FINANCIAL INSTITUTIONS SERIES TRUST, 485B24E, 1996-09-30

FINANCIAL INSTITUTIONS SERIES TRUST
485B24E, 1996-09-30

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1996

SECURITIES ACT FILE NO. 2-78646
INVESTMENT COMPANY ACT FILE NO. 811-3189
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /

POST-EFFECTIVE AMENDMENT NO. 15 /X/

AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

AMENDMENT NO. 30 /X/

(Check appropriate box or boxes)

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SUMMIT CASH RESERVES FUND
OF FINANCIAL INSTITUTIONS SERIES TRUST

(Exact Name of Registrant as Specified in Charter)

800 Scudders Mill Road
Plainsboro, New Jersey 08536
(Address of Principal Executive Offices) (Zip Code)

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 LLP
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 22, 1996.

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)............... 364,996,205 $ 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 364,706,205 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) 364,706,205 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.

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<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> <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; 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
</TABLE>

PART C

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 30, 1996

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 monthly 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 are being offered by certain securities dealers
which have entered into securities clearing arrangements or have other business
relationships with Broadcort Capital Corp. ('Broadcort'). Shares of the Money
Fund also are offered pursuant to an exchange program with certain
participating funds as described herein.

Shares of the Money Fund may be purchased at their net asset value without
any sales charge. For shareholders purchasing their shares through a securities
dealer having a relationship with Broadcort, 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. There is no
minimum with respect to initial or subsequent purchases made in connection with
the exchange program. Shares may be redeemed at any time at net asset value as
described herein. See 'Purchase of Shares' and 'Redemption of Shares.'

------------------------

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 30, 1996
(the 'Statement of Additional Information'), has been filed with the Securities
and Exchange Commission (the '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, 1996:

<TABLE>
<S> <C>
Management Fees....................................... 0.27%(a)
Administration Fees................................... 0.27%
Other Expenses(c)
Dividend and Transfer Agency
Fees........................... 0.28%(b)
Other............................ 0.31%
-----------

Total Other Expenses.......................... 0.59%
-----------
TOTAL MONEY FUND OPERATING EXPENSES.......................... 1.13%
-----------
-----------
</TABLE>

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(a) See 'Management of the Trust--Management and Advisory Arrangements'--page 8.

(b) See 'Management of the Trust--Transfer Agency Services'--page 10.

(c) The foregoing Fee Table represents anticipated expenses based on an
average net asset level for the fiscal year ended May 31, 1996. Subsequent to
this period, the Money Fund has experienced a higher expense ratio based on a
significantly lower asset level. Effective September 30, 1996, the Investment
Manager is voluntarily reimbursing the Money Fund for all expenses other than
the management and administrative fees. However, the Investment Manager may
discontinue any voluntary reimbursement (unless otherwise required pursuant to
state expense limitations) in whole or in part at any time without notice.

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 1.13% and a
5% annual return throughout the period....................... $12 $36 $62 $137
</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.

<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, 1996 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,
--------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Asset Value:
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 $ 1.00
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Investment

income--net.......... .0476 .0444 .0254 .0262 .0464 .0684 .0811 .0799 .0640 .0564
Realized and unrealized
gain (loss) on
investments--net..... (.0011) .0014 .0003 .0007 (.0001) .0024 (.0003) .0002 (.0006) .0002
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations............. .0465 .0458 .0257 .0269 .0463 .0708 .0808 .0801 .0634 .0566
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Less dividends and
distributions:
Investment
income--net.......... (.0476) (.0444) (.0254) (.0262) (.0463) (.0684) (.0808) (.0799) (.0634) (.0564)
Realized gain on
investments--net..... --** (.0001) (.0003) (.0007) -- (.0024)* -- (.0002)* -- (.0002)*
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total dividends and
distributions.......... (.0476) (.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 $ 1.00
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Total investment
return................. 4.87% 4.52% 2.57% 2.74% 4.44% 7.36% 8.42% 8.30% 6.49% 5.84%
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
RATIOS TO AVERAGE NET
ASSETS:
Expenses................. 1.13% .98% .90% .86% .79% .85% .74% .82% .79% .74%
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
Investment income and
realized gain on
investments--net....... 4.83% 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)......... $34,865 $89,119 $135,301 $156,677 $237,868 $374,212 $546,593 $637,424 $707,716 $631,055
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
------- ------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>

- ------------------
* Includes unrealized gain (loss).

** Amount is less than $.0001 per share.

<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, 1996 and to include and exclude realized gains and losses
for the seven-day period ended August 31, 1996, and information as to the
compounded annualized yield, excluding gains and losses, for the same periods.

<TABLE>
<CAPTION>
SEVEN-DAY PERIOD ENDED
--------------------------------
MAY 31, 1996 AUGUST 31, 1996
------------- ----------------
<S> <C> <C>
Annualized Yields:
Including gains and losses.............. 3.84% 4.03%
Excluding gains and losses.............. 3.84% 4.03%
Compounded Annualized Yield.................. 3.91% 4.11%
Average maturity of portfolio at end of
period..................................... 21 days 32 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.

