Tax-Free Instruments Trust
15TH ANNUAL REPORT MARCH 31, 1998
ESTABLISHED 1981
[Graphic]
Dear Shareholder:
Tax-Free Instruments Trust was created in 1981, and I am pleased to present its
15th Annual Report.
This report covers the 12-month reporting period from April 1, 1997 through
March 31, 1998. It begins with a discussion with the trust's portfolio manager,
Jeff A. Kozemchak, Vice President of Federated Management. Following his
discussion you will find a complete listing of the trust's municipal money
market holdings and the publication of the trust's financial statements.
In Tax-Free Instruments Trust, your ready cash is at work pursuing daily income
free from federal regular income tax.* You have the comfort of knowing that the
trust is managed to keep the value of your investment at a stable $1.00 per
share which the trust has maintained since its inception.** You also have daily
access to your invested cash.
On March 31, 1998, the trust's $1.9 billion portfolio was invested among more
than 280 money market securities issued by municipalities across the United
States. Tax-free dividends paid to shareholders during the reporting period
totaled $0.03 per share for both Investment Shares and Institutional Service
Shares.
Thank you for your participation 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,
Glen R. Johnson
President
May 15, 1998
* 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 fund is not insured or guaranteed by the U.S. government.
INVESTMENT REVIEW
[Graphic]
Jeff A. Kozemchak, CFA
Vice President
Federated Management
[Graphic]
WHAT IS YOUR REVIEW OF THE ECONOMIC AND INTEREST RATE ENVIRONMENT DURING THE
TRUST'S FISCAL YEAR ENDED MARCH 31, 1998?
During the trust's fiscal year, the Federal Reserve Board (the "Fed") kept
monetary policy unchanged despite robust economic growth in the U.S. The economy
posted a rate of growth of over 3% for the last three quarters of 1997, and has
continued at this above-trend pace so far in 1998. Over most of the spring and
summer of last year, the continued benign inflation picture soothed a market
that would otherwise have been unsettled at such a vigorous pace of growth.
Toward the end of the third quarter of 1997, signs of tight labor markets began
to build expectations of a need for a tightening by the Fed as added insurance
against inflation. However, dramatic declines in the Asian equity markets in the
fourth quarter of 1997 curtailed this expectation, and overseas developments
dominated the rest of the year. Concern over the situation and its resulting
impact on the domestic economy abated somewhat by the end of the reporting
period in March 1998. The Fed remained on hold, content to wait until the
economic picture became more clear.
Movements in short-term Treasury securities -- particularly Treasury bills --
were strongly influenced by technical factors over the period. A reduction in
the overall size of Treasury bills due to improvement in the federal budget
deficit kept these securities well-bid and trading well below the 5.50% Fed
Funds Target Rate. In addition, a periodic flight-to-quality to these securities
from investors seeking a safe haven from the turmoil overseas also drove their
yields lower. Reflecting these conditions, yields on one-year tax-free municipal
notes were attractive for most of the period, averaging over 68.00% of Treasury
bills. The yield on one-year municipal notes, for example, began the reporting
period at close to 4.00%, on the heels of the last policy change by the Fed -- a
25 basis point tightening to bring the Fed Funds Target Rate to its current
level of 5.50% -- in late March 1997. It declined steadily to 3.75% by the end
of the year as inflation remained friendly. The yield then dropped sharply to
3.60% in January, and 3.50% in February due to supply constraints and fears that
the as-yet-unknown impact of the financial troubles in Asia on the domestic
economy might be worse than previously thought. The yield then rose to close the
period at 3.65% as growth continued.
In addition to economic fundamentals, short-term variable rate demand notes were
strongly influenced by technical factors over this period, most notably tax
payments in April and the summer note issuance season. Variable rate demand
notes (VRDNs), which comprise more than 50% of the trust's assets, started the
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, but moved sharply higher in June to above 4.00%, as supply and demand
imbalances occurred. From August through December, yields remained in a range
between 3.50% to 4.00%, moving up and down due to supply and demand conditions.
In the first quarter of 1998, yield levels reflected strong demand for municipal
securities, as investors emphasized liquidity in preparation for tax-payments in
April 1998. Yields during this quarter ranged mostly from 3.00% to 3.50%. Over
the period, VRDN yields averaged 68% or more of taxable rates, making them
generally attractive over time for investors at the 31% or higher federal tax
brackets.
[Graphic]
WHAT WAS THE TRUST'S MATURITY RANGE DURING THE REPORTING PERIOD?
The trust remained in a 45-55 day average maturity range over the reporting
period, kept a neutral stance, and moved within that range according to relative
value opportunities. During last summer's note issuance season, we began to see
value in notes, as supply became plentiful and notes traded cheaply relative to
Treasuries and our interest rate outlook. The trust's average maturity extended
during this period into the low 60-day range, but has since drifted back down to
end the reporting period at 51 days. We continued to emphasize a barbelled
structure for the portfolio, combining a significant position in 7-day VRDNs
with purchases of longer-term securities with maturities between 6 and 12
months.
[Graphic]
HOW HAS THE TRUST PERFORMED FROM A YIELD PERSPECTIVE?
The 7-day net yield for the trust's Institutional Service Shares on March 31,
1998, was 3.12% compared to 3.05% on March 31, 1997. The latest yield was the
equivalent of a 5.17% taxable yield for investors in the highest federal tax
bracket. Over the 12-month period, the tax-exempt yield averaged 3.20%, which
equals a taxable equivalent yield of 5.30% for those same investors.*
* The 7-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. Yields will vary. Yields quoted for money market
funds most closely reflect the trust's current earnings.
For the Investment Shares, the 7-day net yield on March 31, 1998, was 2.97%
compared to 2.90% on March 31, 1997. The latest yield was equivalent to a 4.92%
taxable yield for investors in the highest federal tax bracket. The average
tax-exempt yield over the period was 3.05%, which equals a taxable equivalent
yield of 5.05% for those investors in the highest federal tax bracket.*
[Graphic]
AS WE APPROACH MID 1998, WHAT IS YOUR OUTLOOK FOR RATES?
The jury is still out on the extent of the impact that the crisis in Asian
economies will have on U.S. growth. As a result, the Fed, although certain to be
troubled by persistent above-trend growth in an environment where labor markets
are tight, will likely remain on hold until the effect is better known. Much of
this should be revealed over the second quarter of 1998. If the drag on the U.S.
economy is not as great as once feared, expectations of a need for Fed
tightening may then resurface. In the near term, however, market movements will
as likely reflect technical factors as fundamental ones. These supply/demand
imbalances could very well present attractive investment opportunities for the
trust. We will continue to watch, with great interest, market developments in
order to best serve our municipal clients.
* The 7-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. Yields will vary. Yields quoted for money market
funds most closely reflect the trust's current earnings.
