[Graphic]
GLEN R. JOHNSON
President
Tax-Free Instruments Trust
President's Message
Dear Shareholder:
Tax-Free Instruments Trust was created in 1981, and I am pleased to present its
17th Semi-Annual Report. This report covers the first half of the trust's fiscal
year, which is the six-month period from April 1, 1999 through September 30,
1999. It begins with an interview with the trust's portfolio manager, Jeff A.
Kozemchak, Senior Vice President of Federated Investment Management Company.
Following his discussion are two additional items of shareholder interest. First
is a complete listing of the trust's holdings, and second is a publication of
the trust's financial statements.
Tax-Free Instruments Trust keeps your cash pursuing daily tax-free income 1 from
a portfolio of approximately 250 short-term money market securities issued by
municipalities across the U.S. In addition, the trust is managed to keep the
value of your principal stable, while giving you daily access to your invested
cash.2 It has accomplished this goal since its inception.
Tax-free dividends paid to shareholders during the six-month reporting period
totaled $0.01 per share for both Investment Shares and Institutional Service
Shares. Net assets reached approximately $1.9 billion on September 30, 1999.
Thank you for keeping your cash working through the daily, tax-free earning
power of Tax-Free Instruments Trust. As always, we welcome your comments and
suggestions.
Sincerely,
[Graphic]
Glen R. Johnson
President
November 15, 1999
1 Income may be subject to the federal alternative minimum tax and state and
local taxes.
2 An investment in the trust is neither insured nor 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.
[Graphic]
JEFF A. KOZEMCHAK, CFA
Senior Vice President
Federated Investment Management Company
Investment Review
WHAT IS YOUR ANALYSIS OF THE RISING INTEREST RATE ENVIRONMENT DURING THE
REPORTING PERIOD, AND ITS EFFECT ON THE SHORT-TERM MUNICIPAL MARKET?
The economy entered 1999 with considerable strength, and lingering fears about
the economic crises overseas were replaced by concerns that robust economic
growth would ignite inflationary pressures. First quarter U.S. gross domestic
product ("GDP") was 4.30%, driven by consumer demand and housing. The second
quarter of 1999 brought continued evidence of growth that the market and the
Federal Reserve Board (the "Fed") could no longer ignore. In spite of a benign
inflationary picture, interest rates rose across the yield curve, as
expectations mounted that the Fed would tighten monetary policy due to growth
that exceeded traditional measures of non- inflationary potential. The Fed
issued commentary that reinforced this belief, even though it acknowledged that
productivity gains continued to rein in inflationary pressures. By the time Fed
Chairman Greenspan testified before the Joint Economic Committee in June 1999,
market expectations reflected the inevitable near-term tightening and
anticipated additional tightenings. As a result, when the Fed opted to tighten
by 25 basis points on June 30, 1999, but announced a neutral inter-meeting
policy stance, the market took this as a sign that additional tightenings may
not be forthcoming. In July, however, Chairman Greenspan indicated in his
Humphrey Hawkins testimony before Congress, that the Fed was prepared to
continue to act preemptively against the threat of inflation. The Fed did indeed
act in late August by raising the Fed Funds Target rate by an additional 25
basis points to bring it up to 5.25%. In September 1999, labor market
constraints remained a concern of the Fed, reinforcing the belief that an
additional tightening could occur as early as mid-November.
Interest rates in tax-exempt money markets over the period were influenced by
the two Fed tightenings as well as the expectation of a future tightening.
Supply and demand factors also played a large role in the absolute level of
interest rates, as demand was rather weak during the income tax payment season
in April 1999 and rather strong in early June and July 1999. The supply of
fixed-rate notes improved in June and July as the summer note issuance season
began.
Yields on variable rate demand notes ("VRDN"), which comprise over 65% of the
trust's assets, started the reporting period at a low of 2.80%, but corrected
rather quickly and moved up over 4.00% in late April 1999, due to net
redemptions in the money markets as investors made record income tax payments.
From May through August 1999, VRDN yields remained range bound between 3.00% and
3.50% as demand stabilized and supply became more plentiful. In September 1999,
net redemption activity once again prompted VRDN selling, pushing rates as high
as 3.85% by the end of the reporting period.
WHAT WERE YOUR STRATEGIES FOR TAX-FREE INSTRUMENTS TRUST DURING THE SIX-MONTH
REPORTING PERIOD ENDED SEPTEMBER 30, 1999?
Early in the reporting period, we maintained a 35-40 day average maturity target
range, which was consistent with our expectations for tighter monetary policy
for most of the reporting period. In June 1999, new issuance of fixed-rate notes
began, but at levels we deemed unattractive or too low. We decided to wait until
August 1999, after interest rates rose over the summer, to extend the average
maturity of the trust and lock-in more attractive yields.
HOW HAS THE TRUST PERFORMED OVER THE REPORTING PERIOD FROM A
YIELD PERSPECTIVE?
The 7-day net yield 1 for the Institutional Service Shares on September 30, 1999
was 3.22% compared to 2.62% six months earlier. The latest yield was the
equivalent of a 5.33% taxable yield for investors in the highest federal tax
bracket.2
For the Investment Shares, the 7-day net yield on September 30, 1999 was 3.07%
compared to 2.47% six months earlier. This latest yield was equivalent to a
5.08% taxable yield for investors in the highest federal tax bracket.
AS WE MOVE TOWARD THE END OF 1999, EXPECTATIONS ARE MIXED FOR FURTHER
TIGHTENINGS, OR INCREASES IN RATES, BY THE FED. WHAT DO YOU SEE AHEAD FOR
SHORT-TERM RATES?
We believe that further tightenings are likely with a strong chance of one more
this year. If economic data continues to show strong growth combined with labor
market constraints and increasing inflationary signals, then it is likely that
the Fed will move to increase rates to moderate domestic demand. With this
outlook in mind, the average maturity of the trust will continue to be managed
in accordance with our expectations of a continued Fed bias toward more
restrictive monetary policy (i.e., higher rates). Therefore, we will continue to
keep the average maturity targeted in a neutral range while evaluating
attractive investment opportunities to enhance the trust's yield. We will
continue to watch market developments with great interest in order to best serve
our municipal clients.
1 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.
2 Performance quoted represents past performance and is no guarantee of future
results. Yields will vary. Yields quoted for money market funds most closely
reflect the trust's current earnings.
Portfolio of Investments
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
99.9%
ALABAMA-1.8%
$ 6,000,000 Homewood, AL IDA Weekly
VRDNs (Mountain Brook Inn
(Homewood AL))/(SouthTrust
Bank of Alabama,
Birmingham LOC) $ 6,000,000
10,000,000 Hoover, AL Board of
Education, (Series 1999C),
3.80% BANs, 8/1/2000 10,000,000
12,000,000 Jefferson County, AL,
(Series A), 3.45% Bonds
(Bayerische Landesbank
Girozentrale LOC),
10/1/1999 12,000,000
665,000 Madison, AL IDA, (Series A)
Weekly VRDNs (Executive
Inn)/(AmSouth Bank N.A.,
Birmingham LOC) 665,000
4,295,000 Stevenson, AL IDB,
Industrial Revenue Bonds
(Series 1996-A) Weekly
VRDNs (Unitog Co.)/(UMB
Bank, N.A. LOC) 4,295,000
TOTAL 32,960,000
ALASKA-0.3%
5,440,000 Alaska State Housing
Finance Corp., PT-37 Daily
VRDNs (Merrill Lynch
Capital Services, Inc.
