SUMMIT
CASH RESERVES
FUND
Financial Institutions
Series Trust
FUND LOGO
Annual Report
May 31, 1998
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
Printed on post-consumer recycled paper
Summit Cash Reserves Fund
May 31, 1998
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Face Interest Maturity Value
Issue Amount Rate* Date (Note 1a)
<S> <C> <C> <C> <C>
US Treasury Bill $230,000 4.85% 8/06/98 $227,955
Total US Government Obligations--Discount (Cost--$227,955) 227,955
Total Investments (Cost--$227,955)--90.2% 227,955
Other Assets Less Liabilities--9.8% 24,797
--------
Net Assets--100.0% $252,752
========
<FN>
*Certain US Government Obligations are traded on a discount basis;
the interest rate shown is the discount rate paid at the time of
purchase by the Fund.
See Notes to Financial Statements.
</TABLE>
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
Kevin J. McKenna, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Donald C. Burke, Vice President
Carlo J. Giannini, 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
Summit Cash Reserves Fund
May 31, 1998
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of May 31, 1998
<S> <S> <C>
Assets: Investments, at value (identified cost--$227,955*) (Notes 1a & 1e) $ 227,955
Cash 739
Investment adviser receivable (Note 2) 10,237
Prepaid registration fees and other assets (Note 1d) 96,211
------------
Total assets 335,142
------------
Liabilities: Payable to administrator (Note 2) 59
Accrued expenses and other liabilities 82,331
------------
Total liabilities 82,390
------------
Net Assets: Net assets $ 252,752
============
Net Assets Shares of beneficial interest, $.10 par value, unlimited
Consist of: number of shares authorized $ 25,275
Paid-in capital in excess of par 227,477
------------
Net assets--Equivalent to $1.00 per share based on 252,752 shares of
beneficial interest outstanding $ 252,752
============
<FN>
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations
<CAPTION>
For the Year Ended
May 31, 1998
<S> <S> <C> <C>
Investment Income Interest and amortization of premium and discount earned $ 13,040
(Note 1c):
Expenses: Professional fees $ 106,500
Registration fees (Note 1d) 43,689
Accounting services (Note 2) 15,492
Printing and shareholder reports 6,688
Trustees' fees and expenses 5,332
Investment advisory fees (Note 2) 677
Administrative fees (Note 2) 677
------------
Total expenses before reimbursement 179,055
Reimbursement of expenses (Note 2) (179,055)
------------
Total expenses after reimbursement 0
------------
Investment income--net 13,040
------------
Net Increase in Net Assets Resulting from Operations $ 13,040
============
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 1998
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Year Ended May 31,
Increase (Decrease) in Net Assets: 1998 1997
<S> <S> <C> <C>
Operations: Investment income--net $ 13,040 $ 457,144
Realized loss on investments--net -- (853)
Change in unrealized appreciation on investments--net -- 2,439
------------ ------------
Net increase in net assets resulting from operations 13,040 458,730
------------ ------------
Dividends to Investment income--net (13,040) (456,291)
Shareholders ------------ ------------
(Note 1f): Net decrease in net assets resulting from dividends
to shareholders (13,040) (456,291)
------------ ------------
Beneficial Net proceeds from sale of shares -- 68,683,693
Interest Net asset value of shares issued to shareholders in
Transactions reinvestment of dividends (Note 1f) 13,013 451,377
(Note 3): ------------ ------------
13,013 69,135,070
Cost of shares redeemed -- (103,762,576)
------------ ------------
Net increase (decrease) in net assets derived from beneficial
interest transactions 13,013 (34,627,506)
Net Assets: Total increase (decrease) in net assets 13,013 (34,625,067)
Beginning of year 239,739 34,864,806
------------ ------------
End of year $ 252,752 $ 239,739
============ ============
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 1998
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 Year Ended May 31,
Increase (Decrease) in Net Asset Value: 1998 1997 1996 1995 1994
<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 .0531 .0432 .0476 .0444 .0254
Realized and unrealized gain (loss) on
investments--net -- .0001 (.0011) .0014 .0003
-------- -------- -------- -------- --------
Total from investment operations .0531 .0433 .0465 .0458 .0257
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.0531) (.0431) (.0476) (.0444) (.0254)
Realized gain on investments--net -- -- --++ (.0001) (.0003)
-------- -------- -------- -------- --------
Total dividends and distributions (.0531) (.0431) (.0476) (.0445) (.0257)
-------- -------- -------- -------- --------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return 5.44% 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 72.77% 1.97% 1.13% .98% .90%
======== ======== ======== ======== ========
Investment income and realized gain on
investments--net 5.30% 4.18% 4.83% 4.35% 2.54%
======== ======== ======== ======== ========
Supplemental Net assets, end of year (in thousands) $ 253 $ 240 $ 34,865 $ 89,119 $135,301
Data: ======== ======== ======== ======== ========
<FN>
++Amount is less than $.0001 per share.
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 1998
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 May 31,
1998, 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. 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 money market
securities pursuant to repurchase agreements. Under such agreements,
the counterparty 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 year
ended May 31, 1998, FAM earned fees of $677, all of which were
waived. FAM also reimbursed the Fund for additional expenses of
$178,378. 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.
Summit Cash Reserves Fund
May 31, 1998
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, 1998, 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.
<AUDIT-REPORT>
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,
1998, 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,
1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Summit Cash Reserves Fund of Financial Institutions Series Trust as
of May 31, 1998, 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 16, 1998
</AUDIT-REPORT>
