ANNUAL REPORT
[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
16th Annual Report. This report covers the 12-month reporting period from April
1, 1998 through March 31, 1999. It begins with an interview with the fund's
portfolio manager, Jeff A. Kozemchak, Senior Vice President of Feder ated
Investment Management Company. Following his discussion you will find two
additional items of shareholder interest. First is a complete listing of the
fund's tax-free money market holdings, and second is the publication of the
fund's financial statements.
Tax-Free Instruments Trust keeps your ready cash pursuing daily income free from
federal regular income tax. 1 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.2 You also have daily access to
your invested cash.
On March 31, 1999, the trust's $2 billion portfolio was invested among more than
276 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,
[Graphic]
Glen R. Johnson
President
May 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 REVIEW OF THE TRUST'S FISCAL YEAR?
There were two central themes in the short-term money markets over the 12- month
reporting period ended March 31, 1999. First, the economy continued to grow at a
robust pace, with gross domestic product expanding in the second, third and
fourth quarters of 1998 at 1.8%, 3.7% and 6.0%, respectively, and all
indications that this same strength had spilled over into 1999. Although the
manufacturing sector was soft, the housing and retail sectors continued to
propel the U.S. economy forward. Inflation remained benign, perhaps reflecting
advances in productivity that have enabled growth to be achieved without upward
pressure on prices. Under normal circumstances, however, the growth trajectory
of the economy would have been sufficient to concern Fed eral Reserve Board (the
"Fed") officials about the inflationary threat that could result from such
above-trend growth.
Economic crises in countries overseas were the second, and ultimately more
dominant, theme over the reporting period. In August 1998, the economic trou
bles in Asia spread to encompass Russia and then Latin America. As fears that
the United States could not continue to be immune to what had become a global
economic crisis weighed heavily on the U.S. equity market, investors both
domestic and abroad fled to the perceived safety of the U.S. Treasury market.
Yields on Treasury securities were driven sharply downward, as investors shunned
credit-sensitive markets in favor of the safe haven of U.S. Treasuries, and a
credit/liquidity crisis in the U.S. financial markets became evident.
THE REPORTING PERIOD ALSO SAW THE FED "EASE," OR CUT RATES WHILE TREASURY RATES
DECLINED DURING AN INTENSE "FLIGHT-TO-QUALITY" BY INVESTORS. WHAT ARE YOUR
COMMENTS ON THESE DEVELOPMENTS? AND HOW DID SHORT-TERM TAX-FREE RATES BEHAVE
DURING THE FISCAL YEAR?
Faced with the credit and liquidity crisis, the Fed voted to ease monetary
policy by 25 basis points in an attempt to calm investor fears, bringing the Fed
Funds Target Rate down to 5.25% in late September 1998. Market partici pants
viewed this move to be too tentative, however, and it was not until the Fed took
two additional easing steps-in mid-October and November of 1998, bringing the
Fed Funds Target Rate to 4.75%-that some semblance of calm returned to the
markets. Credit spreads narrowed over this period, albeit not back to levels
that pre-dated the crisis.
Movements in short-term interest rates reflected the turbulent economic con
ditions in the middle of the reporting period, and then the relative tran
quility of the markets once the Fed easings had their desired effect. The yield
on the 1-year Treasury bill began the period at 5.40%, but in August and
September of 1998 was driven downward by an onslaught of inves tors-both
domestic and abroad -seeking a safe haven from world economic uncertainty and
the instability of the U.S. equity market. As a result, the yield on this
security reached a low of 3.85% by mid-October. As the addi tional easing steps
by the Fed calmed investors, the yield on this security rose moderately to 4.60%
by early November. Although the Fed took one addi tional easing step in
mid-November, the yield on this security traded within a relatively narrow range
of 4.40% to 4.60% through January of 1999. In February and March of 1999, strong
economic growth pushed the yield as high as 4.90% before it ended the reporting
period at 4.75%.
In addition to economic fundamentals, short-term municipal securities were
strongly influenced by technical factors over the reporting period, notably the
April tax payment season, the summer note issuance season, year-end cash flows,
and more recently, tight supply conditions. Variable rate demand notes
("VRDNs"), which comprised more than 50% of the trust's assets as of March 31,
1999, averaged 3.40% over the reporting period, but ranged as high as 4.40% in
April of 1998 and as low as 2.25% in February of 1999.
Over the reporting period, VRDN yields averaged roughly 67% of taxable rates,
making them attractive for investors at the 35% or higher federal tax brack ets.
Municipal 1-year fixed-rate note prices rallied along with Treasuries but also
suffered from a lack of supply, as yields fell over the reporting period from
3.75% to 3.10%. Municipal notes were cheap relative to Treasury bills for the
last nine months of 1998, but were fairly expensive in the first quarter of
1999.
WHAT STRATEGIES GUIDED THE TRUST DURING THE REPORTING PERIOD?
We maintained a 40-55 day average maturity target range. In June and July of
1998, new issuance of fixed-rate notes allowed us to extend the average matu
rity to 55 days from a low of 38 days in June and lock in some very attrac tive
1-year yields ahead of the Fed's interest rate cuts. We continued to maintain a
50-55 day range through the end of the year, but tight supply con ditions
combined with strong cash inflows into the trust caused the maturity to fall to
40-45 days by the end of the reporting period. We continued to emphasize a
barbelled structure for the portfolio, combining a significant position in 7-day
VRDNs and commercial paper with purchases of longer term securities with
maturities between 6 and 12 months.
HOW HAS THE TRUST PERFORMED FROM A YIELD PERSPECTIVE?
The 7-day net yield for the trust's Institutional Service Shares on March 31,
1999 was 2.62% compared to 3.12% on March 31, 1998. 1 The latest yield was the
equivalent of a 4.33% taxable yield for investors in the highest federal tax
bracket. For the trust's Investment Shares, the 7-day net yield on March 31,
1999 was 2.47% compared to 2.97% on March 31, 1998.1 The latest yield was
equivalent to a 4.08% taxable yield for investors in the highest federal tax
bracket.
WHAT KIND OF SHORT-TERM TAX-FREE INTEREST RATE ENVIRONMENT DO YOU SEE THROUGH
1999?
The economy continues to remain robust with little or no signs of inflation. The
Fed is not likely to raise interest rates or take preemptive action until price
or wage pressures materialize. We look for short-term interest rates to remain
unchanged over the near-term, and expect growth to moderate as we approach the
summer months. Accordingly, we plan to maintain a neutral aver age maturity
range for the trust over the near term. In the summer months, we will likely
extend the maturity as new issuance and rollover of municipal notes occurs
during this period. As always, we will continue to watch, with great interest,
market developments in order to best serve our municipal investors.
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.
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.
Portfolio of Investments
MARCH 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
98.9%
ALABAMA-1.9%
$ 6,000,000 Homewood, AL IDA Weekly
VRDNs (Mountain Brook
Inn)
(Homewood
AL)/(SouthTrust Bank of
Alabama, Birmingham LOC) $ 6,000,000
12,000,000 Jefferson County, AL,
(Series A), 3.45% Bonds
(Bayerische Landesbank
Girozentrale LOC),
10/1/1999 12,000,000
6,400,000 1 Jefferson County, AL,
Trust Receipts (Series
1998 FR/RI-7) Weekly
VRDNs
(FGIC INS)/(Bank of New
York, New York LIQ) 6,400,000
785,000 Madison, AL IDA, (Series
A) Weekly VRDNs
(Executive Inn)/(Amsouth
Bank N.A., Birmingham
LOC) 785,000
4,000,000 St. Clair County, AL IDB,
(Series 1993) Weekly
VRDNs (Ebsco Industries,
Inc.)/(National
Australia Bank, Ltd.,
Melbourne LOC) 4,000,000
4,500,000 Stevenson, AL IDB,
Industrial Revenue Bonds
(Series 1996-A) Weekly
VRDNs (Unitog Co.)/(UMB
Bank, N.A. LOC) 4,500,000
4,700,000 Sumter County, AL IDA,
Industrial Revenue Bonds
(Series 1995A) Weekly
VRDNs (Fulghum Fibres
Project (AL))/(Regions
Bank, Alabama LOC) 4,700,000
TOTAL 38,385,000
ARIZONA-2.6%
23,850,000 Arizona Agricultural
Improvement & Power
District, 3.15% CP (Salt
River Project, AZ
Agricultural Improvement
& Power District),
Mandatory Tender
6/18/1999 23,850,000
1,165,000 Arizona State
Transportation Board,
5.90% Bonds, 7/1/1999 1,171,422
850,000 Arizona State
Transportation Board,
6.90% Bonds (Maricopa
County, AZ Regional Area
Road Fund)/(MBIA INS),
7/1/1999 856,595
500,000 Maricopa County, AZ
Unified School District
No. 48, 6.00% Bonds,
7/1/1999 502,724
5,985,000 Maricopa County, AZ IDA,
(Series 1984) Weekly
VRDNs (Gannett Co.,
Inc.) 5,985,000
1,000,000 Maricopa County, AZ IDA,
(Series 1999A) Daily
VRDNs (Orangewood
CCRC)/(Banque Nationale
de Paris LOC) 1,000,000
1,920,000 1 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 NT and SA, San
Francisco LOC) 2,300,000
1,950,000 Phoenix, AZ IDA, (Series
1997) Weekly VRDNs
(Interface Data Systems,
Inc.)/
(Bank One, Arizona N.A.