LIQ) 5,440,000
ARIZONA-1.4%
5,985,000 Maricopa County, AZ, IDA
(Series 1984) Weekly VRDNs
(Gannett Co., Inc.) 5,985,000
2,950,000 Maricopa County, AZ, IDA,
(Series 1999A) Daily VRDNs
(Orangewood CCRC)/(Banque
Nationale de Paris LOC) 2,950,000
1,920,000 Phoenix, AZ Civic
Improvement Corp., PA-405
(Series 1998A) Weekly
VRDNs (FSA INS)/(Merrill
Lynch Capital Services,
Inc. LIQ) 1,920,000
2,300,000 Phoenix, AZ IDA, (Series
1984) Weekly VRDNs (Del Mar
Terrace Apartments)/(Bank
of America, N.A. LOC) 2,300,000
1,980,000 Phoenix, AZ IDA, PT-1032
Weekly VRDNs (GNMA
COL)/(Merrill Lynch
Capital Services, Inc.
LIQ) 1,980,000
2,425,000 Phoenix, AZ, PA-236 Weekly
VRDNs (Merrill Lynch
Capital Services, Inc.
LIQ) 2,425,000
1,115,000 Pima County, AZ IDA Weekly VRDNs (A & P Investments)/(Bank One,
Arizona N.A. LOC) 1,115,000
5,203,000 Pima County, AZ IDA Weekly
VRDNs (BJR Investments,
Inc.)/(Bank One, Arizona
N.A. LOC) 5,203,000
820,000 Scottsdale, AZ IDA Weekly
VRDNs (Scottsdale Memorial
Hospitals)/(AMBAC
INS)/(Credit Local de
France LIQ) 820,000
800,000 Yavapai, AZ IDA, (Series
1997B) Weekly VRDNs
(Yavapai Regional Medical
Center)/(FSA INS)/(Credit
Local de France LIQ) 800,000
TOTAL 25,498,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
ARKANSAS-0.5%
$ 9,600,000 Hope, AR, Solid Waste
Disposal Revenue Bonds
(Series 1994), 4.10% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender
10/28/1999 $ 9,600,000
CALIFORNIA-5.2%
20,000,000 ABN AMRO MuniTOPS
Certificates Trust
(California Non-AMT)
(Series 1999-7) Weekly
VRDNs (Los Angeles, CA
Unified School
District)/(MBIA INS)/(ABN
AMRO Bank N.V., Amsterdam
LIQ) 20,000,000
9,500,000 California Public Capital
Improvements Financing
Authority, Trust Receipts
(Series 1996 FR-3) Weekly
VRDNs (MBIA INS)/(Bank of
New York, New York LIQ) 9,500,000
1,000,000 California State, Floater
Certificates (Series 1998-
55) Weekly VRDNs (FGIC
INS)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 1,000,000
31,900,000 Los Angeles, CA Unified
School District, (Series
FR/RI-A19) Weekly VRDNs
(Bank of New York, New York
LIQ) 31,900,000
16,500,000 Monterey Peninsula, CA
Water Management District
Weekly VRDNs (Wastewater
Reclaimation)/(Bank of
America, N.A. LOC) 16,500,000
16,485,666 PBCC LeaseTOPS Trust
(California Non-AMT)
(Series 1998-1) Weekly
VRDNs (AMBAC INS)/(Pitney
Bowes Credit Corp. LIQ) 16,485,666
1,000,000 San Francisco, CA City &
County Airport Commission,
Floater Certificates
(Series 1998-31) Weekly
VRDNs (FGIC INS)/(Bank of
America, N.A. LIQ) 1,000,000
TOTAL 96,385,666
COLORADO-2.2%
1,815,000 Colorado Health Facilities
Authority, (Series 1998F)
Weekly VRDNs
(Developmental
Disabilities Center)/(Bank
One, Colorado LOC) 1,815,000
2,960,000 Colorado Health Facilities
Authority, (Series 1998B)
Weekly VRDNs
(Developmental Pathways,
Inc.)/(Bank One, Colorado
LOC) 2,960,000
2,915,000 Colorado Health Facilities
Authority, (Series 1998D)
Weekly VRDNs (North Metro
Community Servies,
Inc.)/(Bank One, Colorado
LOC) 2,915,000
300,000 Colorado Health Facilities
Authority, (Series 1998E)
Weekly VRDNs (Arkansas
Valley)/(Bank One,
Colorado LOC) 300,000
760,000 Colorado Health Facilities
Authority, (Series 1998H)
Weekly VRDNs (Community
Partnership for Child
Development)/(U.S. Bank,
N.A. Minneapolis LOC) 760,000
2,100,000 Colorado Postsecondary
Educational Facilities,
(Series 1997) Weekly VRDNs
(Waldorf School
Association of Boulder,
Inc. - Shining Mountain
Waldorf School)/(KeyBank,
N.A. LOC) 2,100,000
3,000,000 Colorado Springs, CO Utility System, IDRB's (Series 1996)
Weekly VRDNs (Micro Metals, Inc.)/(U.S. Bank, N.A.
Minneapolis LOC) 3,000,000
16,670,000 1 Denver, CO City & County
Airport Authority, CDC
Class A Certificates,
(Series 1997K), 3.45% TOBs
(MBIA INS)/(CDC Municipal
Products, Inc. LIQ),
Optional Tender 5/11/2000 16,670,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
COLORADO-CONTINUED
$ 4,605,000 Mesa County, CO, (Series
1996) Weekly VRDNs (3D
Systems Corp.)/(Norwest
Bank Minnesota, N.A. LOC) $ 4,605,000
5,365,000 Thornton, CO, Multifamily
Housing Refunding Revenue
Bonds (Series 1989A)
Weekly VRDNs (Quail Ridge
Project)/(General Electric
Capital Corp. LOC) 5,365,000
TOTAL 40,490,000
CONNECTICUT-3.5%
3,020,000 Connecticut Development
Authority Health Care
Revenue Weekly VRDNs
(Corporation for
Independent Living)/(Chase
Manhattan Bank N.A.,
New York LOC) 3,020,000
8,400,000 Connecticut Development
Authority Health Care
Revenue Weekly VRDNs
(Corporation for
Independent
Living)/(Credit Local de
France LOC) 8,400,000
1,500,000 Connecticut Development
Authority, (Series 1997A) Weekly VRDNs (Bradley Airport Hotel
Project)/(KBC Bank N.V.
