MUNICIPAL FUND FOR TEMPORARY INVESTMENT, 497, 1996-04-08

MUNICIPAL FUND FOR TEMPORARY INVESTMENT
497, 1996-04-08

Previous: IRT PROPERTY CO, DEF 14A, 1996-04-08

Next: TRIAD SYSTEMS CORP, SC 13D/A, 1996-04-08

<PAGE> 1

MUNIFUND
An Investment Portfolio Offered by
MUNICIPAL FUND FOR TEMPORARY INVESTMENT

<TABLE>
<S> <C>
400 Bellevue Parkway For purchase and redemption orders only call:
Suite 100 800-441-7450 (in Delaware: 302-791-5350).
Wilmington, DE 19809 For yield information call: 800-821-6006
(MuniFund shares code: 50; MuniFund Dollar
shares code: 59).
For other information call: 800-821-7432.
</TABLE>

Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company that currently offers shares in three
separate investment portfolios. The shares described in this Prospectus
represent interests in the MuniFund portfolio, a money market portfolio (the
"Fund"). The Fund's investment objective is to provide institutions with as high
a level of current interest income exempt from federal income taxes as is
consistent with relative stability of principal. The Fund invests substantially
all of its assets in short-term tax-exempt obligations issued by state and local
governments.

Fund shares may not be purchased by individuals directly, but institutional
investors may purchase shares for accounts maintained by individuals. In
addition to MuniFund Shares, investors may purchase MuniFund "Dollar Shares"
which accrue daily dividends in the same manner as MuniFund Shares but bear all
fees payable by the Fund to institutional investors for certain services they
provide to the beneficial owners of such Shares. (See "Management of the
Fund--Service Organizations.")

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

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED,
ENDORSED, OR OTHERWISE SUPPORTED BY PNC BANK CORP. OR ITS AFFILIATES, OR
THE U.S. GOVERNMENT, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE
CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO
MAINTAIN ITS NET ASSET VALUE OF $1.00 PER
SHARE.

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

PNC Institutional Management Corporation ("PIMC") and PNC Bank, National
Association ("PNC Bank") serve as the Fund's adviser and sub-adviser,
respectively. PFPC Inc. ("PFPC") and Provident Distributors, Inc. ("PDI") serve
as the Fund's administrators. PDI also serves as the Fund's distributor.

This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information currently dated March
30, 1996, has been filed with the Securities and Exchange Commission and is
available to investors without charge by calling the Fund at 800-821-7432. The
Statement of Additional Information, as amended from time to time, is
incorporated in its entirety by reference into this Prospectus.

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

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.

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

March 30, 1996

<PAGE> 2

BACKGROUND AND EXPENSE INFORMATION

Two classes of shares are offered by this Prospectus: MuniFund shares and
MuniFund Dollar shares ("Dollar Shares"). Shares of each class represent equal,
pro rata interests in the Fund and accrue daily dividends in the same manner
except that the Dollar Shares bear fees payable by the Fund (at the rate of .25%
per annum) to institutional investors for services they provide to the
beneficial owners of such shares. (See "Management of the Fund--Service
Organizations.")

EXPENSE SUMMARY

<TABLE>
<CAPTION>
MUNIFUND
MUNIFUND DOLLAR
ESTIMATED ANNUAL FUND OPERATING EXPENSES SHARES SHARES
- ---------------------------------------------------------- ------------- -------------
<S> <C> <C> <C> <C>
(as a percentage of average net assets)
Management Fees (net of waivers)..................... .10% .10%
Other Expenses....................................... .17% .42%
Administration Fees (net of waivers)............ .10% .10%
Shareholder Servicing Fees...................... 0% .25%
Miscellaneous................................... .07% .07%
---- ---- ---- ----
Total Fund Operating Expenses (net of waivers)....... .27% .52%
==== ====
</TABLE>

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

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming: (1) a 5% annual return; and (2)
redemption at the end of each time period with respect
to the following shares:
MuniFund Shares: $3 $ 9 $15 $ 34
Dollar Shares: $5 $17 $29 $ 65
</TABLE>

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES AND RATE OF RETURN MAY BE GREATER OR
LESSER THAN THOSE SHOWN.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. In addition, institutional investors may charge
fees for providing services in connection with their customers' investment in
Dollar Shares. (For more complete descriptions of the various costs and
expenses, see "Management of the Fund" in this Prospectus and the Statement of
Additional Information and the financial statements and related notes contained
in the Statement of Additional Information.) For the fiscal year ended November
30, 1995, absent fee waivers, management and administration fees would each have
been .175% of the Fund's average daily net assets. The investment adviser and
administrators have agreed to waive the advisory and administration fees
otherwise payable to them and to reimburse the Fund for its operating expenses
to the extent necessary to ensure that the operating expense ratio for the Fund
(excluding fees paid to Service Organizations pursuant to Servicing Agreements)
does not exceed .27% of the Fund's average daily net assets. These waivers may
be terminated upon 120-days' written notice to the Fund. Absent such fee waivers
and expense reimbursements for such period, the estimated "Total Fund Operating
Expenses" for MuniFund shares and Dollar Shares would have been .41% and .66%,
respectively, of the average daily net assets of the MuniFund portfolio. The
foregoing table has not been audited by the Fund's independent accountants.

2
<PAGE> 3

FINANCIAL HIGHLIGHTS

The following financial highlights for MuniFund Shares and Dollar Shares
have been derived from the financial statements of the Fund for the fiscal year
ended November 30, 1995, and for each of the nine preceding fiscal years. The
financial highlights for the fiscal years set forth below have been audited by
KPMG Peat Marwick LLP, independent accountants whose report on the financial
statements and financial highlights (for the most recent five years) of the Fund
is included in the Statement of Additional Information. The tables should be
read in conjunction with the financial statements and related notes included in
the Statement of Additional Information. Further information about the
performance of the Fund is available in the annual report to shareholders, which
may be obtained without charge by calling 800-821-7432.

MUNIFUND SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989
-------- -------- ---------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ---------- ---------- --------- -------- ----------
Income from investment
operations:
Net investment income............ .0360 0.255 .0224 .0285 .0437 .0562 .0602
-------- -------- ---------- ---------- --------- -------- ----------
Less distributions:
Dividends to shareholders from
net investment income.......... (.0360) (.0255) (.0224) (.0285) (.0437) (.0562) (.0602)
-------- -------- ---------- ---------- --------- -------- ----------
Net asset value, end of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ========= ========= ======== =========
Total return..................... 3.66% 2.58% 2.27% 2.89% 4.46% 5.77% 6.19%
Ratios/Supplemental data:
Net assets, end of period
(000s)......................... 720,318 687,895 1,019,749 1,006,324 1,060,468 988,069 1,075,732
Ratio of expenses to average
daily
net assets1.................... .27% .26% .25% .30% .30% .30% .30%
Ratio of net investment income to
average daily net assets....... 3.59% 2.53% 2.24% 2.86% 4.40% 5.62% 6.01%

1988(2) 1987(2) 1986(2)
---------- ---------- ----------
<S> <C><C> <C> <C>
Net asset value, beginning
of period...................... $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------
Income from investment
operations:
Net investment income............ .0494 .0431 .0454
---------- ---------- ----------
Less distributions:
Dividends to shareholders from
net investment income.......... (.0494) (.0431) (.0454)
---------- ---------- ----------
Net asset value, end of period... $ 1.00 $ 1.00 $ 1.00
========= ========= =========
Total return..................... 5.21% 4.50% 4.63%
Ratios/Supplemental data:
Net assets, end of period
(000s)......................... 1,662,051 2,163,284 2,237,218
Ratio of expenses to average
daily
net assets1.................... .29% .30% .36%
Ratio of net investment income to
average daily net assets....... 4.91% 4.31% 4.49%
</TABLE>

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

(1) Without the waiver of advisory and administration fees, the ratios of
expenses to average daily net assets would have been 0.41%, 0.41%, 0.41%,
0.41%, 0.41%, 0.42%, 0.40%, 0.38%, 0.36% and 0.38% for the years ended
November 30, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987 and 1986,
respectively.

(2) Total return data has not been audited.

3
<PAGE> 4

MUNIFUND DOLLAR SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------------------------------------------------
JANUARY 17,
1986(2,4)
TO
1995 1994 1993 1992 1991 1990 1989 1988(4) 1987(4) NOVEMBER 30, 1986
------- ------- ------- ------- ------- ------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from
investment
operations:
Net investment
income........... .0335 .0230 .0199 .0260 .0412 .0537 .0577 .0469 .0406 .0360
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends to
shareholders from
net investment
income........... (.0335) (.0230) (.0199) (.0260) (.0412) (.0537) (.0577) (.0469) (.0406) (.0360)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value,
end of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ======= ====================
Total return....... 3.41% 2.33% 2.02% 2.64% 4.21% 5.52% 5.94% 4.96% 4.25% 4.38%(3)
Ratios/Supplemental
data:
Net assets, end
of period
(000s)........... 6,474 2,785 6,783 1,414 26,418 2,187 10,680 18,243 21,333 618
Ratio of expenses
to average daily
net assets(1).... .52% .51% .50% .55% .55% .55% .55% .54% .55% .61%(3)
Ratio of net
investment income
to average daily
net assets....... 3.34% 2.28% 1.99% 2.61% 4.15% 5.37% 5.76% 4.66% 4.06% 4.19%(3)
</TABLE>

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

(1) Without the waiver of advisory and administration fees, the ratios of
expenses to average daily net assets would have been 0.66%, 0.66%, 0.66%,
0.66%, 0.66%, 0.67%, 0.65%, 0.63%, 0.61% and 0.63% (annualized) for the
years ended November 30, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988,
1987 and for the period ended November 30, 1986, respectively.

(2) First issuance of Dollar Shares.

(3) Annualized.

(4) Total return data has not been audited.

4
<PAGE> 5

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to provide investors with as high a
level of current interest income exempt from federal income tax as is consistent
with relative stability of principal. There can be no assurance that the Fund
will achieve its investment objective. The Fund is a money market fund that is
subject to the quality, diversification and other requirements of Rule 2a-7
under the Investment Company Act of 1940, as amended (the "1940 Act") and other
rules of the Securities and Exchange Commission (the "SEC").

In pursuing its investment objective, the Fund invests substantially all of
its assets in a diversified portfolio of short-term tax-exempt obligations
issued by or on behalf of states, territories, and possessions of the United
States, the District of Columbia, and their respective authorities, agencies,
instrumentalities, and political subdivisions and tax-exempt derivative
securities such as tender option bonds, participations, beneficial interests in
trusts and partnership interests (collectively, "Municipal Obligations"). The
Fund will not knowingly purchase securities the interest on which is subject to
federal income tax. (See, however, "Taxes" below concerning treatment of
exempt-interest dividends paid by the Fund for purposes of the federal
alternative minimum tax applicable to particular classes of investors.)

Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the Fund
from tax-exempt derivative securities are rendered by counsel to the respective
sponsors of such securities. The Fund and its investment adviser will rely on
such opinions and will not review independently the underlying proceedings
relating to the issuance of Municipal Obligations, the creation of any
tax-exempt derivative securities, or the bases for such opinions.

The Fund will purchase only Municipal Obligations which are "First Tier
Eligible Securities" (as defined by the SEC) and which present minimal credit
risks as determined by the Fund's investment adviser pursuant to guidelines
approved by the Company's Board of Trustees. First Tier Eligible Securities
consist of (i) securities that either (a) have short-term debt ratings at the
time of purchase within the highest rating category assigned by at least two
unaffiliated nationally recognized statistical rating organizations ("Rating
Agencies") (or one Rating Agency if the security was rated by only one Rating
Agency), or (b) are issued by issuers with such ratings, and (ii) certain
securities that are unrated (including securities of issuers that have long-term
but not short-term ratings) but are of comparable quality as determined by the
Fund's investment adviser pursuant to guidelines approved by the Company's Board
of Trustees. The Appendix to the Statement of Additional Information includes a
description of applicable ratings by Rating Agencies.

Except during periods of unusual market conditions or during temporary
defensive periods, the Fund will invest substantially all, but in no event less
than 80%, of its total assets in Municipal Obligations with remaining maturities
of 397 days (thirteen months) or less as determined in accordance with the SEC
rules. The Fund may hold uninvested cash reserves pending investment, during
temporary defensive periods or if, in the opinion of the Fund's investment
adviser, suitable

5
<PAGE> 6

tax exempt obligations are unavailable. There is no percentage limitation on the
amount of assets which may be held uninvested. Uninvested cash reserves will not
earn income.

Except for the investment limitations enumerated below, the Fund's
investment objective and the policies described above are not fundamental and
may be changed by the Company's Board of Trustees without the affirmative vote
of the holders of a majority of the Fund's outstanding shares. If there is a
change in the investment objective, shareholders should consider whether the
Fund remains an appropriate investment in light of their then current financial
position and needs. (A complete list of the investment limitations that cannot
be changed without a vote of shareholders is contained in the Statement of
Additional Information under "Investment Objectives and Policies.")

The Fund may not:

1. Purchase any securities other than Municipal Obligations and put
options with respect to such obligations.

2. Purchase the securities of any issuer if as a result more than 5%
of the value of the Fund's assets would be invested in the securities of
such issuer except that up to 25% of the value of the Fund's assets may be
invested without regard to this 5% limitation.

3. Borrow money except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Fund's assets at the time
of such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. (This borrowing provision is not for
investment leverage, but solely to facilitate management of the Fund's
portfolio by enabling the Fund to meet redemption requests where the
liquidation of portfolio securities is deemed to be disadvantageous or
inconvenient.)

4. Knowingly invest more than 10% of the value of the Fund's assets in
securities with legal or contractual restrictions on resale.

In addition, without the affirmative vote of the holders of a majority of
the Fund's outstanding shares, the Fund may not change its policy of investing
at least 80% of its total assets in obligations the interest on which is exempt
from federal income tax (except during periods of unusual market conditions or
during temporary defensive periods). Securities issued or guaranteed by the U.S.
Government, its agencies, or instrumentalities (including securities backed by
the full faith and credit of the United States) are not deemed to be subject to
the second investment limitation above.

If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in value of the
Fund's portfolio securities will not constitute a violation of such limitation.

TYPES OF MUNICIPAL OBLIGATIONS

6
<PAGE> 7

interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities include private activity bonds which
are not payable from the unrestricted revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved.

The Fund's portfolio may also include "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of moral
obligation bonds is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which created
the issuer.

OTHER INVESTMENT PRACTICES

Municipal Obligations purchased by the Fund may include variable rate
demand notes. Such notes are frequently not rated by credit rating agencies, but
unrated notes purchased by the Fund will be determined by the Fund's investment
adviser to be of comparable quality at the time of purchase to rated instruments
purchasable by the Fund. Where necessary to ensure that a note is a First Tier
Eligible Security, the Fund will require that the issuer's obligation to pay the
principal of the note be backed by an unconditional bank letter or line of
credit, guarantee, or commitment to lend. While there may be no active secondary
market with respect to a particular variable rate demand note purchased by the
Fund, the Fund may, upon the notice specified in the note, demand payment of the
principal of the note at any time or during specified periods not exceeding
thirteen months depending upon the instrument involved, and may resell the note
at any time to a third party. The absence of such an active secondary market,
however, could make it difficult for the Fund to dispose of a variable rate
demand note if the issuer were to default on its payment obligation or during
periods that the Fund is not entitled to exercise its demand rights, and the
Fund could, for this or other reasons, suffer a loss to the extent of the
default. While, in general, the Fund will invest only in securities that mature
within thirteen months of purchase, the Fund may invest in variable rate demand
notes which have nominal maturities in excess of thirteen months, if such
instruments carry demand features that comply with conditions established by the
SEC.