<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 and funding agreements),
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

<PAGE>

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.

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, bank notes 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. Under such
agreements, the counterparty 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 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.

<PAGE>

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 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 or sell money market securities on a forward
commitment basis at fixed 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 purchase 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, 1996, the average
maturity of its portfolio ranged from 21 days to 88 days.

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

<PAGE>

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 and 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.'); and Director of Merrill Lynch Funds
Distributor, Inc.

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 Director, LaSalle Street Fund.

WALTER MINTZ--Special Limited Partner of Cumberland Associates
(investment partnership) since 1982.

ROBERT S. SALOMON, JR.--Principal of STI Management (investment
adviser).

MELVIN R. SEIDEN--President of Silbanc Properties, Ltd. (real estate,
investment and consulting).

STEPHEN B. SWENSRUD--Principal of Fernwood Associates (financial
consultants).

- ------------------

* Interested person, as defined in the 1940 Act, of the Trust.

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
8

<PAGE>

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 130 registered investment companies and provide investment advice to
individual and institutional accounts. As of August 31, 1996, the Investment
Manager and MLAM had a total of approximately $212.3 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, 1996, the fee paid by the Money Fund to the Investment Manager was $193,099

and the fee paid to Broadcort was $193,099 (based on average net assets of
approximately $70.1 million), and the effective fee rate was 0.27%. No fee was
paid to FAM during such period. At August 31, 1996 the net assets of the Trust
aggregated approximately $30.0 million. At this asset level, the annual
management fee would aggregate approximately $82,590 and the effective fee rate
would be approximately 27%.

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

<PAGE>

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, 1996,
the amount of such reimbursement was $36,639.

During the fiscal year ended May 31, 1996, the ratio of total expenses to
average net assets was 1.13%.

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, 1996, the total fee paid by the Trust to the
Transfer Agent pursuant to the Transfer Agency Agreement was $195,372.

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 after purchase. Beginning on or about October 28, 1996, shares purchased
will begin accruing dividends on the day of purchase. For shareholders
purchasing their shares through a securities dealer having a relationship with
Broadcort, the minimum initial purchase is $5,000 and the minimum subsequent
purchase is $1,000, except that lower minimums apply as described below. The
minimum initial purchase with respect to 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 applicable principal underwriter of the Money Fund. There is no
minimum with respect to initial or subsequent purchases made in connection with
the exchange program.

Merrill Lynch Funds Distributor, Inc. ('MLFD'), 800 Scudders Mill Road,
Plainsboro, New Jersey 08536, Calamos Financial Services, Inc., 1111 East
Warrenville Road, Naperville, Illinois 60563, Calvert Distributors, Inc., 4550
Montgomery Avenue, Bethesda, Maryland 20814, Franklin Templeton Distributors,
Inc., 777 Mariners Island Boulevard, San Mateo, California 94403, Ivy MacKenzie
Distributors Inc., 700 South Federal Highway, Boca Raton, Florida 33432,
Nicholas-Applegate Securities, c/o BFDS, 2 Heritage Drive, North Quincy,
Massachusetts 02171, Van Eck Securities Corporation, 99 Park Avenue, New York,
New York 10016 act as principal underwriters, of the shares of the Money Fund
(the 'Principal Underwriters'). MLFD is an affiliate of both the Investment
Manager and of Merrill Lynch. Shares may be purchased directly from securities
dealers with whom MLFD, or another Principal Underwriter, with the Money Fund's
consent, 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. Shares of the Money Fund are
also offered through Merrill Lynch pursuant to an exchange program with certain
other investment companies for which each Principal Underwriter, other than
MLFD, also acts as principal underwriter. See 'Shareholder Services--Exchange
Program.'

<PAGE>

METHODS OF PAYMENT

Payment Through Securities Dealers. Investments in the Money Fund may be
made through securities dealers who have dealer arrangements with the Principal
Underwriters. 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 three-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. Checks should be made payable
to Merrill Lynch Financial Data Services, 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 ('NYSE') 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

<PAGE>

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 two methods pursuant to which
shareholders may redeem shares. In certain instances, the Transfer Agent may
require additional documents in connection with redemptions.

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 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.

------------------------

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. 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 with a direct account at Merrill Lynch Financial Data
Services, Inc. has an Investment Account and will receive quarterly 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

<PAGE>

public offering price through his securities dealer, by wire or by mail directly
to the Transfer Agent, acting as agent for his dealer. A direct shareholder may
ascertain the number of shares in his Investment Account by telephoning the
Transfer Agent at (800) MER-FUND or (800-637-3863) 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.

