<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1995
SECURITIES ACT FILE NO. 2-78646
INVESTMENT COMPANY ACT FILE NO. 811-3189
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 14 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 29 /X/
(Check appropriate box or boxes)
------------------------
SUMMIT CASH RESERVES FUND
OF FINANCIAL INSTITUTIONS SERIES TRUST
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C>
800 Scudders Mill Road
Plainsboro, New Jersey 08536
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, including Area Code (609) 282-2800
Arthur Zeikel
Financial Institutions Series Trust
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011
(Name and address of Agent for Service)
Copies to:
<TABLE>
<S> <C>
Philip L. Kirstein, Esq. Counsel for the Trust:
FUND ASSET MANAGEMENT, L.P. BROWN & WOOD
P.O. Box 9011 One World Trade Center
Princeton, New Jersey 08543-9011 New York, N.Y. 10048
Attention: Thomas R. Smith, Jr.
</TABLE>
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
/x/ immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
------------------------
The Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act
of 1940. The notice required by such rule for the Registrant's most recent
fiscal year was filed on July 20, 1995.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT OF MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES SHARES BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE* FEE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of beneficial interest (par
value $.10 per share)............... 438,372,555 $1.00 $290,000 $100
</TABLE>
*(1) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940.
(2) The total amount of securities redeemed or repurchased during Registrant's
previous fiscal year was 438,082,555 shares of beneficial interest.
(3) None of the shares described in (2) above have been used for reduction
pursuant to Rule 24e-2(a) or Rule 24f-2(c) under the Investment Company Act
of 1940 in previous filings during Registrant's current fiscal year.
(4) 438,082,555 of the shares redeemed during Registrant's previous fiscal year
are being used for the reduction of the registration fee in this amendment
of the Registration Statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUMMIT CASH RESERVES FUND
FINANCIAL INSTITUTIONS SERIES TRUST
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------- -----------------------------------------------
<S> <C>
PART A
Item 1. Cover Page...................................... Cover Page
Item 2. Synopsis........................................ Fee Table
Item 3. Condensed Financial Information................. Supplementary Financial Information;
Yield Information
Item 4. General Description of Registrant............... Investment Objectives and Policies; Additional
Information
Item 5. Management of the Fund.......................... Fee Table; Management of the Trust; Portfolio
Transactions; Inside Back
Cover Page
Item 5A. Management's Discussion of Fund Performance.... Not Applicable
Item 6. Capital Stock and Other Securities.............. Cover Page; Additional Information
Item 7. Purchase of Securities Being Offered............ Fee Table; Purchase of Shares; Additional
Information; Inside Back Cover Page
Item 8. Redemption or Repurchase........................ Fee Table; Redemption of Shares
Item 9. Pending Legal Proceedings....................... Not Applicable
PART B
Item 10. Cover Page...................................... Cover Page
Item 11. Table of Contents............................... Back Cover Page
Item 12. General Information and History................. Not Applicable
Item 13. Investment Objectives and Policies.............. Investment Objectives and Policies
Item 14. Management of the Fund.......................... Management of the Trust
Item 15. Control Persons and Principal Holders of
Securities...................................... Not Applicable
Item 16. Investment Advisory and Other Services.......... Management of the Trust; Purchase of Shares;
General Information
Item 17. Brokerage Allocation............................ Portfolio Transactions; Financial
Statements
Item 18. Capital Stock and Other Securities.............. General Information--Description of
Series and Shares
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered................................... Purchase of Shares; Redemption of
Shares; Purchase and Redemption of
Shares Through Certain Retirement
Plans; Determination of Net Asset
Value; Shareholder Services
Item 20. Tax Status...................................... Taxes
Item 21. Underwriters.................................... Purchase of Shares
Item 22. Calculation of Performance Data................. Yield Information
Item 23. Financial Statements............................ Financial Statements
PART C
</TABLE>
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
SEPTEMBER 27, 1995
SUMMIT CASH RESERVES FUND
FINANCIAL INSTITUTIONS SERIES TRUST
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 PHONE NO. (609) 282-2800
The investment objectives of the Summit Cash Reserves Fund (the 'Money
Fund') are to seek current income, preservation of capital and liquidity
available from investing in a diversified portfolio of short-term money market
securities. These securities will primarily consist of U.S. Government and
Government agency securities, bank certificates of deposit and bankers'
acceptances, commercial paper and repurchase agreements. For purposes of its
investment policies, the Money Fund defines short-term money market securities
as having a maturity of no more than 762 days (25 months) in the case of U.S.
Government and Government agency securities and no more than 397 days (13
months) in the case of all other securities. There can be no assurance that the
investment objectives of the Money Fund will be realized. The Money Fund is a
separate series of Financial Institutions Series Trust (the 'Trust'), a no-load,
diversified, open-end investment company organized as a Massachusetts business
trust.
The net income of the Money Fund is declared as dividends daily and
reinvested daily in additional shares at net asset value. THE MONEY FUND SEEKS
TO MAINTAIN A CONSTANT $1.00 NET ASSET VALUE PER SHARE, ALTHOUGH THIS CANNOT BE
ASSURED. AN INVESTMENT IN THE MONEY FUND IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. In order to maintain a constant net asset value of $1.00
per share, the Money Fund may reduce the number of shares held by its
shareholders.
Shares of the Money Fund may be purchased at their net asset value without
any sales charge. The minimum initial purchase is $5,000 and subsequent
purchases generally must be $1,000 or more, except that lower minimums apply in
the case of purchases by certain retirement plans and for accounts advised by
banks and registered investment advisers. Shares may be redeemed at any time at
net asset value as described herein. See 'Purchase of Shares' and 'Redemption of
Shares.'
Shares of the Money Fund are being offered by certain securities dealers
which have entered into securities clearing arrangements or have other business
relationships with Broadcort Capital Corp.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Prospectus is a concise statement of information about the Money Fund
that is relevant to making an investment in the Money Fund. This Prospectus
should be read carefully and retained for future reference. A statement
containing additional information about the Money Fund, dated September 27, 1995
(the 'Statement of Additional Information'), has been filed with the Securities
and Exchange Commission and can be obtained, without charge, by calling or by
writing the Money Fund at the above telephone number or address. The Statement
of Additional Information is hereby incorporated by reference into this
Prospectus.
------------------------
FUND ASSET MANAGEMENT -- INVESTMENT MANAGER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC. -- DISTRIBUTOR
<PAGE>
FEE TABLE
ANNUAL MONEY FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) FOR
THE FISCAL YEAR ENDED
MAY 31, 1995:
<TABLE>
<S> <C>
Management Fees....................................... 0.28%(a)
Administration Fees................................... 0.28%
Other Expenses
Dividend and Transfer Agency
Fees........................... 0.18%(b)
Other............................ 0.24%
-----------
Total Other Expenses.......................... 0.42%
-----------
TOTAL MONEY FUND OPERATING EXPENSES.......................... 0.98%
-----------
-----------
</TABLE>
- ------------------
(a) See 'Management of the Trust--Management and Advisory Arrangements'--page 9.
(b) See 'Management of the Trust--Transfer Agency Services'--page 10.
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID FOR THE PERIOD OF:
-------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment assuming an operating expense ratio of 0.98% and a
5% annual return throughout the period....................... $ 10 $31 $54 $120
</TABLE>
The foregoing Fee Table is intended to assist investors in understanding
the costs and expenses that a shareholder in the Money Fund will bear directly
or indirectly. The Example set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATE OF RETURN,
AND ACTUAL EXPENSES AND ANNUAL RATE OF RETURN MAY BE MORE OR LESS THAN THOSE
ASSUMED FOR PURPOSES OF THE EXAMPLE.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in
conjunction with the annual audits of the financial statements of the Money Fund
by Deloitte & Touche LLP, independent auditors. Financial statements for the
fiscal year ended May 31, 1995 and the independent auditors' report thereon are
included in the Statement of Additional Information. The following per share
data and ratios have been derived from information provided in the Money Fund's
audited financial statements. Further information about the performance of the
Money Fund is contained in the Money Fund's most recent annual report to
shareholders which may be obtained, without charge, by calling or by writing the
Money Fund at the telephone number or address on the front cover of this
Prospectus.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
year............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Investment income--net........... .0444 .0254 .0262 .0464 .0684 .0811 .0799 .0640 .0564
Realized and unrealized gain
(loss) on investments--net..... .0014 .0003 .0007 (.0001) .0024 (.0003) .0002 (.0006) .0002
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations... .0458 .0257 .0269 .0463 .0708 .0808 .0801 .0634 .0566
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net........... (.0444) (.0254) (.0262) (.0463) (.0684) (.0808) (.0799) (.0634) (.0564)
Realized gain on
investments--net............... (.0001) (.0003) (.0007) -- (.0024)* -- (.0002)* -- (.0002)*
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions.................... (.0445) (.0257) (.0269) (.0463) (.0708) (.0808) (.0801) (.0634) (.0566)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of year....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total Investment Return............ 4.52% 2.57% 2.74% 4.44% 7.36% 8.42% 8.30% 6.49% 5.84%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... .98% .90% .86% .79% .85% .74% .82% .79% .74%
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Investment income and realized gain
on investments--net.............. 4.35% 2.54% 2.72% 4.48% 7.14%* 8.03%* 7.98%* 6.33%* 5.65%*
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands)....................... $ 89,119 $135,301 $156,677 $237,868 $374,212 $546,593 $637,424 $707,716 $631,055
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
<CAPTION>
1986
--------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
year............................. $ 1.00
--------
Investment income--net........... .0710
Realized and unrealized gain
(loss) on investments--net..... .0006
--------
Total from investment operations... .0716
--------
Less dividends and distributions:
Investment income--net........... (.0710)
Realized gain on
investments--net............... (.0006)*
--------
Total dividends and
distributions.................... (.0716)
--------
Net asset value, end of year....... $ 1.00
--------
--------
Total Investment Return............ 7.44%
--------
--------
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... .79%
--------
--------
Investment income and realized gain
on investments--net.............. 7.14%*
--------
--------
SUPPLEMENTAL DATA:
Net assets, end of year (in
thousands)....................... $641,216
--------
--------
</TABLE>
- ------------------
* Includes unrealized gain (loss).
3
<PAGE>
YIELD INFORMATION
Set forth below is yield information for the indicated seven-day periods,
computed to include and exclude realized gains and losses for the seven-day
period ended May 31, 1995 and to include and exclude realized gains and losses
for the seven-day period ended August 31, 1995, and information as to the
compounded annualized yield, excluding gains and losses, for the same periods.
<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
--------------------------------
MAY 31, 1995 AUGUST 31, 1995
------------- ----------------
<S> <C> <C>
Annualized Yields:
Including gains and losses.............. 5.20% 4.92%
Excluding gains and losses.............. 5.19% 4.92%
Compounded Annualized Yield.................. 5.33% 5.04%
Average maturity of portfolio at end of
period..................................... 65 days 78 days
</TABLE>
The yield of the Money Fund refers to the income generated by an investment
in the Money Fund over a stated seven-day period. This income is then
annualized; that is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The compounded annualized yield is
calculated similarly but, when annualized, the income earned by an investment in
the Money Fund is assumed to be reinvested. The compounded annualized yield will
be somewhat higher than the yield because of the effect of the assumed
reinvestment.
The yield on Money Fund shares normally will fluctuate on a daily basis.
Therefore, the yield for any given past period is not an indication or
representation by the Money Fund of future yields or rates of return on its
shares. The Money Fund's yield is affected by changes in interest rates on money
market securities, average portfolio maturity, the types and quality of
portfolio securities held, and operating expenses. Current yield information may
not provide a basis for comparison with bank deposits or other investments which
pay a fixed yield over a stated period of time.
On occasion, the Money Fund may compare its yield to (i) the industry
averages compiled by Donoghue's Money Fund Report, a widely recognized
independent publication that monitors the performance of money market mutual
funds, (ii) the average yield reported by the Bank Rate Monitor National
Index(Trademark) for money market deposit accounts offered by the 100 leading
banks and thrift institutions in the ten largest standard metropolitan
statistical areas, (iii) yield data published by Lipper Analytical Services,
Inc., (iv) the yield on an investment in 90-day Treasury bills on a rolling
basis, assuming quarterly compounding, or (v) performance data published by
Morningstar Publications, Inc., Money Magazine, U.S. News & World Report,
Business Week, CDA Investment Technology, Inc., Forbes Magazine and Fortune
Magazine. As with yield quotations, yield comparisons should not be considered
indicative of the Money Fund's yield or relative performance for any future
period.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Money Fund are to seek current income,
preservation of capital and liquidity available from investing in a diversified
portfolio of short-term money market securities. The investment objectives are
fundamental policies of the Money Fund which may not be changed without a vote
of the majority of the outstanding shares of the Money Fund.
4
<PAGE>
Investment in the Money Fund offers several benefits. The Money Fund seeks
to provide as high a yield potential as is available, consistent with the
preservation of capital, from short-term money market securities utilizing
professional money market management, block purchases of securities and yield
improvement techniques. It provides high liquidity because of its redemption
features and seeks reduced risk resulting from diversification of assets. There
can be no assurance that the investment objectives of the Money Fund will be
realized. Certain expenses are borne by investors, including advisory and
management fees, administrative costs and operational costs.
In managing the Money Fund, Fund Asset Management, L.P. (the 'Investment
Manager') will employ a number of professional money management techniques,
including varying the composition of investments and the average maturity of the
portfolio based upon its assessment of the relative values of the various money
market securities and future interest rate patterns. These assessments will
respond to changing economic and money market conditions and to shifts in fiscal
and monetary policy. The Investment Manager will also seek to improve yield by
taking advantage of yield disparities that regularly occur in the money market.
For example, market conditions frequently result in similar securities trading
at different prices. Also, there are frequently differences in the yield between
the various types of money market securities. The Money Fund seeks to enhance
yield by purchasing and selling securities based on these yield disparities.
The following is a description of the types of money market securities in
which the Money Fund may invest:
United States Government Securities: Marketable securities issued by
or guaranteed as to principal and interest by the U.S. Government and
supported by the full faith and credit of the United States.
United States Government Agency Securities: Debt securities issued by
U.S. Government-sponsored enterprises, Federal agencies and certain
international institutions which are not direct obligations of the United
States but involve U.S. Government sponsorship or guarantees by U.S.
Government agencies or enterprises. The U.S. Government is not obligated to
provide financial support to these instrumentalities.
Bank Money Instruments: Obligations of commercial banks, savings
banks or savings and loan associations such as certificates of deposit,
including variable rate certificates of deposit, time deposits, deposit
notes, bank notes and bankers' acceptances. The savings banks and savings
and loan associations must be organized and operating in the United States.
The obligations of commercial banks may be issued by U.S. banks, foreign
branches or subsidiaries of U.S. banks ('Eurodollar' obligations) or U.S.
branches or subsidiaries of foreign banks ('Yankeedollar' obligations).
The Money Fund may invest only in Eurodollar obligations which by
their terms are general obligations of the U.S. parent bank. Yankeedollar
obligations in which the Money Fund may invest must be issued by U.S.
branches or subsidiaries of foreign banks which are subject to state or
federal banking regulations in the U.S. and by their terms must be
general obligations of the foreign parent.
Commercial Paper and Other Short-term Obligations: Commercial paper
(including variable amount master demand notes), which refers to
short-term, unsecured promissory notes issued by corporations,
partnerships, trusts or other entities to finance short-term credit needs,
and non-convertible debt securities (e.g., bonds and debentures) with no
more than 397 days (13 months) remaining to maturity at the date of
purchase. Short-term obligations issued by trusts include mortgage-related
or asset-backed debt instruments, including pass-through certificates
representing participations in, or bonds and notes backed by, pools of
mortgage, credit card, automobile or other types of receivables. These
structured financings will be
5
<PAGE>
supported by sufficient collateral and other credit enhancements,
including letters of credit, insurance, reserve funds and guarantees by
third parties, to enable such instruments to obtain the requisite quality
rating by a nationally recognized statistical rating organization, as
described below.
Foreign Bank Money Instruments: U.S. dollar-denominated obligations
of foreign depository institutions and their foreign branches and
subsidiaries, such as certificates of deposit, bankers' acceptances, time
deposits and deposit notes. The obligations of such foreign branches and
subsidiaries may be the general obligation of the parent bank or may be
limited to the issuing branch or subsidiary by the terms of the specific
obligation or by government regulation. Such investments will only be made
if determined to be of comparable quality to other investments permissible
for the Money Fund. The Money Fund will not invest more than 25% of its
total assets (taken at market value at the time of each investment) in
these obligations.
Foreign Short-Term Debt Instruments: U.S. dollar-denominated
commercial paper and other short-term obligations issued by foreign
entities. Such investments are subject to quality standards similar to
those applicable to investments in comparable obligations of domestic
issuers. Investments in foreign entities in general involve the same risks
as those described in the Statement of Additional Information in connection
with investments in Eurodollar and Yankeedollar obligations and obligations
of foreign depository institutions and their foreign branches and
subsidiaries.
The following is a description of other types of investments or investment
practices in which the Money Fund may invest or engage:
Repurchase Agreements: The Money Fund may invest in the money market
securities described above pursuant to repurchase agreements. Repurchase
agreements may be entered into only with a member bank of the Federal
Reserve System or a primary dealer in U.S. Government securities or an
affiliate thereof. Under such agreements, the seller agrees, upon
entering into the contract, to repurchase the security
from the Money Fund at a mutually agreed upon time and price, thereby
determining the yield during the term of the agreement. This results in a
fixed rate of return insulated from market fluctuations during such period.
Reverse Repurchase Agreements: The Money Fund may enter into reverse
repurchase agreements which involve the sale of money market securities
held by the Money Fund, with an agreement to repurchase the securities at
an agreed upon price, date and interest payment. During the time a reverse
repurchase agreement is outstanding, the Money Fund will maintain a
segregated custodial account containing U.S. Government or other
appropriate high-grade debt securities having a value equal to the
repurchase price.
Preservation of capital is a prime investment objective of the Money Fund,
and, while the types of money market securities in which the Money Fund invests
are not completely risk free, such securities are generally considered to have
low principal risk. There is the risk of the failure of issuers to meet their
principal and interest obligations. Repurchase agreements may be construed to be
collateralized loans by the purchaser to the seller secured by the securities
transferred to the purchaser. In the event of default by the seller under a
repurchase agreement construed to be a collateralized loan, the underlying
securities are not owned by the Money Fund but only constitute collateral for
the seller's obligation to pay the repurchase price. With respect to repurchase
agreements and reverse repurchase agreements, there is also the risk of the
failure of parties involved to
6
<PAGE>
repurchase at the agreed upon price or to return the securities involved in
such transactions, in which event the Money Fund may suffer time delays and
incur costs or possible losses in connection with such transactions.
Bank money instruments in which the Money Fund invests must be issued by
depository institutions with total assets of at least $1 billion, except that up
to 10% of total assets (taken at market value) may be invested in certificates
of deposit of smaller institutions if such certificates of deposit are Federally
insured.
The Money Fund may invest in participations in, or bonds and notes backed
by, pools of mortgage, credit card, automobile or other types of receivables
with remaining maturities of no more than 397 days (13 months). These structured
financings will be supported by sufficient collateral and other credit
enhancements, including letters of credit, insurance, reserve funds and
guarantees by third parties, to enable such instruments to obtain the requisite
quality rating by a nationally recognized statistical rating organization, as
described below.
The Money Fund's investments in short-term corporate, partnership and trust
debt and bank money instruments will be rated, or will be issued by issuers who
have been rated, in one of the two highest rating categories for short-term debt
obligations by a nationally recognized statistical rating organization (an
'NRSRO') or, if not rated, will be of comparable quality as determined by the
Trustees of the Money Fund. The Money Fund's investments in corporate,
partnership and trust bonds and debentures (which must have maturities at the
date of purchase of 397 days (13 months) or less) will be in issuers who have
received from the requisite NRSROs a rating, with respect to a class of
short-term debt obligations that is comparable in priority and security with the
investment, in one of the two highest rating categories for short-term
obligations or, if not rated, will be of comparable quality as determined by the
Trustees of the Money Fund. Currently, there are six NRSROs: Duff & Phelps
Credit Ratings Co., Fitch Investors Service, Inc., IBCA Limited and its
affiliate IBCA, Inc., Thomson BankWatch, Inc., Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group.
A regulation of the Securities and Exchange Commission ordinarily limits
investments by the Money Fund in securities issued by any one issuer (other than
the U.S. Government, its agencies or instrumentalities) to not more than 5% of
its total assets, or in the event that such securities do not have the highest
rating, not more than 1% of its total assets. In addition, such regulation
requires that not more than 5% of the Money Fund's total assets be invested in
securities that do not have the highest rating or are not of comparable quality
to securities with the highest rating as determined by the Trustees of the Money
Fund.
The Money Fund may purchase money market securities on a forward commitment
basis at fixed purchase terms. The purchase of money market securities on a
forward commitment basis involves the risk that the yields available in the
market when the delivery takes place may actually be higher than those obtained
in the transaction itself; if yields increase, the value of the securities
purchased on a forward commitment basis will generally decrease. A separate
account of the Money Fund will be established with the Money Fund's Custodian
consisting of cash or liquid money market securities having a market value at
all times at least equal to the amount of the forward commitment.
For purposes of its investment policies, the Money Fund defines short-term
money market securities as having a maturity of no more than 762 days (25
months) in the case of U.S. Government and Government agency securities and no
more than 397 days (13 months) in the case of all other securities. The
dollar-weighted average maturity of the Money Fund's portfolio will not exceed
90 days. During the Money Fund's fiscal year ended May 31, 1995, the average
maturity of its portfolio ranged from 28 days to 72 days.
7
<PAGE>
Investment Restrictions. The Trust has adopted a number of restrictions
and policies relating to the investment of the assets and activities of the
Money Fund, which are fundamental policies and may not be changed without the
approval of the holders of a majority of the Money Fund's outstanding voting
securities as defined in the Investment Company Act of 1940 (the '1940 Act').
Among the more significant restrictions, the Money Fund may not: (1) purchase
any securities other than (i) money market securities and (ii) the other
investments described under 'Investment Objectives and Policies'; (2) invest
more than 25% of its total assets (taken at market value at the time of each
investment) in the securities of issuers in any particular industry (other
than U.S. Government securities, U.S. Government agency securities or domestic
bank money instruments); (3) purchase the securities of any one issuer, other
than the U.S. Government, its agencies or instrumentalities, if immediately
after such purchase, more than 5% of the value of its total assets (taken at
market value) would be invested in such issuer, except that, with respect to
25% of the value of the Money Fund's total assets, the Money Fund may invest
up to 10% of its total assets in bank money instruments or repurchase
agreements with any one bank; (4) purchase more than 10% of the outstanding
securities of an issuer except that such restriction shall not apply to U.S.
Government or Government agency securities, bank money instruments repurchase
agreements; and (5) enter into repurchase agreements if, as a result, more
than 10% of the Money Fund's net assets (taken at market value at the time of
each investment, together with any other investments deemed illiquid) would be
subject to repurchase agreements maturing in more than seven days.
MANAGEMENT OF THE TRUST
TRUSTEES
The Trustees of the Trust consist of six individuals, five of whom are not
'interested persons' of the Trust as defined in the 1940 Act. The Trustees of
the Trust are responsible for the overall supervision of the operations of the
Trust and perform the various duties imposed on the directors of investment
companies by the 1940 Act.
The Trustees of the Trust are:
ARTHUR ZEIKEL*--President of the Investment Manager and Merrill Lynch
Asset Management, L.P. ('MLAM'); President and Director of Princeton
Services, Inc. ('Princeton Services'); Executive Vice President of Merrill
Lynch & Co., Inc. ('ML&Co.'); Executive Vice President of Merrill Lynch,
Pierce, Fenner & Smith Incorporated ('Merrill Lynch'); and Director of
Merrill Lynch Funds Distributor, Inc. ('MLFD').
JOE GRILLS--Member of the Committee of Investment of Employee Benefit
Assets of the Financial Executives Institute ('CIEBA'); Member of CIEBA's
Executive Committee; Member of the Investment
Advisory Committee of the State of New York Common Retirement Fund;
Director, Duke Management Company, and LaSalle Street Fund.
WALTER MINTZ--Special Limited Partner of Cumberland Associates
(investment partnership).
MELVIN R. SEIDEN--President of Silbanc Properties, Ltd. (real estate,
investment and consulting).
STEPHEN B. SWENSRUD--Principal of Fernwood Associates (financial
consultants).
HARRY WOOLF--Member of the editorial board of Interdisciplinary
Science Reviews; Director, Alex. Brown Mutual Funds; Director, Advanced
Technology Laboratories, Family Health International and SpaceLabs Medical
(medical equipment manufacturing and marketing).
- ------------------
* Interested person, as defined in the 1940 Act, of the Trust.
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MANAGEMENT AND ADVISORY ARRANGEMENTS
The Investment Manager and Broadcort Capital Corp. ('Broadcort') provide
advisory, management and administrative services to the Money Fund pursuant to
three separate agreements. The Investment Manager performs management and
investment advisory services for the Money Fund and the Trust pursuant to an
investment management agreement (the 'Investment Management Agreement').
Broadcort arranges for the performance of certain administrative services for
the Money Fund, primarily shareholder services for shareholders introduced to
the Money Fund by Broadcort, pursuant to an administrative agreement (the
'Broadcort Administrative Agreement'). The Investment Manager arranges for the
performance of certain administrative services for the Money Fund, primarily
shareholder services for other shareholders, pursuant to an administrative
agreement (the 'FAM Administrative Agreement' and, together with the Broadcort
Administrative Agreement, the 'Administrative Agreements').
The Investment Manager is an affiliate of MLAM and is owned and controlled
by ML&Co. The Investment Manager and MLAM act as investment advisers for more
than 125 registered investment companies and provide investment advice to
individual and institutional accounts. As of August 31, 1995, the Investment
Manager and MLAM had a total of approximately $188.9 billion in investment
company and other portfolio assets under management, including accounts of
certain affiliates of the Investment Manager.
Subject to the direction of the Trustees, the Investment Manager is
responsible for the actual management of the Money Fund and constantly reviews
the Money Fund's holdings in light of its own research analysis and that from
other relevant sources. The responsibility for making decisions to buy, sell or
hold a particular security rests with the Investment Manager, subject to review
by the Trustees. The Investment Manager performs certain of the other management
services necessary for the operation of the Trust and the Money Fund, including
regulatory compliance, and provides all the office space, facilities, equipment
and necessary personnel for such services.
Pursuant to the Administrative Agreements with the Trust, Broadcort and FAM
have agreed to provide, and arrange for the performance of, administrative
services for the Money Fund and its shareholders. These services include matters
related to establishment and maintenance of shareholder accounts, processing
purchase and redemption requests, answering clients' inquiries regarding the
Money Fund and providing assistance with respect to various shareholder plans
offered by the Money Fund. These services shall be limited to administrative
services and shall not include investment advisory, promotional or sales
activities. The Broadcort Administrative Agreement provides that Broadcort may
enter into sub-administrative agreements with various securities dealers to
provide certain of these services for their clients who have purchased Money
Fund shares through them.
Pursuant to the Investment Management Agreement, the Investment Manager
receives a fee from the Money Fund at the end of each month at the annual rate
of 0.275% of average daily net assets of the Money Fund not exceeding $500
million and at the annual rate of 0.25% of such assets in excess of $500
million. Pursuant to the Administrative Agreements, Broadcort receives an
identical monthly fee based on assets introduced to the Money Fund by Broadcort
and FAM receives an identical monthly fee based on other assets of the Money
Fund. The aggregate of these fees is higher than that of most money market
funds. Broadcort and FAM may pay all or a portion of their administrative fees
to the securities dealers providing administrative services to the Money Fund's
shareholders. The amount of such payments will depend on the nature of the
services to be rendered pursuant to the sub-administrative arrangement with such
securities dealer and may be based on the average net assets of the accounts for
which such securities dealer provides services. For the fiscal year ended May
31, 1995, the fee paid by the Money Fund to the Investment Manager was $306,952
and the fee paid to Broadcort was
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$306,952 (based on average net assets of approximately $111.6 million), and the
effective fee rate was 0.28%. No fee was paid to FAM during such period.
The Investment Management Agreement and Administrative Agreements obligate
the Money Fund to pay certain expenses incurred in its operations, including,
among other things, the investment management and administrative fees, legal and
audit fees, unaffiliated Trustees' fees and expenses, registration fees,
custodian and transfer agency fees, accounting and pricing costs, and certain of
the costs of printing proxies, shareholder reports, prospectuses and statements
of additional information. Accounting services are provided to the Trust by the
Investment Manager, and the Trust reimburses the Investment Manager for its
costs in connection with such services. For the fiscal year ended May 31, 1995,
the amount of such reimbursement was $34,728.
During the fiscal year ended May 31, 1995, the ratio of total expenses to
average net assets was 0.98%.
TRANSFER AGENCY SERVICES
Merrill Lynch Financial Data Services, Inc. (the 'Transfer Agent'), which
is a wholly-owned subsidiary of ML&Co., acts as the Money Fund's transfer agent
pursuant to a transfer agency, shareholder servicing agency and proxy agency
agreement (the 'Transfer Agency Agreement'). Pursuant to the Transfer Agency
Agreement, the Transfer Agent is responsible for the issuance, transfer and
redemption of shares and the opening and maintenance of shareholder accounts.
Pursuant to the Transfer Agency Agreement, the Transfer Agent receives a fee of
$15.00 per shareholder account and is entitled to reimbursement for
out-of-pocket expenses incurred by it under the Transfer Agency Agreement. For
the fiscal year ended May 31, 1995, the total fee paid by the Trust to the
Transfer Agent pursuant to the Transfer Agency Agreement was $211,232.
PURCHASE OF SHARES
The Trust is offering shares of the Money Fund without sales charge at a
public offering price equal to the net asset value (normally $1.00 per share)
next determined after a purchase order becomes effective. Share purchase orders
are effective on the date Federal Funds become available to the Money Fund. If
Federal Funds are available to the Money Fund prior to the determination of net
asset value (generally 4:00 P.M., New York time) on any business day, the order
will be effective on that day. Shares purchased will begin accruing dividends on
the day following the date of purchase. The minimum initial purchase is $5,000
and the minimum subsequent purchase is $1,000, except that lower minimums apply
as described below. Participants in the self-directed retirement plans for which
Merrill Lynch acts as passive custodian may invest in shares of the Money Fund
without regard to any minimum investment requirements as described under
'Purchase and Redemption of
Shares Through Certain Retirement Plans' in the Statement of Additional
Information. The minimum initial purchase with respect to other Keogh, pension,
profit sharing and individual retirement plans is $250 and there is no minimum
applicable with respect to subsequent investments in connection with such plans.
For accounts advised by banks and registered investment advisers, the minimum
initial purchase is $300 and the minimum subsequent purchase is $100. Any order
may be rejected by the Distributor of the Money Fund.
Merrill Lynch Funds Distributor, Inc., an affiliate of both the Investment
Manager and of Merrill Lynch, acts as the Distributor of the shares of the Money
Fund. Shares may be purchased directly from securities dealers with whom the
Distributor has entered into selected dealer agreements. Dealer agreements will
be entered into with securities dealers that have securities clearing
arrangements or some other business relationship with Broadcort.
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METHODS OF PAYMENT
Payment Through Securities Dealers. Investments in the Money Fund may be
made through securities dealers who have dealer arrangements with the
Distributor. In such a case, the dealer will transmit payment to the Money Fund
on behalf of the investor and will supply the Money Fund with the required
account information. If the investor can provide his dealer with immediately
available funds, the dealer will be able to transmit such funds to the Money
Fund in an expeditious manner. Since there is a five-day settlement period
applicable to the sale of most securities, delays may occur when an investor is
liquidating other investments for investment in the Money Fund.
Payment by Wire. An expeditious method for existing shareholders to invest
in the Money Fund is through the transmittal of Federal Funds by wire to the
Transfer Agent. The Money Fund will not be responsible for delays in the wiring
system. To purchase shares by wiring Federal Funds, payments should be wired to
First Union National Bank of Florida. Shareholders should give their financial
institutions the following wiring instructions: ABA #063000021, DDA
#2112600061186, Merrill Lynch Financial Data Services, Inc. The wire should be
identified as payment to Summit Cash Reserves Fund and should include the
shareholder's name and account number. Failure to submit the required
information may delay investment. Investors are urged to make payment by wire in
Federal Funds.
Payment to the Transfer Agent. Existing shareholders may also invest in
the Money Fund by check which may be submitted directly by mail or otherwise to
the Transfer Agent. Such purchase orders which are sent by mail should be sent
to Merrill Lynch Financial Data Services, Inc., P.O. Box 45290, Jacksonville,
Florida 32232-5290. Purchase orders which are delivered by hand must be
delivered directly to Merrill Lynch Financial Data Services, Inc., 4800 Deer
Lake Drive East, Jacksonville, Florida 32246-6484. Existing shareholders should
enclose the detachable stub from a monthly account statement or confirmation
which they have received. Checks should be made payable to Merrill Lynch Funds
Distributor, Inc. Certified checks are not necessary, but checks are accepted
subject to collection at full face value in United States funds and must be
drawn in United States dollars on a United States bank. Payments for the
accounts of corporations, foundations and other organizations may not be made by
third party checks.
REDEMPTION OF SHARES
The Trust is required to redeem for cash all full and fractional shares of
the Money Fund. The redemption price is the net asset value per share next
determined after receipt by the Transfer Agent of proper notice of redemption as
described in accordance with one of the procedures set forth below. If such
notice is received by the Transfer Agent prior to the determination of net asset
value (generally 4:00 P.M., New York time) on any day during which the New York
Stock Exchange or New York banks are open for business, the redemption will be
effective on such day and payment will be made on the next business day. If the
notice is received after the determination of net asset value has been made, the
redemption will be effective on the next business day and payment will be made
on the second business day thereafter. Shareholders liquidating their holdings
will receive upon redemption all dividends declared and reinvested through the
date of redemption.
At various times the Trust may be requested to redeem shares of the Money
Fund for which good payment has not yet been received. The Trust may delay, or
cause to be delayed, the payment of redemption proceeds until such time as it or
its Transfer Agent has assured itself that good payment has been collected for
the purchase of such shares. In addition, the Trust reserves the right not to
honor redemption checks or requests for Federal Funds redemptions where the
Money Fund shares to be redeemed have been purchased by check within 10 days
prior to
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the date the redemption request is received by the Money Fund's Transfer Agent
unless the check used for investment has been cleared for payment by the
shareholder's bank.
METHODS OF REDEMPTION
Set forth below is information as to the five methods pursuant to which
shareholders may redeem shares. In certain instances, the Transfer Agent may
require additional documents in connection with redemptions.
Redemption by Check. Shareholders may redeem shares by check in an amount
not less than $500. At the shareholder's request, the Transfer Agent will
provide the shareholder with checks drawn on the custody account of the Money
Fund with its check-clearing bank, First Union National Bank of Florida. These
checks can be made payable to the order of any person in any amount not less
than $500. The payee of the check may cash or deposit the check. When such a
check is presented to the Transfer Agent for payment, the Transfer Agent will
present the check to the Trust as authority to redeem a sufficient number of
full and fractional shares in the shareholder's account to cover the amount of
the check. This enables the shareholder to continue earning daily dividends
until the check is cleared. Cancelled checks will be returned to the shareholder
by the Transfer Agent.
Shareholders will be subject to the Transfer Agent's rules and regulations
governing such checking accounts, including the right of the Transfer Agent not
to honor checks in amounts exceeding the value of the shareholder's account at
the time the check is presented for payment. The Trust or the Transfer Agent may
modify or terminate the redemption by check privilege at any time upon 30 days'
notice to participating shareholders. In order to be eligible for the redemption
by check privilege, purchasers should check the box under the caption 'Check
Writing Privilege' on the Purchase Application. The Transfer Agent will then
send checks to the shareholder.
Federal Funds Redemption. Shareholders may also arrange to have redemption
proceeds of $5,000 or more wired in Federal Funds to a predesignated bank
account. In order to be eligible for Federal Funds redemption, the shareholder
must designate on his Purchase Application the domestic commercial bank and
account number to receive the proceeds of his redemption and must have his
signature on the Purchase Application guaranteed. The redemption request for
Federal Funds redemption may be made by telephone, wire or by letter (no
signature guarantee required) to the Transfer Agent and, if received before the
determination of
net asset value of the Money Fund on any business day (generally 4:00 P.M., New
York time), the redemption proceeds will be wired to the investor's
predesignated bank account on the next business day. Shareholders may effect
notice of Federal Funds redemption by telephoning the Transfer Agent at (800)
221-7210 toll-free. The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; if it does not, the Fund may
be liable for any losses due to fraudulent or unauthorized instructions. Among
other things, redemption proceeds may only be wired into the bank account
designated on the Purchase Application. The investor must independently verify
this information at the time the redemption request is made.
Repurchase Through Securities Dealers. The Trust will repurchase shares of
the Money Fund through securities dealers. The Trust will normally accept orders
to repurchase shares by wire or telephone from dealers for their customers at
the net asset value next computed after receipt of the order from the dealer,
provided that such request for repurchase is received from the dealer prior to
the determination of net asset value of the Money Fund (generally 4:00 P.M., New
York time) on any business day. These repurchase arrangements are for the
convenience of shareholders and do not involve a charge by the Trust; however,
dealers may impose a charge on the shareholder for transmitting the notice of
repurchase to the Trust. The Trust reserves the right to reject any order for
repurchase through a securities dealer, but it may not reject properly submitted
requests for redemption as described below. The Trust will promptly notify any
shareholder of any rejection of a repurchase with respect
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<PAGE>
to shares of the Money Fund. For shareholders requesting repurchases through
their securities dealer, payment will be made by the Transfer Agent to the
dealer.
Regular Redemption. A shareholder may also redeem shares by submitting a
written notice of redemption directly to the Transfer Agent, Merrill Lynch
Financial Data Services, Inc., P.O. Box 45290, Jacksonville, Florida 32232-5290.
Redemption requests delivered other than by mail should be delivered to Merrill
Lynch Financial Data Services, Inc., 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484. Redemption requests should not be sent to the Trust. The
notice requires the signature of all persons in whose name the shares are
registered, signed exactly as their names appear on the Transfer Agent's
register. The signatures on the notice must be guaranteed by a national bank or
other bank which is a member of the Federal Reserve System (not a savings bank)
or by a member firm of any national or regional stock exchange. Notarized
signatures are not sufficient.
Automatic Redemption. Broadcort carries securities accounts and performs
clearing services for certain securities dealers selling shares of the Money
Fund. Broadcort has instituted an automatic redemption procedure applicable to
shareholders of the Money Fund whose securities accounts are carried and
serviced by Broadcort. This procedure, which is not applicable to margin
accounts, may be utilized by Broadcort to satisfy amounts due from the
shareholder as a result of purchases of securities or other transactions in the
shareholder's securities account. Under this procedure, unless the shareholder
notifies his securities dealer to the contrary, the shareholder's securities
account carried and serviced by Broadcort will be scanned each business day
prior to the determination of net asset value of the Money Fund (generally 4:00
P.M., New York time) after application of any cash balances in the account, a
sufficient number of Money Fund shares may be redeemed at the net asset value,
as determined on that day, to satisfy any amounts for which the shareholder is
obligated to make payment to Broadcort. Redemptions will be effected on the
business day preceding the date the shareholder is obligated to make such
payment, and Broadcort will receive the redemption proceeds on the day following
the redemption date. Shareholders will receive all dividends declared and
reinvested through the date of redemption, except that, in those instances where
shareholders request transactions that settle on a 'same-day' basis (such as
Federal Funds wire redemptions, branch office checks, transfers to other
Broadcort accounts and certain securities transactions) the Money Fund shares
necessary to effect such transactions will be deemed to have been transferred to
Broadcort prior to the Money Fund's declaration of dividends on that day
(unless the shareholder notifies Merrill Lynch of the contrary). In such
instances, shareholders will receive all dividends declared and reinvested
through the date immediately preceding the date of redemption.
------------------------
Due to the relatively high cost of maintaining accounts of less than
$1,000, the Trust reserves the right to redeem Money Fund shares in any account
for their then current value (which will be promptly paid to the shareholder) if
at any time the total investment does not have a value of at least $1,000,
except that the Trust may not involuntarily redeem Money Fund shares in accounts
where minimums lower than $1,000 are applicable. Shareholders will be notified
that the value of their account is less than $1,000 and allowed two months to
make an additional investment before the redemption is processed. In such event,
the $1,000 minimum on subsequent investments will not be applicable.
SHAREHOLDER SERVICES
The Trust offers a number of shareholder services described below designed
to facilitate investment in shares of the Money Fund. Certain of such services
are not available to investors who place purchase orders for the Money Fund's
Shares through the Merrill Lynch BlueprintSM Program. Full details as to each of
such services and copies of the various plans described below can be obtained
from the Trust.
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INVESTMENT ACCOUNT
Every shareholder has an Investment Account and will receive monthly
reports showing the activity in his account since the preceding statement. A
shareholder may make additions to his Investment Account at any time by
purchasing shares at the applicable public offering price through his securities
dealer, by wire or by mail directly to the Transfer Agent, acting as agent for
his dealer. A shareholder may ascertain the number of shares in his Investment
Account by telephoning the Transfer Agent at (800) 221-7210 toll-free. The
Transfer Agent will furnish this information only after the shareholder has
specified the name, address, account number and social security number of the
registered owner or owners.
ACCRUED MONTHLY PAYOUT PLAN
Shareholders desiring their dividends in cash may enroll in this plan and
receive monthly cash payments resulting from the redemption of the shares
received on dividend reinvestments during the month.
SYSTEMATIC WITHDRAWAL PLAN
A shareholder may elect to receive systematic withdrawal checks from his
Investment Account on either a monthly or quarterly basis.
AUTOMATIC INVESTMENT PLAN
Regular additions may be made to an investor's Investment Account by
pre-arranged charges to his regular bank account at a minimum of $50 per month.