The Fund may also purchase Municipal Obligations on a "when-issued" basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield. The Fund will generally not pay for
such securities or start earning interest on them until they are received.
Securities purchased on a when-issued basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. The Fund expects that commitments to purchase when-issued securities will
not exceed 25% of the value of its total assets absent unusual market
conditions. The Fund does not intend to purchase when-issued securities for
speculative purposes but only in furtherance of its investment objective.

7
<PAGE> 8

stand-by commitments solely to facilitate portfolio liquidity and does not
intend to exercise its rights thereunder for trading purposes.

Although the Fund may invest more than 25% of its net assets in (i)
Municipal Obligations whose issuers are in the same state, (ii) Municipal
Obligations the interest on which is paid solely from revenues of similar
projects, and (iii) private activity bonds, it does not presently intend to do
so on a regular basis. To the extent the Fund's assets are concentrated in
Municipal Obligations that are payable from the revenues of similar projects,
are issued by issuers located in the same state, or are concentrated in private
activity bonds, the Fund will be subject to the peculiar risks presented by the
laws and economic conditions relating to such states, projects, and bonds to a
greater extent than it would be if its assets were not so concentrated.

The Fund will not knowingly invest more than 10% of the value of its total
net assets in illiquid securities, including securities that are illiquid by
virtue of the absence of a readily available market or legal or contractual
restrictions on resale. Securities that have legal or contractual restrictions
on resale but have a readily available market are not deemed illiquid for
purposes of this limitation. The Fund's investment adviser will monitor the
liquidity of such restricted securities under the supervision of the Board of
Trustees. (See "Investment Objectives and Policies--Illiquid Securities" in the
Statement of Additional Information.)

The Fund may purchase securities which are not registered under the
Securities Act of 1933 (the "1933 Act") but which can be sold to qualified
institutional buyers in accordance with Rule 144A under the 1933 Act. Any such
security will not be considered illiquid so long as it is determined by the
Board of Trustees or the adviser, acting under guidelines approved and monitored
by the Board, that an adequate trading market exists for that security. This
investment practice could have the effect of increasing the level of illiquidity
in a portfolio during any period that qualified institutional buyers become
uninterested in purchasing these restricted securities.

The value of the Fund's portfolio securities can be expected to vary
inversely with changes in prevailing interest rates.

PURCHASE AND REDEMPTION OF SHARES

PURCHASE PROCEDURES

Fund shares are sold at the net asset value per share next determined after
receipt of a purchase order by PFPC, the Fund's transfer agent. Purchase orders
for shares are accepted only on days on which both the New York Stock Exchange
and the Federal Reserve Bank of Philadelphia are open for business (a "Business
Day") and must be transmitted to PFPC in Wilmington, Delaware by telephone
(800-441-7450; in Delaware: 302-791-5350) or through the Fund's computer access
program. Orders received before 12:00 noon, Eastern time, for which payment has
been received by PNC Bank, the Fund's custodian, will be executed at 12:00 noon.
Orders received after 12:00 noon and before 2:30 P.M., Eastern time (or orders
received earlier in the same day for which payment has not been received by
12:00 noon), will be executed at 4:00 P.M., Eastern time, if payment has been
received by PNC Bank by that time. Orders received at other times, and orders
for which payment has not been received by 4:00 P.M., Eastern time, will not be
accepted, and notice thereof will be given to the institution placing the order.

8
<PAGE> 9

(Payment for orders which are not received or accepted will be returned after
prompt inquiry to the sending institution.) The Fund may in its discretion
reject any order for shares.

Payment for Fund shares may be made only in federal funds or other funds
immediately available to PNC Bank. The minimum initial investment by an
institution is $3 million for MuniFund and $5,000 for Dollar Shares, however,
broker-dealers and other institutional investors may set a higher minimum for
their customers. There is no minimum subsequent investment. The Fund, at its
discretion, may reduce the minimum initial investment for MuniFund Shares for
specific institutions whose aggregate relationship with the Provident
Institutional Fund is substantially equivalent to this $3 million minimum and
warrants this reduction.

Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in Dollar Shares. (See also "Management of the Fund--Service
Organizations.") Institutions, including banks regulated by the Comptroller of
the Currency, and investment advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state securities
commissions, should consult their legal advisors before investing fiduciary
funds in Dollar Shares. (See also "Management of the Fund--Banking Laws.")

REDEMPTION PROCEDURES

Redemption orders must be transmitted to PFPC in Wilmington, Delaware in
the manner described under "Purchase Procedures." Shares are redeemed at the net
asset value per share next determined after PFPC's receipt of the redemption
order. While the Fund intends to use its best efforts to maintain its net asset
value per share at $1.00, the proceeds paid to a shareholder upon redemption may
be more or less than the amount invested depending upon a share's net asset
value at the time of redemption.

Payment for redeemed shares for which a redemption order is received by
PFPC before 12:00 noon, Eastern time, on a Business Day is normally made in
federal funds wired to the redeeming shareholder on the same day. Payment for
redemption orders which are received between 12:00 noon and 4:00 P.M., Eastern
time, or on a day when PNC Bank is closed, is normally wired in federal funds on
the next day following redemption that PNC Bank is open for business.

The Fund shall have the right to redeem shares in any account if the value
of the account is less than $1,000 after sixty-days' prior written notice to the
shareholder. Any such redemption shall be effected at the net asset value per
share next determined after the redemption order is entered. If during the
sixty-day period the shareholder increases the value of its account to $1,000 or
more, no such redemption shall take place. Moreover, if a shareholder's MuniFund
Shares account falls below an average of $100,000 in any particular calendar
month, the account may be charged an account maintenance fee with respect to
that month. In addition, the Fund may also redeem shares involuntarily or
suspend the right of redemption or under certain special circumstances described
in the Statement of Additional Information under "Additional Purchase and
Redemption Information."

OTHER MATTERS

The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC as of 12:00 noon and 4:00 P.M., Eastern
time, on each day on which both

9
<PAGE> 10

the Federal Reserve Bank of Philadelphia and the New York Stock Exchange are
open for business. Currently, one or both of these institutions are closed on
the customary national business holidays of New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day (observed), Independence
Day, Labor Day, Columbus Day (observed), Veteran's Day, Thanksgiving Day and
Christmas Day. The net asset value per share of each class of the Fund is
calculated by adding the value of all securities and other assets belonging to
the Fund, subtracting liabilities attributable to each class, and dividing the
result by the total number of the Fund's outstanding shares of each class. In
computing net asset value, the Fund uses the amortized cost method of valuation
as described in the Statement of Additional Information under "Additional
Purchase and Redemption Information." The Fund's net asset value per share for
purposes of pricing purchase and redemption orders is determined independently
of the net asset values of the shares in the Company's other investment
portfolios.

Fund shares are sold and redeemed without charge by the Fund. Institutional
investors purchasing or holding Fund shares for their customers accounts may
charge customer fees for cash management and other services provided in
connection with their accounts. A customer should, therefore, consider the terms
of its account with an institution before purchasing Fund shares. An institution
purchasing or redeeming Fund shares on behalf of its customers is responsible
for transmitting orders to the Fund in accordance with its customer agreements.

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

The business and affairs of the Fund are managed under the direction of the
Company's Board of Trustees. The trustees of the Company are as follows:

Philip E. Coldwell is an economic consultant and former Member of the
Board of Governors of the Federal Reserve System.

Robert R. Fortune is a financial consultant and former Chairman,
President and Chief Executive Officer of Associated Electric & Gas
Insurance Services Limited.

Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.

G. Willing Pepper, Chairman of the Board and President of the Company,
is a retired President of Scott Paper Company.

Mr. Pepper is considered by the Company to be an "interested person"
of the Company as defined in the 1940 Act.

The other officers of the Company are as follows:

Edward J. Roach is Vice President and Treasurer of the Company.

Morgan R. Jones, Secretary of the Company, is a partner of the law
firm of Drinker Biddle & Reath, Philadelphia, Pennsylvania.

INVESTMENT ADVISER AND SUB-ADVISER

10
<PAGE> 11

individuals in the United States, and together with its predecessors has been in
the business of managing the investments of fiduciary and other accounts since
1847. PNC Bank is a wholly-owned, indirect subsidiary of PNC Bank Corp., and has
its principal offices at Broad and Chestnut Streets, Philadelphia, Pennsylvania
19102. PNC Bank Corp. is a multi-bank holding company. PIMC and PNC Bank also
serve as adviser and sub-adviser, respectively, to the Company's MuniCash and
Intermediate Municipal Fund portfolios.

PNC Bank Corp., headquartered in Pittsburgh, Pennsylvania, is one of the
largest financial service organizations in the United States with banking
subsidiaries in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky, Indiana,
Massachusetts and Florida. Its major businesses include corporate banking,
consumer banking, mortgage banking and asset management.

PNC Financial Services Group is PNC Bank Corp.'s mutual fund complex,
headquartered in Wilmington, Delaware. This group includes PIMC, PFPC, and PNC
Bank. In 1973, Provident National Bank (a predecessor to PNC Bank) commenced
advising the first institutional money market mutual fund--a U.S.
dollar-denominated constant net asset value fund--offered in the United States.

The PNC Financial Services Group is one of the largest U.S. bank managers
of mutual funds with assets currently under management in excess of $30 billion.
This group, through PFPC and PFPC International Ltd., is also a leading mutual
fund service provider having contractual relationships with approximately 370
mutual funds with 3.5 million shareholders and in excess of $101 billion in
assets, including some $2 billion in non-U.S. assets. This group, through its
PNC Institutional Investment Service, provides investment research to some 250
financial institutions located in the United States and abroad. PNC Bank
provides custodial services for approximately $210 billion in assets, including
approximately $160 billion in mutual fund assets.

As adviser, PIMC manages the Fund's portfolio and is responsible for all
purchases and sales of the Fund's portfolio securities. PIMC also maintains
certain of the Fund's financial accounts and records and computes the Fund's net
asset value and net income. For the advisory services provided and expenses
assumed by it, PIMC is entitled to receive a fee, computed daily and payable
monthly, based on the Fund's average daily net assets. PIMC and the
administrators may from time to time reduce the advisory and administration fees
otherwise payable to them or may reimburse the Fund for its operating expenses.
Any fees waived or expenses reimbursed by PIMC and the administrators with
respect to a particular fiscal year are not recoverable. For the fiscal year
ended November 30, 1995, the Fund paid investment advisory fees aggregating
.105% (net of waivers of .070%) of the Fund's average daily net assets.

As sub-adviser, PNC Bank provides research, credit analysis and
recommendations with respect to the Fund's investments, and supplies PIMC with
certain computer facilities, personnel and other services. For its sub-advisory
services, PNC Bank is entitled to receive from PIMC an amount equal to 75% of
the advisory fee paid by the Fund to PIMC (subject to adjustment in certain
circumstances). The sub-advisory fees paid by PIMC to PNC Bank have no effect on
the advisory fees payable by the Fund to PIMC. PNC Bank also serves as the
Fund's custodian. The services provided by PNC Bank and PIMC and the fees
payable by the Fund for these services are described further in the Statement of
Additional Information under "Management of the Fund."

11
<PAGE> 12

ADMINISTRATORS

PFPC, whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809, and PDI, whose principal business address is 259 Radnor-Chester
Road, Suite 120, Radnor, Pennsylvania 19087, serve as administrators. PFPC is an
indirect wholly-owned subsidiary of PNC Bank Corp. A majority of the outstanding
stock of PDI is owned by its officers. The administrative services provided by
the administrators, which are described more fully in the Statement of
Additional Information, include providing and supervising the operation of an
automated data processing system to process purchase and redemption orders;
assisting in maintaining the Fund's Wilmington, Delaware office; performing
administrative services in connection with the Fund's computer access program
maintained to facilitate shareholder access to the Fund; accumulating
information for and coordinating the preparation of reports to the Fund's
shareholders and the SEC; and maintaining the registration or qualification of
the Fund's shares for sale under state securities laws. PFPC and PDI are each
responsible for carrying out the duties undertaken pursuant to the
Administration Agreement with the Fund.

For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly. (For information regarding
the administrators' waivers and expense reimbursements, see "Investment Adviser
and Sub-Adviser" above.) The Fund also reimburses each administrator for its
reasonable out-of-pocket expenses incurred in connection with the Fund's
computer access program. For the fiscal year ended November 30, 1995, the Fund
paid administration fees aggregating .105% (net of waivers of .070%) of its
average daily net assets.

PFPC also serves as transfer agent, registrar and dividend disbursing
agent. PFPC's address is P.O. Box 8950, Wilmington, Delaware 19885-9628. The
services provided by PFPC and PDI and the fees payable by the Fund for these
services are described further in the Statement of Additional Information under
"Management of the Funds."

DISTRIBUTOR

PDI serves as distributor of the Fund's shares. Its principal offices are
located at 259 Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087. Fund
shares are sold on a continuous basis by the distributor as agent. The
distributor pays the cost of printing and distributing prospectuses to persons
who are not shareholders of the Fund (excluding preparation and printing
expenses necessary for the continued registration of the Fund's shares) and of
printing and distributing all sales literature. No compensation is payable by
the Fund to the distributor for its distribution services.

SERVICE ORGANIZATIONS

12
<PAGE> 13

Statement of Additional Information under "Management of the Funds--Service
Organizations," include aggregating and processing purchase and redemption
requests from customers and placing net purchase and redemption orders with
PFPC; processing dividend payments from the Fund on behalf of customers;
providing information periodically to customers showing their positions in
Dollar Shares; and providing sub-accounting or the information necessary for
sub-accounting with respect to Dollar Shares beneficially owned by customers.
Under the terms of the agreements, Service Organizations are required to provide
to their customers a schedule of any fees that they may charge to the customers
in connection with their investments in Dollar Shares. MuniFund Shares are sold
to institutions that have not entered into servicing agreements with the Fund in
connection with their investments.

EXPENSES

Except as noted above and in the Statement of Additional Information, the
Fund's service contractors bear all expenses in connection with the performance
of their services. Similarly, the Fund bears the expenses incurred in its
operations. For the fiscal year ended November 30, 1995, the Fund's total
expenses for MuniFund Shares and Dollar Shares were .27% and .52% of the average
daily net assets (net of fee waivers of .14% and .14%, respectively). With
regard to fees paid exclusively by Dollar Shares, see "Service Organizations"
above.

BANKING LAWS

Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing or controlling a
registered, open-end investment company engaged continuously in the issuance of
its shares, and prohibit banks generally from issuing, underwriting, selling or
distributing securities such as Fund shares. Such banking laws and regulations
do not prohibit such a holding company or affiliate or banks generally from
acting as investment adviser, transfer agent or custodian to such an investment
company, or from purchasing shares of such a company for or upon the order of
customers. PNC Bank, PIMC and PFPC, as well as some Service Organizations, are
subject to such banking laws and regulations, but believe they may perform the
services for the Fund contemplated by their respective agreements, this
Prospectus and the Statement of Additional Information without violating
applicable banking laws or regulations.