LOC) 1,500,000
12,100,000 Connecticut State HEFA,
(Series B) Weekly VRDNs
(Edgehill)/(Paribas, Paris
LOC) 12,100,000
35,275,000 Connecticut State, PUTTERs
(Series 110) Weekly VRDNs
(FGIC INS)/(J.P. Morgan &
Co., Inc. LIQ) 35,275,000
4,625,000 New Britain, CT, (Series
1999) Weekly VRDNs (AMBAC
INS)/(Bank of Nova Scotia,
Toronto LIQ) 4,625,000
TOTAL 64,920,000
FLORIDA-0.2%
140,000 Highlands County, FL
Health Facilities,
Variable Rate Demand
Revenue Bonds (Series
1996A) Weekly VRDNs
(Adventist Health
System)/(SunTrust Bank,
Central Florida LOC) 140,000
4,000,000 Pinellas County, FL Health
Facility Authority Daily
VRDNs (Chase Manhattan
Bank N.A., New York LOC) 4,000,000
TOTAL 4,140,000
GEORGIA-6.8%
2,900,000 Albany-Dougherty, GA
Payroll Development
Authority Weekly VRDNs
(Flint River Services,
Inc.)/(Columbus Bank and
Trust Co., GA LOC) 2,900,000
11,665,000 Bibb County, GA
Development Authority,
(Series 1991IR-1) Weekly
VRDNs (Temple-Inland,
Inc.) 11,665,000
7,000,000 Burke County, GA
Development Authority, PCR
Bonds (Series 1998A),
3.50% CP (Oglethorpe Power
Corp. Vogtle
Project)/(AMBAC
INS)/(Rabobank Nederland,
Utrecht LIQ), Mandatory
Tender 1/25/2000 7,000,000
9,675,000 Cobb County, GA IDA,
(Series 1997) Weekly VRDNs
(Wyndham Gardens)/(Bankers
Trust Co., New York LOC) 9,675,000
5,830,000 Columbus, GA IDA
Industrial & Port
Development Commission,
(Series 1992) Weekly VRDNs
(Maine Street Village
Partnership)/(Columbus
Bank and Trust Co., GA LOC) 5,830,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
GEORGIA-CONTINUED
$ 3,925,000 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) $ 3,925,000
5,000,000 Crisp County, GA
Development Authority,
Solid Waste Disposal
Revenue Bonds (Series A),
3.75% TOBs (International
Paper Co.), Optional
Tender 3/1/2000 5,000,000
7,000,000 Dalton, GA, 3.64% TANs,
12/31/1999 7,004,107
12,000,000 De Kalb County, GA School
District, (Series 1999),
2.875% TANs, 12/30/1999 12,000,000
325,000 Douglas County, GA School
District, 3.10% Bonds,
1/1/2000 325,000
4,000,000 Fulco, GA Hospital
Authority, (Series 1999)
Weekly VRDNs (Piedmont
Hospital)/(SunTrust Bank,
Atlanta LOC) 4,000,000
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
2,435 Georgia Municipal
Association Weekly VRDNs
(MBIA INS)/(Credit Suisse
First Boston LIQ) 2,435
12,000,000 Glynn County, GA Schools,
3.48% TANs, 12/31/1999 12,005,247
17,500,000 Gwinnett County, GA Water
and Sewer Authority,
Floater Certificates
(Series 1998-70) Weekly
VRDNs (Gwinnett County,
GA)/(Morgan Stanley, Dean
Witter Municipal Funding,
Inc. LIQ) 17,500,000
10,000,000 Rabun County, GA
Development Authority,
(Series 1999) Weekly VRDNs
(Rabun Gap-Nacoochee,
Inc.)/(SunTrust Bank,
Atlanta LOC) 10,000,000
2,000,000 Rome, GA, 3.25% TANs,
12/31/1999 2,000,386
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
7,000,000 Savannah, GA EDA, (Series
1995A) Weekly VRDNs (Home
Depot, Inc.) 7,000,000
3,000,000 Whitfield County, GA
School System, 3.60% TANs,
12/31/1999 3,002,555
TOTAL 127,094,730
HAWAII-0.5%
8,800,000 Clipper Tax-Exempt Trust
(Hawaii AMT) (Series 1998-
7) Weekly VRDNs (Hawaii
Finance and Development
Corp.)/(State Street LIQ) 8,800,000
IDAHO-1.3%
25,000,000 Idaho Health Facilities
Authority, (Series 1995),
3.60% CP (Holy Cross Health
System Corp.), Mandatory
Tender 1/24/2000 25,000,000
ILLINOIS-6.1%
1,100,000 Champaign, IL, IDRB Weekly
VRDNs (Christie
Clinic)/(National City
Bank,
Indiana LOC) 1,100,000
7,100,000 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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
ILLINOIS-CONTINUED
$ 10,000,000 1 Chicago, IL, Variable Rate
Certificates (Series
1998M), 3.70% TOBs (FGIC
INS)/(Bank of America,
N.A. LIQ), Optional Tender
7/13/2000 $ 10,000,000
1,033,000 Illinois Development
Finance Authority Weekly
VRDNs (Newlywed
Food)/(Mellon Bank N.A.,
Pittsburgh LOC) 1,033,000
16,700,000 Illinois Development
Finance Authority, PCR
Daily VRDNs (Diamond Star
Motors Corp.)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 16,700,000
10,010,000 Illinois Development
Finance Authority, PT-131 (Series 1995A) Weekly VRDNs (Catholic
Health Partners Services)/(AMBAC INS)/(Merrill Lynch Capital
Services, Inc.
LIQ) 10,010,000
19,000,000 Illinois Health Facilities
Authority, Revenue Bonds
(Series 1985B) Weekly
VRDNs (OSF Health Care
Systems)/(Bank of America,
N.A. LOC) 19,000,000
11,200,000 Illinois Health Facilities
Authority, Revenue
Refunding Bonds (Series
1997B) Weekly VRDNs
(Advocate Health Care
Network)/(Bank One, N.A.,
Harris Trust & Savings
Bank, Chicago and Northern
Trust Co., Chicago, IL
LIQs) 11,200,000
2,850,000 Mendota, IL, IDRB (Series
1995) Weekly VRDNs
(Minnesota Diversified
Products, Inc.)/(Norwest
Bank Minnesota, N.A. LOC) 2,850,000
29,980,000 Metropolitan Pier &
Exposition Authority, IL,
PT-1079 Weekly VRDNs
(McCormick Place)/(FGIC
INS)/(Bank of America,
N.A. LIQ) 29,980,000
1,600,000 Naperville, IL, Economic
Development Revenue
Refunding Bonds (Series
1994) Weekly VRDNs
(Independence Village
Associates, Ltd.
Project)/(U.S. Bank, N.A.
Minneapolis LOC) 1,600,000
700,000 Oakbrook Terrace, IL, IDRB
(Series 1993) Weekly VRDNs
(La Quinta Inns,
Inc.)/(Bank of America,
N.A. LOC) 700,000
2,000,000 Paxton, IL, (Series 1999)
Weekly VRDNs (Concrete
Technology, Inc.)/(Fifth
Third Bank, Cincinnati
LOC) 2,000,000
TOTAL 113,273,000
INDIANA-1.9%
7,500,000 Elkhart, IN, Community
Schools, 3.25% TANs,
12/31/1999 7,501,812
2,670,000 Hamilton County, IN, EDRB
(Series 1995) Weekly VRDNs
(Fabcon L.L.C.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,670,000
4,500,000 Jasper County, IN, (Series
1998A) Weekly VRDNs (Oak
Grove Christian Retirement
Village, Inc.)/(National
City Bank,
Michigan/Illinois LOC) 4,500,000
2,180,000 Kendallville, IN, IDRB
(Series 1995) Weekly VRDNs
(Rivnut Real Estate, Ltd.
Project)/(National City
Bank, Ohio LOC) 2,180,000
7,000,000 Richmond, IN EDA Weekly
VRDNs (Gannett Co., Inc.) 7,000,000
5,000,000 Spencer County, IN,
(Series 1998) Weekly VRDNs
(American Iron Oxide Co.
Project)/(Bank of Tokyo-
Mitsubishi Ltd. LOC) 5,000,000
6,025,000 Winona Lake, IN, (Series
1999) Weekly VRDNs (Grace
College)/
(KeyBank, N.A. LOC) 6,025,000
TOTAL 34,876,812
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
IOWA-0.3%
$ 2,625,000 Des Moines, IA, IDRB
(Series 1994) Weekly VRDNs
(Printer, Inc.)/(Federal
Home Loan Bank of Des
Moines LOC) $ 2,625,000
3,850,000 Iowa Finance Authority,
(Series 1996) Weekly VRDNs
(Wittern Realty, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 3,850,000
TOTAL 6,475,000
KANSAS-0.1%
1,900,000 Olathe, KS, Industrial
Revenue Bonds (Series
1995) Weekly VRDNs (Garmin
International, Inc.
Project)/(Bank of America,
N.A. LOC) 1,900,000
KENTUCKY-2.4%
5,340,000 Henderson County, KY,
(Series 1996) Weekly VRDNs
(Audubon Metals LLC
Project)/(Harris Trust &
Savings Bank, Chicago LOC) 5,340,000
3,960,000 Kentucky EDFA, (Series
1999B) Weekly VRDNs
(Baptist Healthcare
System)/(MBIA INS)/(Bank
One, Michigan LIQ) 3,960,000
34,000,000 Owensboro, KY, (Series
1996) Weekly VRDNs
(Owensboro Mercy Health
System, Inc.
Project)/(Bank of America,
N.A. LOC) 34,000,000
1,800,000 Owensboro, KY, Limited
Obligation Revenue Bonds,
3.65% TOBs (Dart
Polymers)/(Bank One,
Michigan LOC), Optional
Tender 12/1/1999 1,800,000
TOTAL 45,100,000
LOUISIANA-0.2%
3,000,000 Lake Charles, LA Harbor &
Terminal District, Revenue
Bonds (Series 1995A)
Weekly VRDNs (Polycom-
Huntsman, Inc.