EXCHANGE PROGRAM

The Money Fund participates in an exchange program with certain other
investment companies for which each Principal Underwriter of the Money Fund,
other than MLFD, listed under 'Purchase of Shares' above, also acts as principal
underwriter (the 'Participating Funds'). This exchange program is only available
to investors who maintain the shares of the Participating Funds (and the Money
Fund) in their Merrill Lynch account. A Money Fund shareholder may only exchange
into Participating Funds that have the same Principal Underwriter as the
original Participating Fund the shareholder exchanged out of.

Exchanges of shares of Participating Funds subject to a front-end sales
load ('FESL') into Money Fund shares may also be effected without the imposition
of a sales charge. The holder of such Money Fund shares may subsequently either
exchange back into the same shares of the original Participating Fund without
incurring any FESL or exchange into shares of certain other Participating Funds
distributed by the same Principal Underwriter by remitting an amount equal to
the difference, if any, between the FESL previously paid on the shares of the
original Participating Fund and the FESL payable at the time of the exchange on
the shares of the new Participating Fund.

In addition, exchanges of shares of Participating Funds subject to a
contingent deferred sales charge ('CDSC') ('CDSC Shares') into Money Fund shares
may be effected without the payment of any CDSC that might otherwise be due on
redemption of the Participating Fund shares. A shareholder who exchanges CDSC
Shares for shares of the Money Fund will not, however, receive credit toward
reduction of the CDSC for the time spent in the Money Fund; rather, the CDSC
reduction period will be 'tolled' until such time as the shareholder either
exchanges back into the Participating Fund (or another Participating Fund that
charges a CDSC), or redeems shares of the Money Fund. A shareholder who
exchanges CDSC Shares of a Participating Fund for Money Fund shares and who
subsequently exchanges back into the original Participating Fund (or another
Participating Fund that charges a CDSC and that is distributed by the same
Principal Underwriter) will not pay a CDSC at that time, and the period for
reduction of the CDSC will recommence. If the shareholder exchanges CDSC Shares
for Money Fund shares and then makes a subsequent exchange for CDSC Shares of
another Participating Fund subject to a different CDSC schedule, the shareholder
will be subject to whichever schedule is higher. If the shareholder redeems his
investment from the Money Fund following an exchange from CDSC Shares, the CDSC
will be charged at the rate payable based on a holding period from the time the
shareholder purchased shares of the Participating Fund until the time the
Participating Fund shares were exchanged for shares of the Money Fund.

To effect an exchange, shareholders should contact their Merrill Lynch
financial consultant, who will advise the Money Fund of the exchange. Further

information regarding such exchanges is set forth under 'Shareholder
Services--Exchange Program' in the Statement of Additional Information.

<PAGE>

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, 1996, the Money Fund
engaged in 3 such transactions aggregating approximately $7.4 million.

ADDITIONAL INFORMATION

DIVIDENDS

Dividends are declared and reinvested daily in the form of additional
shares at net asset value. Beginning on or about October 28, 1996, dividends
will be declared daily and reinvested monthly in the form of additional shares
at net asset value. 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 NYSE or New York banks are open for business. Such
determination is made as of the close of business on the NYSE (generally 4:00
P.M., New York time) or, on days when the NYSE 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

<PAGE>

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 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 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

<PAGE>

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.

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, judicial 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

<PAGE>

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.

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) 637-3863.

------------------------

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.

<PAGE>

INVESTMENT MANAGER
Fund Asset Management
Administrative Offices:
800 Scudders Mill Road
Plainsboro, New Jersey 08536
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 LLP
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....................... 8
Transfer Agency Services.............. 10
Purchase of Shares...................... 10
Methods of Payment.................... 11
Redemption of Shares.................... 11
Methods of Redemption................. 12
Shareholder Services.................... 12
Investment Account.................... 13
Accrued Monthly Payout Plan........... 13
Exchange Program...................... 13
Portfolio Transactions.................. 14
Additional Information.................. 14
Dividends............................. 14
Determination of Net Asset Value...... 14
Taxes................................. 15
Organization of the Trust............. 16
Shareholder Inquiries................. 17
Shareholder Reports................... 17
</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 08536

Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011

This Prospectus should be
retained for future reference.

September 30, 1996

----------------------------------------------------
----------------------------------------------------

<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. Shares of the Money Fund also are
offered pursuant to an exchange program with certain participating funds as
described herein.

------------------------

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 30, 1996 (the 'Prospectus'), which has been filed with the
Securities and Exchange Commission (the '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 30, 1996.

<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. 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
accounting, auditing and financial recordkeeping standards and requirements as
U.S. banks. Evidence of

<PAGE>

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, as amended (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 Fund
will not purchase securities while borrowings are outstanding. Interest paid on
such borrowings will reduce

<PAGE>

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

Information about the Trustees and executive officers of the Trust,
including their ages and their principal occupations for at least the last five
years is 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 (64)--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; and Director of
Merrill Lynch Funds Distributor, Inc. ('MLFD') since 1977.

JOE GRILLS (61)--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 Corporation ('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 since 1993; and Director, LaSalle Street Fund since 1995.