TAX-FREE INSTRUMENTS TRUST
PORTFOLIO OF INVESTMENTS
MARCH 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--99.2%
ALABAMA--1.3%
$ 3,000,000 Decatur, AL IDB, Revenue Refunding Bonds (Series 1993)
Weekly VRDNs (Allied-Signal, Inc.) $ 3,000,000
6,000,000 Homewood, AL IDA Weekly VRDNs (Mountain Brook Inn
(Homewood AL))/(SouthTrust Bank of Alabama, Birmingham LOC) 6,000,000
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
900,000 (a) Madison, AL IDA (Series A) Weekly VRDNs (Executive Inn)/
Amsouth Bank N.A., Birmingham LOC) 900,000
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 25,870,000
ARIZONA--1.1%
104,200 Gilbert, AZ IDA Weekly VRDNs (Foxworth-Galbraith Lumber
Co.)/(Bank One, Arizona N.A. LOC) 104,200
9,725,000 Maricopa County, AZ, IDA (Series 1984) Weekly VRDNs
(Gannett Co., Inc.) 9,725,000
1,385,000 Pima County, AZ IDA Weekly VRDNs (A & P Investments)/
(Bank One, Arizona N.A. LOC) 1,385,000
5,203,000 Pima County, AZ IDA Weekly VRDNs (BJR Investments, Inc.)/
(Bank One, Arizona N.A. LOC) 5,203,000
4,100,000 Tempe, AZ IDA (Series 1985) Weekly VRDNs (Elliot's Crossing
Apartments)/(Internationale Nederlanden Bank N.V. LOC) 4,100,000
Total 20,517,200
ARKANSAS--0.4%
5,000,000 Arkansas Development Finance Authority, Home Mortgage
Revenue Bonds (Series C), 3.65% BANs, 3/1/1999 5,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
ARKANSAS--CONTINUED
$ 2,500,000 Pocahontas, AR, IDRB (Series 1995) Weekly VRDNs
(MacLean ESNA L.P. Project)/(Northern Trust Co., Chicago, IL $ 2,500,000
LOC)
Total 7,500,000
CALIFORNIA--6.2%
8,000,000 (a) California Educational Facilities Authority, PA-190 Weekly
VRDNs (Stanford University)/(Merrill Lynch Capital Services,
Inc. LIQ) 8,000,000
13,990,000 (a) California Public Capital Improvements Financing Authority,
Trust Receipts (Series 1996 FR-3) Weekly VRDNs (MBIA INS)/(Bank of
New York, New York LIQ) 13,990,000
10,000,000 California State, 4.50% RANs, 6/30/1998 10,020,100
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
7,000,000 California Transit Finance Authority, VRDB's (Series 1997)
Weekly VRDNs (FSA INS)/(Credit Suisse First Boston LIQ) 7,000,000
26,000,000 Los Angeles County, CA, 4.50% TRANs, 6/30/1998 26,038,882
3,000,000 Moreno Valley Unified School District, CA, 4.50% TRANs, 3,004,265
6/30/1998
6,100,000 (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) 6,100,000
7,800,000 Orange County, CA IDA (Series 1991A) Weekly VRDNs (The
Lakes)/Citibank N.A., New York LOC) 7,800,000
5,000,000 Riverside County, CA, 4.50% TRANs, 6/30/1998 5,006,515
20,000,000 Ventura County, CA, 4.50% TRANs, 7/1/1998 20,028,771
2,500,000 Yucaipa-Calimesa, CA Joint Unified School District, 4.25%
TRANs, 6/30/1998 2,502,374
Total 118,690,907
COLORADO--3.2%
3,375,000 (a) Colorado Municipal Securities Trust (Series 1996B) Weekly
VRDNs Colorado Health Facilities Authority)/(MBIA INS)/(Norwest
Bank Minnesota, N.A. LIQ) 3,375,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
COLORADO--CONTINUED
$ 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
3,600,000 Colorado Springs, CO Utility System, IDRB's (Series 1996)
Weekly VRDNs (Micro Metals, Inc.)/(U.S. Bank, N.A., Minneapolis 3,600,000
LOC)
41,645,000 (a) Denver (City & County), CO, Trust Reciepts (Series 1998
FR/RI-13) Weekly VRDNs (MBIA INS)/(Bank of New York, New York
LIQ) 41,645,000 4,750,000 Mesa County, CO (Series 1996) Weekly VRDNs (3D
Systems
Corp.)/(Norwest Bank Minnesota, N.A. LOC) 4,750,000
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 61,235,000
CONNECTICUT--0.7%
489,400 (a) Clipper Connecticut Tax Exempt Trust (Series 1994-1) Weekly
VRDNs (State Street Bank and Trust Co. LIQ) 489,400
2,500,000 Connecticut Development Authority, PCR (Series 1993A) Weekly
VRDNs (Western Mass Electric Co.)/(Union Bank of
Switzerland, Zurich LOC) 2,500,000
4,200,000 Connecticut State HEFA (Series B) Weekly VRDNs (Edgehill)/
(Banque Paribas, Paris LOC) 4,200,000
4,990,000 (a) Connecticut State HFA (PT-1003) Weekly VRDNs (Merrill Lynch
Capital Services, Inc. LIQ) 4,990,000
2,200,000 Connecticut State (1997 Series B) Weekly VRDNs (Bayerische
Landesbank Girozentrale LIQ) 2,200,000
Total 14,379,400
DISTRICT OF COLUMBIA--0.9%
7,740,000 District of Columbia (Series A) Weekly VRDNs (American
University)/(National Westminster Bank, PLC, London LOC) 7,740,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
DISTRICT OF COLUMBIA--CONTINUED
$10,000,000 District of Columbia (Series B), 4.50% TRANs (Morgan Guaranty
Trust Co., New York and Union Bank of Switzerland, Zurich
LOCs), 9/30/1998 $ 10,030,200
Total 17,770,200
FLORIDA--0.9%
3,000,000 Florida HFA (Series 2-CR-25C), 3.75% TOBs (FGIC
INS)/(Citibank N.A., New York LIQ), Optional Tender 6/15/1998 3,000,000
1,400,000 Highlands County, FL Health Facilities (Series 1996A Accounts
Receivable) Weekly VRDNs (Adventist Health System)/(CAPMAC
Holdings, Inc. INS)/(First National Bank of Chicago LIQ) 1,400,000
7,978,000 Sunshine State Governmental Finance Commission, FL, 3.60% CP
(AMBAC, FGIC INS) and Bank of Nova Scotia, Toronto LIQs),
Mandatory Tender 7/13/1998 7,978,000
5,800,000 Titusville, FL, Multi-Purpose Revenue Bonds, Installment
1995A Weekly VRDNs (Banque Paribas, Paris LOC) 5,800,000
Total 18,178,000
GEORGIA--5.9%
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
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
4,995,000 Bartow County School District, GA, 4.00% TANs, 12/31/1998 5,008,402
3,400,000 Bartow County, GA IDA (First Series 1996) Daily VRDNs
(Georgia
Power Company Plant Bowen Project)/(Georgia Power Co. LOC) 3,400,000
10,000,000 Burke County, GA Development Authority (Series 1997B), 3.80%
Bonds (Oglethorpe Power Corp.)/(AMBAC INS), 5/28/1998 10,000,000
9,675,000 Cobb County, GA IDA (Series 1997) Weekly VRDNs (Wyndham
Gardens)/(Bankers Trust Co., New York LOC) 9,675,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--CONTINUED
$ 5,905,000 Columbus, GA IDA Industrial & Port Development Commission
(Series 1992) Weekly VRDNs (Maine Street Village Partnership)/
(Columbus Bank and Trust Co., GA LOC) $ 5,905,000
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)/(Banque 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
3,015,000 Gainesville, GA Redevelopment Authority, Downtown
Developments, Ltd (Series 1987) Weekly VRDNs (Downtown
Developments, Ltd.)/(Regions Bank, Alabama LOC) 3,015,000
926,437 Georgia Municipal Association Weekly VRDNs (Credit Suisse First
Boston LIQ)/(MBIA LOC) 926,437