RETIREMENT PLANS
Merrill Lynch offers customers of securities dealers offering shares of the
Money Fund three types of self-directed retirement plans for which it acts as
passive custodian ('Retirement Plans'). Information concerning the establishment
and maintenance of Retirement Plans and investments by Retirement Plan accounts
is contained in the Retirement Plan documents available from the securities
dealers offering Money Fund shares to their customers. Information concerning
purchases and redemptions of Money Fund shares by participants in the Retirement
Plans is set forth in the Statement of Additional Information.
PORTFOLIO TRANSACTIONS
The money market securities in which the Money Fund invests are traded
primarily in the over-the-counter market. Where possible, the Money Fund will
deal with the dealers who make a market in the securities involved except in
those circumstances where better prices and execution are available elsewhere.
Such dealers usually are acting as principal for their own account. On occasion,
securities may be purchased directly from the issuer. Money market securities
generally are traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes. The cost of executing portfolio securities
transactions of the Money Fund will primarily consist of dealer spreads and
underwriting commissions. Under the 1940 Act, persons affiliated with the Trust
are prohibited from dealing with the Trust as principal in the purchase and sale
of securities unless an exemptive order allowing such transactions is obtained
from the Securities and Exchange Commission. An affiliated person of the Trust
may serve as its broker in over-the-counter transactions conducted on an agency
basis. The Securities and Exchange Commission has issued an exemptive order
permitting the Trust to conduct certain principal transactions with Merrill
Lynch Government Securities Inc. and Merrill Lynch Money Markets Inc. subject to
certain terms and conditions. During the year ended May 31, 1995, the Money Fund
engaged in 8 such transactions aggregating approximately $14.0 million.
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ADDITIONAL INFORMATION
DIVIDENDS
Dividends are declared and reinvested daily in the form of additional
shares at net asset value. Shareholders will receive statements monthly as to
such reinvestments. Shareholders liquidating their holdings will receive upon
redemption all dividends declared and reinvested through the date of redemption.
Since the net income (including realized gains and losses on the portfolio
assets) is declared as a dividend in shares each time the net income of the
Money Fund is determined, the net asset value per share of the Money Fund
normally remains constant at $1.00 per share.
Net income (from the time of the immediately preceding determination
thereof) consists of (i) interest accrued and/or discount earned (including both
original issue and market discount), (ii) plus or minus all realized gains and
losses on portfolio securities, (iii) less the estimated expenses of the Money
Fund applicable to that dividend period.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Money Fund is determined by the Investment
Manager once daily, immediately after the daily declaration of dividends, on
each day during which the New York Stock Exchange or New York banks are open for
business. Such determination is made as of the close of business on the New York
Stock Exchange (generally 4:00 P.M., New York time) or, on days when the New
York Stock Exchange is closed but New York banks are open, at 4:00 P.M., New
York time. The Money Fund will also determine its net asset value on any day on
which there is sufficient trading of its portfolio securities such that the net
asset value might be materially affected, but only if on such day the Money Fund
is required to sell and redeem shares. The net asset value per share is
determined pursuant to the 'penny-rounding' method by adding the fair value of
all securities and other assets in the portfolio including interest accrued but
not yet received, deducting the portfolio's liabilities and dividing by the
number of shares outstanding. The result of this computation will be rounded to
the nearest whole cent. It is anticipated that net asset value will remain
constant at $1.00 per share, but no assurance can be offered in this regard.
Securities with remaining maturities of greater than 60 days for which market
quotations are readily available will be valued at market value. Securities with
remaining maturities of 60 days or
less will be valued on an amortized cost basis, i.e., by valuing the instrument
at its cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market values of the instrument. Other securities held by the Money Fund
will be valued at their fair value as determined in good faith by or under
direction of the Board of Trustees.
TAXES
The Trust intends to continue to qualify the Money Fund for the special tax
treatment afforded regulated investment companies ('RICs') under the Internal
Revenue Code of 1986, as amended (the 'Code'). If it so qualifies, the Money
Fund (but not its shareholders) will not be subject to Federal income tax on the
part of its net ordinary income and net realized capital gains which it
distributes to shareholders. The Trust intends to cause the Money Fund to
distribute substantially all of such income.
Dividends paid by the Money Fund from its ordinary income and distributions
of the Money Fund's net realized short-term capital gains (together referred to
hereafter as 'ordinary income dividends') are taxable to
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shareholders as ordinary income. Distributions made from the Money Fund's net
realized long-term capital gains ('capital gain dividends') are taxable to
shareholders as long-term capital gains, regardless of the length of time the
shareholder has owned Money Fund shares. Any loss upon the sale or exchange of
Money Fund shares held for six months or less, however, will be treated as
long-term capital loss to the extent of any capital gain dividends received by
the shareholder. Distributions in excess of the Money Fund's earnings and
profits will first reduce the adjusted tax basis of a holder's shares and,
after such adjusted tax basis is reduced to zero, will constitute capital
gains to such holder (assuming the shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Money Fund. Not later than 60 days after the close of
its taxable year, the Trust will provide shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Money Fund, whether from ordinary income or
capital gains, will not be eligible for the dividends received deduction allowed
to corporations under the Code. If the Money Fund pays a dividend in January
which was declared in the previous October, November or December to shareholders
of record on a specified date in one of such months, then such dividend will be
treated for tax purposes as being paid by the Money Fund and received by its
shareholders on December 31 of the year in which the dividend was declared.
If the value of assets held by the Money Fund declines, the Trustees may
authorize a reduction in the number of outstanding shares in shareholders'
accounts so as to preserve a net asset value of $1.00 per share. After such a
reduction, the basis of eliminated shares would be added to the basis of
shareholders' remaining Money Fund shares, and any shareholders disposing of
shares at that time may recognize a capital loss. Distributions, including
distributions reinvested in additional shares of the Money Fund, will
nonetheless be fully taxable, even if the number of shares in shareholders'
accounts has been reduced as described above.
Ordinary income dividends paid by the Money Fund to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Nonresident shareholders are
urged to consult their own tax advisors concerning the applicability of the
United States withholding tax.
Dividends and interest received by the Money Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes.
Under certain provisions of the Code, some taxpayers may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ('backup withholding'). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Trust or who, to the Trust's knowledge, have
furnished an incorrect number. When establishing an account, an investor must
certify under penalty of perjury that such number is correct and that such
investor is not otherwise subject to backup withholding.
A loss realized on a sale or exchange of shares of the Money Fund will be
disallowed if other Money Fund shares are acquired (whether through the
automatic reinvestment of dividends or otherwise) within a 61-day period
beginning 30 days before and ending 30 days after the date that the shares are
disposed of. In such a case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss.
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The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative or administrative action either
prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on United States Government obligations. State
law varies as to whether dividend income attributable to United States
Government obligations is exempt from state income tax.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in the
Money Fund.
ORGANIZATION OF THE TRUST
The Trust was organized July 10, 1987 under the laws of the Commonwealth of
Massachusetts. The Trust is a successor to a Massachusetts business trust of the
same name organized May 28, 1981. It is a no-load, diversified open-end
investment company which is comprised of separate series ('Series'), each of
which is a separate portfolio offering a separate class of shares to selected
groups of purchasers. The Declaration of Trust permits the Trustees to create an
unlimited number of Series and, with respect to each Series, to issue an
unlimited number of full and fractional shares of a single class. All shares
have equal voting rights, except that only shares of the respective Series are
entitled to vote on matters concerning only that Series. Each issued and
outstanding share is entitled to one vote and to participate equally in
dividends and distributions declared by the respective Series and in net assets
of such Series upon liquidation or dissolution remaining after satisfaction of
outstanding liabilities. In the event a Series were unable to meet its
obligations, the remaining Series would assume the unsatisfied obligations of
that Series. The shares of each Series, when issued, will be fully-paid and
non-assessable by the Trust. At the date of this Prospectus, the Money Fund is
the only Series of the Trust.
The Declaration does not require that the Trust hold an annual meeting of
shareholders. However, the Trust will be required to call special meetings of
shareholders in accordance with the requirements of the 1940 Act to seek
approval of new management and advisory arrangements, of a material increase
in distribution fees or of a change in the fundamental policies, objectives or
restrictions of the Money Fund or the Trust. The Trust also would be required
to hold a special shareholders' meeting to elect new Trustees at such time as
less than a majority of the Trustees holding office have been elected by
shareholders. The Declaration provides that a shareholders' meeting may be
called for any reason at the request of 10% of the outstanding shares of any
Series of the Trust or by a majority of the Trustees. Except as set forth
above, the Trustees shall continue to hold office and appoint successor
Trustees.
17
<PAGE>
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Money Fund at the address or
telephone number set forth on the cover page of this Prospectus.
SHAREHOLDER REPORTS
Only one copy of each shareholder report and certain shareholder
communications will be mailed to each identified shareholder regardless of the
number of accounts such shareholder has. If a shareholder wishes to receive
copies of each report and communication for all of the shareholder's related
accounts the shareholder should notify:
Merrill Lynch Financial Data Services, Inc.
P.O. Box 45290
Jacksonville, FL 32232-5290
The notification should include the shareholder's name, address, tax
identification number and Merrill Lynch, and/or mutual fund account numbers. If
you have any questions regarding this please call your Merrill Lynch financial
consultant or Merrill Lynch Financial Data Services, Inc. at (800) 221-7210.
------------------------
The Declaration of Trust establishing the Trust, dated July 10, 1987, a
copy of which, together with all amendments thereto (the 'Declaration'), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name 'Financial Institutions Series Trust' refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim of said Trust
but the 'Trust Estate' only shall be liable.
18
<PAGE>
SUMMIT CASH RESERVES FUND Purchase Application
- --------------------------------------------------------------------------------
INSTRUCTIONS Send this completed form to: MERRILL LYNCH FINANCIAL DATA
SERVICES, INC.,
P.O. Box 45290,
Jacksonville, Florida 32232-5290
================================================================================
1. TO REGISTER SHARES THE ACCOUNT SHOULD BE REGISTERED AS FOLLOWS:
(Please print |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
except for Print Applicant's Name. For clarity, please
signatures) skip a space between names. |_|_|_|_|_|_|_|_|_|
Social Security No.
or Tax ID No.
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
Print Joint Registrant's Name, if any. In case of joint
registration, a joint tenancy with right of survivorship will be
presumed, unless otherwise indicated.
________________________________________________________________________________
________________________________________________________________________________
Street Address City State Zip Code
_______________________________________ _______________________________________
Occupation Name and Address of Employer
_______________________________________
_______________________________________
Amount of Investment $
________________________________________________________________________________
Please make any check payable to Home Phone No. Business Phone No.
Merrill Lynch Financial Data Services, Inc. (Include Area Code)
================================================================================
2. CHECK REDEMPTION PRIVILEGE (SEE TERMS AND CONDITIONS IN THE PROSPECTUS AND
REVERSE SIDE)
/ / I hereby request and authorize Merrill Lynch Financial Data
Check Box Services, Inc. (the 'Transfer Agent') to honor checks drawn by me
(If desired) on my Summit Cash Reserves Fund (the 'Money Fund') account
subject to acceptance by the Money Fund, with payment therefor to
be made by redeeming sufficient shares in my account without a
signature guarantee. The Transfer Agent and the Money Fund do
hereby reserve all their lawful rights for honoring checks drawn
by me and for effecting redemptions pursuant to the Check
Redemption Privilege. I understand that this election does not
create a checking or other bank account relationship between
myself and the Transfer Agent or the Money Fund and that the
relationship between myself and the Transfer Agent is that of
shareholder-transfer agent.
FOR JOINT ACCOUNT: CHECK HERE WHETHER EITHER OWNER / / IS
AUTHORIZED, OR ALL OWNERS / / ARE REQUIRED TO SIGN CHECKS.
================================================================================
3. FEDERAL FUNDS REDEMPTION (SEE TERMS AND CONDITIONS IN THE PROSPECTUS)
/ / The undersigned hereby authorizes and directs Merrill Lynch
Check Box Financial Data Services, Inc. (the 'Transfer Agent') to act on
(If desired) telephone, telegraphic or other instructions (without signature
guarantee) from any person representing himself to be either the
investor or any authorized representative of the investor,
directing redemption of shares in an amount of $5,000 or more of
Summit Cash Reserves Fund (the 'Money Fund') held by the Transfer
Agent on behalf of the undersigned, and to transmit the proceeds
by wire only to the bank account designated below.
Any change in the bank account designated to receive redemption
proceeds shall require a signature guarantee. The investor(s)
understand and agree that the Money Fund and the Transfer Agent
reserve the right to refuse any instructions.
The Transfer Agent requires additional documentation from
corporations, partnerships, trustees and similar institutional
investors in addition to this authorization.
Absent its own negligence, including failure to employ reasonable
procedures to confirm the validity of telephoned instructions,
neither Summit Cash Reserves Fund nor Merrill Lynch Financial
Data Services, Inc. shall be liable for any redemption caused by
unauthorized instructions. Investors may effect notice of this
type of redemption by telephoning the Transfer Agent at the
toll-free number (800) 221-7210. Shares which are being
repurchased through securities dealers will not qualify for
Federal Funds redemption.
FILL OUT THE REST OF THIS SPACE ONLY IF THE ABOVE BOX IS CHECKED. IN ADDITION,
YOUR SIGNATURE(S) MUST BE GUARANTEED. YOUR BANK MUST BE A MEMBER OF THE FEDERAL
RESERVE OR HAVE A CORRESPONDENT BANKING RELATION WITH A BANK THAT DOES BELONG TO
THE FEDERAL RESERVE.
ENCLOSE A SPECIMEN COPY OF YOUR IF YOUR BANK IS NOT A MEMBER OF THE
PERSONAL CHECK (MARKED 'VOID') FOR THE FEDERAL RESERVE:
BANK ACCOUNT LISTED BELOW.
______________________________________
IF YOUR BANK IS A MEMBER OF THE Correspondent Bank Routing Code
FEDERAL RESERVE: Bank Name
______________________________________ ______________________________________
Your Bank Name Bank Routing Code Your Bank Name Bank Routing Code
______________________________________ ______________________________________
Your Account Name Your Account Number Your Account Name Your Account Number
______________________________________ ______________________________________
Address of Bank City State Zip Code Your Bank City State Zip Code
Address
================================================================================
4. AUTOMATIC INVESTMENT PLAN PRIVILEGE (SEE TERMS AND CONDITIONS IN THE
STATEMENT OF ADDITIONAL INFORMATION)
/ / Check this box only if you wish to have an Authorization Form sent to you.
19
<PAGE>
================================================================================
5. SYSTEMATIC WITHDRAWAL PLAN (SEE TERMS AND CONDITIONS IN THE STATEMENT OF
ADDITIONAL INFORMATION)
Minimum Requirements: $10,000 for monthly disbursement, $5,000 for quarterly, of
shares in Summit Cash Reserves Fund at cost or current offering price. In
addition, your signature(s) must be guaranteed. This option is available only if
you do not check No. 6.
The undersigned hereby authorizes and directs Merrill Lynch Financial Data
Services, Inc. on (check only one)
/ / the 24th of each month
/ / March 24, June 24, September 24 and December 24
/ / to redeem a sufficient number of shares in my account to generate
redemption proceeds of $________; or
/ / to redeem ________% of the Shares in my account on such date and pay
the redemption proceeds by check payable to the order of (check only
one)
/ / the registered owner as indicated in item 1 hereinabove.
/ / (other) ___________________________________________
Such check shall be mailed to (check only one)
/ / the address indicated in item 1 hereinabove.
/ / the following name and address:
_________________________________________________________________
================================================================================
6. ACCRUED MONTHLY PAYOUT PLAN (SEE TERMS AND CONDITIONS IN THE STATEMENT OF
ADDITIONAL INFORMATION)
Check Box The undersigned hereby authorizes and directs Merrill Lynch
(if desired) / / Financial Data Services, Inc. to redeem as of the last
Friday of each month all shares purchased during such month
through reinvestment of dividends and distributions and send
the proceeds to me.
================================================================================
7. OTHER INFORMATION
This application enables you to take advantage of any or all of the optional
services available to Summit Cash Reserves Fund shareholders and will update any
options in effect for your account.
If you select the Check Redemption Privilege, a supply of checks imprinted with
your name and shareholder account number will be sent to you in approximately 10
days. You should be certain that a sufficient number of shares are held by the
Transfer Agent for your account to cover the amount of any check drawn by you.
If insufficient shares are in the account, the check will be returned marked
insufficient funds. Since the dollar value of your account is constantly
changing, the total value of your account cannot be determined in advance and
the account cannot be entirely redeemed by check. If the Check Redemption
Privilege is being requested for an account in the name of a corporation or
other institution, the following additional documents must be submitted with
this authorization.
CORPORATION--'Certification of Corporate Resolution,' indicating the names and
titles of officers authorized to write checks, must be signed by an officer
other than one empowered to execute transactions, with his signature guaranteed
and with the corporate seal affixed.
PARTNERSHIPS--'Certificate of Partnership,' naming the partners and the required
number that may act in accordance with the terms of the Partnership Agreement,
is to be executed by a general partner with his signature guaranteed.
TRUSTS--'Certification of Trustees,' naming the trustees and the required number
that may act in accordance with the terms of the Trust Agreement, must be
executed by a certifying trustee with his signature guaranteed and under the
corporate seal.
If you are adding or reinstating the Federal Funds Redemption option, the
signature must be guaranteed in the space provided below. Your signature(s) must
be guaranteed by a commercial bank (not a savings bank) in New York City or one
having a New York City correspondent, or by a member firm of any national
securities exchange. (A Notary Public's seal does not constitute a signature
guarantee.)
================================================================================
8. SIGNATURES
Under penalty of perjury, I certify (1) that the number set forth above is my
correct Social Security No. or Taxpayer Identification No. and (2) that I am not
subject to backup withholding (as discussed in the Prospectus under 'Additional
Information--Taxes') either because I have not been notified that I am subject
thereto as a result of a failure to report all interest or dividends, or the
Internal Revenue Service ('IRS') has notified me that I am no longer subject
thereto.
INSTRUCTIONS: You must strike out the language in (2) above if you have been
notified that you are subject to backup withholding due to underreporting and
you have not received a notice from the IRS that backup withholding has been
terminated.
By the execution of this Purchase Application, the investor represents and
warrants that the investor has full right, power and authority to make the
investment applied for pursuant to this Application, and the person or persons
signing on behalf of the investor represent and warrant that they are duly
authorized to sign this Application and to purchase or redeem shares of Summit
Cash Reserves Fund on behalf of the investor.
The investor hereby affirms that he has received a current Prospectus of Summit
Cash Reserves Fund and appoints Merrill Lynch Financial Data Services, Inc. as
his agent to receive dividends and distributions for their automatic
reinvestment in additional shares of Summit Cash Reserves Fund.
_________________________________ __________ _________________________________
Signature of Investor Date Signature of Joint Registrant,
if any
Signature(s) Guaranteed (only for those electing No. 3 or No. 5):
NOTE: The Guarantor must be either a U.S.
commercial bank (not a savings bank) or a trust
By: __________________________ company in New York City or one that is a
(Authorized Signatory) correspondent of a New York City commercial bank
or trust company, or a member of a national
securities exchange. (A notary public's seal
does not constitute a signature guarantee.)
================================================================================
9. FOR DEALERS AND ADVISERS
/ / Dealer / / Investment Adviser ____________________________________________
Name
________________________________________________________________________________
Street City State Zip
________________________________________________________________________________
If Dealer--Fill A/E's Name A/E's No. Customer Account Number
20
<PAGE>
INVESTMENT MANAGER
Fund Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
ADMINISTRATOR
Broadcort Capital Corp.
100 Church Street
New York, New York 10007
CUSTODIAN
The Bank of New York
90 Washington Street
12th Floor
New York, New York 10286
TRANSFER AGENT
Merrill Lynch Financial Data Services, Inc.
Administrative Offices:
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
Mailing Address:
P.O. Box 45290
Jacksonville, Florida 32232-5290
INDEPENDENT AUDITORS
Deloitte & Touche LLP
117 Campus Drive
Princeton, New Jersey 08540
COUNSEL
Brown & Wood
One World Trade Center
New York, New York 10048-0557
<PAGE>
----------------------------------------------------
----------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRUST, THE INVESTMENT MANAGER, THE ADMINISTRATOR
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY
STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Fee Table............................... 2
Financial Highlights.................... 3
Yield Information....................... 4
Investment Objectives and Policies...... 4
Management of the Trust................. 8
Trustees.............................. 8
Management and Advisory
Arrangements....................... 9
Transfer Agency Services.............. 10
Purchase of Shares...................... 10
Methods of Payment.................... 11
Redemption of Shares.................... 11
Methods of Redemption................. 12
Shareholder Services.................... 13
Investment Account.................... 14
Accrued Monthly Payout Plan........... 14
Systematic Withdrawal Plan............ 14
Automatic Investment Plan............. 14
Retirement Plans...................... 14
Portfolio Transactions.................. 14
Additional Information.................. 15
Dividends............................. 15
Determination of Net Asset Value...... 15
Taxes................................. 15
Organization of the Trust............. 17
Shareholder Inquiries................. 18
Shareholder Reports................... 18
Purchase Application.................... 19
</TABLE>
Prospectus
[LOGO]
- -------------------------------------------------
SUMMIT CASH
RESERVES FUND
FINANCIAL INSTITUTIONS SERIES TRUST
FINANCIAL INSTITUTIONS SERIES TRUST IS ORGANIZED AS A MASSACHUSETTS BUSINESS
TRUST. IT IS NOT A BANK NOR DOES IT OFFER FIDUCIARY OR TRUST SERVICES.
SHARES OF SUMMIT CASH RESERVES FUND ARE NOT EQUIVALENT TO A BANK ACCOUNT. AS
WITH ANY INVESTMENT IN SECURITIES, THE VALUE OF A SHAREHOLDER'S INVESTMENT
IN THE MONEY FUND MAY FLUCTUATE. A SHAREHOLDER'S INVESTMENT IN THE MONEY
FUND IS NOT INSURED BY ANY GOVERNMENT AGENCY.
Principal Office of the Trust:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
This Prospectus should be
retained for future reference.
September 27, 1995
----------------------------------------------------
----------------------------------------------------
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SUMMIT CASH RESERVES FUND
FINANCIAL INSTITUTIONS SERIES TRUST
P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011 PHONE NUMBER (609) 282-2800
The investment objectives of the Summit Cash Reserves Fund (the 'Money
Fund') are to seek current income, preservation of capital and liquidity
available from investing in a diversified portfolio of short-term money market
securities. These securities will primarily consist of U.S. Government and
Government agency securities, bank certificates of deposit and bankers'
acceptances, commercial paper and repurchase agreements. For purposes of its
investment policies, the Money Fund defines short-term money market securities
as having a maturity of no more than 762 days (25 months) in the case of U.S.
Government and Government agency securities and no more than 397 days (13
months) in the case of other securities. There can be no assurance that the
investment objectives of the Money Fund will be realized. The Money Fund is a
separate series of Financial Institutions Series Trust (the 'Trust'), a no-load,
diversified, open-end investment company organized as a Massachusetts business
trust.
------------------------
Shares of the Money Fund are being offered by certain securities dealers
which have entered into securities clearing arrangements or have other business
relationships with Broadcort Capital Corp.
------------------------
This Statement of Additional Information of the Money Fund is not a
prospectus and should be read in conjunction with the Prospectus of the Money
Fund, dated September 27, 1995 (the 'Prospectus'), which has been filed with the
Securities and Exchange Commission and can be obtained, without charge, by
calling or by writing the Money Fund at the above telephone number or address.
This Statement of Additional Information has been incorporated by reference into
the Prospectus.
------------------------
The date of this Statement of Additional Information is September 27, 1995.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Money Fund are to seek current income,
preservation of capital and liquidity available from investing in a diversified
portfolio of short-term money market securities. Reference is made to
'Investment Objectives and Policies' in the Prospectus for a discussion of the
investment objectives and policies of the Money Fund.
As discussed in the Prospectus, the Money Fund may invest in money market
securities pursuant to repurchase agreements. Repurchase agreements may be
entered into only with a member bank of the Federal Reserve System or primary
dealer in U.S. Government securities or an affiliate thereof. Under such
agreements, the seller agrees, upon entering into the contract, to repurchase
the security from the Money Fund at a mutually agreed upon time and price,
thereby determining the yield during the term of the agreement. This results in
a fixed rate of return insulated from market fluctuations during such period.
Such agreements usually cover short periods, such as under one week. The Money
Fund will require the seller to provide additional collateral if the market
value of the securities falls below the repurchase price at any time during the
term of the repurchase agreement. In the event of a default by the seller, the
Money Fund ordinarily will retain ownership of the securities underlying the
repurchase agreement, and instead of a contractually fixed rate of return, the
rate of return to the Money Fund shall be dependent upon intervening
fluctuations of the market value of such securities and the accrued interest on
the securities. In such event, the Money Fund would have rights against the
seller for breach of contract with respect to any losses arising from market
fluctuations following the failure of the seller to perform. In certain
circumstances, repurchase agreements may be construed to be collateralized loans
by the purchaser to the seller secured by the securities transferred to the
purchaser. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities are not owned
by the Money Fund but only constitute collateral for the seller's obligation to
pay the repurchase price. Therefore, the Money Fund may suffer time delays and
incur costs or possible losses in connection with the disposition of the
collateral. From time to time the Money Fund also may invest in money market
securities pursuant to purchase and sale contracts. While purchase and sale
contracts are similar to repurchase agreements, purchase and sale contracts are
structured so as to be in substance more like a purchase and sale of the
underlying security than is the case with repurchase agreements.
Also, as discussed in the Prospectus, the Money Fund may invest in
obligations issued by commercial and savings banks and savings and loan
associations. The obligations of commercial banks may be issued by U.S. banks,
foreign branches or subsidiaries of U.S. banks ('Eurodollar' obligations) or
U.S. branches or subsidiaries of foreign banks ('Yankeedollar' obligations).
Eurodollar and Yankeedollar obligations must be general obligations of the
parent bank.
Eurodollar and Yankeedollar obligations may involve additional investment
risks from the risks of obligations of U.S. banks. Such investment risks include
adverse political and economic developments, the possible imposition of
withholding taxes on interest income payable on such obligations, the possible
seizure or nationalization of foreign deposits and the possible establishment of
exchange controls or other foreign governmental laws or restrictions which might
adversely affect the payment of principal and interest. Generally the issuers of
such obligations are subject to fewer U.S. regulatory requirements than are
applicable to U.S. banks. Foreign branches or subsidiaries of U.S. banks may be
subject to less stringent reserve requirements than U.S. banks. U.S. branches or
subsidiaries of foreign banks are subject to the reserve requirements of the
state in which they are located. There may be less publicly available
information about a U.S. branch or subsidiary of a foreign bank than about a
U.S. bank, and such branches or subsidiaries may not be subject to the same
2
<PAGE>
accounting, auditing and financial recordkeeping standards and requirements as
U.S. banks. Evidence of ownership of Eurodollar obligations may be held outside
of the United States, and the Money Fund may be subject to risks associated with
the holding of such property overseas. Eurodollar obligations of the Money Fund
held overseas will be held by foreign branches of the Money Fund's custodian for
the Trust's portfolio securities or by other U.S. or foreign banks under
subcustodian arrangements complying with the requirements of the Investment
Company Act of 1940 (the '1940 Act').
The Investment Manager will carefully consider the above factors in making
investments in Yankeedollar obligations. Generally the Money Fund will limit its
Yankeedollar investments to obligations of banks organized in Canada, France,
Germany, Japan, the Netherlands, Switzerland, the United Kingdom and other
western industrialized nations.
The Money Fund's investments in short-term corporate, partnership or other
debt and bank money instruments will be rated, or will be issued by issuers who
have been rated, in one of the two highest rating categories for short-term debt
obligations by a nationally recognized statistical rating organization (an
'NRSRO') or, if not rated, will be of comparable quality as determined by the
Trustees of the Money Fund. The Money Fund's investments in corporate,
partnership and trust bonds and debentures (which must have maturities at the
date of purchase of 397 days (13 months) or less) will be in issuers who have
received from the requisite NRSROs a rating with respect to a class of
short-term debt obligations that is comparable in priority and security with the
investment in one of the two highest rating categories for short-term
obligations or if not rated, will be of comparable quality as determined by the
Trustees of the Money Fund. Currently, there are six NRSROs: Duff & Phelps
Credit Ratings Co., Fitch Investors Service, Inc., IBCA Limited and its
affiliate IBCA, Inc., Thomson BankWatch, Inc., Moody's Investors Service, Inc.
and Standard & Poor's Ratings Group. See 'Appendix--Description of Commercial
Paper, Bank Money Instruments and Corporate Bond Ratings.'
In addition to the investment restrictions set forth in the Prospectus, the
Money Fund has adopted the following restrictions and policies relating to the
investment of the assets and activities of the Money Fund, which are fundamental
policies and may not be changed without approval of the holders of a majority of
the Money Fund's outstanding voting securities (which for this purpose means the
lesser of (i) 67% of the shares represented at a meeting at which more than 50%
of the outstanding shares are represented or (ii) more than 50% of the
outstanding shares). The Money Fund may not (1) make investments for the purpose
of exercising control or management; (2) underwrite securities issued by other
persons; (3) purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization; (4)
purchase or sell real estate (other than money market securities secured by real
estate or interests therein or money market securities issued by companies which
invest in real estate or interests therein), commodities or commodity contracts,
interests in oil, gas or other mineral exploration or development programs; (5)
purchase any securities on margin, except for use of short-term credit necessary
for clearance of purchases and sales of portfolio securities; (6) make short
sales of securities or maintain a short position or write, purchase or sell
puts, calls, straddles, spreads or combinations thereof; (7) make loans to other
persons, provided that the Money Fund may purchase money market securities or
enter into repurchase agreements or purchase and sale contracts; (8) borrow
amounts in excess of 20% of its total assets, taken at market value (including
the amount borrowed), and then only from banks as a temporary measure for
extraordinary or emergency purposes (the borrowing provisions shall not apply to
reverse repurchase agreements). [Usually only 'leveraged' investment companies
may borrow in excess of 5% of their assets; however, the Money Fund will not
borrow to increase income but only to meet redemption requests which might
otherwise require untimely dispositions of portfolio securities. The Money
3
<PAGE>
Fund will not purchase securities while borrowings are outstanding. Interest
paid on such borrowings will reduce net income.]; (9) mortgage, pledge,
hypothecate or in any manner transfer as security for indebtedness any
securities owned or held by the Money Fund except as may be necessary in
connection with borrowings referred to in investment restriction (8) above, and
then such mortgaging, pledging or hypothecating may not exceed 10% of the Money
Fund's net assets, taken at market value; (10) invest in securities for which no
readily available market exists if more than 10% of its net assets (taken at
market value) would be invested in such securities; (11) invest in securities
with legal or contractual restrictions on resale (except for repurchase
agreements, purchase and sale contracts or variable amount master demand notes)
or in securities of issuers (other than Government agency securities) having a
record, together with predecessors, of less than three years of continuous
operation if, regarding all such securities, more than 5% of its net assets
(taken at market value) would be invested in such securities; (12) invest in
securities or investments referred to in investment restrictions (10) and (11)
above and investment restriction (5) in the Prospectus if, regarding all such
securities and investments, more than 10% of the Money Fund's total assets
(taken at market value) would be invested in such securities or investment; and
(13) enter into reverse repurchase agreements if, as a result thereof, the Money
Fund's obligations with respect to reverse repurchase agreements would exceed
one-third of its net assets (defined to be total assets, taken at market value,
less liabilities other than reverse repurchase agreements).
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust, their ages and their
principal occupations for at least the last five years are set forth below.
Unless otherwise noted, the address of each Trustee and executive officer is
P.O. Box 9011, Princeton, New Jersey 08543-9011.
ARTHUR ZEIKEL (63)--President and Trustee (1)(2)--President of FAM (which
term as used herein includes its corporate predecessors) since 1977; President
of Merrill Lynch Asset Management, L.P. ('MLAM,' which term as used herein
includes its corporate predecessors) since 1977; President and Director of
Princeton Services, Inc. ('Princeton Services') since 1993; Executive Vice
President of Merrill Lynch & Co., Inc. ('ML&Co.') since 1990; Executive Vice
President of Merrill Lynch, Pierce, Fenner & Smith Incorporated ('Merrill
Lynch') since 1990 and a Senior Vice President thereof from 1985 to 1990; and
Director of Merrill Lynch Funds Distributor, Inc. ('MLFD' or the 'Distributor').
JOE GRILLS (60)--Trustee (2)--183 Soundview Lane, New Canaan, Connecticut
06840. Member of the Committee of Investment of Employee Benefit Assets of the
Financial Executives Institute ('CIEBA') since 1986; member of CIEBA's Executive
Committee since 1988 and its Chairman from 1991 to 1992; Assistant Treasurer of
International Business Machines Incorporated ('IBM') and Chief Investment
Officer of IBM Retirement Funds from 1986 until 1993; Member of the Investment
Advisory Committee of the State of New York Common Retirement Fund; Director,
Duke Management Company; and Director, LaSalle Street Fund.
WALTER MINTZ (66)--Trustee (2)--1114 Avenue of the Americas, New York, New
York 10036. Special Limited Partner of Cumberland Associates (investment
partnership) since 1982.
MELVIN R. SEIDEN (64)--Trustee (2)--780 Third Avenue, New York, New York
10017. President of Silbanc Properties, Ltd. (real estate, investment and
consulting) since 1987; Chairman and President of Seiden & de Cuevas, Inc.
(private investment firm) from 1964 to 1987.
4
<PAGE>
STEPHEN B. SWENSRUD (62)--Trustee (2)--24 Federal Street, Boston,
Massachusetts 02110. Principal of Fernwood Associates (financial consultants).
HARRY WOOLF (72)--Trustee (2)--The Institute for Avanced Study, Olden Lane,
Princeton, New Jersey 08540. Member of the editorial board of Interdisciplinary
Science Reviews; Director, Alex. Brown Mutual Funds; Director, Advanced
Technology Laboratories, Family Health International and SpaceLabs Medical
(medical equipment manufacturing and marketing).
TERRY K. GLENN (55)--Executive Vice President (1)(2)--Executive Vice
President of the Investment Manager and MLAM since 1983; Executive Vice
President and Director of Princeton Services since 1993; President of the
Distributor since 1986 and Director thereof since 1991; President of Princeton
Administrators, L.P. since 1988.
DONALD C. BURKE (35)--Vice President (1)(2)--Vice President and Director of
Taxation of MLAM since 1990; employee of Deloitte & Touche LLP from 1982 to
1990.
CARLO GIANNINI (47)--Vice President (1)--Vice President of MLAM since 1981.
JOSEPH T. MONAGLE, JR. (46)--Vice President (1)(2)--Senior Vice President
of the Investment Manager and MLAM since 1990 and Vice President of MLAM from
1978 to 1990; Senior Vice President of Princeton Services since 1993.
GERALD M. RICHARD (46)--Treasurer (1)(2)--Senior Vice President and
Treasurer of the Investment Manager and MLAM since 1984; Senior Vice President
and Treasurer of Princeton Services since 1993; Treasurer of the Distributor
since 1984 and Vice President thereof since 1981.
ROBERT HARRIS (43)--Secretary (1)(2)--Vice President of MLAM since 1984 and
attorney associated with MLAM since 1980; Secretary of the Distributor since
1982.
- ------------------
(1) Interested person, as defined in the 1940 Act, of the Trust.
(2) Such Trustee or officer is a director or officer of certain other investment
companies for which the Investment Manager or MLAM acts as investment
adviser.
At August 31, 1995, the Trustees and officers of the Trust as a group (12
persons) owned an aggregate of less than 1% of the outstanding shares of
beneficial interest of the Trust. At such date, Mr. Zeikel, an officer and
Trustee of the Trust, and the other officers of the Trust, owned less than 1% of
the outstanding shares of common stock of ML&Co.
COMPENSATION OF TRUSTEES
Pursuant to the terms of its Investment Management Agreement (the
'Investment Management Agreement') with the Trust, the Investment Manager pays
all compensation of officers and employees of the Trust as well as the fees of
all Trustees of the Trust who are affiliated persons of ML&Co. or its
subsidiaries. The Trust pays each unaffiliated Trustee a fee of $2,600 per year
plus $250 per meeting attended and actual out-of-pocket expenses relating to
attendance at such meetings. The Trust also pays each member of the Audit
Committee, which consists of the unaffiliated Trustees, an annual fee of $800
plus a fee of $150 for each meeting of the Audit Committee attended which is
held on a day on which the Board of Trustees does not meet, together with all
out-of-pocket expenses relating to attendance at such meeting. For the fiscal
year ended May 31, 1995, these fees and expenses aggregated $30,487.
5
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The following table sets forth for the fiscal year ended May 31, 1995,
compensation paid by the Trust to the unaffiliated Trustees and, for the
calendar year ending December 31, 1994, the aggregate compensation paid by all
investment companies advised by FAM and its affiliates, MLAM ('FAM/MLAM Advised
Funds'), to the unaffiliated Trustees.
<TABLE>
<CAPTION>
TOTAL COMPENSATION
PENSION OR FROM TRUST AND
AGGREGATE RETIREMENT BENEFITS FAM/MLAM ADVISED
NAME OF COMPENSATION ACCRUED AS PART FUNDS PAID TO
TRUSTEE FROM TRUST OF TRUST EXPENSE TRUSTEES
- --------------------------- ------------ ------------------- ------------------
<S> <C> <C> <C>
Joe Grills(1).............. $ 5,250 None $ 156,000
Walter Mintz(1)............ $ 5,250 None $ 156,000
Melvin R. Seiden(1)........ $ 5,250 None $ 156,000
Stephen B. Swensrud(1)..... $ 5,250 None $ 164,000
Harry Woolf(1)............. $ 5,250 None $ 156,000
</TABLE>
- ------------------
(1) In addition to the Trust, the Trustees serve on the boards of other FAM/MLAM
Advised Funds as follows: Mr. Grills (36 funds and portfolios); Mr. Mintz
(36 funds and portfolios); Mr. Seiden (36 funds and portfolios); Mr.
Swensrud (46 funds and portfolios) and Mr. Woolf (36 funds and portfolios).
MANAGEMENT AND ADVISORY ARRANGEMENTS
Reference is made to 'Management of the Trust--Management and Advisory
Arrangements' in the Prospectus for certain information concerning management
and advisory arrangements of the Trust.
Subject to the direction of the Trustees, the Investment Manager is
responsible for the actual management of the Money Fund and constantly reviews
the Money Fund's holdings in light of its own research analysis and that from
other relevant sources. The responsibility for making decisions to buy, sell or
hold a particular security rests with the Investment Manager, subject to review
by the Trustees. The Investment Manager also performs certain of the other
management services necessary for the operation of the Trust and the Money Fund,
including regulatory compliance, and provides all the office space, facilities,
equipment and necessary personnel for such services.
Securities held by the Money Fund may also be held by other funds or
clients (collectively referred to as 'clients') for which the Investment Manager
or MLAM acts as an advisor or by investment advisory clients of MLAM. Securities
may be held by, or be appropriate investments for, the Money Fund as well as
other clients of the Investment Manager or MLAM. Because of different objectives
or other factors, a particular security may be bought for one or more clients
when one or more clients are selling the same security. If purchases or sales of
securities for the Money Fund or other advisory clients arise for consideration
at or about the same time, transactions in such securities will be made, insofar
as feasible, for the respective funds and clients in a manner deemed equitable
to all. To the extent that transactions on behalf of more than one client of the
Investment Manager or MLAM during the same period may increase the demand for
securities being purchased or the supply of securities being sold, there may be
an adverse effect on price.
As compensation for its services to the Money Fund, the Investment Manager
receives a fee from the Money Fund at the end of each month at the annual rate
of 0.275% of average daily net assets of the Money Fund not exceeding $500
million and at the annual rate of 0.25% of such assets in excess of $500
million. Broadcort Capital Corp. ('Broadcort') and the Investment Manager, as
administrators for the Money Fund, each receive an
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<PAGE>
identical monthly fee based on assets introduced to the Fund by Broadcort or
through other avenues, respectively. For the fiscal year ended May 31, 1992, the
fee paid by the Money Fund to the Investment Manager was $783,688 and the fee
paid to Broadcort was $783,688. For the fiscal year ended May 31, 1993, the fee
paid by the Money Fund to the Investment Manager was $517,432 and the fee paid
to Broadcort was $517,432. For the fiscal year ended May 31, 1994, the fee paid
by the Money Fund to the Investment Manager was $392,910 and the fee paid to
Broadcort was $392,910. For the fiscal year ended May 31, 1995, the fee paid by
the Money Fund to the Investment Manager was $306,952 and the fee paid to the
Administrator was $306,952. No administrative fees were paid to the Investment
Manager during such periods.
California imposes limitations on the expenses of the Money Fund. At the
date hereof, those limitations require that the Investment Manager reimburse the
Money Fund in any amount necessary to prevent such operating expenses (excluding
interest, taxes, distribution fees, brokerage fees and commissions and
extraordinary charges such as litigation costs) of the Money Fund from exceeding
in any fiscal year 2.5% of the Money Fund's first $30 million of average daily
net assets, 2.0% of the next $70 million of average daily net assets and 1.5% of
the remaining average daily net assets. No fee payment will be made to the
Investment Manager or the Administrators during the year which will cause such
expenses to exceed the pro rata expense limitation at the time of such payment.
The Investment Manager and Administrators will share equally with respect to any
reimbursements made pursuant to the expense limitations. No fee reimbursements
were made during the fiscal years ended May 31, 1992, 1993, 1994 or 1995
pursuant to these operating expense limitations.