WALTER MINTZ (67)--Trustee (2)--1114 Avenue of the Americas, New York, New
York 10036. Special Limited Partner of Cumberland Associates (investment
partnership) since 1982.

ROBERT S. SALOMON, JR. (59)--Trustee (2)(3)--106 Dolphin Cove Quay,
Stamford, Connecticut 06902. Principal of STI Management (investment adviser);
Director, Common Fund and the Norwalk Community Technical College Foundation;
Chairman and CEO of Salomon Brothers Asset Management Inc. from 1992 until

<PAGE>

1995; Chairman of Salomon Brothers equity mutual funds from 1992 until 1995;
Director of Stock Research and U.S. Equity Strategist at Salomon Brothers Inc.
from 1975 until 1991.

MELVIN R. SEIDEN (65)--Trustee (2)--780 Third Avenue, Suite 2502, 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.

STEPHEN B. SWENSRUD (63)--Trustee (2)--24 Federal Street, Suite 400,
Boston, Massachusetts 02110. Principal of Fernwood Associates (financial
consultants) since 1975.

TERRY K. GLENN (56)--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 MLFD since
1986 and Director thereof since 1991; President of Princeton Administrators,
L.P. since 1988.

DONALD C. BURKE (36)--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 (48)--Vice President (1)--Vice President of MLAM since 1981.

JOSEPH T. MONAGLE, JR. (47)--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 (47)--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 MLFD since 1984 and
Vice President thereof since 1981.

ROBERT HARRIS (44)--Secretary (1)(2)--Vice President of MLAM since 1984 and
attorney associated with MLAM since 1980; Secretary of MLFD 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.

(3) On January 17, 1996, Robert S. Salomon, Jr. was elected a Trustee of the
Trust to fill the vacancy created by the retirement of Harry Woolf, who
retired as a Trustee, effective December 31, 1995, pursuant to the Trust's
retirement policy.

At August 31, 1996, 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 $1,500 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

<PAGE>

Committee, which consists of the unaffiliated Trustees, an annual fee of $1,500
plus a fee of $250 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, 1996, these fees and expenses aggregated $26,874.

The following table sets forth for the fiscal year ended May 31, 1996,
compensation paid by the Trust to the unaffiliated Trustees and, for the
calendar year ending December 31, 1995, 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>
AGGREGATE

COMPENSATION
PENSION OR FROM TRUST AND
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).............. $ 4,800 None $ 153,883
Walter Mintz(1)............ $ 4,800 None $ 153,883
Robert S. Salomon,
Jr.(1)(2)................ $ 5,000 None $ 0
Melvin R. Seiden(1)........ $ 4,800 None $ 153,883
Stephen B. Swensrud(1)..... $ 4,300 None $ 161,883
Harry Woolf(1)............. $ 800 None $ 153,883
</TABLE>

- ------------------

(1) The Trustees serve on the boards of FAM/MLAM Advised Funds as follows: Mr.
Grills (18 registered investment companies consisting of 38 portfolios); Mr.
Mintz (18 registered investment companies consisting of 38 portfolios); Mr.
Salomon (18 registered investment companies consisting of 38 portfolios);
Mr. Seiden (18 registered investment companies consisting of 38 portfolios);
Mr. Swensrud (20 registered investment companies consisting of 49
portfolios) and Mr. Woolf, prior to his retirement, effective December 31,
1995, pursuant to the Trust's retirement policy (18 registered investment
companies consisting of 38 portfolios).

(2) Mr. Salomon was elected a Trustee of the Trust on January 17, 1996.

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,

<PAGE>

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 identical monthly fee based
on assets introduced to the Fund by Broadcort or through other avenues,
respectively. 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. For the fiscal year ended May 31, 1996, the fee paid by the Money Fund
to the Investment Manager was $193,099 and the fee paid to the Administrator was
$193,099. 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, 1994, 1995 or 1996 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 principal
underwriters), charges of the Custodian and Transfer Agent, the 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

<PAGE>

the Distribution Agreements, the principal underwriters 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 principal underwriters
will pay for the printing and distribution of copies thereof used by them in
connection with the offering to investors. The principal underwriters will also
pay for other supplementary sales literature. A principal underwriter will only
be responsible for paying such expenses as are directly related to the sale of
Money Fund shares by such principal underwriter.

The Investment Manager is a limited partnership, the partners of which are
ML&Co. and Princeton Services. ML&Co. and Princeton Services are 'controlling
persons' of the Manager (as defined in the 1940 Act) because of their ownership
of its voting securities or their power to exercise a controlling influence over
its management or policies.