Project)/(National City,
Pennsylvania LOC) 3,000,000
MAINE-0.4%
6,900,000 Jay, ME, Solid Waste
Disposal Revenue Bonds,
3.95% TOBs (International
Paper Co.), Optional
Tender 6/1/2000 6,900,000
MARYLAND-0.6%
7,215,000 Maryland State Community
Development
Administration, PA-170,
3.55% TOBs (Merrill Lynch
Capital Services, Inc.
LIQ), Optional Tender
2/10/2000 7,215,000
1,900,000 Maryland State Energy
Financing Administration,
Annual Tender Solid Waste
Disposal Revenue Refunding
Bonds, 4.35% TOBs (Nevamar
Corp.)/(International
Paper Co. GTD), Optional
Tender 9/1/2000 1,900,000
1,225,000 Maryland State IDFA,
(Series 1991) Weekly VRDNs
(Maryland Academy of
Sciences Facility)/(Bank
of America, N.A. LOC) 1,225,000
TOTAL 10,340,000
MASSACHUSETTS-5.7%
11,300,000 Commonwealth of
Massachusetts, (Series
1997B) Weekly VRDNs
(Landesbank Hessen-
Thueringen, Frankfurt LIQ) 11,300,000
21,000,000 Massachusetts Bay Transit
Authority, (Series 1999)
Weekly VRDNs (Commerzbank
AG, Frankfurt LIQ) 21,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
MASSACHUSETTS-CONTINUED
$ 16,500,000 Massachusetts Bay Transit
Authority, (Series 1999
FR/RI-A36) Weekly VRDNs
(Bank of New York, New York
LIQ) $ 16,500,000
15,400,000 Massachusetts HEFA,
(Series A) Weekly VRDNs
(Brigham & Women's
Hospital)/(Landesbank
Hessen-Thueringen,
Frankfurt LOC) 15,400,000
14,000,000 Massachusetts HEFA,
(Series F) Weekly VRDNs
(Children's Hospital of
Boston)/(Landesbank
Hessen-Thueringen,
Frankfurt LIQ) 14,000,000
13,000,000 Massachusetts Municipal
Wholesale Electric Co.,
Power Supply System
Revenue Bonds (Series
1994C) Weekly VRDNs
(Canadian Imperial Bank of
Commerce LOC) 13,000,000
15,800,000 Massachusetts Water
Resources Authority,
(Series 1999B) Weekly
VRDNs (Landesbank Hessen-
Thueringen, Frankfurt LOC) 15,800,000
TOTAL 107,000,000
MINNESOTA-2.0%
10,400,000 Becker, MN, PCR (Series 1992A), 3.60% CP (Northern States Power
Co.),
Mandatory Tender 12/8/1999 10,400,000
7,500,000 Bloomington, MN, Highland
Park Apartments (Series
1999), 4.74375% TOBs
(Bayerische Landesbank
Girozentrale), Mandatory
Tender 5/1/2000 7,500,000
4,100,000 Coon Rapids, MN Hospital
Authority, (Series 1985)
Weekly VRDNs (Health
Central System)/(Norwest
Bank Minnesota, N.A. LOC) 4,100,000
1,745,000 Coon Rapids, MN, (Series
1998) Weekly VRDNs (Gerald
R. Sizer)/(Norwest Bank
Minnesota, N.A. LOC) 1,745,000
6,415,000 Minnesota Public
Facilities Authority,
Morgan Stanley Floater
Certificate (Series 1998-
73) Weekly VRDNs (Morgan
Stanley, Dean Witter
Municipal Funding,
Inc. LIQ) 6,415,000
8,100,000 Southern Minnesota
Municipal Power Agency,
3.60% CP, Mandatory Tender
1/28/2000 8,100,000
TOTAL 38,260,000
MISSOURI-0.2%
3,720,000 Missouri Development
Finance Board, (Series
1995) Weekly VRDNs (Wilson
Trailer Sales, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 3,720,000
MULTISTATE-5.2% 10,308,947 ABN AMRO Chicago Corp.
(Series 1997-1) LeaseTOPS
Trust Weekly VRDNs
(LaSalle National Bank,
Chicago LIQ)/(LaSalle
National Bank, Chicago
LOC) 10,308,947
10,850,000 Banc One Capital Higher
Education Tax-Exempt
Income Trust, (Series 1)
Weekly VRDNs (Bank One,
Indiana, N.A. LOC) 10,850,000
7,000,000 Charter Mac Floater
Certificates Trust I,
(First Tranche) Weekly
VRDNs (MBIA
INS)/(Bayerische
Landesbank Girozentrale,
Commerzbank AG, Frankfurt
and Credit Communal de
Belgique, Brussles LIQs) 7,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
MULTISTATE-CONTINUED
$ 15,000,000 Charter Mac Floater
Certificates Trust I,
(Second Tranche) Weekly
VRDNs (MBIA
INS)/(Bayerische
Landesbank Girozentrale,
Commerzbank AG, Frankfurt
and Credit Communal de
Belgique, Brussles LIQs) $ 15,000,000
19,000,000 Charter Mac Floater
Certificates Trust I,
(Third Tranche) Weekly
VRDNs (MBIA
INS)/(Bayerische
Landesbank Girozentrale,
Commerzbank AG, Frankfurt
and Credit Communal de
Belgique, Brussles LIQs) 19,000,000
17,707,000 Clipper Tax-Exempt Trust
(AMT Multistate), (Series
A) Weekly VRDNs
(State Street LIQ) 17,707,000
17,119,000 Clipper Tax-Exempt Trust
(Non-AMT Multistate),
(Series A) Weekly VRDNs
(State Street LIQ) 17,119,000
TOTAL 96,984,947
NEBRASKA-0.4%
1,520,000 Douglas County, NE Weekly
VRDNs (Majors Plastics,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 1,520,000
4,650,000 Douglas County, NE, IDRB
(Series 1997) Weekly VRDNs
(American Laboratories,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 4,650,000
1,060,000 Douglas County, NE,
Industrial Development
Revenue Refunding Bonds
(Series 1994) Weekly VRDNs
(Omaha Fixture
Manufacturing
Project)/(Bank One,
Michigan LOC) 1,060,000
TOTAL 7,230,000
NEVADA-0.3%
2,985,000 Reno, NV, (Series 1997)
Weekly VRDNs (Drill
Systems, Inc.)/(Toronto-
Dominion Bank LOC) 2,985,000
1,900,000 Sparks, NV, IDRB (Series
1996) Weekly VRDNs (The
Antioch Publishing Co.
Project)/(National City
Bank, Ohio LOC) 1,900,000
TOTAL 4,885,000
NEW HAMPSHIRE-0.7%
14,000,000 Dover, NH, 4.10% BANs,
12/28/1999 14,013,248
NEW JERSEY-5.6%
4,000,000 Camden County, NJ Improvement Authority, (Series 1996) Weekly
VRDNs (Parkview Redevelopment Housing Project)/(General
Electric Capital Corp.
LOC) 4,000,000
3,467,000 Clipper Tax-Exempt Trust
(New Jersey Non-AMT)
(Series 1998-6) Weekly
VRDNs (New Jersey Housing &
Mortgage Financing
Authority)/(MBIA
INS)/(State
Street LIQ) 3,467,000
17,900,000 New Jersey EDA Weekly VRDNs
(Center-For-Aging -
Applewood Estates)/(Fleet
National Bank,
Springfield, MA LOC) 17,900,000
6,650,000 New Jersey EDA Weekly VRDNs
(YM-YWHA of Bergen County,
NJ)/(Bank of New York, New
York LOC) 6,650,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
NEW JERSEY-CONTINUED
$ 3,975,000 New Jersey EDA, (Series
1996) Weekly VRDNs (R.
