000
8,000,000(a)Wisconsin Housing & Economic Development Authority, Trust
Receipts Weekly VRDNs (Commerzbank AG, Frankfurt LIQ) 8,000,000
Total 29,900,000
WYOMING--0.2%
1,830,000 Sweetwater County, WY IDA Weekly VRDNs (FMC Gold Co.)/
(Wachovia Bank of NC, N.A., Winston-Salem LOC) 1,830,000
1,900,000 Sweetwater County, WY IDA, PCR Refunding Bonds (Series 1994)
Daily VRDNs (Pacificorp)/(AMBAC INS)/(Bank of New York, New
York, First Interstate Bank of Oregon N.A. LIQ) and
(Nationsbank, N.A., Charlotte LOC) 1,900,000
Total 3,730,000
OTHER--2.0%
9,048,742(a)ABN AMRO Chicago Corp. 1997-1 LeaseTOPS Trust Weekly VRDNs
(Lasalle National Bank, Chicago LIQ)/(Lasalle National Bank,
Chicago LOC) 9,048,742
11,175,000 Banc One Capital Higher Education Tax-Exempt Income Trust,
(Series 1) Weekly VRDNs (Bank One, Indianapolis, N.A. LOC) 11,175,000
17,609,000(a)Clipper Tax Exempt Trust (Non-AMT Multistate), (Series A)
Weekly VRDNs (MBIA INS)/(State Street Bank and Trust Co.
LIQ) 17,609,000
Total 37,832,742
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 1,875,360,935
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 20.9% 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, 1998, these securities amounted
to $745,432,924, which represent 39.5% of net assets. These restricted
securities are considered to be liquid.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,885,572,683) at September 30, 1998.
The following acronyms are used throughout this portfolio: ACES --Adjustable
Convertible Extendable Securities AMBAC --American Municipal Bond Assurance
Corporation AMT --Alternative Minimum Tax BANs --Bond Anticipation Notes CAPMAC
- --Capital Municipal Assurance Corporation CDA --Community Development
Administration COL --Collateralized 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 GNMA
- --Government National Mortgage Association 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 LIQ --Liquidity
Agreement LLC --Limited Liability Corporation LOC --Letter of Credit MBIA
- --Municipal Bond Investors Assurance MERLOTs--Municipal Exempt Receipts
Liquidity Optional Tender Series PCR --Pollution Control Revenue PCFA
- --Pollution Control Finance Authority PLC --Public Limited Company PRF
- --Prerefunded SA --Support Agreement SFM --Single Family Mortgage 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., F-1+,
F-1, and F-2 by Fitch IBCA, 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, 1998,
tier rating percentages were as follows:
TIER RATING PERCENTAGE BASED ON TOTAL MARKET VALUE (UNAUDITED)
FIRST TIER SECOND TIER
95.48% 4.52%
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $1,875,360,935
Income receivable 13,335,735
Receivable for shares sold 32,435
Prepaid expenses 122,692
Total assets 1,888,851,797
LIABILITIES:
Income distribution payable $2,340,514
Payable to Bank 304,893
Accrued expenses 633,707
Total liabilities 3,279,114
NET ASSETS for 1,885,557,190 shares outstanding $1,885,572,683
NET ASSETS CONSIST OF:
Paid in capital $1,885,557,190 Undistributed net investment income 5,242
Accumulated net realized gain on investments 10,251 Total net assets
$1,885,572,683 NET ASSET VALUE, OFFERING PRICE, AND REDEMPTION PROCEEDS PER
SHARE:
INVESTMENT SHARES:
$1,576,234,383 / 1,576,115,064 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$309,338,300 / 309,442,126 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, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $35,619,813
EXPENSES:
Investment advisory fee $ 4,755,765
Administrative personnel and services fee 717,169
Custodian fees 51,105
Transfer and dividend disbursing agent fees and expenses 253,729
Directors'/Trustees' fees 16,105
Auditing fees 7,728
Legal fees 8,857
Portfolio accounting fees 76,006
Shareholder services fee--Investment Shares 2,035,447
Shareholder services fee--Institutional Service Shares 342,435
Share registration costs 43,586
Printing and postage 79,123
Insurance premiums 84,881
Taxes 4,608
Miscellaneous 8,258
Total expenses 8,484,802
Waivers--
Waiver of investment advisory fee $ (495,117)
Waiver of shareholder services fee--
Investment Shares (814,179)
Waiver of shareholder services fee--
Institutional Service Shares (342,435)
Total waivers (1,651,731)
Net expenses 6,833,071
Net investment income 28,786,742
Net realized gain on investments 218,025
Change in net assets resulting from operations $29,004,767