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., Calamos Financial Services, Inc.,
1111 East Warrenville Road, Naperville, Illinois 60563, Calvert Distributors,
Inc., 4550 Montgomery Avenue, Bethesda, Maryland 20814, Franklin Templeton
Distributors, Inc., 777 Mariners Island Boulevard, San Mateo, California 94403,
Ivy MacKenzie Distributors Inc., 700 South Federal Highway, Boca Raton, Florida
33432, Nicholas-Applegate Securities, c/o BFDS, 2 Heritage Drive, North Quincy,
Massachusetts 02171, Van Eck Securities Corporation, 99 Park Avenue, New York,
New York 10016 act as principal underwriters of the shares of the Money Fund
(the 'Principal Underwriters'). MLFD is an affiliate of both the Investment
Manager and of Merrill Lynch. Shares may be purchased directly from securities
dealers with whom MLFD 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. Shares
of the Money Fund are also offered through Merrill Lynch pursuant to an exchange
program with certain other investment companies for which each Principal
Underwriter, other than MLFD, also acts as principal underwriter. See
'Shareholder Services--Exchange Program.'

The Distribution Agreements, after the second anniversary thereof, are
renewable annually, and may be terminated upon 60 days' written notice by either
party to the agreement. Under such Agreements, after the prospectuses,
statements of additional information and periodic reports have been prepared and
set in type, the Principal Underwriters will pay for the printing and
distribution of copies thereof used in connection with the offering to dealers
and investors. The Principal Underwriters will also pay for other supplementary
sales literature. A principal underwriter will only be responsible for paying
such expenses as are directly related to the sale of Money Fund shares by such
Principal Underwriter.

<PAGE>

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. Beginning on or about October 28, 1996,
Money Fund shares will begin accruing dividends on 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 ('NYSE') is closed, other than customary weekend and
holiday closings or (B) during which trading on the NYSE 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
Commission may by order 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.

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 ('OTC') market. Bonds and debentures are
usually traded OTC but may be traded on an exchange. Where

<PAGE>

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 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 Commission. Since OTC
transactions are usually principal transactions, affiliated persons of the
Trust, including Merrill Lynch Government Securities Inc. ('GSI') 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 OTC
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 Commission has issued an order permitting all Merrill Lynch-sponsored
money market funds, including Series of the Trust, to conduct principal
transactions with GSI in U.S. Government securities and U.S. 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.

<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 NYSE or New York banks are open for
business. Such determination is made as of the close of business on the NYSE
(generally 4:00 P.M., New York time) or, on days when the NYSE 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 OTC 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 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 Securities 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.

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

<PAGE>

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 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 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

INVESTMENT ACCOUNT

Every direct shareholder has an Investment Account and will receive
quarterly 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-MER-FUND or
(800-637-3863). 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.

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.

<PAGE>

EXCHANGE PROGRAM

The Money Fund participates in an exchange program with certain other
investment companies for which each Principal Underwriter of the Money Fund,
other than MLFD, listed under 'Purchase of Shares' above also acts as principal
underwriter (the 'Participating Funds'). This exchange program is only available
to investors who maintain the shares of the Participating Funds (and the Money
Fund) in their Merrill Lynch account. A Money Fund shareholder may only exchange
into Participating Funds that have the same Principal Underwriter as the
original Participating Fund the shareholder exchanged out of.

Before effecting an exchange, shareholders should obtain a currently
effective prospectus of the Participating Fund into which the exchange is to be
made for information regarding the fund and for further details regarding such
exchange.

Shares with a net asset value of at least $100 are required to qualify for
the exchange program, and any shares utilized in an exchange must have been held
by the shareholder for 15 days. It is contemplated that the exchange program may
be applicable to other new mutual funds whose shares may be distributed by MLFD
or the Principal Underwriters.

To effect an exchange, shareholders should contact their Merrill Lynch
financial consultant, who will advise the Money Fund of the exchange.
Shareholders with shares for which certificates have not been issued may effect
an exchange by wire through their securities dealers. This exchange
program may be modified or terminated in accordance with the rules of the
Commission. The Money Fund reserves the right to limit the number of times an
investor may effect

<PAGE>

an exchange. Certain Participating Funds may suspend the continuous offering of
their shares at any time and thereafter may resume such offering from time to
time. The exchange program is available only to U.S. shareholders in states
where the exchange legally may be made.

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 or from an excess
of net short-term capital gains over net long-term capital losses (together
referred to hereafter as 'ordinary income dividends') are taxable to
shareholders as ordinary income. Distributions made from an excess of net
long-term capital gains over net short-term capital losses ('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).

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. 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.

<PAGE>

own tax advisers concerning the applicability of the United States withholding
tax.

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.

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 minimize 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, judicial or administrative
action either prospectively or retroactively.

Ordinary income dividends and capital gain dividends may also be subject to
state and local taxes.

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.

<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 (the 'Custodian'), 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. (the 'Transfer Agent'), 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.

<PAGE>

LEGAL COUNSEL

Brown & Wood LLP, 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 of the information set forth in
the Registration Statement and the exhibits relating thereto, which the Trust
has filed with the 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 27, 1996, except that
Marjorie Alfus IRA and Sheldon Spring owned 6.945% and 6.74%, respectively, of
such shares.

------------------------

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.

<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.

<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.

