SUMMIT
CASH RESERVES
FUND
Financial Institutions
Series Trust
FUND LOGO
Semi-Annual Report
November 30, 1995
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance, which will fluctuate. The Fund
seeks to maintain a consistent $1.00 net asset value per share,
although this cannot be assured. An investment in the Fund is
neither insured nor guaranteed by the US Government. Statements and
other information herein are as dated and are subject to change.
<PAGE>
Summit Cash
Reserves Fund
Financial Institutions
Series Trust
Box 9011
Princeton, NJ
08543-9011
DEAR SHAREHOLDER
For the six months ended November 30, 1995, Summit Cash Reserves
Fund paid shareholders a net annualized dividend of 5.11%*. The
Fund's 7-day yield as of November 30, 1995 was 4.89%.
The average portfolio maturity for Summit Cash Reserves Fund at
November 30, 1995 was 57 days compared to 72 days at May 31, 1995.
The Environment
The pace of US economic activity apparently changed during the six
months ended November 30, 1995. During the summer months, there was
strong evidence of a slowing economy, a trend that was reversed
during the third calendar quarter of 1995, when gross domestic
product growth rebounded to a 4.2% pace. However, recent economic
releases suggest that this rate of expansion has not been sustained.
<PAGE>
A number of key measures of economic growth indicate that the
economy is losing momentum. Retail sales for November were soft,
reflecting continued caution on the part of debt-burdened consumers.
Home sales and housing starts both declined in October, despite
lower mortgage rates. At the same time, there has been an increase
in initial unemployment claims, along with weak job and income
growth. In response to this slowing in the economy, inflationary
pressures continue to be subdued.
It appears that investors are not only anticipating that a
lackluster economy will lead the Federal Reserve Board to resume its
easing of monetary policy (as it did at its December 19, 1995
meeting), but also that the Clinton Administration and Congress will
reach an agreement in their current Federal budget deliberations.
While the probable direction of economic activity will continue to
be the primary focus of investors in the weeks ahead, a credible
plan for reducing the Federal budget deficit will also be an
important factor in the investment outlook.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Throughout the six months ended November 30, 1995, yields on
fixed-income securities fell dramatically. With investors seeking
yield, the yield curve flattened and ultimately inverted out to the
one-year sector. Lack of Treasury issuance coupled with strong
foreign demand kept the front end of the yield curve well bid. As a
result, quality spreads remained wide enough for the Fund to favor
short-term money market securities over more expensive short-term
Treasury securities.
The portfolio' s composition at the end of the November period and
as of our last report is detailed below:
Issue 11/30/95 5/31/95
Bank Notes -- 5.6%
Certificates of Deposit--European -- 1.1
Certificates of Deposit--Yankee 4.5% 11.2
Commercial Paper--Discount 44.4 37.8
Corporate Notes 3.0 2.3
Master Notes 4.5 4.5
Repurchase Agreements 0.4 --
US Government Agency
Coupon Obligations 3.0 --
US Government, Agency
& Instrumentality
Obligations--Discount 5.9 6.5
US Government, Agency
& Instrumentality
Obligations--Non-Discount 35.6 28.9
Other Assets Less Liabilities -- 2.1
Liabilities in Excess of Other Assets (1.3) --
------ ------
Total 100.0% 100.0%
====== ======
<PAGE>
In Conclusion
We appreciate your continued support of Summit Cash Reserves Fund,
and we look forward to assisting you with your financial needs in
the months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Carlo J. Giannini)
Carlo J. Giannini
Vice President and Portfolio Manager
January 5, 1996
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <S> <C>
Certificates of Deposit--Yankee--4.5%
Rabobank $2,000 5.76 % 1/31/96 $ 1,999
Nederland, NY 1,000 6.69 3/08/96 1,002
Total Certificates of Deposit--Yankee
(Cost--$3,000) 3,001
<PAGE>
Commercial Paper--Discount--44.4%
ABN AMRO 1,500 5.65 12/27/95 1,494
North America
Finance Inc.
Dean Witter, 1,000 5.70 1/29/96 990
Discover & Co.
Electricite 3,000 5.50 4/17/96 2,936
de France
Ford Motor 3,000 5.69 1/30/96 2,970
Credit Co.
General Motors 2,000 5.73 2/23/96 1,973
Acceptance Corp.
Hanson Finance 1,000 5.63 1/08/96 994
(UK) PLC
Preferred 2,000 5.69 2/05/96 1,979
Receivables
Funding Corp.
Siemens 2,000 5.48 1/11/96 1,986
Corporation
Svenska 3,000 5.68 2/09/96 2,966
Handelsbanken,
Inc.
Sweden, 1,500 5.66 2/15/96 1,482
Kingdom of
Toshiba 1,090 5.65 12/19/95 1,087
International
Finance
(UK) PLC
Vattenfall 3,000 5.64 3/20/96 2,948
Treasury Inc.
