SUMMIT
CASH RESERVES
FUND
Financial Institutions
Series Trust
FUND LOGO
Annual Report
May 31, 2000
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. An
investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other Government agency.
Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the
Fund. 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, 2000
DEAR SHAREHOLDER
For the year ended May 31, 2000, Summit Cash Reserves Fund's Class A
Shares and Class B Shares had net annualized yields of 5.17% and
4.38%, respectively. For the six-month period ended May 31, 2000,
the Fund's Class A Shares and Class B Shares had net annualized
yields of 5.43% and 4.66%, respectively. The Fund's 7-day yield as
of May 31, 2000 was 5.83% for Class A Shares and 5.08% for Class B
Shares.
The average portfolio maturity for Summit Cash Reserves Fund at May
31, 2000 was 47 days, compared to 68 days as of November 30, 1999.
The Environment
As 1999 drew to a close, the Federal Reserve Board took
extraordinary steps to ensure liquidity in the financial markets.
The Federal Reserve Board tightened monetary policy once during the
last quarter of 1999, but adopted a neutral bias through the year-
end in an effort to reassure investors and eliminate uncertainty.
However, growth remained strong and two additional 25 basis point
(0.25%) interest rate increases were implemented in February and
March 2000. At that time, the US Treasury also announced anticipated
changes to the auction schedule. The Federal budget surplus has made
it necessary to decrease the amount of securities sold by the
Treasury, therefore the changes will include reduced auctions,
reduced auction sizes, and a buy-back program (the Treasury intends
to buy back old off-the-run less liquid issues in order to keep
current issues liquid). The announcement caused unintended results
as the yield curve inverted dramatically as investors rushed to buy
the longer-term issues.
At this time, it is unclear when this technical inversion will be
unwound, as it seems likely that further short-term interest rate
increases will be forthcoming as long as the current economic
momentum continues. Although Treasury yields fell sharply, other
fixed-income asset classes did not participate to the same extent.
In addition, the business practices of Government-sponsored agencies
were placed under scrutiny by Congress, which pressured quality
spreads across the yield curve.
In early May, investors began to price in a 50 basis point move,
with a greater probability of more increases later in the summer.
New home sales grew by an alarming 966,000 pace and the unemployment
rate fell to 3.9%. Citing the risk of accelerating inflation, the
Federal Reserve Board increased interest rates by 50 basis points at
their meeting on May 16, 2000. The economy has recently shown signs
of more moderate growth. Therefore, we believe that the Federal
Reserve Board will move more slowly in restricting monetary policy
going forward.
During the six-month period ended May 31, 2000, we maintained a
conservative approach because of the rising interest rate
environment. We adopted a barbell strategy incorporating one-month
and two-month commercial paper with one-year bank certificates of
deposit. We also increased the Fund's position in floating rate
notes since we believe they will provide some protection to the Fund
against rising interest rates.