Realty Co.)/(First Union
National Bank, Charlotte,
NC LOC) $ 3,975,000
1,925,000 New Jersey EDA, (Series 1998A) Weekly VRDNs (Bayshore Health
Care Center)/(KBC Bank N.V.
LOC) 1,925,000
5,000,000 New Jersey EDA, (Series 1998B) Weekly VRDNs (Jewish Home at
Rockleigh)/(PNC Bank, N.A.
LOC) 5,000,000
3,000,000 New Jersey EDA, (Series 1999) Weekly VRDNs (VOADV Property,
Inc.)/(Commerce Bank, N.A., Cherry Hill, NJ
LOC) 3,000,000
9,995,000 1 New Jersey Housing &
Mortgage Financing
Authority, PT-159, 3.70%
TOBs (MBIA
INS)/(Commerzbank AG,
Frankfurt LIQ), Optional
Tender 2/10/2000 9,995,000
26,105,000 New Jersey State
Transportation Trust Fund
Agency, Trust TOCs (Series
1999-2) Weekly VRDNs (FSA
INS)/(Chase Manhattan Bank
N.A., New York LIQ) 26,105,000
12,000,000 Trenton, NJ, 3.25% BANs,
3/10/2000 12,005,068
7,640,000 Trenton, NJ, 4.00% BANs,
10/21/1999 7,643,324
3,509,500 West Amwell Township, NJ,
3.40% BANs, 3/24/2000 3,512,747
TOTAL 105,178,139
NEW MEXICO-1.5%
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
19,200,000 1 Farmington, NM, PT-133,
3.25% TOBs (Southern
California Edison
Co.)/(MBIA INS)/(Credit
Suisse First Boston LIQ),
Optional Tender 4/6/2000 19,200,000
3,900,000 Las Cruces, NM, IDRB
(Series 1994A) Weekly
VRDNs (F & A Dairy
Products, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 3,900,000
TOTAL 28,400,000
NEW YORK-13.5%
5,500,000 Amityville, NY Union Free
School District, (Series
1999), 4.00% TANs,
6/26/2000 5,515,413
4,000,000 Freeport, NY Union Free
School District, 4.00%
TANs, 6/29/2000 4,007,171
5,000,000 Long Beach, NY City School
District, 4.00% TANs,
6/29/2000 5,009,007
19,000,000 Long Island Power
Authority, PA-522 Weekly
VRDNs (Merrill Lynch
Capital Services, Inc.
LIQ)/(FSA LOC) 19,000,000
9,000,000 Metropolitan
Transportation Authority,
NY, MERLOTS (Series 1997 C-
2) Weekly VRDNs (FGIC
INS)/(First Union National
Bank, Charlotte, NC LIQ) 9,000,000
15,650,000 Metropolitan
Transportation Authority, NY, SSP29 (Series 1999) Weekly VRDNs
(FSA INS)/(Chase Manhattan Bank
N.A., New York LIQ) 15,650,000
36,500,000 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) 36,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
NEW YORK-CONTINUED
$ 11,270,000 New York City Municipal
Water Finance Authority,
Trust Receipts, (Series
1998 FR/RI-10) Weekly
VRDNs (FSA INS)/(Bank of
New York, New York LIQ) $ 11,270,000
10,000,000 New York City Municipal
Water Finance Authority,
Trust Receipts, (Series
1998 FR/RI-11) Weekly
VRDNs (FSA INS)/(Bank of
New York, New York LIQ) 10,000,000
23,000,000 New York City, NY
Transitional Finance
Authority, (1998 Subseries
A-1) Weekly VRDNs
(Commerzbank AG, Frankfurt
LIQ) 23,000,000
3,625,000 New York City, NY, Series B Daily VRDNs (FGIC INS)/(FGIC
Securities
Purchase, Inc. LIQ) 3,625,000
1,410,000 New York State Energy
Research & Development
Authority, Trust Receipts,
(Series 1998 FR/RI-9)
Weekly VRDNs (Brooklyn
Union Gas Co.)/(MBIA
INS)/(Bank of New York, New
York LIQ) 1,410,000
2,500,000 New York State HFA, Health
Facilities Revenue Bonds
PA-143 Weekly VRDNs (New
York City, NY)/(Merrill
Lynch Capital Services,
Inc. LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC) 2,500,000
4,260,000 New York State Medical Care Facilities Finance Agency, PA-89
(Series 1994C) Weekly VRDNs (FHA INS)/(Merrill Lynch Capital
Services, Inc.
LIQ) 4,260,000
5,500,000 1 New York State Thruway
Authority, PA-172, 3.80%
TOBs (Merrill Lynch
Capital Services, Inc.
LIQ)/(Merrill Lynch
Capital Services, Inc.
LOC), Optional Tender
1/27/2000 5,500,000
8,900,000 Panama, NY Central School
District, 4.00% BANs,
8/18/2000 8,924,508
9,938,000 Rochester, NY, 3.10% BANs,
10/28/1999 9,939,423
4,200,000 Salem, NY Central School
District, 3.50% BANs,
10/28/1999 4,200,600
9,700,000 Stillwater, NY Central
School District, 4.00%
BANs, 8/18/2000 9,728,752
9,950,000 Trumansburg, NY Central
School District, 3.60%
BANs, 6/15/2000 9,970,340
5,012,200 Tupper Lake, NY Central
School District, 4.00%
BANs, 7/13/2000 5,025,399
10,500,000 VRDC/IVRC Trust, (Series
1992A) Weekly VRDNs (New
York City Municipal Water
Finance Authority)/(MBIA
INS)/(Citibank N.A., New
York LIQ) 10,500,000
6,000,000 VRDC/IVRC Trust, (Series
1993B) Weekly VRDNs (Metropolitan Transportation Authority,
NY)/(AMBAC INS)/(Citibank
N.A., New York LIQ) 6,000,000
17,300,000 VRDC/IVRC Trust, (Series
1993G) Weekly VRDNs (St.
Lukes Roosevelt Hospital
Center)/(FHA INS)/(Chase
Manhattan Bank N.A., New
York LIQ) 17,300,000
13,000,000 William Floyd Union Free
School District, (Series
1999), 4.00% TANs,
6/30/2000 13,039,768
TOTAL 250,875,381
NORTH CAROLINA-6.0%
10,000,000 1 ABN AMRO MuniTOPS Certificates Trust (North Carolina Non-Amt)
(Series 1998-23), 3.30% TOBs (Mission St. Josephs Health
System)/(MBIA INS)/(ABN AMRO Bank N.V., Amsterdam LIQ),
Optional
Tender 2/23/2000 10,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
NORTH CAROLINA-CONTINUED
$ 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
20,820,000 Charlotte, NC, Floater
Certificates (Series 1998-
69) Weekly VRDNs (Morgan
Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) 20,820,000
1,000,000 Cleveland County, NC
Industrial Facilities and
Pollution Control
Financing Authority Weekly
VRDNs (PPG Industries,
Inc.) 1,000,000
17,400,000 Martin County, NC IFA,
(Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) 17,400,000
6,300,000 New Hanover County, NC PCR
Financial Authority,
(Series 1984) Weekly VRDNs
(American Hoist & Derrick
Co. Project)/(BankBoston,
N.A. LOC) 6,300,000
9,500,000 North Carolina Eastern Municipal Power Agency, PT-132 Weekly
VRDNs (MBIA INS)/(Merrill Lynch Capital Services, Inc.
LIQ) 9,500,000
5,650,000 North Carolina Educational
Facilities Finance Agency,
(Series 1990) Weekly VRDNs
(Bowman Gray School of
Medicine)/(Wachovia Bank
of NC, N.A. Winston-Salem
LOC) 5,650,000
5,000,000 1 North Carolina HFA,
Variable Rate Certificates
(Series 1998L), 3.55% TOBs
(Bank of America, N.A.