<PAGE>
Western Australia 1,000 5.60 1/08/96 994
Treasury Corp.
Wool International 2,000 5.61 4/12/96 1,959
Xerox Corp. 3,000 5.70 1/23/96 2,974
Total Commercial Paper--Discount
(Cost--$29,734) 29,732
Corporate Notes--3.0%
Abbey National 1,000 6.45 5/15/96 1,003
Treasury
Services PLC
SMM Trust (1995-K) 1,000 6.08 6/14/96 1,000
Total Corporate Notes
(Cost--$2,000) 2,003
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in Thousands)
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <S> <C>
Master Notes--4.5%
Goldman Sachs $3,000 5.82% 2/14/96 $ 3,000
Group L.P.++
Total Master Notes (Cost--$3,000) 3,000
US Government Agency Coupon Obligations--3.0%
Federal Home 2,000 6.787 2/15/96 2,003
Loan Bank
Total US Government Agency Coupon Obligations
(Cost--$1,999) 2,003
US Government, Agency & Instrumentality Obligations--
Discount--5.9%
<PAGE>
Federal Home 1,000 6.08 3/07/96 985
Loan Bank
US Treasury Bills 3,000 6.83 1/11/96 2,981
Total US Government, Agency & Instrumentality
Obligations--Discount (Cost--$3,960) 3,966
US Government, Agency & Instrumentality Obligations--
Non-Discount--35.6%
Federal Home 1,000 6.18 12/28/95 1,000
Loan Bank++ 1,000 6.21 6/17/96 1,000
5,000 5.82 8/05/96 4,995
Federal National 2,000 6.08 5/13/96 2,000
Mortgage 2,000 5.81 7/08/96 2,000
Association++ 1,000 5.67 8/08/96 1,000
5,000 5.83 2/21/97 5,000
1,800 6.20 5/19/97 1,800
1,000 6.25 5/14/98 1,000
US Treasury Notes 1,000 4.25 12/31/95 999
2,000 5.875 5/31/96 2,003
1,000 6.875 10/31/96 1,012
Total US Government, Agency & Instrumentality
Obligations--Non-Discount (Cost--$23,804) 23,809
Face
Amount Issue
Repurchase Agreements**--0.4%
$247 PaineWebber Inc., purchased on
11/30/1995 to yield 5.91% to 12/01/1995 247
Total Repurchase Agreements (Cost--$247) 247
Total Investments (Cost--$67,744)--101.3% 67,761
Liabilities in Excess of Other Assets--(1.3%) (873)
---------
Net Assets--100.0% $ 66,888
=========
<PAGE>
<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 November 30, 1995.
**Repurchase Agreements are fully collateralized by US Government
Obligations.
++Variable Rate Notes.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Statement of Assets and Liabilities as of November 30, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$67,743,886*)
(Notes 1a & 1e) $ 67,760,956
Cash 822
Interest receivable 244,402
Prepaid registration fees and other assets (Note 1d) 88,267
------------
Total assets 68,094,447
------------
Liabilities: Payables:
Beneficial interest redeemed $ 1,072,562
Administrator (Note 2) 16,524
Investment adviser (Note 2) 16,524 1,105,610
------------
Accrued expenses and other liabilities 100,826
------------
Total liabilities 1,206,436
------------
Net Assets: Net assets $ 66,888,011
============
<PAGE>
Net Assets Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 6,687,094
Paid-in capital in excess of par 60,183,847
Unrealized appreciation on investments--net 17,070
------------
Net assets--Equivalent to $1.00 per share based on 66,870,941
shares of beneficial interest outstanding $ 66,888,011
============
<FN>
*Cost for Federal income tax purposes. As of November 30, 1995, net
unrealized appreciation for Federal income tax purposes amounted to
$17,070, of which $20,861 related to appreciated securities and
$3,791 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Six Months Ended
November 30, 1995
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 2,588,523
(Note 1c):
Expenses: Investment advisory fees (Note 2) $ 116,137
Administrative fees (Note 2) 116,137
Transfer agent fees (Note 2) 97,682
Registration fees (Note 1d) 34,283
Professional fees 29,153
Accounting services (Note 2) 20,419
Trustees' fees and expenses 16,261
Custodian fees 11,685
Printing and shareholder reports 11,149
Other 8,374
------------
Total expenses 461,280
------------
Investment income--net 2,127,243
------------
<PAGE>
Unrealized Change in unrealized appreciation on investments--net (56,358)
Loss on ------------
Investments Net Increase in Net Assets Resulting from Operations $ 2,070,885
- --Net ============
(Note 1c):
</TABLE>
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: Nov. 30, 1995 May 31, 1995
<S> <S> <C> <C>
Operations: Investment income--net $ 2,127,243 $ 4,854,999
Realized gain on investments--net -- 5,155
Change in unrealized appreciation/depreciation on
investments--net (56,358) 143,964
------------ ------------
Net increase in net assets resulting from operations 2,070,885 5,004,118
------------ ------------
Dividends & Investment income--net (2,127,243) (4,854,999)
Distributions to Realized gain on investments--net -- (5,155)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends and
distributions to shareholders (2,127,243) (4,860,154)
------------ ------------
Beneficial Net proceeds from sale of shares 173,937,946 386,906,148
Interest Net asset value of shares issued to shareholders in reinvestment