LOC) 1,950,000
2,000,000 1 Phoenix, AZ IDA, PT-1032
Weekly VRDNs (GNMA
COL)/(Merrill Lynch
Capital Services, Inc.
LIQ) 2,000,000
500,000 Phoenix, AZ, GO UT Bonds
Daily VRDNs (Morgan
Guaranty Trust Co.,
New York LIQ) 500,000
2,425,000 1 Phoenix, AZ, PA-236
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 2,425,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
ARIZONA-CONTINED
$ 1,205,000 Pima County, AZ IDA
Weekly VRDNs (A & P
Investments)/
(Bank One, Arizona N.A.
LOC) $ 1,205,000
5,203,000 Pima County, AZ IDA
Weekly VRDNs (BJR
Investments, Inc.)/(Bank
One,
Arizona N.A. LOC) 5,203,000
850,000 Scottsdale, AZ IDA
Weekly VRDNs (Scottsdale
(Memorial Hospitals))/
(AMBAC Financial Group,
Inc. INS)/(Credit Local
de France LIQ) 850,000
2,300,000 Yavapai, AZ IDA, (Series
1997B) Weekly VRDNs
(Yavapai Regional
Medical Center)/(FSA
INS)/(Credit Local de
France LIQ) 2,300,000
TOTAL 54,018,741
ARKANSAS-0.9%
3,900,000 Hope, AR, Solid Waste
Disposal Revenue Bonds
(Series 1994), 3.70% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory
Tender 4/13/1999 3,900,000
5,500,000 Hope, AR, Solid Waste
Disposal Revenue Bonds
(Series 1994), 3.75% CP
(Temple-Inland Forest
Products Corp.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender
4/8/1999 5,500,000
2,500,000 Pocahontas, AR, IDRB
(Series 1995) Weekly
VRDNs (MacLean ESNA L.P.
Project)/(Northern Trust
Co., Chicago, IL LOC) 2,500,000
7,400,000 Siloam Springs, AR, IDRB
(Series 1994) Weekly
VRDNs (La-Z Boy Chair
Co.)/
(NBD Bank, Michigan LOC) 7,400,000
TOTAL 19,300,000
CALIFORNIA-9.4%
1,700,000 1 ABN AMRO MuniTOPS Certificates Trust (California Non-AMT)
(Series 1998-17) Weekly VRDNs (Sacramento County, CA Airport
System)/(FGIC INS)/(ABN AMRO Bank N.V.,
Amsterdam LIQ) 1,700,000
27,500,000 1 California Community
College Financing
Authority, Trust
Receipts (Series 1998
FR/RI-A24) Weekly VRDNs
(FSA INS)/(Bank of New
York, New York LIQ) 27,500,000
5,000,000 1 California State,
Floater Certificates
(Series 1998-55) Weekly
VRDNs (FGIC INS)/(Morgan
Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) 5,000,000
12,300,000 1 California Statewide
Communities Development
Authority, Trust
Receipts (Series FR/RI-
A23) Weekly VRDNs (FSA
INS)/(Bank of New York,
New York LIQ) 12,300,000
38,300,000 1 Contra Costa County, CA,
Trust Receipts (1998 A-
27) Weekly VRDNs (Bank of
New York, New York LIQ) 38,300,000
11,135,000 Los Angeles County, CA
Metropolitan
Transportation
Authority, 2.70% CP
(Bayerische Hypotheken-
und Vereinsbank AG,
Canadian Imperial Bank
of Commerce and National
Westminster Bank, PLC,
London LOCs), Mandatory
Tender 5/13/1999 11,135,000
20,000,000 Los Angeles County, CA,
(Series A), 4.50% TRANs,
6/30/1999 20,039,412
12,500,000 1 Los Angeles, CA Department of Water & Power, Trust Receipts
(Series 1998 FR/RI-18) Weekly VRDNs (FGIC INS)/(Bank of New
York, New York LIQ) 12,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
CALIFORNIA-CONTINUED
$ 6,075,000 1 Los Angeles, CA Unified
School District, Floater
Certificates
(Series 1998-60) Weekly
VRDNs (FGIC INS)/(Morgan
Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) $ 6,075,000
6,100,000 1 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
18,637,004 1 PBCC LeaseTOPS Trust
(California Non-AMT)
(Series 1998-1) Weekly
VRDNs (AMBAC
INS)/(Pitney Bowes
Credit Corp. LIQ) 18,637,004
28,325,000 1 San Diego, CA Area Local
Governments, Trust
Receipts (Series FR/RI-
A25) Weekly VRDNs (Bank
of New York, New York
LIQ) 28,325,000
1,000,000 1 San Francisco, CA City & County Airport Commission, Floater
Certificates (Series 1998-31) Weekly VRDNs (FGIC INS)/(Bank of
America NT and SA,
San Francisco LIQ) 1,000,000
3,500,000 San Francisco, CA
Redevelopment Finance
Agency, (Series B1)
Weekly VRDNs (Fillmore
Center)/(Bank of Nova
Scotia, Toronto LOC) 3,500,000
TOTAL 192,111,416
COLORADO-1.8%
1,870,000 Colorado Health
Facilities Authority,
(Series 1998F) Weekly
VRDNs (Developmental
Disabilities
Center)/(Bank One,
Colorado LOC) 1,870,000
3,050,000 Colorado Health
Facilities Authority,
(Series 1998B) Weekly
VRDNs (Developmental
Pathways, Inc.)/(Bank
One, Colorado LOC) 3,050,000
3,000,000 Colorado Health
Facilities Authority,
(Series 1998D) Weekly
VRDNs (North Metro
Community Servies,
Inc.)/(Bank One,
Colorado LOC) 3,000,000
315,000 Colorado Health
Facilities Authority,
(Series 1998E) Weekly
VRDNs (Arkansas
Valley)/(Bank One,
Colorado LOC) 315,000
775,000 Colorado Health
Facilities Authority,
(Series 1998H) Weekly
VRDNs (Community
Partnership for Child
Development)/(U.S. Bank,
N.A., Minneapolis LOC) 775,000
2,300,000 Colorado Postsecondary
Educational Facilities,
(Series 1997) Weekly
VRDNs (Waldorf School
Association of Boulder,
Inc. - Shining Mountain
Waldorf
School)/(KeyBank, N.A.
LOC) 2,300,000
3,200,000 Colorado Springs, CO
Utility System, IDRBs
(Series 1996) Weekly
VRDNs
(Micro Metals,
Inc.)/(U.S. Bank, N.A.,
Minneapolis LOC) 3,200,000
12,645,000 1 Denver (City & County),
CO, Trust Receipts, (Series 1998 FR/RI-13) Weekly VRDNs (MBIA
INS)/(Bank of New York,
New York LIQ) 12,645,000
4,655,000 Mesa County, CO, (Series
1996) Weekly VRDNs (3D Systems Corp.)/(Norwest Bank Minnesota,
N.A.
LOC) 4,655,000
5,365,000 1 Thornton, CO,
Multifamily Housing
Refunding Revenue Bonds
(1989 Series A) Weekly
VRDNs (Quail Ridge
Project)/(General
Electric Capital Corp.