<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, 1996, 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,
1996 by correspondence with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, 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, 1996 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 28, 1996

<PAGE>

SCHEDULE OF INVESTMENTS (in Thousands)

Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)

Certificates of Deposit--Yankee--2.9%

Societe Generale, NY $1,000 5.39 % 6/17/96 $ 1,000

Total Certificates of Deposit--Yankee
(Cost--$1,000) 1,000

Commercial Paper--Discount--40.7%

ANZ (Delaware) Inc. 1,000 5.10 7/22/96 992

Allomon Funding 1,150 5.31 6/04/96 1,149
Corp.

Banc One Corp. 1,400 5.33 6/03/96 1,399

Bear Stearns 1,300 5.29 6/03/96 1,300
Companies Inc.

Cargill Incorporated 1,000 5.30 6/07/96 999

Ciba-Geigy Corp. 1,300 5.25 6/04/96 1,299

Ciesco, L.P. 1,099 5.27 6/21/96 1,096

General Motors 1,300 5.34 6/21/96 1,296
Acceptance Corp.

Monte Rosa 1,250 5.29 6/28/96 1,245
Capital Corp.

National Fleet 1,300 5.28 6/03/96 1,300
Funding Corp.

Sandoz Corporation 1,000 5.30 6/06/96 999

Sheffield 1,150 5.30 6/11/96 1,148
Receivables Corp.

Total Commercial Paper--Discount
(Cost--$14,222) 14,222

Corporate Notes--2.9%

SMM Trust (1995-K) 1,000 5.4497 6/14/96 1,000

Total Corporate Notes
(Cost--$1,000) 1,000

SCHEDULE OF INVESTMENTS (in Thousands)

Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)

US Government, Agency & Instrumentality Obligations--
Discount--22.9%

Federal Home $7,000 5.30 % 6/03/96 $ 6,997
Loan Mortgage
Corporation

Federal National 1,000 5.11 10/30/96 978
Mortgage
Association

Total US Government, Agency & Instrumentality
Obligations--Discount (Cost--$7,975) 7,975

US Government, Agency & Instrumentality Obligations--
Non-Discount--24.5%

Federal National 285 8.75 6/10/96 285
Mortgage Association 250 5.50 6/12/96 250
2,000 5.31++ 7/08/96 2,000
1,000 5.32++ 8/08/96 1,000
3,000 5.38++ 2/21/97 3,000

US Treasury Notes 2,000 6.875 10/31/96 2,011

Total US Government, Agency & Instrumentality
Obligations--Non-Discount (Cost--$8,548) 8,546

Face
Amount Issue

Repurchase Agreements**--7.5%

$1,400 Fuji Securities, Inc., purchased on
5/31/1996 to yield 5.37% to 6/03/1996 1,400

1,203 PaineWebber Inc., purchased on
5/31/1996 to yield 5.33% to 6/03/1996 1,203

Total Repurchase Agreements (Cost--$2,603) 2,603

Total Investments (Cost--$35,348)--101.4% 35,346

Liabilities in Excess of Other Assets--(1.4%) (481)
-------
Net Assets--100.0% $34,865
=======

[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, 1996.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
++Variable Rate Notes.

See Notes to Financial Statements.

<PAGE>

FINANCIAL INFORMATION

<TABLE>
Statement of Assets and Liabilities as of May 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$35,348,330*)
(Notes 1a & 1e) $ 35,345,891
Cash 1,494
Receivables:
Interest $ 64,313
Beneficial interest sold 12,000 76,313
------------
Prepaid registration fees and other assets (Note 1d) 104,249
------------
Total assets 35,527,947
------------

Liabilities: Payables:
Beneficial interest redeemed 497,114
Administrator (Note 2) 8,027
Investment adviser (Note 2) 8,027 513,168
------------
Accrued expenses and other liabilities 149,973
------------
Total liabilities 663,141
------------

Net Assets: Net assets $ 34,864,806
============

Net Assets Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $ 3,486,725
Paid-in capital in excess of par 31,380,520
Unrealized depreciation on investments--net (2,439)
------------
Net assets--Equivalent to $1.00 per share based on 34,867,245 shares
of beneficial interest outstanding $ 34,864,806
============
<FN>
*Cost for Federal income tax purposes. As of May 31, 1996, net
unrealized depreciation for Federal income tax purposes
amounted to $2,439, of which $188 related to appreciated securities
and $2,627 related to depreciated securities.
</TABLE>

<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended May 31, 1996
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 4,190,853

(Note 1c):

Expenses: Transfer agent fees (Note 2) $ 195,372
Investment advisory fees (Note 2) 193,099
Administrative fees (Note 2) 193,099
Professional fees 55,279
Registration fees (Note 1d) 38,737
Accounting services (Note 2) 36,639
Trustees' fees and expenses 26,874
Printing and shareholder reports 23,477
Custodian fees 20,396
Other 14,467
------------
Total expenses 797,439
------------
Investment income--net 3,393,414
------------

Realized & Realized gain on investments--net 244
Unrealized Gain Change in unrealized appreciation/depreciation on investments--net (75,867)
(Loss) on ------------
Investments--Net Net Increase in Net Assets Resulting from Operations $ 3,317,791
(Note 1c): ============

See Notes to Financial Statements.