</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
SEPTEMBER 30, YEAR ENDED
1998 MARCH 31,
(UNAUDITED) 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 28,786,742 $ 55,234,088
Net realized gain on investments 218,025 241,962
Change in net assets resulting from operations 29,004,767 55,476,050
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Investment Shares (24,467,525) (46,640,752)
Institutional Service Shares (4,319,217) (8,593,336)
Change in net assets resulting from distributions to
shareholders (28,786,742) (55,234,088)
SHARE TRANSACTIONS--
Proceeds from sale of shares 2,857,287,696 5,300,217,398
Net asset value of shares issued to shareholders in payment
of distributions declared 23,661,874 46,548,654
Cost of shares redeemed (2,925,986,550) (5,171,480,575)
Change in net assets resulting from share transactions (45,036,980) 175,285,477
Change in net assets (44,818,955) 175,527,439
NET ASSETS:
Beginning of period 1,930,391,638 1,754,864,199
End of period (including undistributed net investment income
of $5,242 and $5,242, respectively) $ 1,885,572,683 $ 1,930,391,638
</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
SEPTEMBER 30,
1998 YEAR ENDED MARCH 31,
(UNAUDITED) 1998 1997 1996 1995 1994
<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 0.03 0.02
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.03) (0.03) (0.03) (0.03) (0.02)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 1.52% 3.10% 2.92% 3.32% 2.70% 2.01%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.74%* 0.73% 0.71% 0.71% 0.70% 0.61%
Net investment income 3.01%* 3.04% 2.88% 3.27% 2.66% 2.00%
Expense waiver/reimbursement(b) 0.15%* 0.16% 0.18% 0.24% 0.17% 0.14%
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $1,576,234 $1,646,267 $1,506,918 $1,465,333 $1,277,894 $1,327,506
</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
SEPTEMBER 30,
1998 YEAR ENDED MARCH 31,
(UNAUDITED) 1998 1997 1996 1995 1994(a)
<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 0.03 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.02) (0.03) (0.03) (0.03) (0.03) (0.01)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(B) 1.60% 3.25% 3.08% 3.47% 2.85% 0.92%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.59%* 0.58% 0.56% 0.56% 0.55% 0.55%*
Net investment income 3.15%* 3.19% 3.02% 3.43% 2.82% 1.99%*
Expense waiver/reimbursement(c) 0.30%* 0.31% 0.33% 0.40% 0.17% 0.14%*
SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted) $309,338 $284,124 $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, 1998 (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 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's use of the amortized cost method to value its
portfolio securities is 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 September 30, 1998, the Trust, for federal tax purposes, had a capital loss
carryforward of $208,158, 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 as
follows:
EXPIRATION YEAR EXPIRATION AMOUNT
2004 $208,158
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, 1998, is as
follows:
<TABLE>
<CAPTION>
SECURITY ACQUISTION DATE ACQUISTION COST
<S> <C> <C>
Dakota County, MN Housing &
Redevelopment Authority 9/1/1998 $ 1,485,000
Douglas County, NE, Industrial Development 11/24/1994 1,110,000
Fargo, ND, IDRB (Series 1994) 6/26/1995 2,050,000
Madison, AL IDA, (Series A) 7/31/1996 785,000
Martin County, NC IFA, (Series 1993)
Weekly VRDNs (Weyerhaeuser Co.) 11/28/1997-9/30/1998 15,400,000
Minneapolis/St. Paul MN Housing
Finance Board 8/1/1998 806,000
New Jersey EDA 12/28/1992 116,037
Pennsylvania EDFA, (Series 1996E) 11/14/1996-2/5/1998 2,300,000
Chicago, IL, Variable Rate Certificates
(Series 1998M) 8/6/1998 10,000,000
Clipper Tax Exempt Trust 5/13/1998 17,609,000
Escambia County, FL HFA, PT 1017 9/30/1998 7,750,000
Escambia County, FL HFA, Variable Rate Certificates,
(Series 1997E) 9/30/1998 9,950,000
Fairfax County, VA IDA, 1998 Trust
Receipts FR/RI-A35 6/30/1998 9,445,000
Harris County, TX HFDC 5/8/1998 10,000,000
Henrico County, VA IDA 5/14/1997 16,800,000
Illinois Housing Development Authority 6/9/1998 17,135,000
Jefferson County, AL, Trust Receipts 2/19/1998 6,400,000
Kenton County, KY Airport Board 6/10/1998 11,995,000
Massachusetts Port Authority 8/28/1998 2,500,000
Massachusetts Water Resources Authority 9/4/1998 23,670,000
<CAPTION>
SECURITY ACQUISTION DATE ACQUISTION COST