The Investment Management Agreement and Administrative Agreements obligate
the Investment Manager and the Administrators, respectively, to provide
advisory, administrative and management services, to furnish office space and
facilities for management of the affairs of the Trust and the Money Fund and to
pay all compensation of and furnish office space for officers and employees of
the Trust, as well as the fees of all Trustees of the Trust who are affiliated
persons of ML&Co. or any of its subsidiaries. The Money Fund pays all other
expenses incurred in its operation and a portion of the Trust's general
administrative expenses allocated on the basis of the asset size of the
respective Series. Expenses that are borne directly by the Series include
redemption expenses, expenses of portfolio transactions, expenses of registering
the shares under Federal and state securities laws, pricing costs (including the
daily calculation of net asset value), fees for legal and auditing services,
expenses of printing proxies, shareholder reports, prospectuses and statements
of additional information (except to the extent paid by the Distributor),
charges of the Custodian and Transfer Agent, Securities and Exchange Commission
fees, interest, certain taxes, and other expenses attributable to a particular
Series. Expenses which are allocated on the basis of asset size of the
respective Series include fees and expenses of unaffiliated Trustees, state
franchise taxes and expenses related to shareholder meetings, and other expenses
properly payable by the Trust. See 'General Information--Description of Series
and Shares.' Depending upon the nature of a lawsuit, litigation costs may be
directly applicable to the Series or allocated on the basis of the asset size of
the respective Series. The Trustees have determined that this is an appropriate
method of allocation of expenses. As required by the Distribution Agreement, the
Distributor will pay certain of the expenses of each Series incurred in
connection with the offering of shares of each Series; after the prospectuses,
statements of additional information and periodic reports have been prepared and
set in type, the Distributor will pay for the printing and distribution of
copies thereof used in connection with the offering to investors. The
Distributor will also pay for other supplementary sales literature.
The Investment Manager is a limited partnership, the partners of which are
ML&Co. and Princeton Services, Inc.
7
<PAGE>
Duration and Termination. Unless earlier terminated as described below,
the Investment Management Agreement and the Administrative Agreements will each
continue in effect from year to year if approved annually (a) by the Trustees of
the Trust or by a majority of the outstanding shares of the Money Fund and (b)
by a majority of the Trustees who are not parties to such contract or interested
persons (as defined in the 1940 Act) of any such party. Such agreements
terminate upon assignment and may be terminated without penalty on 60 days'
written notice at the option of either party thereto or by the vote of the
shareholders of the Money Fund.
PURCHASE OF SHARES
Reference is made to 'Purchase of Shares' in the Prospectus for certain
information as to the purchase of Money Fund shares.
Merrill Lynch Funds Distributor, Inc. (the 'Distributor') acts as the
distributor of the shares of the Money Fund. Shares may be purchased directly
from securities dealers with whom the Distributor has entered into a selected
dealer agreement. Dealer agreements will be entered into with securities dealers
that have securities clearing arrangements or some other business relationship
with Broadcort.
The Distribution Agreement is renewable annually, and may be terminated
upon 60 days' written notice by either party. Under such Agreement, after the
prospectuses, statements of additional information and periodic reports have
been prepared and set in type, the Distributor will pay for the printing and
distribution of copies thereof used in connection with the offering to dealers
and investors. The Distributor will also pay for other supplementary sales
literature.
It is the Money Fund's policy to be as fully invested as reasonably
practicable at all times to maximize the yield on the Money Fund's portfolio.
The money markets in which the Money Fund will purchase and sell portfolio
securities normally require immediate settlement of transactions in Federal
Funds. Federal Funds are a commercial bank's deposits in a Federal Reserve Bank
and can be transferred from one member bank's account to that of another member
bank on the same day and thus are considered to be immediately available funds.
Orders for the purchase of Money Fund shares shall become effective on the day
Federal Funds become available to the Money Fund and the shares being purchased
will be issued at the net asset value per share next determined. If Federal
Funds are available to the Money Fund prior to the determination of net asset
value (generally 4:00 P.M., New York time) on any business day, the order will
be effective on that day. Shares purchased will begin accruing dividends on the
day following the date of purchase.
REDEMPTION OF SHARES
Reference is made to 'Redemption of Shares' in the Prospectus for certain
information as to the repurchase and redemption of Money Fund shares.
The right to receive payment with respect to any redemption may be
suspended by the Money Fund for a period of up to seven days. Suspensions of
more than seven days may not be made except (1) for any period (A) during which
the New York Stock Exchange is closed, other than customary weekend and holiday
closings or (B) during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which (A) disposal by the Trust of securities owned by the Money Fund is not
reasonably practicable or (B) it is not reasonably practicable for the Trust
fairly to determine the value of the net assets of the Money Fund; or (3) for
such other periods as the Securities and Exchange Commission may by order
8
<PAGE>
permit for the protection of security holders of the Money Fund. The Commission
shall by rules and regulations determine the conditions under which (i) trading
shall be deemed to be restricted and (ii) an emergency shall be deemed to exist
within the meaning of clause (2) above.
The value of the shareholder's investment at the time of redemption may be
more or less than his cost, depending on the market value of the securities held
by the Money Fund at such time and income earned.
PURCHASE AND REDEMPTION OF SHARES
THROUGH CERTAIN RETIREMENT PLANS
Merrill Lynch offers customers of securities dealers offering shares of the
Money Fund three types of self-directed retirement plans for which it acts as
passive custodian ('Retirement Plans'). These plans are an individual retirement
account ('IRA'), The Merrill Lynch Tax-Deferred Basic(Trademark) Retirement
Plan, designed for sole proprietorships, partnerships and small corporations
('Basic Plan') and a simplified employee pension plan ('SEP'). Information
concerning the establishment and maintenance of Retirement Plans and investments
by Retirement Plan accounts is contained in the Retirement Plan documents
available from the securities dealers offering Money Fund shares to their
customers.
PURCHASE BY RETIREMENT PLANS
Special purchase procedures apply in the case of the Retirement Plans.
There is no minimum initial or subsequent purchase requirement with respect to
purchases of Money Fund shares by participants in the Retirement Plans. In
addition, participants in the Retirement Plans may elect to have cash balances
in their account automatically invested in the Money Fund.
Cash balances of participants who elect to have such funds automatically
invested in the Money Fund will be invested as follows. Cash balances arising
from the sale of securities held in the Retirement Plan account which do not
settle on the day of the transaction (such as most common and preferred stock
transactions) become available to the Money Fund and will be invested in shares
of the Money Fund on the business day following the day that proceeds with
respect thereto are received in the Retirement Plan account. Proceeds giving
rise to cash balances from the sale of securities held in the Retirement Plan
account settling on a same day basis and from principal repayments on debt
securities held in the account become available to the Money Fund and will be
invested in shares of the Money Fund on the next business day following receipt.
Cash balances arising from dividends or interest payments on securities held in
the Retirement Plan account or from a contribution to the Retirement Plan are
invested in shares of the Money Fund on the business day following the date the
payment is received in the Retirement Plan account. Cash balances of less than
$1.00 will not be invested and no return will be earned.
A participant in the IRA, Basic or SEP Retirement Plans who has not elected
to have cash balances automatically invested in shares of the Money Fund may
enter a manual purchase order through his securities dealer.
REDEMPTIONS BY RETIREMENT PLANS
Distributions from Retirement Plans to a participant prior to the time the
participant reaches age 59 1/2 may subject the participant to penalty taxes.
There are, however, no adverse tax consequences resulting from redemptions of
shares of the Money Fund where the redemption proceeds remain in the Retirement
Plan account
9
<PAGE>
and are otherwise invested. Shareholders should consult their tax adviser
concerning tax consequences resulting from redemptions of shares of the Money
Fund.
The Money Fund has instituted an automatic redemption procedure for
participants in the Retirement Plans who have elected to have cash balances in
their accounts automatically invested in shares of the Money Fund. In the case
of such participants, unless directed otherwise, a sufficient number of shares
of the Money Fund will be redeemed to purchase other securities which the
participant has selected for investments in his Retirement Plan account.
Retirement Plan participants may redeem shares of the Money Fund by
submitting a written notice of redemption to their securities dealer.
Participants in IRA, Basic and SEP Retirement Plans should contact their
securities dealer to effect such redemptions. Redemption requests should not be
sent to the Trust. If inadvertently sent to the Trust, they will be forwarded to
the proper person. The notice must bear the signature of the person in whose
name the Retirement Plan is maintained, signed exactly as his name appears on
his Retirement Plan adoption agreement.
Retirement Plan participants considering transferring their retirement
accounts to another brokerage firm or financial institution should be aware that
if the firm to which the retirement account is to be transferred will not take
delivery of the shares of the Money Fund, a shareholder must either (a) redeem
the shares so that the cash proceeds can be transferred to the account at the
new firm or (b) continue to maintain a Retirement Plan account for those shares.
CONFIRMATIONS
All purchases and redemptions of Money Fund shares and dividend
reinvestments will be confirmed to participants in the IRA, Basic and SEP
Retirement Plans (rounded to the nearest share) in the statement which is sent
monthly to all participants in these Retirement Plans.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities of the Money Fund. Subject
to policy established by the Board of Trustees of the Trust, the Investment
Manager is primarily responsible for the Money Fund's portfolio decisions and
the placing of the portfolio transactions. In placing orders, it is the policy
of the Money Fund to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Investment Manager generally seeks reasonably competitive
spreads or commissions, the Money Fund will not necessarily be paying the lowest
spread or commission available. The Money Fund's policy of investing in
securities with short maturities will result in high portfolio turnover.
The money market securities in which the Money Fund invests are traded
primarily in the over-the-counter market. Bonds and debentures are usually
traded over-the-counter but may be traded on an exchange. Where possible, the
Money Fund will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Money market securities are generally traded on a net basis and do
not normally involve either brokerage commissions or transfer taxes. The cost of
executing portfolio securities transactions of the Money Fund will primarily
consist of
10
<PAGE>
dealer spreads and underwriting commissions. Under the 1940 Act, persons
affiliated with the Trust are prohibited from dealing with the Trust as a
principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the Securities and Exchange
Commission. Since over-the-counter transactions are usually principal
transactions, affiliated persons of the Trust, including Merrill Lynch
Government Securities Inc. and Merrill Lynch Money Markets Inc., may not serve
the Money Fund as dealer in connection with such transactions, except pursuant
to the exemptive order described below. However, affiliated persons of the Trust
may serve as its broker in over-the-counter transactions conducted on an agency
basis. The Trust may not purchase securities from any underwriting syndicate of
which Merrill Lynch is a member, except in accordance with applicable rules
under the 1940 Act.
The Securities and Exchange Commission has issued an order permitting all
Merrill Lynch-sponsored money market funds, including Series of the Trust, to
conduct principal transactions with Merrill Lynch Government Securities Inc.
('GSI') in United States Government and Government agency securities and with a
subsidiary of GSI in certificates of deposit and other short-term bank money
instruments and commercial paper. This order contains a number of conditions,
including conditions designed to insure that the price to the Money Fund from
GSI or its subsidiary is equal to or better than that available from other
sources. GSI and its subsidiary have informed the Money Fund that they will in
no way, at any time, attempt to influence or control the activities of the Money
Fund or the Investment Manager in placing such principal transactions. The
exemptive order allows GSI or its subsidiary, Merrill Lynch Money Markets Inc.,
to receive a dealer spread on any transaction with the Money Fund no greater
than its customary dealer spread for transactions of the type involved.
Generally such spreads do not exceed 0.25% of the principal amount of the
securities involved.
The Trustees of the Trust have considered the possibilities of recapturing
for the benefit of the Money Fund expenses of possible portfolio transactions,
such as dealer spreads and underwriting commissions, by conducting such
portfolio transactions through affiliated entities. For example, dealer spreads
received by GSI or its subsidiary on transactions conducted pursuant to the
permissive order described above could be offset against the management and
administrative fees payable by the Money Fund to the Investment Manager and the
Administrator. After considering all factors deemed relevant, the Trustees made
a determination not to seek such recapture. The Trustees will reconsider this
matter from time to time. The Investment Manager has arranged for the Money
Fund's custodian to receive any tender offer solicitation fees on behalf of the
Money Fund payable with respect to portfolio securities of the Money Fund.
The Money Fund does not expect to use one particular dealer, but, subject
to obtaining the best price and execution, dealers who provide supplemental
investment research (such as information concerning money market securities,
economic data and market forecasts) to the Investment Manager may receive orders
for transactions by the Money Fund. Information so received will be in addition
to and not in lieu of the services required to be performed by the Investment
Manager under the Investment Management Agreement and the expenses of the
Investment Manager will not necessarily be reduced as a result of the receipt of
such supplemental information.
11
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Money Fund is determined by the
Investment Manager once daily, immediately after the daily declaration of
dividends, on each day during which the New York Stock Exchange or New York
banks are open for business. Such determination is made as of the close of
business on the New York Stock Exchange (generally 4:00 P.M., New York time) or,
on days when the New York Stock Exchange is closed but New York banks are open,
at 4:00 P.M., New York time. The Money Fund will also determine its net asset
value on any day on which there is sufficient trading in its portfolio
securities that the net asset value might be materially affected, but only if on
any such day the Money Fund is required to sell or redeem shares. The net asset
value is determined pursuant to the 'penny-rounding' method by adding the value
of all securities and other assets in the portfolio, deducting the portfolio's
liabilities, dividing by the number of shares outstanding and rounding the
result to the nearest whole cent.
The money market securities in which the Money Fund invests are traded
primarily in the over-the-counter markets. Except as set forth below, these
securities are valued at the most recent bid price or yield equivalent as
obtained from dealers that make markets in such securities. Assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the direction of the Board of Trustees of
the Trust. Securities with a remaining maturity of 60 days or less are valued on
an amortized cost basis. Under this method of valuation, the security is
initially valued at cost on the date of purchase (or in the case of securities
purchased with more than 60 days remaining to maturity, the market value on the
61st day prior to maturity); and thereafter the Money Fund assumes a constant
proportionate amortization in value until maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. For purposes of valuation, the maturity of a variable rate
security is deemed to be the next date on which the interest rate is to be
adjusted.
In accordance with the Securities and Exchange Commission rule applicable
to the valuation of its portfolio securities, the Money Fund will maintain a
dollar-weighted portfolio maturity of 90 days or less and will purchase
instruments having remaining maturities of not more than 397 days (13 months),
with the exception of U.S. Government and U.S. Government agency securities,
which may have remaining maturities of up to 762 days (25 months). The Money
Fund will invest only in securities determined by the Trustees to be of high
quality with minimal credit risks. In addition, the Trustees have established
procedures designed to stabilize, to the extent reasonably possible, the Money
Fund's price per share as computed for the purpose of sales and redemptions at
$1.00. Deviations of more than an insignificant amount between the net asset
value calculated using market quotations and that calculated on a
'penny-rounded' basis will be reported to the Trustees by the Manager. In the
event the Trustees determine that a deviation exists which may result in
material dilution or other unfair results to investors or existing shareholders,
the Money Fund will take such corrective action as it regards as necessary and
appropriate, including the reduction of the number of outstanding shares of the
Money Fund by having each shareholder proportionately contribute shares to the
Money Fund's capital; the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio maturity;
withholding dividends; or establishing a net asset value per share solely by
using available market quotations. If the number of outstanding shares is
reduced in order to maintain a constant 'penny-rounded' net asset value of $1.00
per share, the shareholders will contribute proportionately to the Money Fund's
capital. Each shareholder will be deemed to have agreed to such contribution by
such shareholder's investment in the Money Fund.
12
<PAGE>
Since the net income of the Money Fund (including realized gains and losses
on the portfolio securities) is declared as a dividend each time the net income
of the Money Fund is determined, the net asset value per share of the Money Fund
normally remains at $1.00 per share immediately after each determination and
dividend declaration. Any increase in the value of a shareholder's investment in
the Money Fund, representing the reinvestment of dividend income, is reflected
by an increase in the number of shares of the Money Fund in the account and any
decrease in the value of a shareholder's investment may be reflected by a
decrease in the number of shares in the account. See 'Taxes.'
YIELD INFORMATION
The Money Fund normally computes its annualized yield by determining the
net income for a seven-day base period for a hypothetical pre-existing account
having a balance of one share at the beginning of the base period, dividing the
net income by the net asset value of the account at the beginning of the base
period to obtain the base period return, multiplying the result by 365 and then
dividing by seven. Under this calculation, the yield reflects realized and
unrealized gains and losses on portfolio securities. In accordance with
regulations adopted by the Securities and Exchange Commission, the Money Fund is
required to disclose its annualized yield for certain seven-day base periods in
a standardized manner which does not take into consideration any realized or
unrealized gains or losses on portfolio securities. The Securities and Exchange
Commission also permits the calculation of a standardized effective or
compounded yield. This is computed by compounding the unannualized base period
return which is done by adding one to the base period return, raising the sum to
a power equal to 365 divided by seven, and subtracting one from the result. This
compounded yield calculation also excludes realized and unrealized gains or
losses on portfolio securities.
The yield on the Money Fund's shares normally will fluctuate on a daily
basis. Therefore, the yield for any given past period is not an indication or
representation by the Money Fund of future yields or rates of return on its
shares. The yield is affected by such factors as changes in interest rates on
Treasury securities, average portfolio maturity, the types and quality of
portfolio securities held and operating expenses. The yield on Money Fund shares
for various reasons may not be comparable to the yield on shares of other money
market funds or other investments.
SHAREHOLDER SERVICES
The Trust offers a number of shareholder services described below designed
to facilitate investment in shares of the Money Fund. Full details as to each of
such services and copies of the various plans described below can be obtained
from the Trust.
INVESTMENT ACCOUNT
Every shareholder has an Investment Account and will receive monthly
reports showing the activity in his account since the preceding statement. A
shareholder may make additions to his Investment Account at any time by
purchasing shares at the applicable public offering price either through his
securities dealer, by wire or by mail directly to the Transfer Agent, acting as
agent for his dealer. A shareholder may ascertain the number of shares in his
Investment Account by telephoning the Transfer Agent at (800) 221-7210
toll-free. The Transfer Agent will
13
<PAGE>
furnish this information only after the shareholder has specified the name,
address, account number and social security number of the registered owner or
owners.
In the interest of economy and convenience and because of the operating
procedures of the Trust, certificates representing the Money Fund shares will
not be physically issued. Shares of the Money Fund are maintained by the Trust
on its register maintained by the Transfer Agent and the holders thereof will
have the same rights and ownership with respect to such shares as if
certificates had been issued.
AUTOMATIC INVESTMENT PLAN
The Trust offers an Automatic Investment Plan whereby the Transfer Agent is
authorized through preauthorized checks of $50 or more to charge the regular
bank account of the shareholder on a regular basis to provide systematic
additions to the Investment Account of such shareholder. See the Purchase
Application in the Prospectus. A shareholder's Automatic Investment Plan may be
terminated at any time without charge or penalty by the shareholder, the Trust,
the Transfer Agent or the Distributor.
ACCRUED MONTHLY PAYOUT PLAN
The dividends of the Money Fund are automatically reinvested in additional
shares of the Money Fund. Shareholders desiring cash payments may enroll in the
Accrued Monthly Payout Plan, under which shares equal in number to shares
credited through the automatic reinvestment of dividends and distributions
during each month are redeemed at the net asset value on the last Friday of such
month in order to meet the monthly distribution. Investors may open an Accrued
Monthly Payout Plan by completing the appropriate portion of the Purchase
Application in the Prospectus. A shareholder's Accrued Monthly Payout Plan may
be terminated at any time without charge or penalty by the shareholder, the
Trust, the Transfer Agent or the Distributor.
SYSTEMATIC WITHDRAWAL PLANS
A shareholder may elect to make systematic withdrawals from an Investment
Account on either a monthly or quarterly basis as provided below. Quarterly
withdrawals are available for shareholders who have acquired shares of the Money
Fund having a value, based upon cost or the current offering price, of $5,000 or
more, and monthly withdrawals for shareholders with shares with such a value of
$10,000 or more. The quarterly periods end on the 24th day of March, June,
September and December. See the Purchase Application in the Prospectus.
At the time of each withdrawal payment, sufficient shares are redeemed from
those on deposit in the shareholder's account to provide the withdrawal payment
specified by the shareholder. The shareholder may specify either a dollar amount
or a percentage of the value of his shares. Redemptions will be made at net
asset value as determined at the close of business on the New York Stock
Exchange on the 24th day of each month or the 24th day of the last month of each
quarter, whichever is applicable. A shareholder's Systematic Withdrawal Plan may
be terminated at any time, without charge or penalty, by the shareholder, the
Trust, the Transfer Agent or the Distributor. A shareholder may not elect to
make systematic withdrawals while he is enrolled in the Accrued Monthly Payout
Plan.
Withdrawal payments should not be considered as dividends, yield or income.
Withdrawals are sales of shares and may result in taxable gain or loss. If
periodic withdrawals continuously exceed reinvested dividends, the shareholder's
original investment will be correspondingly reduced. Shareholders are cautioned
not to
14
<PAGE>
designate withdrawal programs that result in an undue reduction of principal.
There are no minimums on amounts that may be systematically withdrawn. Periodic
investments may not be made into an Investment Account in which the shareholder
has elected to make systematic withdrawals.
TAXES
FEDERAL
The Trust intends to continue to qualify the Money Fund for the special tax
treatment afforded regulated investment companies ('RICs') under the Internal
Revenue Code of 1986, as amended (the 'Code'). If it so qualifies, the Money
Fund (but not its shareholders) will not be subject to Federal income tax on the
part of its net ordinary income and net realized capital gains which it
distributes to shareholders. The Money Fund intends to distribute substantially
all of such income.
As discussed in the Money Fund's Prospectus, the Trust may establish other
series in addition to the Money Fund (together with the Fund, the 'Series').
Each Series of the Trust is treated as a separate corporation for Federal income
tax purposes. Each Series therefore is considered to be a separate entity in
determining its treatment under the rules for RICs described in the Prospectus.
Losses in one Series do not offset gains in another Series, and the requirements
(other than certain organizational requirements) for qualifying for RIC status
are determined at the Series level rather than the Trust level.
Dividends paid by the Money Fund from its ordinary income, and
distributions of the Money Fund's net realized short-term capital gains
(together referred to hereafter as 'ordinary income dividends') are taxable to
shareholders as ordinary income. Distributions made from the Money Fund's net
realized long-term capital gains ('capital gain dividends') are taxable to
shareholders as long-term capital gains, regardless of the length of time the
shareholder has owned Money Fund shares. Any loss upon the sale or exchange of
Money Fund shares held for six months or less, however, will be treated as
long-term capital loss to the extent of any capital gain dividends received by
the shareholder. Distributions in excess of the Money Fund's earnings and
profits will first reduce the adjusted tax basis of a holder's shares and, after
such adjusted tax basis is reduced to zero, will constitute capital gains to
such holder (assuming the shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Money Fund. Not later than 60 days after the close of
its taxable year, the Trust will provide shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Money Fund, whether from ordinary income or
capital gains, will not be eligible for the dividends received deduction allowed
to corporations under the Code. If the Money Fund pays a dividend in January
which was declared in the previous October, November or December to shareholders
of record on a specified date in one of such months, then such dividend will be
treated for tax purposes as being paid by the Money Fund and received by its
shareholders on December 31 of the year in which the dividend was declared.
If the value of assets held by the Money Fund declines, the Trustees may
authorize a reduction in the number of outstanding shares in shareholder's
accounts so as to preserve a net asset value of $1.00 per share. After such a
reduction, the basis of eliminated shares would be added to the basis of
shareholders' remaining Money Fund shares, and any shareholders disposing of
shares at that time may recognize a capital loss.
15
<PAGE>
Distributions, including distributions reinvested in additional shares of the
Money Fund, will nonetheless be fully taxable, even if the number of shares in
shareholders' accounts has been reduced as described above.
Ordinary income dividends paid by the Money Fund to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% United States
withholding tax under existing provisions of the Code applicable to foreign
individuals and entities unless a reduced rate of withholding or a withholding
exemption is provided under applicable treaty law. Nonresident shareholders are
urged to consult their own tax advisers concerning the applicability of the
United States withholding tax.
Dividends and interest received by the Money Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes.
Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ('backup withholding'). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Trust or who, to the Trust's knowledge, have
furnished an incorrect number. When establishing an account, an investor must
certify under penalty of perjury that such number is correct and that such
investor is not otherwise subject to backup withholding.
A loss realized on a sale or exchange of shares of the Money Fund will be
disallowed if other Money Fund shares are acquired (whether through the
automatic reinvestment of dividends or otherwise) within a 61-day period
beginning 30 days before and ending 30 days after the date that the shares are
disposed of. In such a case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss.
The Code requires a RIC to pay a nondeductible 4% excise tax to the extent
the RIC does not distribute, during each calendar year, 98% of its ordinary
income, determined on a calendar year basis, and 98% of its capital gains,
determined, in general, on an October 31 year-end, plus certain undistributed
amounts from previous years. While the Money Fund intends to distribute its
income and capital gains in the manner necessary to avoid imposition of the 4%
excise tax, there can be no assurance that sufficient amounts of the Money
Fund's taxable income and capital gains will be distributed to avoid entirely
the imposition of the tax. In such event, the Money Fund will be liable for the
tax only on the amount by which it does not meet the foregoing distribution
requirements.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and these Treasury
regulations are subject to change by legislative or administrative action either
prospectively or retroactively.
Ordinary income dividends and capital gain dividends may also be subject to
state and local taxes.
Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on United States Government obligations. State
law varies as to whether dividend income attributable to United States
Government obligations is exempt from state income tax.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors should
also consider applicable foreign taxes in their evaluation of an investment in
the Money Fund.
16
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SERIES AND SHARES
The Declaration of Trust provides that the Trust shall be comprised of
separate Series ('Series') each of which will consist of a separate portfolio
which will issue a separate class of shares. The Trustees are authorized to
create an unlimited number of Series and, with respect to each Series, to issue
an unlimited number of full and fractional shares of beneficial interest, par
value $.10 per share, of a single class and to divide or combine the shares into
a greater or lesser number of shares without thereby changing the proportionate
beneficial interests in the Series. All shares have equal voting rights, except
that only shares of the respective Series are entitled to vote on matters
concerning only that Series. Shareholders are entitled to one vote for each full
share held and fractional votes for fractional shares held in the election of
Trustees and on other matters submitted to the vote of shareholders. Each issued
and outstanding share is entitled to participate equally in dividends and
distributions declared by the respective Series and in net assets of such Series
upon liquidation or dissolution remaining after satisfaction of outstanding
liabilities.
In the event a Series were unable to meet its obligations, the remaining
Series would assume the unsatisfied obligations of that Series. The shares of
each Series, when issued, will be fully paid and nonassessable, have no
preference, preemptive, conversion, exchange or similar rights, and are freely
transferable. Holders of shares of any Series are entitled to redeem their
shares as described elsewhere herein and in the Prospectus. Shares do not have
cumulative voting rights and the holders of more than 50% of the shares of the
Trust voting for the election of Trustees can elect all of the Trustees if they
choose to do so and in such event the holders of the remaining shares would not
be able to elect any Trustees. No amendment may be made to the Declaration of
Trust without the affirmative vote of a majority of the outstanding shares of
the Trust except under certain limited circumstances set forth in the
Declaration of Trust.
CUSTODIAN
The Bank of New York, 90 Washington Street, 12th Floor, New York, New York
10286, acts as custodian of the Money Fund's assets. The Custodian is
responsible for safeguarding and controlling the Money Fund's cash and
securities, handling the delivery of securities and collecting interest on the
Money Fund's investments.
TRANSFER AGENT
Merrill Lynch Financial Data Services, Inc., 4800 Deer Lake Drive East,
Jacksonville, Florida 32246-6484, a subsidiary of ML&Co., acts as the Money
Fund's transfer agent. The Transfer Agent is responsible for the issuance,
transfer and redemption of shares and the opening and maintenance of shareholder
accounts.
INDEPENDENT AUDITORS
Deloitte & Touche LLP, 117 Campus Drive, Princeton, New Jersey 08540, have
been selected as the independent auditors of the Money Fund. The selection of
independent auditors is subject to ratification by the shareholders of the Money
Fund. The independent auditors are responsible for auditing the financial
statements of the Money Fund.
17
<PAGE>
LEGAL COUNSEL
Brown & Wood, One World Trade Center, New York, New York 10048, is counsel
for the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of the Trust ends on May 31 of each year. The Trust will
send to shareholders of the Money Fund at least semi-annually reports showing
its portfolio securities and other information. An annual report containing
financial statements audited by independent auditors will be sent to
shareholders each year.
ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information with respect to
the shares of the Money Fund do not contain all the information set forth in the
Registration Statement and the exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the 1940 Act, to which reference is hereby made.
Offerings of shares of separate Series of the Trust will be made by separate
prospectuses.
To the knowledge of the Trust, no person or entity owned beneficially 5% or
more of the Money Fund's shares on September 1, 1995.
------------------------
The Declaration of Trust establishing the Trust, dated July 10, 1987, a
copy of which, together with all amendments thereto (the 'Declaration'), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name 'Financial Institutions Series Trust' refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim of said Trust
but the 'Trust Estate' only shall be liable.
18
<PAGE>
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER
AND CORPORATE BOND RATINGS
COMMERCIAL PAPER
Commercial paper with the greatest capacity for timely payment is rated A
by Standard & Poor's Ratings Group ('S&P'). Issues within this category are
further redefined with designations 1, 2 and 3 to indicate the relative degree
of safety; A-1, the highest of the three, indicates the degree of safety is
either overwhelming or very strong; A-2 indicates the capacity for timely
repayment is strong.
Moody's Investors Service, Inc. ('Moody's') employs the designations of
Prime-1, Prime-2 and Prime-3 to indicate the relative capacity of the rated
issuers to repay punctually. Prime-1 issues have a superior capacity for
repayment. Prime-2 issues have a strong capacity for repayment, but to a lesser
degree than Prime-1.
Commercial paper rated A.1+ by IBCA Limited or its affiliate IBCA, Inc.
(together, 'IBCA') are obligations supported by the highest capacity for timely
repayment. Commercial paper rated A.1 has a very strong capacity for timely
repayment. Commercial paper rated A.2 has a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
Fitch Investors Service, Inc. ('Fitch') employs the rating F-1+ to indicate
issues regarded as having the strongest degree of assurance for timely payment.
The rating F-1 reflects an assurance of timely payment only slightly less in
degree than issues rated F-1+, while the rating F-2 indicates a satisfactory
degree of assurance for timely payment, although the margin of safety is not as
great as indicated by the F-1+ and F-1 categories.
Duff & Phelps Credit Ratings Co. ('Duff & Phelps') employs the designation
of Duff 1 with respect to top grade commercial paper and bank money instruments.
Duff 1+ indicates the highest certainty of timely payment: short-term liquidity
is clearly outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations. Duff 1- indicates high certainty of timely payment. Duff
2 indicates good certainty of timely payment: liquidity factors and company
fundamentals are sound.
Thomson BankWatch, Inc. ('TBW') employs the designations TBW-1, TBW-2,
TBW-3 and TBW-4 as ratings for commercial paper, other senior short-term
obligations and deposit obligations of the entities to which the rating has been
assigned. TBW-1 is the highest category and indicates a very high degree of
likelihood that principal and interest will be paid on a timely basis. TBW-2 is
the second highest category and indicates that while the degree of safety
regarding timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated TBW-1.
CORPORATE BONDS
Bonds rated AAA have the highest rating assigned by S&P to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
Bonds rated AA have a very strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degree.
19
<PAGE>
Bonds rated Aaa by Moody's are judged to be of the best quality. Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Bonds rated Aa are judged to be of high quality by all
standards. They are rated lower than the best bonds because margins of
protection may not be as large or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities. Moody's applies
numerical modifiers, 1, 2 and 3 in each generic rating classification from Aa
through B in its corporate bond rating system. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category.
Bonds rated AAA by IBCA are obligations for which there is the lowest
expectation of investment risk. Capacity for timely repayment of principal and
interest is substantial such that adverse changes in business, economic or
financial conditions are unlikely to increase investment risk significantly.
Bonds rated AA are obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk, albeit not very significantly.
Bonds rated AAA by Fitch are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Bonds rated AAA by Duff & Phelps are deemed to be of the highest credit
quality: the risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt. AA indicates high credit quality: protection
factors are strong, and risk is modest but may vary slightly from time to time
because of economic conditions.
Bonds rated AAA by TBW are accorded the highest rating category which
indicates that the ability to repay principal and interest on a timely basis is
very high. AA is the second highest rating category and indicates a superior
ability to repay principal and interest on a timely basis with limited
incremental risk versus issues rated in the highest rating category.
20
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
SUMMIT CASH RESERVES FUND OF
FINANCIAL INSTITUTIONS SERIES TRUST:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Summit Cash Reserves Fund of Financial
Institutions Series Trust as of May 31, 1995, the related statements of
operations for the year then ended and changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
the financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at May 31,
1995 by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Summit Cash Reserves
Fund of Financial Institutions Series Trust as of May 31, 1995 the results of
its operations, the changes in its net assets, and the financial highlights for
the respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
June 30, 1995
21
<PAGE>
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Bank Notes--5.6%
First Bank of $4,000 6.04 % 6/01/95 $ 4,000
South Dakota, N.A.
Morgan Guaranty 1,000 6.40 5/28/96 1,000
Trust Co.
Total Bank Notes
(Cost--$5,000 ) 5,000
Certificates of Deposit--European--1.1%
Abbey National 1,000 6.42 5/29/96 1,000
Treasury Services PLC
Total Certificates of Deposit--European
(Cost--$1,000) 1,000
Certificates of Deposit--Yankee--11.2%
Deutsche Bank, NY 1,000 6.40 5/29/96 1,000
Rabobank 1,000 6.69 3/08/96 1,005
Nederland, NY
Sanwa Bank, Chicago 4,000 6.045 6/19/95 4,000
Sumitomo Bank, NY 4,000 6.04 6/05/95 4,000
Total Certificates of Deposit--Yankee
(Cost--$10,001) 10,005
Commercial Paper--Discount--37.8%
Beta Finance Inc. 1,000 6.00 7/18/95 992
CXC Incorporated 1,000 6.00 7/14/95 993
Cheltenham & Glouster 2,000 6.02 6/09/95 1,997
Building Society
Ciesco L.P. 402 6.25 6/01/95 402
Corporate 2,500 6.02 6/05/95 2,498
Receivables Corp.
Deer Park 1,000 5.98 6/08/95 999
Refining L.P. 3,000 6.00 6/28/95 2,986
Hanson Finance 3,500 6.02 6/05/95 3,497
(UK) PLC
McKenna Triangle 2,000 6.02 6/05/95 1,998
National Corporation 1,000 5.96 6/19/95 997
New Center 2,000 6.25 7/07/95 1,988
Asset Trust 1,000 5.96 8/09/95 988
Nomura Holding 4,000 6.03 7/14/95 3,971
America Inc.
Preferred 1,000 5.95 8/17/95 987
Receivables
Funding Corp.
Santander Finance 2,000 6.27 8/07/95 1,977
(Delaware) Inc.
Sheffield 3,500 5.97 6/12/95 3,493
Receivables Corp.
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
Commercial Paper--Discount (concluded)
Svenska $1,000 5.95 % 8/15/95 $ 987
Handelsbanken, Inc.
Windmill Funding Corp. 2,000 6.00 7/26/95 1,981
Total Commercial Paper--Discount
(Cost--$33,729) 33,731
Corporate Notes--2.3%
Abbey National 1,000 6.45 5/15/96 1,004
Treasury Services PLC
SMM Trust (1995-K) 1,000 6.0825++ 6/14/96 1,000
Total Corporate Notes
(Cost--$2,000) 2,004
Master Notes--4.5%
Goldman Sachs 4,000 6.08 2/14/96 4,000
Group L.P.++
Total Master Notes (Cost--$4,000) 4,000
US Government, Agency & Instrumentality Obligations--
Discount--6.5%
Federal Home Loan Bank 1,000 6.08 3/07/96 956
Federal National 2,000 5.72 11/30/95 1,942
Mortgage Association
US Treasury Bills 3,000 6.83 1/11/96 2,896
Total US Government, Agency & Instrumentality
Obligations--Discount (Cost--$5,766) 5,794
US Government, Agency & Instrumentality Obligations--
Non-Discount--28.9%
Federal Home 1,000 6.43++ 6/21/95 1,000
Loan Bank 1,000 6.41 11/22/95 1,002
1,000 6.43++ 12/28/95 1,000
2,000 6.787 2/15/96 2,011
1,000 6.46++ 6/17/96 1,000
5,000 5.885 8/05/96 4,991
Federal National 2,000 6.33 5/13/96 2,000
Mortgage Association++ 5,000 6.12 2/21/97 5,000
1,800 6.45 5/19/97 1,800
1,000 6.50 5/14/98 1,000
US Treasury Notes 4,000 4.25 11/30/95 3,969
1,000 4.25 12/31/95 991
Total US Government, Agency & Instrumentality
Obligations--Non-Discount (Cost--$25,728) 25,764
Total Investments (Cost--$87,224)--97.9% 87,298
Other Assets Less Liabilities--2.1% 1,821
--------
Net Assets--100.0% $ 89,119
========
[FN]
*Commercial Paper and certain US Government Agency Obligations are
traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Fund. Other
securities bear interest at the rates shown, payable at fixed dates
or upon maturity. The interest rates on variable rate securities are
adjusted periodically based upon the appropriate indexes; the
interest rates shown are the rates in effect at May 31, 1995.
++Variable Rate Notes.
See Notes to Financial Statements.
22
<PAGE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of May 31, 1995
<S> <C> <C> <C>
Assets: Investments, at value (identified cost--$87,224,077*) (Notes 1a & 1e) $ 87,297,505
Cash 16,045
Receivables:
Securities sold $ 2,996,485
Interest 202,952 3,199,437
------------
Prepaid registration fees and other assets (Note 1d) 88,267
------------
Total assets 90,601,254
------------
Liabilities: Payables:
Beneficial interest redeemed 1,365,361
Administrator (Note 2) 23,673
Investment adviser (Note 2) 23,673 1,412,707
------------
Accrued expenses and other liabilities 69,732
------------
Total liabilities 1,482,439
Net Assets: Net assets $ 89,118,815
============
Net Assets Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $ 8,904,539
Paid-in capital in excess of par 80,140,848
Unrealized appreciation on investments--net 73,428
------------
Net assets--Equivalent to $1.00 per share based on 89,045,387 shares
of beneficial interest outstanding $ 89,118,815
============
<FN>
*Cost for Federal income tax purposes. As of May 31, 1995, net
unrealized appreciation for Federal income tax purposes amounted to
$73,428, of which $73,630 related to appreciated securities and $202
related to depreciated securities.
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Year Ended
May 31, 1995
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 5,951,605
(Note 1c):
Expenses: Investment advisory fees (Note 2) $ 306,952
Administrative fees (Note 2) 306,952
Transfer agent fees (Note 2) 211,232
Registration fees (Note 1d) 88,561
Professional fees 53,018
Printing and shareholder reports 40,964
Accounting services (Note 2) 34,728
Trustees' fees and expenses 30,487
Custodian fees 21,353
Other 2,359
------------
Total expenses 1,096,606
------------
Investment income--net 4,854,999
------------
Realized & Realized gain on investments--net 5,155
Unrealized Change in unrealized appreciation/depreciation on investments--net 143,964
Gain on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 5,004,118
(Note 1c): ============
See Notes to Financial Statements.
</TABLE>
23
<PAGE>
FINANCIAL INFORMATION (concluded)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Year Ended May 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <C> <C> <C>
Operations: Investment income--net $ 4,854,999 $ 3,592,553
Realized gain on investments--net 5,155 41,290
Change in unrealized appreciation/depreciation on
investments--net 143,964 (61,245)
------------ ------------
Net increase in net assets resulting from operations 5,004,118 3,572,598
------------ ------------
Dividends & Investment income--net (4,854,999) (3,592,553)
Distributions Realized gain on investments--net (5,155) (41,290)
to Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends and
distributions to shareholders (4,860,154) (3,633,843)
------------ ------------
Beneficial Net proceeds from sale of shares 386,906,148 553,322,448
Interest Net asset value of shares issued to shareholders in reinvestment
Transactions of dividends (Note 1f) 4,849,989 3,625,745
(Note 3): ------------ ------------
391,756,137 556,948,193
Cost of shares redeemed (438,082,555) (578,262,259)
------------ ------------
Net decrease in net assets derived from beneficial interest
transactions (46,326,418) (21,314,066)
------------ ------------
Net Assets: Total decrease in net assets (46,182,454) (21,375,311)
Beginning of year 135,301,269 156,676,580
------------ ------------
End of year $ 89,118,815 $135,301,269
============ ============
</TABLE>
Financial Highlights
<TABLE>
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended May 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .0444 .0254 .0262 .0464 .0684
Realized and unrealized gain (loss) on
investments--net .0014 .0003 .0007 (.0001) .0024
-------- -------- -------- -------- --------
Total from investment operations .0458 .0257 .0269 .0463 .0708
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.0444) (.0254) (.0262) (.0463) (.0684)
Realized gain on investments--net (.0001) (.0003) (.0007) .0000 (.0024)++
-------- -------- -------- -------- --------
Total dividends and distributions (.0445) (.0257) (.0269) (.0463) (.0708)
-------- -------- -------- -------- --------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return 4.52% 2.57% 2.74% 4.44% 7.36%
======== ======== ======== ======== ========
Ratios to Expenses .98% .90% .86% .79% .85%
Average ======== ======== ======== ======== ========
Net Assets: Investment income and realized gain
on investments--net 4.35% 2.54% 2.72% 4.48% 7.14%++
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 89,119 $135,301 $156,677 $237,868 $374,212
Data: ======== ======== ======== ======== ========
<FN>
++Includes unrealized gain (loss).
See Notes to Financial Statements.