LOC) 5,365,000
TOTAL 37,175,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
CONNECTICUT-3.0%
$ 4,875,000 Connecticut Development
Health Care Facilities
Weekly VRDNs
(Independence
Living)/(Chase Manhattan
Bank N.A., New York LOC) $ 4,875,000
6,200,000 Connecticut Development
Health Care Facilities
Weekly VRDNs
(Independence
Living)/(Credit Local de
France LOC) 6,200,000
9,500,000 Connecticut State HEFA,
(Series B) Weekly VRDNs
(Edgehill)/(Paribas,
Paris LOC) 9,500,000
30,000,000 Connecticut State
Transportation
Infrastructure Authority
Weekly VRDNs
(Commerzbank AG,
Frankfurt LOC) 30,000,000
10,000,000 Hartford, CT
Redevelopment Authority
Weekly VRDNs (Underwood
Towers)/
(FSA INS)/(Societe
Generale, Paris LIQ) 10,000,000
TOTAL 60,575,000
DISTRICT OF COLUMBIA-
0.3%
6,000,000 District of Columbia
Housing Finance Agency,
(1998 Series B), 3.80%
TOBs
(AIG Funding, Inc.),
Mandatory Tender
6/23/1999 6,000,000
FLORIDA-0.4%
7,500,000 Highlands County, FL
Health Facilities,
(Series 1996B Accounts
Receivable) Weekly VRDNs
(Adventist Health
System)/(MBIA
INS)/(Canadian Imperial
Bank of Commerce LIQ) 7,500,000
GEORGIA-6.8%
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
3,500,000 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) 3,500,000
11,665,000 Bibb County, GA
Development Authority,
(Series 1991IR-1) Weekly
VRDNs (Temple-Inland,
Inc.) 11,665,000
20,000,000 Burke County, GA
Development Authority,
PCRBs (Series 1998A),
3.15% CP (Oglethorpe
Power Corp. Vogtle
Project)/(AMBAC
Financial Group, Inc.
INS)/(Rabobank
Nederland, Utrecht LIQ),
Mandatory Tender
4/16/1999 20,000,000
10,000,000 Burke County, GA
Development Authority,
PCRBs (Series 1998A),
3.15% CP (Oglethorpe
Power Corp. Vogtle
Project)/(AMBAC
Financial Group, Inc.
INS)/(Rabobank
Nederland, Utrecht LIQ),
Mandatory Tender
7/28/1999 10,000,000
5,700,000 Cobb County, GA IDA,
(Series 1997) Weekly
VRDNs (Wyndham Gardens)/
(Bankers Trust Co., New
York LOC) 5,700,000
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
1,600,000 Coweta County, GA
Development Authority,
PCRBs (First Series
1996)
Daily VRDNs (Georgia
Power Co.) 1,600,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
GEORGIA-CONTINUED
$ 7,000,000 Coweta County, GA
Residential Care
Facilities for the
Elderly, First Lien
Revenue Bonds (Series
1996B) Weekly VRDNs
(Wesley Woods of Newman-
Peachtree City, Inc.
Project)/(Paribas, Paris
LOC) $ 7,000,000
5,000,000 Crisp County, GA
Development Authority,
Solid Waste Disposal
Revenue Bonds (Series
A), 3.75% TOBs
(International Paper
Co.), Optional Tender
3/1/2000 5,000,000
12,000,000 De Kalb County, GA School
District, (Series 1999),
2.875% TANs, 12/30/1999 12,000,000
1,325,000 Douglas County, GA
School District, 3.10%
Bonds, 1/1/2000 1,325,000
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
622,882 Georgia Municipal
Association Weekly VRDNs
(MBIA INS)/(Credit
Suisse
First Boston LIQ) 622,882
5,000,000 Georgia Municipal
Electric Authority,
(Series Z), 4.50% Bonds,
1/1/2000 5,046,613
7,460,000 Georgia State, UT GO,
5.75% Bonds, 9/1/1999 7,541,426
17,500,000 1 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
19,650,000 Municipal Electric
Authority of Georgia,
(Series 1985A), 3.25% CP
(Landesbank Hessen-
Thueringen, Frankfurt
LOC), Mandatory Tender
6/23/1999 19,650,000
TOTAL 138,640,921
HAWAII-0.4%
9,000,000 1 Clipper Tax-Exempt Trust
(Hawaii AMT) (Series
1998-7) Weekly VRDNs
(Hawaii Finance and
Development
Corp.)/(State Street
Bank and Trust Co. LIQ) 9,000,000
IDAHO-2.0%
40,000,000 Idaho Health Facilities
Authority, (Series
1995), 3.15% CP (Holy
Cross Health System
Corp.), Mandatory Tender
4/7/1999 40,000,000
ILLINOIS-7.1% 12,450,520 1 ABN AMRO Chicago Corp.
1997-1 LeaseTOPS Trust
Weekly VRDNs
(Lasalle National Bank,
Chicago LIQ)/(Lasalle
National Bank, Chicago
LOC) 12,450,520
1,100,000 Champaign, IL, IDRB
Weekly VRDNs (Christie
Clinic)/(National City
Bank,
Indiana LOC) 1,100,000
7,100,000 1 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
19,900,000 1 Chicago, IL, Floater
Certificates (Series 1998-28) Weekly VRDNs (Lakefront Millineum
Parking)/(MBIA INS)/(Bank of America NT and SA, San Francisco
LIQ) 19,900,000
10,000,000 1 Chicago, IL, Variable Rate Certificates (Series 1998M), 3.70%
TOBs (FGIC INS)/(Bank of America NT and SA, San Francisco LIQ),
Optional
Tender 8/4/1999 10,000,000
1,033,000 Illinois Development
Finance Authority Weekly
VRDNs (Newlywed
Food)/(Mellon Bank N.A.,
Pittsburgh LOC) 1,033,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
ILLINOIS-CONTINUED
$ 2,100,000 Illinois Development
Finance Authority, EDRB
(Series 1995) Weekly
VRDNs (Evapco, Inc.
Project)/(Nationsbank,
N.A., Charlotte LOC) $ 2,100,000
3,200,000 Illinois Development
Finance Authority, IDRB
(Series 1995) Weekly
VRDNs (Dickson
Weatherproof Nail Co.
Project)/(Lasalle
National Bank, Chicago
LOC) 3,200,000
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 1 Illinois Development
Finance Authority, PT-
131 (Series 1995A)
Weekly VRDNs (Catholic
Health Partners
Services)/(Ambac
Financial Group, Inc.
INS)/(Credit Suisse
First Boston LIQ) 10,010,000
40,000,000 Illinois Health
Facilities Authority,
Revenue Bonds (Series
1985B) Weekly VRDNs (OSF
Health Care Systems) 40,000,000
14,500,000 1 Illinois Housing
Development Authority,
PT-7, 3.80% TOBs (AMBAC
Financial Group, Inc.
INS)/(Commerzbank AG,
Frankfurt LIQ), Optional
Tender 5/13/1999 14,500,000
1,765,000 Martinsville, IL, IDRB
(Series 1995) Weekly
VRDNs (PAP-R Products
Company Project)/(Bank
One, Illinois, N.A. LOC) 1,765,000
3,000,000 Mendota, IL, IDRB
(Series 1995) Weekly
VRDNs (Minnesota
Diversified Products,
Inc. Project)/(Norwest
Bank Minnesota, N.A.
LOC) 3,000,000
140,000 Morton, IL, IDRB (Series
1996) Weekly VRDNs
(Morton Welding Co, Inc.
Project)/(Bank One,
Illinois, N.A. LOC) 140,000
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
1,300,000 Oakbrook Terrace, IL,
IDR (Series 1993) Weekly
VRDNs (La Quinta Inns,
Inc.)/(Nationsbank,
N.A., Charlotte LOC) 1,300,000
TOTAL 145,898,520
INDIANA-2.2%
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
2,200,000 Bluffton, IN, Economic
Development Revenue
Refunding Bonds Weekly
VRDNs (Blount,
Inc.)/(Morgan Guaranty
Trust Co., New York LOC) 2,200,000
7,500,000 Elkhart, IN, Community
Schools, 3.25% TANs,
12/31/1999 7,505,456
2,835,000 Hamilton County, IN,
EDRB (Series 1995) Weekly VRDNs (Fabcon L.L.C.
Project)/(Norwest Bank Minnesota, N.A.
LOC) 2,835,000
4,500,000 Jasper County, IN,
(Series 1998A) Weekly
VRDNs (Oak Grove
Christian Retirement
Village, Inc.)/(National
City Bank,
Michigan/Illinois LOC) 4,500,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
INDIANA-CONTINUED
$ 2,230,000 Kendallville, IN, IDRB
(Series 1995) Weekly
VRDNs (Rivnut Real
Estate, Ltd.