LIQ), Optional Tender
6/1/2000 5,000,000
3,300,000 North Carolina Medical
Care Commission, (Series
1996) Weekly VRDNs (North
Carolina Baptist) 3,300,000
2,500,000 North Carolina Medical
Care Commission, Revenue
Bonds (Series 1992B)
Weekly VRDNs (North
Carolina Baptist) 2,500,000
1,400,000 North Carolina Medical
Care Commission, Revenue
Bonds (Series 1993) Weekly
VRDNs (Moses H. Cone
Memorial) 1,400,000
7,500,000 North Carolina Municipal
Power Agency No. 1, (Series
A), 3.80% CP (Morgan
Guaranty Trust Co., New
York and UBS AG LOCs),
Mandatory Tender 10/8/1999 7,500,000
16,885,000 North Carolina State,
Floater Certificates
(Series 1998-38) Weekly
VRDNs (Morgan Stanley,
Dean Witter Municipal
Funding, Inc. LIQ) 16,885,000
TOTAL 111,855,000
NORTH DAKOTA-0.1%
1,635,000 Fargo, ND, IDRB (Series
1994) Weekly VRDNs (Pan-O-
Gold Baking Co.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 1,635,000
OHIO-0.2%
1,000,000 Banc One Capital Higher
Education Tax-Exempt
Income Trust, (Series 2
Certificates of Ownership)
Weekly VRDNs (Bank One,
Kentucky LOC) 1,000,000
3,000,000 Ohio State Water
Development Authority, PCR
Refunding Bonds Weekly
VRDNs (General Motors
Corp.) 3,000,000
TOTAL 4,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
OKLAHOMA-1.0%
$ 2,295,000 Claremore, OK IDA Weekly
VRDNs (Baldor Electric
Co.)/(Wachovia Bank of NC,
N.A. Winston-Salem LOC) $ 2,295,000
4,500,000 Oklahoma State Industrial
Authority, Flexible Rate
Hospital Revenue Bonds
(Series 1990B) Weekly
VRDNs (Baptist Medical
Center, OK)/(Morgan
Guaranty Trust Co., New
York LIQ) 4,500,000
11,700,000 Oklahoma State Industrial
Authority, Health System
Revenue Bonds (Series
1995A) Weekly VRDNs
(Baptist Medical Center,
OK)/(Morgan Guaranty Trust
Co., New York LIQ) 11,700,000
TOTAL 18,495,000
OREGON-1.3%
25,000,000 Oregon State, Veteran's
Welfare Bonds (Series 73G)
Weekly VRDNs (Morgan
Guaranty Trust Co., New
York LIQ) 25,000,000
PENNSYLVANIA-2.3%
22,000,000 Clinton County, PA IDA,
Solid Waste Disposal
Revenue Bonds (Series
1992A), 3.95% TOBs
(International Paper Co.),
Optional Tender 1/15/2000 22,000,000
1,765,000 Clinton County, PA
Municipal Authority,
(Series A) Weekly VRDNs
(Lock Haven Hospital)/(PNC
Bank, N.A. LOC) 1,765,000
15,000,000 Dauphin County, PA General
Authority, (Education and
Health Loan Program,
(Series 1997) Weekly VRDNs
(AMBAC INS)/(Chase
Manhattan Bank N.A., New
York LIQ) 15,000,000
1,375,000 Erie County, PA IDA, Multi
Mode Revenue Refunding
Bonds Weekly VRDNs (Corry
Manor, Inc.)/(PNC Bank,
N.A. LOC) 1,375,000
2,000,000 Montgomery County, PA IDA
Weekly VRDNs (Plymouth
Woods)/
(PNC Bank, N.A. LOC) 2,000,000
900,000 Pennsylvania EDFA, (Series
1995 E) Weekly VRDNs (Home
Nursing Agency Affiliates
Project)/(PNC Bank, N.A.
LOC) 900,000
TOTAL 43,040,000
SOUTH CAROLINA-0.4%
7,500,000 South Carolina State
Public Service Authority,
3.40% CP (Bank of America,
N.A., Bank of Nova Scotia,
Toronto, Commerzbank AG,
Frankfurt and Toronto-
Dominion Bank LIQs),
Mandatory Tender
10/14/1999 7,500,000
SOUTH DAKOTA-0.8%
600,000 Rapid City, SD Weekly VRDNs
(Gillette Dairy Black
Hills, Inc.)/(Bank of
Tokyo-Mitsubishi Ltd. LOC) 600,000
4,840,000 South Dakota EDFA, (Series
1998) Weekly VRDNs (FIMCO,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 4,840,000
9,000,000 South Dakota Housing
Development Authority,
(Series I), 3.20% BANs,
12/2/1999 9,000,000
1,215,000 South Dakota Housing
Development Authority,
Homeownership Mortgage
Bonds (Series 1997E)
Weekly VRDNs 1,215,000
TOTAL 15,655,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
TENNESSEE-0.4%
$ 5,300,000 Carter County, TN IDB,
(Series 1983) Monthly
VRDNs (Inland Container
Corp.)/(Temple-Inland,
Inc. GTD) $ 5,300,000
2,000,000 Montgomery Co, TN Public
Building Authority, Pooled
Financing Revenue Bonds
(Series 1996) Weekly VRDNs
(Montgomery County
Loan)/(Bank of
America, N.A. LOC) 2,000,000
205,000 Washington County, TN IDB,
Revenue Refunding Bonds
(Series 1996) Weekly VRDNs
(Springbrook Properties
Project)/(SunTrust Bank,
Nashville LOC) 205,000
TOTAL 7,505,000
TEXAS-7.3%
15,750,000 1 ABN AMRO MuniTOPS Certificates Trust (Multistate AMT) (Series
1998-15), 3.35% TOBs (Houston, TX Airport System)/(FGIC
INS)/(ABN AMRO Bank N.V., Amsterdam LIQ), Optional Tender
2/16/2000 15,750,000
10,000,000 1 ABN AMRO MuniTOPS Certificates Trust (Multistate Non-AMT)
(Series 1998-24), 3.25% TOBs (Barbers Hill, TX Independent
School District)/(Texas Permanent School Fund Guarantee Program
GTD)/(ABN AMRO Bank N.V., Amsterdam LIQ),
Optional Tender 11/10/1999 10,000,000
17,950,000 Angelina and Neches River
Authority, Texas, Solid
Waste Disposal Revenue
Bonds (Series 1993), 4.15%
CP (Temple-Eastex,
Inc.)/(Temple-Inland, Inc.
GTD), Mandatory Tender
10/27/1999 17,950,000
3,000,000 Angelina and Neches River
Authority, Texas, Waste
Disposal Revenue Bonds
(Series 1998), 4.10% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender
10/28/1999 3,000,000
900,000 Corpus Christi, TX IDC
Weekly VRDNs (Grainger
(W.W.), Inc.) 900,000
1,125,000 Harris County, TX Cultural
Education Facilities
Finance Corp. Weekly VRDNs
(Houston Museum of Natural
Sciences)/(Bank One, Texas
N.A. LOC) 1,125,000
8,300,000 Harris County, TX HFDC,
Hospital Revenue Bonds
(Series 1997) Daily VRDNs
(Methodist Hospital,
Harris County, TX) 8,300,000
10,000,000 Harris County, TX HFDC,
Trust Receipts (Series
1998 FR/RI-23) Weekly
VRDNs (Hermann
Hospital)/(FSA 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
20,000,000 Harris County, TX, Toll
Road UT & Sub Lien Revenue
(Series 1994-G) Weekly
VRDNs (Morgan Guaranty
Trust Co., New York LIQ) 20,000,000
1,360,000 Liberty County, TX IDA
Weekly VRDNs (Insteel
Industries, Inc.)/(First
Union National Bank,
Charlotte, NC LOC) 1,360,000
1,480,000 North Richland Hills, TX
IDC Weekly VRDNs (Tecnol,
Inc.)/(Bank of
America, N.A. LOC) 1,480,000
10,000,000 San Antonio, TX Electric &
Gas, Municipal Securities
Trust Receipts (Series
1997 SG 101) Weekly VRDNs
(Societe Generale, Paris
LIQ) 10,000,000
10,000,000 1 Southeast Texas Housing Finance Corp., PT-165, 3.35% TOBs
(GNMA COL)/(Banque Nationale de Paris LIQ), Optional
Tender 3/9/2000 10,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
TEXAS-CONTINUED
$ 25,000,000 Texas State, 4.50% TRANs,
8/31/2000 $ 25,176,908
TOTAL 135,996,908
UTAH-0.4%
7,830,000 Salt Lake County, UT,
Multifamily Housing
Revenue Refunding Bonds
(Series 1992) Weekly VRDNs
(Santa Fe
Apartments)/(First
Security Bank of Utah,
N.A. LOC) 7,830,000
VIRGINIA-6.7%
6,245,000 Alexandria, VA
Redevelopment and Housing
Authority, (Series 1996A)
Weekly VRDNs (Glebe Park
Apartments Project)/(KBC
Bank N.V. LOC) 6,245,000
3,200,000 Arlington County, VA
Weekly VRDNs (Ballston
Public Parking)/(Citibank
N.A.
