[FUND LOGO]
STRATEGIC
Performance
Semi-Annual Report
November 30, 1997
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.
Summit Cash Reserves Fund
Financial Institutions Series Trust
Box 9011
Princeton, NJ
08543-9011
[RECYCLE LOGO]
Printed on post-consumer recycled paper
Summit Cash Reserves Fund November 30, 1997
DEAR SHAREHOLDER
For the six months ended November 30, 1997, Summit Cash Reserves Fund
paid shareholders a net annualized dividend of 6.14%.* The Fund's 7-
day yield as of November 30, 1997 was 4.39%.
The average portfolio maturity for Summit Cash Reserves Fund at
November 30, 1997 was 52 days, compared to 15 days as of May 31, 1997.
The Environment
Volatility highlighted stock and bond markets worldwide during the
six-month period ended November 30, 1997. The difficulties began in
Southeast Asia. Following currency devaluations in several Southeast
Asian countries this summer, the Hong Kong dollar -- the value of
which is pegged to the US dollar -- came under speculative attack in
foreign currency markets. Monetary authorities in Hong Kong raised
interest rates to support the currency, and the Hong Kong stock market
declined sharply. This event raised investor concerns worldwide
regarding the viability of continued global economic growth.
At first, US stock market investors focused on the challenges that
would face US multinational corporations in the wake of the poorer
Asian economic prospects. The sell-off then broadened to other stocks
as well. Although the decline proved to be short-lived, investor
confidence was not definitively restored, and stock market volatility
continued. Although the US bond market benefited during periods when
investors anticipated slower economic growth, the release of stronger-
than-expected economic statistics led to periods of declining bond
prices.
For the six months ended November 30, 1997, Summit Cash Reserves
Fund's asset base increased slightly to approximately $247,000. The
Fund was invested in US Treasury bills, a strategy we anticipate
continuing for the foreseeable future.
As 1997 draws to a close, investors are likely to continue to focus on
the prospects for the US economy. Although the Federal Reserve Board
did not tighten monetary policy at its November 12, 1997 meeting, it
remains to be seen whether US economic growth remains moderate enough
and inflationary pressures sufficiently contained to preclude an
increase in short-term interest rates in the near term.
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,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/CARLO J. GIANNINI
Carlo J. Giannini
Vice President and Portfolio Manager
December 30, 1997
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after
all expenses.
<TABLE>
<CAPTION>
Summit Cash Reserves Fund November 30, 1997
SCHEDULE OF INVESTMENTS
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
US Government Obligations -- Discount
US Treasury Bills $10,000 5.20 % 1/22/98 $9,925
195,000 5.205 1/22/98 193,538
---------
Total US Government Obligations -- Discount (Cost -- $203,458) 203,463
Total Investments (Cost -- $203,458) -- 82.3% 203,463
Other Assets Less Liabilities -- 17.7% 43,687
---------
Net Assets -- 100.0% $247,150
=========
* Certain US Government Obligations are traded on a discount basis; the interest rates shown are the discount rates
paid at the time of purchase by the Fund.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL INFORMATION
Statement of Assets and Liabilities as of November 30, 1997
<S> <C> <C>
Assets: Investments, at value (identified cost -- $203,458*) (Notes 1a & 1e) $203,463
Cash 9,024
Investment adviser receivable (Note 2) 9,246
Prepaid registration fees and other assets (Note 1d) 92,718
---------
Total assets 314,451
---------
Liabilities: Payable to administrator (Note 2) 52
Accrued expenses and other liabilities 67,249
---------
Total liabilities 67,301
---------
Net Assets: Net assets $247,150
=========
Net Assets Shares of beneficial interest, $.10 par value, unlimited number of
Consist of: shares authorized $24,715
Paid-in capital in excess of par 222,430
Unrealized appreciation on investments -- net 5
---------
Net assets -- Equivalent to $1.00 per share based on 247,145 shares
of beneficial interest outstanding $247,150
=========
* Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Six Months Ended
November 30, 1997
<S> <C> <C> <C>
Investment Income Interest and amortization of premium and discount earned $7,428
(Note 1c):
Expenses: Professional fees $20,419
Registration fees (Note 1d) 19,649
Printing and shareholder reports 8,038
Accounting services (Note 2) 5,906
Investment advisory fees (Note 2) 335
Administrative fees (Note 2) 335
---------
Total expenses before reimbursement 54,682
Reimbursement of expenses (Note 2) (54,682)
---------
Total expenses after reimbursement 0
---------
