Report of Ernst & Young LLP, Independent Auditors
Board of Trustees of
Federated Institutional Trust
In planning and performing our audit of the financial statements
of the Federated Government Ultrashort Fund (formerly, Federated
Institutional Short Duration Government Fund) (the "Fund", one
portfolio constituting the Federated Institutional Trust) for the
year ended July 31, 2000, we considered its internal control,
including control activities for safeguarding securities, to
determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and to comply with the
requirements of Form N-SAR, and not to provide assurance on
internal control.
The management of the Fund is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess
the expected benefits and related costs of internal control.
Generally, internal controls that are relevant to an audit
pertain to the Fund's objective of preparing financial
statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles.
Those internal controls include the safeguarding of assets
against unauthorized acquisition, use, or disposition.
Because of inherent limitations in any internal control,
misstatements due to errors or fraud may occur and not be
detected. Also, projections of any evaluation of internal
control to future periods are subject to the risk that internal
control may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or
procedures may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material
weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a
condition in which the design or operation of one or more of
the specific internal control components does not reduce to a
relatively low level the risk that errors or fraud in amounts
that would be material in relation to the consolidated financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing
their assigned functions. However, we noted no matters involving
internal control, including control activities for safeguarding
securities, and its operation that we consider to be material
weaknesses as defined above as of July 31, 2000.
This report is intended solely for the information and use of
the board of trustees and management of the Federated Government
Ultrashort Fund of the Federated Institutional Trust and the
Securities and Exchange Commission and is not intended to be and
should not be used by anyone other than these specified parties.
ERNST & YOUNG LLP
Boston, Massachusetts
September 14, 2000