New York LOC) 3,200,000
9,000,000 Chesterfield County, VA
IDA, (Series 1987A), 3.45%
CP (Virginia Electric
Power Co.), Mandatory
Tender 11/8/1999 9,000,000
9,000,000 Chesterfield County, VA
IDA, 3.45% CP (Virginia
Electric Power Co.),
Mandatory Tender 10/5/1999 9,000,000
4,600,000 Fairfax County, VA EDA,
(Series 1995) Weekly VRDNs
(American Society of Civil
Engineers Foundation, Inc.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 4,600,000
1,800,000 Fairfax County, VA IDA
Weekly VRDNs (Inova Health
System)/(Credit Suisse
First Boston LIQ) 1,800,000
5,500,000 Fairfax County, VA IDA,
1998 Trust Receipts FR/RI-
A35 Weekly VRDNs (Fairfax
Hospital
System)/(Bayerische
Hypotheken-und Vereinsbank
AG LIQ)/(United States
Treasury PRF) 5,500,000
4,000,000 Hampton, VA Redevelopment
& Housing Authority,
(Series 1998) Weekly VRDNs
(Township
Apartments)/(AmSouth Bank
N.A., Birmingham LOC) 4,000,000
16,800,000 Henrico County, VA IDA,
MERLOTS (Series 1997C)
Weekly VRDNs (Bon Secours
Health System)/(FSA
INS)/(First Union National
Bank, Charlotte, NC LIQ) 16,800,000
20,500,000 James City County, VA IDA,
(Series 1997) Weekly VRDNs
(Riverside Health System-
Patriots Colony) 20,500,000
3,825,000 Newport News, VA
Redevelopment & Housing
Authority, (Series 1999)
Weekly VRDNs (River Park
Towers)/(Bank One, Arizona
N.A. LOC) 3,825,000
2,885,000 Richmond, VA Redevelopment
& Housing Authority,
(Series 1989) Weekly VRDNs
(Belmont Apartment)/(First
Union National Bank,
Charlotte, NC LOC) 2,885,000
6,600,000 Roanoke, VA IDA, Hospital
Revenue Bonds (Series
1997A) Daily VRDNs
(Carillion Health
System)/(Bank of America,
N.A. LOC) 6,600,000
8,500,000 Virginia Resources
Authority, Water and Sewer
(Series 1997) Weekly VRDNs
(Henrico County,
VA)/(Crestar Bank of
Virginia, Richmond LIQ) 8,500,000
10,000,000 Virginia State Public
Building Authority,
Floater Certificates
(Series 1998-131) Weekly
VRDNs (MBIA INS)/(Morgan
Stanley, Dean Witter
Municipal Funding,
Inc. LIQ) 10,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
VIRGINIA-CONTINUED
$ 4,000,000 Williamsburg, VA IDA,
(Series 1988) Weekly VRDNs
(Colonial Williamsburg
Foundation Museum)/(Bank
of America, N.A. LOC) $ 4,000,000
7,800,000 York County, VA IDA,
(Series 1985), 3.45% CP
(Virginia Electric Power
Co.), Mandatory Tender
10/5/1999 7,800,000
TOTAL 124,255,000
WEST VIRGINIA-0.3%
2,520,000 Berkeley County, WV County
Commission, IDBs (Series
1994) Weekly VRDNs
(Brentwood Industries,
Inc. Project)/(First Union
National Bank, Charlotte,
NC LOC) 2,520,000
3,000,000 Marshall County, WV, PCR
(Series 1992) Weekly VRDNs
(PPG Industries, Inc.) 3,000,000
TOTAL 5,520,000
WISCONSIN-1.6%
4,000,000 Beloit, WI School District, 3.35% TRANs,
10/29/1999 4,000,328
2,650,000 Combined Locks, WI,
Revenue Refunding Bonds,
(Series 1997) Weekly VRDNs
(Appleton Papers)/(Bank of
Nova Scotia, Toronto LOC) 2,650,000
3,100,000 Glendale River Hills
School District, WI, 3.95%
TRANs, 8/21/2000 3,106,650
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
4,500,000 Mukwonago, WI Area School
District, 4.00% TRANs,
8/24/2000 4,511,638
540,000 Spooner, WI, (Series 1994)
Weekly VRDNs (Nash Finch
Co.)/(U.S. Bank, N.A.,
Minneapolis LOC) 540,000
3,750,000 Sun Prairie, WI Area School
District, 4.00% TRANs,
8/23/2000 3,761,288
2,600,000 Superior, WI, (Series
1998) Weekly VRDNs
(Partridge River Superior,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 2,600,000
2,175,000 Wisconsin HEFA, (Series
1997) Weekly VRDNs (16th
Street Community Health
Center, Inc.)/(Bank One,
Wisconsin, N.A. LOC) 2,175,000
5,220,000 Wisconsin HEFA, (Series
1997) Weekly VRDNs (Cedar
Crest, Inc.)/(Bank One,
Wisconsin, N.A. LOC) 5,220,000
TOTAL 30,564,904
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
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
3,400,000 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 Bank of America, N.A.
LOCs) 3,400,000
TOTAL 5,230,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 1,862,821,735
</TABLE>
Securities that are subject to alternative minimum tax represent 15.4% of the
portfolio as calculated based upon total portfolio market value.
1 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At September 30, 1999, these
securities amounted to $112,115,000 which represents 6.0% of net assets.
2 Also represents cost for federal tax purposes.
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, MIG-1 or MIG-2 by Moody's Investors Service, or F-1+, F-1 or 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, 1999,
the portfolio securities were rated as follows:
Tier Rating Percentages Based on Total Market Value
<TABLE>
<CAPTION>
FIRST TIER SECOND TIER
<S> <C>
93.8% 6.2%
</TABLE>
Note: The categories of investments are shown as a percentage of net assets
($1,863,992,625) at September 30, 1999.