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
19,650,000 Municipal Electric Authority of Georgia (Series 1985A), 3.55% CP
(Bayerische Landesbank Girozentrale, Credit Suisse First Boston and
Morgan Guaranty Trust Co., New York LOCs), Mandatory Tender
5/15/1998 19,650,000
5,000,000 Richmond County, GA Development Authority, Solid Waste Disposal
Revenue Bonds (Series 1995) Weekly VRDNs (Federal Paper Board
Co., Inc.)/(Wachovia Bank of Georgia N.A., Atlanta LOC) 5,000,000
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
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
GEORGIA--CONTINUED
$ 3,200,000 Savannah, GA EDA (Series 1995A) Weekly VRDNs (Home Depot, Inc.) $ 3,200,000
6,000,000 Screven County, GA IDA (Series 1995) Weekly VRDNs (Sylvania Yarn
Systems, Inc. Project)/(SunTrust Bank, Atlanta LOC) 6,000,000
Total 113,059,839
ILLINOIS--6.5%
1,250,000 Champaign, IL, IDRB Weekly VRDNs (Christie Clinic)/(National
City Bank, Indiana LOC) 1,250,000
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 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
19,400,000 (a) Illinois Health Facilities Authority (Series 1989A) Weekly VRDNs
(Methodist Health Services Corp.)/(Fuji Bank, Ltd., Tokyo LOC) 19,400,000
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
1,910,000 Martinsville, IL, IDRB (Series 1995) Weekly VRDNs (PAP-R Products
Company Project)/(Bank One, Illinois, N.A. LOC) 1,910,000
3,500,000 Mendota, IL, IDRB (Series 1995) Weekly VRDNs (Minnesota
Diversified Products, Inc. Project)/(Norwest Bank Minnesota,
N.A. LOC) 3,500,000
12,200,000 (a) Metropolitan Pier & Exposition Authority, IL, Trust Receipts
(Series 1998 FR/RI-8) Weekly VRDNs (McCormick Place)/
(AMBAC INS)/(Bank of New York, New York LIQ) 12,200,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
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
1,900,000 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, Illinois, N.A. LOC) 2,859,000
Total 125,152,000
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 6/18/1998 2,400,000
3,000,000 Hamilton County, IN, EDRB (Series 1995) Weekly VRDNs (Fabcon
L.L.C. Project)/(Norwest Bank Minnesota, N.A. LOC) 3,000,000
4,500,000 Jasper County, IN (Series 1998A) Weekly VRDNs (Oak Grove
Christian Retirement Village, Inc.)/(First of America Bank -
Michigan LOC) 4,500,000
2,320,000 Kendallville, IN, IDRB (Series 1995) Weekly VRDNs (Rivnut Real
Estate, Ltd. Project)/(National City Bank, Ohio LOC) 2,320,000
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 23,550,000
IOWA--0.4%
3,075,000 Des Moines, IA, IDR Bonds (Series 1994) Weekly VRDNs
(Printer, Inc.)/(Norwest Bank Minnesota, N.A. LOC) 3,075,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
IOWA--CONTINUED
$ 4,400,000 Iowa Finance Authority (Series 1996) Weekly VRDNs
(Wittern Realty, Inc. Project)/(Norwest Bank Minnesota, N.A. LOC) $ 4,400,000
Total 7,475,000
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--2.3%
1,620,000 Boone County, KY (Series 1996) Weekly VRDNs (Western States
Envelope Co.)/(Bank One, Wisconsin, N.A. LOC) 1,620,000
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
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
6/1/1998 1,800,000
Total 44,805,000
LOUISIANA--0.9%
6,950,000 Louisiana PFA (Series 1985A) Weekly VRDNs (FGIC INS)/(Societe
Generale, Paris LIQ) 6,950,000
10,600,000 St. James Parish, LA, PCR Refunding Bonds (Series 1988B), 3.65%
CP (Texaco, Inc.), Mandatory Tender 5/12/1998 10,600,000
Total 17,550,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
MAINE--0.4%
$ 1,200,000 Gardiner, ME IDB Weekly VRDNs (Associated Grocers)/(Westpac
Banking Corp. Ltd., Sydney LOC) $ 1,200,000
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 8,100,000
MARYLAND--1.2%
18,862,000 Maryland Health & Higher Educational Facilities Authority, Pooled
Loan Program Revenue Notes, 3.25% CP (John Hopkins University)/
(Nationsbank, N.A., Charlotte LIQ), Mandatory Tender 4/1/1998 18,862,000
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 22,392,000
MASSACHUSETTS--4.0%
8,300,000 Agawam, MA, 4.10% BANs, 9/15/1998 8,307,291
7,897,000 Attleboro, MA, 4.25% BANs, 9/10/1998 7,908,111
17,755,594 (a) Clipper Tax Exempt Trust (Series A) Weekly VRDNs (Massachusetts
State Lottery Commission)/(AMBAC INS)/(State Street Bank and
Trust Co. LIQ) 17,755,594
11,500,000 Commonwealth of Massachusetts (1997 Series B) Weekly VRDNs
(Landesbank Hessen-Thueringen, Frankfurt LIQ) 11,500,000
2,215,000 (a) Massachusetts Turnpike Authority (PA-324) Weekly VRDNs
(MBIA INS)/(Merrill Lynch Capital Services, Inc. LIQ) 2,215,000
12,200,000 Massachusetts Water Resources Authority (Series 1994), 3.30% CP
(Morgan Guaranty Trust Co., New York LOC), Mandatory Tender
4/27/1998 12,200,000
8,500,000 Rutland, MA, 4.05% BANs, 6/26/1998 8,502,872
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
MASSACHUSETTS--CONTINUED
$ 7,000,000 Springfield, MA, 4.40% BANs (Fleet National Bank, Springfield,
MA LOC), 9/4/1998 $ 7,014,370
2,250,000 Watertown, MA, 4.25% BANs, 8/28/1998 2,253,058
Total 77,656,296
MICHIGAN--0.3%
750,000 Dearborn, MI Economic Development Corp. (Series 1990) Weekly
VRDNs (Exhibit Productions, Inc. Project)/(First of America Bank -
Illinois LOC) 750,000
5,000,000 Michigan State Building Authority (Series 1), 3.40% CP (Canadian
Imperial Bank of Commerce, Toronto LOC), Mandatory Tender
4/9/1998 5,000,000
800,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1991) Weekly VRDNs (Martin Luther Memorial Home, Inc.)/
(Bank One, Indianapolis, N.A. LOC) 800,000
Total 6,550,000
MINNESOTA--0.7%
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
1,880,000 Coon Rapids, MN (Series 1998) Weekly VRDNs (Gerald R. Sizer)/
(Norwest Bank Minnesota, N.A. LOC) 1,880,000
1,345,000 (a) Dakota County, MN Housing & Redevelopment Authority
(Custodial Receipts), 4.00% TOBs (GNMA COL)/(Corestates Bank
N.A., Philadelphia, PA LIQ), Optional Tender 6/1/1998 1,345,000
881,000 (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 8/1/1998 881,000
Total 13,706,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
MISSISSIPPI--0.7%
$ 4,480,000 Mississippi Business Finance Corp. (Series 1995) Weekly VRDNs
(Mississippi Baking Company L.L.C. Project)/(First National Bank
of Maryland, Baltimore LOC) $ 4,480,000
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 13,880,000
MISSOURI--1.1%
4,330,000 Missouri Development Finance Board (Series 1995) Weekly VRDNs
(Wilson Trailer Sales, Inc. Project)/(Norwest Bank Minnesota, N.A.