Should future legislative, judicial or administrative action prohibit or
restrict the activities of bank Service Organizations in connection with the
provision of support services to their customers, the Fund might be required to
alter or discontinue its arrangements with Service Organizations and change its
method of operations with respect to Dollar Shares. It is not anticipated,
however, that any change in the Fund's method of operations would affect its net
asset value per share or result in a financial loss to any customer.

DIVIDENDS

13
<PAGE> 14

are redeemed. Dividends are paid monthly by check, or by wire transfer if
requested in writing by the shareholder, within five business days after the end
of the month or within five business days after a redemption of all of a
shareholder's shares of a particular class. The Fund does not expect to realize
net long-term capital gains.

Dividends are determined in the same manner for each class of shares of the
Fund. Dollar Shares bear all the expense of fees paid to Service Organizations
and as a result, at any given time, the net yield on Dollar Shares will be
approximately .25% lower than the net yield on MuniFund Shares.

Institutional shareholders may elect to have their dividends reinvested in
additional full and fractional shares of the same class of shares with respect
to which such dividends are declared at the net asset value of such shares on
the payment date. Reinvested dividends receive the same tax treatment as
dividends paid in cash. Such election, or any revocation thereof, must be made
in writing to PFPC at P.O. Box 8950, Wilmington, Delaware 19899, and will become
effective after its receipt by PFPC with respect to dividends paid.

PFPC, as transfer agent, will send each Fund shareholder or its authorized
representative an annual statement designating the amount, if any, of any
dividends and distributions made during each year and their federal tax
qualification.

TAXES

The Fund qualified in its last taxable year and intends to qualify in
future years as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). A regulated investment company is generally
exempt from federal income tax on amounts distributed to its shareholders.

Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the Fund distribute to its
shareholders at least the sum of 90% of its exempt-interest income net of
certain deductions and 90% of its investment company taxable income for such
year. Dividends derived from exempt-interest income may be treated by the Fund's
shareholders as items of interest excludable from their gross income under
Section 103(a) of the Code, unless under the circumstances applicable to the
particular shareholder the exclusion would be disallowed. (See the Statement of
Additional Information under "Additional Information Concerning Taxes.")

If the Fund should hold certain private activity bonds issued after August
7, 1986, shareholders must include, as an item of tax preference, the portion of
dividends paid by the Fund that is attributable to interest on such bonds in
their federal alternative minimum taxable income for purposes of determining
liability (if any) for the 26-28% alternative minimum tax applicable to
individuals and the 20% alternative minimum tax and the environmental tax
applicable to corporations. Corporate shareholders must also take all
exempt-interest dividends into account in determining certain adjustments for
federal alternative minimum and environmental tax purposes. The environmental
tax applicable to corporations is imposed at the rate of .12% on the excess of
the corporation's modified federal alternative minimum taxable income over
$2,000,000. Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.

14
<PAGE> 15

Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such months will be deemed to have
been received by the shareholders and paid by the Fund on December 31 of such
year provided that such dividends are actually paid during January of the
following year.

The foregoing discussion is only a brief summary of some of the important
federal tax considerations generally affecting the Fund and its shareholders. No
attempt is made to present a detailed explanation of the federal, state or local
income tax treatment of the Fund or its shareholders, and this discussion is not
intended as a substitute for careful tax planning. Accordingly, potential
investors in the Fund should consult their tax advisors with specific reference
to their own tax situation.

YIELDS

From time to time, the "yields", "effective yields", and "tax-equivalent
yields" for MuniFund Shares and Dollar Shares may be quoted in advertisements or
in reports to shareholders. Yield quotations are computed separately for
MuniFund Shares and Dollar Shares. The "yield" for a particular class or
sub-class of Fund shares refers to the income generated by an investment in the
shares over a specified period (such as a seven-day period). This income is then
"annualized"; that is, the amount of income generated by the investment during
that period is assumed to be generated for each such period over a 52-week or
one-year period and is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the income earned by an
investment in a particular class or sub-class is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The "tax-equivalent yield"
demonstrates the level of taxable yield necessary to produce an after-tax yield
equivalent to the Fund's tax-free yield for MuniFund Shares and Dollar Shares.
It is calculated by increasing the yield (calculated as above) by the amount
necessary to reflect the payment of federal taxes at a stated rate. The
"tax-equivalent yield" will always be higher than the "yield".

The Fund's yields may be compared to those of other mutual funds with
similar objectives, to bond or other relevant indices, or to rankings prepared
by independent services or other financial or industry publications that monitor
the performance of mutual funds, or to the average yields reported by the Bank
Rate Monitor from money market deposit accounts offered by the 50 leading banks
and thrift institutions in the top five standard metropolitan statistical areas.
For example, such data are reported in national financial publications such as
IBC/Donoghue's Money Fund Report(R), Ibbotson Associates of Chicago, The Wall
Street Journal and The New York Times, reports prepared by Lipper Analytical
Services, Inc., and publications of a local or regional nature.

15
<PAGE> 16

The Fund's yield figures for MuniFund Shares and Dollar Shares represent
the Fund's past performances, will fluctuate, and should not be considered as
representative of future results. The yield of any investment is generally a
function of portfolio quality and maturity, type of investment, and operating
expenses. Any fees charged by Service Organizations or other institutional
investors directly to their customers in connection with investments in Fund
shares are not reflected in the Fund's yields; and, such fees, if charged, would
reduce the actual return received by customers on their investments. The methods
used to compute the Fund's yields are described in more detail in the Statement
of Additional Information. Investors may call (800) 821-6006 (MuniFund Shares
code: 50; Dollar Shares code: 59) to obtain current yield information.

DESCRIPTION OF SHARES AND MISCELLANEOUS

The Company was organized as a Maryland corporation in 1979 under the name
Municipal Fund for Temporary Investment, Inc. and was reorganized into a
Pennsylvania trust effective June 1, 1981. The Fund commenced operations on
February 4, 1980.

The Company's Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of full and fractional shares of beneficial interest
in the Company and to classify or reclassify any unissued shares into one or
more classes of shares. Pursuant to such authority, the Board of Trustees has
authorized the issuance of six classes of shares designated as MuniFund,
MuniFund Dollar, MuniCash, MuniCash Dollar, Intermediate Municipal and
Intermediate Municipal Dollar. The Declaration of Trust further authorizes the
trustees to classify or reclassify any class of shares into one or more
sub-classes.

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE
AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS RELATING TO THE FUND.
INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING MUNICASH OR
INTERMEDIATE MUNICIPAL FUND MAY OBTAIN SEPARATE PROSPECTUSES DESCRIBING THOSE
PORTFOLIOS BY CALLING THE DISTRIBUTOR AT 800-998-7633.

The Company does not intend to hold annual meetings of shareholders except
as required by the 1940 Act or other applicable law. The Company will call a
meeting of shareholders for the purpose of voting upon the question of removal
of a member of the Board of Trustees upon written request of shareholders owning
at least 10% of the outstanding shares of the Company entitled to vote.

Each Fund Share represents an equal proportionate interest in the assets
belonging to the Fund. Each share is without par value and has no preemptive or
conversion rights. When issued for payment as described in this Prospectus,
shares will be fully paid and non-assessable.

16
<PAGE> 17

"Additional Description Concerning Fund Shares" for examples where the 1940 Act
requires voting by portfolio.) Shareholders of the Company are entitled to one
vote for each full share held (irrespective of class or portfolio) and
fractional votes for fractional shares held. Voting rights are not cumulative
and, accordingly, the holders of more than 50% of the aggregate shares of the
Company may elect all of the trustees.

For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."

As stated above, the Company is organized as a trust under the laws of the
Commonwealth of Pennsylvania. Shareholders of such a trust may, under certain
circumstances, be held personally liable (as if they were partners) for the
obligations of the trust. The Company's Declaration of Trust provides for
indemnification out of the trust property of any shareholder of the Fund held
personally liable solely by reason of being or having been a shareholder and not
because of any acts or omissions or some other reason.

17
<PAGE> 18

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 19

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 20

- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS
OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION
INCORPORATED HEREIN BY
REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS
PROSPECTUS; AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR
ITS DISTRIBUTOR. THIS
PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE
COMPANY OR BY THE DISTRIBUTOR
IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

---------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information.................. 2
Financial Highlights........... 3
Investment Objective and
Policies..................... 5
Purchase and Redemption of
Shares....................... 8
Management of the Fund......... 10
Dividends...................... 13
Taxes.......................... 14
Yields......................... 15
Description of Shares and
Miscellaneous................ 16
</TABLE>

PIF-P-009

- --------------------------------------------------------------------------------
MUNIFUND
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR
TEMPORARY INVESTMENT
LOGO

PROSPECTUS

March 30, 1996

<PAGE> 21

MuniFund
Dollar Shares
An Investment Portfolio Offered by
MUNICIPAL FUND FOR TEMPORARY INVESTMENT

<TABLE>
<S> <C>
400 Bellevue Parkway For purchase and redemption orders only call:
Suite 100 800-441-7450 (in Delaware: 302-791-5350).
Wilmington, DE 19809 For yield information call: 800-821-6006
(Dollar Shares code: 59).
For other information call: 800-821-7432.
</TABLE>

Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company that currently offers shares in three
separate investment portfolios. This Prospectus offers one class of shares
("Dollar Shares") in the MuniFund portfolio, a money market portfolio (the
"Fund"). The Fund's investment objective is to provide institutions with as high
a level of current interest income exempt from federal income taxes as is
consistent with relative stability of principal. The Fund invests substantially
all of its assets in short-term tax-exempt obligations issued by state and local
governments.
------------------------

------------------------
PNC Institutional Management Corporation ("PIMC") and PNC Bank, National
Association ("PNC Bank") serve as the Fund's adviser and sub-adviser,
respectively. PFPC Inc. ("PFPC") and Provident Distributors, Inc. ("PDI") serve
as the Fund's administrators. PDI also serves as the Fund's distributor. Dollar
Shares are sold exclusively to and must be purchased through Service
Organizations. Service Organizations provide various shareholder services to
their customers in connection with their investment in Dollar Shares. (See
"Management of the Fund--Service Organizations.")

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

March 30, 1996

<PAGE> 22

BACKGROUND AND EXPENSE INFORMATION

Two classes of shares are offered by the Fund: MuniFund shares and Dollar
shares. Shares of each class represent equal, pro rata interests in the Fund and
accrue daily dividends in the same manner except that the Dollar Shares bear
fees payable by the Fund (at the rate of .25% per annum) to Service
Organizations for administrative support services they provide to the beneficial
owners of such shares. (See "Management of the Fund--Service Organizations.")

EXPENSE SUMMARY--MUNIFUND DOLLAR

<TABLE>
<CAPTION>
DOLLAR
SHARES
----------
<S> <C> <C>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (net of waivers)............................................ .10%
Other Expenses.............................................................. .42%
Administration Fees (net of waivers)................................... .10%
Shareholder Servicing Fees............................................. .25%
Miscellaneous.......................................................... .07%
--- ---
Total Fund Operating Expenses (net of waivers).............................. .52%
===
</TABLE>

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

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming: (1) a 5% annual return; and (2)
redemption at the end of each time period with respect
to Dollar Shares: $5 $17 $29 $ 65
</TABLE>

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES AND RATE OF RETURN MAY BE GREATER OR
LESSER THAN THOSE SHOWN.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. In addition, Service Organizations may charge fees
for providing services in connection with their customers' investments in Dollar
Shares. (For more complete descriptions of the various costs and expenses, see
"Management of the Fund" in this Prospectus and the Statement of Additional
Information and the financial statements and related notes contained in the
Statement of Additional Information.) For the fiscal year ended November 30,
1995, absent fee waivers, management and administration fees would each have
been .175% of the Fund's average daily net assets. The investment adviser and
administrators have agreed to waive the advisory and administration fees
otherwise payable to them and to reimburse the Fund for its operating expenses
to the extent necessary to ensure that the operating expense ratio for the Fund
(excluding fees paid to Service Organizations pursuant to Servicing Agreements)
does not exceed .27% of the Fund's average daily net assets. These waivers may
be terminated upon 120-days' written notice to the Fund. Absent such fee waivers
and expense reimbursements for such period, the estimated "Total Fund Operating
Expenses" for Dollar Shares would have been .66% of the average daily net assets
of the MuniFund portfolio. The foregoing table has not been audited by the
Fund's independent accountants.

2
<PAGE> 23

FINANCIAL HIGHLIGHTS

The following financial highlights for MuniFund Shares have been derived
from the financial statements of the Fund for the fiscal year ended November 30,
1995, and for each of the nine preceding fiscal years and for MuniFund Dollar
Shares for the fiscal year ended November 30, 1995, and for each of the eight
preceding fiscal years and the fiscal period ended November 30, 1986
(commencement of operations). The financial highlights for the fiscal years set
forth below have been audited by KPMG Peat Marwick LLP, independent accountants
whose report on the financial statements and financial highlights (for the most
recent five years) of the Fund is included in the Statement of Additional
Information. The tables should be read in conjunction with the financial
statements and related notes included in the Statement of Additional
Information. Further information about the performance of the Fund is available
in the annual report to shareholders, which may be obtained without charge by
calling 800-821-7432.

MUNIFUND SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ---------- ---------- ---------- -------- ----------
Income from Investment Operations:
Net Investment Income............... .0360 .0255 .0224 .0285 .0437 .0562
-------- ---------- ---------- ---------- -------- ----------
Less Distributions:
Dividends to Shareholders from Net
Investment Income................. (.0360) (.0255) (.0224) (.0285) (.0437) (.0562)
-------- ---------- ---------- ---------- -------- ----------
Net Asset Value, End of Period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========= ========= ========= ======== =========
Total Return........................ 3.66% 2.58% 2.27% 2.89% 4.46% 5.77%
Ratios/Supplemental Data:
Net Assets, End of Period (000s).... 720,318 687,895 1,019,749 1,006,324 1,060,468 988,069
Ratio of Expenses to Average Daily
Net Assets1....................... .27% .26% .25% .30% .30% .30%
Ratio of Net Investment Income to
Average Daily Net Assets.......... 3.59% 2.53% 2.24% 2.86% 4.40% 5.62%

1989 1988(2) 1987(2) 1986(2)
---------- ---------- ---------- ----------
<S> <C><C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ----------
Income from Investment Operations:
Net Investment Income............... .0602 .0494 .0431 .0454
---------- ---------- ---------- ----------
Less Distributions:
Dividends to Shareholders from Net
Investment Income................. (.0602) (.0494) (.0431) (.0454)
---------- ---------- ---------- ----------
Net Asset Value, End of Period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= =========
Total Return........................ 6.19% 5.21% 4.50% 4.63%
Ratios/Supplemental Data:
Net Assets, End of Period (000s).... 1,075,732 1,662,051 2,163,284 2,237,218
Ratio of Expenses to Average Daily
Net Assets1....................... .30% .29% .30% .36%
Ratio of Net Investment Income to
Average Daily Net Assets.......... 6.01% 4.91% 4.31% 4.49%
</TABLE>

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

(2) Total return data has not been audited.