The following acronyms are used throughout this portfolio:
AMBAC -American Municipal Bond Assurance Corporation AMT -Alternative Minimum
Tax BANs -Bond Anticipation Notes 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 GTD -Guaranteed 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 IDRB
- -Industrial Development Revenue Bond IDFA -Industrial Development Finance
Authority IFA -Industrial Finance Authority INS -Insured LIQ -Liquidity
Agreement LOC(s) -Letter(s) of Credit MBIA -Municipal Bond Investors Assurance
MER -Municipal Exempt Receipts LOTS -Liquidity Optional Tender Series PCR
- -Pollution Control Revenue PRF -Prerefunded PUTTERs -Puttable Tax-Exempt
Receipts TANs -Tax Anticipation Notes TOBs -Tender Option Bonds TRANs -Tax and
Revenue Anticipation Notes UT -Unlimited Tax VRDNs -Variable Rate Demand Notes
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 1,862,821,735
Income receivable 11,511,820
Receivable for shares sold 793
TOTAL ASSETS 1,874,334,348
LIABILITIES:
Payable for shares
redeemed $ 175
Income distribution
payable 2,201,924
Payable to bank 8,012,922
Accrued expenses 126,702
TOTAL LIABILITIES 10,341,723
Net assets for
1,864,021,692 shares
outstanding $ 1,863,992,625
NET ASSETS CONSIST OF:
Paid in capital $ 1,863,972,340
Undistributed net
investment income 5,242
Accumulated net realized
gain on investments 15,043
TOTAL NET ASSETS $ 1,863,992,625
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
INVESTMENT SHARES:
$1,637,998,113 /
1,637,922,997 shares
outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$225,994,512 / 226,098,695
shares outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
SIX MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 33,108,746
EXPENSES:
Investment advisory fee $ 4,843,759
Administrative personnel
and services fee 730,439
Custodian fees 53,811
Transfer and dividend
disbursing agent fees and
expenses 309,089
Directors'/Trustees' fees 12,208
Auditing fees 9,011
Legal fees 13,427
Portfolio accounting fees 92,643
Shareholder services fee-
Investment Shares 2,142,301
Shareholder services fee-
Institutional Service
Shares 279,579
Share registration costs 51,620
Printing and postage 60,053
Insurance premiums 64,574
Miscellaneous 9,431
TOTAL EXPENSES 8,671,945
WAIVERS AND
REIMBURSEMENTS:
Waiver of investment
advisory fee $ (534,430)
Waiver of shareholder
services fee-Investment
Shares (856,920)
Waiver of shareholder
services fee-Institutional
Service Shares (279,579)
TOTAL WAIVERS (1,670,929)
Net expenses 7,001,016
Net investment income 26,107,730
Net realized gain on
investments 33,243
Change in net assets
resulting from operations $ 26,140,973
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
(unaudited) ENDED
SEPTEMBER 30, MARCH 31,
1999 1999
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 26,107,730 $ 54,286,478
Net realized gain on
investments 33,243 189,574
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 26,140,973 54,476,052
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Investment Shares (22,959,595) (46,223,330)
Institutional Service
Shares (3,148,135) (8,063,148)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (26,107,730) (54,286,478)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 2,668,962,727 5,621,973,916
Net asset value of shares
issued to shareholders in
payment of
distributions declared 22,082,312 45,729,563
Cost of shares redeemed (2,872,274,893) (5,553,095,455)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS (181,229,854) 114,608,024
Change in net assets (181,196,611) 114,797,598
NET ASSETS:
Beginning of period 2,045,189,236 1,930,391,638
End of period $ 1,863,992,625 $ 2,045,189,236
</TABLE>
See Notes which are an integral part of the Financial Statements
Financial Highlights-Investment Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1999 1999 1998 1997 1996 1995
<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 0.01 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.35% 2.83% 3.10% 2.92% 3.32% 2.70%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.90% 3 0.90% 0.89% 0.89% 0.95% 0.87%
Net investment income 2 2.51% 3 2.62% 2.88% 2.70% 3.03% 2.49%
Expenses (after waivers) 0.74% 3 0.74% 0.73% 0.71% 0.71% 0.70%
Net investment income
(after waivers) 2.67% 3 2.78% 3.04% 2.88% 3.27% 2.66%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $1,637,998 $1,771,606 $1,646,267 $1,506,918 $1,465,333 $1,277,894
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such waivers had
not occurred, the ratios would have been as indicated.
3 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(unaudited)
SEPTEMBER 30, YEAR ENDED MARCH 31,
1999 1999 1998 1997 1996 1995
<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 0.01 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.01) (0.03) (0.03) (0.03) (0.03) (0.03)
NET ASSET VALUE, END
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 1.42% 2.98% 3.25% 3.08% 3.47% 2.85%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.90% 3 0.90% 0.89% 0.89% 0.96% 0.72%
Net investment income 2 2.51% 3 2.62% 2.88% 2.69% 3.03% 2.65%
Expenses (after waivers) 0.59% 3 0.59% 0.58% 0.56% 0.56% 0.55%
Net investment income
(after waivers) 2.82% 3 2.93% 3.19% 3.02% 3.43% 2.82%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $225,995 $273,583 $284,124 $247,946 $304,516 $358,826
</TABLE>
1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
2 During the period, certain fees were voluntarily waived. If such waivers had
not occurred, the ratios would have been as indicated.
3 Computed on an annualized basis.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
SEPTEMBER 30, 1999 (UNAUDITED)
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 exempt from federal income tax consistent with stability of
principal.
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS
The Trust uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act. Investments in other open-end regulated
investment companies are valued at net asset value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date.
FEDERAL TAXES
It is the Trust's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provisions for federal tax are
necessary.
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.
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.
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, 1999, capital paid-in aggregated
$1,863,972,340. Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1999 1999
<S> <C> <C>
INVESTMENT SHARES:
Shares sold 2,305,547,976 4,781,934,595
Shares issued to
shareholders in payment of
distributions declared 21,932,883 45,282,001
Shares redeemed (2,461,069,263) (4,702,040,492)
NET CHANGE RESULTING FROM
INVESTMENT SHARE
TRANSACTIONS (133,588,404) 125,176,104
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
SEPTEMBER 30, MARCH 31,
1999 1999
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 363,464,103 840,039,321
Shares issued to
shareholders in payment of
distributions declared 149,429 447,562
Shares redeemed (411,205,630) (851,054,963)
NET CHANGE RESULTING FROM
INSTITUTIONAL SERVICE
SHARE TRANSACTIONS (47,592,098) (10,568,080)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS (181,180,502) 114,608,024
</TABLE>
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Federated Investment Management Company, 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 Company ("FSSC"), the Trust will pay FSSC up to 0.25% of average daily
net assets of the Trust for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. FSSC may
voluntarily choose to waive any portion of its fee. FSSC 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 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
Federated Services Company 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, 1999, the Trust engaged in purchase and
sale transactions with funds that have a common investment adviser (or
affiliated investment advisers), common Directors/Trustees, and/or common
Officers. These purchase and sale transactions were made at current market value
pursuant to Rule 17a-7 under the Act amounting to $1,990,649,000 and
$1,778,287,000, respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
CHANGE OF INDEPENDENT AUDITORS
On May 19, 1999, the Trust's Trustees, upon the recommendation of the Audit
Committee of the Trustees, requested and subsequently accepted the resignation
of Arthur Andersen LLP ("AA") as the Trust's independent auditors. AA's reports
on the Trust's financial statements for the fiscal years ended March 31, 1998
and March 31, 1999 contained no adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles. During the Trust's fiscal years ended March 31, 1998 and March 31,
1999, (i) there were no disagreements with AA on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of AA, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements for such years; and (ii)
there were no reportable events of the kind described in Item 304(a)(1)(v) of
Regulation S-K under the Securities Act of 1934, as amended.
The Trust, by action of its Trustees, upon the recommendation of the Audit
Committee of the Trustees, has engaged Ernst & Young LLP ("E&Y") as the
independent auditors to audit the Trust's financial statements for the fiscal
year ending March 31, 2000. During the Trust's fiscal years ended March 31, 1998
and March 31, 1999, neither the Trust nor anyone on its behalf has consulted E&Y
on items which (i) concerned the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Trust's financial statements of (ii)
concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of
Item 304 of Regulation S-K) of reportable events (as described in paragraph
(a)(1)(v) of said Item 304).
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
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH
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 and Secretary
RICHARD B. FISHER
Vice President
JEFF A. KOZEMCHAK
Vice President
RICHARD J. THOMAS
Treasurer
LESLIE K. ROSS
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 the possible loss of principal.
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.
SEMI-ANNUAL REPORT
AS OF SEPTEMBER 30, 1999
[Graphic]
Federated
World-Class Investment Manager
Tax-Free Instruments Trust
Established 1981
17TH SEMI-ANNUAL REPORT
[Graphic]
Federated
Tax-Free Instruments Trust
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor
Cusip 876924101
Cusip 876924200
8110107 (11/99)
[Graphic]