LOC) 4,330,000
6,366,000 Missouri State Environmental Improvement & Energy Authority,
3.80% CP (Kansas City Power And Light Co.), Mandatory Tender
5/27/1998 6,366,000
10,000,000 Missouri State HEFA (Series 1997N), 4.50% TRANs (St. Louis, MO
School District), 9/14/1998 10,026,134
Total 20,722,134
NEBRASKA--0.5%
1,700,000 Douglas County, NE Weekly VRDNs (Majors Plastics, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 1,700,000
5,000,000 Douglas County, NE, IDRB (Series 1997) Weekly VRDNs (American
Laboratories, Inc.)/(Norwest Bank Minnesota, N.A. LOC) 5,000,000
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
2,065,000 Douglas County, NE, Subordinated IDRB (Series 1995) Weekly
VRDNs (Aksarben Foods, Inc. Project)/(Norwest Bank Minnesota,
N.A. LOC) 2,065,000
Total 9,875,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NEVADA--1.8%
$29,000,000 Nevada Housing Division, Multi-Unit Housing Revenue Refunding
Bonds (1991 Series A) Weekly VRDNs (Park Vista Apartments
Project)/(Sumitomo Bank Ltd., Osaka LOC) $ 29,000,000
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 35,000,000
NEW HAMPSHIRE--1.0%
15,000,000 New Hampshire Business Finance Authority, PCR Bonds (Series A),
3.60% CP (New England Power Co.), Mandatory Tender 4/6/1998 15,000,000
5,000,000 New Hampshire Business Finance Authority, PCR Bonds (Series A),
3.70% CP (New England Power Co.), Mandatory Tender 5/1/1998 5,000,000
Total 20,000,000
NEW JERSEY--3.8%
4,768,858 Berkeley Township, NJ, 4.25% BANs, 4/13/1998 4,769,312
2,500,000 Haddonfield, NJ, 4.45% BANs, 6/5/1998 2,502,054
1,429,900 Hammonton, NJ, 4.00% BANs, 6/30/1998 1,430,235
6,005,000 Lakewood Township, NJ, 4.00% BANs, 1/22/1999 6,019,064
5,500,000 New Jersey EDA Weekly VRDNs (Center-For-Aging - Applewood
Estates)/(Fleet National Bank, Springfield, MA LOC) 5,500,000
162,447 (a) New Jersey EDA Weekly VRDNs (H.L. Bhasin)/(Ford Motor Credit
Corp. LIQ)/(Chase Manhattan Bank N.A., New York LOC) 162,447
5,500,000 New Jersey EDA Weekly VRDNs (YM-YWHA of Bergen County, NJ)/
(Bank of New York, New York LOC) 5,500,000
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
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NEW JERSEY--CONTINUED
$ 5,000,000 (a) New Jersey State Transportation Trust Fund Agency, Trust Receipts
(Series 1996-1) Weekly VRDNs (MBIA INS)/(Bank of New York,
New York LIQ) $ 5,000,000
2,800,000 Old Bridge Township, NJ, 4.25% BANs, 10/20/1998 2,805,205
9,449,139 Stafford Township, NJ, 4.375% BANs, 5/15/1998 9,452,143
13,000,000 Trenton, NJ, 3.80% BANs, 3/10/1999 13,018,813
Total 72,554,273
NEW MEXICO--0.9%
5,885,000 Albuquerque, NM (Series 1996) Weekly VRDNs (Rose's Southwest
Papers, Inc. Project)/(Norwest Bank Minnesota, N.A. LOC) 5,885,000
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
5,500,000 Las Cruces, NM, IDRB (Series 1994A) Weekly VRDNs (F & A Dairy
Products, Inc. Project)/(Norwest Bank Minnesota, N.A. LOC) 5,500,000
Total 16,685,000
NEW YORK--6.1%
5,000,000 Allegany-Limestone, NY Central School District, 4.05% BANs,
12/30/1998 5,004,675
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
5,000,000 Nassau County, NY, (Series 1998A), 4.25% BANs, 8/17/1998 5,012,545
7,090,000 (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) 7,090,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NEW YORK--CONTINUED
$ 7,000,000 (a) New York City, NY (PA-156) Weekly VRDNs (Merrill Lynch Capital
Services, Inc. LIQ)/(Merrill Lynch Capital Services, Inc. LOC) $ 7,000,000
15,000,000 New York City, NY (Series A), 4.50% RANs (Bayerische Landesbank
Girozentrale, Landesbank Hessen-Thueringen, Frankfurt, Morgan
Guaranty Trust Co., New York, National Westminster Bank, PLC,
London, Societe Generale, Paris and Westdeutsche Landesbank
Girozentrale LOCs), 6/30/1998 15,024,174
5,000,000 New York City, NY, (Series G), 4.25% Bonds, 8/1/1998 5,009,782
2,000,000 New York City, NY, Subseries A-10 Daily VRDNs (Morgan Guaranty
Trust Co., New York LOC) 2,000,000
6,990,000 New York City, NY, UT GO, 4.50% Bonds, 8/1/1998 7,002,524
7,000,000 (a) New York State Environmental Facilities Corp., Trust Receipts
(Series 1997 FR/RI-4) Weekly VRDNs (New York City Municipal
Water Finance Authority)/(Bank of New York, New York LIQ) 7,000,000
5,000,000 New York State Power Authority (Series 2), 3.30% CP (Bank of Nova
Scotia, Toronto, Commerzbank AG, Frankfurt, Credit Local de
France, Landesbank Hessen-Thueringen, Frankfurt, Morgan
Guaranty Trust Co., New York and Toronto-Dominion Bank LOCs),
Mandatory Tender 4/7/1998 5,000,000
5,000,000 South Country Central School District, NY, 4.15% TANs, 6/25/1998 5,002,795
15,000,000 (a) VRDC/IVRC Trust (Series 1992A) Weekly VRDNs (New York City
Municipal Water Finance Authority)/(MBIA INS)/(Hongkong &
Shanghai Banking Corp. LIQ) 15,000,000
6,500,000 (a) VRDC/IVRC Trust (Series 1993G) Weekly VRDNs (St. Lukes
Roosevelt Hospital Center)/(FHA INS)/(Hongkong & Shanghai
Banking Corp. LIQ) 6,500,000
5,000,000 William Floyd UFSD, 4.125% TANs, 6/30/1998 5,002,102
Total 118,463,597
NORTH CAROLINA--7.5%
4,600,000 Catawba County, NC Industrial Facilities & Pollution Control
Financing Authority, (Series 1994) Weekly VRDNs (Ethan Allen Inc.