3
<PAGE> 24

MUNIFUND DOLLAR SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------------------------------------------------------------------------
JANUARY 17,
1986(2,4)
TO
1995 1994 1993 1992 1991 1990 1989 1988(4) 1987(4) NOVEMBER 30, 1986
------- ------- ------- ------- ------- ------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income........ .0335 .0230 .0199 .0260 .0412 .0537 .0577 .0469 .0406 .0360
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends to shareholders
from net investment
income..................... (.0335) (.0230) (.0199) (.0260) (.0412) (.0537) (.0577) (.0469) (.0406) (.0360)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ======= ====================
Total return................. 3.41% 2.33% 2.02% 2.64% 4.21% 5.52% 5.94% 4.96% 4.25% 4.38%(3)
Ratios/Supplemental data:
Net assets, end of
period (000s).............. 6,474 2,785 6,783 1,414 26,418 2,187 10,680 18,243 21,333 618
Ratio of expenses to average
daily net assets1.......... .52% .51% .50% .55% .55% .55% .55% .54% .55% .61%(3)
Ratio of net investment
income to average daily net
assets..................... 3.34% 2.28% 1.99% 2.61% 4.15% 5.37% 5.76% 4.66% 4.06% 4.19%(3)
</TABLE>

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

(2) First issuance of Dollar Shares.

(3) Annualized.

(4) Total return data has not been audited.

4
<PAGE> 25

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the Funds
from tax-exempt derivative securities are rendered by counsel to the respective
sponsors of such securities. The Fund and its investment adviser will rely on
such opinions and will not review independently the underlying proceedings
relating to the issuance of Municipal Obligations, the creation of any
tax-exempt derivative securities, or the bases for such opinions.

Except during periods of unusual market conditions or during temporary
defensive periods, the Fund will invest substantially all, but in no event less
than 80%, of its total assets in Municipal Obligations with remaining maturities
of 397 days (thirteen months) or less as determined in accordance with the rules
of the SEC. The Fund may hold uninvested cash reserves pending investment,
during temporary defensive periods or if, in the opinion of the Fund's
investment

5
<PAGE> 26

adviser, suitable tax exempt obligations are unavailable. There is no percentage
limitation on the amount of assets which may be held uninvested. Uninvested cash
reserves will not earn income.

The Fund may not:

1. Purchase any securities other than Municipal Obligations and put
options with respect to such obligations.

4. Knowingly invest more than 10% of the value of the Fund's assets in
securities with legal or contractual restrictions on resale.

TYPES OF MUNICIPAL OBLIGATIONS

6
<PAGE> 27

or class of facilities or, in some cases, from the proceeds of a special excise
tax or other specific revenue source such as the user of the facility being
financed. Revenue securities include private activity bonds which are not
payable from the unrestricted revenues of the issuer. Consequently, the credit
quality of private activity bonds is usually directly related to the credit
standing of the corporate user of the facility involved.

OTHER INVESTMENT PRACTICES

Municipal Obligations purchased by the Fund may include variable rate
demand notes. Such notes are frequently not rated by credit rating agencies, but
unrated notes purchased by the Fund will be determined by the Fund's investment
adviser to be of comparable quality at the time of purchase to rated instruments
purchaseable by the Fund. Where necessary to ensure that a note is a First Tier
Eligible Security, the Fund will require that the issuer's obligation to pay the
principal of the note be backed by an unconditional bank letter or line of
credit, guarantee, or commitment to lend. While there may be no active secondary
market with respect to a particular variable rate demand note purchased by the
Fund, the Fund may, upon the notice specified in the note, demand payment of the
principal of the note at any time or during specified periods not exceeding
thirteen months, depending upon the instrument involved, and may resell the note
at any time to a third party. The absence of such an active secondary market,
however, could make it difficult for the Fund to dispose of a variable rate
demand note if the issuer were to default on its payment obligation or during
periods that the Fund is not entitled to exercise its demand rights, and the
Fund could, for this or other reasons, suffer a loss to the extent of the
default. While, in general, the Fund will invest only in securities that mature
within thirteen months of purchase, the Fund may invest in variable rate demand
notes which have nominal maturities in excess of thirteen months, if such
instruments carry demand features that comply with conditions established by the
SEC.

In addition, the Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment, a
dealer would agree to purchase at the Fund's option specified Municipal
Obligations at a specified price. The Fund will acquire stand-by commitments
solely to facilitate portfolio liquidity and does not intend to exercise its
rights thereunder for trading purposes.

7
<PAGE> 28

The value of the Fund's portfolio securities can be expected to vary
inversely with changes in prevailing interest rates.

PURCHASE AND REDEMPTION OF SHARES

PURCHASE PROCEDURES

Dollar Shares are sold exclusively to institutional investors, such as
banks, savings and loan associations and other financial institutions, including
affiliates of PNC Bank Corp. ("Service Organizations"), acting on behalf of
themselves or their customers and customers of their affiliates ("customers").
The customers, which may include individuals, trusts, partnerships and
corporations, must maintain accounts (such as demand deposit, custody, trust or
escrow accounts) with the Service Organization. Service Organizations (or their
nominees) will normally be the holders of record of Dollar Shares, and will
reflect their customers' beneficial ownership of shares in the account
statements provided by them to their customers. The exercise of voting rights
and the delivery to customers of shareholder communications from the Fund will
be governed by the customers' account agreements with the Service Organizations.
Investors wishing to purchase Dollar Shares should contact their account
representatives.

Purchase orders must be transmitted by a Service Organization directly to
PFPC, the Fund's transfer agent. All such transactions are effected pursuant to
procedures established at the Service Organization in connection with a
customer's account. Shares are sold at the net asset value per share next
determined after receipt of a purchase order by PFPC.

8
<PAGE> 29

Purchase orders for shares are accepted by the Fund only on days on which
both the New York Stock Exchange and the Federal Reserve Bank of Philadelphia
are open for business (a "Business Day") and must be transmitted to PFPC in
Wilmington, Delaware, by telephone (800-441-7450; in Delaware: 302-791-5350) or
through the Fund's computer access program. Orders received before 12:00 noon,
Eastern time, for which payment has been received by PNC Bank, the Fund's
custodian, will be executed at 12:00 noon. Orders received after 12:00 noon and
before 2:30 P.M., Eastern time (or orders received earlier in the same day for
which payment has not been received by 12:00 noon), will be executed at 4:00
P.M., Eastern time, if payment has been received by PNC Bank by that time.
Orders received at other times, and orders for which payment has not been
received by 4:00 P.M., Eastern time, will not be accepted, and notice thereof
will be given to the Service Organization placing the order. (Payment for orders
which are not received or accepted will be returned after prompt inquiry to the
sending institution.) The Fund may in its discretion reject any order for
shares.

Payment for Dollar Shares may be made only in federal funds or other funds
immediately available to PNC Bank. The minimum initial investment by a Service
Organization is $5,000; however, Service Organizations may set higher minimums
for their customers. There is no minimum subsequent investment.

Conflict of interest restrictions may apply to a Service Organization's
receipt of compensation paid by the Fund in connection with the investment of
fiduciary funds in Dollar Shares. (See also "Management of the Fund--Service
Organizations.") Institutions, including banks regulated by the Comptroller of
the Currency, and investment advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state securities
commissions, should consult their legal advisors before investing fiduciary
funds in Dollar Shares. (See also "Management of the Fund--Banking Laws.")

REDEMPTION PROCEDURES

Redemption orders must be transmitted by the Service Organization to PFPC
in Wilmington, Delaware in the manner described under "Purchase Procedures."
Shares are redeemed at the net asset value per share next determined after
PFPC's receipt of the redemption order. While the Fund intends to use its best
efforts to maintain its net asset value per share at $1.00, the proceeds paid to
a shareholder upon redemption may be more or less than the amount invested
depending upon a share's net asset value at the time of redemption.

9
<PAGE> 30

in the Statement of Additional Information under "Additional Purchase and
Redemption Information."

OTHER MATTERS

The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC as of 12:00 noon and 4:00 P.M., Eastern
time, on each Business Day on which both the Federal Reserve Bank of
Philadelphia and the New York Stock Exchange are open for business. Currently,
one or both of these institutions are closed on the customary national business
holidays of New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day (observed), Independence Day, Labor Day, Columbus Day
(observed), Veteran's Day, Thanksgiving Day and Christmas Day. The net asset
value per share of each class of the Fund is calculated by adding the value of
all securities and other assets belonging to the Fund, subtracting liabilities
attributable to each class, and dividing the result by the total number of the
Fund's outstanding shares of each class. In computing net asset value, the Fund
uses the amortized cost method of valuation as described in the Statement of
Additional Information under "Additional Purchase and Redemption Information."
The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined independently of the net asset values of the
shares in the Company's other investment portfolios.

Fund shares are sold and redeemed without charge by the Fund. Service
Organizations purchasing or holding Dollar Shares for their customer accounts
may charge customer fees for cash management and other services. In addition, if
a customer has agreed with a particular Service Organization to maintain a
minimum balance in its account with the Service Organization and the balance in
such account falls below that minimum, the customer may be obliged by the
Service Organization to redeem all or part of its shares in the Fund to the
extent necessary to maintain the required minimum balance in such account. A
customer should, therefore, consider the terms of its account with a Service
Organization before purchasing Dollar Shares. A Service Organization purchasing
or redeeming Fund shares on behalf of its customers is responsible for
transmitting orders to the Fund in accordance with its customer agreements, and
to provide customers with account statements with respect to share transactions
for their accounts.

10
<PAGE> 31

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

The business and affairs of the Fund are managed under the direction of the
Company's Board of Trustees. The trustees of the Company are as follows:

Philip E. Coldwell is an economic consultant and former Member of the
Board of Governors of the Federal Reserve System.

Robert R. Fortune is a financial consultant and former Chairman,
President and Chief Executive Officer of Associated Electric & Gas
Insurance Services Limited.

Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.

G. Willing Pepper, Chairman of the Board and President of the Company,
is a retired President of Scott Paper Company.

Mr. Pepper is considered by the Company to be an "interested person"
of the Company as defined in the 1940 Act.

The other officers of the Company are as follows:

Edward J. Roach is Vice President and Treasurer of the Company.

Morgan R. Jones, Secretary of the Company, is a partner of the law
firm of Drinker Biddle & Reath, Philadelphia, Pennsylvania.

INVESTMENT ADVISER AND SUB-ADVISER

PIMC a wholly-owned subsidiary of PNC Bank, serves as the Fund's investment
adviser. PIMC was organized in 1977 by PNC Bank to perform advisory services for
investment companies, and has its principal offices at 400 Bellevue Parkway,
Wilmington, Delaware 19809. PNC Bank serves as the Fund's sub-adviser. PNC Bank
is one of the largest bank managers of investments for individuals in the United
States, and together with its predecessors has been in the business of managing
the investments of fiduciary and other accounts since 1847. PNC Bank is a
wholly-owned, indirect subsidiary of PNC Bank Corp., and has its principal
offices at Broad and Chestnut Streets, Philadelphia, Pennsylvania 19102. PNC
Bank Corp. is a multi-bank holding company. PIMC and PNC Bank also serve as
adviser and sub-adviser, respectively to the Company's MuniCash and Intermediate
Municipal Fund portfolios.

PNC Bank Corp., headquartered in Pittsburgh, Pennsylvania, is one of the
largest financial services organizations in the United States with banking
subsidiaries in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky, Indiana,
Massachusetts and Florida. Its major businesses include corporate banking,
consumer banking, mortgage banking and asset management.

11
<PAGE> 32

relationships with approximately 370 mutual funds with 3.5 million shareholders
and in excess of $101 billion in assets, including some $2 billion in non-U.S.
assets. This group, through its PNC Institutional Investment Service, provides
investment research to some 250 financial institutions located in the United
States and abroad. PNC Bank provides custodial services for approximately $210
billion in assets, including approximately $160 billion in mutual fund assets.

ADMINISTRATORS

PFPC whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809, and PDI whose principal business address is 259 Radnor-Chester
Road, Suite 120, Radnor, Pennsylvania 19087, serve as administrators. PFPC is an
indirect wholly-owned subsidiary of PNC Bank Corp. A majority of the outstanding
stock of PDI is owned by its officers. The administrative services provided by
the administrators, which are described more fully in the Statement of
Additional Information, include providing and supervising the operation of an
automated data processing system to process purchase and redemption orders;
assisting in maintaining the Fund's Wilmington, Delaware office; performing
administrative services in connection with the Fund's computer access program
maintained to facilitate shareholder access to the Fund; accumulating
information for and coordinating the preparation of reports to the Fund's
shareholders and the SEC; and maintaining the registration or qualification of
the Fund's shares for sale under state securities laws. PFPC and PDI are each
responsible for carrying out the duties undertaken pursuant to the
Administration Agreement with the Fund.

For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly. (For information regarding
the administrators' waivers and expense reimbursements, see "Investment Adviser
and Sub-Adviser" above.) The Fund also reimburses each administrator for its
reasonable out-of-pocket expenses incurred in connection with the Fund's
computer access program. For the fiscal year ended November 30, 1995, the Fund
paid administrative fees aggregating .105% (net of waivers of .070%) of its
average daily net assets.

12
<PAGE> 33

DISTRIBUTOR

SERVICE ORGANIZATIONS

As stated above, Service Organizations may purchase Dollar Shares. Dollar
Shares are identical in all respects to MuniFund Shares except that they bear
the service fees described below and enjoy certain exclusive voting rights on
matters relating to these fees. The Fund will enter into an agreement with each
Service Organization which purchases Dollar Shares requiring it to provide
support services to its customers who are the beneficial owners of such shares
in consideration of the Fund's payment of .25% (on an annualized basis) of the
average daily net asset value of the Dollar Shares held by the Service
Organization for the benefit of customers. Such services, which are described
more fully in the Statement of Additional Information under "Management of the
Fund--Service Organizations," include aggregating and processing purchase and
redemption requests from customers and placing net purchase and redemption
orders with PFPC; processing dividend payments from the Fund on behalf of
customers; providing information periodically to customers showing their
positions in Dollar Shares; and providing sub-accounting or the information
necessary for sub-accounting with respect to Dollar Shares beneficially owned by
customers. Under the terms of the agreements, Service Organizations are required
to provide to their customers a schedule of any fees that they may charge to the
customers in connection with their investments in Dollar Shares.

EXPENSES

Except as noted above and in the Statement of Additional Information, the
Fund's service contractors bear all expenses in connection with the performance
of their services. Similarly, the Fund bears the expenses incurred in its
operations. For the fiscal year ended November 30, 1995, the Fund's total
expenses for Dollar Shares were .52% of the average daily net assets (net of fee
waivers of .14%). With regard to fees paid exclusively by Dollar Shares, see
"Service Organizations" above.