Project)/(National City
Bank, Ohio LOC) $ 2,230,000
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
2,065,000 Winamac, IN, (Series 1997) Weekly VRDNs (Pulaski Health
Foundation, Inc.)/(KeyBank, N.A. LOC) 2,065,000
TOTAL 44,185,456
IOWA-0.9%
2,800,000 Des Moines, IA, IDR Bonds
(Series 1994) Weekly
VRDNs (Printer, Inc.)/
(Federal Home Loan Bank
of Des Moines LOC) 2,800,000
3,850,000 Iowa Finance Authority,
(Series 1996) Weekly
VRDNs (Wittern Realty,
Inc. Project)/(Norwest
Bank Minnesota, N.A.
LOC) 3,850,000
12,000,000 Iowa School
Corporations, (1998-99
Series A), 4.50% TRANs
(FSA INS), 6/25/1999 12,022,915
TOTAL 18,672,915
KANSAS-0.1%
1,900,000 Olathe, KS, Industrial
Revenue Bonds (Series
1995) Weekly VRDNs
(Garmin International,
Inc.
Project)/(Nationsbank,
N.A., Charlotte LOC) 1,900,000
KENTUCKY-2.8%
1,440,000 Boone County, KY,
(Series 1996) Weekly
VRDNs (Western States
Envelope Co.)/(Bank One,
Wisconsin, N.A. LOC) 1,440,000
5,340,000 Henderson County, KY,
(Series 1996) Weekly
VRDNs (Audubon Metals
LLC Project)/(Harris
Trust & Savings Bank,
Chicago LOC) 5,340,000
1,730,000 Jefferson County, KY,
Industrial Building
Revenue Bonds (Series
1995) Weekly VRDNs
(Derby Industries, Inc.
Project)/(Bank One,
Kentucky LOC) 1,730,000
11,995,000 1 Kenton County, KY
Airport Board, Trust Receipts (Series 1998F- 1), TOBs (MBIA
INS)/(Bank of America NT and SA, San Francisco LIQ), Optional
Tender
5/12/1999 11,995,000
34,000,000 Owensboro, KY, (Series
1996) Weekly VRDNs
(Owensboro Mercy Health
System, Inc.
Project)/(Bank of
America, IL LOC) 34,000,000
1,800,000 Owensboro, KY, Limited
Obligation Revenue
Bonds, 3.30% TOBs (Dart
Polymers)/(NBD Bank,
Michigan LOC), Optional
Tender 6/1/1999 1,800,000
TOTAL 56,305,000
LOUISIANA-0.4%
8,000,000 Lake Charles, LA Harbor &
Terminal District,
Revenue Bonds (Series
1995A) Weekly VRDNs
(Polycom-Huntsman, Inc.
Project)/(National City,
Pennsylvania LOC) 8,000,000
MAINE-0.3%
6,900,000 Jay, ME, Solid Waste
Disposal Revenue Bonds,
4.00% TOBs
(International
Paper Co.), Optional
Tender 6/1/1999 6,900,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
MARYLAND-0.3%
$ 2,468,000 Frederick County, MD,
Series 1998A Weekly
VRDNs (Thogar, LLC)/
(FMB Bank LOC) $ 2,468,000
1,900,000 Maryland State Energy
Financing
Administration, Annual
Tender Solid Waste
Disposal Revenue
Refunding Bonds, 4.20%
TOBs (Nevamar
Corp.)/(International
Paper Co. GTD), Optional
Tender 9/1/1999 1,900,000
1,435,000 Maryland State IDFA,
(Series 1991) Weekly
VRDNs (Maryland Academy
of Sciences
Facility)/(Nationsbank,
N.A., Charlotte LOC) 1,435,000
TOTAL 5,803,000
MASSACHUSETTS-4.6%
6,097,000 Attleboro, MA, 3.90%
BANs, 9/10/1999 6,107,445
28,500,000 Commonwealth of
Massachusetts, (1997
Series B) Weekly VRDNs
(Landesbank Hessen-
Thueringen, Frankfurt
LIQ) 28,500,000
3,500,000 1 Commonwealth of Massachusetts, (Series 1998 FR/RI-A20) Weekly
VRDNs (MBIA INS)/(National Westminster Bank, PLC,
London LIQ) 3,500,000
2,450,000 1 Massachusetts HEFA,
Floater Certificates
(Series 1998-80) Weekly
VRDNs (Stonehill
College)/(MBIA
INS)/(Morgan Stanley,
Dean Witter Municipal
Funding, Inc. LIQ) 2,450,000
1,165,000 Massachusetts IFA,
(Series 1998A) Weekly
VRDNs (JHC Assisted
Living Corp.)/(Fleet
National Bank,
Springfield, MA LOC) 1,165,000
2,000,000 Massachusetts Municipal
Wholesale Electric Co.,
Power Supply System
Revenue Bonds (1994
Series C) Weekly VRDNs
(Canadian Imperial Bank
of Commerce LOC) 2,000,000
23,670,000 1 Massachusetts Water
Resources Authority, PT- 1078 Weekly VRDNs (MBIA INS)/(Bank of
America NT and SA, San Francisco
LIQ) 23,670,000
4,600,000 Springfield, MA, 4.00%
BANs (Fleet National
Bank, Springfield, MA
LOC), 9/2/1999 4,608,431
16,000,000 Sterling, MA, 3.70%
BANs, 8/5/1999 16,024,192
5,212,000 Topsfield, MA, 3.75%
BANs, 9/23/1999 5,222,833
TOTAL 93,247,901
MICHIGAN-0.0%
650,000 Dearborn, MI Economic
Development Corp.,
(Series 1990) Weekly
VRDNs (Exhibit
Productions, Inc.
Project)/(National City
Bank, Michigan/Illinois
LOC) 650,000
265,000 Michigan Strategic Fund,
Limited Obligation
Revenue Bonds (Series
1991) Weekly VRDNs
(Martin Luther Memorial
Home, Inc.)/(Bank One,
Indiana, N.A. LOC) 265,000
TOTAL 915,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
MINNESOTA-0.9%
$ 9,600,000 Brooklyn Park, MN EDA,
Brooks Landing and
Brooks Gardens (Series
1997), 4.5725% TOBs
(Bayerische Landesbank
Girozentrale), Optional
Tender 3/1/2000 $ 9,600,000
1,815,000 Coon Rapids, MN, (Series
1998) Weekly VRDNs
(Gerald R.
Sizer)/(Norwest Bank
Minnesota, N.A. LOC) 1,815,000
6,415,000 1 Minnesota Public
Facilities Authority,
Morgan Stanley Floater
Certificate
(Series 1998-73) Weekly
VRDNs (Morgan Stanley,
Dean Witter Municipal
Funding, Inc. LIQ) 6,415,000
TOTAL 17,830,000
MISSISSIPPI-1.0%
3,655,000 Mississippi Business
Finance Corp., (Series
1995) Weekly VRDNs
(Mississippi Baking
Company L.L.C.
Project)/(FMB Bank LOC) 3,655,000
5,400,000 Mississippi Business
Finance Corp., (Series
1995) Weekly VRDNs
(Schuller International,
Inc.)/(Bank of New York,
New York LOC) 5,400,000
7,500,000 Mississippi Home Corp.,
Multifamily Housing
Adjustable/Fixed Rate
Revenue Bonds (Series
1997) Weekly VRDNs
(Windsor Park
Apartments)/(SouthTrust
Bank of Alabama,
Birmingham LOC) 7,500,000
4,000,000 Warren County, MS IDA
Weekly VRDNs (Vesper Corp.)/(PNC Bank, N.A.
LOC) 4,000,000
TOTAL 20,555,000
MISSOURI-0.8%
3,890,000 Missouri Development Finance Board, (Series 1995) Weekly VRDNs
(Wilson Trailer Sales, Inc. Project)/(Norwest Bank Minnesota,
N.A.
LOC) 3,890,000
11,500,000 Missouri State HEFA
Weekly VRDNs (Barnes
Hospital)/(Morgan
Guaranty
Trust Co., New York LOC) 11,500,000
TOTAL 15,390,000
MULTI STATE-4.0%
7,000,000 1 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
5,000,000 1 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) 5,000,000
30,000,000 1 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) 30,000,000
18,497,000 1 Clipper Tax-Exempt Trust
(AMT MultiState),
(Series A) Weekly VRDNs
(State Street Bank and
Trust Co. LIQ) 18,497,000
17,214,000 1 Clipper Tax-Exempt Trust
(Non-AMT Multistate),
(Series A) Weekly VRDNs
(MBIA INS)/(State Street
Bank and Trust Co. LIQ) 17,214,000
4,995,000 1 Delaware River Port
Authority, PA, PA-443 Weekly VRDNs (FGIC INS)/(Merrill Lynch
Capital Services, Inc.