</TABLE>
24
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Summit Cash Reserves Fund (the "Fund") is a separate fund offering a
separate class of shares of Financial Institutions Series Trust (the
"Trust"). The Trust is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company
which comprises a series of separate portfolios offering a separate
class of shares to selected groups of purchasers. The Fund is
currently the only operating series of the Trust. The following is a
summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--The money market securities in which
the Fund invests are traded primarily in the over-the-counter
markets. Investments maturing more than sixty days after the
valuation date are valued at the most recent bid price or yield
equivalent as obtained from dealers that make markets in such
securities. When such securities are valued with sixty days or less
to maturity, the difference between the valuation existing on the
sixty-first day before maturity and maturity value is amortized on a
straight-line basis to maturity. Investments maturing within sixty
days from their date of acquisition are valued at amortized cost,
which approximates market value. Assets for which market quotations
are not readily available are valued at fair value as determined in
good faith by or under the direction of the Trustees of the Trust.
For purposes of valuation, the maturity of a variable rate security
is deemed to be the next coupon date on which the interest rate is
to be adjusted.
(b) Income taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no Federal income tax provision is
required.
(c) Security transactions and investment income--Security
transactions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization of
premium and discount) is recognized on the accrual basis. Realized
gains and losses on security transactions are determined on the
identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(e) Repurchase agreements--The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank of
the Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the security at a mutually agreed upon time and price.
The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additional
securities daily to ensure that the contract is fully
collateralized.
(f) Dividends to shareholders--The Fund declares dividends daily and
reinvests daily such dividends (net of non-resident alien tax and
back-up withholding tax) in additional fund shares at net asset
value. Dividends are declared from the total of net investment
income and net realized gain or loss on investments.
2. Investment Advisory and Administrative
Agreements:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM" or "Investment Adviser") and Broadcort
Capital Corporation (the "Administrator"), a subsidiary of Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co., which is the limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Investment Adviser and the Administrator each receive
a fee from the Fund at the end of each month at the annual rate of
0.275% of the average daily net assets of the Fund not exceeding
$500 million, and at the annual rate of 0.25% of average daily net
assets in excess of $500 million. Under their respective agreements
with the Fund, the Investment Adviser and the Administrator are
obligated to reimburse the Fund to the extent the Fund's aggregate
ordinary
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
operating expenses (excluding interest, taxes, brokerage
fees and commissions, and extraordinary charges such as litigation
costs) exceed in any fiscal year 2.5% of the Fund's first $30
million of average daily net assets, 2.0% of the next $70 million of
average daily net assets, and 1.5% of the remaining average daily
net assets. No fee payment will be made to the Investment Adviser or
Administrator during the year which will cause such expenses to
exceed the pro rata expense limitation at the time of such payment.
The Investment Adviser and Administrator will share equally with
respect to any reimbursements made pursuant to the expense
limitations.
Merrill Lynch Funds Distributor, Inc. ("MLFD"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc., is the distributor of the
shares of the Fund.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a
wholly-owned subsidiary of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, MLFD, MLFDS, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the periods
corresponds to the amounts included in the Statements of Changes in
Net Assets for net proceeds from sale of shares and cost of shares
redeemed, respectively, since shares are recorded at $1.00 per
share.
26
<PAGE>
----------------------------------------------------
----------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objectives and Policies............ 2
Management of the Trust....................... 4
Trustees and Officers....................... 4
Compensation of Trustees.................... 5
Management and Advisory
Arrangements............................. 6
Purchase of Shares............................ 8
Redemption of Shares.......................... 8
Purchase and Redemption of Shares Through
Certain Retirement Plans.................... 9
Purchase by Retirement Plans................ 9
Redemptions by Retirement Plans............. 9
Confirmations............................... 10
Portfolio Transactions........................ 10
Determination of Net Asset Value.............. 12
Yield Information............................. 13
Shareholder Services.......................... 13
Investment Account.......................... 13
Automatic Investment Plan................... 14
Accrued Monthly Payout Plan................. 14
Systematic Withdrawal Plans................. 14
Taxes......................................... 15
General Information........................... 17
Description of Series and Shares............ 17
Custodian................................... 17
Transfer Agent.............................. 17
Independent Auditors........................ 17
Legal Counsel............................... 18
Reports to Shareholders..................... 18
Additional Information...................... 18
Appendix...................................... 19
Independent Auditors' Report.................. 21
Financial Statements.......................... 22
</TABLE>
Statement of
Additional Information
[LOGO]
- -------------------------------------------------
SUMMIT CASH
RESERVES FUND
FINANCIAL INSTITUTIONS SERIES TRUST
FINANCIAL INSTITUTIONS SERIES TRUST IS ORGANIZED AS A MASSACHUSETTS BUSINESS
TRUST. IT IS NOT A BANK NOR DOES IT OFFER FIDUCIARY OR TRUST SERVICES. SHARES
OF THE SUMMIT CASH RESERVES FUND ARE NOT EQUIVALENT TO A BANK ACCOUNT. AS WITH
ANY INVESTMENT IN SECURITIES, THE VALUE OF A SHAREHOLDER'S INVESTMENT IN THE
MONEY FUND MAY FLUCTUATE. A SHAREHOLDER'S INVESTMENT IN THE MONEY FUND IS NOT
INSURED BY ANY GOVERNMENT AGENCY.
Principal Office of the Trust:
800 Scudders Mill Road
Plainsboro, New Jersey
Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
September 27, 1995
----------------------------------------------------
----------------------------------------------------
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS:
Contained in Part A:
Financial Highlights for each of the years in the ten-year period
ended May 31, 1995
Contained in Part B:
Schedule of Investments as of May 31, 1995
Statement of Assets and Liabilities as of May 31, 1995
Statement of Operations for the year ended May 31, 1995
Statement of Changes in Net Assets for the years ended May 31, 1995
and 1994
Financial Highlights for each of the years in the five-year period
ended May 31, 1995
(B) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
1(a) -- Declaration of Trust, dated July 10, 1987.(a)
(b) -- Instrument establishing Summit Cash Reserves Fund (the 'Fund') as a series of the Registrant.(a)
2 -- By-Laws of Registrant.(a)
3 -- None.
4 -- Portions of the Declaration of Trust, Establishment and Designation and By-Laws of the Registrant
defining the rights of holders of the Fund as a series of the Registrant.(b)
5(a) -- Investment Management Agreement between Registrant and Fund Asset Management, Inc. relating to Summit
Cash Reserves Fund.(a)
(b) -- Administrative Agreement between Registrant and Fund Asset Management, L.P. relating to Summit Cash
Reserves Fund.
(c) -- Form of Sub-Administrative Agreement relating to Summit Cash Reserves Fund.
(d) -- Administrative Agreement between Registrant and Broadcort Capital Corp. relating to Summit Cash
Reserves Fund.(a)
(e) -- Form of Sub-Administrative Agreement relating to Summit Cash Reserves Fund.(a)
6(a) -- Amended and Restated Distribution Agreement between Registrant and Merrill Lynch Funds Distributor,
Inc.(a)
(b) -- Form of Selected Dealers Agreement relating to Summit Cash Reserves Fund.(a)
7 -- None.
8 -- Custody Agreement between Registrant and The Bank of New York relating to Summit Cash Reserves
Fund.(a)
9 -- Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency Agreement between
Registrant and Merrill Lynch Financial Data Service, Inc. relating to Summit Cash Reserves Fund.(a)
10 -- Opinion of Brown & Wood, counsel to the Registrant.
11 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
12 -- None.
13 -- Certificate of Fund Asset Management, Inc. relating to Summit Cash Reserves Fund.(a)
14 -- None.
15 -- None.
16 -- Schedule for computation of each performance quotation provided in the Registration Statement in
response to Item 22.(a)
17 -- Financial Data Schedule.
</TABLE>
(Footnotes on next page)
C-1
<PAGE>
(Footnotes from previous page)
- ------------------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis and Retrieval
('EDGAR') phase-in requirements.
(b) Reference is made to Article II, Section 2.3 and Articles V, VI, VIII, IX, X
and XI of the Registrant's Declaration of Trust, previously filed as Exhibit
1(a) to the Registration Statement referred to in paragraph (a) above; to
the Certificates of Establishment and Designation establishing the Fund as a
series of the Registrant and establishing Class A and Class B shares of
beneficial interest of the Fund, which will be filed as Exhibits 1(c) and
1(d), respectively, to the Registration Statement; and to Articles I, V and
VI of the Registrant's By-Laws, previously filed as Exhibit 2 to the
Registration Statement referred to in paragraph (a) above.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Registrant is not controlled by or under common control with any person.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
NUMBER OF
HOLDERS AT
TITLE OF CLASS AUGUST 31, 1995
- ------------------------------------------------------------ ---------------
<S> <C>
Shares of beneficial interest, par value $.10 per share..... 6,638
Note: The number of holders shown above includes holders of record plus
beneficial owners, whose shares are held of record by Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
</TABLE>
ITEM 27. INDEMNIFICATION.
Section 5.3 of the Registrant's Declaration of Trust provides as follows:
'The Trust shall indemnify each of its Trustees, officers, employees,
and agents (including persons who serve at its request as directors,
officers or trustees of another organization in which it has any interest,
as a shareholder, creditor or otherwise) against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably
incurred by him in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, in which he
may be involved or with which he may be threatened, while in office or
thereafter, by reason of his being or having been such a trustee, officer,
employee or agent, except with respect to any matter as to which he shall
have been adjudicated to have acted in bad faith, willful misfeasance,
gross negligence or reckless disregard of his duties; provided, however,
that as to any matter disposed of by a compromise payment by such person,
pursuant to a consent decree or otherwise, no indemnification either for
said payment or for any other expenses shall be provided unless the Trust
shall have received a written opinion from independent legal counsel
approved by the Trustees to the effect that if either the matter of willful
misfeasance, gross negligence or reckless disregard of duty, or the matter
of good faith and reasonable belief as to the best interests of the Trust,
had been adjudicated, it would have been adjudicated in favor of such
person. The rights accruing to any Person under these provisions shall not
exclude any other rights to which he may be lawfully entitled; provided
that no Person may satisfy any right of indemnity or reimbursement granted
herein or in Section 5.1 [relating to no personal liability of
shareholders, Trustees, etc.] or to which he may be otherwise entitled
except out of the property of the Trust, and no Shareholder shall be
personally liable to any Person with respect to any claim for indemnity or
reimbursement or otherwise. The Trustee may make advance payments in
connection with indemnification under this Section 5.3, provided that the
indemnified person shall have given a written undertaking to reimburse the
Trust in the event it is subsequently determined that he is not entitled to
such indemnification.'
Insofar as the conditional advancing or indemnification moneys for actions
based upon the Investment Company Act of 1940 may be concerned, such payments
will be made only on the following conditions: (i) the advances must be limited
to amounts used, or to be used, for the preparation or presentation of a defense
to the action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of a written promise by, or on
behalf of, the recipient to repay that amount of the advance which exceeds the
amount to which it is ultimately determined that he is entitled to receive from
the Registrant by reason of
C-2
<PAGE>
indemnification; and (iii)(a) such promise must be secured by a surety bond,
other suitable insurance or an equivalent form of security which assures that
any repayments may be obtained by the Registrant without delay or litigation,
which bond, insurance or other form of security must be provided by the
recipient of the advance, or (b) a majority of a quorum of the Registrant's
disinterested, non-party Trustees, or an independent legal counsel in a written
opinion, shall determine, based upon a review of readily available facts, that
the recipient of the advance ultimately will be found entitled to
indemnification.
In Section 9 of the Distribution Agreement relating to the securities being
offered hereby, the Registrant agrees to indemnify the Distributor and each
person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933 against certain types of civil liabilities arising in
connection with the Registration Statement or Prospectus.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons of the
Registrant and the principal underwriter pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, officer, or controlling
person of the Registrant and the principal underwriter in connection with the
successful defense of any action, suit or proceedings) is asserted by such
Trustee, officer or controlling person or the principal underwriter in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER.
Fund Asset Management, L.P. (the 'Investment Manager') acts as the
investment adviser for the following open-end investment companies: CBA Money
Fund, CMA Government Securities Fund, CMA Money Fund, CMA Multi-State Municipal
Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund
Accumulation Program, Inc., Merrill Lynch Basic Value Fund, Inc., Merrill Lynch
California Municipal Series Trust, Merrill Lynch Corporate Bond Fund, Inc.,
Merrill Lynch Federal Securities Trust, Merrill Lynch Funds for Institutions
Series, Merrill Lynch Institutional Tax-Exempt Fund, Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, Merrill Lynch Multi-State Municipal
Series Trust, Merrill Lynch Municipal Bond Fund, Inc., Merrill Lynch Phoenix
Fund, Inc., Merrill Lynch Special Value Fund, Inc., Merrill Lynch World Income
Fund, Inc. and The Municipal Fund Accumulation Program, Inc.; and for the
following closed-end investment companies: Apex Municipal Fund, Inc., Corporate
High Yield Fund, Inc., Corporate High Yield Fund II, Inc., Emerging Tigers Fund,
Inc., Income Opportunities Fund 1999, Inc., Income Opportunities Fund 2000,
Inc., MuniAssets Fund, Inc., MuniEnhanced Fund, Inc., MuniInsured Fund, Inc.,
MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest California Insured Fund,
Inc., MuniVest Florida Fund, MuniVest Michigan Insured Fund, Inc., MuniVest New
Jersey Fund, Inc., MuniVest New York Insured Fund, Inc., MuniVest Pennsylvania
Insured Fund, MuniYield Arizona Fund, Inc., MuniYield California Fund, Inc.,
MuniYield California Insured Fund, Inc., MuniYield California Insured Fund II,
Inc., MuniYield Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund,
Inc., MuniYield Insured Fund, Inc., MuniYield Insured Fund II, Inc., MuniYield
Michigan Fund, Inc., MuniYield Michigan Insured Fund, Inc., MuniYield New Jersey
Fund, Inc., MuniYield New Jersey Insured Fund, Inc., MuniYield New York Insured
Fund, Inc., MuniYield New York Insured Fund II, Inc., MuniYield New York Insured
Fund III, Inc., MuniYield Pennsylvania Fund, MuniYield Quality Fund, Inc.,
MuniYield Quality Fund II, Inc., Senior High Income Portfolio, Inc., Senior High
Income Portfolio II, Inc., Taurus MuniCalifornia Holdings, Inc., Taurus
MuniNewYork Holdings, Inc. and Worldwide Dollar Vest Fund, Inc.
Merrill Lynch Asset Management, L.P., ('MLAM'), an affiliate of the
Investment Adviser, acts as the investment adviser for the following open-end
investment companies: Merrill Lynch Adjustable Rate Securities Fund, Inc.,
Merrill Lynch Americas Income Fund, Inc., Merrill Lynch Asset Builder Program,
Inc., Merrill Lynch Asset Growth Fund, Inc., Merrill Lynch Asset Income Fund,
Inc., Merrill Lynch Balanced Fund for Investment and Retirement, Inc., Merrill
Lynch Capital Fund, Inc., Merrill Lynch Developing Capital Markets Fund, Inc.,
Merrill Lynch Dragon Fund, Inc., Merrill Lynch EuroFund, Merrill Lynch Fund For
Tomorrow, Inc., Merrill Lynch Fundamental Growth Fund, Inc., Merrill Lynch
Global Allocation Fund, Inc., Merrill Lynch Global Bond Fund for Investment and
Retirement, Merrill Lynch Global Convertible Fund, Inc., Merrill Lynch
C-3
<PAGE>
Global Utility Fund, Inc., Merrill Lynch Growth Fund for Investment and
Retirement, Merrill Lynch Healthcare Fund, Inc., Merrill Lynch Institutional
Intermediate Fund, Merrill Lynch International Equity Fund, Merrill Lynch Global
Holdings, Inc., Merrill Lynch Latin America Fund, Inc., Merrill Lynch Middle
East/Africa Fund, Inc., Merrill Lynch Municipal Series Trust, Merrill Lynch
Global Resources Trust, Merrill Lynch Pacific Fund, Inc., Merrill Lynch Ready
Assets Trust, Merrill Lynch Retirement Series Trust, Merrill Lynch Series Fund,
Inc., Merrill Lynch Short-Term Global Income Fund, Inc., Merrill Lynch Strategic
Dividend Fund, Merrill Lynch Technology Fund, Inc., Merrill Lynch U.S. Treasury
Money Fund, Merrill Lynch U.S.A. Government Reserves, Merrill Lynch Utility
Income Fund, Inc., and Merrill Lynch Variable Series Funds, Inc.; and for the
following closed-end investment companies: Convertible Holdings, Inc., Merrill
Lynch High Income Municipal Bond Fund, Inc. and Merrill Lynch Senior Floating
Rate Fund, Inc.
The address of each of these investment companies is P.O. Box 9011,
Princeton, New Jersey 08543-9011, except that the address of Merrill Lynch Funds
for Institutions Series and Merrill Lynch Institutional Intermediate Fund is One
Financial Center, 15th Floor, Boston, Massachusetts 02111-2646. The address of
the Investment Manager, MLAM and Merrill Lynch Funds Distributor, Inc. (the
'Distributor') is also P.O. Box 9011, Princeton, New Jersey 08543-9011. The
address of Merrill Lynch, Pierce, Fenner & Smith Incorporated ('Merrill Lynch')
and Merrill Lynch & Co., Inc. ('ML & Co.') is North Tower, World Financial
Center, 250 Vesey Street, New York, New York 10281. The address of Merrill Lynch
Financial Data Services, Inc. is 4800 Deer Lake Drive East, Jacksonville,
Florida 32246-6484.
Set forth below is a list of each officer and partner of the Investment
Manager indicating each business, profession, vocation or employment of a
substantial nature in which each such person or entity has been engaged since
June 1, 1993 for his or her or its own account or in the capacity of director,
officer, partner or trustee. In addition, Mr. Zeikel is President, Mr. Richard
is Treasurer and Mr. Glenn is Executive Vice President of substantially all of
the investment companies described in the preceding paragraph and also hold the
same positions with all or substantially all of the investment companies advised
by MLAM as they do with those advised by the Investment Manager. Messrs.
Giordano, Harvey, Kirstein and Monagle are directors or officers of one or more
of such companies.
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT MANAGER PROFESSION, VOCATION OR EMPLOYMENT
- --------------------------------- --------------------------- ------------------------------------------------
<S> <C> <C>
ML & Co. ........................ Limited Partner Financial Services Holding Company
Princeton Services, Inc.
('Princeton Services')......... General Partner General Partner of MLAM
Arthur Zeikel.................... President President of MLAM; President and Director of
Princeton Services; Director of Merrill Lynch
Funds Distributor, Inc. ('MLFD'); Executive
Vice President of Merrill Lynch & Co., Inc.;
Executive Vice President of Merrill Lynch
Terry K. Glenn................... Executive Vice President Executive Vice President of MLAM; Vice President
and Director of Princeton Services; President
and Director of MLFD; President of Princeton
Administrators, L.P.
Vincent R. Giordano.............. Senior Vice President Senior Vice President of MLAM; Senior Vice
President of Princeton Services
Elizabeth Griffin................ Senior Vice President Senior Vice President of MLAM
Norman R. Harvey................. Senior Vice President Senior Vice President of MLAM; Senior Vice
President of Princeton Services
N. John Hewitt................... Senior Vice President Senior Vice President of MLAM; Senior Vice
President of Princeton Services
Philip L. Kirstein............... Senior Vice President, Senior Vice President, General Counsel and
General Counsel and Secretary of MLAM; Senior Vice President,
Secretary General Counsel, Director and Secretary of
Princeton Services; Director of MLFD
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT MANAGER PROFESSION, VOCATION OR EMPLOYMENT
- --------------------------------- --------------------------- ------------------------------------------------
<S> <C> <C>
Ronald M. Kloss.................. Senior Vice President and Senior Vice President and Controller of MLAM;
Controller Senior Vice President and Controller of
Princeton Services
Stephen M. M. Miller............. Senior Vice President Executive Vice President of Princeton
Administration; Senior Vice President of
Princeton Services
Joseph T. Monagle................ Senior Vice President Senior Vice President of MLAM; Senior Vice
President of Princeton Services
Richard L. Reller................ Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services
Gerald M. Richard................ Senior Vice President and Senior Vice President and Treasurer of MLAM;
Treasurer Vice President and Treasurer of Princeton
Services; Vice President and Treasurer of MLFD
Ronald L. Welburn................ Senior Vice President Senior Vice President of MLAM; Senior Vice
President of Princeton Services
Anthony Wiseman.................. Senior Vice President Senior Vice President of MLAM; Senior Vice
President of Princeton Services
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant, for each of
the open-end investment companies referred to in the first two paragraphs of
Item 28 except CBA Money Fund, CMA Government Securities Fund, CMA Money Fund,
CMA Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA Treasury Fund,
Convertible Holdings, Inc., The Corporate Fund Accumulation Program, Inc.,
MuniAssets Fund, Inc., and The Municipal Fund Accumulation Program, Inc.; and
MLFD also acts as the principal underwriter for the following closed-end
investment companies: Merrill Lynch High Income Municipal Bond Fund, Inc. and
Merrill Lynch Senior Floating Rate Fund, Inc.
(b) Set forth below is information concerning each director and officer of
the Distributor. The principal business address of each such person is P.O. Box
9011, Princeton, New Jersey 08543-9011, except that the address of Messrs.
Crook, Aldrich, Brady, Breen, Graczyk, Fatseas and Wasel is One Financial
Center, Boston, Massachusetts 02111-2646.
<TABLE>
<CAPTION>
(2) (3)
(1) POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH DISTRIBUTOR WITH REGISTRANT
- -------------------------------- --------------------------------------- ---------------------------
<S> <C> <C>
Terry K. Glenn.................. President and Director Executive Vice President
Arthur Zeikel................... Director President and Trustee
Philip L. Kirsten............... Director None
William E. Aldrich.............. Senior Vice President None
Robert W. Crook................. Senior Vice President None
Kevin Boman..................... Vice President None
Michael J. Brady................ Vice President None
William M. Breen................ Vice President None
Sharon Creveling................ Vice President and Assistant Treasurer None
Mark A. DeSario................. Vice President None
James T. Fatseas................ Vice President None
Stanley Graczyk................. Vice President None
Michelle T. Lau................. Vice President None
Gerald M. Richard............... Vice President and Treasurer Treasurer
Debra W. Landsman-Yaros......... Vice President None
Salvatore Venezia............... Vice President None
William Wasel................... Vice President None
Robert Harris................... Secretary Secretary
</TABLE>
(c) Not applicable.
C-5
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder will be maintained at the
offices of the Registrant, 800 Scudders Mill Road, Plainsboro, New Jersey 08536
and the Transfer Agent, 4800 Deer Lake Drive East, Jacksonville, Florida
32246-6484.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth under the caption 'Management of the
Trust--Management and Advisory Arrangements' in the Prospectus constituting Part
A and the Statement of Additional Information constituting Part B of the
Registration Statement, Registrant is not a party to any management-related
service contract.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report to shareholders, upon
request and without charge.
C-6
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT CERTIFIES THAT IT MEETS ALL OF
THE REQUIREMENTS FOR EFFECTIVENESS OF THIS POST-EFFECTIVE AMENDMENT TO THE
REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE SECURITIES ACT OF 1933
AND HAS DULY CAUSED THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
TOWNSHIP OF PLAINSBORO, AND STATE OF NEW JERSEY ON THE 26TH DAY OF SEPTEMBER,
1995.
FINANCIAL INSTITUTIONS SERIES TRUST
(Registrant)
By /S/ GERALD M. RICHARD
--------------------------------
(Gerald M. Richard, Treasurer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------------------------------- ------------------------------ ------------------
<S> <C> <C>
ARTHUR ZEIKEL* President and Trustee
- ---------------------------------- (Principal Executive
(Arthur Zeikel) Officer)
/s/ GERALD M. RICHARD Treasurer (Principal Financial
- ---------------------------------- and Accounting Officer) September 26, 1995
(Gerald M. Richard)
JOE GRILLS* Trustee
- ----------------------------------
(Joe Grills)
WALTER MINTZ* Trustee
- ----------------------------------
(Walter Mintz)
MELVIN R. SEIDEN* Trustee
- ----------------------------------
(Melvin R. Seiden)
STEPHEN B. SWENSRUD* Trustee
- ----------------------------------
(Stephen B. Swensrud)
HARRY WOOLF* Trustee
- ----------------------------------
(Harry Woolf)
*By/s/ GERALD M. RICHARD
- ----------------------------------
(Gerald M. Richard, September 26, 1995
Attorney-in-Fact)
</TABLE>
C-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1(a) -- Declaration of Trust, dated July 10, 1987.(a)
(b) -- Instrument establishing Summit Cash Reserves Fund (the 'Fund') as a series of the Registrant.(a)
2 -- By-Laws of Registrant.(a)
3 -- None.
4 -- Portions of the Declaration of Trust, Establishment and Designation and By-Laws of the Registrant
defining the rights of holders of the Fund as a series of the Registrant.(b)
5(a) -- Investment Management Agreement between Registrant and Fund Asset Management, Inc. relating to Summit
Cash Reserves Fund.(a)
(b) -- Administrative Agreement between Registrant and Fund Asset Management, L.P. relating to Summit Cash
Reserves Fund.
(c) -- Form of Sub-Administrative Agreement relating to Summit Cash Reserves Fund.
(d) -- Administrative Agreement between Registrant and Broadcort Capital Corp. relating to Summit Cash
Reserves Fund.(a)
(e) -- Form of Sub-Administrative Agreement relating to Summit Cash Reserves Fund.(a)
6(a) -- Amended and Restated Distribution Agreement between Registrant and Merrill Lynch Funds Distributor,
Inc.(a)
(b) -- Form of Selected Dealers Agreement relating to Summit Cash Reserves Fund.(a)
7 -- None.
8 -- Custody Agreement between Registrant and The Bank of New York relating to Summit Cash Reserves
Fund.(a)
9 -- Transfer Agency, Dividend Disbursing Agency and Shareholder Servicing Agency Agreement between
Registrant and Merrill Lynch Financial Data Service, Inc. relating to Summit Cash Reserves Fund.(a)
10 -- Opinion of Brown & Wood, counsel to the Registrant.
11 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
12 -- None.
13 -- Certificate of Fund Asset Management, Inc. relating to Summit Cash Reserves Fund.(a)
14 -- None.
15 -- None.
16 -- Schedule for computation of each performance quotation provided in the Registration Statement in
response to Item 22.(a)
17 -- Financial Data Schedule.
</TABLE>
<PAGE>
Ex-99.1(a)
DECLARATION OF TRUST
OF
MERRILL LYNCH NEW FINANCIAL INSTITUTIONS SERIES TRUST
THE DECLARATION OF TRUST of Merrill Lynch New Financial Institutions
Series Trust is made the 10th day of July, 1987 by the parties signatory
hereto, as trustees (such persons, so long as they shall continue in
office in accordance with the terms of this Declaration of Trust, and
all other persons who at the time in question have been duly elected or
appointed as trustees in accordance with the provisions of this
Declaration of Trust and are then in office, being hereinafter called
the "Trustees")
W I T N E S S E T H :
WHEREAS, the Trustees desire to form a trust fund under the laws of
Massachusetts for the investment and reinvestment of funds contributed
thereto; and
WHEREAS, it is proposed that the beneficial interest in the trust assets
be divided into transferable shares of beneficial interest which may, at
the discretion of the Trustees, be divided into separate series as
hereinafter provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust, all money and property contributed to the trust fund to manage
and dispose of the same for the benefit of the holders from time to time
of the shares of beneficial interest issued hereunder and subject to the
provisions hereof, to wit:
<PAGE>
ARTICLE I
The Trust
1.1. Name. The name of the trust created hereby (the "Trust", which
term shall be deemed to include any Series of the Trust when the context
requires) shall be "Merrill Lynch New Financial Institutions Series
Trust", and so far as may be practicable the Trustees shall conduct the
activities of the Trust, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter used)
shall refer to the Trustees as Trustees, and not individually, and shall
not refer to the officers, agents, employees or Shareholders of the
Trust or any Series thereof. Each Series of the Trust which shall be
established and designated by the Trustees pursuant to Section 6.2 shall
conduct its activities under such name as the Trustees shall determine
and set forth in the instrument establishing such Series. Should the
Trustees determine that the use of the name of the Trust or any Series
is not advisable, they may select such other name for the Trust or such
Series as they deem proper and the Trust or Series may conduct its
activities under such other name. Any name change shall be effective
upon the execution by a majority of the then Trustees of an instrument
setting forth the new name. Any such instrument shall have the status of
an amendment to this Declaration.
1.2. Definitions. As used in this Declaration, the following terms
shall have the following meanings:
The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "majority Shareholder Vote" (the 67% or 50% requirement of the
third sentence of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given
them in the 1940 Act.
"Declaration" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "Declaration", "hereof",
"herein" and "hereunder" shall be deemed to refer to the Declaration
rather than the article or section in which such words appear.
"Fundamental Policies" shall mean the investment restrictions set forth
in the Prospectus of any Series and designated as fundamental policies
therein.
"Person" shall mean and include individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.
2.
<PAGE>
"Prospectus" shall mean the currently effective Prospectus of any Series
of the Trust under the Securities Act of 1933, as amended, including the
Statement of Additional Information incorporated by reference therein.
"Series" shall mean the separate series that may be established and
designated pursuant to Section 6.2.
"Shareholders" shall mean as of any particular time all holders of
record of outstanding Shares at such time.
"Shares" shall mean the equal proportionate transferable units of
interest into which the beneficial interest in any Series of the Trust
shall be divided from time to time and includes fractions of Shares as
well as whole Shares. All references to Shares shall be deemed to be
Shares of any or all Series as the context may require.
"Trustees" shall mean the signatories to this Declaration of Trust, so
long as they shall continue in office in accordance with the terms
hereof, and all other persons who at the time in question have been duly
elected or appointed and have qualified as trustees in accordance with
the provisions hereof and are then in office, are herein referred to as
the "Trustees", and reference in this Declaration of Trust to a Trustee
or Trustees shall refer to such person or persons in their capacity as
Trustees hereunder.
"Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time
is owned or held by or for the account of the Trust, any Series thereof
or the Trustees.
The "1940 Act" refers to the Investment Company Act of 1940 and the
regulations promulgated thereunder, as amended from time to time.
3.
<PAGE>
ARTICLE II
Trustees
2.1. Number and Qualification. The number of Trustees shall be fixed
from time to time by written instrument signed by a majority of the
Trustees then in office, provided, however, that the number of Trustees
shall in no event be less than three or more than fifteen (except prior
to the first public offering of Shares). Any vacancy created by an
increase in Trustees may, to the extent permitted by the 1940 Act, be
filled by the appointment of an individual having the qualifications
described in this Article made by a written instrument signed by a
majority of the Trustees then in office. Any such appointment shall not
become effective, however, until the individual named in the written
instrument of appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of this
Declaration. No reduction in the number of Trustees shall have the
effect of removing any Trustee from office prior to the expiration of
his term. Whenever a vacancy in the number of Trustees shall occur,
until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees in office, regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be an
individual at least 21 years of age who is not under legal disability.
Trustees need not own Shares.
2.2. Term of Office. Each Trustee shall (except in the event of
resignations or removals or vacancies pursuant to Section 2.3 or 2.4
hereof) hold office until his successor has been elected and is
qualified to serve as Trustee.
2.3. Resignation and Removal. Any Trustee may resign his trust (without
need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered or mailed to the Chairman, if any, the
President or the Secretary and such resignation shall be effective upon
such delivery, or at a later date according to the terms of the
instrument. Any of the Trustees may be removed (provided the aggregate
number of Trustees after such removal shall not be less than the number
required by Section 2.1 hereof) with cause, by the action of two-thirds
of the remaining Trustees. Any Trustee may be removed at any special
meeting of the Shareholders by a vote of two-thirds of the outstanding
Shares. Upon the resignation or removal of a Trustee, or his otherwise
ceasing to be a Trustee, he shall execute and deliver such documents as
the remaining Trustees shall require for the purpose of conveying to the
successor Trustee or the remaining Trustees any Trust Property held in
the name of the resigning or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver
on his behalf such
4.
<PAGE>
documents as the remaining Trustees shall require as provided in the
preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, bankruptcy,
adjudicated incompetence or other incapacity to perform the duties of
the office, or removal, of a Trustee. No such vacancy shall operate to
annul this Declaration or to revoke any existing agency created pursuant
to the terms of this Declaration. In the case of a vacancy, the
Shareholders, acting at any meeting of Shareholders held in accordance
with Section 10.2 hereof, or, to the extent permitted by the 1940 Act, a
majority of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so
elected by the Trustees shall hold office as provided in this
Declaration.
2.5. Meetings. Meetings of the Trustees shall be held from time to time
upon the call of the Chairman, if any, the President, the Secretary or
any two Trustees. Regular meetings of the Trustees may be held without
call or notice at a time and place fixed by the By-Laws or by resolution
of the Trustees. Notice of any other meeting shall be mailed or
otherwise given not less than 48 hours before the meeting but may be
waived in writing by any Trustee either before or after such meeting.
The attendance of a Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Trustee attends a meeting for the
express purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened. The
Trustees may act with or without a meeting. A quorum for all meetings
of the Trustees shall be a majority of the Trustees. Unless provided
otherwise in this Declaration of Trust, any action of the Trustees may
be taken at a meeting by vote of a majority of the Trustees present (a
quorum being present) or without a meeting by written consents of a
majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any,
may act with or without a meeting. A quorum for all meetings of any
such committee shall be a majority of the members thereof. Unless
provided otherwise in this Declaration, any action of any such committee
may be taken at a meeting by vote of a majority of the members present
(a quorum being present) or without a meeting by written consent of a
majority of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust within the
meaning of Section 1.2 hereof or otherwise interested in any action to
be taken may be counted for quorum purposes under this Section and shall
be entitled to vote to the extent permitted by the 1940 Act.
5.
<PAGE>
To the extent permitted by the 1940 Act, all or any one or more Trustees
may participate in a meeting of the Trustees or any committee thereof by
means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each
other and participation in a meeting pursuant to such communications
systems shall constitute presence in person at such meeting.
2.6. Officers. The Trustees shall annually elect a President, a
Secretary and a Treasurer and may elect a Chairman. The Trustees may
elect or appoint or authorize the Chairman, if any" or President to
appoint such other officers or agents with such powers as the Trustees
may deem to be advisable. The Chairman and President shall be and the
Secretary and Treasurer may, but need not, be a Trustee.
2.7. By-Laws. The Trustees may adopt and from time to time amend or
repeal the By-Laws for the conduct of the business of the Trust.
6.
<PAGE>
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust or any Series
thereof to the same extent as if the Trustees were the sole owners of
the Trust Property and business in their own right, but with such powers
of delegation as may be permitted by this Declaration. The Trustees may
perform such acts as in their sole discretion are proper for conducting
the business of the Trust or any Series thereof. The enumeration of any
specific power herein shall not be construed as limiting the aforesaid
power. Such powers of the Trustees may be exercised without order of or
resort to any court.
3.2. Investments. The Trustees shall have power, subject to the
Fundamental Policies, to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute
or otherwise deal in or dispose of negotiable or non-negotiable
instruments, obligations, evidences of indebtedness, certificates of
deposit or indebtedness, commercial paper, repurchase agreements,
reverse repurchase agreements and other securities, including,
without limitation those issued, guaranteed or sponsored by any
state, territory or possession of the United States and the District
of Columbia and their political subdivisions, agencies and
instrumentalities, or by the United States Government or its
agencies or instrumentalities, or international instrumentalities,
or by any bank, savings institution, corporation or other business
entity organized under the laws of the United States and, to the
extent provided in the Prospectus and not prohibited by the
Fundamental Policies, organized under foreign laws; and to. exercise
any and all rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind and
description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or
more persons, firms, associations or corporations to exercise any of
said rights, powers and privileges in respect of any of said
instruments; and the Trustees shall be deemed to have the foregoing
powers with respect to any additional securities in which any Series
of the Trust may invest should the
7.
<PAGE>
investment policies set forth in the Prospectus or the
Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or any Series, nor shall
the Trustees be limited by any law limiting the investments which may be
made by fiduciaries.
3.3. Legal Title. Legal title to all the Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees, or in the name of the Trust or any
Series thereof, or in the name of any other Person as nominee, on such
terms as the Trustees may determine, provided that the interest of the
Trust or any Series thereof therein is appropriately protected.
The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each person who may hereafter become a
Trustee upon his due election and qualification. Upon the resignation,
removal or death of a Trustee he shall automatically cease to have any
right, title or interest in any of the Trust Property, and the right,
title and interest of such Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of
title shall be effective whether or not conveyancing documents have been
executed and delivered.
3.4. Issuance and Repurchase of Securities. The Trustees shall have the
power to issue, sell., repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in,
Shares, including shares in fractional denominations, and, subject to
the more detailed provisions set forth in Articles VIII and IX, to apply
to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the applicable Series of
the Trust whether capital or surplus or otherwise, to the full extent
now or hereafter permitted by the laws of the Commonwealth of
Massachusetts governing business corporations.
3.5. Borrow Money. Subject to the Fundamental Policies, the Trustees
shall have power to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust or any Series thereof, including the
lending of portfolio securities, and to endorse, guarantee, or undertake
the performance of any obligation, contract or engagement of any other
person, firm, association or corporation.
3.6. Delegation; Committees. The Trustees shall have power, consistent
with their continuing exclusive authority over the management of the
Trust and the Trust Property, to delegate from
8.
<PAGE>
time to tine to such of their number or to officers, employees or agents
of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees
or otherwise as the Trustees may deem expedient, to the same extent as
such delegation is permitted to directors of a Massachusetts business
corporation and is permitted by the 1940 Act.
3.7. Collection and Payment. The Trustees shall have power to collect
all property due to the Trust or any Series thereof; to pay all claims,
including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue of
which any property is owed to the Trust or any Series thereof; and to
enter into releases, agreements and other instruments.
3.8. Expenses. The Trustees shall have power to incur and pay any
expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration of
Trust, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all
officers, employees and Trustees. The Trustees may pay themselves such
compensation for special services, including legal, underwriting,
syndicating and brokerage services, as they in good faith may deem
reasonable and reimbursement for expenses reasonably incurred by
themselves on behalf of the Trust.
3.9. Miscellaneous Powers. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem desirable
for the transaction, of the business of the Trust or any Series thereof;
(b) enter into joint ventures, partnerships and any other combinations
or associations; (c) purchase, and pay for out of Trust Property,
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisors, distributors, selected dealers
or independent contractors of the Trust or any Series thereof against
all claims arising by reason of holding any such position or by reason
of any action taken or omitted by any such Person in such capacity,
whether or not constituting negligence, or whether or not the Trust
would have the power to indemnify such Person against such liability;
(d) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers,
employees and agents of the Trust; (e) make donations, irrespective of
benefit to the Trust, for charitable, religious, educational,
scientific, civic or similar purposes; (f) to the extent permitted by
law, indemnify any Person with whom the Trust or any Series thereof has
dealings, including any advisor, administrator, manager, distributor and
selected dealers with respect to any Series, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual
obligations of others; (h)
9.
<PAGE>
determine and change the fiscal year of the Trust and the method in
which its accounts shall be kept; and (i) adopt a seal for the Trust but
the absence of such seal shall not impair the validity of any instrument
executed on behalf of the Trust.
3.10. Further Powers. The Trustees shall have power to conduct the
business of the Trust or any Series thereof and carry on its operations
in any and all of its branches and maintain offices both within and
without the Commonwealth of Massachusetts, in any and all states of the
United States of America, in the District of Columbia, and in any and
all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of
foreign governments, and to do all such other things and execute all
such instruments as they deem necessary, proper or desirable in order to
promote the interests of the Trust or any Series thereof although such
things are not herein specifically mentioned. Any determination as to
what is in the interests of the Trust or any Series thereof made by the
Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor of a
grant of power to the Trustees. The Trustees will not be required to
obtain any court order to deal with the Trust Property.
10.
ARTICLE IV
Advisory, Management and Distribution Arrangements
4.1. Advisory and Management Arrangements. Subject to a Majority
Shareholder Vote of the applicable Series, as required by the 1940 Act,
the Trustees may in their discretion from time to time enter into
advisory or management contracts whereby the other party to such
contract shall undertake to furnish the Trustees such advisory and
management services, with respect to a Series as the Trustees shall from
time to time consider desirable and all upon such terms and conditions
as the Trustees may in their discretion determine. Notwithstanding any
provisions of this Declaration of Trust, the Trustees may authorize any
advisor or manager (subject to such general or specific instructions as
the Trustees may from time to time adopt) to effect purchases, sales,
loans or exchanges of portfolio securities of any series of the Trust on
behalf of the Trustees or may authorize any officer, employee or Trustee
to effect such purchases, sales, loans or exchanges pursuant to
recommendations of any such advisor, administrator or manager (and all
without further action by the Trustees). Any such purchases, sales,
loans and exchanges shall be deemed to have been authorized by all of
the Trustees.
4.2. Distribution Arrangements. The Trustees may in their discretion
from time to time enter into a contract, providing for the sale of the
Shares of the Trust or any Series of the Trust to net the Trust not less
than the par value per share, whereby the Trust may either agree to sell
the Shares to the other party to the Contract or appoint such other
party its sales agent for such Shares. In either case, the contract
shall be on such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this
Article IV or the By-Laws; and such contract may also provide for the
repurchase or sale of Shares by such other party as principal or as
agent of the Trust and may provide that such other party may enter into
selected dealer agreements with registered securities dealers to further
the purpose of the distribution or repurchase of the Shares.
4.3. Parties to Contract. Any contract of the character described in
Section 4.1 and 4.2 of this Article IV or in Article VII hereof may be
entered into with any corporation, firm, trust or association, although
one or more of the Trustees or officers of the Trust may be an officer,
director, Trustee, shareholder, or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable
by reason of the existence of any such relationship, nor shall any
person holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of
said contract or accountable for any profit realized directly or indi-
11.
<PAGE>
rectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this
Article IV or the By-Laws. The same person (including a firm,
corporation, trust, or association) may be the other party to contracts
entered into pursuant to Sections 4.1 and 4.2 above or Article VII, and
any individual may be financially interested or otherwise affiliated
with persons who are parties to any or all of the contracts mentioned in
this Section 4.3.