BANKING LAWS

13
<PAGE> 34

continuously in the issuance of its shares, and prohibit banks generally from
issuing, underwriting, selling or distributing securities such as Fund shares.
Such banking laws and regulations do not prohibit such a holding company or
affiliate or banks generally from acting as investment adviser, transfer agent
or custodian to such an investment company, or from purchasing shares of such a
company for or upon the order of customers. PNC Bank, PIMC and PFPC, as well as
some Service Organizations, are subject to such banking laws and regulations,
but believe they may perform the services for the Fund contemplated by their
respective agreements, this Prospectus and the Statement of Additional
Information without violating applicable banking laws or regulations.

DIVIDENDS

Shareholders of the Fund are entitled to dividends and distributions
arising only from the net investment income and capital gains, if any, earned on
investments held by the Fund. The Fund's net investment income is declared daily
as a dividend to shareholders of record at the close of business on the day of
declaration. Shares begin accruing dividends on the day the purchase order for
the shares is executed and continue to accrue dividends through the day before
such shares are redeemed. Dividends are paid monthly by check, or by wire
transfer if requested in writing by the shareholder, within five business days
after the end of the month or within five business days after a redemption of
all of a shareholder's shares of a particular class. The Fund does not expect to
realize net long-term capital gains.

TAXES

The Fund qualified in its last taxable year and intends to qualify in
future years as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the

14
<PAGE> 35

"Code"). A regulated investment company is generally exempt from federal income
tax on amounts distributed to its shareholders.

YIELDS

15
<PAGE> 36

particular class or sub-class of Fund shares refers to the income generated by
an investment in the shares over a specified period (such as a seven-day
period). This income is then "annualized"; that is, the amount of income
generated by the investment during that period is assumed to be generated for
each such period over a 52-week or one-year period and is shown as a percentage
of the investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in a particular class or
sub-class is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment. The "tax-equivalent yield" demonstrates the level of taxable yield
necessary to produce an after-tax yield equivalent to the Fund's tax-free yield
for MuniFund Shares and Dollar Shares. It is calculated by increasing the yield
(calculated as above) by the amount necessary to reflect the payment of federal
taxes at a stated rate. The "tax-equivalent yield" will always be higher than
the "yield".

The Fund's yield figures for MuniFund Shares and Dollar Shares represent
the Fund's past performance, will fluctuate, and should not be considered as
representative of future results. The yield of any investment is generally a
function of portfolio quality and maturity, type of investment, and operating
expenses. Any fees charged by Service Organizations directly to their customers
in connection with investments in Dollar Shares are not reflected in the Dollar
Shares' yields; and such fees, if charged, would reduce the actual return
received by customers on their investments. The methods used to compute the
Fund's yields are described in more detail in the Statement of Additional
Information. Investors may call (800) 821-6006 (Dollar Shares code: 59) to
obtain current yield information.

DESCRIPTION OF SHARES AND MISCELLANEOUS

THIS PROSPECTUS RELATES PRIMARILY TO THE DOLLAR SHARES OF THE FUND AND
DESCRIBES ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS,

16
<PAGE> 37

CONTRACTS, AND OTHER MATTERS RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN
SIMILAR INFORMATION REGARDING THE FUND'S OTHER CLASS OF SHARES, MUNICASH OR
INTERMEDIATE MUNICIPAL FUND MAY OBTAIN SEPARATE PROSPECTUSES BY CALLING THE
DISTRIBUTOR AT 800-998-7633.

Each Fund Share represents an equal, proportionate interest in the assets
belonging to the Fund. Each share is without par value and has no preemptive or
conversion rights. When issued for payment as described in this Prospectus,
shares will be fully paid and non-assessable.

Holders of the Company's MuniFund Shares and Dollar Shares will vote in the
aggregate and not by class on all matters, except where otherwise required by
law and except that only Dollar Shares will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Fund's arrangements with
Service Organizations. Further, shareholders of all of the Company's portfolios
will vote in the aggregate and not by portfolio except as otherwise required by
law or when the Board of Trustees determines that the matter to be voted upon
affects only the interests of the shareholders of a particular portfolio. (See
the Statement of Additional Information under "Additional Description Concerning
Fund Shares" for examples where the 1940 Act requires voting by portfolio.)
Shareholders of the Company are entitled to one vote for each full share held
(irrespective of class or portfolio) and fractional votes for fractional shares
held. Voting rights are not cumulative and, accordingly, the holders of more
than 50% of the aggregate shares of the Company may elect all of the trustees.

For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."

17
<PAGE> 38

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 39

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 40

---------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information.................. 2
Financial Highlights........... 3
Investment Objective and
Policies..................... 5
Purchase and Redemption of
Shares....................... 8
Management of the Fund......... 11
Dividends...................... 14
Taxes.......................... 14
Yields......................... 15
Description of Shares and
Miscellaneous................ 16
</TABLE>

PIF-P-023

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

MUNIFUND
DOLLAR SHARES
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR TEMPORARY
INVESTMENT
LOGO

Prospectus

March 30, 1996

<PAGE> 41

MuniCash
An Investment Portfolio Offered by
MUNICIPAL FUND FOR TEMPORARY INVESTMENT

<TABLE>
<S> <C>
400 Bellevue Parkway For purchase and redemption orders only call:
Suite 100 800-441-7450 (in Delaware: 302-791-5350).
Wilmington, DE 19809 For yield information call: 800-821-6006
(MuniCash shares code: 48; MuniCash Dollar
shares code: 54).
For other information call: 800-821-7432.
</TABLE>

Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company that currently offers shares in three
separate investment portfolios. The shares described in this Prospectus
represent interests in the MuniCash portfolio, a money market portfolio (the
"Fund"). The Fund's investment objective is to provide institutions with as high
a level of current interest income exempt from federal income taxes as is
consistent with relative stability of principal. The Fund invests substantially
all of its assets in short-term tax-exempt obligations issued by state and local
governments.

Fund shares may not be purchased by individuals directly, but institutional
investors may purchase shares for accounts maintained by individuals. In
addition to MuniCash Shares, investors may purchase MuniCash "Dollar Shares",
which accrue daily dividends in the same manner as MuniCash Shares but bear all
fees payable by the Fund to institutional investors for certain services they
provide to the beneficial owners of such Shares. (See "Management of the
Fund--Service Organizations.")

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

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED,
ENDORSED, OR OTHERWISE SUPPORTED BY PNC BANK CORP. OR ITS AFFILIATES, OR THE
U.S. GOVERNMENT, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN THE
FUND INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE
CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO MAINTAIN ITS NET ASSET VALUE OF
$1.00 PER SHARE. ------------------------

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

March 30, 1996

<PAGE> 42

BACKGROUND AND EXPENSE INFORMATION

Two classes of shares are offered by this Prospectus: MuniCash shares and
MuniCash Dollar shares ("Dollar Shares"). Shares of each class represent equal,
pro rata interests in the Fund and accrue daily dividends in the same manner
except that the Dollar Shares bear fees payable by the Fund (at the rate of .25%
per annum) to institutional investors for services they provide to the
beneficial owners of such shares. (See "Management of the Fund--Service
Organizations.")

EXPENSE SUMMARY

<TABLE>
<CAPTION>
MUNICASH
MUNICASH DOLLAR
ESTIMATED ANNUAL FUND OPERATING EXPENSES SHARES SHARES
------------ ------------
<S> <C> <C> <C> <C>
(as a percentage of average net assets)
Management Fees (net of waivers)............................. .06% .06%
Other Expenses............................................... .12% .37%
Administration Fees (net of waivers).................... .06% .06%
Shareholder Servicing Fees.............................. 0% .25%
Miscellaneous........................................... .06% .06%
---- ---- ---- ----
Total Fund Operating Expenses (net of waivers)............... .18% .43%
==== ====
</TABLE>

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

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming: (1) a 5% annual return; and (2) redemption at the
end of each time period with respect to the following
shares:
MuniCash shares:........................................ $2 $ 6 $10 $ 23
Dollar Shares:.......................................... $4 $14 $24 $ 54
</TABLE>

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES AND RATE OF RETURN MAY BE GREATER OR
LESSER THAN THOSE SHOWN.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. In addition, institutional investors may charge
fees for providing services in connection with their customers' investments in
Dollar Shares. (For more complete descriptions of the various costs and
expenses, see "Management of the Fund" in this Prospectus and the Statement of
Additional Information and the financial statements and related notes contained
in the Statement of Additional Information.) For the fiscal year ended November
30, 1995, absent fee waivers, management and administration fees would each have
been .175% of the Fund's average daily net assets. The investment adviser and
administrators have agreed to waive the advisory and administrative fees
otherwise payable to them and to reimburse the Fund for its operating expenses
to the extent necessary to ensure that the operating expense ratio for the Fund
(excluding fees paid to Service Organizations pursuant to Servicing Agreements)
does not exceed .18% of the Fund's average daily net assets. These waivers may
be terminated upon 120-days' written notice to the Fund. Absent such fee waivers
and expense reimbursements for such period, the estimated "Total Fund Operating
Expenses" for MuniCash shares and Dollar Shares would have been .41% and .66%,
respectively, of the average daily net assets of the MuniCash portfolio. The
foregoing table has not been audited by the Fund's independent accountants.

2
<PAGE> 43

FINANCIAL HIGHLIGHTS

The following financial highlights for MuniCash Shares and MuniCash Dollar
Shares have been derived from the financial statements of the Fund for the
fiscal year ended November 30, 1995, and for each of the nine preceding fiscal
years. The financial highlights for the fiscal years set forth below have been
audited by KPMG Peat Marwick LLP, independent accountants whose report on the
financial statements and financial highlights (for the most recent five years)
of the Fund is included in the Statement of Additional Information. The tables
should be read in conjunction with the financial statements and related notes
included in the Statement of Additional Information. Further information about
the performance of the Fund is available in the annual report to shareholders,
which may be obtained without charge by calling 800-821-7432.

MUNICASH SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ------- -------- -------- --------
Income from
investment
operations:
Net investment
income........... .0382 .0266 .0235 .0300 .0453 .0577
-------- -------- ------- -------- -------- --------
Less distributions:
Dividends to
shareholders from
net investment
income........... (.0382) (.0266) (.0235) (.0300) (.0453) (.0577)
-------- -------- ------- -------- -------- --------
Net asset value,
end
of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return....... 3.89% 2.69% 2.38% 3.04% 4.62% 5.93%
Ratios/Supplemental
data:
Net assets, end of
period (000s).... 321,642 273,439 572,482 857,812 361,280 352,614
Ratio of expenses
to average daily
net assets(1).... .18% .19% .20% .20% .20% .15%
Ratio of net
investment income
to average daily
net assets....... 3.83% 2.59% 2.36% 2.90% 4.58% 5.76%

1989 1988(2) 1987(2) 1986(2)
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value,
beginning of
period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
Income from
investment
operations:
Net investment
income........... .0613 .0506 .0436 .0463
------- ------- ------- -------
Less distributions:
Dividends to
shareholders from
net investment
income........... (.0613) (.0506) (.0436) (.0463)
------- ------- ------- -------
Net asset value,
end
of period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total return....... 6.31% 5.18% 4.45% 4.73%
Ratios/Supplemental
data:
Net assets, end of
period (000s).... 60,312 37,702 13,925 7,918
Ratio of expenses
to average daily
net assets(1).... .24% .24% .30% .34%
Ratio of net
investment income
to average daily
net assets....... 6.10% 5.05% 4.36% 4.54%
</TABLE>

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

(1)Without the waiver of advisory and administration fees, the ratios of
expenses to average daily net assets would have been 0.41%, 0.42%, 0.42%,
0.40%, 0.43%, 0.43%, 0.44%, 0.43%, 0.43%, 0.46% and 0.58% (annualized) for
the years ended November 30, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988,
1987 and 1986, respectively.

(2)Total return data has not been audited.

3
<PAGE> 44

MUNICASH DOLLAR SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988(2) 1987(2) 1986(2)
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income.............. .0357 .0241 .0210 .0275 .0428 .0552 .0588 .0483 .0414 .0443
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends to
shareholders from
net investment
income.............. (.0357) (.0241) (.0210) (.0275) (.0428) (.0552) (.0588) (.0483) (.0414) (.0443)
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end
of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return.......... 3.64% 2.44% 2.13% 2.79% 4.37% 5.68% 6.06% 4.93% 4.20% 4.48%
Ratios/Supplemental
data:
Net assets, end of
period (000s)....... 101,424 99,688 95,225 81,669 49,582 52,213 40,102 52,773 61,842 55,580
Ratio of expenses to
average
daily net assets(1). .43% .44% .45% .45% .45% .40% .49% .47% .52% .54%
Ratio of net
investment income to
average daily net
assets.............. 3.58% 2.34% 2.11% 2.70% 4.33% 5.51% 5.87% 4.82% 4.14% 4.34%
</TABLE>

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

(1)Without the waiver of advisory and administration fees, the ratios of
expenses to average daily net assets would have been 0.66%, 0.67%, 0.67%,
0.65%, 0.68%, 0.68%, 0.69%, 0.66%, 0.65%, 0.66% and 0.67%, for the years
ended November 30, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987 and
1986, respectively.

(2)Total return data has not been audited.

4
<PAGE> 45

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

In pursuing its investment objective, the Fund invests substantially all of
its assets in a diversified portfolio of short-term tax-exempt obligations
issued by or on behalf of states, territories, and possessions of the United
States, the District of Columbia, and their respective authorities, agencies,
instrumentalities, and political subdivisions and tax-exempt derivative
securities such as tender option bonds, participations, beneficial interests in
trusts and partnership interests (collectively, "Municipal Obligations"). The
Fund will not knowingly purchase securities the interest on which is subject to
regular federal income tax. (See, however, "Taxes" below concerning treatment of
exempt-interest dividends paid by the Fund for purposes of the federal
alternative minimum tax applicable to particular classes of investors.)

Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the Funds
from tax-exempt derivative securities are rendered by counsel to the respective
sponsors of such securities. The Fund and its investment adviser will rely on
such opinions and will not review independently the underlying proceedings
relating to the issuance of Municipal Obligations, the creation of any
tax-exempt derivative securities, or the bases for such opinions.

The Fund will purchase only Municipal Obligations which are "Eligible
Securities" (as defined by the SEC) and which present minimal credit risks as
determined by the Fund's investment adviser pursuant to guidelines approved by
the Company's Board of Trustees. Eligible Securities consist of (i) securities
that either (a) have short-term debt ratings at the time of purchase within the
two highest rating categories assigned by at least two unaffiliated nationally
recognized statistical rating organizations ("Rating Agencies") (or one Rating
Agency if the security was rated by only one Rating Agency), or (b) are issued
by issuers with such ratings, and (ii) certain securities that are unrated
(including securities of issuers that have long-term but not short-term ratings)
but are of comparable quality as determined by the Fund's investment adviser
pursuant to guidelines approved by the Company's Board of Trustees. The Appendix
to the Statement of Additional Information includes a description of applicable
ratings by Rating Agencies.

Except during periods of unusual market conditions or during temporary
defensive periods, the Fund will invest substantially all, but in no event less
than 80%, of its total assets in Municipal Obligations with remaining maturities
of 397 days (thirteen months) or less as determined in accordance with the rules
of the SEC. The Fund may hold uninvested cash reserves pending investment,
during temporary defensive periods or if, in the opinion of the Fund's
investment

5
<PAGE> 46

adviser, suitable tax-exempt obligations are unavailable. There is no percentage
limitation on the amount of assets which may be held uninvested. Uninvested cash
reserves will not earn income.