Project)/(Bankers Trust Co., New York LOC) 4,600,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NORTH CAROLINA--CONTINUED
$ 1,000,000 Cleveland County, NC Industrial Facilities and Pollution Control
Financing Authority Weekly VRDNs (PPG Industries, Inc.) $ 1,000,000
3,250,000 Lee County, NC Industrial Facility & PCFA (Series 1989) Weekly
VRDNs (Avondale Mills, Inc.)/(SunTrust Bank, Atlanta LOC) 3,250,000
20,000,000 (a) Martin County, NC IFA (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) 20,000,000
500,000 (a) NCNB Pooled Tax-Exempt Trust (Series 1990A) Weekly VRDNs
(NCNB Tax Exempt Trust 1990a)/(Nationsbank, N.A., Charlotte LOC) 500,000
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
6,000,000 New Hanover County, NC PCFA (Series 1984) Weekly VRDNs
(American Hoist & Derrick Co. Project)/(First Union National Bank,
Charlotte, NC LOC) 6,000,000
6,060,000 (a) North Carolina Eastern Municipal Power Agency, PA -171
(Series 1996A) Weekly VRDNs (MBIA INS)/(Merrill Lynch Capital
Services, Inc. LIQ) 6,060,000
8,000,000 (a) North Carolina Eastern Municipal Power Agency, PT-132, 3.90%
TOBs (MBIA INS)/(Credit Suisse First Boston LIQ), Mandatory
Tender 10/1/1998 8,000,000
5,900,000 North Carolina Educational Facilities Finance Agency (Series 1990)
Weekly VRDNs (Bowman Gray School of Medicine)/(Wachovia
Bank of NC, N.A., Winston-Salem LOC) 5,900,000
4,000,000 North Carolina Medical Care Commission Hospital (Series 1996)
Weekly VRDNs (Adult Communities Total Services, Inc)/(Lasalle
National Bank, Chicago LOC) 4,000,000
3,300,000 North Carolina Medical Care Commission Hospital (Series 1996)
Weekly VRDNs (North Carolina Baptist) 3,300,000
3,000,000 North Carolina Medical Care Commission Hospital Revenue Bonds
(Series 1992B) Weekly VRDNs (North Carolina Baptist) 3,000,000
5,050,000 North Carolina Medical Care Commission Hospital Revenue Bonds
(Series 1993) Weekly VRDNs (Moses H. Cone Memorial) 5,050,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NORTH CAROLINA--CONTINUED
$ 5,915,000 North Carolina Municipal Power Agency No. 1 (Series A), 3.45% CP
(Morgan Guaranty Trust Co., New York and Union Bank of
Switzerland, Zurich LOCs), Mandatory Tender 4/1/1998 $ 5,915,000
6,900,000 Wake County, NC Industrial Facilities & PCFA (Series 1990A), 4.10%
CP (Carolina Power & Light Co.), Mandatory Tender 4/1/1998 6,900,000
6,200,000 Wake County, NC Industrial Facilities & PCFA (Series 1990A), 4.20%
CP (Carolina Power & Light Co.), Mandatory Tender 4/13/1998 6,200,000
23,000,000 Wake County, NC Industrial Facilities & PCFA (Series 1990A), 4.20%
CP (Carolina Power & Light Co.), Mandatory Tender 4/9/1998 23,000,000
23,100,000 Wake County, NC Industrial Facilities & PCFA (Series 1990B), 4.25%
CP (Carolina Power & Light Co.), Mandatory Tender 5/8/1998 23,100,000
7,000,000 Wilson County, NC PCA (Series 1994) Weekly VRDNs
(Granutec, Inc.)/(Branch Banking & Trust Co, Wilson LOC) 7,000,000
Total 145,475,000
NORTH DAKOTA--0.1%
2,470,000 (a) Fargo, ND, IDRB (Series 1994) Weekly VRDNs (Pan-O-Gold Baking
Co. Project)/(Norwest Bank Minnesota, N.A. LOC) 2,470,000
OHIO--0.5%
100,000 Cuyahoga County, OH IDA Weekly VRDNs (Health Hill)/(Union
Bank of Switzerland, Zurich LOC) 100,000
10,000,000 Ohio HFA, Residential Mortgage Revenue Notes (1998 Series A-2),
3.80% BANs, 3/1/1999 10,000,000
Total 10,100,000
OKLAHOMA--0.8%
2,295,000 Claremore, OK IDA Weekly VRDNs (Baldor Electric Co.)/(Wachovia
Bank of Georgia N.A., Atlanta LOC) 2,295,000
2,050,000 Oklahoma County, OK Finance Authority, (Series 1996) Weekly
VRDNs (Avalon Project)/(Bank One, Texas N.A. LOC) 2,050,000
4,375,000 Oklahoma State Industrial Authority, Health System Revenue Bonds
(Series 1995A) Weekly VRDNs (Baptist Medical Center, OK)/
(Morgan Guaranty Trust Co., New York LIQ) 4,375,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
NORTH CAROLINA--CONTINUED
$ 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 14,820,000
OREGON--0.1%
2,000,000 Oregon State, Veteran's Welfare Bonds (Series 73H) Weekly VRDNs
(Morgan Guaranty Trust Co., New York LOC) 2,000,000
PENNSYLVANIA--3.8%
1,200,000 Berks County, PA IDA Weekly VRDNs (Lutheran Home at Topton
Project)/(Corestates Bank N.A., Philadelphia, PA LOC) 1,200,000
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
1,530,000 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
2,500,000 (a) Pennsylvania EDFA (Series 1996 E) Weekly VRDNs (Adelphoi, Inc.)/
(PNC Bank, N.A. LOC) 2,500,000
7,000,000 Philadelphia, PA (Series A), 4.50% TRANs, 6/30/1998 7,008,296
10,000,000 Philadelphia, PA, GO (Series 1990), 4.10% CP (Fuji Bank, Ltd., Tokyo
LOC), Mandatory Tender 4/1/1998 10,000,000
10,000,000 Philadelphia, PA, GO (Series 1990), 3.90% CP (Fuji Bank, Ltd., Tokyo
LOC), Mandatory Tender 4/16/1998 10,000,000
7,000,000 Philadelphia, PA, GO (Series 1990), 4.20% CP (Fuji Bank, Ltd., Tokyo
LOC), Mandatory Tender 4/30/1998 7,000,000
10,000,000 Philadelphia, PA, GO (Series 1990), 4.25% CP (Fuji Bank, Ltd., Tokyo
LOC), Mandatory Tender 4/21/1998 10,000,000
Total 74,238,296
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
RHODE ISLAND--0.7%
$ 6,000,000 Bristol Warren, RI Regional School District, 4.25% BANs, 7/16/1998 $ 6,004,176
2,700,000 Cumberland, RI (Series 1), 4.25% BANs, 8/6/1998 2,703,199
4,200,000 Cumberland, RI (Series 2), 4.25% BANs, 8/6/1998 4,204,976
Total 12,912,351
SOUTH CAROLINA--2.0%
1,000,000 Berkeley County, SC (Series 1996A) Weekly VRDNs
(Nucor Corporation) 1,000,000
2,395,000 Berkeley, SC IRB (Series 1989) Weekly VRDNs (W.W. Williams Co.