4.4. Provisions and Amendments. Any contract entered into pursuant to
Section 4.1 and 4.2 of this Article IV shall be consistent with and
subject to the requirements of Section 15 of the 1940 Act with respect
to its continuance in effect, its termination, and the method of
authorization and approval of such contract or renewal thereof, and no
amendment to any contract entered into pursuant to Section 4.1 shall be
effective unless assented to by a Majority Shareholder Vote of the
applicable series.
12.
<PAGE>
ARTICLE V
Limitations of Liability of Shareholders,
Trustees and Others
5.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust Property or the acts, obligations or
affairs of the Trust or any Series thereof. No Trustee, officer,
employee or agent of the Trust. shall be subject to any personal
liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the
Trust or any Series thereof, save only that arising from his bad faith,
willful misfeasance, gross negligence or reckless disregard of his duty
to such Person; and all such Persons shall look solely to the Trust
Property for satis- faction of claims of any nature arising in
connection with the affairs of the Trust or any Series thereof. If any
Shareholder, Trustee, officer, employee, or agent, as such, of the
Trust, is made a party to any suit or proceeding to enforce any such
liability, he shall not on account thereof, be held to any personal
liability. The Trust shall indemnify and hold each Shareholder harmless
from and against all claims and liabilities, to which such Shareholder
may become subject by reason of his being or having been a Shareholder,
and shall reimburse such Shareholder for all legal and other expenses
reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under this Section 5.1
shall not exclude any other right to which such Shareholder may be
lawfully entitled, nor shall anything herein contained restrict the
right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
5.2. Non-Liability of Trustees, etc. No Trustee, officer, employee or
agent of the Trust shall be liable to the Trust, any Series, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting Trustee
to redress any breach of trust) except for his own bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties.
5.3. Mandatory Indemnification. The Trust shall indemnify each of its
Trustees, officers, employees, and agents (including persons who serve
at its request as directors, officers or trustees of another
organization in which it has any interest, as a shareholder, creditor or
otherwise) against all liabilities and expenses (including amounts paid
in satisfaction of judgments, in compromise, as fines and penalties, and
as counsel fees) reasonably incurred by him in connection with the
defense or disposition of
13.
<PAGE>
any action, suit or other proceeding, whether civil or criminal, in
which he may be involved or with which he may be threatened, while in
office or thereafter, by reason of his being or having been such a
trustee, officer, employee or agent, except with respect to any matter
as to which he shall have been adjudicated to have acted in bad faith,
willful misfeasance, gross negligence or reckless disregard of his
duties; provided, however, that as to any matter disposed of by a
compromise payment by such person, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless the Trust shall have received a
written opinion from independent legal counsel approved by the Trustees
to the effect that if either the matter of willful misfeasance, gross
negligence or reckless disregard of duty, or the matter of good faith
and reasonable belief as to the best interests of the Trust, had been
adjudicated, it would have been adjudicated in favor of such person.
The rights accruing to any Person under these provisions shall not
exclude any other right to which he may be lawfully entitled; provided
that no Person may satisfy any right of indemnity or reimbursement
granted herein or in Section 5.1 or to which he may be otherwise
entitled except out of the property of the Trust, and no Shareholder
shall be personally liable to any Person with respect to any claim for
indemnity or reimbursement or otherwise. The Trustees may make advance
payments in connection with indemnification under this Section 5.3,
provided that the indemnified person shall have given a written
undertaking to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification.
5.4. No Bond Required of Trustees. No Trustee shall, as such, be
obligated to give any bond or security or other security for the
performance of any of his duties hereunder.
5.5. No Duty of Investigation; Notice in Trust Instruments, etc. No
purchaser, lender, transfer agent or other person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound
to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or
agent or be liable for the application of money or property paid,
loaned, or delivered to or on the order of the Trustees or of said
officer, employee or agent. Every obligation, contract, undertaking,
instrument, certificate, Share, other security of the Trust or any
Series, and every other act or thing whatsoever executed in connection
with the Trust or any Series shall be conclusively taken to have been
executed or done by the executors thereof only in their capacity as
Trustees under this Declaration of Trust or in their capacity as
officers, employees or agents of the Trust. Every written obligation,
contract, undertaking, instrument, certificate, Share, other security of
the Trust or any Series made or issued by the Trustees or by any
officers, employees or agents of the Trust, in their capacity as
14.
<PAGE>
such, shall contain an appropriate recital to the effect that the
Shareholders, Trustees, officers, employees and agents of the Trust
shall not personally be bound by or liable thereunder, nor shall resort
be had to their private property for the satisfaction of any obligation
or claim thereunder, and appropriate references shall be made therein to
the Declaration of Trust, and may contain any further recital which they
may deem appropriate, but the omission of such recital shall not operate
to impose personal liability on any of the Trustees, Shareholders,
officers, employees or agents of the Trust. The Trustees nay maintain
insurance for the protection of the Trust Property, its Shareholders,
Trustees, officers, employees and agents in such amount as the Trustees
shall deem adequate to cover possible tort liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable.
5.6. Reliance on Experts, etc. Each Trustee and officer or employee of
the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure
to act resulting from reliance in good faith upon the books of account
or other records of the Trust, upon an opinion of counsel, or upon
reports made to the Trust by any of its officers or employees or by any
advisor, administrator, manager, distributor, selected dealer,
accountant, appraiser or other expert or consultant selected with
reasonable care by the Trustees, officers or employees of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
15.
<PAGE>
ARTICLE VI
Shares of Beneficial Interest
6.1. Beneficial Interest. The interest of the beneficiaries hereunder
shall be divided into transferable shares of beneficial interest with
par value $.10 per share. The number of such shares of beneficial
interest authorized hereunder is unlimited. All Shares issued hereunder
including, without limitation, shares issued in connection with a
dividend in Shares or a split of Shares, shall. be fully paid and
nonassessable.
6.2. Series Designation. The Trustees, in their discretion from time to
time, may authorize the division of Shares into two or more Series, each
series relating to a separate portfolio of investments. The different
Series shall be established and designated, and the variations in the
relative rights and preferences as between the different Series shall be
fixed and determined, by the Trustees; provided, that all Shares shall
be identical except that there may be variations between different
Series as to purchase price, determination of net asset value, the
price, terms and manner of redemption, special and relative rights as to
dividends and on liquidation, conversion rights, and conditions under
which the several Series shall have separate voting rights. All
references to Shares in this Declaration shall be deemed to be shares of
any or all Series as the context may require.
If the Trustees shall divide the Shares into two or more Series, the
following provisions shall be applicable:
(a) The number of Shares of each Series that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued Shares or any
Shares previously issued and reacquired of any series into one or more Series
that may be established and designated from time to time. The Trustees may hold
as treasury Shares (of the same or some other Series), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any Series reacquired by the Trust at their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust Property
of each Series that may be established shall be governed by Section 3.2
of this Declaration.
(c) All consideration received by the Trust for the issue or sale of Shares
of a particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and
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any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that Series
for all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust. In the event that
there are any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to
any particular series, the Trustees shall allocate them among any one or
more of the Series established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair
and equitable. Each such allocation by the Trustees shall be conclusive
and binding upon the shareholders of all Series for all purposes.
(d) The assets belonging to each particular Series shall be charged with
the liabilities of the Trust in respect of that Series and all expenses,
costs, charges and reserves attributable to that Series, and any general
liabilities, expenses, costs, charges or reserves of the Trust which are
not readily identifiable as belonging to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of
the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the
holders of all Series for all purposes. The Trustees shall have full
discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(e) The power of the Trustees to pay dividends and make distributions
with respect to any one or more Series shall be governed by Section 9.2
of this Trust. Dividends and distributions on Shares of a particular
Series may be paid with such frequency as the Trustees may determine,
which may be daily or otherwise, pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Series, from such of the
income and capital gains, accrued or realized, from the assets belonging
to that Series, as the Trustees may determine, after providing for
actual and accrued liabilities belonging to that Series. All dividends
and distributions on Shares of a particular Series shall be distributed
pro rata to the holders of that Series in proportion to the number of
Shares of that Series held by such holders at the date and time of
record established for the payment of such dividends or distributions.
The establishment and designation of any Series of Shares shall be
effective upon the execution by a majority of the then Trustees of an
instrument setting forth the establishment and
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designation of such Series. Such instrument shall also set forth any
rights and preferences of such Series which are in addition to the
rights and preferences of Shares set forth in this Declaration. At any
time that there are no Shares outstanding of any particular Series
previously established and designated, the Trustees may by an instrument
executed by a majority of their number abolish that Series and the
establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this
Declaration.
6.3. Rights of Shareholders. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders
shall have no interest therein other than the beneficial interest
conferred by their Shares with respect to a particular series, and they
shall have no right to call for any partition or division of any
property, profits, rights or interests of the Trust nor can they be
called upon to share or assume any losses of the Trust or suffer an
assessment of any kind by virtue of their ownership of Shares. The
Shares shall be personal property giving only the rights in this
Declaration specifically set forth. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion or exchange
rights (except for rights of appraisal specified in section 11.4).
6.4. Trust Only. It is the intention of the Trustees to create only the
relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees
to create a general partnership, limited partnership, joint stock
association, corporation, bailment or any form of legal relationship
other than a trust. Nothing in this Declaration of Trust shall be
construed to make the Shareholders, either by themselves or with the
Trustees, partners or members of a joint stock association.
6.5. Issuance of Shares. The Trustees, in their discretion, may from
time to time without vote of the Shareholders issue Shares with respect
to any Series that may have been established pursuant to Section 6.2, in
addition to the then issued and outstanding Shares and Shares held in
the treasury, to such party or parties and for such amount not less than
par value and type of con- sideration, including cash or property, at
such time or times (including, without limitation, each business day in
accordance with the maintenance of a constant net asset value per share
as set forth in Section 9.3 hereof), and on such terms as the Trustees
may deem best, and may in such manner acquire other assets (including
the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. In connection with any
issuance of Shares, the Trustees may issue fractional Shares. The
Trustees may from time to time divide or combine the Shares of any
Series into a greater or lesser number without thereby changing the
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proportionate beneficial interests in such Series of the Trust.
Reductions in the number of outstanding Shares may be made pursuant to
the constant net asset value per share formula set forth in Section 9.3.
Contributions to the Trust may be accepted for, and Shares shall be
redeemed as, whole Shares and/or 1/l,000ths of a Share or multiples
thereof.
6.6. Register of Shares. A register shall be kept at the Trust or any
transfer agent duly appointed by the Trustees under the direction of the
Trustees which shall contain the names and addresses of the Shareholders
and the number of Shares (with respect to each Series that may have been
established) held by them respectively and a record of all transfers
thereof. Separate reg- isters shall be established and maintained for
each Series of the Trust. Each such register shall be conclusive as to
who are the holders of the Shares of the applicable Series and who shall
be entitled to receive dividends or distributions or otherwise to
exercise or enjoy the rights of Shareholders. No Shareholder shall be
entitled to receive payment of any dividend or distribution, nor to have
notice given to him as herein provided, until he has given his address
to a transfer agent or such other officer or agent of the Trustees as
shall keep the register for entry thereon. it is not contemplated that
certificates will be issued for the Shares; however, the Trustees, in
their discretion, may authorize the issuance of share certificates and
promulgate appropriate rules and regulations as to their use.
6.7. Transfer Agent and Registrar. The Trustee shall have power to
employ a transfer agent or transfer agents, and a registrar or
registrars, with respect to the Shares of the various Series. The
transfer agent or transfer agents may keep the applicable register and
record therein the original issues and transfers, if any, of the said
Shares of the applicable Series. Any such transfer agent. and registrars
shall perform the duties usually performed by transfer agents and
registrars of certificates of stock in a corporation, except as modified
by the Trustees.
6.8. Transfer of Shares. Shares shall be transferable on the records of
the Trust only by the record holder thereof or by his agent thereto duly
authorized in writing, upon delivery to the Trustees or a transfer agent
of the Trust of a duly executed instrument of transfer, together with
such evidence of the genuineness of each such execution and
authorization and of other matters as may reasonably be required. Upon
such delivery the transfer shall be recorded on the applicable register
of the Trust. Until such record is made, the Shareholder of record shall
be deemed to be the holder of such Shares for all purposes hereof and
neither the Trustees nor any transfer agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any notice
of the proposed transfer.
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Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by
operation of law, shall be recorded on the applicable register of Shares
as the holder of such Shares upon production of the proper evidence
thereof to the Trustees or a transfer agent of the Trust, but until such
record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereof and neither the Trustees
nor any transfer agent or registrar nor any officer or agent of the
Trust shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
6.9. Notices. Any and all notices to which any Shareholder hereunder
may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder
of record at his last known address as recorded on the applicable
register of the Trust.
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ARTICLE VII
Custodians
7.1. Appointment and Duties. The Trustees shall at all times employ a
Custodian or custodians, meeting the qualifications for custodians for
portfolio securities of investment companies contained in the 1940 Act,
as custodian with respect to each Series of the Trust. It is
contemplated that separate custodians may be employed for the different
Series of the Trust. Any custodian, acting with respect to one or more
Series, shall have authority as agent of the Trust or the Series with
respect to which it is acting, but subject to such restrictions,
limitations and other requirements, if any, as may be contained in the
By-Laws of the Trust and the 1940 Act:
(1) to hold the securities owned by the Trust or the Series and
deliver the same upon written order;
(2) to receive and receipt for any moneys due to the Trust or
the Series and deposit the same in its own banking department (if a
bank) or elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and
accounts of the Trust or the Series and furnish clerical and
accounting services; and
(5) if authorized to do so by the Trustees, to compute the net
income of the Trust or the Series,
all upon such basis of compensation as may be agreed upon between the
Trustees and the custodian. If so directed by a Majority Shareholder
Vote of the Series with respect to which the custodian is acting, the
custodian shall deliver and pay over all property of the Trust held by
it as specified in such vote.
The Trustees may also authorize each custodian to employ one or more
sub-custodians from time to time to perform such of the acts and
services of the custodian and upon such terms and conditions, as may be
agreed upon between the custodian and such sub-custodian and approved by
the Trustees, provided that in every case such sub-custodian shall meet
the qualifications for custodians contained in the 1940 Act.
7.2. Central Certificate System. Subject to such rules, regulations and
order as the Commission may adopt, the Trustees may direct the custodian
to deposit all or any part of the securities
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owned by the Trust or the Series in a system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be
permitted by the Commission, or otherwise in accordance with the 1940
Act, pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible
and may be transferred or pledged by bookkeeping entry without physical
delivery of such securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the Trust.
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ARTICLE VIII
Redemption
8.1. Redemptions. All outstanding Shares of any Series of the Trust may
be redeemed at the option of the holders thereof, upon and subject to
the terms and conditions provided in this Article VIII. The Trust
shall, upon application of any Shareholder or pursuant to authorization
from any Shareholder of a particular Series, redeem or repurchase from
such Shareholder outstanding Shares of such Series for an amount per
share determined by the application of a formula adopted for such
purpose by the Trustees with respect to such Series (which formula shall
be consistent with the 1940 Act); provided that (a) such amount per
share shall not exceed the cash equivalent of the proportionate interest
of each share in the assets of the Series of the Trust at the time of
the purchase or redemption and (b) if so authorized by the Trustees, the
Trust may, at any time and from time to time, charge fees for effecting
such redemption, at such rates as the Trustees may establish, as and to
the extent permitted under the 1940 Act, and may, at any time and from
time to time, pursuant to such Act, suspend such right of redemption.
The procedures for effecting redemption shall be as set forth in the
Prospectus with respect to the applicable Series from time to time.
8.2. Redemption of Shares; Disclosure of Holding. If the Trustees
shall, at any time and in good faith, be of the opinion that direct or
indirect ownership of Shares or other securities of the Trust has or may
become concentrated in any person to an extent which would disqualify
the Trust as a regulated investment company under the Internal Revenue
Code, then the Trustees shall have the power by lot or other means
deemed equitable by them (i) to call for redemption a number, or
principal amount, of Shares or other securities of the Trust sufficient
in the opinion of the Trustees, to maintain or bring the direct or
indirect ownership of Shares or other securities of the Trust into
conformity with the requirements for such qualification and (ii) to
refuse to transfer or issue Shares or other securities of the Trust to
any Person whose acquisition of the Shares or other securities of the
Trust in question would in the opinion of the Trustees result in such
disqualification. The redemption shall be effected at a redemption
price determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall upon demand
disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust
as the Trustees deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other
taxing authority.
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8.3. Redemptions of Accounts of Less than $1,000. Due to the relatively
high cost of maintaining investment accounts of less than $1,000, the
Trustees shall have the power to redeem shares at a redemption price
determined in accordance with Section 8.1 if at any time the total
investment in such account does not have a value of at least $1,000;
provided, however, that the Trustees may not exercise such power with
respect to Shares of any Series if the Prospectus of such Series does
not describe such power. In the event the Trustees determine to
exercise their power to redeem Shares provided in this Section 8.3,
shareholders shall be notified that the value of their account is less
than $1,000 and allowed 60 days to make an additional investment before
redemption is processed.
8.4. Redemptions Pursuant to Constant Net Asset Value Formula. The
Trust may also reduce the number of outstanding Shares of any Series
pursuant to the provisions of Section 9.3.
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ARTICLE IX
Determination of Net Asset Value,
Net Income and Distributions
9.1. Net Asset Value. The net asset value of each outstanding Share of
each Series of the Trust shall be determined at such time or times on
such days as the Trustees may determine, in accordance with the 1940
Act, with respect to each Series. The method of determination of net
asset value shall be determined by the Trustees and shall be as set
forth in the Prospectus with respect to the applicable Series. The
power and duty to make the daily calculations for any Series may be
delegated by the Trustees to the adviser, administrator, manager,
custodian, transfer agent or such other person as the Trustees may
determine. The Trustees may suspend the daily determination of net
asset value to the extent permitted by the 1940 Act.
9.2. Distributions to Shareholders. The Trustees shall from time to
time distribute ratably among the Shareholders of any Series such
proportion of the net profits, surplus (including paid-in surplus),
capital, or assets with respect to such Series held by the Trustees as
they may deem proper. Such distribution may be made in cash or property
(including without limitation any type of obligations of the Trust or
any assets thereof), and the Trustees may distribute ratably among the
Shareholders of any Series additional Shares of such Series in such
manner, at such times, and on such terms as the Trustees may deem
proper. Such distributions may be among the Shareholders of record at
the time of declaring a distribution or among the Shareholders of record
at such later date as the Trustees shall determine. The Trustees may
always retain from the net profits such amount as they may deem
necessary to pay the debts or expenses of the Trust or to meet
obligations of the Trust, or as they may deem desirable to use in the
conduct of its affairs or to retain for future requirements or
extensions of the business. The Trustees may adopt and offer to
Shareholders of any Series such dividend reinvestment plans, cash
dividend payout plans or related plans as the Trustees shall deem
appropriate for such Series.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the
above provisions shall be interpreted to give the Trustees the power in
their discretion to distribute for any fiscal year as ordinary dividends
and as capital gains distributions, respectively, additional amounts
sufficient to enable the Trust to avoid or reduce liability for taxes.
9.3. Constant Net Asset Value; Reduction of Outstanding Shares. The
Trustees shall have the power to determine the net
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income of any series of the Trust on each day the net asset value of
such Series is determined as provided in Section 9.1 and at each such
determination declare such net income for such Series as dividends with
the result that the net asset value per share of the Series of the Trust
shall remain at a constant dollar value. The determination of net
income and the resultant declaration of dividends shall be as set forth
in the Prospectus. In such event fluctuations in value may be reflected
in the number of outstanding Shares in each. Shareholder's account. It
is expected that each series of the Trust will have a positive net
income at the time of each determination. If for any reason such net
income is a negative amount, the Trust may offset such amount against
dividends accrued in the account of the Shareholder of the applicable
Series. If and to the extent such negative amount exceeds such accrued
dividends, the Trust shall have authority to reduce the number of the
outstanding Shares of the Series. Such reduction will be effected by
having each Shareholder proportionately contributing to the Series
capital the necessary Shares that represent the amount of the excess
upon such determination. Each Shareholder will be deemed to have agreed
to such contribution in these circumstances by his investment in the
Series of the Trust. This procedure will permit the net asset value per
share of the Series of the Trust to be maintained at a constant dollar
value per share.
The Trustees, by resolution, may discontinue or amend the practice of
maintaining the net asset value per share at a constant dollar amount
with respect to any Series at any time and such modification shall be
evidenced by appropriate changes in the Prospectus.
9.4. Power to Modify Foreqoing Procedures. Notwithstanding any of the
foregoing provisions of this Article IX, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining
the per share net asset value of the Trust's Shares or net income, or
the declaration and payment of dividends and distributions as they may
deem necessary or desirable to enable the Trust to comply with any
provision of the 1940 Act, or any se- curities association registered
under the Securities Exchange Act of 1934, or any order of exemption
issued by said Commission, all as in effect now or hereafter amended or
modified.
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ARTICLE X
Shareholders
10.1. Voting Powers. The Shareholders shall have power to vote (i) for
the removal of Trustees as provided in Section 2.3, (ii) with respect to
any advisory or management contract as provided in Section 4.1, (iii)
with respect to the amendment of this Declaration as provided in Section
11.3, (iv) with respect to such additional matters relating to the Trust
as may be required or authorized by the 1940 Act, the laws of the
Commonwealth of Massachusetts or other applicable law or by this
Declaration or by the By-Laws of the Trust, and (v) with respect to such
additional matters relating to the Trust as may be properly submitted
for Shareholder approval. Any matter affecting a particular series,
including without limitation matters affecting the advisory or
management arrangements or investment policies or restrictions of a
Series, shall not be deemed to have been effectively acted upon unless
approved by the required vote of the Shareholders of such Series.
Notwithstanding the foregoing, to the extent permitted by the 1940 Act,
each Series shall not be required to vote separately on the selection of
independent public accountants, the election of Trustees and any
submission with respect to a contract with a principal underwriter or
distributor.
10.2. Meetings of Shareholders. Special meetings of the Shareholders
may be called at any time by a majority of the Trustees and shall be
called by any Trustee upon written request of Shareholders of any Series
holding in the aggregate not less than 10% of the outstanding Shares of
such Series having voting rights, such request specifying the purpose or
purposes for which such meeting is to be called. Any such meeting shall
be held within or without the Commonwealth of Massachusetts on such day
and at such time as the Trustees shall designate. The holders of a
majority of outstanding Shares of each Series present in person or by
proxy shall constitute a quorum for the transaction of any business,
except as may otherwise be required by the 1940 Act, the laws of the
Commonwealth of Massachusetts or other applicable law or by this
Declaration or the By-Laws of the Trust. If a quorum is present at a
meeting of a particular Series, the affirmative vote of a majority of
the Shares of such Series represented at the meeting constitutes the
action of the Shareholders, unless the 1940 Act, the laws of the
Commonwealth of Massachusetts or other applicable law, this Declaration
or the By-Laws of the Trust requires a greater number of affirmative
votes.
10.3. Notice of Meetings. Notice of all meetings of the Shareholders,
stating the time, place and purposes of the meeting, shall be given by
the Trustees by mail to each Shareholder at his registered address,
mailed at least 10 days and not more than 60 days before the meeting.
Only the business stated in the notice of
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the meeting shall be considered at such meeting. Any adjourned meeting
may be held as adjourned without further notice.
10.4. Record Date for Meetings. For the purpose of determining the
Shareholders who are entitled to notice of and to vote at any meeting,
or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time close the transfer books for
such period, not exceeding 30 days, as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date not more
than 60 days prior to the date of any meeting of Shareholders or daily
dividends or other action as a record date for the determination of the
Persons to be treated as Shareholders of record for such purposes,
except for dividend payments which shall be governed by Section 9.2
hereof.
10.5. Proxies, etc. At any meeting of Shareholders, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on
file with the Secretary, or with such other officer or agent of the
Trust as the Secretary may direct, for verification prior to the time at
which such vote shall be taken. Pursuant to a resolution of a majority
of the Trustees, proxies may be solicited in the name of one or more
Trustees or one or more of the officers of the Trust. Only Shareholders
of record shall be entitled to vote. Each full Share shall be entitled
to one vote and fractional Shares shall be entitled to a vote of such
fraction. When any Share it held jointly by several persons, any one of
them may vote at any meeting in person or by proxy in respect of such.
Share, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or
prior to its exercise, and the burden of proving invalidity shall rest
on the challenger. If the holder of any such Share is a minor or a
person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such
Share, he may vote by his guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy.
10.6. Reports. The Trustees shall cause to be prepared with respect to
each Series at least annually a report of operations containing a
balance sheet and statement of income and undistributed income of the
applicable Series of the Trust prepared in conformity with generally
accepted accounting principles and an opinion of an independent public
accountant on such financial statements. It is contemplated that
separate reports may be prepared for the various Series. Copies of such
reports shall be mailed to all Shareholders of record of the applicable
Series
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within the time required by the 1940 Act, and in any event within a
reasonable period preceding the annual meeting of Shareholders. The
Trustees shall, in addition, furnish to the Shareholders at least
annually, interim reports containing an unaudited balance sheet of the
Series as of the end of such period and an unaudited statement of income
and surplus for the period from the beginning of the current fiscal year
to the end of such period.
10.7. Inspection of Records. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted
shareholders of a Massachusetts business corporation.
10.8. Shareholder Action by Written Consent. Any action which may be
taken by Shareholders may be taken without a meeting if a majority of
Shareholders of each Series entitled to vote on the matter (or such
larger proportion thereof as shall be required by any express provision
of this Declaration) consent to the action in writing and the written
consents are filed with the records of the meetings of Shareholders.
Such consent shall be treated for all purposes as a vote taken at a
meeting of Shareholders.
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ARTICLE XI
Duration; Termination of Trust;
Amendment; Mergers, Etc.
11.1. Duration. Subject to possible termination in accordance with the
provisions of Section 11.2 hereof, the Trust created hereby shall
continue until the expiration of 20 years after the death of the last
survivor of the initial Trustees named herein and the following named
persons:
Name Address Date of Birth
- ---- ------- --------------
Avery Moores Bruno 25 Rutgers Place September 19, 1983
Scarsdale, N.Y. 10583
Daryl Lian Kleiman 375 South End Avenue May 9, 1986
New York, N.Y. 10280
Lindsay Rider MacKinnon Mountain Farm Road January 27, 1981
Tuxedo Park, N.Y. 10987
Scott Robert Petkanics 4 Hickory Drive September 14, 1986
Maplewood, N.J. 07040
Angus Washburn Smith 26 Prescott Avenue October 15, 1982
Bronxville, N.Y. 10708
Elisabeth Lyon Smith 26 Prescott Avenue October 15, 1982
Bronxville, N.Y. 10708
11.2. Termination.
(a) The Trust may be terminated by the affirmative vote of the holders
of not less than two-thirds of the Shares of each Series of the Trust at
any meeting of Shareholders or by an instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by the
holders of not less than two-thirds of such Shares. Any Series may be
so terminated by vote 4 or written consent of not less than two-thirds
of the Shares of such Series. Upon the termination of the Trust or any
Series,
(i) The Trust or such Series shall carry on no business except
for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust
or such Series and all of the powers of the Trustees under this
Declaration shall continue until the
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affairs of the Trust or such Series shall have been wound up,
including the power to fulfill or discharge the contracts of the
Trust or such Series, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the
remaining Trust Property to one or more persons at public or private
sale for consideration which may consist in whole or in part of
cash, securities or other property of any kind, discharge or pay its
liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange,
transfer or other disposition of all or substantially all the Trust
Property shall require approval of the principal terms of the
transaction and the nature and amount of the consideration by vote
or consent of the holders of a majority of the Shares entitled to
vote.
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and
refunding agreements, as they deem necessary for their protection,
the Trustees may distribute the remaining Trust Property of any
Series, in cash or in kind or partly each, among the Shareholders of
such Series according to their respective rights.
(b) After termination of the Trust or any Series and distribution to the
Shareholders as herein provided, a majority of the Trustees shall
execute and lodge among the records of the Trust an instrument in
writing setting forth the fact of such termination. Upon termination of
the Trust, the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease. Upon termination of any Series, the
Trustees shall thereunder be discharged from all further liabilities and
duties with respect to such Series, and the rights and interests of all
Shareholders of such Series shall thereupon cease.
11.3. Amendment Procedure.
(a) This Declaration may be amended by the affirmative vote of the
holders of not less than a majority of the Shares at any meeting of
Shareholders or by an instrument in writing, without a meeting, signed
by a majority of the Trustees and consented to by the holders of not
less than a majority of such Shares. The Shareholders of each Series
shall have the right to vote separately on amendments to this
Declaration to the extent provided by Section 10.1. The Trustees may
also amend this Declaration without the vote or consent of Shareholders
if they deem it necessary to conform this Declaration to the
requirements of applicable federal laws or regulations or the
requirements of the regulated investment company provisions of the
Internal
31.
<PAGE>
Revenue Code, but the Trustees shall not be liable for failing so to do.
(b) No amendment may be made, under Section 11.3 (a) above, which would
change any rights with respect to any Shares of the Trust by reducing
the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto, except
with the vote or consent of the holders of two-thirds of the Shares of
each Series. Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from personal
liability of the Shareholders, Trustees, officers, employees and agents
of the Trust or to permit assessments upon Shareholders.
(c) A certification in recordable form signed by a majority of the
Trustees setting forth an amendment and reciting that it was duly
adopted by the Shareholders or by the Trustees as aforesaid or a copy of
the Declaration, as amended, in recordable form, and executed by a
majority of the Trustees, shall be conclusive evidence of such amendment
when lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a
Registration Statement under the Securities Act of 1933, as amended,
covering the first public offering of Shares of the Trust shall have
become effective, this Declaration of Trust may be terminated or amended
in any respect by the affirmative vote of a majority of the Trustees or
by an instrument signed by a majority of the Trustees.
11.4. Merger, Consolidation and Sale of Assets. The Trust may merge or
consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of
the Trust Property, including its good will, upon such terms and
conditions and for such consideration when and as authorized at any
meeting of Shareholders called for the purpose by the affirmative vote
of the holders of not less than two-thirds of the Shares of each
Series, or by an instrument or instruments in writing without a meeting,
consented to by the holders of not less than two-thirds of such Shares
of each Series, and any such merger, consolidation, sale, lease or
exchange shall be deemed for all purposes to have been accomplished
under and pursuant to the statutes of the Commonwealth of Massachusetts.
Any Series may so merge, consolidate or effect a sale or exchange of
assets by the vote or written consent of not less than two-thirds of
the Shares of such Series. In respect of any such merger,
consolidation, sale or exchange of assets, any Shareholder shall be
entitled to rights of appraisal of his Shares to the same extent as a
shareholder of a Massachusetts business corporation in respect of a
merger, consolidation, sale or exchange of assets of
32.
<PAGE>
a Massachusetts business corporation, and such rights shall be his
exclusive remedy in respect of his dissent from any such action.
11.5. Incorporation. With the approval of the holders of a majority of
the Shares, the Trustees may cause to be organized or assist in
organizing a corporation or corporations under the laws of any
jurisdiction or any other trust, partnership, association or other
organization to take over all of the Trust Property or to carry on any
business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property to any
such corporation, trust, association or organization in exchange for the
Shares or securities thereof or otherwise, and to lend money to,
subscribe for the Shares or securities of, and enter into any contracts
with any such corporation, trust, partnership, association or
organization, or any corporation, partnership, trust, association or
organization in which the Trust holds or is about to acquire shares or
any other interest. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if
and to the extent permitted by law, as provided under the law then in
effect. Nothing contained herein shall be construed as requiring
approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations
or other organizations and selling, conveying or transferring a portion
of the Trust Property to such organizations or entities.
33.
<PAGE>
ARTICLE XII
Miscellaneous
12.1. Filing. This Declaration and any amendment hereto shall be filed
in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts
and may also be filed or recorded in such other places as the Trustees
deem appropriate. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee stating that such
action was duly taken in a manner provided herein, and unless such
amendment or such certificate sets forth some later time for the
effectiveness of such amendment, such amendment shall be effective upon
its filing. A restated Declaration, containing the original Declaration
and all amendments theretofore made, may be executed from time to time
by a majority of the Trustees and shall, upon filing with the Secretary
of the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu
of the original Declaration and the various amendments thereto.
12.2. Resident Agent. The Trust shall maintain a resident agent in the
Commonwealth of Massachusetts, which agent shall initially be CT
Corporation System, 10 Post Office Square, Boston, Massachusetts 02109.
The trustees may designate a successor resident agent, provided,
however, that such appointment shall not become effective until written
notice thereof is delivered to the office of the Secretary of the
Commonwealth.
12.3. Governing Law. This Declaration is executed by the Trustees and
delivered in the Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said State and reference shall be specifically
made to the business cor- poration law of the Commonwealth of
Massachusetts as to the construction of matters not specifically covered
herein or as to which an ambiguity exists.
12.4. Counterparts. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original,
and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
12.5. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust, or of any
recording office in which this Declaration may be recorded, appears to
be a Trustee hereunder, certifying to: (a) the number
34.
<PAGE>
or identity of Trustees or Shareholders, (b) the name of the Trust or
any Series thereof, (c) the establishment of any Series, (d) the due
authorization of the execution of any instrument or writing, (e) the
form of any vote passed at a meeting of Trustees or Shareholders, (f)
the fact that the number of Trustees or Shareholders present at any
meeting or executing any written instrument satisfies the requirements
of this Declaration, (g) the form of any By-Laws adopted by or the
identity of any officers elected by the Trustees, or (h) the existence
of any fact or facts which in any manner relate to the affairs of the
Trust or any Series, shall be conclusive evidence as to the matters so
certified in favor of any person dealing with the Trustees and their
successors.
12.6. Provisions in Conflict With Law or Regulations.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other applicable
laws and regulations, the conflicting provision shall be deemed never to
have constituted a part of this Declaration; provided, however, that
such de-termination shall not affect any of the remaining provisions of
this Declaration or render invalid or improper any action taken or
omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability
shall attach only to such provision in such jurisdiction and shall not
in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration in any jurisdiction.
35.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
/s/ Robert Harris
---------------------------------
Robert Harris
22 Zeloof Drive
Lawrenceville, New Jersey 08648
/s/ Mark B. Goldfus
---------------------------------
Mark B. Goldfus
509 Bergen Street
Lawrenceville, New Jersey 08648
/s/ Barbara G. Fraser
---------------------------------
Barbara G. Fraser
324 Cedar Lane
Swarthmore, Pennsylvania 19081
/s/ Robert W. Crook
---------------------------------
Robert W. Crook
49 May Street
Everett, Massachusetts 02149
36.
<PAGE>
Ex-99.1(b)
FINANCIAL INSTITUTIONS SERIES TRUST
Establishment and Designation
of
Summit Cash Reserves Fund
The undersigned, being a majority of the Trustees of Financial Institutions
series Trust, a Massachusetts business trust (the "Trust"), acting pursuant to
Section 6.2 of the Declaration of Trust dated July 10, 1987 (the "Declaration")
of the Trust, do hereby divide the shares of beneficial interest of the Trust,
par value $.10 per share ("Shares"), to create a separate Series, within the
meaning of said section 6.2, as follows:
1. The Series is designated the "Summit Cash
Reserves Fund" (referred to herein as the
"Summit Fund").
2. Shares of the Summit Fund shall be entitled to
all of the rights and preferences accorded to
Shares under the Declaration.
3. The purchase price of Shares of the Summit
Fund, the method of determination of net asset
value of the Summit Fund, the price, terms and
manner of redemption of Shares of the Summit
Fund, and the relative dividend rights of
holders of Shares of the Summit Fund shall be
established by the Trustees of the Trust in
accordance with the provisions of the
Declaration and shall be set forth in the
currently effective prospectus and statement of
additional information of the Trust relating to
the Summit Fund, as amended from time to time,
under the Securities Act of 1933, as amended.
<PAGE>
IN WITNESS WHEREOF, the undersigned have signed this instrument in duplicate
original counterparts and have caused a duplicate original to be lodged among
the records of the Trust this 30th day of September, 1988.
/s/ Arthur Zeikel /s/ Howard Hawkins
------------------- -------------------
Arthur Zeikel Howard Hawkins
279 Watchung Fork 33 Meadow Croft Lane
Westfield, NJ 07090 Greenwich, CT 06830
/s/ Walter Mintz /s/ Melvin R. Seiden
------------------- -------------------
Walter Mintz Melvin R. Seiden
2 East 88th Street P.O. Box 720
New York, NY 10128 Pawling, NY 12564
/s/ Stephen B. Swensrud /s/ Harry Woolf
------------------- -------------------
Stephen B. Swensrud Harry Woolf
RFD #2, Box 403 28 Haslet Avenue
East Kingston, NH 03827 Princeton, NJ 08540
The Declaration of Trust establishing Financial Institutions Series Trust, dated
July 10, 1987, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Financial Institutions Series Trust"
refers to the Trustees under the Declaration collectively as Trustees, but not
as individuals or personally; and no Trustee, shareholder, officer, employee or
agent of Financial Institutions Series Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Trust but the Trust Property only shall be liable.
<PAGE>
Ex-99.2
FINANCIAL INSTITUTIONS SERIES TRUST
BY-LAWS
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing FINANCIAL INSTITUTIONS SERIES TRUST dated May
27, 1981, as from time to time amended (hereinafter called the "Declaration").
All words and terms capitalized in these By-Laws shall have the meaning or
meanings set forth for such words or terms in the Declaration.
ARTICLE I
Shareholder Meetings
Section 1.1. Chairman. The Chairman, if any, shall act as chairman at all
meetings of the Shareholders; in his absence, the President shall act as
chairman; and in the absence of the Chairman and the President, the Trustee or
Trustees present at each meeting may elect a temporary chairman for the meeting,
who may be one of themselves.
<PAGE>
Section 1.2. Proxies; Voting. Shareholders may vote either in person or by
duly executed proxy and each full share represented at the meeting shall have
one vote, all as provided in Article 10 of the Declaration. No proxy shall be
valid after eleven (11) months from the date of its execution, unless a longer
period is expressly stated in such proxy.
Section 1.3. Closing of Transfer Books and Fixing Record Dates. For the
purpose of determining the Shareholders who are entitled to notice of or to
vote or act at any meeting, including any adjournment thereof, or who are en-
titled to participate in any dividends, or of any other proper purpose, the
Trustees may from time to time close the transfer books or fix a record date in
the manner provided in Section 10.3 of the Declaration. If the Trustees do not
prior to any meeting of Shareholder so fix a record date or close the transfer
books, then the date of mailing notice of the meeting or the date upon which the
dividend resolution is adopted, as the case may be, shall be the record date.
Section 1.4. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed,
2
<PAGE>
the Chairman, if any, of any meeting of Shareholders may, and on the request of
any Shareholder or his proxy shall, appoint Inspectors of Election of the
meeting. The number of Inspectors shall be either one or three. If appointed
at the meeting on the request of one or more Shareholders or proxies, a majority
of Shares present shall determine whether one or three Inspectors are to be
appointed, but failure to allow such determination by the Shareholders shall not
affect the validity of the appointment of Inspectors of Election. In case any
person appointed as Inspector fails to appear or fails or refuses to act, the
vacancy may be filled by appointment made by the Trustees in advance of the con-
vening of the meeting or at the meeting by the person acting as chairman. The
Inspectors of Election shall determine the number of Shares outstanding, the
Shares represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, shall receive votes, ballots or consents,
shall hear and determine all challenges and questions in any way arising in
connection with the right to vote, shall count and tabulate all votes or
consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Shareholders. If there are
three Inspectors of Election, the decision, act
3
<PAGE>
or certificate of a majority is effective in all respects as the decision, act
or certificate of all. on request of the Chairman, if any, of the meeting, or of
any Shareholder or his proxy, the Inspectors of Election shall make a report in
writing of any challenge or question or matter determined by them and shall
execute a certificate of any facts found by them.
Section 1.5. Records at Shareholder Meetings. At each meeting of the
Shareholders there shall be open for inspection the minutes of the last
previous Annual or Special Meeting of Shareholders of the Trust and a list of
the Shareholders of the Trust, certified to be true and correct by the
Secretary or other proper agent of the Trust, as of the record date of the
meeting or the date of closing of transfer books, as the case may be. Such list
of Shareholders shall contain the name of each Shareholder in alphabetical
order and the address and number of Shares owned by such Shareholder.
Shareholders shall have such other rights and procedures of inspection of the
books and records of the Trust as are granted to shareholders of a Massachusetts
business corporation.
4
<PAGE>
ARTICLE II
Trustees
Section 2.1. Annual and Regular Meetings. The Trustees shall hold an
annual meeting for the election of officers and the transaction of other
business which may come before such meeting, as soon as practicable after the
Annual Meeting of Shareholders. Regular meetings of the Trustees may be held
without call or notice at such place or places and times as the Trustees may by
resolution provide from time to time.
Section 2.2. Special Meetings. Special Meetings of the Trustees shall be
held upon the call of the Chairman, if any, the President, the Secretary or any
two Trustees, at such time, on such day, and at such place, as shall be
designated in the notice of the meeting.
Section 2.3. Notice. Notice of a meeting shall be given by mail or by
telegram (which term shall include a cablegram) or delivered personally. If
notice is given by mail, it shall be mailed not later than 48 hours preceding
the meeting and if given by telegram or personally, such telegram shall be sent
or delivery made not later than 48 hours preceding the meeting. Notice by
telephone shall constitute personal delivery for these purposes. Notice of a
5
<PAGE>
meeting of Trustees may be waived before or after any meeting by signed written
waiver. Neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Trustees need be stated in the notice or waiver of
notice of such meeting, and no notice need be given of action proposed to be
taken by unanimous written consent. The attendance of a Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting has not been lawfully called or
convened.
Section 2.4. Chairman; Records. The Chairman, if any, shall act as
chairman at all meetings of the Trustees; in his absence the President shall act
as chairman; and, in the absence of the Chairman and the President, the Trustees
present shall elect one of their number to act as temporary chairman. The
results of all actions taken at a meeting Of the Trustees, or by unanimous
written consent of the Trustees, shall be recorded by the Secretary.