LIQ) 4,995,000
TOTAL 82,706,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
NEBRASKA-0.9%
$ 1,580,000 Douglas County, NE
Weekly VRDNs (Majors
Plastics, Inc.)/(Norwest
Bank Minnesota, N.A.
LOC) $ 1,580,000
4,900,000 Douglas County, NE, IDRB
(Series 1997) Weekly
VRDNs (American
Laboratories,
Inc.)/(Norwest Bank
Minnesota, N.A. LOC) 4,900,000
1,060,000 Douglas County, NE,
Industrial Development
Revenue Refunding Bonds
(Series 1994) Weekly
VRDNs (Omaha Fixture
Manufacturing Project)/
(NBD Bank, Michigan LOC) 1,060,000
10,825,000 1 Nebraska Investment
Finance Authority,
Variable Rate
Certificates
(Series 1998X), 3.25%
TOBs (Bank of America NT
and SA, San Francisco
LIQ), Optional Tender
6/15/1999 10,825,000
TOTAL 18,365,000
NEVADA-0.3%
3,665,000 Reno, NV, (Series 1997)
Weekly VRDNs (Drill
Systems, Inc.)/(Toronto-
Dominion Bank LOC) 3,665,000
1,900,000 Sparks, NV, IDRBs
(Series 1996) Weekly
VRDNs (The Antioch
Publishing Co.
Project)/(National City
Bank, Ohio LOC) 1,900,000
TOTAL 5,565,000
NEW JERSEY-8.6%
4,000,000 1 Camden County, NJ Improvement Authority, (Series 1996) Weekly
VRDNs (Parkview Redevelopment Housing Project)/(General
Electric Capital Corp.
LOC) 4,000,000
12,625,000 1 Clipper Tax-Exempt Trust
(New Jersey Non-AMT)
(Series 1998-6) Weekly
VRDNs (New Jersey
Housing & Mortgage
Financing
Authority)/(MBIA
INS)/(State Street Bank
and Trust Co. LIQ) 12,625,000
2,685,546 Lavallette Borough, NJ,
4.125% BANs, 4/30/1999 2,686,214
7,700,000 New Jersey EDA Weekly
VRDNs (Center-For-Aging
- Applewood
Estates)/(Fleet National
Bank, Springfield, MA
LOC) 7,700,000
6,650,000 New Jersey EDA Weekly
VRDNs (YM-YWHA of Bergen
County, NJ)/(Bank of New
York, New York LOC) 6,650,000
3,950,000 New Jersey EDA, (Series
1998A) Weekly VRDNs
(Bayshore Health Care
Center)/(KBC
Bancassurance Holding
LOC) 3,950,000
8,700,000 New Jersey EDA, (Series
1998A) Weekly VRDNs
(Jewish Home at
Rockleigh)/(Allied Irish
Banks PLC LOC) 8,700,000
5,000,000 New Jersey EDA, (Series
1998B) Weekly VRDNs
(Jewish Home at
Rockleigh)/(PNC Bank,
N.A. LOC) 5,000,000
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
7,030,000 1 New Jersey State
Educational Facilities
Authority, (Series 1998
FR/RI-A33) Trust
Receipts Weekly VRDNs
(AMBAC Financial Group,
Inc. INS)/(National
Westminster Bank, PLC,
London LIQ) 7,030,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
NEW JERSEY-CONTINUED
$ 12,000,000 1 New Jersey State
Transportation Trust
Fund Agency, (Series
1998 FR/RI-A21) Weekly
VRDNs (AMBAC Financial
Group, Inc.
INS)/(National
Westminster Bank, PLC,
London LIQ) $ 12,000,000
10,000,000 1 New Jersey State
Transportation Trust Fund Agency, Floater Certificates (Series
1998-54) Weekly VRDNs (FSA INS)/(Morgan Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) 10,000,000
31,605,000 1 New Jersey State
Transportation Trust
Fund Agency, TOCs Trust
Series 1999-2 Weekly
VRDNs (FSA INS)/(Chase
Manhattan Bank N.A., New
York LIQ) 31,605,000
23,760,000 1 New Jersey State
Transportation Trust
Fund Agency, Trust
Receipts FR/RI-A37
Weekly VRDNs (AMBAC
Financial Group, Inc.
INS)/(National
Westminster Bank, PLC,
London LIQ) 23,760,000
6,300,000 1 New Jersey State, PA-265
Weekly VRDNs (Merrill
Lynch Capital Services,
Inc. LIQ) 6,300,000
12,000,000 Trenton, NJ, 3.25% BANs,
3/10/2000 12,010,827
7,640,000 Trenton, NJ, 4.00% BANs,
10/21/1999 7,673,738
3,509,500 West Amwell Township,
NJ, 3.40% BANs,
3/24/2000 3,516,143
TOTAL 175,201,922
NEW MEXICO-0.5%
2,000,000 Albuquerque, NM, (Series
1996A) Weekly VRDNs (El
Encanto, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,000,000
3,300,000 Albuquerque, NM, Revenue
Refunding Bonds (Series
1992) Weekly
VRDNs (Charter Hospital
of Albuquerque,
Inc.)/(Chase Manhattan
Bank N.A.,
New York LOC) 3,300,000
4,700,000 Las Cruces, NM, IDRB
(Series 1994A) Weekly
VRDNs (F & A Dairy
Products, Inc.
Project)/(Norwest Bank
Minnesota, N.A. LOC) 4,700,000
TOTAL 10,000,000
NEW YORK-7.8%
8,750,000 Lansingburgh, NY Central
School District, 3.90%
BANs, 6/18/1999 8,751,795
4,500,000 Levittown Union Free
School District, NY,
3.80% TANs, 6/23/1999 4,500,977
8,815,000 1 Metropolitan
Transportation Authority, New York, Commuter Facilities Revenue
Bonds (PA-168) Weekly VRDNs (FGIC INS)/(Merrill Lynch Capital
Services, Inc.
LIQ) 8,815,000
1,500,000 New York City, NY
Transitional Finance
Authority, (1998
Subseries A-1) Weekly
VRDNs (Commerzbank AG,
Frankfurt LIQ) 1,500,000
13,000,000 1 New York City, NY, Trust
Receipts (Series 1998
FR/RI A-79), 2.90% TOBs
(National Westminster
Bank, PLC, London LIQ),
Optional Tender
4/13/1999 13,000,000
10,000,000 1 New York City, NY, Trust
Receipts (Series 1998
FR/RI-A77), 2.90% TOBs
(National Westminster
Bank, PLC, London LIQ),
Optional Tender
4/13/1999 10,000,000
10,000,000 New York City, NY, UT GO (Series F), 4.10% Bonds,
8/1/1999 10,009,733
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
NEW YORK-CONTINUED
$ 10,475,000 1 New York State Dormitory
Authority, PA-60 (Series
1993) Weekly VRDNs
(Rochester General
Hospital)/(FHA
INS)/(Merrill Lynch
Capital Services, Inc.
LIQ) $ 10,475,000
19,000,000 New York State Energy
Research & Development
Authority Daily VRDNs
(Niagara Mohawk Power
Corp.)/(Toronto-Dominion
Bank LOC) 19,000,000
600,000 1 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) 600,000
2,500,000 1 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
4,340,000 1 New York State Medical Care Facilities Finance Agency, (1994
Series C) (PA-89) Weekly VRDNs (FHA INS)/(Merrill Lynch Capital
Services, Inc.
LIQ) 4,340,000
9,938,000 Rochester, NY, 3.10%
BANs, 10/28/1999 9,949,066
4,200,000 Salem, NY Central School
District, 3.50% BANs,
10/28/1999 4,204,664
13,900,000 1 Triborough Bridge &
Tunnel Authority, NY, Floater Certificates (Series 1998-72)
Weekly VRDNs (FGIC INS)/(Morgan Stanley, Dean Witter Municipal
Funding, Inc.
LIQ) 13,900,000
23,400,000 1 Triborough Bridge &
Tunnel Authority, NY,
Trust Receipts (Series
1998 FR/RI-A1) Weekly
VRDNs (Bayerische
Hypotheken-und
Vereinsbank AG LIQ) 23,400,000
1,100,000 1 VRDC/IVRC Trust, (Series
1992A) Weekly VRDNs (New York City Municipal Water Finance
Authority)/(MBIA INS)/(Hong Kong & Shanghai Banking Corp.