Transactions of dividends and distributions (Note 1f) 2,120,724 4,849,989
(Note 3): ------------ ------------
176,058,670 391,756,137
Cost of shares redeemed (198,233,116) (438,082,555)
------------ ------------
Net decrease in net assets derived from beneficial interest
transactions (22,174,446) (46,326,418)
------------ ------------
Net Assets: Total decrease in net assets (22,230,804) (46,182,454)
Beginning of period 89,118,815 135,301,269
------------ ------------
End of period $ 66,888,011 $ 89,118,815
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements. For the Six
Months Ended For the Year Ended May 31,
Increase (Decrease) in Net Asset Value: Nov. 30, 1995 1995 1994 1993 1992
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Operating --------- --------- --------- --------- ---------
Performance: Investment income--net .0253 .0444 .0254 .0262 .0464
Realized and unrealized gain (loss) on
investments--net (.0007) .0014 .0003 .0007 (.0001)
--------- --------- --------- --------- ---------
Total from investment operations .0246 .0458 .0257 .0269 .0463
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net (.0253) (.0444) (.0254) (.0262) (.0463)
Realized gain on investments--net -- (.0001) (.0003) (.0007) .0000
--------- --------- --------- --------- ---------
Total dividends and distributions (.0253) (.0445) (.0257) (.0269) (.0463)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total investment return 5.11%* 4.52% 2.57% 2.74% 4.44%
========= ========= ========= ========= =========
Ratios to Average Expenses 1.09%* .98% .90% .86% .79%
Net Assets: ========= ========= ========= ========= =========
Investment income and realized gain
on investments--net 5.04%* 4.35% 2.54% 2.72% 4.48%
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $ 66,888 $ 89,119 $ 135,301 $ 156,677 $ 237,868
========= ========= ========= ========= =========
<FN>
*Annualized.
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. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. 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.
<PAGE>
(e) Repurchase agreements-- The Fund invests in US Government
securities pursuant to repurchase agreements with a member bank of
the Federal Reserve System or a primary dealer in US Government
securities. Under such agreements, the bank or primary dealer agrees
to repurchase the security at a mutually agreed upon time and price.
The Fund takes possession of the underlying securities, marks to
market such securities and, if necessary, receives additional
securities daily to ensure that the contract is fully
collateralized.
(f) Dividends to shareholders-- The Fund declares dividends daily
and reinvests daily such dividends (net of non-resident alien tax
and back-up withholding tax) in additional fund shares at net asset
value. Dividends are declared from the total of net investment
income and net realized gain or loss on investments.
2. Investment Advisory and Administrative
Agreements:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM" or "Investment Adviser") and Broadcort
Capital Corporation (the "Administrator"), a subsidiary of Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of ML & Co., which is the limited partner
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Investment Adviser and the Administrator each receive
a fee from the Fund at the end of each month at the annual rate of
0.275% of the average daily net assets of the Fund not exceeding
$500 million, and at the annual rate of 0.25% of average daily net
assets in excess of $500 million. Under their respective agreements
with the Fund, the Investment Adviser and the Administrator are
obligated to reimburse the Fund to the extent the Fund's aggregate
ordinary operating expenses (excluding interest, taxes, brokerage
fees and commissions, and extraordinary charges such as litigation
costs) exceed in any fiscal year 2.5% of the Fund's first $30
million of average daily net assets, 2.0% of the next $70 million of
average daily net assets, and 1.5% of the remaining average daily
net assets. No fee payment will be made to the Investment Adviser or
Administrator during the year which will cause such expenses to
exceed the pro rata expense limitation at the time of such payment.
The Investment Adviser and Administrator will share equally with
respect to any reimbursements made pursuant to the expense
limitations.
<PAGE>
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.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Joe Grills, Trustee
Walter Mintz, Trustee
Melvin R. Seiden, Trustee
Stephen B. Swensrud, Trustee
Harry Woolf, Trustee
Terry K. Glenn, Executive Vice President
Donald C. Burke, Vice President
Carlo J. Giannini, Vice President
Kevin J. McKenna, Vice President
Joseph T. Monagle, Vice President
Gerald M. Richard, Treasurer
Robert Harris, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, New York 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210
<PAGE>