6
<PAGE>
ARTICLE III
Officers
Section 3.1. Officers of the Trust. The officers of the Trust shall
consist of a Chairman, if any, a President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice-Presidents, as may be
elected by the Trustees. Any two or more of the offices may be held by the same
person, except that the same person may not be both President and Secretary.
The Trustees may designate a vice-President as an Executive Vice-President and
may designate the order in which the other Vice-Presidents may act. The
Chairman and the President shall be Trustees. but no other officer of the Trust
need be a Trustee.
Section 3.2. Election and Tenure. At the initial organization meeting
and thereafter at each annual meeting of the Trustees, the Trustees shall elect
the Chairman, if any, President, Secretary, Treasurer and such other officers as
the Trustees shall deem necessary or appropriate in order to carry out the
business of the Trust. Such officers shall hold office until the next annual
meeting of the Trustees and until their successors have been duly elected and
quali-
7
<PAGE>
fied. The Trustees may fill any vacancy in office or add any additional
officers at any time.
Section 3.3. Removal of Officers. Any officer may be removed at any time,
with or without cause, by action of a majority of the Trustees. This provision
shall not prevent the making of a contract of employment for a definite term
with any officer and shall have no effect upon any cause of action which any
officer may have as a result of removal in breach of a contract of employment.
Any officer may resign at any time by notice in writing signed by such officer
and delivered or mailed to the Chairman, if any, President, or Secretary, and
such resignation shall take effect immediately upon receipt by the Chairman, if
any, President, or Secretary, or at a later date according to the terms of such
notice in writing.
Section 3.4. Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such
amount and with such sureties as the Trustees may determine.
Section 3.5. Chairman, President, and Vice-Presidents. The Chairman, if
any, shall, if present, preside at all meetings of the Shareholders and of the
Trustees and shall exercise and perform such other powers and duties as may be
from
8
<PAGE>
time to time assigned to him by the Trustees. Subject to such supervisory
powers, if any, as may be given by the Trustees to the Chairman, if any, the
President shall be the chief executive officer of the Trust and, subject to the
control of the Trustees, shall have general supervision, direction and control
of the business of the Trust and of its employees and shall exercise such
general powers of management as are usually vested in the office of President of
a corporation. In the absence of the Chairman, if any, the President shall
preside at all meetings of the Shareholders and of the Trustees. The
President shall be, ex officio, a member of all standing committees. Subject to
direction of the Trustees, the Chairman, if any, and the President shall each
have power in the name and on behalf of the Trust to execute any and all loan
documents, contracts, agreements, deeds, mortgages, and other instruments in
writing, and to employ and discharge employees and agents of the Trust. Unless
otherwise directed by the Trustees, the Chairman, if any, and the President
shall each have full authority and power, on behalf of all of the Trustees, to
attend and to act and to vote, on behalf of the Trust at any meetings of
business organizations in which the Trust holds an interest, or to confer such
powers upon any other persons,
9
<PAGE>
by executing any proxies duly authorizing such persons. The Chairman, if any,
and the President shall have such further authorities and duties as the Trustees
shall from time to time determine. In the absence or disability of the
President, the Vice-Presidents in order of their rank as fixed by the Trustees
or, if more than one and not ranked, the vice-President designated by the
Trustees, shall perform all of the duties of the President, and when so acting
shall have all the powers of and be subject to all of the restrictions upon the
President. Subject to the direction of the Trustees, and of the President, each
Vice-President shall have the power in the name and on behalf of the Trust to
execute any and all loan documents, contracts, agreements, deeds, mortgages and
other instruments in writing, and, in addition, shall have such other duties and
powers as shall be designated from time to time by the Trustees or by the
President.
Section 3.6. Secretary. The Secretary shall keep the minutes of all
meetings of, and record all votes of, Shareholders, Trustees and the Executive
Committee, if any. He shall be custodian of the seal of the Trust, if any, and
he (and any other person so authorized by the Trustees) shall affix the seal or,
if permitted, a facsimile thereof, to any
10
<PAGE>
instrument executed by the Trust which would be sealed by a Delaware
corporation executing the same or a similar instrument and shall attest the
seal and the signature or signatures of the officer or officers executing such
instrument on behalf of the Trust. The Secretary shall also perform any other
duties commonly incident to such office in a Massachusetts business corporation,
and shall have such other authorities and duties as the Trustees shall from time
to time determine.
Section 3.7. Treasurer. Except as otherwise directed by the Trustees, the
Treasurer shall have the general supervision of the monies, funds, securities,
notes receivable and other valuable papers and documents of the Trust, and shall
have and exercise under the supervision of the Trustees and of the President all
powers and duties normally incident to his office. He may endorse for deposit
or collection all notes, checks and other instruments payable to the Trust or to
its order. He shall deposit all funds of the Trust in such depositories as the
Trustees shall designate. He shall be responsible for such disbursement of the
funds of the Trust as may be ordered by the Trustees or the President. He shall
keep accurate account of the books of the Trust's transactions which shall be
the property of the Trust, and
11
<PAGE>
which together with all other property of the Trust in his possession, shall be
subject at all times to the inspection and control of the Trustees. Unless the
Trustees shall otherwise determine, the Treasurer shall be the principal
accounting officer of the Trust and shall also be the principal financial
officer of the Trust. He shall have such other duties and authorities as the
Trustees shall from time to time determine. Notwithstanding anything to the
contrary herein contained, the Trustees may authorize any adviser,
administrator, manager or transfer agent to maintain bank accounts and deposit
and disburse funds of any Series of the Trust on behalf of such Series.
Section 3.8. Other Officers and Duties. The Trustees may elect such other
officers and assistant officers as they shall from time to time determine to be
necessary or desirable in order to conduct the business of the Trust." Assis-
tant officers shall act generally in the absence of the officer whom they
assist and shall assist that officer in the duties of his office. Each officer,
employee and agent of the Trust shall have such other duties and authority as
may be conferred upon him by the Trustees or delegated to him by the President.
12
<PAGE>
ARTICLE IV
Miscellaneous
Section 4.1. Depositories. In accordance with Section 7.1 of the
Declaration, the funds of the Trust shall be deposited in such depositories as
the Trustees shall designate and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents (including any adviser,
administrator or manager), as the Trustees may from time to time authorize.
Section 4.2. Signatures. All contracts and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents, as
provided in these By-Laws or as the Trustees may from time to time by reso-
lution provide.
Section 4.3. Seal. The seal of the Trust, if any, or any Series of the
Trust, if any, may be affixed to any document, and the seal and its attestation
may be lithographed, engraved or otherwise printed on any document with the
same force and effect as if it had been imprinted and attested manually in the
same manner and with the same effect as if done by a Massachusetts business
corporation.
13
<PAGE>
ARTICLE V
Stock Transfers
Section 5.1. Certificates. Certificates representing Shares of any Series
of the Trust shall not be issued.
Section 5.2. Transfer Agents, Registrars and the Like. As provided in
Section 6.7 of the Declaration, the Trustees shall have authority to employ and
compensate such transfer agents and registrars with respect to the Shares of the
various Series of the Trust as the Trustees shall deem necessary or desirable.
In addition, the Trustees shall have power to employ and compensate such
dividend disbursing agents, warrants agents and agents for the reinvestment of
dividends as they shall deem necessary or desirable. Any of such agents shall
have such power and authority as is delegated to any of them by the Trustees.
Section 5.3. Transfer of Shares. The Shares of the Trust shall be
transferable on the books of the Trust only upon delivery to the Trustees or a
transfer agent of the Trust of proper documentation as provided in Section 6.8
of the Declaration. The Trust, or its transfer agents, shall be authorized to
refuse any transfer unless and until presentation of such evidence as may be
reasonably required to show that the requested transfer is proper.
14
<PAGE>
Section 5.4. Registered Shareholders. The Trust may deem and treat the
holder of record of any Share as the absolute owner thereof for all purposes
and shall not be required to take any notice of any right or claim of right of
any other person.
ARTICLE VI
Amendment of By-Laws
Section 6.1. Amendment and Repeal of By-Laws. In accordance with Section
2.7 of the Declaration, the Trustees shall have the power to alter, amend or
repeal the By-Laws or adopt new By-Laws at any time. Action by the Trustees
with respect to the By-Laws shall be taken by an affirmative vote of a majority
of the Trustees. The Trustees shall in no event adopt By-Laws which are in
conflict with the Declaration, and any apparent inconsistency shall be
construed in favor of the related provisions in the Declaration.
The Declaration of Trust establishing Financial Institutions Series
Trust, dated May 27, 1981, a copy of which, together with all amendments thereto
(the "Declaration"), is on file in the office of the Secretary of the
Commonwealth
15
<PAGE>
of Massachusetts, provides that the name Financial Institutions Series Trust
refers to the Trustees under the Declaration collectively as Trustees, but not
as individuals or personally; and no Trustee, shareholder, officer, employee or
agent of Financial Institutions Series Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Financial Institutions Series Trust but the Trust Estate only
shall be liable.
<PAGE>
Ex-99.5(a)
SUMMIT CASH RESERVES FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of September, 1986 by and between
FINANCIAL INSTITUTIONS SERIES TRUST, a Massachusetts business trust
(hereinafter referred to as the "Trust"), and FUND ASSET MANAGEMENT,
Inc., a Delaware corporation (hereinafter referred to as the "Investment
Manager").
W I T N E S S E T H :
WHEREAS, the Trust is engaged in business as a diversified open-end
investment company registered under the Investment Company Act of 1940,
as amended (hereinafter referred to as the "Investment Company Act");
and
WHEREAS, the Trust is authorized to establish separate series, each
or which will offer a separate class of shares; and
WHEREAS the Trust has established the SUMMIT CASH RESERVES FUND (the
"Money Fund") as a series of the Trust; and
WHEREAS, pursuant to an Administrative Agreement (hereinafter referred
to as the "Administrative Agreement") between the Trust and the
Administrator named therein (hereinafter refined to as the
"Administrator") the Administrator has agreed to provide, and arrange
for the performance of administrative services for the Money Fund and
its shareholders; and
WHEREAS, the Investment Manager is engaged in business as a registered
investment adviser under the Investment Advises Act of 1940, as amended
and
WHEREAS, the Investment Manager is willing to provide management and
investment advisory services to the Money Fund on the terms and
conditions hereinafter set forth;
Now, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth. the parties covenant and
agree as follows:
ARTICLE I
DUTIES OF THE INVESTMENT MANAGER
The Trust hereby retains the Investment Manager to act as the manager
and investment advisor of the Money Fund and to furnish, or arrange for
affiliates to furnish, the investment advisory and management services
described below, subject to the supervision of the Trustees of the
Trust, for the period and on the terms and conditions set forth in this
Agreement. The Investment Manager hereby accepts such employment and
agrees during such period, at its expense, to render or arrange for the
rendering or, such services and to assume the obligations provided for
herein. The Investment Manager shall for all purposes herein be deemed
to be an independent contractor and shall. unless otherwise expressly
provided or authorized. have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust.
(a) Investment Advisory Services. The Investment Manager shall provide
the Trust with such investment research, advice and supervision as the
latter may from time to time consider necessary for the proper
supervision of the use of the Money Fund. The Investment Manager shall
act as an investment adviser to the Trust and as such shall furnish
continuously an investment program and shall determine from time to time
which securities shall be purchased sold or exchanged and what portion
of the assets of the
<PAGE>
Money Fund shall be held in the various money market securities or cash,
subject always to the restrictions of the Declaration of Trust and
BY-Laws of the Trust, as amended from time to time, the provisions of
the Investment Company Act and the statements relating to the Trust's
investment objectives, investment policies and investment restrictions
as the same arc set forth in the currently effective prospectus relating
to the shares of beneficial Interest of the Money Fund under the
Securities Act of 1933, as amended (the "Prospectus"). The Investment
Manager shall also make decisions for the Trust as to the manner in
which voting rights, rights to consent to corporate action and any other
rights pertaining to the Trust's portfolio securities shall be exercise.
Should the Trust of the Trust at any time, however. make any definite
determination as to investment policy and notify the Investment Manager
thereof in writing, the Investment Manager shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination his been revoked The
Investment Manager shall take, on behalf of the Money Fund, all actions
which it deems necessary to implement the investment policies determined
as provided above, and in particular to place all orders for the
purchase or sale of portfolio securities for the Money Fund's account
with brokers or dealers selected by it, and to that end, the Investment
Manager is authorized as the agent of the Trust to give instructions to
the Custodian of the Money Fund as to deliveries of securities and
payments of cash for the account or the Money Fund. In connection with
the selection of such brokers or dealers and the placing of such order
the Investment Manager is directed at all times to conduct portfolio
transactions for the Money Fund in accordance with the policies
determined by the Board of Trust of the Trust and set forth in the
Prospectus. Subject to this requirement and the provisions of the
Investment Company Act, the Securities Exchange Act of 1934, as amended
and other applicable provisions of law, the Investment Manager may
select broken or dealers with which it or the Trust is affiliated.
(b) Management Services. In addition to investment advisory services,
the Investment Manager shall perform, or supervise the performance of,
management and administrative services in connection with the management
of the Money Fund and, on behalf of the Money Fund, conduct relations
with custodians, depositories, transfer agents, dividend disbursing
agent other shareholder service agents, accountants, attorneys,
underwriters, brokers and dealers corporate fiduciaries, insurer, banks,
and such other persons in any such other capacity deemed to be necessary
or desirable, other than those operations which are to be managed by the
Administrator pursuant to the Administrative Agreement. In this
connection, the Investment Manager shall provide the Money Fund with
office space, equipment and facilities and such other services as the
Investment Manager shall from time to time determine to be necessary or
useful to perform its obligations under this Agreement. The Investment
Manager shall make reports to the Board of Trustees of its performance
of obligations hereunder and furnish advice and recommendations with
respect to such other as or the business and affairs of the Money Fund
as it shall determine to be desirable.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
(a) The Investment Manager. The Investment Manager assumes and shall
pay for maintaining the staff and personnel necessary to perform its
obligations under this Agreement, and shall at its own expense, provide
the office space, equipment and facilities which it is obligated to
provide under Article l(b) hereof, and shall pay all compensation of
officers of the Trust and all trustees of the Trust who arc affiliated
persons of the Investment Manager.
(b) The Trust. The Trust assumes and shall pay or cause to be paid all
other expand of the Money Fund (except for the expenses incurred by the
Distributor), including general administrative expenses of the Trust
which are allocated among its separate services on the basis or their
respective asset size. The expenses to be paid by the Trust include,
without limitation: redemption expenses, expenses or portfolio
transactions,
2
<PAGE>
expenses of registering shares under Federal and state securities laws,
pricing costs (including the daily calculation of net asset value),
expenses of printing shareholder reports and promote, charges of the
Custodian and Transfer Agent, Securities and Exchange Commission fee,
interest, taxes, fees and actual out of-pocket expenses of trustees who
arc not affiliated persons of the Investment Manager or the
Administrator. fees for legal and auditing services, litigation expenses
costs or printing proxies and other expenses related to shareholder
meetings, and other expenses properly payable by the Trust. The
Distributor will pay certain of expenses of the Money Fund incurred in
connection with the continuous offering of Money Fund shares.
ARTICLE III
COMPENSATION OF THE INVESTMENT MANAGER
(a) Investment Management Fee. For the services rendered, the
facilities furnished and the expenses assumed by the Investment Manager,
the Trust shall pay to the Investment Manager compensation at the
following annual rates calculated as hereinafter set forth; commencing
on the day following effectiveness hereof:
INVESTMENT
MANAGEMENT
FEE
----------
Portion of average daily value of net assets:
Not exceeding $500 million..................... 0.275%
In excess of $500 million ..................... 0.25 %
Except as hereinafter set forth, compensation under this Agreement shall
be calculated and accrued daily and paid monthly by applying the annual
rate to the average daily net assets of the Money Fund determined as or
the close of business each day. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for that part of the month this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. Subject to the provisions
of subsection (b) hereof, payment of the Investment Manager's
compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by subsection
(b) hereof.
(b) Expense Limitations. In the event the operating expenses or the
Money Fund, including amounts payable to the Investment Manager pursuant
to subsection (a) hereof, for any fiscal year ending on a date on which
this Agreement is in effect exceed the expense limitations applicable to
the Money Fund imposed by applicable state securities laws or
regulations thereunder. as such limitations may be raised or lowered
from time to time, the Investment Manager shall reduce its management
fee by the extent of 50% of such excess and, if required pursuant to any
such Laws or regulations, will reimburse the Money Fund in the amount of
50% of such excess, it being understood that the Administrator has
agreed to effect identical reductions and reimbursements in accordance
with the terms of the Administrative Agreement; provided, however, to
the extent permitted by law, there shall be excluded from such expenses
the amount of any interest, taxes, brokerage commissions and
extraordinary expense (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Money Fund. Whenever the expenses or
the Money Fund exceed a pro rata portion of the applicable annual
expense limitations, the estimated amount of reimbursement under such
limitations shall be applicable as an offset against the monthly payment
of the fee due to the Investment Manager. Should two or more such
expense limitations be applicable as at the end or the last business day
or the month, that expense limitation which results in the largest
reduction in the Investment Manager's fee shall be applicable.
3
<PAGE>
ARTICLE IV
LIMITATION OF LIABILITY OF THE INVESTMENT MANAGER
The Investment Manager shall not be liable for any error of judgment or
mistake of law or for any loss among out of any investment or for any
act or omission in the management of the Money Fund, except for
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligation and duties
hereunder. As used in this Article IV, the term "Investment Manager"
include directors, officers and employees of the Investment Manager as
well as that corporation itself.
ARTICLE V
ACTIVITIES OF THE INVESTMENT MANAGER
The services of the Investment Manager to the Money Fund are not to be
deemed to be exclusive, the Investment Manager being free to render
services to others. It is understood that trustees, officers, employees
and shareholders of the Trust and Money Fund are or may become
interested in the Investment Manager, as directors, officers, employers
and shareholders or otherwise and that directors, officers, employees
and shareholders of the Investment Manager are or may become similarly
interested in the Fund and Money Fund, and that the Investment Manager
may become interested in the Trust and Money Fund as shareholder or
otherwise.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force until December 31, 1983 and thereafter, but
only so long as such continuance is specifically approved at least
annually by (i) the Board of Trustees of the Trust, or by the vote of a
majority of the outstanding voting securities of the Money Fund, and
(ii) a majority of those Trustees who are not interested persons of any
party to his Agreement cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty by the Board or Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Money Fund, or by the
Investment Manager, on sixty days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding
voting securities of the Money Fund, a (ii) majority of those Trustees
of the Trust who are not interested persons of any party to this
Agreement cast in person at a meeting called for the purpose of voting
on such approval.
4
<PAGE>
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The term "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in
this Agreement, shall have the respective meanings specified in the
Investment Company Act.
ARTICLE IX
GOVERNING LAW
This Agreement shah be construed in accordance with the laws of the
State of New York and the applicable provisions of the Investment
Company Act. To the extent that the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
ARTICLE X
PERSONAL LIABILITY
The Declaration of Trust establishing Financial Institutions Series
Trust, dated July 10, 1987, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name
"Financial Institutions Series Trust" refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or
personally; and no Trustees, shareholder, officer, employee or agent of
Financial Institutions Series Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with
the affairs of said Financial Institutions Series Trust, but the Trust
Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as or the date first above written.
FINANCIAL INSTITUTIONS SERIES TRUST
By /s/ Arthur Zeikel
-------------------------------
Arthur Zeikel
FUND ASSET MANAGEMENT, INC.
By /s/ Terry K. Glenn
-------------------------------
Terry K. Glenn
5
<PAGE>
SUPPLEMENT TO INVESTMENT ADVISORY AGREEMENT
WITH
FUND ASSET MANAGEMENT
As of January 1, 1994 Fund Asset Management was reorganized as a limited
partnership, formally known as Fund Asset Management, L.P. ("FAM"). The
general partner of FAM is Princeton Services, Inc. and the limited
partners are Fund Asset Management, Inc. and Merrill Lynch & Co, Inc.
Pursuant to Rule 202(a)(l)-l under the Investment Advisers Act of 1940
and Rule 2a-6 under the Investment Company Act of 1940 such
reorganization did not constitute an assignment of this investment
advisory agreement since it did not involve a change of control or
management of the investment adviser. Pursuant to the requirements of
Section 205 of the Investment Advisers Act of 1940, however. Fund Asset
Management hereby supplements this investment advisory agreement by
undertaking to advise you of any change in the membership of the
partnership within a reasonable time after any such occurs.
By /s/ Arthur Zeikel
-------------------------------
Arthur Zeikel
Dated January 3, 1994
<PAGE>
Ex-99.5(b)
SUMMIT CASH RESERVES FUND
ADMINISTRATIVE AGREEMENT
AGREEMENT made this 26th day of June, 1995, by and between FINANCIAL
INSTITUTIONS SERIES TRUST, a Massachusetts business trust (hereinafter referred
to as the "Trust"), and FUND ASSET MANAGEMENT, L.P., a Delaware limited
partnership (hereinafter referred to as the "Administrator").
WITNESSETH:
WHEREAS, the Trust is engaged in business as a diversified open-end
investment company registered under the Investment Company Act of 1940, as
amended (hereinafter referred to as "the Investment Company Act"); and
WHEREAS, the Trust is authorized to establish separate series, each of
which will offer a separate class of shares; and
WHEREAS, the Trust has established the SUMMIT CASH RESERVES FUND (the
"Money Fund") as a series of the Trust; and
WHEREAS, pursuant to an Investment Management Agreement (hereinafter
referred to as the "Investment Management Agreement") between the Trust and Fund
Asset Management, L.P. (in such capacity, hereinafter referred to as the
"Investment Manager"), the Investment Manager has agreed to provide management
and investment advisory services to the Money Fund; and
WHEREAS, the Trust has entered into an administrative agreement with
Broadcort Capital Corp. ("Broadcort") for the performance of certain
administrative services to the Money Fund and to shareholders of the Money Fund
introduced to the Money Fund by Broadcort ("Broadcort Shareholders") on the
terms and conditions set forth in such agreement; and
WHEREAS, the Administrator (acting for itself or through an affiliate)
is willing to provide and arrange for performance of administrative services to
the Money Fund and to shareholders of the Money Fund other than Broadcort
Shareholders (the "Shareholders") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto set forth, the parties agree as follows:
<PAGE>
ARTICLE I
DUTIES OF THE ADMINISTRATOR
The Trust hereby retains the Administrator (acting for itself or through
an affiliate) to act as an administrator of the Money Fund and to furnish the
Money Fund and the Shareholders of the Money Fund with administrative services
as set forth below.
The administrative services to be furnished by the Administrator shall
include establishment and maintenance of Shareholder accounts, processing
purchase and redemption requests from the Shareholders, answering Shareholder
inquires regarding the Money Fund, providing assistance to the Shareholders with
respect to various shareholder plans offered by the Money Fund, and such other
services as the Trust may reasonably request. The foregoing services shall be
limited to administrative services and shall not include investment advisory,
promotional or sales activities. The Administrator shall for all purposes
herein be deemed to be an independent contractor and shall have, unless
otherwise expressly provided or authorized, no authority to act for or represent
the Trust in any way or otherwise be deemed an agent of the Trust.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Administrator shall furnish at its own expense all administrative
services, equipment, facilities and executive, supervisory and clerical
personnel necessary to carry out its obligations under this Agreement.
ARTICLE III
COMPENSATION OF THE ADMINISTRATOR
(a) Administrative Fee. For the services rendered, the facilities
furnished and the expenses assumed by the Administrator, the Trust shall pay to
the Administrator compensation at the following annual rates calculated as
hereinafter set forth, commencing on the day following effectiveness hereof:
2
<PAGE>
Administration
Fee
--------------
Portion of average daily value of net assets
attributable to the Shareholders:
Not exceeding $500 million 0.275%
In excess of $500 million 0.25%
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and paid monthly by applying the annual rate to the
average daily net assets of the Money Fund attributable to the Shareholders
determined as of the close of business each day. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Subject to the provisions of subsection (b) hereof,
payment of the Administrator's compensation for the preceding month shall be
made as promptly as possible after completion of the computations contemplated
by subsection (b) hereof.
(b) Expense Limitations. In the event the operating expenses of the Money
Fund, including amounts payable to the Administrator pursuant to subsection (a)
hereof, for any fiscal year ending on a date on which this Agreement is in
effect, exceed the expense limitations applicable to the Money Fund imposed by
applicable state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Administrator shall reduce its
administrative fee by the extent of 50% of such excess times the proportion of
average daily net assets attributable to the Shareholders and, if required
pursuant to any such laws or regulations, will reimburse the Money Fund in the
amount of 50% of such excess times the proportion of average daily net assets
attributable to the Shareholders, it being understood that Broadcort has agreed
to effect proportional reductions and reimbursements in accordance with the
terms of its administrative agreement with the Trust and that the Investment
Manager has agreed to effect reductions and reimbursements to the extent of 50%
of such excess in accordance with the terms of the Investment Management
Agreement; provided, however, to the extent permitted by law, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Money Fund. Whenever the expenses of the Money
Fund exceed a pro rata portion of the applicable annual expense limitations, the
estimated amount of reimbursement under such limitations shall be applicable as
an offset against the monthly payment of the fee due to the
3
<PAGE>
Administrator. Should two or more such expense limitations be applicable as at
the end of the last business day of the month, that expense limitation which
results in the largest reduction in the Administrator's fee shall be applicable.
ARTICLE IV
LIMITATION OF LIABILITY OF THE ADMINISTRATOR
The Administrator shall not be liable for any error of judgment or
mistake of law or for any act or omission in the administration of the Money
Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article V, the term "Administrator" shall
include partners, officers and employees of the Administrator as well as that
entity itself.
ARTICLE V
ACTIVITIES OF THE ADMINISTRATOR
The services of the Administrator to the Money Fund are not to be deemed
to be exclusive, the Administrator being free to render services to others. It
is understood that trustees, officers, employees and shareholders of the Trust
and Money Fund are or may become interested in the Administrator, as partners,
officers, employees and shareholders or otherwise and that partners, officers,
employees and shareholders of the Administrator are or may become similarly
interested in the Trust and Money Fund, and that the Administrator may become
interested in the Trust and Money Fund as shareholder or otherwise.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force until the second anniversary hereof and thereafter,
but only so long as such continuance is specifically approved at least annually
by (i) the Board of Trustees of the Trust, or by the vote of a majority of the
outstanding voting securities of the Money Fund, and (ii) a majority of those
Trustees who are not interested persons of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the
4
<PAGE>
Money Fund, or by the Administrator, on sixty days' written notice to the other
party. This Agreement shall automatically terminate in the event of its
assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Trustees of the Trust, or by the vote
of a majority of outstanding voting securities of the Money Fund, and (ii) a
majority of those Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities",
"assignment","affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified tn the Investment
Company Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Investment Company Act.
To the extent that the applicable laws of the State of New York or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
PERSONAL LIABILITY
The Declaration of Trust establishing Financial Institutions Series
Trust, dated July 10, 1987, a copy of which, together with all amendments
thereto (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name "Financial Institutions
Series Trust" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of Financial Institutions Series Trust shall be held
to any personal liability, nor shall resort be had to their private property for
the satisfaction of
5
<PAGE>
any obligation or claim or otherwise in connection with the affairs of said
Financial Institutions Series Trust, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FINANCIAL INSTITUTIONS SERIES TRUST
By /s/ Arthur Zeikel
---------------------------------
Arthur Zeikel
FUND ASSET MANAGEMENT, L.P.
By /s/ Terry K. Glenn
---------------------------------
Terry K. Glenn
<PAGE>
Ex-99.5(c)
SUMMIT CASH RESERVES FUND
SUB-ADMINISTRATIVE AGREEMENT
AGREEMENT made this ________ day of ________ by and between Fund Asset
Management, L.P., a limited partnership, as Administrator of a Series of
Financial Institutions Series Trust (hereinafter referred to as the
"Administrator" and the "Trust", respectively), and ______________ (hereinafter
referred to as the "Sub-Administrator").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as a diversified open-end
investment company registered under the Investment Company Act of 1940, as
amended (hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Trust is authorized to establish separate series, each of
which will offer a separate class of shares; and
WHEREAS, the Trust has established the SUMMIT CASH RESERVES FUND (the
"Money Fund") as a series of the Trust; and
WHEREAS, pursuant to an Administrative Agreement (hereinafter referred to
as the "Administrative Agreement") between the Trust and the Administrator,
dated as of June 26, 1995, the Administrator has agreed to provide and arrange
for performance of administrative services to the Money Fund and certain of its
shareholders on the terms and conditions set forth in the Administrative
Agreement.
WHEREAS, the Administrative Agreement provides that the Administrator may
enter into various sub-administrative
<PAGE>
agreements with certain securities dealers pursuant to which such dealers will
provide various of the administrative services described in Article I of the
Administrative Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties agree as follows:
ARTICLE I
Duties of the Sub-Administrator
The Administrator hereby retains the Sub-Administrator to act as a
sub-administrator of the Money Fund and to furnish the Money Fund with
administrative services as requested by the Administrator and as set forth below
in connection with shares of the Money Fund purchased by clients of the
Sub-Administrator.
The administrative services to be furnished by the Sub-Administrator shall
include establishment and maintenance of shareholder accounts, processing
purchase and redemption requests, answering shareholder inquiries regarding the
Money Fund, providing assistance to shareholders with respect to various
shareholder plans offered by the Money Fund, and such other services as the
Administrator may reasonably request. The foregoing services shall be limited
to administrative services and shall not include investment advisory,
promotional or sales activities. The Sub-Administrator shall for all purposes
herein be deemed to be an independent contractor with the Administrator and
shall have, unless otherwise expressly provided or
-2-
<PAGE>
authorized, no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
ARTICLE II
Allocation of Charges and Expenses
The Sub-Administrator shall furnish at its own expense all administrative
services, equipment, facilities and executive, supervisory and clerical
personnel necessary to carry out its obligations under this Agreement.
ARTICLE III
Compensation of the Sub-Administrator
For the services rendered, the facilities furnished and the expenses
assumed by the Sub-Administrator, the Administrator shall pay to the
Sub-Administrator compensation as set forth in a separate agreement between
the Administrator and Sub-Administrator.
ARTICLE IV
Limitation of Liability of the Sub-Administrator
The Sub-Administrator shall not be liable for any error of judgment or
mistake of law or for any act or omission in the administration of the Money
Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article IV, the term "Sub-Administrator"
shall include directors, partners, officers
-3-
<PAGE>
and employees of the Sub-Administrator as well as that entity itself.
ARTICLE V
Activities of the Sub-Administrator
The services of the Sub-Administrator to the Money Fund are not to be
deemed to be exclusive, the Sub-Administrator being free to render services to
others. It is understood that trustees, officers, employees and shareholders of
the Trust and Money Fund are or may become interested in the Sub-Administrator,
as directors, partners, officers, employees and shareholders or otherwise and
that directors, partners, officers, employees and shareholders of the
Sub-Administrator are or may become similarly interested in the Trust and Money
Fund, and that the Sub-Administrator may become interested in the Trust and
Money Fund as shareholder or otherwise.
ARTICLES VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above written
and shall remain in force until _________________ and thereafter if approved by
the parties hereto.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Administrator, the Board of Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Money Fund, or by the
Sub-Administrator on written notice to the other party.
-4-
<PAGE>
This Agreement shall automatically terminate in the event of its assignment
or in the event that the Administrative Agreement is terminated.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved in writing by the parties hereto.
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting securities" and
"assignment", when used in this Agreement, shall have the respective meanings
specified in the Investment Company Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein,
-5-
<PAGE>
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FUND ASSET MANAGEMENT, L.P.
By___________________________________
FIRM NAME: __________________________
By___________________________________
Address:_____________________________
-6-
<PAGE>
Ex-99.5(d)
SUMMIT CASH RESERVES FUND
ADMINISTRATIVE AGREEMENT
AGREEMENT made this 26th day of June, 1995, by and between FINANCIAL
INSTITUTIONS SERIES TRUST, a Massachusetts business trust (hereinafter referred
to as the "Trust"), and BROADCORT CAPITAL CORP., a Delaware corporation
(hereinafter referred to as the "Administrator").
WITNESSETH:
WHEREAS, the Trust is engaged in business as a diversified open-end
investment company registered under the Investment Company Act of 1940, as
amended (hereinafter referred to as "the Investment Company Act"); and
WHEREAS, the Trust is authorized to establish separate series, each of
which will offer a separate class of shares; and
WHEREAS, the Trust has established the SUMMIT CASH RESERVES FUND (the
"Money Fund") as a series of the Trust; and
WHEREAS, pursuant to an Investment Management Agreement (hereinafter
referred to as the "Investment Management Agreement") between the Trust and Fund
Asset Management, L.P. (hereinafter referred to, in such capacity, as the
"Investment Manager"), the Investment Manager has agreed to provide management
and investment advisory services to the Money Fund; and
WHEREAS, the Administrator is willing to provide and arrange for
performance of administrative services to the Money Fund and to shareholders of
the Money Fund introduced to the Money Fund by the Administrator ("Broadcort
Shareholders") on the terms and conditions hereinafter set forth; and
WHEREAS, the Trust has entered into an administrative agreement with Fund
Asset Management, L.P. (hereinafter referred to, in such capacity, as "FAM") for
the performance of administrative services to the Money Fund and to shareholders
of the Money Fund other than Broadcort Shareholders, on the terms and conditions
set forth in such agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto set forth, the parties agree as follows:
<PAGE>
ARTICLE I
DUTIES OF THE ADMINISTRATOR
The Trust hereby retains the Administrator to Act as an administrator of
the Money Fund and to furnish the Money Fund and the Broadcort Shareholders of
the Money Fund with administrative services as set forth below.
The administrative services to be furnished by the Administrator shall
include establishment and maintenance of Broadcort Shareholder accounts,
processing purchase and redemption requests from Broadcort Shareholders,
answering Broadcort Shareholder inquires regarding the Money Fund, providing
assistance to Broadcort Shareholders with respect to various shareholder plans
offered by the Money Fund, and such other services as the Trust may reasonably
request. The foregoing services shall be limited to administrative services and
shall not include investment advisory, promotional or sales activities. The
Administrator shall for all purposes herein be deemed to be an independent
contractor and shall have, unless otherwise expressly provided or authorized, no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
ARTICLE II
SUB-ADMINISTRATIVE AGREEMENTS
The Trust acknowledges that the Administrator intends to enter into
sub-administrative agreements with certain securities dealers pursuant to which
such dealers will provide various of the administrative services described in
Article I of this Agreement for their clients who have purchased shares of
beneficial interest of the Money Fund through them. The Trust further
acknowledges that the Administrator may pay all or a portion of its
administrative compensation received under this Agreement to securities dealers
with which it has entered into sub-administrative agreements. The Administrator
shall not enter into any such agreements unless the form of such agreement has
previously been approved by the Trust.
ARTICLE III
ALLOCATION OF CHARGES AND EXPENSES
The Administrator shall furnish at its own expense all administrative
services, equipment, facilities and executive, supervisory and clerical
personnel necessary to carry out its obligations under this Agreement.
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ARTICLE IV
COMPENSATION OF THE ADMINISTRATOR
(a) Administrative Fee. For the services rendered, the facilities
furnished and the expenses assumed by the Administrator, the Trust shall pay to
the Administrator compensation at the following annual rates calculated as
hereinafter set forth, commencing on the day following effectiveness hereof:
Administration
Fee
--------------
Portion of average daily value of net assets
attributable to Broadcort Shareholders:
Not exceeding $500 million 0.275%
In excess of $500 million 0.25%
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and paid monthly by applying the annual rate to the
average daily net assets of the Money Fund attributable to Broadcort
Shareholders determined as of the close of business each day. If this Agreement
becomes effective subsequent to the first day of a month or shall terminate
before the last day of a month, compensation for that part of the month this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. Subject to the provisions of
subsection (b) hereof, payment of the Administrator's compensation for the
preceding month shall be made as promptly as possible after completion of the
computations contemplated by subsection (b) hereof.
(b) Expense Limitations. In the event the operating expenses of the Money
Fund, including amounts payable to the Administrator pursuant to subsection (a)
hereof, for any fiscal year ending on a date on which this Agreement is in
effect, exceed the expense limitations applicable to the Money Fund imposed by
applicable state securities laws or regulations thereunder, as such limitations
may be raised or lowered from time to time, the Administrator shall reduce its
administrative fee by the extent of 50% of such excess times the proportion of
average daily net assets attributable to Broadcort Shareholders and, if required
pursuant to any such laws or regulations, will reimburse the Money Fund in the
amount of 50% of such excess times the proportion of average daily net assets
attributable to Broadcort Shareholders, it being understood that FAM has agreed
to effect proportional reductions and reimbursements in accordance with the
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<PAGE>
terms of its administrative agreement with the Trust and that the Investment
Manager has agreed to effect reductions and reimbursements to the extent of 50%
of such excess in accordance with the terms of the Investment Management
Agreement; provided, however, to the extent permitted by law, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Money Fund. Whenever the expenses of the Money
Fund exceed a pro rata portion of the applicable annual expense limitations, the
estimated amount of reimbursement under such limitations shall be applicable as
an offset against the monthly payment of the fee due to the Administrator.
Should two or more such expense limitations be applicable as at the end of the
last business day of the month, that expense limitation which results in the
largest reduction in the Administrator's fee shall be applicable.
ARTICLE V
LIMITATION OF LIABILITY OF THE ADMINISTRATOR
The Administrator shall not be liable for any error of judgment or mistake
of law or for any act or omission in the administration of the Money Fund,
except for willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
hereunder. As used in this Article V, the term "Administrator" shall include
directors, officers and employees of the Administrator as well as that
corporation itself.
ARTICLE VI
ACTIVITIES OF THE ADMINISTRATOR
The services of the Administrator to the Money Fund are not to be deemed to
be exclusive, the Administrator being free to render services to others. It is
understood that trustees, officers, employees and shareholders of the Trust and
Money Fund are or may become interested in the Administrator, as directors,
officers, employees and shareholders or otherwise and that directors, officers,
employees and shareholders of the Administrator are or may become similarly
interested in the Trust and Money Fund, and that the Administrator may become
interested in the Trust and Money Fund as shareholder or otherwise.
4
<PAGE>
ARTICLE VII
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force until the second anniversary hereof and thereafter,
but only so long as such continuance is specifically approved at least annually
by (i) the Board of Trustees of the Trust, or by the vote of a majority of the
outstanding voting securities of the Money Fund, and (ii) a majority of those
Trustees who are not interested persons of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Money Fund, or by the Administrator, on
sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the Board of Trustees of the Trust, or by the vote
of a majority of the outstanding voting securities of the Money Fund, and (ii) a
majority of those Trustees of the Trust who are not interested persons of any
party to this Agreement cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities",
"assignment","affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified tn the Investment
Company Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York or any of the
provisions herein,
5
<PAGE>
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
ARTICLE XI
PERSONAL LIABILITY
The Declaration of Trust establishing Financial Institutions Series Trust,
dated July 10, 1987, a copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Financial Institutions Series Trust"
refers to the Trustees under the Declaration collectively as Trustees, but not
as individuals or personally; and no Trustee, shareholder, officer, employee or
agent of Financial Institutions Series Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Financial Institutions Series Trust, but the Trust Estate only
shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
FINANCIAL INSTITUTIONS SERIES TRUST
By /s/ Arthur Zeikel
-----------------------------------
Arthur Zeikel
BROADCORT CAPITAL CORP.
By /s/ George Y. Bramwell
-----------------------------------
George Y. Bramwell
6
<PAGE>
Ex-99.5(e)
SUMMIT CASH RESERVES FUND
SUB-ADMINISTRATIVE AGREEMENT
AGREEMENT made this ________ day of ________ by and between Broadcort
Capital Corp., a Delaware corporation, as Administrator of a Series of Financial
Institutions Series Trust (hereinafter referred to as the "Administrator" and
the "Trust", respectively), and ______________ (hereinafter referred to as the
"Sub-Administrator").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as a diversified open-end
investment company registered under the Investment Company Act of 1940, as
amended (hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Trust is authorized to establish separate series, each of
which will offer a separate class of shares; and
WHEREAS, the Trust has established the SUMMIT CASH RESERVES FUND (the
"Money Fund") as a series of the Trust; and
WHEREAS, pursuant to an Administrative Agreement (hereinafter referred to
as the "Administrative Agreement") between the Trust and the Administrator,
dated as of June 26, 1995, the Administrator has agreed to provide and arrange
for performance of administrative services to the Money Fund and certain of its
shareholders on the terms and conditions set forth in the Administrative
Agreement.
WHEREAS, the Administrative Agreement provides that the Administrator may
enter into various sub-administrative
<PAGE>
agreements with certain securities dealers pursuant to which such dealers will
provide various of the administrative services described in Article I of the
Administrative Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties agree as follows:
ARTICLE I
Duties of the Sub-Administrator
The Administrator hereby retains the Sub-Administrator to act as a
sub-administrator of the Money Fund and to furnish the Money Fund with
administrative services as requested by the Administrator and as set forth below
in connection with shares of the Money Fund purchased by clients of the
Sub-Administrator.
The administrative services to be furnished by the Sub-Administrator shall
include establishment and maintenance of shareholder accounts, processing
purchase and redemption requests, answering shareholder inquiries regarding the
Money Fund, providing assistance to shareholders with respect to various
shareholder plans offered by the Money Fund, and such other services as the
Administrator may reasonably request. The foregoing services shall be limited
to administrative services and shall not include investment advisory,
promotional or sales activities. The Sub-Administrator shall for all purposes
herein be deemed to be an independent contractor with the Administrator and
shall have, unless otherwise expressly provided or
2
<PAGE>
authorized, no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
ARTICLE II
Allocation of Charges and Expenses
The Sub-Administrator shall furnish at its own expense all administrative
services, equipment, facilities and executive, supervisory and clerical
personnel necessary to carry out its obligations under this Agreement.