LIQ) 1,100,000
12,000,000 1 VRDC/IVRC Trust, (Series
1993B) Weekly VRDNs
(Metropolitan
Transportation
Authority, New
York)/(AMBAC Financial
Group, Inc. INS)/(Hong
Kong & Shanghai Banking
Corp. LIQ) 12,000,000
2,000,000 1 VRDC/IVRC Trust, (Series
1993G) Weekly VRDNs (St.
Lukes Roosevelt Hospital
Center)/(FHA INS)/(Hong
Kong & Shanghai Banking
Corp. LIQ) 2,000,000
TOTAL 160,046,235
NORTH CAROLINA-6.3%
10,000,000 1 ABN AMRO MuniTOPS
Certificates Trust
(North Carolina Non-Amt)
(Series 1998-23), 3.25%
TOBs (Mission St.
Josephs Health System)/
(MBIA INS)/(ABN AMRO
Bank N.V., Amsterdam
LIQ), Optional Tender
6/2/1999 10,000,000
4,600,000 Catawba County, NC
Industrial Facilities
and PCFA, (Series 1994)
Weekly VRDNs (Ethan
Allen Inc.
Project)/(Bankers Trust
Co., New York LOC) 4,600,000
20,830,000 1 Charlotte, NC, Floater
Certificates (Series
1998-69) Weekly VRDNs
(Morgan Stanley, Dean
Witter Municipal
Funding, Inc. LIQ) 20,830,000
1,000,000 Cleveland County, NC
Industrial Facilities
and PCFA Weekly VRDNs
(PPG Industries, Inc.) 1,000,000
7,495,000 1 Clipper, NC Tax-Exempt
Trust Weekly VRDNs
(North Carolina State)/
(State Street Bank and
Trust Co. LIQ) 7,495,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
NORTH CAROLINA-CONTINUED
$ 17,400,000 Martin County, NC IFA,
(Series 1993) Weekly
VRDNs (Weyerhaeuser Co.) $ 17,400,000
9,100,000 New Hanover County, NC
PCFA, (Series 1984)
Weekly VRDNs (American
Hoist
& Derrick Co.
Project)/(BankBoston,
N.A. LOC) 9,100,000
7,766,000 1 North Carolina Eastern Municipal Power Agency, PA -171
(Series 1996A) Weekly VRDNs (MBIA INS)/(Merrill Lynch Capital
Services, Inc.
LIQ) 7,766,000
16,000,000 1 North Carolina Eastern
Municipal Power Agency,
PT-132 Weekly VRDNs
(MBIA INS)/(Credit
Suisse First Boston LIQ) 16,000,000
1,800,000 North Carolina
Educational Facilities
Finance Agency, (Series
1990) Weekly VRDNs (Bowman Gray School of Medicine)/(Wachovia
Bank of NC, N.A., Winston-
Salem LOC) 1,800,000
4,000,000 North Carolina Medical
Care Commission, (Series
1996) Weekly VRDNs
(Adult Communities Total
Services, Inc.)/(Lasalle
National Bank, Chicago
LOC) 4,000,000
1,000,000 North Carolina Medical
Care Commission, (Series
1996) Weekly VRDNs
(North Carolina Baptist) 1,000,000
5,500,000 North Carolina Medical
Care Commission, (Series
1998) Weekly VRDNs
(Cornelia Nixon Davis
Nursing Home,
Inc.)/(Wachovia Bank of
NC, N.A., Winston-Salem
LOC) 5,500,000
3,000,000 North Carolina Medical Care Commission, Revenue Bonds (Series
1993) Weekly VRDNs (Moses H.
Cone Memorial) 3,000,000
3,000,000 North Carolina Municipal
Power Agency No. 1,
(Series A), 3.15% CP
(Morgan Guaranty Trust
Co., New York and UBS AG
LOCs), Mandatory Tender
7/22/1999 3,000,000
17,255,000 1 North Carolina State,
Floater Certificates
(Series 1998-38) Weekly
VRDNs
(Morgan Stanley, Dean
Witter Municipal
Funding, Inc. LIQ) 17,255,000
TOTAL 129,746,000
NORTH DAKOTA-0.1%
2,050,000 Fargo, ND, IDRB (Series 1994) Weekly VRDNs (Pan- O-Gold Baking
Co. Project)/(Norwest Bank
Minnesota, N.A. LOC) 2,050,000
OHIO-1.0%
7,500,000 Banc One Capital Higher
Education Tax-Exempt
Income Trust, (Series 2
Certificates of
Ownership) Weekly VRDNs
(Bank One, Kentucky LOC) 7,500,000
7,185,000 Franklin County, OH
Hospital Facility
Authority, (Series 1992)
Weekly VRDNs (Wesley
Glenn, Inc.)/(Fifth
Third Bank, Cincinnati
LOC) 7,185,000
5,600,000 Miami County, OH, 3.90%
BANs, 7/15/1999 5,603,418
TOTAL 20,288,418
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
OKLAHOMA-1.6%
$ 2,295,000 Claremore, OK IDA Weekly
VRDNs (Baldor Electric
Co.)/
(Wachovia Bank of NC,
N.A., Winston-Salem LOC) $ 2,295,000
1,990,000 Oklahoma County, OK
Finance Authority,
(Series 1996) Weekly
VRDNs
(Avalon Project)/(Bank
One, Texas N.A. LOC) 1,990,000
9,000,000 Oklahoma State
Industrial Authority,
Flexible Rate Hospital
Revenue Bonds
(Series 1990B) Weekly
VRDNs (Baptist Medical
Center, OK)/(Morgan
Guaranty Trust Co., New
York LIQ) 9,000,000
20,000,000 Oklahoma State
Industrial Authority,
Health System Revenue
Bonds
(Series 1995A) Weekly
VRDNs (Baptist Medical
Center, OK)/
(Morgan Guaranty Trust
Co., New York LIQ) 20,000,000
TOTAL 33,285,000
PENNSYLVANIA-2.9%
6,000,000 Allegheny County, PA
IDA, (Series 1986)
Weekly VRDNs (Dowty
Corp.)/
(U.S. Bank, N.A.,
Minneapolis LOC) 6,000,000
22,000,000 Clinton County, PA IDA,
Solid Waste Disposal
Revenue Bonds (Series
1992A), 3.95% TOBs
(International Paper
Co.), Optional Tender
1/15/2000 22,000,000
1,840,000 Clinton County, PA
Municipal Authority,
(Series A) Weekly VRDNs
(Lock Haven
Hospital)/(PNC Bank,
N.A. LOC) 1,840,000
1,455,000 Erie County, PA IDA,
Multi Mode Revenue
Refunding Bonds Weekly
VRDNs
(Corry Manor, Inc.)/(PNC
Bank, N.A. LOC) 1,455,000
2,000,000 Montgomery County, PA
IDA Weekly VRDNs
(Plymouth Woods)/
(PNC Bank, N.A. LOC) 2,000,000
1,000,000 Pennsylvania EDFA, (1995
Series E) Weekly VRDNs
(Home Nursing Agency
Affiliates Project)/(PNC
Bank, N.A. LOC) 1,000,000
8,495,000 1 Pennsylvania HFA,
Variable Rate
Certificates 1998-Y,
3.20% TOBs (Bank of
America NT and SA, San
Francisco LIQ), Optional
Tender 5/15/1999 8,495,000
10,000,000 Philadelphia, PA School
District, (Series B),
4.25% TRANs
(PNC Bank, N.A. LOC),
6/30/1999 10,014,752
7,250,000 Philadelphia, PA, 4.25%
TRANs, 6/30/1999 7,260,594
TOTAL 60,065,346
PUERTO RICO-0.5%
10,000,000 1 Commonwealth of Puerto Rico, Floater Certificates (Series
1998-87) Weekly VRDNs (MBIA INS)/(Morgan Stanley, Dean Witter
Municipal Funding, Inc.
LIQ) 10,000,000
SOUTH CAROLINA-0.4%
7,325,000 1 ABN AMRO MuniTOPS Certificates Trust (Multistate AMT) (Series
1998-7) Weekly VRDNs (South Carolina State Ports
Authority)/(FSA INS)/(ABN AMRO Bank
N.V., Amsterdam LIQ) 7,325,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
SOUTH DAKOTA-1.2%
$ 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
14,000,000 South Dakota Housing
Development Authority,
(Series I), 3.20% BANs,
12/2/1999 14,000,000
1,135,000 1 South Dakota Housing
Development Authority,
CDC Municipal Products,
Inc. Class A
Certificates (Series
1996C) Weekly VRDNs (CDC
Municipal Products, Inc.