The Fund's portfolio composition at the end of the May period and as
of our last report to shareholders is detailed as follows:
5/31/00 11/30/99
Bank Notes 11.9% 8.0%
Certificates of Deposit--European -- 1.9
Certificates of Deposit--Yankee 9.7 10.9
Commercial Paper 42.0 43.6
Corporate Notes 2.6 2.8
Funding Agreements 3.5 1.1
Medium-Term Notes 21.5 22.7
Repurchase Agreements -- 6.6
US Government, Agency &
Instrumentality Obligations--
Non-Discount 7.5 3.4
Liabilities in Excess of Other Assets -- (1.0)
Other Assets Less Liabilities 1.3 --
------ ------
Total 100.0% 100.0%
====== ======
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Robert Sabatino)
Robert Sabatino
Vice President and Portfolio Manager
June 30, 2000
Summit Cash Reserves Fund
May 31, 2000
SCHEDULE OF INVESTMENTS (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
Bank Notes--11.9%
American Express $ 5,000 6.73++ % 6/19/2000 $ 5,000
Centurion Bank 5,000 6.75++ 7/13/2000 5,000
First USA Bank NA 2,000 6.215 10/18/2000 1,993
First Union National 5,000 6.87++ 8/28/2000 5,001
Bank
Fleet National Bank 10,000 6.471++ 1/22/2001 10,007
Total Bank Notes
(Cost--$27,006) 27,001
Certificates of Deposit--Yankee--9.7%
Bank Austria AG, NY 3,000 6.06 11/20/2000 2,983
Bank of Nova 2,000 6.74 3/14/2001 1,989
Scotia, NY
Bayerische 3,000 6.61 3/07/2001 2,982
Landesbank
Girozentrale, NY
Credit Suisse 5,000 6.72++ 6/07/2000 5,000
First Boston, NY
Deutsche Bank 3,000 5.62 6/26/2000 2,998
AG, NY
Svenska 2,000 6.65 3/06/2001 1,989
Handelsbanken 2,000 6.98 5/02/2001 1,992
AB, NY
Unibank A/S, NY 2,000 6.81 4/17/2001 1,989
Total Certificates of Deposit--Yankee
(Cost--$21,994) 21,922
Commercial Paper--42.0%
AT&T Corp. 3,000 6.24++ 7/13/2000 2,999
2,000 6.476++ 8/07/2000 2,000
Amsterdam Funding 4,000 6.53 6/02/2000 3,999
Corp. 5,900 6.09 6/12/2000 5,889
British 5,000 6.09 6/30/2000 4,976
Telecommunications
PLC
CXC Incorporated 6,000 6.10 6/20/2000 5,981
Centric Capital Corp. 3,000 6.10 6/16/2000 2,992
DaimlerChrysler 3,000 5.98 6/21/2000 2,990
North America
Holdings Corp.
Eureka 4,000 6.59 7/07/2000 3,974
Securitization Inc.
Face Interest Maturity
Issue Amount Rate* Date Value
Commercial Paper (concluded)
Fortis Funding LLC $ 7,870 6.59 % 7/21/2000 $ 7,798
GE Capital 5,000 6.60 7/21/2000 4,954
International
Funding, Inc.
GTE Corporation 3,600 6.53 6/19/2000 3,588
General Electric 5,000 6.60 7/21/2000 4,954
Financial Assurance
Holdings Inc.
Invensys Plc 4,130 6.60 7/17/2000 4,095
Lehman Brothers 5,000 6.08 8/01/2000 4,943
Holdings Inc. 5,000 6.17 8/17/2000 4,928
New Center Asset 4,078 6.60 7/19/2000 4,042
Trust
Old Line 5,236 6.10 6/01/2000 5,236
Funding Corp.
Salomon, Smith 4,779 6.56 7/12/2000 4,743
Barney Holdings, Inc.
WCP Funding Inc. 5,000 6.08 6/16/2000 4,988
Windmill 5,458 6.08 6/13/2000 5,447
Funding Corp.
Total Commercial Paper
(Cost--$95,529) 95,516
Corporate Notes--2.6%
Associates 1,000 6.375 6/15/2000 1,000
Corporation of
North America
SMM Trust, 5,000 6.321++ 9/25/2000 5,000
Series 1999-H
Total Corporate Notes
(Cost--$6,000) 6,000
Funding Agreements--3.5%
General Electric 2,000 6.278++ 9/01/2000 2,000
Life and Annuity
Assurance Co.
Jackson National 1,000 6.288++ 2/01/2001 1,000
Life Insurance Co.
Pacific Life 5,000 6.278++ 1/31/2001 5,000
Insurance Co.