<S> <C> <C>
Metropolitan Transportation Authority,
New York, Commuter Facilities 9/30/1998 $ 8,815,000
Milwaukee, WI, Trust Receipts (Series 1998)
Daily VRDNs (National Westminster Bank,
PLC, London LIQ) 8/17/1998 4,100,000
New Jersey Housing & Mortgage
Financing Authority 2/23/1998 9,995,000
New Jersey State EDA 9/25/1998 1,500,000
New Jersey State Transportation Trust
Fund Agency 5/21/1998-8/17/1998 14,400,000
New Jersey State 8/13/1998 3,500,000
New York State Dormitory Authority 9/17/1998 9,550,000
North Carolina Eastern Municipal Power Agency PT-132 10/2/1998 8,000,000
Northern California Transmission Agency 9/10/1998 4,000,000
Orange County, CA Local
Transportation Authority 5/20/1998-9/17/1998 9,950,000
PBCC LeaseTOPS Trust 9/9/1998 12,498,000
Philadelphia Authority for
Industrial Development 8/26/1998 10,000,000
Phoenix, AZ IDA PT-1032 9/18/1998 2,000,000
Phoenix, AZ, PA-236 6/30/1998 905,000
San Diego, CA Area Local Governments 7/9/1998-9/30/1998 37,325,000
Southeast Texas Housing Finance Corp. 3/25/1998 10,000,000
Tennessee Housing Development Agency 8/29/1997 7,995,000
Texas State, Trust Receipts (Series A58) 9/1/1998 17,000,000
Texas State, Trust Receipts (Series A59) 9/2/1998-9/30/1998 65,000,000
Triborough Bridge & Tunnel Authority, NY,
Trust Receipts 8/28/1998 5,500,000
Tulsa, OK International Airport 3/31/1997 6,100,000
California Public Capital Improvements
Financing Authority 8/28/1998-9/29/1998 31,000,000
Chicago, IL Public Building Commission,
(Series 1997) 7/1/1997 7,100,000
NCNB Pooled Tax-Exempt Trust, (Series 1990B) 12/4/1990 2,700,000
<CAPTION>
SECURITY ACQUISTION DATE ACQUISTION COST
<S> <C> <C>
New Jersey State Transportation Trust
Fund Agency 7/11/1997 $ 7,521,401
New York City Municipal Water Finance
Authority, New York 7/31/1998-9/3/1998 49,000,000
South Dakota Housing Development Authority
CDC Municipal Products, Inc. 8/22/1996 5,630,000
South Dakota Housing Development Authority 9/19/1996 3,935,000
Thornton, CO, Multifamily Housing 10/4/1995-10/19/1995 5,365,000
Tulsa County, OK HFA 9/28/1998 11,000,000
VRDC/IVRC Trust, (Series 1992A) 9/9/1998-9/30/1998 5,000,000
Wisconsin Housing & Economic
Development Authority 11/6/1997 8,000,000
</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. At September 30, 1998, capital paid-in aggregated is
$1,885,557,190. Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED
1998 MARCH 31,
INVESTMENT SHARES (UNAUDITED) 1998
<S> <C> <C>
Shares sold 2,406,490,410 4,451,502,443
Shares issued to shareholders in payment of distributions
declared 23,470,235 45,566,902
Shares redeemed (2,500,180,878) (4,357,926,684)
Net change resulting from Investment share transactions (70,220,233) 139,142,661
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED
1998 MARCH 31,
INSTITUTIONAL SERVICE SHARES (UNAUDITED) 1998
<S> <C> <C>
Shares sold 450,797,286 848,714,955
Shares issued to shareholders in payment of distributions
declared 191,639 981,752
Shares redeemed (425,805,672) (813,553,891)
Net change resulting from Institutional Service share
transactions 25,183,253 36,142,816
Net change resulting from share transactions (45,036,980) 175,285,477
</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, Inc. 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, 1998, 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 $2,077,146,980 and $2,090,997,594, respectively.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
5. YEAR 2000
Similar to other financial organizations, the Trust could be adversely affected
if the computer systems used by the Trust's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Trust's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Trust's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Trust.
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd, Esq.
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr., Esq.
Peter E. Madden
John E. Murray, Jr., J.D., S.J.D.
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 investment 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 prospectus which contains facts
concerning its objective and policies, management fees, expenses, and other
information.
[Graphic]Federated Investors
Federated Securities Corp., Distributor
Federated Investors, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 876924101
Cusip 876924200
8110107 (11/98)
[Graphic]