</TABLE>

<PAGE>

FINANCIAL INFORMATION (concluded)

<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended May 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 3,393,414 $ 4,854,999
Realized gain on investments--net 244 5,155
Change in unrealized appreciation/depreciation on
investments--net (75,867) 143,964
------------ ------------
Net increase in net assets resulting from operations 3,317,791 5,004,118
------------ ------------

Dividends & Investment income--net (3,393,414) (4,854,999)
Distributions to Realized gain on investments--net (244) (5,155)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends and
distributions to shareholders (3,393,658) (4,860,154)

------------ ------------

Beneficial Interest Net proceeds from sale of shares 307,144,408 386,906,148
Transactions Net asset value of shares issued to shareholders in
(Note 3): reinvestment of dividends and distributions (Note 1f) 3,383,655 4,849,989
------------ ------------
310,528,063 391,756,137
Cost of shares redeemed (364,706,205) (438,082,555)
------------ ------------
Net decrease in net assets derived from beneficial
interest transactions (54,178,142) (46,326,418)
------------ ------------

Net Assets: Total decrease in net assets (54,254,009) (46,182,454)
Beginning of year 89,118,815 135,301,269
------------ ------------
End of year $ 34,864,806 $ 89,118,815
============ ============
</TABLE>

<TABLE>
Financial Highlights
<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: 1996 1995 1994 1993 1992
<S> <S> <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 .0476 .0444 .0254 .0262 .0464
Realized and unrealized gain (loss) on
investments--net (.0011) .0014 .0003 .0007 (.0001)
-------- -------- -------- -------- --------
Total from investment operations .0465 .0458 .0257 .0269 .0463
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.0476) (.0444) (.0254) (.0262) (.0463)
Realized gain on investments--net --++ (.0001) (.0003) (.0007) .0000
-------- -------- -------- -------- --------
Total dividends and distributions (.0476) (.0445) (.0257) (.0269) (.0463)
-------- -------- -------- -------- --------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return 4.87% 4.52% 2.57% 2.74% 4.44%
======== ======== ======== ======== ========

Ratios to Average Expenses 1.13% .98% .90% .86% .79%
Net Assets: ======== ======== ======== ======== ========
Investment income and realized gain
on investments--net 4.83% 4.35% 2.54% 2.72% 4.48%
======== ======== ======== ======== ========

Supplemental Net assets, end of year (in thousands) $ 34,865 $ 89,119 $135,301 $156,677 $237,868

Data: ======== ======== ======== ======== ========
<FN>
++Less than $.0001 per share.

See Notes to Financial Statements.
</TABLE>

<PAGE>

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 and distributions 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 and distributions 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 operating

<PAGE>

NOTES TO FINANCIAL STATEMENTS (concluded)

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.

4. Capital Loss Carryforward:
At May 31, 1996, the Fund had a net capital loss carryforward of
approximately $4,800, all of which expires in 2004. This amount will
be available to offset like amounts of any future taxable gains.

<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.......................... 9
Portfolio Transactions........................ 9
Determination of Net Asset Value.............. 11
Yield Information............................. 12
Shareholder Services.......................... 12
Investment Account.......................... 12
Exchange Program............................ 13
Taxes......................................... 14
Federal..................................... 14
General Information........................... 16
Description of Series and Shares............ 16
Custodian................................... 16
Transfer Agent.............................. 16
Independent Auditors........................ 16
Legal Counsel............................... 17
Reports to Shareholders..................... 17
Additional Information...................... 17
Appendix...................................... 18
Independent Auditors' Report.................. 20
Financial Statements.......................... 21

</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 08536

Mailing Address:
P.O. Box 9011
Princeton, New Jersey 08543-9011
September 30, 1996

----------------------------------------------------
----------------------------------------------------

<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, 1996

Contained in Part B:
Schedule of Investments as of May 31, 1996
Statement of Assets and Liabilities as of May 31, 1996
Statement of Operations for the year ended May 31, 1996
Statement of Changes in Net Assets for the years ended May 31, 1996
and 1995
Financial Highlights for each of the years in the five-year period
ended May 31, 1996

(B) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------
<S> <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)
(c) -- Form of Sub-Administrative Agreement relating to Summit Cash Reserves Fund.(c)
(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 LLP, 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.

(c) Filed on EDGAR as an exhibit to Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A, filed September 27, 1995.