Total Funding Agreements
(Cost--$8,000) 8,000
Summit Cash Reserves Fund
May 31, 2000
SCHEDULE OF INVESTMENTS (concluded) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
Medium-Term Notes--21.5%
AT & T Capital $ 3,950 7.50 % 11/15/2000 $ 3,958
Corporation
Associates 2,000 5.90 6/23/2000 2,000
Corporation of 2,800 6.44++ 3/16/2001 2,798
North America
Deutsche 1,150 7.00 7/10/2000 1,150
Pfandbrief und
Hypothekenbank
Finova Capital Corp. 2,000 6.45 6/01/2000 2,000
Ford Motor 4,000 6.27++ 10/02/2000 3,999
Credit Company
General Motors 1,000 6.875 7/17/2000 1,000
Acceptance Corp. 2,000 6.253++ 7/20/2000 1,998
8,000 6.091++ 9/01/2000 7,999
Goldman Sachs 2,000 6.00 8/07/2000 1,999
Group, Inc. 4,000 6.55 12/22/2000 4,000
Household Finance 2,000 6.975 6/07/2000 2,000
Corp.
Morgan Stanley, Dean 5,000 6.249++ 1/22/2001 4,998
Witter, Discover & Co. 5,000 6.52++ 3/16/2001 5,000
Face Interest Maturity
Issue Amount Rate* Date Value
Medium-Term Notes (concluded)
Norwest $ 4,000 6.446++% 9/07/2000 $ 3,999
Financial Inc.
Total Medium-Term Notes
(Cost--$48,917) 48,898
US Government, Agency & Instrumentality
Obligations--Non-Discount--7.5%
Federal Home Loan 2,000 6.353++ 7/14/2000 2,000
Banks
Federal National 5,000 6.193++ 9/17/2001 4,995
Mortgage Association
Student Loan 5,000 6.543++ 9/29/2000 5,000
Marketing 5,000 6.413++ 8/23/2001 4,998
Association
Total US Government, Agency & Instrumentality
Obligations--Non-Discount (Cost--$16,993) 16,993
Total Investments (Cost--$224,439)--98.7% 224,330
Other Assets Less Liabilities--1.3% 2,917
--------
Net Assets--100.0% $227,247
========
*Commercial Paper and certain US Government, Agency &
Instrumentality Obligations are traded on a discount basis. The
interest rates shown reflect the rates paid at the time of purchase
by the Fund. Other securities bear interest at the rates shown,
payable at fixed dates through maturity. The interest rates on
variable rate securities are adjusted periodically based on
appropriate indexes. The interest rates shown are the rates in
effect at May 31, 2000.
++Variable Rate Notes.
See Notes to Financial Statements.
Summit Cash Reserves Fund
May 31, 2000
<TABLE>
FINANCIAL INFORMATION
<CAPTION>
Statement of Assets and Liabilities as of May 31, 2000
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$224,439,315*) $224,330,164
Cash 54,383
Receivables:
Beneficial interest sold $ 3,634,423
Interest 1,720,527 5,354,950
------------
Prepaid registration fees 97,141
------------
Total assets 229,836,638
------------
Liabilities: Payables:
Beneficial interest redeemed 2,051,451
Dividends to shareholders 191,623
Distributor 109,889
Investment adviser 77,571 2,430,534
------------
Accrued expenses and other liabilities 159,053
------------
Total liabilities 2,589,587
------------
Net Assets: Net assets $227,247,051
============
Net Assets Class A Shares of beneficial interest, $.10 par value,
Consist of: unlimited number of shares authorized $ 5,259,470
Class B Shares of beneficial interest, $.10 par value,
unlimited number of shares authorized 17,476,151
Paid-in capital in excess of par 204,620,581
Unrealized depreciation on investments--net (109,151)
------------
Net assets $227,247,051
============
Net Asset Class A--Based on net assets of $52,563,936 and 52,594,697 shares of
Value: beneficial interest outstanding $ 1.00
============
Class B--Based on net assets of $174,683,115 and 174,761,505 shares of
beneficial interest outstanding $ 1.00
============
*Cost for Federal income tax purposes. As of May 31, 2000, net
unrealized depreciation for Federal income tax purposes amounted to
$109,151, of which $965 related to appreciated securities and
$110,116 related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 2000
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statement of Operations
For the Year Ended
May 31, 2000
<S> <S> <C> <C>
Investment Income: Interest and amortization of premium and discount earned $ 13,833,865
Expenses: Distribution fees--Class B $ 1,350,752
Investment advisory fees 1,201,451
Professional fees 105,580
Transfer agent fees--Class B 97,150
Printing and shareholder reports 85,883
Accounting services 76,182
Registration fees 70,625
Transfer agent fees--Class A 26,314
Trustees' fees and expenses 25,690
Custodian fees 23,580
Pricing fees 698
Other 19,266
------------
Total expenses before reimbursement 3,083,171
Reimbursement of expenses (110,240)