LIQ) 1,135,000
3,335,000 South Dakota Housing
Development Authority,
Homeownership Mortgage
Bonds (1997 Series E)
Weekly VRDNs 3,335,000
790,000 1 South Dakota Housing
Development Authority,
PT-85 (1988 Series A)
Weekly VRDNs (Rabobank
Nederland, Utrecht LIQ) 790,000
780,000 Watertown, SD, (Series
1991) Weekly VRDNs (Tescom Corp.)/(Norwest Bank Minnesota, N.A.
LOC) 780,000
TOTAL 25,480,000
TENNESSEE-0.5%
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)/(Nationsbank,
N.A., Charlotte LOC) 2,000,000
3,495,000 1 Tennessee Housing
Development Agency,
(Series 1997K) Weekly
VRDNs
(Bank of America NT and
SA, San Francisco LIQ) 3,495,000
205,000 Washington County, TN
IDB, Revenue Refunding
Bonds (Series 1996)
Weekly VRDNs
(Springbrook Properties
Project)/(SunTrust Bank,
Nashville LOC) 205,000
TOTAL 11,000,000
TEXAS-5.5%
15,750,000 1 ABN AMRO MuniTOPS Certificates Trust (Multistate AMT) (Series
1998-15), 3.25% TOBs (Houston, TX Airport System)/(FGIC
INS)/(ABN AMRO Bank N.V., Amsterdam LIQ), Optional
Tender 6/2/1999 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), 3.80% CP (Temple-
Eastex, Inc.)/(Temple-
Inland, Inc. GTD),
Mandatory Tender
4/9/1999 17,950,000
3,000,000 Angelina and Neches
River Authority, Texas,
Solid Waste Disposal
Revenue Bonds (Series
1998), 3.70% CP (Temple-
Inland Forest Products
Corp.)/(Temple-Inland,
Inc. GTD), Mandatory
Tender 4/13/1999 3,000,000
900,000 Corpus Christi, TX IDC
Weekly VRDNs (Grainger
(W.W.), Inc.) 900,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
TEXAS-CONTINUED
$ 1,500,000 Harris County, TX
Cultural Education
Facilities Finance Corp.
Weekly VRDNs (Houston
Museum of Natural
Sciences)/(Bank One,
Texas N.A. LOC) $ 1,500,000
3,500,000 Harris County, TX HFDC,
(Series 1994) Daily
VRDNs (Methodist
Hospital,
Harris County, TX) 3,500,000
10,000,000 1 Harris County, TX HFDC,
Trust Receipts (Series
1997) Weekly VRDNs
(Hermann Hospital)/(MBIA
INS)/(Bank of New York,
New York LIQ) 10,000,000
955,000 Harris County, TX IDC
Weekly VRDNs (Grainger
(W.W.), Inc.) 955,000
27,460,000 1 Irving, TX Independent
School District, PT-1048
Weekly VRDNs
(Texas Permanent School
Fund Guarantee Program
GTD)/(Bank of America NT
and SA, San Francisco
LIQ) 27,460,000
1,530,000 Liberty County, TX IDA
Weekly VRDNs (Insteel
Industries, Inc.)/(First
Union National Bank,
Charlotte, NC LOC) 1,530,000
1,480,000 North Richland Hills, TX
IDC Weekly VRDNs
(Tecnol,
Inc.)/(Nationsbank,
N.A., Charlotte LOC) 1,480,000
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
9,345,000 Texas Small Business
IDC, (Series 1986)
Weekly VRDNs (Texas
Public Facilities
Capital Access
Program)/(KBC
Bancassurance Holding
LOC) 9,345,000
TOTAL 113,370,000
UTAH-0.4%
7,400,000 Salt Lake County, UT,
Multifamily Housing
Revenue Refunding Bonds
(Series 1992) Weekly
VRDNs (Santa Fe
Apartments)/(First
Security Bank
of Utah, N.A. LOC) 7,400,000
VIRGINIA-4.2%
3,350,000 Arlington County, VA
Weekly VRDNs (Ballston
Public Parking)/
(Citibank N.A., New York
LOC) 3,350,000
9,000,000 Chesterfield County, VA
IDA, 3.10% CP (Virginia
Electric Power Co.),
Mandatory Tender
8/13/1999 9,000,000
6,100,000 Fairfax County, VA EDA,
(Series 1995) Weekly
VRDNs (American Society
of Civil Engineers
Foundation, Inc.
Project)/(Mellon Bank
N.A., Pittsburgh LOC) 6,100,000
1,065,000 Fairfax County, VA EDA,
Facilities Revenue
Refunding Bonds (Series
1993) Weekly VRDNs
(Future Homemakers of
America)/(Nationsbank,
N.A., Charlotte LOC) 1,065,000
1,800,000 Fairfax County, VA IDA
Weekly VRDNs (Inova
Health System)/(Credit
Suisse First Boston LIQ) 1,800,000
5,500,000 1 Fairfax County, VA IDA,
1998 Trust Receipts
FR/RI-A35 Weekly VRDNs
(Fairfax Hospital
System)/(National
Westminster Bank, PLC,
London LIQ)/
(United States Treasury
PRF) 5,500,000
2,400,000 Fauquier County, VA IDA,
Revenue Refunding Bonds
Weekly VRDNs
(Warrenton Development
Co.)/(Nationsbank, N.A.,
Charlotte LOC) 2,400,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
VIRGINIA-CONTINUED
$ 3,500,000 Hampton, VA
Redevelopment & Housing
Authority, (Series 1998)
Weekly VRDNs (Township
Apartments)/(Amsouth
Bank N.A., Birmingham
LOC) $ 3,500,000
16,800,000 1 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
22,000,000 James City County, VA
IDA, (Series 1997)
Weekly VRDNs (Riverside
Health
System-Patriots Colony) 22,000,000
2,945,000 Richmond, VA
Redevelopment & Housing
Authority, (Series 1989)
Weekly VRDNs (Belmont
Apartment)/(First Union
National Bank,
Charlotte, NC LOC) 2,945,000
4,000,000 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), 3.15% CP
(Virginia Electric Power
Co.), Mandatory Tender
8/13/1999 7,800,000
TOTAL 86,260,000
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-0.9%
4,000,000 Beloit, WI School
District, 3.35% TRANs,
10/29/1999 4,002,468
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
640,000 Spooner, WI, (Series
1994) Weekly VRDNs (Nash
Finch Co.)/(U.S. Bank,
N.A., Minneapolis LOC) 640,000
2,600,000 Superior, WI, (Series
1998) Weekly VRDNs
(Partridge River
Superior, Inc.)/(Norwest
Bank Minnesota, N.A.
LOC) 2,600,000
2,235,000 Wisconsin HEFA, (Series
1997) Weekly VRDNs (16th
Street Community Health
Center, Inc.)/(Bank One,
Wisconsin, N.A. LOC) 2,235,000
5,220,000 Wisconsin HEFA, (Series
1997) Weekly VRDNs
(Cedar Crest, Inc.)/
(Bank One, Wisconsin,
N.A. LOC) 5,220,000
TOTAL 19,347,468
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM MUNICIPALS-
continued
WYOMING-0.1%
$ 1,830,000 Sweetwater County, WY
IDA Weekly VRDNs (FMC
Gold Co.)/(Wachovia Bank
of NC, N.A., Winston-
Salem LOC) $ 1,830,000
TOTAL INVESTMENTS (AT
AMORTIZED COST) 2 $ 2,023,160,259
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 19.7% 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 by criteria
approved by the fund's board of directors. At March 31, 1999, these securities
amounted to $855,754,524, which represents 41.8% of net assets.