Project)/(Bank One, Ohio, N.A. LOC) 2,395,000
13,300,000 Charleston County, SC School District (Series 1998), 4.00% BANs,
6/30/1998 13,313,029
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)/(Wachovia Bank of SC, N.A., Columbia LOC) 2,300,000
10,000,000 South Carolina State Public Service Authority, 3.60% CP (Bank of
America NT and SA, San Francisco, Bank of Nova Scotia, Toronto,
Commerzbank AG, Frankfurt and Toronto-Dominion Bank LIQs),
Mandatory Tender 7/14/1998 10,000,000
Total 38,508,029
SOUTH DAKOTA--1.7%
865,000 Rapid City, SD Weekly VRDNs (Gillette Dairy Black Hills, Inc.)/
(Bank of Tokyo-Mitsubishi Ltd. LOC) 865,000
11,585,000 (a) South Dakota Housing Development Authority, CDC Municipal
Products, Inc. Class A Certificates (Series 1996C) Weekly VRDNs
(CDC Municipal Products, Inc. LIQ) 11,585,000
11,890,000 South Dakota Housing Development Authority, Homeownership
Mortgage Bonds (1997 Series E) Weekly VRDNs 11,890,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
SOUTH DAKOTA--CONTINUED
$ 8,115,000 (a) South Dakota Housing Development Authority, PT-85 (1988 Series A)
Weekly VRDNs (Rabobank Nederland, Utrecht LIQ) $ 8,115,000
1,030,000 Watertown, SD (Series 1991) Weekly VRDNs (Tescom Corp.)/
(Norwest Bank Minnesota, N.A. LOC) 1,030,000
Total 33,485,000
TENNESSEE--2.3%
34,300,000 Metropolitan Government Nashville & Davidson County, TN HEFA,
Hospital Revenue Bonds (Series 1992), 3.75% CP (Baptist Hospital,
Inc. (TN))/(Nationsbank, N.A., Charlotte LOC), Mandatory Tender
4/27/1998 34,300,000
1,500,000 Metropolitan Government Nashville & Davidson County, TN IDB
(Series 1994) Weekly VRDNs (Shoney's Inn)/(First Union National
Bank, Charlotte, NC LOC) 1,500,000
7,995,000 (a) Tennessee Housing Development Agency (Series C) 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 44,020,000
TEXAS--10.3%
6,000,000 Capital Industrial Development Corp., TX (Series 1998) Weekly
VRDNs (Bank One, Arizona N.A. LOC) 6,000,000
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
1,875,000 Harris County, TX Cultural Education Facilities Finance Corp.
Weekly VRDNs (Houston Museum of Natural Sciences)/(Bank One,
Texas N.A. LOC) 1,875,000
5,650,000 Harris County, TX HFDC (Series 1994) Daily VRDNs (Methodist
Hospital, Harris County, TX) 5,650,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$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
1,870,000 Liberty County, TX IDA Weekly VRDNs (Insteel Industries, Inc.)/
(First Union National Bank, Charlotte, NC LOC) 1,870,000
25,000,000 North Central Texas HFDC, Flexible Rate Hospital Revenue Bonds
(Series 1991A), 3.60% CP (Methodist Hospitals of Dallas)/
(MBIA INS)/(Rabobank Nederland, Utrecht LIQ), Mandatory
Tender 7/16/1998 25,000,000
1,580,000 North Richland Hills, TX IDC Weekly VRDNs (Tecnol, Inc.)/
(Nationsbank, N.A., Charlotte LOC) 1,580,000
5,000,000 Sabine River Authority, TX, PCR (Series 1996B) Daily VRDNs
(Texas Utilities Electric Co.)/(AMBAC INS)/(Bank of New York,
New York LIQ) 5,000,000
14,300,000 San Antonio, TX, Electric & Gas Systems Commercial Paper Notes,
(Series A), 3.45% CP (Chase Bank of Texas, Morgan Guaranty Trust
Co., New York, Toronto-Dominion Bank and Union Bank of
Switzerland, Zurich LIQs), Mandatory Tender 4/7/1998 14,300,000
14,300,000 San Antonio, TX, Electric & Gas Systems Commercial Paper Notes,
(Series A), 3.50% CP (Chase Bank of Texas, Morgan Guaranty Trust
Co., New York, Toronto-Dominion Bank and Union Bank of
Switzerland, Zurich LIQs), Mandatory Tender 6/17/1998 14,300,000
10,000,000 San Antonio, TX, Waste System (Series 1995), 3.20% CP
(Westdeutsche Landesbank Girozentrale LIQ), Mandatory Tender
4/1/1998 10,000,000
13,700,000 San Antonio, TX, Waste System (Series 1995), 3.45% CP
(Westdeutsche Landesbank Girozentrale LIQ), Mandatory Tender
4/1/1998 13,700,000
13,000,000 San Antonio, TX, Waste System (Series 1995), 3.55% CP
(Westdeutsche Landesbank Girozentrale LIQ), Mandatory Tender
7/13/1998 13,000,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
TEXAS--CONTINUED
$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
6,000,000 Tarrant County, TX IDC Weekly VRDNs (Holden Business Forms)/
(Norwest Bank Minnesota, N.A. LOC) 6,000,000
11,300,000 Texas State Public Finance Authority (Series 1993A), 3.50% CP
(Texas
State), Mandatory Tender 6/8/1998 11,300,000
44,000,000 Texas State (Series A), 4.75% TRANs, 8/31/1998 44,162,927
Total 198,092,927
UTAH--1.8%
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
21,500,000 Utah State (Series 1997A), 3.40% CP (Toronto-Dominion Bank LIQ),
Mandatory Tender 4/1/1998 21,500,000
5,000,000 Washington County, UT School District, 4.00% TANs, 6/1/1998 5,000,962
Total 33,900,962
VIRGINIA--7.7%
6,420,000 Alexandria, VA Redevelopment and Housing Authority
(Series 1996A) Weekly VRDNs (Glebe Park Apartments Project)/
(Kredietbank N.V., Brussels LOC) 6,420,000
2,500,000 Arlington County, VA Weekly VRDNs (Ballston Public Parking)/
(Citibank N.A., New York LOC) 2,500,000
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, 3.50% CP (Virginia Electric Power
Co.),
Mandatory Tender 7/15/1998 10,000,000
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
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
VIRGINIA--CONTINUED
$ 1,900,000 Fairfax County, VA IDA Weekly VRDNs (Inova Health System)/
(Credit Suisse First Boston LIQ) $ 1,900,000
10,800,000 Fairfax County, VA IDA (Series 1993B), 3.50% CP (Inova Health
System), Mandatory Tender 4/13/1998 10,800,000
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 Frederick County, VA IDA (Series 1997) Weekly VRDNs (Jouan, Inc.)/
(Wachovia Bank of NC, NA, Winston-Salem LOC) 3,500,000
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
28,500,000 James City County, VA IDA (Series 1997) Weekly VRDNs (Riverside
Health System-Patriots Colony) 28,500,000
3,000,000 Richmond, VA Redevelopment & Housing Authority (Series 1989)
Weekly VRDNs (Belmont Apartment)/(First Union National Bank,
Charlotte, NC LOC) 3,000,000
8,500,000 Richmond, VA Redevelopment & Housing Authority (Series B-1)
Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische
Landesbank Girozentrale LOC) 8,500,000
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
6,000,000 Richmond, VA Redevelopment & Housing Authority (Series B-2)
Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische
Landesbank Girozentrale LOC) 6,000,000
3,160,000 Richmond, VA Redevelopment & Housing Authority (Series B-5)
Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische
Landesbank Girozentrale LOC) 3,160,000
3,555,000 Richmond, VA Redevelopment & Housing Authority (Series B-6)
Weekly VRDNs (Richmond, VA Red Tobacco Row)/(Bayerische