------------
Total expenses after reimbursement 2,972,931
------------
Investment income--net 10,860,934
------------
Realized & Realized loss on investments--net (6,760)
Unrealized Loss on Change in unrealized depreciation on investments--net (73,037)
Investments--Net: ------------
Net Increase in Net Assets Resulting from Operations $ 10,781,137
============
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 2000
<TABLE>
FINANCIAL INFORMATION (continued)
<CAPTION>
Statements of Changes in Net Assets
For the Year Ended
May 31,
Increase (Decrease) in Net Assets: 2000 1999
<S> <S> <C> <C>
Operations: Investment income--net $ 10,860,934 $ 4,370,063
Realized gain (loss) on investments--net (6,760) 480
Change in unrealized depreciation on investments--net (73,037) (36,114)
------------ ------------
Net increase in net assets resulting from operations 10,781,137 4,334,429
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (3,068,633) (1,258,531)
Shareholders: Class B* (7,785,541) (3,111,532)
Realized gain on investments--net:
Class A -- (120)
Class B* -- (360)
------------ ------------
Net decrease in net assets resulting from
dividends and distributions to shareholders (10,854,174) (4,370,543)
------------ ------------
Beneficial Net increase in net assets derived from beneficial
Interest interest transactions 3,989,978 223,113,472
Transactions: ------------ ------------
Net Assets: Total increase in net assets 3,916,941 223,077,358
Beginning of year 223,330,110 252,752
------------ ------------
End of year $227,247,051 $223,330,110
============ ============
*Class B Shares commenced operations on October 9, 1998.
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 2000
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights
<CAPTION>
The following per share data and ratios have been derived Class A
from information provided in the financial statements. For the Year Ended May 31,
Increase (Decrease) in Net Asset Value: 2000 1999 1998 1997 1996
<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 .0508 .0556 .0531 .0432 .0476
Realized and unrealized gain (loss) on
investments--net (.0005) (.0004) -- .0001 (.0011)
-------- -------- -------- -------- --------
Total from investment operations .0503 .0552 .0531 .0433 .0465
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.0508) (.0556) (.0531) (.0431) (.0476)
Realized gain on investments--net -- --+++ -- -- --+++
-------- -------- -------- -------- --------
Total dividends and distributions (.0508) (.0556) (.0531) (.0431) (.0476)
-------- -------- -------- -------- --------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return** 5.17% 5.71% 5.36% 4.40% 4.95%
======== ======== ======== ======== ========
Ratios to Average Expenses, net of reimbursement .67% .34% .00% 1.38% 1.13%
Net Assets: ======== ======== ======== ======== ========
Expenses .71% 1.04% 72.77% 1.97% 1.13%
======== ======== ======== ======== ========
Investment income and realized gain on
investments--net 5.09% 4.75% 5.30% 4.18% 4.83%
======== ======== ======== ======== ========
Supplemental Data: Net assets, end of year (in thousands) $ 52,564 $ 56,512 $ 253 $ 240 $ 34,865
======== ======== ======== ======== ========
<CAPTION>
Class B
For the
For the Period
Year Oct. 9,
The following per share data and ratios have been derived Ended 1998++ to
from information provided in the financial statements. May 31, May 31,
Increase (Decrease) in Net Asset Value: 2000 1999
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 1.00 $ 1.00
Operating -------- --------
Performance: Investment income--net .0432 .0260
Realized and unrealized loss on investments--net (.0004) (.0002)
-------- --------
Total from investment operations .0428 .0258
-------- --------
Less dividends and distributions:
Investment income--net .0432 (.0260)
Realized gain on investments--net -- --+++
-------- --------
Total dividends and distributions .0432 (.0260)
-------- --------
Net asset value, end of period $ 1.00 $ 1.00
======== ========
Total investment return** 4.38% 4.12%*
======== ========
Ratios to Average Expenses, net of reimbursement 1.43% 1.10%*
Net Assets: ======== ========
Expenses 1.48% 1.46%*
======== ========
Investment income and realized gain on investments--net 4.33% 3.99%*
======== ========
Supplemental Data: Net assets, end of period (in thousands) $174,683 $166,818
======== ========
*Annualized.