ARTICLE III
Compensation of the Sub-Administrator
For the services rendered, the facilities furnished and the expenses
assumed by the Sub-Administrator, the Administrator shall pay to the
Sub-Administrator compensation as set forth in a separate agreement between the
Administrator and Sub-Administrator.
ARTICLE IV
Limitation of Liability of the Sub-Administrator
The Sub-Administrator shall not be liable for any error of judgment or
mistake of law or for any act or omission in the administration of the Money
Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article IV, the term "Sub-Administrator"
shall include directors, partners, officers
3
<PAGE>
and employees of the Sub-Administrator as well as that entity itself.
ARTICLE V
Activities of the Sub-Administrator
The services of the Sub-Administrator to the Money Fund are not to be
deemed to be exclusive, the Sub-Administrator being free to render services to
others. It is understood that trustees, officers, employees and shareholders of
the Trust and Money Fund are or may become interested in the Sub-Administrator,
as directors, partners, officers, employees and shareholders or otherwise and
that directors, partners, officers, employees and shareholders of the
Sub-Administrator are or may become similarly interested in the Trust and Money
Fund, and that the Sub-Administrator may become interested in the Trust and
Money Fund as shareholder or otherwise.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above written
and shall remain in effect unless and until terminated in accordance with the
paragraph below.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Administrator, the Board of Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Money Fund, or by the
Sub-Administrator on written notice to the other party.
4
<PAGE>
This Agreement shall automatically terminate in the event of its assignment
or in the event that the Administrative Agreement is terminated.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved in writing by the parties hereto.
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting securities" and
"assignment", when used in this Agreement, shall have the respective meanings
specified in the Investment Company Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
BROADCORT CAPITAL CORP.
By___________________________________
FIRM NAME: __________________________
By___________________________________
Address:_____________________________
6
<PAGE>
Ex-99.6(a)
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
AGREEMENT made this 30th day of September, 1988, as amended and
restated as of June 26, 1995, between FINANCIAL INSTITUTIONS SERIES TRUST, a
trust organized under the laws of Massachusetts (the "Trust") and MERRILL LYNCH
FUNDS DISTRIBUTOR, INC., a Delaware corporation (the "Distributor");
WITNESSETH:
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as a diversified open-end investment
company and it is affirmatively in the interest of the Trust to offer its shares
for sale in a continuous offering; and
WHEREAS, the Trust is authorized to establish separate series, ("Series"),
each of which will offer a separate class of shares of beneficial interest, par
value $.10 per share (collectively referred to as "shares"), to selected groups
of purchasers; and
WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to investors or through
other securities dealers; and
WHEREAS, the Trust and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the shares of the various
Series, as the same are organized from time to time, including, without
limitation, the Summit Cash Reserves Fund series (the "Cash Fund"), each
offering to commence after the effectiveness of the registration statement
covering
<PAGE>
the shares of a particular Series filed pursuant to the Securities Act
of 1933, as amended (the "Securities Act").
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Trust hereby appoints the
Distributor as the distributor and representative of the Trust to sell shares to
the selected groups of investors specified as eligible investors in the
currently effective prospectus (the "Prospectus") relating to the shares of
each Series which may be established by the Trust and the Distributor hereby
accepts such appointment. The Distributor shall be the exclusive principal
underwriter for each Series other than the Cash Fund, it being understood that
the Cash Fund may enter into distribution agreements with other principal
underwriters in addition to the Distributor. The Trust during the term of this
Agreement shall sell its shares to the Distributor upon the terms and
conditions set forth below.
Section 2. Exclusive Nature of Duties. With respect to each Series other
than the Cash Fund, the Distributor shall be the exclusive representative of
the Trust to act as principal underwriter and distributor, except that:
(a) The Trust may, upon written notice to the Distributor, from time
to time designate other principal underwriters and distributors of shares of
one or more Series with respect to areas other than the United States as to
which the Distributor may have expressly waived in writing its right to act
as such. If such designation is
2
<PAGE>
deemed exclusive, the right of the Distributor under this Agreement to
sell shares in the areas so designated shall terminate, but this Agreement
shall remain otherwise in full effect until terminated in accordance with
the other provisions hereof.
(b) The exclusive rights granted to the Distributor to purchase shares
from the Trust shall not apply to shares of any Series issued in connection
with the merger or consolidation of any other investment company or
personal holding company with the Trust or the acquisition by purchase or
otherwise of all (or substantially all) the assets or the outstanding
shares of any such company by the Trust.
(c) Such exclusive rights shall also not apply to shares issued by the
Trust pursuant to reinvestment of dividends and capital gains
distributions.
Section 3. Purchase of Shares from the Trust.
(a) The Distributor shall have the right to buy from the Trust the shares
needed, but not more than the shares needed (except for clerical errors in
transmission) to fill unconditional orders for shares of the Trust placed with
the Distributor by investors or securities dealers. The price which the
Distributor shall pay for the shares so purchased from the Trust shall be the
net asset value, determined as set forth in Section 3(c) hereof, used in
determining the public offering price described below on which such orders were
based.
3
<PAGE>
(b) The shares are to be resold by the Distributor to investors at the
public offering price, as set forth in Section 3(c) hereof, or to securities
dealers having agreements with the Distributor upon the terms and conditions set
forth in Section 7 hereof.
(c) The public offering price of the shares of any Series, i.e., the price
per share at which the Distributor may sell shares to the public, shall be the
public offering price as set forth in the Prospectus relating to such shares,
which shall be the net asset value thereof, as determined in accordance with
the description thereof contained in the Prospectus relating to that Series,
plus any sales charge which may be approved by the Trustees of the Trust.
(d) The Trust, or any agent of the Trust designated in writing by it, shall
be promptly advised of all purchase orders for shares received by the
Distributor. Procedures may be established by the Trust and the Distributor
whereby purchase orders for shares of any Series are presented directly to the
Trust or an agent designated by the Trust upon the condition that in such cases
it shall be deemed that the sale of the shares to be purchased is made pursuant
to Section 3 hereof. Any order may be rejected by the Trust or the
Distributor, provided, however, that neither will arbitrarily or without
reasonable cause refuse to accept or confirm orders for the purchase of
shares. The Trust (or its agent) will confirm orders upon their receipt, or in
accordance with any exemptive order or regulation of the
4
<PAGE>
Securities and Exchange Commission, and will make appropriate book entries
pursuant to the instructions of the Distributor. Purchase orders are effective
when Federal Funds become available to the Trust. The Distributor agrees to
cause such payment and such instructions to be delivered promptly to the Trust
(or its agent).
Section 4. Redemption or Repurchase of Shares by the Trust.
(a) Any of the outstanding shares may be tendered for redemption or
repurchase at any time, and the Trust shall redeem or repurchase the shares so
tendered in accordance with its obligations and rights as set forth in its
Declaration of Trust, as amended from time to time, and in accordance with the
applicable provisions contained in the Prospectus relating to such shares. The
Trust shall pay the total amount of the redemption price as defined in the
above paragraph pursuant to the instructions of the Distributor and in
accordance with the terms set forth in the Prospectus relating to the shares
being redeemed.
(b) The Trust reserves the right to reject any order for repurchase through
a securities dealer, but the right to redeem shares, or to receive payment with
respect to any such redemption, upon the presentation of properly submitted
redemption requests in accordance with the procedures set forth in the
Prospectus relating to such shares, may only be suspended in accordance with
the provisions of the Investment Company Act.
5
<PAGE>
Section 5. Duties of the Trust.
(a) The Trust shall furnish to the Distributor copies of all information,
financial statements and other documents which the Distributor may reasonably
request for use in connection with the distribution of shares of the Trust, and
this shall include one certified copy, upon request by the Distributor, of all
financial statements of each Series prepared for the Trust by independent
public accountants. The Trust shall make available to the Distributor such
number of copies of the Prospectus for each Series as the Distributor shall
reasonably request.
(b) The Trust shall take, from time to time, all necessary action to
register shares of each Series under the Securities Act to the end that there
will be available for sale such number of shares as the Distributor may
reasonably be expected to sell.
(c) The Trust shall use its best efforts to qualify and maintain the
qualification of an appropriate number of shares of each Series for sale under
the securities laws of such states as the Distributor and the trust may
approve. Any such qualification may be withheld, terminated or withdrawn by
the Trust at any time in its discretion. As provided in Section 8(c) hereof,
the expense of qualification and maintenance of qualification shall be borne by
the Trust. The Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Trust in
connection with such qualifications.
6
<PAGE>
(d) The Trust will furnish to the Distributor, in reasonable quantities
upon request by the Distributor, copies of annual and interim reports of each
Series.
Section 6. Duties of the Distributor.
(a) The Distributor shall devote reasonable time and effort to effect sales
of shares of the Trust, but shall not be obligated to sell any specific number
of shares. The services of the Distributor hereunder are not to be deemed
exclusive and nothing herein contained shall prevent the Distributor from
entering into distribution arrangements with other investment companies so long
as the performance of its obligations hereunder is not impaired thereby.
(b) In selling the shares of the Trust, the Distributor shall use its best
efforts in all respects duly to conform with the requirements of all federal and
state laws and regulations and the regulations of the National Association of
Securities Dealers, Inc. (the "NASD") relating to the sale of such securities.
Neither the Distributor nor any other person is authorized by the Trust to give
any information or to make any representations, other than those contained in
the Prospectus for each Series or any sales literature specifically approved by
the Trust for use with respect to a particular Series.
(c) The Distributor shall adopt and follow procedures, as approved by the
Trust, for the confirmation of sales to investors and selected dealers, the
collection of amounts payable by investors on such sales, and the cancellation
of unsettled
7
<PAGE>
transactions, as may be necessary to comply with the requirements of the NASD,
as such requirements may from time to time exist.
(d) The Distributor hereby agrees that no other principal underwriter,
distributor or selected dealer (except pursuant to a selected dealer agreement
between the Distributor and a selected dealer) of Cash Fund shares shall be
liable for any actions of the Distributor hereunder or for any loss, liability
or expense incurred by the Distributor hereunder.
Section 7. Selected Dealer Agreements.
(a) The Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for the
sale of shares; provided, however, that the form of selected dealer agreement
shall be approved by the Trust. Shares sold to selected dealers shall be for
resale by such dealers only in accordance with the provisions of the Prospectus
relating to such shares.
(b) Within the United States, the Distributor shall offer and sell shares
only to such selected dealers as are members in good standing of the NASD.
Section 8. Payment of Expenses.
(a) The Trust shall bear all of its costs and expenses, including fees and
disbursements of its counsel and auditors, in connection with the preparation
and filing of any required registration statements and prospectuses under the
Investment Company Act, the Securities Act, and all amendments and supplements
thereto, and the expense of preparing, printing,
8
<PAGE>
mailing and otherwise distributing prospectuses, annual or interim reports
and proxy materials to its shareholders.
(b) After the prospectuses and annual and interim reports have been
prepared, set in type and mailed to shareholders, the Distributor shall bear
the costs and expenses of printing and distributing any copies thereof which
are used in connection with the offering of the shares. The Distributor shall
bear the costs and expenses of preparing, printing and distributing any
supplementary sales literature used by the Distributor in connection with the
offering of the shares for sale. Any expenses of advertising incurred in
connection with such offering will also be the obligation of the Distributor.
(c) The Trust shall bear the cost and expenses of qualification of the
shares for sale, and, if necessary or advisable in connection therewith, of
qualifying the Trust as a broker or dealer, in such states of the United States
or other jurisdictions as shall be selected by the Trust and the Distributor,
and the cost and expenses payable to each such state for continuing
qualification therein until the Trust decides to discontinue such
qualification.
Section 9. Indemnification.
(a) The Trust shall indemnify and hold harmless the Distributor and each
person, if any, who controls the Distributor against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, claim, damage or expense and reasonable
counsel
9
<PAGE>
fees incurred in connection therewith), arising by reason of any person
acquiring any shares, which may be based upon the Securities Act, or on any
other statute or at common law, on the ground that the registration statement
or related Prospectus of any Series, as from time to time amended and
supplemented, or the annual or interim reports to shareholders of any Series,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, information furnished to the Trust in connection
therewith by or on behalf of the Distributor; provided, however, that in no
case (i) is the indemnity of the Trust in favor of the Distributor and any such
controlling persons to be deemed to protect such Distributor or any such
controlling persons thereof against any liability to the Trust or its security
holders to which the Distributor or any such controlling persons would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of reckless disregard
of its obligations and duties under this Agreement, or (ii) is the Trust to be
liable under its indemnity agreement contained in this paragraph with respect
to any claim made against the Distributor or any such controlling persons,
unless the Distributor or such controlling persons, as the case may be, shall
have notified the Trust in writing within a reasonable time after the summons
or other first legal process
10
<PAGE>
giving information of the nature of the claim shall have been served
upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of
such service on any designated agent), but failure to notify the Trust
of any such claim shall not relieve it from any liability which it may
have to the person against whom such action is brought otherwise than
on account of its indemnity agreement contained in this paragraph. The
Trust will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but if the Trust elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons,
defendant or defendants in the suit. In the event the Trust elects to
assume the defense of any such suit and retain such counsel, the
Distributor or such controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, but, in case the Trust does not
elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any
counsel retained by them. The Trust shall promptly notify the
Distributor of the commencement of any litigation or proceedings
against it or any of its officers or Trustees in connection with the
issuance or sale of any of the shares.
11
<PAGE>
(b) The Distributor shall indemnify and hold harmless the Trust and each of
its Trustees and officers and each person, if any, who controls the Trust
against any loss, liability, claim, damage, or expense described in the
foregoing indemnity contained in subsection (a) of this Section, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Trust in writing by or on behalf of the
Distributor for use in connection with the registration statement or related
Prospectus of any Series, as from time to time amended, or the annual or interim
reports to shareholders of any Series. In case any action shall be brought
against the Trust or any person so indemnified, in respect of which indemnity
may be sought against the Distributor, the Distributor shall have the rights
and duties given to the Trust, and the Trust and each person so indemnified
shall have the rights and duties given to the Distributor by the provisions of
subsection (a) of this Section 9.
Section 10. Duration and Termination of this Agreement.
This Agreement shall become effective as of the date first above written
and shall remain in force until September 30, 1990 and thereafter, but only so
long as such continuance is specifically approved at least annually by (i) the
Trustees of the Trust, or by the vote of a majority of the outstanding voting
securities of the Trust, and (ii) a majority of those Trustees who are not
parties to this Agreement or interested persons of any such party
12
cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Trust, or by the Distributor, on sixty
days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment.
Section 11. Amendments. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the Trustees of
Trust, or by the vote of a majority of outstanding voting securities of the
Trust, and (ii) by a majority of those Trustees who are not parties to this
Agreement or interested persons of any such party, which vote must be cast in
person at a meeting called for the purpose of voting on such approval.
Section 12. Definitions of Certain Terms. The terms "vote of a majority of
the outstanding voting securities", "assignment", "interested person" and
"affiliated person", when used in this Agreement, shall have the respective
meanings specified tn the Investment Company Act.
Section 13. Governing Law. The Agreement shall be construed in
accordance with the laws of the State of New York and the applicable provisions
of the Investment Company Act. To the extent that the applicable laws of the
State of New York, or any of the provisions herein, conflict with the
applicable
13
<PAGE>
provisions of the Investment Company Act, the latter shall control.
Section 14. Personal Liability. The Declaration of Trust establishing
Financial Institutions Series Trust, dated July 10, 1987, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that the
name "Financial Institutions Series Trust" refers to the Trustees under the
Declaration collectively as Trustees, but not as individuals or personally; and
no Trustee, shareholder, officer, employee or agent of Financial Institutions
Series Trust, shall be held to any personal liability, nor shall resort be had
to their private property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Financial Institutions Series
Trust, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written in New York, New York.
FINANCIAL INSTITUTIONS SERIES TRUST
By /s/ Arthur Zeikel
-----------------------------------
Arthur Zeikel
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Terry K. Glenn
-----------------------------------
Terry K. Glenn
14
EX-99.6(b)
SUMMIT CASH RESERVES FUND
Financial Institutions Series Trust
SHARES OF BENEFICIAL INTEREST
SELECTED DEALER AGREEMENT
______________, 19
Gentlemen:
Merrill Lynch Funds Distributor, Inc. (the "Distributor") has entered into
a Distribution Agreement with Financial Institutions Series Trust, a
Massachusetts business trust (the "Trust"), pursuant to which it acts as a
distributor for the sale of shares of beneficial interest, par value $.10 per
share, of the Trust. Pursuant to the Distribution Agreement, we have the right
to distribute for resale shares ("Shares") of Summit Cash Reserves Fund (the
"Money Fund"), a series of the Trust. The Trust is a diversified open-end
investment company registered under the Investment Company Act of 1940, as
amended, and the Shares being offered are registered under the Securities Act of
1933, as amended. You have received a copy of the Distribution Agreement
between ourselves and the Trust and reference is made herein to certain
provisions of such Distribution Agreement. The term "Prospectus" as used herein
refers to the prospectus on file with the Securities and Exchange Commission
which is part of the most recent effective registration statement relating to
the Shares filed pursuant to the Securities Act of 1933, as amended. As
principal, we offer to sell Shares to you, as a selected dealer, upon the
following terms and conditions:
1. In all sales of Shares to the public you shall act as dealer for your
own account, and in no transaction shall you have any authority to act as agent
for the Trust or for us.
2. Shares may be offered by you only as described in the Prospectus.
Orders received from you will be accepted through us only at the public offering
price applicable to each order, as set forth in the Prospectus. The procedure
relating to the handling of orders shall be subject to Section 4 hereof and
instructions which we or the Trust shall forward to you from time to time. All
orders are subject to acceptance or rejection by the Distributor or the Trust in
the sole discretion of either.
<PAGE>
The minimum initial and subsequent purchase requirements are as set forth in the
Prospectus, as amended from time to time.
3. You agree that you will not place orders for any Shares except in
accordance with the procedures described in the Prospectus. You agree that you
will not offer or sell any of the Shares except under circumstances that will
result in compliance with the applicable Federal and state securities laws and
that you will not furnish to any person any information relating to the Shares
which is inconsistent in any respect with the information contained in the
Prospectus (as then amended or supplemented) or cause any advertisement to be
published in any newspaper or posted in any public place without our consent and
the consent of the Trust.
4. As a selected dealer, you are hereby authorized (i) to place orders
directly with the Trust for Shares to be sold by us to you subject to the
applicable terms and conditions governing the placement of orders by us set
forth in Section 3 of the Distribution Agreement, and (ii) to tender Shares
directly to the Trust or its agent for redemption subject to the applicable
terms and conditions set forth in Section 4 of the Distribution Agreement and
the Prospectus.
5. You shall not withhold placing orders received from your customers so
as to profit yourself as a result of such withholding: e.g., by a change in the
"net asset value" from that used in determining the offering price to your
customers.
6. No person is authorized to make any representations concerning Shares
except those contained in the Prospectus and in such printed information
subsequently issued by us or the Trust as information supplemental to such
Prospectus. In purchasing shares through us you shall rely solely on the
representations contained in the Prospectus and supplemental information above
mentioned. Any printed information which we furnish you other than the Trust's
Prospectus, periodic reports and proxy solicitation material are our sole
responsibility and not the responsibility of the Trust, and you agree that the
Trust shall have no liability or responsibility to you in these respects unless
expressly assumed in connection therewith.
7. You agree to deliver to any purchasers whose Shares you are holding as
record holder copies of the Prospectus, as amended from time to time, and the
annual and interim reports and proxy solicitation materials relating to the
Trust. Additional copies of the Prospectus, annual or interim reports and proxy
solicitation materials of the Trust will be supplied to you in reasonable
quantities upon request.
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<PAGE>
8. We reserve the right in our discretion, without notice, to suspend
sales or withdraw the offering of Shares entirely. Each party hereto has the
right to cancel this agreement upon notice to the other party.
9. We shall have full authority to take such action as we may deem
advisable in respect of all matters pertaining to the offering of the Shares.
We shall be under no liability to you except for lack of good faith and for
obligations expressly assumed by us herein. Nothing contained in this paragraph
is intended to operate as, and the provisions of this paragraph shall not in any
way whatsoever constitute, a waiver by you of compliance with any provisions of
the Securities Act of 1933, as amended, or of the rules and regulations of the
Securities and Exchange Commission issued thereunder.
10. You represent that you are a member of the National Association of
Securities Dealers, Inc. and, with respect to any sales in the United States, we
both hereby agree to abide by the Rules of Fair Practice of such Association.
11. Upon application to us, we will inform you as to the states or other
jurisdictions in which we believe the Shares have been qualified for sale under,
or are exempt from the requirements of, the respective securities laws of such
states, but we assume no responsibility or obligation as to your right to sell
Shares in any jurisdiction. We will file with the Department of State in New
York a Further State Notice with respect to the Shares, if necessary.
12. We shall have full authority to act upon your express instructions to
effect transactions in Shares through us on behalf of your customers under the
terms and conditions provided in the Prospectus. You agree to hold us free and
harmless as a result of action taken with respect to authorized repurchases or
exchanges upon your express instructions.
13. All communications to us should be sent to the address below. Any
notice to you shall be duly given if mailed or telegraphed to you at the address
specified below.
14. The Declaration of Trust establishing Financial Institutions Series
Trust, dated July 10, 1987, a copy of which, together with all amendments
thereto (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, provides that the name "Financial Institutions
Series Trust" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of Financial Institutions Series Trust shall be held
to any personal liability, nor shall resort be had to their private property for
3
<PAGE>
the satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Financial Institutions Series Trust but the Trust Estate only
shall be liable.
Please indicate your acceptance of this Agreement by signing and returning
one copy to us at our address specified below.
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
By /s/ Terry K. Glenn
-------------------------------------------
(Authorized Signature)
Please return one signed copy
of this Agreement to:
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.
P. O. Box 9011
Princeton, New Jersey 08543-9011
Accepted:
Firm Name:
-----------------------------------------------------------
By:
-----------------------------------------------------------
Address:
-----------------------------------------------------------
-----------------------------------------------------------
Date:
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<PAGE>
Ex-99.8
CUSTODY AGREEMENT
Agreement made as of this 14th day of September, 1982 between FINANCIAL
INSTITUTIONS SERIES TRUST, an unincorporated business trust organized
under the laws of the State of Massachusetts, having its principal
office and place of business at 165 Broadway, New York, New York 10080
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a New York
corporation authorized to do a banking business, having its principal
office and place of business at 48 Wall Street, New York, New York 10015
(hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set
forth the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the Treasurer, the
Controller or any other person, whether or not any such person is an
Officer or employee of the Fund, duly authorized by the Board of
Trustees of the Fund to give Oral Instructions and Written Instructions
on behalf of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the
Custodian from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its
successor or successors arid its nominee or nominees.
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian which is actually received by the Custodian and
signed on behalf of the Fund by any two Officers of the Fund.
<PAGE>
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission,
its successor or successors and its nominee or, nominees, provided the
Custodian has received a certified copy of a resolution of the Fund's
Board of Trustees specifically approving deposits in DTC. The term
"Depository" shall further mean and include any other person authorized
to act as a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, specifically
identified in a certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the Custodian.
5. "ISU Money Maximizer Fund" shall mean the separate series,
offering, a separate class of shares, of the Fund bearing such name.
6. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Board of Trustees of the Fund to execute any
Certificate, instruction, notice or other instrument on behalf of the
Fund and listed in the Certificate annexed hereto as Appendix B or such
other Certificate as may be received by the Custodian from time to time.
7. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person
reasonably believed by the Custodian to be an Authorized Person.
8. "Security" shall be Money Market Securities including without
limitation, debt obligations issued or guaranteed as to principal and
interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, certificates of deposit and
bankers' acceptances, repurchase agreements with respect to the same and
bank time deposits, where the purchase and sale of such securities
normally requires settlement in federal funds on the same day as such
purchase or sale.
9. "Written Instructions" shall mean written communications
actually received by the Custodian from an Authorized Person or from a
person reasonably believed by the Custodian to be an Authorized Person
by telex or any other such system whereby the receiver of such
communications is able to verify by codes or otherwise with a reasonable
degree of certainty the authenticity of the sender of such
communication.
2
<PAGE>
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as Custodian
of all the Securities and moneys at any time owned by the Fund and specifically
allocated to ISU Money Maximizer Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such Custodian of
Securities and money owned by the Fund and specifically allocated to ISU Money
Maximizer Fund and agrees to perform the duties thereof as hereinafter set
forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. The Fund will deliver or cause to be delivered to the Custodian all.
Securities and all moneys owned by it and specifically allocated to ISU Money
Maximizer Fund, including cash received for the issuance of ISU Money Maximizer
Fund shares, at any time during the period of this Agreement. The Custodian
will not be responsible for such Securities and such moneys until actually
received by it. The Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously made and moneys are
not finally collected and to charge against the Fund's account hereunder the
amount of any electronic fund transfer transmitted by the Bank of New York
pursuant to an agreement dated , 1982 between said bank and ISU
Companies, Inc., and previously credited thereto whenever The Bank of New York
is obligated, under and within the meaning of the rules of the New York
Automated Clearing House, as amended from time, to accept an adjustment with
respect to such electronic fund transfer. The Fund shall deliver to the
Custodian a certified resolution of the Board of Trustees of the Fund approving,
authorizing and instructing the Custodian on a continuous and on-going basis to
deposit in the Book-Entry System all Securities eligible for deposit therein and
to utilize the Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales, of Securities, loans of Securities, and
deliveries and returns of Securi-
3
<PAGE>
ties collateral. Prior to a deposit of Securities of the Fund in the Depository
the Fund shall deliver to the Custodian a certified resolution of the Board of
Trustees of the Fund approving, authorizing and instructing the Custodian on a
continuous and on-going basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Depository all Securities
eligible for deposit therein and to utilize the Depository to the extent
possible in connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities collateral.
Securities and moneys of the Fund deposited in either the Book-Entry System or
the Depository will be represented in accounts which include only assets held by
the Custodian for customers, including, but not limited to, accounts in which
the Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name of the
Fund all moneys received by it for the account of the Fund, and shall disburse
the same only:
(a) In payment for Securities purchased, as provided in Article IV
hereof;
(b) In payment of dividends or distributions as provided in Article
V hereof;
(c) In payment of original issue or other taxes, as provided in
Article VI hereof;
(d) In payment for capital stock of the Fund redeemed by it, as
provided in Article VI hereof;
(e) Pursuant to Certificates setting forth the name and address
of the person to whom the payment is to be made, and the purpose for which
payment is to be made; or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article IX hereof.
3. Promptly after the close of business on each day the Custodian shall
furnish the Fund with confirmations and a summary of all transfers to or from
the account of the Fund hereunder during said day. Where Securities are trans-
ferred to the account of the Fund hereunder, the Custodian shall also by
book-entry or otherwise identify as belonging to the Fund a quantity of
Securities in a fungible bulk of
4
<PAGE>
Securities registered in the name of the Custodian (or its nominee) or shown on
the Custodian's account on the books of the Book-Entry System or the
Depository. At least monthly and from time to time, the Custodian shall furnish
the Fund with a detailed statement of the Securities and moneys held for the
Fund hereunder.
4. All Securities held for the Fund hereunder, which are issued or
issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that form: all other
Securities held for the Fund hereunder may be registered in the name of the
Fund, in the name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor or successors, or their nominee or
nominees. The Fund agrees to furnish to the Custodian appropriate instruments
to enable the Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of the Book-Entry
System or the Depository any Securities which it may hold hereunder for the
account of the Fund and which may from time to time be registered in the name of
the Fund. The Custodian shall hold all such Securities which are not held in the
Book-Entry System or in the Depository in a separate account in the name of the
Fund physically segregated at all times from those of any other person or
persons.
5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with respect to
all Securities held for the Fund hereunder:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon all
Securities which may mature or be called redeemed, or retired, or otherwise
become payable;
(c) Surrender Securities in temporary form for definitive Securities;
(d) Execute, as custodian, any necessary declara- tions or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein
5
<PAGE>
deposited, for the account of the Fund all rights and similar securities issued
with respect to any Securities held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons as may be designated in
such Certificate proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any Securities held hereunder may
be exercised;
(b) Deliver any Securities held for the Fund hereunder in exchange
for other Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund hereunder to any
protective committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold hereunder such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of the Fund held
hereunder and take such other steps as shall be stated in said order to be for
the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund to be held
hereunder, the Fund shall deliver to the Custodian, a Certificate, Oral
Instruction, or Written Instructions, specifying Title respect to each such
purchase: (a) the name of the issuer and the title of the Securities, (b) the
number of shares or the principal amount purchased
6
<PAGE>
and accrued interest, if any, (c) the date of purchase and settlement, (d) the
purchase price per unit, (e) the total amount payable upon such purchase, and
(f) the name of the person from whom, or the broker through whom the purchase
was made. The Custodian shall upon receipt of Securities purchased by or for
the Fund pay out of the moneys held for the account of the Fund hereunder the
total amount payable to the person from whom or the broker through whom the
purchase was made, provided that the same conforms to the total amount payable
as set forth in such Certificate, Oral Instructions, or Written Instructions.
2. Promptly after each sale of Securities by the Fund held hereunder, the
Fund shall deliver to the Custodian, a Certificate, Oral Instructions, or
Written Instructions, specifying with respect to each such sale: (a) the name of
the issuer and the title of the Security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Fund upon such sale, and (f)
the name of the broker through whom or the person to whom the sale was made.
The Custodian shall deliver the Securities upon receipt of the total amount
payable to the Fund upon such sale, provided that the same conforms to the total
amount payable as set forth in such Certificate, Oral Instructions, or Written
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
ARTICLE V
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees, certified by the Secretary or any Assistant Secretary,
either (i) setting forth with respect to Shares of ISU Money Maximizer Fund the
date of the declaration of a dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined the amount payable per share to the shareholders of record as of that
date and the total amount payable to the Dividend Agent of the Fund on the
payment date, or (ii) authorizing with respect to shares of ISU Money Maximizer
Fund the declaration of dividends and distributions on a daily basis and
7
<PAGE>
authorizing the Custodian to rely on a Certificate, Oral Instructions or Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the total amount payable
to the Dividend Agent on the payment date.
2. Upon the payment, date specified in such resolution, Certificate,
Oral Instructions, or Written Instructions, as the case may be, the Custodian
shall pay out of the moneys held for the account of the Fund hereunder the total
amount payable to the Dividend Agent of the Fund.
ARTICLE VI
SALE AND REDEMPTION OF SHARES OF CAPITAL STOCK OF THE FUND
1. Whenever the Fund shall sell any shares of ISU Money Maximizer
Fund, it shall deliver to the Custodian a Certificate duly specifying:
(a) The number of shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the
sale of such shares.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the account of tile Fund.
3. Upon issuance of any shares of ISU money Maximizer Fund in
accordance with the foregoing provisions of this Article, the Custodian shall
pay, out of the money held for the account of the Fund, all original issue or
other taxes required to be paid by the Fund in connection with such issuance
upon the receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall hereafter
redeem any shares of ISU Money Maximizer Fund, it shall furnish to the Custodian
a Certificate specifying:
(a) The number of shares to be redeemed; and
8
<PAGE>
(b) The amount to be paid for the shares to be redeemed.
5. Upon receipt from the Transfer Agent of an advice setting forth the
number of shares of ISU Money Maximizer Fund, received by the Transfer Agent for
redemption and that such shares are in good form for redemption, the Custodian
shall pay the Transfer Agent, out of the moneys held for the account of the
Fund, the total amount specified in the Certificate issued pursuant to the
foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
shares of ISU Money Maximizer Fund, whenever shares of ISU Money Maximizer Fund
are redeemed pursuant to any check redemption privilege which may from time to
time be offered by the Fund, the Custodian, unless otherwise instructed by a
Certificate, shall, upon receipt of an advice from the Fund or its agent setting
forth that the redemption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part of such check
redemption privilege out of the money held in the account of the Fund hereunder
for such purposes.
ARTICLE VII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of the Fund which results in an overdraft because the moneys held by the
Custodian for the account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft because moneys held by the Custodian for the account of the Fund shall
be insufficient to pay an amount payable pursuant to an adjustment referred to
in paragraph 1 of Article III hereof, or which results in an overdraft for some
other reason, or if the Fund is for any other reason indebted to the Custodian
(except a borrowing for investment or for temporary or emergency purposes using
Securities as collateral pursuant to a separate agreement and subject to the
provisions of paragraph 2 of this Article VII), such overdraft or indebtedness
shall be deemed to be a loan made by the Custodian to the Fund payable on demand
and shall bear interest from the
9
<PAGE>
date incurred at a rate per annum (based on a 360-day year for the actual number
of days involved) equal to 1/2% over Custodian's prime commercial lending rate
in effect from time to time, such rate to be adjusted on the effective date of
any change in such prime commercial lending rate but in no event to be less than
6% per annum. In addition, the Fund hereby agrees that the Custodian shall have
a continuing lien and security interest in and to any property at any time held
by it for the benefit of the Fund or in which the Fund may have an interest
which is then in the Custodian's possession or control or in possession or
control of any third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, and any time to charge any
such overdraft or indebtedness together with interest due thereon against any
balance of account standing to the Fund's credits hereunder on the Custodian's
books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using, Securities held hereunder as collateral for such borrowings, a
notice or undertaking in the form, currently employed by any such bank setting
forth the amount which such bank will loan to the Fund against delivery of a
stated amount of collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a) the name of the
bank, (b) the amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement, (c) the time and date, if known, on which the
loan is to be entered into, (d) the date on which the loan becomes due and
payable, (e) the total amount payable to the Fund on the borrowing date, (f) the
market value of Securities held hereunder to be delivered as collateral for such
loan, including the name of the issuer, the title and the number of shares or
the principal amount of any particular Securities, and (g) a statement
specifying whether such loan is for investment purposes or for temporary or
emergency purposes and that such loan is in conformance with the Investment
Company Act of 1940 and the Fund's prospectus. The Custodian shall deliver on
the borrowing date specified in a Certificate the specified collateral and the
executed promissory note, if any, against, delivery by the lending bank of the
total amount of the loan, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at the option of
the lending bank, keep such collateral in its possession, but such collateral
shall be subject to all
10
<PAGE>
rights therein given the lending batik by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this Paragraph. The Fund shall cause all Securities released from
collateral status in connection with a loan described in this paragraph to be
returned directly to the Custodian, and the Custodian shall receive from time to
time such return of collateral as may be tendered to it. In the event that the
Fund fails to specify in a Certificate the name of the issuer, the title and
number of shares or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, the Custodian shall not be under any
obligation to deliver any Securities.
ARTICLE VIII
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its Declaration of Trust
and as disclosed in its most recent and currently effective prospectus to lend
portfolio Securities held hereunder, within 24 hours after each such loan of
portfolio Securities the Fund shall deliver or cause to be delivered to the
Custodian a Certificate specifying with respect to each such loan: (a) the name
of the issuer and the title of the Securities, (b) the number of shares or the
principal amount loaned, (c) the date of loan and delivery, (d) the total amount
to be delivered to the Custodian against the loan of the Securities, including
the amount. of collateral in cash or securities and the premium, if any,
separately identified, and (e) the name of the broker, dealer, or financial
institution to which the loan was made. The Custodian shall deliver such
Securities to be loaned to the broker, dealer or financial institution to which
the loan was made upon receipt of the total amount designated as to be delivered
against the loan of Securities. The Custodian may accept payment in connection
with a delivery otherwise than through the Book-Entry System or Depository only
in the form of a certified or bank cashier's check payable to the order, of the
Fund or the Custodian drawn on New York Clearing House funds and may deliver
Securities in accordance with the customs prevailing among dealers in
securities.
11
<PAGE>
2. Promptly after each terminator of a loan of Securities by the Fund
described in preceding paragraph 1 of this Article VIII, the Fund shall deliver
or cause to be delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of securities: (a) the name of the
issuer and the title of the Securities to be returned, (b) the number of shares
or the principal amount to be returned, (c) the date of termination, (d) the
total amount of collateral in cash or securities to be delivered by the
Custodian (including the cash collateral for such Securities minus any
offsetting credits as described in said Certificate), and (e) the name of the
broker, dealer, or financial institution from which the Securities will be
returned. The Custodian shall receive all Securities returned from the broker,
dealer, or financial institution to which such Securities were loaned and upon
receipt thereof shall pay, out of the moneys held for the account of the Fund
hereunder the total amount payable upon such return of Securities as set forth
in the Certificate.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its
nominee shall be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, except for any such
loss or damage arising out of its own negligence or willful misconduct. The
Custodian may, with respect to questions of law, apply for and obtain the advice
and opinion of counsel to the Fund or of its own counsel, at the expense of the
Fund, and shall be fully protected with respect to anything done or omitted by
it in good faith in conformity with such advice or opinion. The Custodian shall
be liable to the Fund for any loss or damage resulting from the use of the
Book-Entry System or, any Depository arising by reason of any negligence,
misfeasance or willful misconduct on the part of the Custodian or any of its
employees or agents.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by or
for the Fund, the legality of the purchase thereof, or the propriety of the
amount paid therefor;
12
<PAGE>
(b) The legality of the Bale of any Securities by or for the Fund,
or the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale of any shares of the Fund,
or the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of the Fund, or
the propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend by
the Fund;
(f) The legality of any borrowing by the Fund using Securities as
collateral; or
(g) The legality of any loan of portfolio Securities pursuant to
Article VIII of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by a broker,
dealer, or financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for the Fund
against any, loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such cash
collateral held by it for the Fund is sufficient collateral for the Fund, but
such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article VIII of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during period of such loan or at the termination of such loan provided, however,
that the Custodian shall promptly notify the Fund in the event that such
dividends or interest are not paid arid received when due.
3. The Custodian shall not be liable for, or consid- ered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
13
<PAGE>
4. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
6. The Custodian may appoint one or more banking, institutions as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including,
but not limited to, banking institutions located in foreign countries, of
Securities and moneys at any time owned by the Fund, upon terms is and
conditions approved in a Certificate.
7. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
the Fund are such as properly may be held by the Fund under the provisions of
its Articles of Incorporation.
8. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from, time to time between the Custodian and the Fund. The
Custodian may charge such compensation and any expenses incurred by the
Custodian in the performance of its duties pursuant to such agreement against
any money held by it for the account of the Fund. The Custodian shall also be
entitled to charge against any money held by it for the account of the Fund the
amount of any loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement. The expenses which the Custodian may charge against the account of
the Fund held hereunder include, but are not limited to, the expenses of
Sub-Custodians arid foreign branches of the Custodian incurred in settling
14
<PAGE>
outside of New York, City transactions involving the purchase and sale of
Securities of the Fund.
9. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Articles IV or V hereof. The Fund agrees to forward to
the Custodian a Certificate or facsimile thereof confirming such Oral
Instructions or Written Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by hand delivery,
telecopier or other similar device, or otherwise, by the close of business of
the same day that such Oral Instructions or Writing Instructions are given to
the Custodian. The Fund agrees that the fact that such confirming Certificate
or facsimile thereof is not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions or Written Instructions
given to the Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from an Authorized Person.
10. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative at the Fund's expense.
11. The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System
or the Depository and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
12. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising, or incurred because of or in
connection
15
<PAGE>
with the Custodian's payment or non-payment of checks pursuant to paragraph 6
of Article VI as part of any check redemption privilege program of the Fund,
except for any such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct.
13. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be accompanied
by a copy of a resolution of the Board of Directors of the Fund, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event such notice is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of its Board of Trustees, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian shall upon receipt
of a notice of acceptance by the successor custodian on that date deliver
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice
16
<PAGE>
of termination of this Agreement and upon the delivery by the Custodian of all
Securities (other than Securities held in the Book-Entry System which cannot be
delivered to the Fund) and moneys then owned by the Fund and held by the
Custodian hereunder be deemed to be its own custodian and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book Entry
System which cannot be delivered to the Fund to hold such Securities hereunder
in accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund, setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Custodian a new
Certificate in similar form in the event that any such present Authorized Person
ceases to be an Authorized Person or in the event that other or additional
Authorized Persons are elected or appointed. Until such new Certificate shall
be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of the present
Authorized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund, setting forth the names and the signatures of the
present Officers of the Fund. The Fund agrees to furnish to the Custodian a new
Certificate in similar form in the event any such present Officer ceases to be
an Officer of the Fund, or in the event that other or additional Officers are
elected or appointed. Until such new Certificate shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon the signatures of the Officers as set forth in the last delivered
Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such
17
<PAGE>
other place as the Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at 165 Broadway, New
York, New York 10080 or at such other place as the Fund may from time to time
designate in writing.
5. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Trustees of the Fund.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of its Board of Trustees.
7. This Agreement shall be construed in accordance with the laws of
the State of New York.
8. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
9. No shareholder, Trustee, officer, employee or agent of the Fund
shall be subject to any liability whichsoever to the Custodian in connection
with the Fund's property or the acts, obligations or affairs of the Fund and the
Custodian shall look solely to the Fund's property for satisfaction of claims of
any nature arising in connection with the affairs of the Trust.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto leave caused talks Agreements to be
executed their respective Officers, thereunto duly authorized, as of the day and
year first above written.
FINANCIAL INSTITUTIONS SERIES
TRUST
By: /s/ Herbert Hirsche Jr.
--------------------------
Herbert Hirsche Jr.