Landesbank Girozentrale LOC) 3,555,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
VIRGINIA--CONTINUED
$ 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
7,500,000 Virginia Resources Authority, Water and Sewer (Series 1997)
Weekly VRDNs (Henrico County, VA)/(Crestar Bank of Virginia,
Richmond LIQ) 7,500,000
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 3,414,543
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), 3.55% CP (Virginia Electric
Power Co.), Mandatory Tender 7/15/1998 7,800,000
Total 149,284,543
WEST VIRGINIA--0.9%
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
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
WEST VIRGINIA--CONTINUED
$11,500,000 Marshall County, WV, PCR (Series 1992) Weekly VRDNs
(PPG Industries, Inc.) $ 11,500,000
Total 17,700,000
WISCONSIN--2.7%
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
5,000,000 Mequon-Thiensville, WI School District, 4.10% TRANs, 10/1/1998 5,003,597
15,430,000 Merrill Area, WI Common Public School District, 4.55% BANs,
10/1/1998 15,454,398
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 10,007,474
2,345,000 Wisconsin Health and Educational Facilities Authority (Series
1997)
Weekly VRDNs (16th Street Community Health Center, Inc.)/
(Bank One, Wisconsin, N.A. LOC) 2,345,000
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
280,000 (a) Wisconsin Housing & Economic Development Authority (Series
B), 4.05% TOBs (FSA INS)/(Corestates Bank N.A., Philadelphia,
PA LIQ), Optional Tender 6/1/1998 280,000
8,000,000 (a) Wisconsin Housing & Economic Development Authority, Trust
Receipts (Series 1997) Weekly VRDNs (Commerzbank AG,
Frankfurt LIQ) 8,000,000
Total 51,700,469
WYOMING--0.3%
1,830,000 Sweetwater County, WY IDA Weekly VRDNs (FMC Gold Co.)/
(Wachovia Bank of NC, N.A., Winston-Salem LOC) 1,830,000
</TABLE>
TAX-FREE INSTRUMENTS TRUST
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS--CONTINUED
WYOMING--CONTINUED
$ 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. and Nationsbank of
Texas, N.A. LIQs) $ 1,900,000
1,930,000 Wyoming Community Development Authority (Series 1986C), 3.80%
TOBs (First National Bank of Chicago LIQ), Optional Tender
6/1/1998 1,930,041
Total 5,660,041
OTHER--1.2%
11,009,424 (a) ABN AMRO Chicago Corp. 1997-1 LeaseTOPS Trust Weekly VRDNs
(Lasalle National Bank, Chicago LIQ)/(Lasalle National Bank,
Chicago LOC) 11,009,424
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
Total 22,184,424
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 1,915,768,888
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 19.3% 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 March 31, 1998, these securities amounted
to $374,937,865 which represents 19.4% 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
($1,930,391,638) at March 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
BANs --Bond Anticipation Notes
CAPMAC --Capital Municipal Assurance Corporation
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
IRB -- Industrial Revenue Bond
LIQ --Liquidity Agreement
LLC --Limited Liability Corporation
LOC --Letter of Credit
MBIA --Municipal Bond Investors Assurance
MERLOTs --Municipal Exempt Receipts - Liquidity Optional Tender Series
PCA --Pollution Control Authority
PCR --Pollution Control Revenue
PCFA --Pollution Control Finance Authority
PFA --Public Facility Authority
PLC --Public Limited Company
RANs --Revenue Anticipation Notes
SA --Support Agreement
SFM --Single Family Mortgage
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
TRANs --Tax and Revenue Anticipation Notes
UT --Unlimited Tax
VRDB --Variable Rate Demand Bond
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 ("S&P"), MIG-1, or MIG-2 by Moody's Investors Service, Inc., F-1+, F-1,
and F-2 by Fitch IBCA, Inc. ("Fitch") 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 March 31 1998, tier
rating percentages were as follows:
TIER RATING PERCENT BASED ON TOTAL MARKET VALUE (UNAUDITED)
FIRST TIER SECOND TIER
94.4% 5.6%
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at amortized cost and value $ 1,915,768,888
Cash 5,288,785
Income receivable 14,841,059
Receivable for shares sold 16,426,606
Prepaid expenses 122,692
Total assets 1,952,448,030
LIABILITIES:
Payable for shares redeemed $ 19,686,737
Income distribution payable 1,779,199
Accrued expenses 590,456
Total liabilities 22,056,392
NET ASSETS for 1,930,594,170 shares outstanding $ 1,930,391,638
NET ASSETS CONSIST OF:
Paid in capital $ 1,930,594,170
Undistributed net investment income 5,242
Accumulated net realized loss on investments (207,774)
Total Net Assets $ 1,930,391,638
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
INVESTMENT SHARES:
$1,646,267,395 / 1,646,335,297 shares outstanding $1.00
INSTITUTIONAL SERVICE SHARES:
$284,124,243 / 284,258,873 shares outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 68,054,262
EXPENSES:
Investment advisory fee $ 9,018,069
Administrative personnel and services fee 1,361,111
Custodian fees 90,575
Transfer and dividend disbursing agent fees and 606,995
expenses
Directors'/Trustees' fees 32,443
Auditing fees 15,548
Legal fees 16,816
Portfolio accounting fees 153,749
Shareholder services fee--Investment Shares 3,835,777
Shareholder services fee--Institutional Service 673,051
Shares
Share registration costs 131,294
Printing and postage 142,610
Insurance premiums 32,587
Taxes 11,250
Miscellaneous 15,091
Total expenses 16,136,966
Waivers --
Waiver of investment advisory fee $(1,109,430)
Waiver of shareholder services fee--Investment (1,534,311)
Shares
Waiver of shareholder services fee
--Institutional Service Shares (673,051)
Total waivers (3,316,792)
Net expenses 12,820,174
Net investment income 55,234,088
Net realized gain on investments 241,962
Change in net assets resulting from operations $ 55,476,050
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TAX-FREE INSTRUMENTS TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1998 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 55,234,088 $ 51,072,941
Net realized gain (loss) on investments ($241,962 and
$228,552 net gain, respectively, as computed for federal
income tax purposes) 241,962 228,552
Change in net assets resulting from operations 55,476,050 51,301,493
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income
Investment Shares (46,640,752) (41,768,570)
Institutional Service Shares (8,593,336) (9,304,371)
Change in net assets resulting from distributions
to shareholders (55,234,088) (51,072,941)
SHARE TRANSACTIONS--
Proceeds from sale of shares 5,300,217,398 4,986,838,234
Net asset value of shares issued to shareholders in payment
of distributions declared 46,548,654 42,372,256
Cost of shares redeemed (5,171,480,575) (5,044,423,524)