**The Fund's Investment Adviser voluntarily waived a portion of its
management fee when applicable. Without such waiver, the Fund's
performance would have been lower.
++Commencement of operations.
+++Amount is less than $.0001 per share.
See Notes to Financial Statements.
</TABLE>
Summit Cash Reserves Fund
May 31, 2000
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 select groups of purchasers. The Fund is
currently the only operating series of the Trust. The Fund's
financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. Both
classes of shares have equal voting, dividend, liquidation and other
rights, except that only shares of the respective classes are
entitled to vote on matters concerning only that class and Class B
Shares bear certain expenses related to the distribution of such
shares. The following is a summary of significant accounting
policies followed by the Fund.
(a) Valuation of investments--Portfolio securities with remaining
maturities of greater than sixty days, for which market quotations
are readily available, are valued at market value. As securities
transition from sixty-one to sixty days 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. Securities maturing sixty days or less from their date of
acquisition are valued at amortized cost, which approximates market
value. For the 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. Other investments for which market
quotations are not readily available are valued at their fair value
as determined in good faith by or under the direction of the Fund's
Board of Trustees.
(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. If the counterparty defaults and
the fair value of the collateral declines, liquidation of the
collateral by the Fund may be delayed or limited.
(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 Management Agreement with
Fund Asset Management, L.P. ("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. The Fund has entered into a Distribution Agreement
and Distribution Plan with Princeton Funds Distributor, Inc. ("PFD"
or the "Distributor"), which is a wholly-owned subsidiary of Merrill
Lynch Group, Inc.
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. FAM also performs certain
administrative services necessary for the operation of the Trust and
the Fund. For such services, FAM receives a fee from the Fund at the
end of each month at the annual rate of .50% of the average daily
net assets of the Fund. For the year ended May 31, 2000, FAM earned
fees of $1,201,451, of which $110,240 was waived.
Pursuant to the Distribution Plan adopted by the Fund in accordance
with Rule 12b-1 under the Investment Company Act of 1940, the Fund
pays the Distributor an ongoing distribution fee accrued daily and
paid monthly at the annual rate of .75% of the Fund's average daily
net assets attributable to Class B Shares. This fee may be used to
help defray the expenses associated with marketing activities and
services related to Class B Shares.
For the year ended May 31, 2000, MLPF&S received contingent deferred
sales charges of $982,984 relating to transactions in Class B
Shares, respectively.
Financial Data Services, Inc. ("FDS"), 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, PFD, FDS, and/or ML & Co.
3. Shares of Beneficial Interest:
Net increase in net assets derived from beneficial interest
transactions were $3,989,978 and $223,113,472 for the years ended
May 31, 2000 and May 31, 1999, respectively.