The Fund may not:

1. Purchase any securities other than obligations the interest on
which is exempt from federal income tax, which may have put options.

4. Knowingly invest more than 10% of the value of the Fund's assets in
securities with legal or contractual restrictions on resale.

TYPES OF MUNICIPAL OBLIGATIONS

6
<PAGE> 47

OTHER INVESTMENT PRACTICES

Municipal Obligations purchased by the Fund may include variable rate
demand notes. Such notes are frequently not rated by credit rating agencies, but
unrated notes purchased by the Fund will be determined by the Fund's investment
adviser to be of comparable quality at the time of purchase to rated instruments
purchasable by the Fund. Where necessary to ensure that a note is an Eligible
Security, the Fund will require that the issuer's obligation to pay the
principal of the note be backed by an unconditional bank letter or line of
credit, guarantee, or commitment to lend. While there may be no active secondary
market with respect to a particular variable rate demand note purchased by the
Fund, the Fund may, upon the notice specified in the note, demand payment of the
principal of the note at any time or during specified periods not exceeding
thirteen months, depending upon the instrument involved, and may resell the note
at any time to a third party. The absence of such an active secondary market,
however, could make it difficult for the Fund to dispose of a variable rate
demand note if the issuer were to default on its payment obligation or during
periods that the Fund is not entitled to exercise its demand rights, and the
Fund could, for this or other reasons, suffer a loss to the extent of the
default. While, in general, the Fund will invest only in securities that mature
within thirteen months of purchase, the Fund may invest in variable rate demand
notes which have nominal maturities in excess of thirteen months, if such
instruments carry demand features that comply with conditions established by the
SEC.

7
<PAGE> 48

Although the Fund may invest more than 25% of its net assets in (i)
Municipal Obligations whose issuers are in the same state and (ii) Municipal
Obligations the interest on which is paid solely from revenues of similar
projects, it does not presently intend to do so on a regular basis. To the
extent the Fund's assets are concentrated in Municipal Obligations that are
payable from the revenues of similar projects or are issued by issuers located
in the same state, the Fund will be subject to the peculiar risks presented by
such projects and by the laws and economic conditions relating to such states to
a greater extent than it would be if its assets were not so concentrated. In
addition, the Fund may invest its net assets without limitation in private
activity bonds. While interest paid on private activity bonds will be exempt
from regular federal income tax, it may be treated as a specific tax preference
item under the federal alternative minimum tax. (See "Taxes".) Investors should
also be aware of the possibility of state and local alternative minimum income
tax or minimum income tax liability on interest from private activity bonds.

The value of the Fund's portfolio securities can be expected to vary
inversely with changes in prevailing interest rates.

PURCHASE AND REDEMPTION OF SHARES

PURCHASE PROCEDURES

Fund shares are sold at the net asset value per share next determined after
receipt of a purchase order by PFPC, the Fund's transfer agent. Purchase orders
for shares are accepted only on days on which both the New York Stock Exchange
and the Federal Reserve Bank of Philadelphia are open for business and must be
transmitted to PFPC in Wilmington, Delaware by telephone (800-441-7450; in
Delaware: 302-791-5350) or through the Fund's computer access program. Orders
received before 12:00 noon, Eastern time, for which payment has been received by
PNC Bank, the Fund's custodian, will be executed at 12:00 noon. Orders received
after 12:00 noon and before 2:30 P.M., Eastern time (or orders received earlier
in the same day for which payment has not been received by 12:00 noon), will be
executed at 4:00 P.M., Eastern time, if payment has been received by PNC Bank by
that time. Orders received at other times, and orders for which payment has not
been received by 4:00 P.M., Eastern time, will not be accepted, and notice
thereof will be given to the institution placing the order. (Payment for orders
which

8
<PAGE> 49

are not received or accepted will be returned after prompt inquiry to the
sending institution.) The Fund may in its discretion reject any order for
shares.

Payment for Fund shares may be made only in federal funds or other funds
immediately available to PNC Bank. The minimum initial investment by an
institution is $3 million for MuniCash Shares and $5,000 for Dollar Shares;
however, broker-dealers and other institutional investors may set a higher
minimum for their customers. There is no minimum subsequent investment. The
Fund, at its discretion, may reduce the minimum initial investment for MuniCash
Shares for specific institutions whose aggregate relationship with the Provident
Institutional Fund is substantially equivalent to this $3 million minimum and
warrants this reduction.

REDEMPTION PROCEDURES

The Fund shall have the right to redeem shares in any account if the value
of the account is less than $1,000 after sixty-days' prior written notice to the
shareholder. Any such redemption shall be effected at the net asset value per
share next determined after the redemption order is entered. If during the
sixty-day period the shareholder increases the value of its account to $1,000 or
more, no such redemption shall take place. Moreover, if a shareholder's MuniCash
Shares account falls below an average of $100,000 in any particular calendar
month, the account may be charged an account maintenance fee with respect to
that month. In addition, the Fund may also redeem shares involuntarily or
suspend the right of redemption or under certain special circumstances described
in the Statement of Additional Information under "Additional Purchase and
Redemption Information."

OTHER MATTERS

The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC as of 12:00 noon and 4:00 P.M., Eastern
time, on each day on which both

9
<PAGE> 50

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

The business and affairs of the Fund are managed under the direction of the
Company's Board of Trustees. The trustees of the Company are as follows:

Philip E. Coldwell is an economic consultant and former Member of the
Board of Governors of the Federal Reserve System.

Robert R. Fortune is a financial consultant and former Chairman,
President and Chief Executive Officer of Associated Electric & Gas
Insurance Services Limited.

Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.

G. Willing Pepper, Chairman of the Board and President of the Company,
is a retired President of Scott Paper Company.

Mr. Pepper is considered by the Company to be an "interested person"
of the Company as defined in the 1940 Act.

The other officers of the Company are as follows:

Edward J. Roach is Vice President and Treasurer of the Company.

Morgan R. Jones, Secretary of the Company, is a partner of the law
firm of Drinker Biddle & Reath, Philadelphia, Pennsylvania.

10
<PAGE> 51

INVESTMENT ADVISER AND SUB-ADVISER

PIMC, a wholly-owned subsidiary of PNC Bank, serves as the Fund's
investment adviser. PIMC was organized in 1977 by PNC Bank to perform advisory
services for investment companies, and has its principal offices at 400 Bellevue
Parkway, Wilmington, Delaware 19809. PNC Bank serves as the Fund's sub-adviser.
PNC Bank is one of the largest bank managers of investments for individuals in
the United States, and together with its predecessors has been in the business
of managing the investments of fiduciary and other accounts since 1847. PNC Bank
is a wholly-owned, indirect subsidiary of PNC Bank Corp., and has its principal
offices at Broad and Chestnut Streets, Philadelphia, Pennsylvania 19102. PNC
Bank Corp. is a multi-bank holding company. PIMC and PNC Bank also serve as
adviser and sub-advisers, respectively to the Company's MuniFund and
Intermediate Municipal Fund portfolios.

As adviser, PIMC manages the Fund's portfolio and is responsible for all
purchases and sales of the Fund's portfolio securities. PIMC also maintains
certain of the Fund's financial accounts and records and computes the Fund's net
asset value and net income. For the advisory services provided and expenses
assumed by it, PIMC is entitled to receive a fee, computed daily and payable
monthly, based on the Fund's average daily net assets. PIMC and the
administrators may from time to time reduce the advisory and administration fees
otherwise payable to them or may reimburse the Fund for its operating expenses.
Any fees waived or expenses reimbursed by PIMC and the administrators with
respect to a particular fiscal year are not recoverable. For the fiscal year
ended November 30, 1995, the Fund paid investment advisory fees aggregating
.062% (net of waivers of .113%) of the Fund's average daily net assets.

11
<PAGE> 52

advisory fees payable by the Fund to PIMC. PNC Bank serves as the Fund's
custodian. The services provided by PNC Bank and PIMC and the fees payable by
the Fund for these services are described further in the Statement of Additional
Information under "Management of the Funds."

ADMINISTRATORS

For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly. (For information regarding
the administrators' waivers and expense reimbursements, see "Investment Adviser
and Sub-Adviser" above.) The Fund also reimburses each administrator for its
reasonable out-of-pocket expenses incurred in connection with the Fund's
computer access program. For the fiscal year ended November 30, 1995, the Fund
paid administrative fees aggregating .062% (net of waivers of .113%) of its
average daily net assets.

DISTRIBUTOR

SERVICE ORGANIZATIONS

12
<PAGE> 53

purchases Dollar Shares requiring it to provide support services to its
customers who are the beneficial owners of such shares in consideration of the
Fund's payment of .25% (on an annualized basis) of the average daily net asset
value of the Dollar Shares held by the Service Organization for the benefit of
customers. Such services, which are described more fully in the Statement of
Additional Information under "Management of the Funds--Service Organizations,"
include aggregating and processing purchase and redemption requests from
customers and placing net purchase and redemption orders with PFPC; processing
dividend payments from the Fund on behalf of customers; providing information
periodically to customers showing their positions in Dollar Shares; and
providing sub-accounting or the information necessary for sub-accounting with
respect to Dollar Shares beneficially owned by customers. Under the terms of the
agreements, Service Organizations are required to provide to their customers a
schedule of any fees that they may charge to the customers in connection with
their investments in Dollar Shares. MuniCash Shares are sold to institutions
that have not entered into servicing agreements with the Fund in connection with
their investments.

EXPENSES

Except as noted above and in the Statement of Additional Information, the
Fund's service contractors bear all expenses in connection with the performance
of their services. Similarly, the Fund bears the expenses incurred in its
operations. For the fiscal year ended November 30, 1995, the Fund's total
expenses for MuniCash Shares and Dollar Shares were .18% and .43% of the average
daily net assets (net of fee waivers of .23% and .23%, respectively). With
regard to fees paid exclusively by Dollar Shares, see "Service Organizations"
above.

BANKING LAWS

13
<PAGE> 54

DIVIDENDS

TAXES

14
<PAGE> 55

corporations. Corporate shareholders must also take all exempt-interest
dividends into account in determining certain adjustments for federal
alternative minimum and environmental tax purposes. The environmental tax
applicable to corporations is imposed at the rate of .12% on the excess of the
corporation's modified federal alternative minimum taxable income over
$2,000,000. Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.

YIELDS

From time to time, the "yields", "effective yields" and "tax-equivalent
yields" for MuniCash Shares and Dollar Shares may be quoted in advertisements or
in reports to shareholders. Yield quotations are computed separately for
MuniCash Shares and Dollar Shares. The "yield" for a particular class or
sub-class of Fund shares refers to the income generated by an investment in the
shares over a specified period (such as a seven-day period). This income is then
"annualized"; that is, the amount of income generated by the investment during
that period is assumed to be generated for each such period over a 52-week or
one-year period and is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the income earned by an
investment in a particular class or sub-class is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The "tax-equivalent yield"
demonstrates the level of taxable yield necessary to produce an after-tax yield
equivalent to the Fund's tax-free yield for MuniCash Shares and Dollar Shares.
It is calculated by increasing the yield (calculated as above) by the amount
necessary to reflect the payment of federal taxes at a stated rate. The
"tax-equivalent yield" will always be higher than the "yield".

15
<PAGE> 56

reported by the Bank Rate Monitor from money market deposit accounts offered by
the 50 leading banks and thrift institutions in the top five standard
metropolitan statistical areas. For example, such data are reported in national
financial publications such as IBC/Donoghue's Money Fund Report(R), Ibbotson
Associates of Chicago, The Wall Street Journal, and The New York Times, reports
prepared by Lipper Analytical Services, Inc., and publications of a local or
regional nature.

The Fund's yield figures for MuniCash Shares and Dollar Shares represent
the Fund's past performance, will fluctuate, and should not be considered as
representative of future results. The yield of any investment is generally a
function of portfolio quality and maturity, type of investment, and operating
expenses. Any fees charged by Service Organizations or other institutional
investors directly to their customers in connection with investments in Fund
shares are not reflected in the Fund's yields; and such fees, if charged, would
reduce the actual return received by customers on their investments. The methods
used to compute the Fund's yields are described in more detail in the Statement
of Additional Information. Investors may call (800) 821-6006 (MuniCash Shares
code: 48; Dollar Shares code: 54) to obtain current yield information.

DESCRIPTION OF SHARES AND MISCELLANEOUS

The Company's Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of full and fractional shares of beneficial interest
in the Company and to classify or reclassify any unissued shares into one or
more classes of shares. Pursuant to such authority, the Board of Trustees has
authorized the issuance of six classes of shares designated as MuniCash,
MuniCash Dollar, MuniFund, MuniFund Dollar, Intermediate Municipal and
Intermediate Municipal Dollar. The Declaration of Trust further authorizes the
trustees to classify or reclassify any class of shares into one or more
sub-classes.

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE
AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS RELATING TO THE FUND.
INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING MUNIFUND OR
INTERMEDIATE MUNICIPAL FUND MAY OBTAIN SEPARATE PROSPECTUSES DESCRIBING THOSE
PORTFOLIOS BY CALLING THE DISTRIBUTOR AT 800-998-7633.

16
<PAGE> 57

Holders of the Company's MuniCash Shares and Dollar Shares will vote in the
aggregate and not by class on all matters, except where otherwise required by
law and except that only Dollar Shares will be entitled to vote on matters
submitted to a vote of shareholders pertaining to the Fund's arrangements with
Service Organizations. Further, shareholders of all of the Company's portfolios
will vote in the aggregate and not by portfolio except as otherwise required by
law or when the Board of Trustees determines that the matter to be voted upon
affects only the interests of the shareholders of a particular portfolio. (See
the Statement of Additional Information under "Additional Description Concerning
Fund Shares" for examples where the 1940 Act requires voting by portfolio.)
Shareholders of the Company are entitled to one vote for each full share held
(irrespective of class or portfolio) and fractional votes for fractional shares
held. Voting rights are not cumulative and, accordingly, the holders of more
than 50% of the aggregate shares of the Company may elect all of the trustees.

For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."

17
<PAGE> 58

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 59

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 60

- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS,
OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION
INCORPORATED HEREIN BY
REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS
PROSPECTUS; AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR
ITS DISTRIBUTOR. THIS
PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE
COMPANY OR BY THE DISTRIBUTOR
IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

---------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information.................. 2
Financial Highlights........... 3
Investment Objective and
Policies..................... 5
Purchase and Redemption of
Shares....................... 8
Management of the Fund......... 10
Dividends...................... 14
Taxes.......................... 14
Yields......................... 15
Description of Shares and
Miscellaneous................ 16
</TABLE>

PIF-P-010

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

MUNICASH
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR TEMPORARY
INVESTMENT
[LOGO]

Prospectus

March 30, 1996

<PAGE> 61

MUNIFUND AND MUNICASH
Investment Portfolios Offered By
Municipal Fund for Temporary Investment

Statement of Additional Information
March 30, 1996

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Municipal Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Additional Purchase and Redemption Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Additional Information Concerning Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Additional Yield Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Additional Description Concerning Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Auditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>

This Statement of Additional Information is meant to be read
in conjunction with the Prospectuses for the MuniFund and MuniCash portfolios,
each dated March 30, 1996, and is incorporated by reference in its entirety
into each Prospectus. Because this Statement of Additional Information is not
itself a prospectus, no investment in shares of the MuniFund or MuniCash
portfolios should be made solely upon information contained herein. Copies of
a Prospectus for MuniFund, or MuniCash may be obtained by calling 800-821-7432.
Capitalized terms used but not defined herein have the same meanings as in the
Prospectuses.
<PAGE> 62
THE COMPANY

Municipal Fund for Temporary Investment (the "Company") is a
no-load, diversified, open-end investment company presently offering three
separate investment portfolios--MuniFund and MuniCash (individually, a "Fund";
collectively, the "Funds") and Intermediate Municipal Fund.