Change in net assets resulting from share transactions 175,285,477 (15,213,034)
Change in net assets 175,527,439 (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) $ 1,930,391,638 $ 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>
YEAR ENDED MARCH 31,
1998 1997 1996 1995 1994
<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 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS
Distributions from net investment (0.03) (0.03) (0.03) (0.03) (0.02)
income
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN(A) 3.10% 2.92% 3.32% 2.70% 2.01%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.73% 0.71% 0.71% 0.70% 0.61%
Net investment income 3.04% 2.88% 3.27% 2.66% 2.00%
Expense waiver/reimbursement(b) 0.16% 0.18% 0.24% 0.17% 0.14%
SUPPLEMENTAL DATA
Net assets, end of period (000 $1,646,267 $1,506,918 $1,465,333 $1,277,894 $1,327,506
omitted)
</TABLE>
(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>
YEAR ENDED MARCH 31,
1998 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 0.03 0.03 0.03 0.03 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (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
TOTAL RETURN(B) 3.25% 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 3.19% 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) $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
MARCH 31, 1998
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'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 March 31, 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 "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 March 31, 1998 is as follows:
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Jefferson County, AL, Trust Receipts 2/19/1998 $ 6,400,000
Madison, AL IDA, (Series A) 7/31/1996 900,000
California Educational Facilities Authority 2/20/1998 8,000,000
California Public Capital Improvements
Financing Authority 3/18/1998 - 4/2/1998 13,990,000
Northern California Transmission Agency 2/19/1998 6,100,000
Colorado Municipal Securities Trust
(Series 1996B) 9/12/1997 3,375,000
Denver (City & County), CO 2/12/1998 41,645,000
Thornton, CO, Multifamily Housing 10/4/1995 - 10/19/1995 5,365,000
Clipper Connecticut Tax Exempt Trust 10/31/1997 489,400
Connecticut State HFA, PT-1003 7/18/1997 4,990,000
Chicago, IL Public Building Commission
(Series 1997) 6/30/1997 - 7/1/1997 17,100,000
Illinois Health Facilities Authority
(Series 1989A) 2/27/1998 - 3/19/1998 19,400,000
Metropolitan Pier & Exposition Authority, IL 2/13/1998 12,200,000
Clipper Tax Exempt Trust 2/12/1998 17,755,594
Massachusetts Turnpike Authority 2/10/1998 2,215,000
Dakota County, MN Housing
& Redevelopment Authority 3/20/1998 1,345,000
Minneapolis/St. Paul, MN Housing Finance
Board 2/2/1998 881,000
Douglas County, NE Industrial Development 11/22/1994 1,110,000
New Jersey EDA 12/28/1992 162,447
New Jersey Housing & Mortgage Financing
Authority 2/23/1998 9,995,000
New Jersey State Transportation Trust Fund
Agency 2/17/1998 5,000,000
</TABLE>
<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C>
Metropolitan Transportation Authority,
New York, Commuter Facilities 8/29/1997 $ 8,815,000
Metropolitan Transportation Authority,
New York 6/12/1997 13,000,000
New York City Municipal Water Finance
Authority 10/16/1997 - 10/22/1997 7,090,000
New York City, NY (PA-156) 12/30/1997 7,000,000
New York State Environmental Facilities
Corp. 10/30/1997 7,000,000
VRDC/IVRC Trust (Series 1992A) 2/18/1998 - 3/19/1998 15,000,000
VRDC/IVRC Trust (Series 1993G) 12/24/1997 6,500,000
Martin County, NC IFA, (Series 1993) 11/28/1997 - 3/19/1998 20,000,000
NCNB Pooled Tax-Exempt Trust
(Series 1990A) 1/3/1992 500,000
NCNB Pooled Tax-Exempt Trust
(Series 1990B) 11/29/1990 2,700,000
North Carolina Eastern Municipal Power
Agency PA-171 3/23/1998 6,060,000
North Carolina Eastern Municipal Power
Agency PT-132 10/2/1997 8,000,000
Fargo, ND IDRB (Series 1994) 6/26/1995 2,470,000
ABN AMRO Chicago Corp. 1997-1 Lease
TOPS Trust 12/30/1997 - 3/4/1998 11,009,424
Tulsa, OK International Airport 3/31/1997 6,100,000
Pennsylvania EDFA (Series 1996 E) 11/13/1996 - 2/4/1998 2,500,000
South Dakota Housing Development
Authority, CDC Municipal Products, Inc. 8/22/1996 11,585,000
South Dakota Housing Development
Authority 9/19/1996 8,115,000
Tennessee Housing Development Agency 8/29/1997 7,995,000
Harris County, TX HFDC 9/24/1997 - 12/26/1997 10,000,000
Southeast Texas Housing Finance Corp. 3/25/1998 10,000,000
Henrico County, VA IDA 5/14/1997 16,800,000
Wisconsin Housing & Economic
Development Authority (Series B) 2/27/1998 280,000
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 March 31, 1998, capital paid-in aggregated $1,930,594,170.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
INVESTMENT SHARES 1998 1997
<S> <C> <C>
Shares sold 4,451,502,443 4,067,609,898
Shares issued to shareholders in payment of 45,566,902 40,667,650
distributions declared
Shares redeemed (4,357,926,684) (4,066,883,584)
Net change resulting from Investment Share 139,142,661 41,393,964
transactions
<CAPTION>
YEAR ENDED MARCH 31
INSTITUTIONAL SERVICE SHARES 1998 1997
<S> <C> <C>
Shares sold 848,714,955 919,228,336
Shares issued to shareholders in payment of distributions 981,752 1,704,606
declared
Shares redeemed (813,553,891) (977,539,940)
Net change resulting from Institutional Service Share
transactions 36,142,816 (56,606,998)
Net change resulting from share transactions 175,285,477 (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 March 31, 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 $3,382,957,312 and $3,465,804,000, respectively.
GENERAL -- Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
YEAR 2000 ISSUE -- 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.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of
TAX-FREE INSTRUMENTS TRUST:
We have audited the accompanying statement of assets and liabilities of Tax-Free
Instruments Trust (a Massachusetts business trust), including the schedule of
portfolio investments, as of March 31, 1998, and the related statement of
operations for the year then ended, and the statement of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the periods presented. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Tax-Free Instruments Trust as of March 31, 1998, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
May 14, 1998
DIRECTORS
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
William J. Copeland
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Peter E. Madden
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
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
1-800-341-7400
www.federatedinvestors.com
Cusip 876924101
Cusip 876924200
8042604 (5/98)