Transactions in shares of beneficial interest for each class were as
follows:
Class A Shares for the Year Dollar
Ended May 31, 2000 Shares Amount
Shares sold 244,294,503 $ 244,294,503
Shares issued to share-
holders in reinvestment
of dividends 2,362,958 2,362,958
------------ -------------
Total issued 246,657,461 246,657,461
Shares redeemed (250,584,757) (250,584,757)
------------ -------------
Net decrease (3,927,296) $ (3,927,296)
============ =============
Class A Shares for the Year Dollar
Ended May 31, 1999 Shares Amount
Shares sold 294,469,397 $ 294,469,397
Shares issued to share-
holders in reinvestment
of dividends and
distributions 948,339 948,339
------------ -------------
Total issued 295,417,736 295,417,736
Shares redeemed (239,148,496) (239,148,496)
------------ -------------
Net increase 56,269,240 $ 56,269,240
============ =============
Class B Shares for the Year Dollar
Ended May 31, 2000 Shares Amount
Shares sold 379,616,380 $ 379,616,380
Shares issued to share-
holders in reinvestment
of dividends 6,558,409 6,558,409
------------ -------------
Total issued 386,174,789 386,174,789
Shares redeemed (378,257,515) (378,257,515)
------------ -------------
Net increase 7,917,274 $ 7,917,274
============ =============
Class B Shares for the Period
October 9, 1998++ to Dollar
May 31, 1999 Shares Amount
Shares sold 380,085,530 $ 380,085,530
Shares issued to share-
holders in reinvestment
of dividends and
distributions 2,716,668 2,716,668
------------ -------------
Total issued 382,802,198 382,802,198
Shares redeemed (215,957,966) (215,957,966)
------------ -------------
Net increase 166,844,232 $ 166,844,232
============ =============
++Prior to October 9, 1998 (commencement of operations), the Fund
issued 10,000 shares to MLAM for $10,000.
4. Capital Loss Carryforward:
At May 31, 2000, the Fund had a net capital loss carryforward of
approximately $5,000, of which $4,000 expires in 2004 and $1,000
expires in 2005. This amount will be available to offset like
amounts of any future taxable gains.
Summit Cash Reserves Fund
May 31, 2000
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,
2000, 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 auditing standards
generally accepted in the United States of America. 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, 2000 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, 2000, the results of its operations, the changes in its
net assets, and the financial highlights for the respective stated
periods in accordance with accounting principles generally accepted
in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
June 28, 2000
OFFICERS AND TRUSTEES
Terry K. Glenn, President and Trustee
Joe Grills, Trustee
Walter Mintz, Trustee
Robert S. Salomon Jr., Trustee
Melvin R. Seiden, Trustee
Stephen B. Swensrud, Trustee
Arthur Zeikel, Trustee
Kevin J. McKenna, Senior Vice President
Joseph T. Monagle Jr., Senior Vice President
Robert Sabatino, Vice President
Donald C. Burke, Vice President and Treasurer
Robert Harris, Secretary
Custodian
The Bank of New York
90 Washington Street, 12th Floor
New York, NY 10286
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210
Summit Cash Reserves Fund
May 31, 2000
IMPORTANT TAX INFORMATION (unaudited)
None of the ordinary income distributions paid daily by Summit Cash
Reserves Fund of the Financial Institutions Series Trust during the
fiscal year ended May 31, 2000 qualify for the dividends received
deduction for corporations. Additionally, there were no long-term
capital gains distributions paid by the Fund during the year.
Of the Fund's ordinary income distributions paid during the year,
4.07% was attributable to Federal obligations. In calculating the
foregoing percentage, expenses of the Fund have been allocated on a
pro rata basis.
The law varies in each state as to whether and what percentage of
dividend income attributable to Federal obligations is exempt from
state income tax. We recommend that you consult your tax adviser to
determine if any portion of the dividends you received is exempt
from state income tax.
Please retain this information for your records.