Investment income -- net 7,428
---------
Unrealized Gain on Change in unrealized appreciation on investments -- net 5
Investments -- Net ---------
(Note 1c): Net Increase in Net Assets Resulting from Operations $7,433
=========
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
November 30, May 31,
Increase (Decrease) in Net Assets: 1997 1997
<S> <C> <C> <C>
Operations: Investment income -- net $7,428 $457,144
Realized loss on investments -- net -- (853)
Change in unrealized appreciation/depreciation on investments -- net 5 2,439
------------ ------------
Net increase in net assets resulting from operations 7,433 458,730
------------ ------------
Dividends to Investment income -- net (7,428) (456,291)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends to shareholders (7,428) (456,291)
------------ ------------
Beneficial Interest Net proceeds from sale of shares -- 68,683,693
Transactions Net asset value of shares issued to shareholders in reinvestment of
(Note 3): dividends (Note 1f) 7,406 451,377
------------ ------------
7,406 69,135,070
Cost of shares redeemed -- (103,762,576)
------------ ------------
Net increase (decrease) in net assets derived from beneficial interest
transactions 7,406 (34,627,506)
------------ ------------
Net Assets: Total increase (decrease) in net assets 7,411 (34,625,067)
Beginning of period 239,739 34,864,806
------------ ------------
End of period $247,150 $239,739
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Nov. 30, For the Year Ended May 31,
1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<S> <C> <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 .0306 .0432 .0476 .0444 .0254
Realized and unrealized gain (loss) on
investments -- net --+ .0001 (.0011) .0014 .0003
--------- --------- --------- --------- ---------
Total from investment operations .0306 .0433 .0465 .0458 .0257
--------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income -- net (.0306) (.0431) (.0476) (.0444) (.0254)
Realized gain on investments -- net -- -- --+ (.0001) (.0003)
--------- --------- --------- --------- ---------
Total dividends and distributions (.0306) (.0431) (.0476) (.0445) (.0257)
--------- --------- --------- --------- ---------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
========= ========= ========= ========= =========
Total investment return 6.14%++++ 4.40% 4.95% 4.51% 2.56%
========= ========= ========= ========= =========
Ratios to Average Expenses, net of reimbursement .00%* 1.38% 1.13% .98% .90%
Net Assets: ========= ========= ========= ========= =========
Expenses 44.94%* 1.97% 1.13% .98% .90%
========= ========= ========= ========= =========
Investment income and realized gain on
investments -- net 6.11%* 4.18% 4.83% 4.35% 2.54%
========= ========= ========= ========= =========
Supplemental Net assets, end of period
Data: (in thousands) $247 $240 $34,865 $89,119 $135,301
========= ========= ========= ========= =========
* Annualized.
+ Amount is less than $.0001 per share.
++++ Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund November 30, 1997
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. As of November 30, 1997, all of
the Fund's shares outstanding are owned by Fund Asset Management, L.P.
("FAM"). Furthermore, the Fund is not offering additional shares for
purchase at the present time. 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.
(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 monthly 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 and an
Administrative Agreement with FAM. The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned subsidiary
of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities and equipment to provide
such services to the Fund. For such services, the Investment Adviser
receives 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. For the six months ended
November 30, 1997, FAM earned fees of $335, all of which were waived.
FAM also reimbursed the Fund for additional expenses of $54,347.
Pursuant to the Administrative Agreement, the Fund pays FAM a monthly
fee identical to the investment advisory fee, in return for the
performance of administrative services (other than investment advice
and related portfolio activities) necessary for the operation of the
Fund.
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, 1997, the Fund had a net capital loss carryforward of
approximately $6,000, of which $5,000 expires in 2004 and $1,000
expires in 2005. This amount will be available to offset like amounts
of any future taxable gains.
OFFICERS AND TRUSTEES
Arthur Zeikel, President and Trustee
Joe Grills, Trustee
Walter Mintz, Trustee
Robert S. Salomon Jr., Trustee
Melvin R. Seiden, Trustee
Stephen B. Swensrud, 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, NY 10286
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210