The investment objective and policies of MuniFund and MuniCash
are comparable, and securities held by each of these portfolios consist of
tax-exempt obligations (as defined in the prospectuses) and tax-exempt
derivatives such as tender option bonds, participations, beneficial interests
in trusts and partnership interests ("Municipal Obligations") having remaining
maturities of 13 months or less at the time of purchase. Although MuniFund and
MuniCash have the same investment adviser and have comparable investment
objectives, their yields will normally differ due to their differing cash flows
and their differing types of portfolio securities (for example, MuniFund
invests in securities rated in the highest category by Rating Agencies, and
MuniCash may invest in securities rated in the two highest categories by Rating
Agencies).

THIS STATEMENT OF ADDITIONAL INFORMATION AND MUNIFUND'S AND
MUNICASH'S PROSPECTUSES RELATE PRIMARILY TO THE FUNDS AND DESCRIBE ONLY THE
INVESTMENT OBJECTIVES AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS
RELATING TO EACH FUND. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION
REGARDING INTERMEDIATE MUNICIPAL FUND MAY OBTAIN A SEPARATE PROSPECTUS
DESCRIBING THAT PORTFOLIO BY CALLING THE DISTRIBUTOR AT 800-998-7633.

INVESTMENT OBJECTIVE AND POLICIES

As stated in the Funds' Prospectuses, the investment objective
of each Fund is to provide as high a level of current interest income exempt
from federal income tax as is consistent with relative stability of principal.
The following policies supplement the description of each Fund's investment
objective and policies as contained in the applicable Prospectuses.

PORTFOLIO TRANSACTIONS

Subject to the general control of the Company's Board of
Trustees, PNC Institutional Management Corporation ("PIMC"), each Fund's
investment adviser, is responsible for, makes decisions with respect to, and
places orders for all purchases and sales of portfolio securities for a Fund.
Purchases and sales of portfolio securities are usually principal transactions
without brokerage commissions. In making portfolio investments, PIMC seeks to
obtain the best net price and the most favorable execution of orders. To the
extent that the execution and price

-2-
<PAGE> 63
offered by more than one dealer are comparable, PIMC may, in its discretion,
effect transactions in portfolio securities with dealers who provide the
Company with research advice or other services. Research advice and other
services furnished by brokers through whom the Funds effect securities
transactions may be used by PIMC in servicing accounts in addition to a Fund,
and not all such services will necessarily benefit a Fund.

Transactions in the over-the-counter market are generally
principal transactions with dealers, and the costs of such transactions involve
dealer spreads rather than brokerage commissions. With respect to
over-the-counter transactions, a Fund, where possible, 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.

Investment decisions for each Fund are made independently from
those for another of the Company's portfolios or other investment company
portfolios or accounts managed by PIMC. Such other portfolios may invest in
the same securities as the Funds. When purchases or sales of the same security
are made at substantially the same time on behalf of such other portfolios,
transactions are averaged as to price, and available investments allocated as
to amount, in a manner which PIMC believes to be equitable to each portfolio,
including either Fund. In some instances, this investment procedure may
adversely affect the price paid or received by a Fund or the size of the
position obtained for a Fund. To the extent permitted by law, PIMC may
aggregate the securities to be sold or purchased for a Fund with those to be
sold or purchased for such other portfolios in order to obtain best execution.

The Funds will not execute portfolio transactions through or
acquire portfolio securities issued by PIMC, PNC Bank, National Association
("PNC Bank"), PFPC Inc. ("PFPC") or Provident Distributors, Inc. ("PDI"), or
any affiliated person (as such term is defined in the Investment Company Act of
1940 (the "1940 Act") of any of them, except to the extent permitted by the
Securities and Exchange Commission ("the SEC"). In addition, the Funds will
not purchase Municipal Obligations during the existence of any underwriting or
selling group relating thereto of which PDI or PNC Bank or any affiliate
thereof is a member, except to the extent permitted by the SEC. Under certain
circumstances, a Fund may be at a disadvantage because of these limitations in
comparison with other investment company portfolios which have a similar
investment objective but are not subject to such limitations. Furthermore,
with respect to such transactions and securities, a Fund will not give
preference to Service Organizations with whom a Fund enters into agreements
concerning the provision of support services to customers who beneficially own
MuniFund Dollar shares or MuniCash

-3-
<PAGE> 64
Dollar shares (collectively, "Dollar shares"). (See the applicable Prospectus,
"Management of the Fund--Service Organizations.")

A Fund may participate, if and when practicable, in bidding
for the purchase of Municipal Obligations directly from an issuer in order to
take advantage of the lower purchase price available to members of a bidding
group. A Fund will engage in this practice, however, only when PIMC, in its
sole discretion, believes such practice to be in a Fund's interest.

The Funds do not intend to seek profits through short-term
trading. Each Fund's annual portfolio turnover will be relatively high, but a
Fund's portfolio turnover is not expected to have a material effect on its net
income. Each Fund's portfolio turnover rate is expected to be zero for
regulatory reporting purposes.

ADDITIONAL INFORMATION ON INVESTMENT PRACTICES

VARIABLE AND FLOATING RATE INSTRUMENTS. Municipal Obligations
purchased by the Funds may include variable and floating rate instruments,
which provide for adjustments in the interest rate on certain reset dates or
whenever a specified interest rate index changes, respectively. Variable and
floating rate instruments are subject to the credit quality standards described
in the Prospectuses. In some cases the Funds may require that the obligation
to pay the principal of the instrument be backed by a letter or line of credit
or guarantee. Such instruments may carry stated maturities in excess of 397
days (thirteen months) provided that the maturity-shortening provisions stated
in Rule 2a-7 are satisfied. Although a particular variable or floating rate
demand instrument may not be actively traded in a secondary market, in some
cases, a Fund may be entitled to principal on demand and may be able to resell
such notes in the dealer market.

Variable and floating rate demand instruments held by a Fund
may have maturities of more than thirteen months provided: (i) the Fund is
entitled to the payment of principal at any time, or during specified intervals
not exceeding thirteen months, upon giving the prescribed notice (which may not
exceed 30 days), and (ii) the rate of interest on such instruments is adjusted
at periodic intervals which may extend up to thirteen months (397 days).
Variable and floating rate notes that do not provide for payment within seven
days may be deemed illiquid and subject to the 10% limitation on such
investments.

In determining a Fund's average weighted portfolio maturity
and whether a variable or floating rate demand instrument has a remaining
maturity of thirteen months or less, each instrument will be deemed by a Fund
to have a maturity equal

-4-
<PAGE> 65
to the longer of the period remaining until its next interest rate adjustment
or the period remaining until the principal amount can be recovered through
demand. In determining whether an unrated variable or floating rate demand
instrument is of comparable quality at the time of purchase to "Eligible
Securities" in which a Fund may invest, each Fund's investment adviser will
follow guidelines adopted by the Company's Board of Trustees.

WHEN-ISSUED SECURITIES. As stated in the Funds' Prospectuses,
a Fund may purchase Municipal Obligations on a "when-issued" basis (i.e., for
delivery beyond the normal settlement date at a stated price and yield). When
a Fund agrees to purchase when-issued securities, the custodian will set aside
cash or liquid portfolio securities equal to the amount of the commitment in a
separate account. Normally, the custodian will set aside portfolio securities
to satisfy a purchase commitment, and in such a case that Fund may be required
subsequently to place additional assets in the separate account in order to
ensure that the value of the account remains equal to the amount of that Fund's
commitment. It may be expected that a Fund's net assets will fluctuate to a
greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. Because that Fund will set aside
cash or liquid assets to satisfy its purchase commitments in the manner
described, such Fund's liquidity and ability to manage its portfolio might be
affected in the event its commitments to purchase when-issued securities ever
exceeded 25% of the value of its assets. When a Fund engages in when-issued
transactions, it relies on the seller to consummate the trade. Failure of the
seller to do so may result in a Fund's incurring a loss or missing an
opportunity to obtain a price considered to be advantageous. Neither Fund
intends to purchase when-issued securities for speculative purposes but only in
furtherance of its investment objective. Each Fund reserves the right to sell
the securities before the settlement date if it is deemed advisable.

STAND-BY COMMITMENTS. Each Fund may acquire "stand-by
commitments" with respect to Municipal Obligations held in its portfolio.
Under a stand-by commitment, a dealer would agree to purchase at a Fund's
option specified Municipal Obligations at their amortized cost value to the
Fund plus accrued interest, if any. (Stand-by commitments acquired by a Fund
may also be referred to as "put" options.) Stand-by commitments may be
exercisable by a Fund at any time before the maturity of the underlying
Municipal Obligations and may be sold, transferred, or assigned only with the
instruments involved. A Fund's right to exercise stand-by commitments will be
unconditional and unqualified.

-5-
<PAGE> 66
The amount payable to a Fund upon its exercise of a stand-by
commitment will normally be (i) the Fund's acquisition cost of the Municipal
Obligations (excluding any accrued interest which the Fund paid on their
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the securities, plus
(ii) all interest accrued on the securities since the last interest payment
date during that period.

Each Fund expects that stand-by commitments will generally be
available without the payment of any direct or indirect consideration.
However, if necessary or advisable, a Fund may pay for a stand-by commitment
either separately in cash or by paying a higher price for portfolio securities
which are acquired subject to the commitment (thus reducing the yield to
maturity otherwise available for the same securities). The total amount paid
in either manner for outstanding stand-by commitments held by a Fund will not
exceed 1/2 of 1% of the value of that Fund's total assets calculated
immediately after each stand-by commitment is acquired.

Each Fund intends to enter into stand-by commitments only with
dealers, banks, and broker-dealers which, in the investment adviser's opinion,
present minimal credit risks. A Fund's reliance upon the credit of these
dealers, banks, and broker-dealers will be secured by the value of the
underlying Municipal Obligations that are subject to the commitment.

A Fund would acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. The acquisition of a stand-by commitment would not affect
the valuation or assumed maturity of the underlying Municipal Obligations,
which would continue to be valued in accordance with the amortized cost method.
Stand-by commitments acquired by a Fund would be valued at zero in determining
net asset value. Where the Fund paid any consideration directly or indirectly
for a stand-by commitment, its cost would be reflected as unrealized
depreciation for the period during which the commitment was held by that Fund.

ILLIQUID SECURITIES. A Fund may not invest more than 10% of
its total net assets in illiquid securities, including securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation. Each Fund's investment adviser will
monitor on an ongoing basis the liquidity of such restricted securities under
the supervision of the Board of Trustees.

-6-
<PAGE> 67
Rule 144A under the Securities Act allows for a broader
institutional trading market for securities otherwise subject to restriction on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act for resales of certain
securities to qualified institutional buyers. The investment adviser
anticipates that the market for certain restricted securities such as
institutional municipal securities will expand further as a result of this
regulation and the development of automated systems for the trading, clearance,
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL system sponsored by the National Association of Securities
Dealers.

Each Fund's investment adviser will monitor the liquidity of
restricted securities under the supervision of the Board of Trustees. In
reaching liquidity decisions, the investment adviser will consider, inter alia,
the following factors: (1) the unregistered nature of a Rule 144A security;
(2) the frequency of trades and quotes for the Rule 144A security; (3) the
number of dealers willing to purchase or sell the Rule 144A security and the
number of other potential purchasers; (4) dealer undertakings to make a market
in the Rule 144A security; (5) the trading markets for the Rule 144A security;
and (6) the nature of the Rule 144A security and the nature of marketplace
trades (including, the time needed to dispose of the Rule 144A security,
methods of soliciting offers, and mechanics of transfer).

The Appendix to this Statement of Additional Information
contains a description of the relevant rating symbols used by Rating Agencies
for Municipal Obligations that may be purchased by each Fund.

INVESTMENT LIMITATIONS

The Funds' Prospectuses summarize certain investment
limitations that may not be changed without the affirmative vote of the holders
of a majority of such Fund's outstanding shares (as defined below under
"Miscellaneous"). Below is a complete list of each Fund's investment
limitations that may not be changed without such a vote of shareholders.

A Fund may not:

1. With respect to MuniFund, purchase any securities
other than Municipal Obligations and put options with respect to such
obligations; with respect to MuniCash, purchase any securities other than
obligations the interest on which is exempt from federal income tax, and put
options with respect to such obligations.

-7-
<PAGE> 68
2. Purchase the securities of any issuer if as a result
more than 5% of the value of the Fund's assets would be invested in the
securities of such issuer except that up to 25% of the value of the Fund's
assets may be invested without regard to this 5% limitation.

3. Borrow money except from banks for temporary purposes
and then in amounts not in excess of 10% of the value of the Fund's assets at
the time of such borrowing; or mortgage, pledge or hypothecate any assets
except in connection with any such borrowing and in amounts not in excess of
the lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. (This borrowing provision is not for
investment leverage, but solely to facilitate management of the Fund's
portfolio by enabling the Fund to meet redemption requests where the
liquidation of portfolio securities is deemed to be disadvantageous or
inconvenient.)

4. Knowingly invest more than 10% of the value of the
Fund's assets in securities with legal or contractual restrictions on resale.

5. Make loans except that the Fund may purchase or hold
debt obligations in accordance with its investment objective, policies and
limitations.

6. Underwrite any issue of securities except to the
extent that the purchase of Municipal Obligations or other securities directly
from the issuer thereof in accordance with the Fund's investment objective,
policies and limitations may be deemed to be underwriting.

7. Purchase or sell real estate except that the Fund may
invest in Municipal Obligations secured by real estate or interests therein.

8. Purchase securities on margin, make short sales of
securities or maintain a short position.

9. Write or sell puts, calls, straddles, spreads or
combinations thereof.

10. Purchase or sell commodities or commodity contracts,
or invest in oil, gas or mineral exploration or development programs.

11. Invest in industrial revenue bonds where the payment
of principal and interest are the responsibility of a company (including its
predecessors) with less than 3 years of continuous operation.

-8-
<PAGE> 69
12. Purchase securities of other investment companies
except in connection with a merger, consolidation, acquisition or
reorganization.

In addition, without the affirmative vote of the holders of a
majority of a Fund's outstanding shares, such Fund may not change its policy of
investing at least 80% of its total assets in obligations the interest on which
is exempt from federal income tax (except during periods of unusual market
conditions or during temporary defensive periods). Securities issued or
guaranteed by the U.S. government, its agencies, or instrumentalities
(including securities backed by the full faith and credit of the United States)
are not deemed to be subject to the second investment limitation above. With
respect to MuniCash, the percentage restrictions on borrowing and
collateralization contained in the third investment limitation above are based
on the Fund's total assets, and any interest paid by the Fund on its borrowings
pursuant to this investment limitation would reduce the Fund's income. It is
currently MuniCash's policy not to purchase portfolio securities while
borrowings in excess of 5% of the Fund's net assets are outstanding. The
policies and practices stated in this paragraph may be changed without the
affirmative vote of the holders of a majority of the Fund's outstanding shares,
but any such change may require the approval of the SEC and would be disclosed
in the Funds' prospectuses prior to being made.