Attest: /s/ Philip L. Kirstein
----------------------
Philip L. Kirstein
THE BANK OF NEW YORK
By: /s/
---------------------------
Attest: /s/
----------------------
19
<PAGE>
APPENDIX A
I, and I, Secretary of FINANCIAL
INSTITUTIONS SERIES TRUST, an unincorporated business trust organized under
the laws of the State of Massachusetts (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust and
By-Laws to give Oral Instructions and Written Instructions on behalf of the
Fund, and the signatures set forth opposite their respective names are their
true and correct signatures:
Name Signature
- ------------------------------------- ------------------------------------
<PAGE>
APPENDIX B
I, and I, Secretary of FINANCIAL
INSTITUTIONS SERIES TRUST, an unincorporated business trust organized under the
laws of the State of Massachusetts (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust and
By-Laws to give Oral Instructions and Written Instructions on behalf of the
Fund, and the signatures set forth opposite their respective names are their
true and correct signatures:
Name Signature
- ------------------------------------- ------------------------------------
<PAGE>
Ex-99.9
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 30th day of September, 1988 between FINANCIAL
INSTITUTIONS SERIES TRUST, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at Plainsboro, New Jersey (hereinafter
referred to as the "Trust"), and Merrill Lynch Financial Data Services, Inc., a
corporation organized and existing under the laws of the State of New Jersey,
having its principal office and place of business at Somerset, New Jersey
(hereinafter referred to as the "Transfer Agent").
W I T N E S S E T H
that for and in consideration of the mutual promises hereinafter set forth, the
parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
<PAGE>
1. "Authorized Officer" shall be deemed to be the
Chairman, President, any Vice President, the Secretary, and the
Treasurer of the Trust, or any other person duly authorized by the
Board of Trustees of the Trust to execute any certificate,
instruction, notice or other instrument on behalf of the Trust.
2. "Certificate" shall mean any notice, instruction or
other instrument in writing authorized or required by this
Agreement to be given to the Transfer Agent, which is actually
received by the Transfer Agent and signed on behalf of the Trust
by any two Authorized Officers.
3. "Custodian" shall mean the custodian of all of the
securities and all monies owned by the Summit Cash Reserves Fund
portfolio of the Trust.
4. "Shares" shall mean all or any part of the shares of
beneficial interest of the Summit Cash Reserves Fund portfolio of
the Trust which are authorized and issued by the Trust.
5. "Written Instructions" shall mean written
communications by telex or any other such system whereby the
receiver of such communications is able to verify by codes or
otherwise with a reasonable degree of certainty the authenticity
of the sender of such communication.
2
<PAGE>
ARTICLE II
APPOINTMENT OF TRANSFER AGENT
1. The Trust hereby constitutes and appoints the Transfer Agent as
transfer agent for all of the separate class of shares of beneficial interest of
the Trust constituting the separate series of the Trust known as the Summit Cash
Reserves Fund issued by the Trust during the period of this Agreement as the
same shall from time to time be constituted (such shares to be hereinafter
referred to as "Shares" as provided in Paragraph 4 of Article I of this
Agreement).
2. The Transfer Agent hereby accepts appointment as transfer agent and
agrees to perform the duties thereof as hereinafter set forth.
3. In connection with such appointment, the Trust shall deliver or in
the case of item (e), make available upon request, the following documents to
the Transfer Agent:
(a) A certified copy of the Declaration of Trust
or other document evidencing the Trust's form of organization
(such document hereinafter being referred to as the "Charter") and
all amendments thereto;
(b) A certified copy of the By-Laws of the Trust;
(c) a certified copy of a resolution of the Board
of Trustees of the Trust appointing the Transfer Agent and
appointing an Authorized officer of the Trust to execute this
Transfer Agency Agreement;
3
<PAGE>
(d) A certificate signed by the Secretary of the
Trust specifying the number of authorized Shares of the Trust and
the number of such authorized Shares issued and currently
outstanding, the names and specimen signatures of the officers of
the Trust and the name and address of the legal counsel for the
Trust;
(e) Copies of the Registration Statements, as
amended to date, filed by the Trust with the Securities and
Exchange Commission under the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, together with
any applications filed in connection therewith;
(f) A certified copy of the order or consent of
each governmental or regulatory authority, required by law for the
issuance of the Shares of the Trust, and an opinion of legal
counsel for the Trust that the order or consent of no other
governmental or regulatory authority is required;
(g) opinion of counsel for the Trust with respect
to the validity of the authorized and outstanding Shares of the
Trust and the status of such Shares under the Securities Act of
1933, as amended, and any other applicable federal or state law or
regulation (i.e., if subject to registration, that they have been
registered and that the Registration Statement has become
effective or, if exempt, the specific grounds therefor); and
(h) A signature card bearing the signatures of the
Authorized officers of the Trust who will be the only persons
authorized to sign Written Instructions and requests.
4
<PAGE>
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. The Trust is authorized to issue an unlimited number of Shares, and
shall deliver to the Transfer Agent the following documents on or before the
effective date of any decrease in the total number of Shares of the Trust
authorized to be issued:
(a) A certified copy of the amendment to the
Charter giving effect to such decrease;
(b) A certified copy of the order or consent of
each governmental or regulatory authority, required by law for the
decrease in the number of Shares authorized to be issued, and an
opinion of counsel for the Trust that the order or consent of no
other governmental or regulatory authority is required; and
5
<PAGE>
(c) An opinion of counsel for the Trust with
respect to the validity of the Shares the Trust and the status
Of such Shares under the Securities Act of 1933, as amended,
and any other applicable federal or state law or regulation
(i.e., if subject to registration, that they have been
registered and that the Registration Statement has become
effective or, if exempt, the specific grounds therefor).
as amended, and any other applicable federal or state law
or regulation (i.e., if subject to registration, that they
have been registered and that the Registration Statement has
become effective or, if exempt, the specific grounds therefor).
ARTICLE IV
ISSUE, REDEMPTION, AND TRANSFER OF SHARES
OF BENEFICIAL INTEREST OF THE TRUST
1. A written order for the purchase of Shares actually received by the
Transfer Agent through the mail shall be accepted by the Transfer Agent if such
order:
(a) Consists of a Share purchase application
designed by the Trust which is completed and signed by the
purchaser or his authorized agent, or, in the case of an order
for the account of an existing Shareholder, consists of either
the detachable stub from a Statement of an Account previously
sent to such Shareholder pursuant to paragraph 9 of this Article
IV, or a signed writing indicating the name, address, and social
security number of each person in whose name the Shares are to
be registered and the account number; and
6
<PAGE>
(b) Is accompanied by a check drawn in US. dollars on
a US. bank and payable to the order of Merrill Lynch Funds
Distributor, Inc. ("Distributor"), or such other entity as may be
approved in a Certificate, for an amount which satisfies the
minimum purchase requirements set forth in paragraph 5 of this
Article IV.
2. A bank wire order actually received by the Transfer Agent for the
purchase of full and fractional Shares (bank wire purchase order") shall be
accepted by the Transfer Agent and the wired funds delivered to the Custodian if
such bank wire purchase order:
(a) is for an amount which satisfies the minimum
purchase requirements set forth in paragraph 4 of this Article IV;
(b) Includes the name of the Trust;
(c) Specifies (i) in the case of a bank wire
purchase order for the account of an existing Shareholder, the
name of the Shareholder and the Shareholder's account number, or
(ii) in the case of a bank wire purchase order for a person not an
existing Shareholder the name, address, and social security number
of each person in whose name the Shares are to be registered.
3. An order for the purchase of Shares actually received by the
Transfer Agent form the Distributor shall be accepted by the Transfer Agent if
such order:
7
<PAGE>
(a) Is for an appropriate amount within the
meaning of paragraph 4 of this Article IV; and
(b) Specifies (i) in the case of an order for the
account of an existing Shareholder, such Shareholder's account
number, or (ii) in the case of an order for a person not an
existing Shareholder, the name, address, and social security
number of each person in whose name the Shares are to be
registered.
4. The Transfer Agent shall not accept any order for the purchase of
Shares unless such order satisfies the following minimum purchases requirements.
(a) The minimum purchase in the case of an initial
purchase order the account of a person not a Shareholder at
the time of such order is $5,000.00.
(b) The minimum purchase in the case of a purchase
order for the account of a Shareholder at the time of such order
is $1,000.00.
(c) The minimum purchase of the case of an initial
purchase order which states the such order is for a Keogh,
Pension, Profit-Sharing or Individual Retirement Account is
$250.00 per plan. There shall be no minimum applicable with
respect to subsequent purchase orders in connection with such
plans.
8
<PAGE>
(d) The minimum purchase in the case of an initial
purchase order which states that such order is for an account
advised by a bank or an investment advisor registered under the
Investment Adviser Act of 1940, including the Investment Adviser
of the Trust, is $300.00.
(e) The minimum purchase in the case of a purchase
order which states that such order is for an existing account
advised by a bank or an investment adviser registered under the
Investment Advisers Act of 1940 is $100.00.
(f) There shall be no minimum purchase requirement
with respect to a purchase order for the account of an existing
Shareholder who has been advised by the Trust that the value of
his account is less than $1,000.00 and that the Shares in his
account may be redeemed unless additional Shares are purchased.
5. The Transfer Agent shall have no duty or obligation to accept any
purchase order not satisfying all the requirements of any one of the first three
paragraphs of this Article IV and shall be free to reject any such order without
the giving of any notice.
9
<PAGE>
6. Upon the Transfer Agent's acceptance of an order for the purchase of
Shares, the Transfer Agent shall furnish the Custodian with an advice specifying
(a) the number of Shares sold, trade date and price, and (b) the amount of money
to be received by the Custodian for the sale of such Shares.
7. A purchase order accepted pursuant to this Article by the Transfer
Agent shall become effective on the day Federal Funds are made available to the
Custodian with respect to such order, provided, however, that in the event
Federal-Funds are received with respect to a purchase order after the close of
trading on the New York Stock Exchange, Inc. such order, shall become effective
on the next business day.
8. The Transfer Agent shall, when so instructed by a Shareholder on
forms prescribed by the Trust and acceptable to the Transfer Agent draw a
pre-authorized check of $.50 or more on the Shareholder's regular bank account
on the specific date in each month or quarter, as specified in such form, to be
applied to the purchase of full and fractional Shares to be held in the
Shareholder's account by the Transfer Agent and shall process such check for
collection. The Transfer Agent shall at all times have the absolute right,
without the prior consent of the Trust, to amend or cancel this service for any
Shareholder, and shall do so whenever directed in a writing signed by the
Shareholder that is actually received by the Transfer Agent. The Transfer Agent
shall automatically cancel this service to any Shareholder whenever any
pre-authorized check is returned as being uncollected.
10
<PAGE>
9. (a) On the business day next Succeeding the day on which (i) a
purchase order becomes effective or (ii) Federal Funds with respect to a
pre-authorized check drawn by the Transfer Agent have been received, the
Transfer Agent shall, unless it would result in an over-issue of Shares. as
defined in Section 8-104(2) of the Uniform Commercial Code, issue the
appropriate number of full and fractional Shares based on the net asset value
per Share as next determined after the purchase order became effective or
Federal Funds with respect to the pre-authorized check were made available to
the Custodian, as the case may be, and hold such Shares in the account for which
the purchase order was accepted or the pre-authorized check drawn; provided,
however, that the Transfer Agent shall not be required to issue any Shares after
it has received from an Authorized Officer of the Trust or from any appropriate
Federal or State authority written notification that the sale of the shares has
been suspended or discontinued, and the Transfer Agent shall be entitled to rely
upon such written notification.
11
<PAGE>
Promptly after the issuance of such Shares, the Transfer Agent shall send to the
Purchaser or his authorized agent at the address appearing on the books of the
Transfer Agent a Statement of Account indicating that amount of full and
fractional Shares purchased (in the case of fractional Shares, rounded to three
decimal places), the price per Share, and the balance in the account as of the
date of such Statement of Account. In no event shall the Transfer Agent be
required to issue any certificate for any Shares.
(b) Notwithstanding paragraph 14 of this Article
IV, on the last Friday of each month the Transfer Agent
shall upon receipt of (i) an advice from an Authorized Officer
of the Trust specifying the per Share dividend for each day
during such month and (ii) an advice from the Custodian that
the aggregate amount of such per Share dividends has been
received by it, unless it would result in an over-issue as
defined in Section 8-104(2) of the Uniform Commercial Code,
issue to each Shareholder the appropriate amount of full and
fractional Shares, based on the net asset value per Share
determined as of the close of trading on the New York Stock
Exchange, Inc. on such day. Shares so issued shall be credited
to the account which holds the Shares on which the dividends
were paid. Notwithstanding the foregoing, the Transfer Agent
12
<PAGE>
shall not be required to issue any Shares after it has received
from an Authorized Officer of the Trust or from any appropriate
Federal or State authority written notifications that the sale of
the Shares has been suspended or discontinued and the Transfer
Agent shall be entitled to rely upon such written notification.
10. A written redemption request actually received by the Transfer Agent
for the redemption of Shares shall be accepted by the Transfer Agent if:
(a) Such redemption request specifies either
(i) the number of full and fractional Shares to be redeemed,
or (ii) the dollar value, based on the net asset value next
determined after the Transfer Agent's acceptance of such.
request, of Shares to be redeemed;
(b) Such redemption request is signed by all
of the registered owners of the shares; and
(c) Either (i) all the signatures contained
in the redemption request are subject to a signature guarantee
of a national bank or other bank which is a member of the
Federal Reserve System or a firm of any national or regional
stock exchange acceptable to the Transfer Agent and the Trust
given not more than 30 days prior to the Transfer Agent's actual
receipt of the redemption request or (ii) if the redemption
proceeds are in excess of $1000, the request specifies a
13
<PAGE>
domestic bank account, previously designated in a signed writing
with appropriate signature guarantees received from the
Shareholder named in the written request, to which the redemption
proceeds are to be wired.
11. A telephone, telegraph, or telex (or other similar device)
redemption request actually received by the Transfer Agent shall be accepted by
the Transfer Agent if:
(a) Such redemption requests specifies either (i)
a number of full and fractional Shares having a value equal to or
in excess of $1,000 based on the net asset value next determined
after the Transfer Agent's acceptance of such request, or (ii) a
dollar value of Shares to be redeemed in excess of $1,000 based on
the net asset value next determined after the Transfer Agent's
acceptance of such request, and
(b) Such redemption request specifies the full
name of the Shareholder, the number of the account which the
Shares are held by the Transfer Agent and, in the case of a
telegraph, or telex (or other similar device) redemption request,
the name of the Trust; and
(c) The Transfer Agent has previously received a
signed writing from the Shareholder named in the telephone,
telegraph, or telex or other similar device redemption request
with each signature thereon guaranteed by a national bank or
14
<PAGE>
other bank which is a member of the Federal Reserve System or a
member firm of any national or regional stock exchange acceptable
to the Transfer Agent and the Trust, electing to utilize such
redemption procedures and designating the domestic bank account
specified in the redemption request.
12. A redemption request actually received by the Transfer Agent from
Distributor shall be accepted if such request specifies (a) the number of full
and fractional Shares to be redeemed; and (b) the full name of the Shareholder
and the number of the account in which the Shares are held by the Transfer
Agent.
13. The Transfer Agent shall, when instructed by a Shareholder on a form
prescribed by the Trust and acceptable to the Transfer Agent, redeem on the 24th
day of each calendar month or calendar quarter, as the case may be, or if such
day is not a business day on the next succeeding day which is a business day, a
sufficient number of shares in the Shareholder's account to generate the amount
of redemption proceeds the Shareholder elects from time to time to receive;
provided, however, that a direction from a Shareholder to redeem Shares shall be
acted upon by the Transfer Agent only if such Shareholder has previously
purchased Shares having a value, based on cost of the public offering price on
the day on which a redemption is to be made, of at least $5,000, in the case of
quarterly redemptions, and at least $10,000, in the case of monthly redemptions.
15
<PAGE>
Such redemptions shall be made at the net asset value per Share applicable to
such last Friday of such month or quarter, as the case may be.
14. The Transfer Agent shall, when instructed by Shareholder on a form
prescribed by the Trust and acceptable to the Transfer Agent, redeem on the last
Friday of each calendar month the number of Shares purchased-for such
Shareholder by the reinvestment of dividends and distributions paid during such
month, provided, however, that the Transfer Agent shall not act upon any such
direction received from a Shareholder who has directed the Transfer Agent to act
pursuant to paragraph 13 of this Article IV unless such direction has previously
been withdrawn. Redemptions pursuant to this paragraph shall be at the net
asset value per Share, including accrued dividends, determined as of the close
of the trading on the New York Stock Exchange, Inc. on the last Friday of such
month.
15. A redemption request actually received by the Transfer Agent to
redeem Shares held in the account of a Share- holder for at least 60 days and
pay the proceeds of such redemp- tion to the Transfer Agent for any of the
investment companies in the most recent and currently effective prospectus for
the Trust shall be accepted by the Transfer Agent if such request:
16
<PAGE>
(a) Specifies the Shareholder account number
from which the Shares are to be redeemed;
(b) Specifies either (i) a number of full and
fractional Shares to be redeemed or (ii) a dollar value, based
on the net asset value next determined after the Transfer
Agent's acceptance of such request, of Shares to be redeemed;
(c) Specifies the name of the above investment
company to whose Transfer Agent the proceeds of redemption
are to be sent; and
(d) Consists of either (i) a writing signed
by each registered owner of the Shares to be redeemed with
each signatures guaranteed by a national bank or a member
firm of any regional stock exchange acceptable to the Transfer
Agent and the Trust or (ii) a wire received from Distributor.
16. The Transfer Agent shall accept a Certificate directing the
redemption of Shares ("a redemption direction"), provided such Certificate:
(a) Specifies the number of the account in
which is held the Shares to be redeemed;
(b) Specifies either (i) the number of full
and fractional Shares to be redeemed or (ii) directs that
all the Shares in such account are to be redeemed; and
17
<PAGE>
(c) States that such redemption either (i) is
necessary in order for the Trust not to be deemed a personal
holding company within the meaning of the Internal Revenue Code of
1954, as amended, or (ii) is a proper exercise of the Trust's
right to redeem Shares in an account when the value of the Shares
in such account is below a minimum amount established by the Trust
and has remained below such amount after appropriate notice was
given to the owner of such account by the Trust.
17. The Transfer Agent shall accept checks drawn on the Trust's account
("redemption checks") and effect a redemption of full and fractional Shares
having a value equal to the amount of such check provided:
(a) Such check contains the Shareholder account
number of the signer(s) of such check;
(b) Such check is signed by each registered owner
of Shares in such account;
(c) Each drawer has previously elected in writing
to use the check redemption privilege and has supplied the
Transfer Agent with a signature card and any other documents
required by the Transfer Agent;
(d) Acceptance of such check would not conflict
with the rules, regulations and procedures of the account of the
Trust.
18
<PAGE>
(e) Such check is for an amount of at least
$500.00; and
(f) The Shares in the account have a value
based on the net asset value next determined after presentment
of such check at least equal to the amount of such check.
18. A redemption request, a redemption direction, and a redemption check
accepted prior to the close of trading on the New York Stock Exchange, Inc.
shall become effective on the day of acceptance. A redemption pursuant to
paragraph 13 of this Article IV shall become effective on the 24th day of the
calendar month, or if such day is not a business day on the next succeeding day
which is a business day, and a redemption pursuant to paragraph 14 of this
Article IV shall become effective on the last Friday of the calendar month,
calendar year or calendar quarter, as the case may be, and a redemption request,
a redemption direction, and a redemption check accepted after the close-of
trading on the New York Stock Exchange, Inc. shall become effective on the next
succeeding business day. All redemptions of Shares shall be at the net asset
value, including accrued dividends, next determined after the redemption,
redemption request, redemption direction, or redemption check became effective.
19. The Transfer Agent shall have no duty or obligation to accept any
redemption request, redemption check, redemption direction or to effect any
redemption except as hereinbefore provided.
19
<PAGE>
20. Upon the effectiveness of a redemption request, redemption check,
redemption direction or redemption pursuant to paragraphs 10, 11, 12, 13, 14,
15, 16 or 17 of this Article, the Transfer Agent shall deliver to the Custodian
an advice setting forth the number of Shares redeemed and the amount to be paid
for such Shares, and stating that such Shares are valid and in good form for
redemption. After the Transfer Agent has received moneys paid to it by the
Custodian for the redemption of Shares the Transfer Agent shall (i) in the case
of a check redemption, deposit such moneys in the account of the Trust on which
the redemption check was drawn; (ii) in the case of a redemption that specifies
a previously designated domestic bank account, wire Federal Funds to such
account on the business day next succeeding the business day on which the
redemption request became effective, (iii) in the case of a redemption request
from the Distributor, make payment to the Distributor on the business day next
succeeding the business day on which the redemption request became effective;
(iv) in the case of an exchange privilege described in paragraph 15 of this
Article pay the proceeds of such redemption to the designated transfer agent for
such investment company on the business day next succeeding the business day on
which such redemption became effective; and (v) in all other- cases mail the
redemption proceeds in the form of a check, payable to the order of the
registered owner(s) of the
20
<PAGE>
Shares, to the address as it appears on the books Of the Transfer Agent on the
business day next succeeding the business day on which the redemption request or
redemption direction became effective, provided, however, that in the event
Shares being redeemed were purchased within 30 calendar days of the date of the
effectiveness of the redemption request, redemption check, or redemption
direction, the Transfer Agent may delay acting in accordance with this paragraph
until the second succeeding business day after the redemption request,
redemption check, or redemption direction became effective.
21. All Shares redeemed pursuant to this Article shall be canceled by
the Transfer Agent.
22. The Transfer Agent shall effect a transfer of Shares by the
registered owner(s) thereof upon the Transfer Agent's receipt of a letter of
instructions signed by the registered owner(s), with all signatures guaranteed
by a national bank or other bank which is a member of the Federal Reserve System
or by a member firm of any national or regional stock exchange, acceptable to
the Transfer Agent and the Trust dated not more than 30 days prior to the date
of receipt by the Transfer Agent, which specifies the name, address and social
security number of the transferee.
21
<PAGE>
23. Notwithstanding any provision contained in this Agreement to the
contrary, the Transfer Agent may require as a condition when he transfers
redemption of any Shares or such documents as the Transfer Agent may deem
necessary to evidence the authority of the person requesting the transfer or
redemption and the payment of any taxes. In the case of small estates, where no
administration is contemplated, the Transfer Agent may, when furnished with an
appropriate surety bond, without further approval of the Trust, transfer or
redeem Shares registered in the name of the deceased when the current market
value of the Shares being registered does not exceed $2,000.00. The Transfer
Agent may in effecting transfers or redemptions, rely, upon the Uniform Act for
the Simplification of Fiduciary Securities Transfers or the Uniform Commercial
Code, as the same may be amended from time to time, which in the opinion of
legal counsel for the Trust or the Transfer Agent's own legal counsel protect
the Transfer Agent in not requiring certain documents in connection with the
transfer or redemption of Shares, and the Trust shall indemnify the Transfer
Agent for any act done or omitted in reliance upon such laws or opinions of
counsel.
24. The Transfer Agent shall when so directed in a Certificate, suspend
the right of redemption or postpone the date of payment of the proceeds of
redemption for more than 7 calendar days following the day on which tender for
22
<PAGE>
redemption is made (1) for any period during which the New York Stock Exchange,
Inc. is closed other than on customary weekend and holiday closings; (2) for any
period during which, as determined by the Securities and Exchange Commission by
rule, regulation or orders, (i) trading on the New York Stock Exchange, Inc. is
suspended or (ii) an emergency exists as a result of which disposal by the Trust
of its portfolio securities is not reasonably practicable or it is not
reasonably practicable to determine the value of the Trust's net assets; or (3)
for such other periods as the Securities and Exchange Commission may by order
permit.
25. Prior to the close of business on each business day the Trust shall
deliver or cause to be delivered to the Transfer Agent an advice setting forth
the net asset value of the Shares of the Trust, and the Transfer Agent shall be
entitled to rely upon such advice and shall not be responsible for the accuracy
of the same.
26. Not later than the last day of the first week of each calendar month
the Transfer Agent shall mail to each Shareholder or his authorized agent, at
the address appearing on the books of the Transfer Agent, a Monthly Activity
Statement indicating each purchase and redemption by or for the account of such
Shareholder for the prior calendar month, specifying the date, amount of full
and fractional Shares purchased or redeemed,
23
as the case may be, the price at which the same were purchased or redeemed, the
balance in the Shareholder's account after giving effect to each purchase or
redemption, and the closing balance in such account as of the Friday of the
calendar month.
27. After the close of business on each business day the Transfer Agent
shall adjust the number of Shares outstanding as of the close of business on
such day by adding to the number of Shares outstanding at the start of such day
(i) the number of Shares for which purchase orders were accepted on such day,
(ii) the number of Shares for the pre-authorized, checks were drawn by the
Transfer Agent on such day, and (iii) the number of Shares purchased by the
reinvestment of dividends or distributions on such day, and subtract therefrom
(a) the number of Shares for which a redemption request was accepted on such
day, (b) the number of Shares for which a redemption direction was accepted on
such day, (c) the number of Shares for which a redemption check was received on
such day, and (d) thenumber of Shares redeemed pursuant to paragraphs 13 or 14
of this Article on such day. On the next business day the Transfer Agent shall
send to the Trust an advice setting forth the number of Shares outstanding as of
the close of business on the preceding business day.
24
<PAGE>
28. The Transfer Agent shall orally advise any telephone caller,
without regard to the identity of the caller, of the number of full and
fractional Shares owned by any registered owner at the time of receipt of such
telephone call if, but only if, the telephone called specifies either:
I. (a) The name(s) of the registered owner(s);
(b) The address of the registered owner(s)
appearing on the books of the Transfer
Agent;
(c) The registered owner's(s') account number;
and
(d) The social security number of the registered
owner(s);
or
II. (a) The Financial Consultant number appearing on
the books of the Transfer Agents; and
(b) The account number of the registered owner.
25
<PAGE>
ARTICLE V
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Trust shall furnish to the Transfer Agent a certified resolution
of the Board of Trustees of the Trust authorizing the declaration of dividends
or distributions on a daily basis and authorizing the Transfer Agent to rely on
a Certificate specifying the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of which
Shareholders entitled to payment shall be determined, the amount payable per
Share to the Shareholders of record as of that date.
2. Upon the payment date specified in such resolution, or certificate
the Transfer Agent shall accrue for each Share issued and outstanding at the
opening of business on such payment date the total amount payable as a dividend
or distribution with respect to such Shares. On the last Friday of each month
the Transfer Agent shall act in accordance with the provisions of Article IV.
26
<PAGE>
3. The Transfer Agent. shall in no way be responsible for the
determination of the rate of dividend or distributions due to the Shareholders.
4. It is understood that the Transfer Agent shall file such
appropriate information returns concerning the payment of dividends and capital
gain distributions with the proper Federal, State and local authorities as may
be required by law to be filed by the Trust, but shall in no way be responsible
for the collection or withholding of taxes due on such dividends or
distributions due to Shareholders unless required of it by applicable law.
ARTICLE VI
CONCERNING THE TRUST
1. The Trust shall promptly deliver to the Transfer Agent written
notice of any change in the officers authorized to sign Written Instructions or
requests, together with a specimen signature of each new Authorized officer.
2. At any time the Transfer Agent may apply to an Authorized Officer
of the Trust for Written Instructions, and may consult counsel for the Trust or
its own counsel, with respect to any matter arising in connection with the
appointment, and shall not be liable for any action taken or omitted by it in
good faith in accordance with such Written Instructions or such opinion of
counsel.
27
<PAGE>
3. The copy of the Charter of the Trust and copies of all amendments
thereto shall be certified by the Secretary of State (or other appropriate
official) of the state of organ- ization, and if such Charter and/or amendments
are required by law also to be filed with a county or other officer or official
body, a certificate of such filing shall be filed with a certified copy
submitted to the Transfer Agent. A copy of the order or consent of each
governmental or regulatory authority required by law as a prerequisite to the
issuance of Shares of the Trust shall be certified by the Secretary or other
proper officer of such governmental or regulatory authority; The copy of the
By-Laws and copies of all amendments thereto, and copies of resolutions of the
Board of Trustees of the Trust, shall be certified by the Secretary of the Trust
under the corporate seal.
4. The Trust or its authorized agent shall be responsible for the
valuation of its Shares with respect to all purchase and redemption orders.
ARTICLE VII
CONCERNING THE TRANSFER AGENT
The Transfer Agent shall not be liable and shall be fully protected in
acting upon any paper, document, or telephone
28
<PAGE>
instruction believed by it to be genuine and to have been signed or made by the
proper person or persons and shall not be held to have any notice of any change
of authority of any person until receipt of written notice thereof from the
Trust or such person.
2. The Transfer Agent shall keep such records in the form and manner as
it may deem advisable but not inconsistent with the rules and regulations of
appropriate government authorities. The Transfer Agent may deliver to the Trust
from time to time at its discretion, for safekeeping or disposition by the Trust
in accordance with law, such records, papers or documents, including checks
drawn on the Trust's account and signed by Shareholders, accumulated in the
execution of its duties as such Transfer Agent, as the Transfer Agent may deem
expedient, and the Trust assume all responsibility for any failure thereafter to
produce any record, paper or document so returned, if and when required. The
records maintained by the Transfer Agent pursuant this Paragraph, including the
records described in Schedule A annexed hereto and made a part hereof, which
have not been previously delivered to the Trust pursuant to the foregoing
provisions of this paragraph, shall be considered to be the property of the
Trust and such records shall be delivered to the Trust on the date of
termination of this Agreement, as specified in Article IX of this Agreement, in
the form and manner kept by the Transfer Agent on such date of termination.
29
<PAGE>
3. The Transfer Agent may, in connection with its appointment, employ
agents or attorneys in fact, and shall not be liable for any loss arising out of
or in connection with its actions under this appointment so long as it acts in
good faith and is not negligent or guilty of any willful misconduct. The Trust
shall indemnify and exonerate, save and hold harmless the Transfer Agent from
and against any and all claims (whether with or without basis in fact or law),
demands, expenses and liabilities of any and every nature which the Transfer
Agent may sustain or incur or which may be asserted against the Transfer Agent
by any person by reason of or as a result of any action taken or omitted to be
taken by the Transfer Agent in good faith and without negligence in reliance
upon any (i) written, telephone or wire purchase order, redemption request or
instruction received by the Transfer Agent pursuant to this Agreement, (ii)
instrument or order believed by it to be genuine and to be signed, countersigned
or executed by any duly authorized person or persons, (iii) Certificate or oral
or Written Instruction of an Authorized Officer of the Trust or (iv) opinion of
legal counsel for the Trust or the Transfer Agent. The Trust shall indemnify
and exonerate, save and hold the Transfer Agent harmless from and against any
and all claims (whether with or without basis in fact or law), demands, expenses
and liabilities of any and every nature which the Transfer Agent may sustain or
incur or which
30
<PAGE>
may be asserted against the Transfer Agent by any person by reason of or as a
result of any action taken or omitted to be taken by the Transfer Agent in
connection with its appointment in reliance upon any law, act, regulation or
interpretation of the same by an appropriate governmental agency even though the
same may thereafter have been altered, changed, amended or repealed. In order
that the indemnification provision contained in this paragraph 3 shall apply,
upon the assertion of a claim for which the Trust may be required to indemnify
the Transfer Agent, the Transfer Agent shall promptly notify the trust of such
assertion, and shall keep the Trust advised with respect to all developments
concerning such claim. The Trust shall have the option to participate with the
Transfer Agent in the defense of such claim. The Transfer Agent shall in no case
confess any claim of make any compromise in any case in which the Trust may be
required to indemnify the Transfer Agent except with the Trust's prior written
consent.
4. Specifically, but not by way of limitation, the Trust shall
indemnify and exonerate, save and hold the Transfer Agent harmless from and
against any and all claims (whether with or without basis in fact or law),
demands, expenses and liabilities of any and every nature which the Transfer
Agent may sustain by any person in connection with the Transfer Agent's capacity
and authorization to issue shares of the Trust and the form and amount of
authorized Shares of the Fund.
31
<PAGE>
5. The Transfer Agent will supply Shareholder lists to the Trust from
time to time upon receiving a request therefor from an Authorized officer of the
Trust.
6. In case of any requests or demands for the inspection of the
Shareholder records of the Trust, the Transfer Agent will endeavor to notify the
Trust and to secure instructions from an Authorized Officer of the Trust as to
such inspection. The Transfer Agent reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
7. At the request of an Authorized officer of the Trust, the Transfer
Agent will address and mail such appropriate notices to Shareholders as the
Trust may direct.
8. The Transfer Agent shall not be responsible for the valuation of
the Shares of the Trust with respect to purchase and redemption orders, and
shall be furnished such valuations by the Trust or its agent.
9. The Transfer Agent shall not be responsible for the payment of any
original issue or other taxes required to be paid by the Trust in connection
with the issuance or transfer of any Shares.
10. Notwithstanding any of the foregoing provisions of this Agreement,
the Transfer Agent shall be under no duty or obligation to inquire into, and
shall not be liable for:
32
<PAGE>
(a) The legality of the issue or sale of any
Shares of the Trust, or the sufficiency of the amount to be
received therefor;
(b) The legality of the redemption of any Shares
of the Trust, or the propriety of the amount to be paid therefor;
(c) The legality of the declaration of any
dividend by the Trust, or the legality of the issue of any Shares
of the Trust, in payment of any stock dividend; or
(d) The legality of any recapitalization or
readjustment of the Shares of the Trust.
11. The Transfer Agent shall be entitled to receive and the Trust
hereby Agrees to pay to the Transfer Agent its out-of-pocket expenses and such
compensation as may be agreed from time to time by the Transfer Agent and the
Trust.
12. The Transfer Agent hereby agrees to hire, purchase, develop and
maintain such dedicated personnel, facilities, equipment, software, resources
and capabilities as may be reasonably determined by the Fund to be necessary for
the satisfactory performance of the duties and responsibilities of the Transfer
Agent under the Agreement.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than 90 days after the date of receipt of such notice.
In the event such notice is given by the Trust, it shall be
33
<PAGE>
accompanied by a copy of a resolution of the Board of Trustees of the Trust,
certified by the Secretary or any Assistant Secretary electing to terminate this
Agreement and designating a successor transfer agent or transfer agents. In the
event such notice is given by the Transfer Agent, the Trust shall, on or before
the termination date, deliver to the Transfer Agent a copy of a resolution of
its Board of Directors certified by the Secretary or any Assistant Secretary
designating a successor transfer agent or transfer agents. In the absence of
such designation by the Trust, the Transfer Agent may designate a successor
transfer agent. If the Trust fails to designate a successor transfer agent and
if the Transfer Agent is unable to find a successor transfer agent, the Trust
shall upon the date specified in the notice of termination of this Agreement be
deemed to be its own transfer agent and the Transfer Agent shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement.
ARTICLE XI
MISCELLANEOUS
1. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust
34
<PAGE>
shall be sufficiently given if addressed to the Trust and mailed or delivered to
it as its primary office in Plainsboro, New Jersey or at such other place as the
Trust may from time to time designate in writing.
2. Any notices or other instrument in writing, authorized or required by
this Agreement to be given to the Transfer Agent shall be sufficiently given if
addressed to the Transfer Agent and mailed or delivered to it at its primary
office in Somerset, New Jersey or at such other place as the Transfer Agent may
from time to time designate in writing.
3. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the formality of this
Agreement.
4. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Trust without the written consent
of the Transfer Agent.
5. This Agreement shall be construed in accordance with the laws of the
State of New York.
35
<PAGE>
6. The Declaration of Trust establishing the Trust, dated January 21,
1975, a copy of which, together with all amendments thereto (the "Declaration")
, is on file in the office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Merrill Lynch Ready Assets Trust" refers
to the Trustees under the Declaration collectively as Trustees, but not as
individuals or personally; and no Trustee, shareholder, officer, employee or
agent of the Trust shall be held to any personal liability, nor shall resort he
had to their private property for the satisfaction of any obligation or claim
otherwise in connection with the affairs of said Trust by the Trust Estate only
shall be liable.
7. This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
FINANCIAL INSTITUTIONS SERIES TRUST
By /s/ Gerald M. Richard
-----------------------------------
Gerald M. Richard
ATTEST:
/s/ Robert Harris
- ------------------------------
Robert Harris
MERRILL LYNCH FINANCIAL DATA
SERVICE, INC.
By /s/ Robert C. Doan
-----------------------------------
Robert C. Doan
ATTEST:
/s/ Herbert R. Hirsche
- ------------------------------
Herbert R. Hirsche
37
<PAGE>
Schedule A
The Transfer Agent will establish, maintain and provide to the Trust the
following:
A. Daily Journal of Subscription Receipts, Availability and Funds
Transfers to Custody.
B. Daily Journal of Redemption Payment Demand.
C. Daily Sales and Transaction Journals containing the day's detail of
all transactions.
D. Daily Closed Account Journal.
E. Daily Dividend Proof (Daily & Monthly).
F. Daily Redemption Blotter.
G. Daily Shares Proof (Daily & Monthly).
H. Daily Master Control Proof.
I. Daily Prospectus Mailing Report.
J. Daily Blue Sky Report (frequency as agreed upon).
K. Daily Quality Control Reports.
L. Large Item Report.
M. Weekly Status Report.
N. Research and Correspondence Status Report.
0. Monthly Sales by State and Dividends Reinvested.
P. Monthly Shareholders Master File List.
Q. Monthly Record of Out-of-Pocket Cost Incurred.
<PAGE>
FEE AGREEMENT
PURSUANT TO PARAGRAPH 11 OF ARTICLE VII
(CONCERNING THE TRANSFER AGENT)
OF THE
TRANSFER AGENCY AGREEMENT
BETWEEN
MERRILL LYNCH SUMMIT CASH RESERVES FUND
AND
MERRILL LYNCH FINANCIAL DATA SERVICE, INC.
1. Annualized Shareholder Account Charges
$13.00 per Shareholder Account (First 300,000 accounts)
$12.50 per Shareholder Account (Second 300,000 accounts)
$12.00 per Shareholder Account (Third 300,000 accounts)
$11.00 per Shareholder Account (All accounts thereafter)
2. Out-of-Pocket Expenses
Reimbursement for reasonable out-of-pocket expenses
incurred in connection with this Agreement and its
performance hereunder, including, but not limited to, postage
and supplies.
Statements of accrued account charges and incurred out-of-pocket charges shall
be sent monthly by MLFDS to the Fund at its principal place of business and
thereafter shall be promptly satisfied by the Fund.
SUMMIT CASH RESERVES FUND
BY: /s/ Gerald M. Richard
------------------------------------
Gerald M. Richard
Title: TREASURER
MERRILL LYNCH FINANCIAL DATA SERVICE, INC.
By: /s/ Robert C. Doan
------------------------------------
Robert C. Doan
Title:
Dated as of September 29, 1986
<PAGE>
Ex-99.13
CERTIFICATE OF SOLE SHAREHOLDER
Fund Asset Management, Inc., the holder of 100,000 shares of beneficial
interest, par value $0.10 per share, of Summit Cash Reserves Fund (the "Money
Fund"), a series of Financial Institutions Series Trust, a Massachusetts
business trust (the "Trust"), does hereby confirm to the Trust its
representation that it purchased such shares for investment purposes, with no
present intention of redeeming or reselling any portion thereof, and does
further agree that if it redeems any portion of such shares prior to the
amortization of the Money Fund's organizational expenses, the proceeds thereof
will be reduced by the proportionate amount that the total unamortized balance
bears to the number of shares being redeemed.
MERRILL LYNCH ASSET MANAGEMENT, INC.
By /s/ William W. Hewitt
--------------------------------
Dated: November 10, 1982
<PAGE>
Ex-99.16
Summit Cash Reserves Fund of
Financial Institutions Series Trust
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AS OF MAY 31, 1988
Base Period Return
------------------
Including Excluding
gains and losses gains and losses
---------------- ----------------
Net Income of one share for a seven-day
base period .001083 .001181
Divided by
Net asset value of one share at beginning
of base period $1.00 $1.00
Equals
Base period return (unannualized) .001083 .001181
Annualized Return
-----------------
Base period return (unannualized) .001083 .001181
Divided by 7 .000155 .000169
Multiplied by 365
Equals .056575 .061685
Annualized return 5.66% 6.17%
Effective or Compounded Yield
-----------------------------
Base period return (unannualized)* .001083
Divided by 7 .000155
Add
1
Equals 1.000155
Sum raised to 365th power 1.05820134
Subtract
1
Equals
Effective or Compounded Yield 5.82%
- ----------
* Calculated using base period return (unannualized) excluding gains and losses.
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, N.Y. 10048-0557
TELEPHONE: 212-839-5300
FACSIMILE: 212-839-5599
September 27, 1995
Summit Cash Reserves Fund of
Financial Institutions Series Trust
P.O. Box 9011
Princeton, New Jersey 08543-9011
Dear Sirs:
This opinion is furnished in connection with the
registration by Summit Cash Reserves Fund of Financial
Institutions Series Trust, a Massachusetts business trust (the
"Fund"), of 438,372,555 shares of beneficial interest, par value
$0.10 per share (the "Shares"), under the Securities Act of 1933
pursuant to a registration statement on Form N-1A (File No. 2-
78646), as amended (the "Registration Statement").
As counsel for the Fund, we are familiar with the
proceedings taken by it in connection with the authorization,
issuance and sale of the Shares. In addition, we have examined
and are familiar with the Declaration of Trust of the Fund, as
amended, the By-Laws of the Fund and such other documents as we
have deemed relevant to the matters referred to in this opinion.
Based upon the foregoing, we are of the opinion that the
Shares, upon issuance and sale in the manner referred to in the
Registration Statement for consideration not less than the par
value thereof, will be legally issued, fully paid and non-
assessable shares of beneficial interest.
In rendering this opinion, we have relied as to matters of
Massachusetts law upon an opinion of Bingham, Dana & Gould
rendered to the Fund.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of our name
in the Prospectus and Statement of Additional Information
constituting parts thereof.
Very truly yours,
/s/ Brown & Wood
2
INDEPENDENT AUDITORS' CONSENT
Summit Cash Reserves Fund
of Financial Institutions Series Trust
We consent to the use in Post-Effective Amendment No. 14 to
Registration Statement No. 2-78646 of our report dated June 30,
1995 appearing in the Statement of Additional Information, which
is a part of such Registration Statement, and to the reference to
us under the caption "Financial Highlights" appearing in the
Prospectus, which also is a part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Princeton, New Jersey
September 26, 1995
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