2 Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($2,045,189,236) at March 31, 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 Bond FGIC -Financial Guaranty Insurance
Company FHA -Federal Housing Administration FSA -Financial Security Assurance
GNMA -Government National Mortgage Association GO -General Obligation GTD
- -Guaranty HEFA -Health and Education Facilities Authority HFA -Housing Finance
Authority HFDC -Health Facility Development Corporation IDA -Industrial
Development Authority IDB -Industrial Development Bond IDC -Industrial
Development Corporation IDR -Industrial Development Revenue IDRB -Industrial
Development Revenue Bond IDFA -Industrial Development Finance Authority IFA
- -Industrial Finance Authority INS -Insured LIQ -Liquidity Agreement LOC(s)
- -Letter(s) of Credit MBIA -Municipal Bond Investors Assurance MERLOTS -Municipal
Exempt Receipts Liquidity Optional Tender Series PCFA -Pollution Control Finance
Authority PCR -Pollution Control Revenue PCRB(s) -Pollution Control Revenue
Bond(s) PRF -Prerefunded SA -Support Agreement TANs -Tax Anticipation Notes TOBs
- -Tender Option Bonds TRANs -Tax and Revenue Anticipation Notes UT -Unlimited Tax
VRDNs -Variable Rate Demand Notes
The Trust may only invest in securities rated in one of the two highest
short-term rating categories by nationally recognized statistical rating
organizations ("NRSROs") or unrated securities of comparable quality. An NRSRO's
two highest rating categories are determined without regard for sub- categories
and gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's ("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, 1999, the
portfolio securities were rated as follows:
TIER RATING PERCENT BASED ON TOTAL MARKET VALUE (UNAUDITED)
FIRST TIER SECOND TIER
94.2% 5.8%
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
MARCH 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Total investments in
securities, at amortized
cost and value $ 2,023,160,259
Cash 1,420,082
Income receivable 14,209,473
Receivable for shares
sold 15,235,905
TOTAL ASSETS 2,054,025,719
LIABILITIES:
Payable for investments
purchased $ 1,332,416
Payable for shares
redeemed 5,383,444
Income distribution
payable 1,533,179
Accrued expenses 587,444
TOTAL LIABILITIES 8,836,483
Net assets for
2,045,202,194 shares
outstanding $ 2,045,189,236
NET ASSETS CONSIST OF:
Paid in capital $ 2,045,202,194
Undistributed net
investment income 5,242
Accumulated net realized
loss on investments (18,200)
TOTAL NET ASSETS $ 2,045,189,236
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PROCEEDS PER
SHARE:
INVESTMENT SHARES:
$1,771,606,207 /
1,771,511,401 shares
outstanding $1.00
INSTITUTIONAL SERVICE
SHARES:
$273,583,029 /
273,690,793 shares
outstanding $1.00
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Operations
YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 68,194,508
EXPENSES:
Investment advisory fee $ 9,674,880
Administrative personnel
and services fee 1,458,972
Custodian fees 61,722
Transfer and dividend
disbursing agent fees
and expenses 624,655
Directors'/Trustees'
fees 24,482
Auditing fees 17,979
Legal fees 30,525
Portfolio accounting
fees 135,376
Shareholder services
fee-Investment Shares 4,152,784
Shareholder services
fee-Institutional
Service Shares 684,656
Share registration costs 91,219
Printing and postage 107,620
Insurance premiums 251,707
Miscellaneous 19,786
TOTAL EXPENSES 17,336,363
WAIVERS:
Waiver of investment
advisory fee $ (1,082,563)
Waiver of shareholder
services fee-Investment
Shares (1,661,114)
Waiver of shareholder
services fee-
Institutional Service
Shares (684,656)
TOTAL WAIVERS (3,428,333)
Net expenses 13,908,030
Net investment income 54,286,478
Net realized gain on
investments 189,574
Change in net assets
resulting from
operations $ 54,476,052
</TABLE>
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment income $ 54,286,478 $ 55,234,088
Net realized gain on
investments ($189,574
and $241,962 net gains,
respectively, as
computed for federal
income tax purposes) 189,574 241,962
CHANGE IN NET ASSETS
RESULTING FROM
OPERATIONS 54,476,052 55,476,050
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income
Investment Shares (46,223,330) (46,640,752)
Institutional Service
Shares (8,063,148) (8,593,336)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (54,286,478) (55,234,088)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 5,621,973,916 5,300,217,398
Net asset value of shares
issued to shareholders
in payment of
distributions declared 45,729,563 46,548,654
Cost of shares redeemed (5,553,095,455) (5,171,480,575)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 114,608,024 175,285,477
Change in net assets 114,797,598 175,527,439
NET ASSETS:
Beginning of period 1,930,391,638 1,754,864,199
End of period (including
undistributed net
investment income of
$5,242 and $5,242,
respectively) $ 2,045,189,236 $ 1,930,391,638
</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>
YEAR ENDED MARCH 31 1999 1998 1997 1996 1995
<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 0.03
LESS DISTRIBUTIONS:
Distributions from net
investment income (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
TOTAL RETURN 1 2.83% 3.10% 2.92% 3.32% 2.70%
RATIOS TO AVERAGE
NET ASSETS:
Expenses 0.74% 0.73% 0.71% 0.71% 0.70%
Net investment income 2.78% 3.04% 2.88% 3.27% 2.66%
Expense waiver/reimbursement 2 0.16% 0.16% 0.18% 0.24% 0.17%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $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 con
tingent deferred sales charge, if applicable.
2 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
Financial Highlights-Institutional Service Shares
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998 1997 1996 1995
<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 0.03
LESS DISTRIBUTIONS:
Distributions from net
investment income (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
TOTAL RETURN 1 2.98% 3.25% 3.08% 3.47% 2.85%
RATIOS TO AVERAGE NET ASSETS:
Expenses 0.59% 0.58% 0.56% 0.56% 0.55%
Net investment income 2.93% 3.19% 3.02% 3.43% 2.82%
Expense waiver/reimbursement 2 0.31% 0.31% 0.33% 0.40% 0.17%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $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 con
tingent deferred sales charge, if applicable.
2 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
Notes to Financial Statements
MARCH 31, 1999
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 alterna
tive minimum 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 regu
lated 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 pay ment
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 registra tion
under federal securities laws or in transactions exempt from such regis tration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securi ties may be
resold without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Board of Trustees. The Trust will not incur any registra tion 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 rev enues 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 March 31, 1999, capital paid-in aggregated $2,045,202,194.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31 1999 1998
<S> <C> <C>
INVESTMENT SHARES:
Shares sold 4,781,934,595 4,451,502,443
Shares issued to
shareholders in payment
of distributions
declared 45,282,001 45,566,902
Shares redeemed (4,702,040,492) (4,357,926,684)
NET CHANGE RESULTING
FROM INVESTMENT SHARE
TRANSACTIONS 125,176,104 139,142,661
<CAPTION>
YEAR ENDED MARCH 31 1999 1998
<S> <C> <C>
INSTITUTIONAL SERVICE
SHARES:
Shares sold 840,039,321 848,714,955
Shares issued to
shareholders in payment
of distributions
declared 447,562 981,752
Shares redeemed (851,054,963) (813,553,891)
NET CHANGE RESULTING
FROM INSTITUTIONAL
SERVICE
SHARE TRANSACTIONS (10,568,080) 36,142,816
NET CHANGE RESULTING
FROM SHARE TRANSACTIONS 114,608,024 175,285,477
</TABLE>
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 volun tary waiver
at any time at its sole discretion.
Effective March 31, 1999, Federated Management merged into Federated Advis ers.
Also effective on March 31, 1999, Federated Advisers changed its name to
Federated Investment Management Company.
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 Adminis trative
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 Share holder
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 discre tion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES
FServ, through its subsidiary FSSC, serves as transfer and dividend disburs ing
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, 1999, the Trust engaged in purchase and sale
transactions with funds that have a common investment adviser (or affil iated
investment advisers), common Directors/Trustees, and/or common Offic ers. These
purchase and sale transactions were made at current market value pursuant to
Rule 17a-7 under the Act amounting to $3,536,688,641 and $3,500,587,094,
respectively.
GENERAL
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
YEAR 2000 (UNAUDITED)
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 mea sures 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 port
folio of investments, as of March 31, 1999, the related statement of opera tions
for the year then ended, 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
five years in the period then ended. These financial state ments and financial
highlights are the responsibility of the Trust's manage ment. 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 stan
dards. 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 finan cial
statements. Our procedures included confirmation of securities owned as of March
31, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant esti mates
made by management, as well as evaluating the overall financial state ment
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, 1999, the results of its opera tions
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 each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Boston, Massachusetts
May 18, 1999
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
RICHARD J. THOMAS
Treasurer
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 gov
ernment agency. Investment in mutual funds involves investment risk, includ ing
the possible loss of principal. Although money market funds seek to maintain a
stable net asset value of $1.00 per share, there is no assurance that they will
be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the trust's prospectus which contains facts con
cerning its objective and policies, management fees, expenses, and other
information.
AS OF MARCH 31, 1999
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Federated
World-Class Investment Manager
ANNUAL REPORT
Tax-Free Instruments Trust
Established 1981
16TH ANNUAL REPORT
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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
8042604 (5/99)
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