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, 1996
- ------------------------------------------------------------ ---------------

<S> <C>
Shares of beneficial interest, par value $.10 per share..... 1,516

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

C-2

<PAGE>

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
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 Emerging Tigers 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., 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., 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 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

C-3

<PAGE>

Lynch Global Allocation Fund, Inc., Merrill Lynch Global Bond Fund for
Investment and Retirement, Merrill Lynch Global Convertible Fund, Inc., Merrill
Lynch Global Utility Fund, Inc., Merrill Lynch Growth Fund, Inc., 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., Merrill Lynch Senior Floating Rate Fund, Inc.
and Merrill Lynch Municipal Strategy 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 9081, Princeton, New Jersey 08543-9081. 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, Hewitt, Kirstein and Monagle are directors or officers of one
or more of such companies.

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

Michael J. Hennewinkel........... Senior Vice President Senior Vice President of MLAM

N. John Hewitt................... Senior Vice President Senior Vice President of MLAM; Senior Vice
President of Princeton Services
</TABLE>

C-4

<PAGE>

<TABLE>
<CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT MANAGER PROFESSION, VOCATION OR EMPLOYMENT
- --------------------------------- --------------------------- ------------------------------------------------
<S> <C> <C>
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

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

Michael L. Quinn................. Senior Vice President Senior Vice President of FAM; Senior Vice
President of Princeton Services; Managing
Director and First Vice President of Merrill
Lynch from 1989 until 1995

Richard L. Reller................ Senior Vice President Senior Vice President of MLAM; 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
9081, Princeton, New Jersey 08543-9081, except that the address of Messrs.
Aldrich, Brady, Breen, Crook, Fatseas and Wasel is One Financial Center, 15th
Floor, 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. Kirstein.............. 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

Mark A. DeSario................. Vice President None
</TABLE>

C-5

<PAGE>

<TABLE>
<CAPTION>
(2) (3)
(1) POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH DISTRIBUTOR WITH REGISTRANT
- -------------------------------- --------------------------------------- ---------------------------
<S> <C> <C>
James T. Fatseas................ Vice President None

Michelle T. Lau................. Vice President None

Debra W. Landsman-Yaros......... Vice President None

Gerald M. Richard............... Vice President and Treasurer Treasurer

Salvatore Venezia............... Vice President None

William Wasel................... Vice President None

Robert Harris................... Secretary Secretary
</TABLE>

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,
1996.

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>
SIGNATURE 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, 1996
(Gerald M. Richard)

JOE GRILLS* Trustee
- ----------------------------------
(Joe Grills)

WALTER MINTZ* Trustee
- ----------------------------------
(Walter Mintz)

ROBERT S. SALOMON, JR.* Trustee

- ----------------------------------
(Robert S. Salomon, Jr.)

MELVIN R. SEIDEN* Trustee
- ----------------------------------
(Melvin R. Seiden)

STEPHEN B. SWENSRUD* Trustee
- ----------------------------------
(Stephen B. Swensrud)

*By/s/ GERALD M. RICHARD
- ---------------------------------- September 26, 1996
(Gerald M. Richard,
Attorney-in-Fact)
</TABLE>

C-7

<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------------------------------
<S> <C>
10 -- Opinion of Brown & Wood LLP, counsel to the Registrant.
11 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant.
27 -- Financial Data Schedule.
</TABLE>

- ------------------
(a) Refiled pursuant to the Electronic Data Gathering, Analysis and Retrieval
('EDGAR') phase-in requirements.

<PAGE>

Exhibit 10

Brown & Wood LLP
One World Trade Center
New York, NY 10048-0557

September 30, 1996

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 364,996,205 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

<PAGE>

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 LLP

<PAGE>
Exhibit 11

INDEPENDENT AUDITORS' CONSENT

Summit Cash Reserves Fund
of Financial Institutions Series Trust:

We consent to the use in Post-Effective Amendment No. 15 to Registration
Statement No. 2-78646 of our report dated June 28, 1996 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, 1996

<ARTICLE> 6
<CIK> 0000353281
<NAME> FINANCIAL INSTITUTIONS SERIES TRUST
<SERIES>
<NUMBER> 010
<NAME> SUMMIT CASH RESERVES FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 35348330
<INVESTMENTS-AT-VALUE> 35345891
<RECEIVABLES> 76313
<ASSETS-OTHER> 105743
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35527947
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 663141
<TOTAL-LIABILITIES> 663141
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 34867245
<SHARES-COMMON-STOCK> 34867245
<SHARES-COMMON-PRIOR> 89045387
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2439)
<NET-ASSETS> 34864806
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4190853
<OTHER-INCOME> 0
<EXPENSES-NET> (797439)
<NET-INVESTMENT-INCOME> 3393414
<REALIZED-GAINS-CURRENT> 244
<APPREC-INCREASE-CURRENT> (75867)
<NET-CHANGE-FROM-OPS> 3317791
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3393414)
<DISTRIBUTIONS-OF-GAINS> (244)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 307144408
<NUMBER-OF-SHARES-REDEEMED> (364706205)
<SHARES-REINVESTED> 3383655
<NET-CHANGE-IN-ASSETS> (54254009)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 193099
<INTEREST-EXPENSE> 0

<GROSS-EXPENSE> 797439
<AVERAGE-NET-ASSETS> 70087739
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>