In order to permit the sale of Fund shares in certain states,
the Funds may make commitments more restrictive than the investment policies
and limitations above. Should a Fund determine that any such commitment is no
longer in its best interests, it will revoke the commitment by terminating
sales of its shares in the state involved.

MUNICIPAL OBLIGATIONS

Municipal Obligations include debt obligations issued by
governmental entities to obtain funds for various public purposes, including
the construction of a wide range of public facilities, the refunding of
outstanding obligations, the payment of general operating expenses, and the
extension of loans to public institutions and facilities. Private activity
bonds that are or were issued by or on behalf of public authorities to finance
various privately-operated facilities are included within the term Municipal
Obligations if the interest paid thereon is exempt from federal income tax.
Opinions relating to the validity of Municipal Obligations and to the exemption
of interest thereon from federal income taxes are rendered by counsel to the
issuers or bond counsel to the respective issuing authorities at the time of
issuance. Neither the Funds nor their investment adviser will review
independently the underlying

-9-
<PAGE> 70
proceedings relating to the issuance of Municipal Obligations or the bases for
such opinions.

The Funds may hold tax-exempt derivatives which may be in the
form of tender option bonds, participations, beneficial interests in a trust,
partnership interests or other forms. A number of different structures have
been used. For example, interests in long-term fixed-rate Municipal
Obligations, held by a bank as trustee or custodian, are coupled with tender
option, demand and other features when the tax-exempt derivatives are created.
Together, these features entitle the holder of the interest to tender (or put)
the underlying Municipal Obligation to a third party at periodic intervals and
to receive the principal amount thereof. In some cases, Municipal Obligations
are represented by custodial receipts evidencing rights to receive specific
future interest payments, principal payments, or both, on the underlying
municipal securities held by the custodian. Under such arrangements, the
holder of the custodial receipt has the option to tender the underlying
municipal securities at its face value to the sponsor (usually a bank or broker
dealer or other financial institution), which is paid periodic fees equal to
the difference between the bond's fixed coupon rate and the rate that would
cause the bond, coupled with the tender option, to trade at par on the date of
a rate adjustment. The Funds may hold tax-exempt derivatives, such as
participation interests and custodial receipts, for Municipal Obligations which
give the holder the right to receive payment of principal subject to the
conditions described above. The Internal Revenue Service has not ruled on
whether the interest received on tax-exempt derivatives in the form of
participation interests or custodial receipts is tax-exempt, and accordingly,
purchases of any such interests or receipts are based on the opinion of counsel
to the sponsors of such derivative securities. Neither the Funds nor their
investment adviser will review independently the underlying proceedings related
to the creation of any tax-exempt derivatives or the bases for such opinions.

As described in the Funds' Prospectuses, the two principal
classifications of Municipal Obligations consist of "general obligation" and
"revenue" issues, and each Fund's portfolio may include "moral obligation"
issues, which are normally issued by special purpose authorities. There are,
of course, variations in the quality of Municipal Obligations both within a
particular classification and between classifications, and the yields on
Municipal Obligations depend upon a variety of factors, including general money
market conditions, the financial condition of the issuer, general conditions of
the municipal bond market, the size of a particular offering, the maturity of
the obligation, and the rating of the issue. The ratings of Rating Agencies
represent their opinions as to the quality of Municipal Obligations. It should
be recognized, however, that ratings are general and are not absolute standards
of quality, and Municipal

-10-
<PAGE> 71
Obligations with the same maturity, interest rate, and rating may have
different yields while Municipal Obligations of the same maturity and interest
rate with different ratings may have the same yield. Subsequent to its
purchase by a Fund, an issue of Municipal Obligations may cease to be rated or
its rating may be reduced below the minimum rating required for purchase by the
Fund. A Fund's investment adviser will consider such an event in determining
whether the Fund should continue to hold the obligation.

An issuer's obligations under its Municipal Obligations are
subject to the provisions of bankruptcy, insolvency, and other laws affecting
the rights and remedies of creditors, such as the federal Bankruptcy Code, and
laws, if any, which may be enacted by federal or state legislatures extending
the time for payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on and principal of its Municipal
Obligations may be materially adversely affected by litigation or other
conditions.

Among other instruments, each Fund may purchase short-term
General Obligation Notes, Tax Anticipation Notes, Bond Anticipation Notes,
Revenue Anticipation Notes, Tax-Exempt Commercial Paper, Construction Loan
Notes, and other forms of short-term loans. Such notes are issued with a
short-term maturity in anticipation of the receipt of tax funds, the proceeds
of bond placements, or other revenues. In addition, each Fund may invest in
other types of tax-exempt instruments such as municipal bonds, private activity
bonds, and pollution control bonds, provided they have remaining maturities of
thirteen months or less at the time of purchase.

The payment of principal and interest on most securities
purchased by a Fund will depend upon the ability of the issuers to meet their
obligations. The District of Columbia, each state, each of their political
subdivisions, agencies, instrumentalities, and authorities and each multi-state
agency of which a state is a member is a separate "issuer" as that term is used
in this Statement of Additional Information and the Funds' Prospectuses. The
non-governmental user of facilities financed by private activity bonds is also
considered to be an "issuer."

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

IN GENERAL

Information on how to purchase and redeem each Fund's shares
is included in the applicable Prospectuses. The issuance of a Fund's shares is
recorded on a Fund's books, and share

-11-
<PAGE> 72
certificates are not issued unless expressly requested in writing.
Certificates are not issued for fractional shares.

The regulations of the Comptroller of the Currency provide
that funds held in a fiduciary capacity by a national bank approved by the
Comptroller to exercise fiduciary powers must be invested in accordance with
the instrument establishing the fiduciary relationship and local law. The
Company believes that the purchase of MuniFund or MuniCash shares by such
national banks acting on behalf of their fiduciary accounts is not contrary to
applicable regulations if consistent with the particular account and proper
under the law governing the administration of the account.

Prior to effecting a redemption of shares represented by
certificates, PFPC, the Company's transfer agent, must have received such
certificates at its principal office. All such certificates must be endorsed
by the redeeming shareholder or accompanied by a signed stock power, in each
instance with the signature guaranteed by a commercial bank, a member of a
major stock exchange or other eligible guarantor institution, unless other
arrangements satisfactory to a Fund have previously been made. A Fund may
require any additional information reasonably necessary to evidence that a
redemption has been duly authorized.

Under the 1940 Act, a Fund may suspend the right of redemption
or postpone the date of payment upon redemption for any period during which the
New York Stock Exchange is closed, other than customary weekend and holiday
closings, or during which trading on said Exchange is restricted, or during
which (as determined by the SEC by rule or regulation) an emergency exists as a
result of which disposal or valuation of portfolio securities is not reasonably
practicable, or for such other periods as the SEC may permit. (A Fund may also
suspend or postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions.) In addition, a Fund may redeem
shares involuntarily in certain other instances if the Board of Trustees
determines that failure to redeem may have material adverse consequences to
that Fund's shareholders in general. If the Board of Trustees determines that
conditions exist which make payment of redemption proceeds wholly in cash
unwise or undesirable, a Fund may make payment wholly or partly in securities
or other property. (See "Net Asset Value" below for an example of when such
form of payment might be appropriate.)

-12-
<PAGE> 73
accounting services (such as purchase, redemption, and dividend recordkeeping).
Sub-accounts may be established by name or number either when the Master
Account is opened or later.

NET ASSET VALUE

As stated in each Fund's Prospectus, each Fund's net asset
value per share is calculated by adding the value of all of the Fund's
Portfolio securities and other assets belonging to that Fund, subtracting the
liabilities attributable to each class, and dividing the result by the total
number of the outstanding shares of each class outstanding. Assets belonging
to a Fund consist of the consideration received upon the issuance of Fund
shares together with all income, earnings, profits, and proceeds derived from
the investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, any funds or payments derived from any
reinvestment of such proceeds, and a portion of any general assets of the
Company not belonging to a particular portfolio. Assets belonging to a Fund
are charged with the direct liabilities of that Fund and with a share of the
general liabilities of the Company allocated on a daily basis in proportion to
the relative net assets of the Fund and the Company's other portfolio.
Determinations made in good faith and in accordance with generally accepted
accounting principles by the Company's Board of Trustees as to the allocation
of any assets or liabilities with respect to a Fund are conclusive.

As stated in the Funds' Prospectuses, in computing the net
asset value of its shares for purposes of sales and redemptions, each Fund uses
the amortized cost method of valuation. Under this method, a Fund values each
of its portfolio securities at cost on the date of purchase and thereafter
assumes a constant proportionate amortization of any discount or premium until
maturity of the security. As a result, the value of a portfolio security for
purposes of determining net asset value normally does not change in response to
fluctuating interest rates. While the amortized cost method provides certainty
in portfolio valuation, it may result in valuations for the Funds' securities
which are higher or lower than the market value of such securities.

In connection with its use of amortized cost valuation, each
Fund limits the dollar-weighted average maturity of its portfolio to not more
than 90 days and does not purchase any instrument with a remaining maturity of
more than 13 months (397 days)(with certain exceptions). The Company's Board
of Trustees has also established, pursuant to rules promulgated by the SEC,
procedures that are intended to stabilize each Fund's net asset value per share
for purposes of sales and redemptions at $l.00. Such procedures include the
determination at such intervals as the Board deems appropriate, of the extent,
if any, to which a

-13-
<PAGE> 74
Fund's net asset value per share calculated by using available market
quotations deviates from $1.00 per share. In the event such deviation exceeds
1/2 of 1% with respect to either Fund, the Board will promptly consider what
action, if any, should be initiated. If the Board believes that the amount of
any deviation from a Fund's $1.00 amortized cost price per share may result in
material dilution or other unfair results to investors or existing
shareholders, it will take such steps as it considers appropriate to eliminate
or reduce to the extent reasonably practicable any such dilution or unfair
results. These steps may include selling portfolio instruments prior to
maturity, shortening the Fund's average portfolio maturity, redeeming shares in
kind, reducing or withholding dividends, or utilizing a net asset value per
share determined by using available market quotations.

MANAGEMENT OF THE FUNDS

TRUSTEES AND OFFICERS

The Company's trustees and executive officers, their
addresses, principal occupations during the past five years, and other
affiliations are provided below. In addition to the information set forth
below, the trustees serve in the following capacities:

Each trustee of the Company serves as a director of Temporary
Investment Fund, Inc. ("Temp") and Provident Institutional Funds, Inc. ("PIF")
and as a trustee of Trust for Federal Securities ("Fed"). In addition, Messrs.
Fortune and Pepper are directors of Independence Square Income Securities, Inc.
("ISIS") and Managing General Partners of Chestnut Street Exchange Fund
("Chestnut"); Messrs. Pepper and Johnson are directors of Municipal Fund for
California Investors, Inc. ("Cal Muni"); Mr. Johnson is a director of Municipal
Fund for New York Investors, Inc. ("New York Muni") and the International
Dollar Reserve Fund ("IDR").

Each of the Company's officers, with the exception of Mr. Jones, holds like
offices with Temp, Fed, and PIF. In addition, Mr. Roach is Treasurer of
Chestnut, President and Treasurer of New York Muni and the RBB Fund, Inc.
("RBB"), and Vice President and Treasurer of ISIS and Cal Muni; Mr. Pepper is
President and Chairman of the Board of Cal Muni and PIF; Mr. Fortune is
President and Chairman of Chestnut and ISIS; and, Mr. Jones is
Secretary of Chestnut, Cal Muni and New York Muni. Each of the investment
companies named above receives various advisory and other services from PIMC
and PNC Bank. Of the above-mentioned funds, PDI provides distribution services
to Temp, Fed, Cal Muni, New York Muni, PIF and IDR. Of the above-mentioned
funds, PFPC and PDI provide administrative services to Temp, PIF, Fed, Cal Muni
and New York Muni.

-14-
<PAGE> 75

<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ------------- -----------------------
<S> <C> <C>
PHILIP E. COLDWELL(2,3,4) Trustee Economic Consultant;
Coldwell Financial Chairman Coldwell Financial Consultants
Consultants Member of the Board of
3330 Southwestern Blvd. Governors of the Federal
Dallas, TX 75225 Reserve System, 1974 to
1980; President, Federal Reserve Bank
Age 73 of Dallas, 1968 to 1974; Director,
Maxus Energy Corporation (energy
products); 1989-1993 Director, Diamond
Shamrock Corp. (energy and chemical
products) until 1987.

ROBERT R. FORTUNE(2,3,4) Trustee Financial Consultant; Former
2920 Ritter Lane Chairman, President and
Allentown, PA 18104 Chief Executive Officer of Associated
Electric & Gas Insurance Services
Age 79 Limited 1984 to 1993; Member of the
Financial Executives Institute and
American Institute of Certified Public
Accountants; Director, Prudential
Utility Fund, Inc., and Prudential
Structured Maturity Fund, Inc.

RODNEY D. JOHNSON(3,4) Trustee President, Fairmount Capital
Fairmount Capital Advisors, Inc. (financial
Advisors, Inc. advising) since 1987;
1435 Walnut Street Vice President for Financial
Drexel Building Affairs and Treasurer, Temple
Philadelphia, PA 19102 University, 1983 to 1987; Member, Board
of Education, School District of
Age 54 Philadelphia, 1983 to 1988.

G. WILLING PEPPER(1,2) Chairman of Retired; Chairman of the
128 Springton Lake Road the Board, Board, The Institute
Media, PA 19063 President, for Cancer Research until 1979;
and Trustee Director, Philadelphia National Bank
Age 87 until 1978; President, Scott Paper
Company, 1971 to 1973; Chairman of the
Board, Specialty Composites Corp. until
May 1984.

EDWARD J. ROACH Vice President Certified Public Accountant;
Bellevue Park and Treasurer Vice Chairman of the Board,
Corporate Center Fox Chase Cancer Center;
400 Bellevue Parkway Trustee Emeritus, Pennsylvania
Suite 100 School for the Deaf; Trustee,
Wilmington, DE 19809 Emeritus Immaculata College; Director,
The Bradford Funds, Inc.
Age 71

</TABLE>

-15-
<PAGE> 76
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ------------- -----------------------
<S> <C> <C>
MORGAN R. JONES Secretary Partner of the law firm of
1345 Chestnut Street Drinker Biddle & Reath,
PNB Building Philadelphia, Pennsylvania.
Philadelphia, PA 19107-3496

Age 56
</TABLE>

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

(1) This trustee is considered by the Company to be an "interested
person" of the Company as defined in the 1940 Act.
(2) Executive Committee Member.
(3) Audit Committee Member.
(4) Nominating Committee Member.

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

During intervals between meetings of the Board, the Executive
Committee may exercise the authority of the Board of Trustees in the management
of the Company's business to the extent permitted by law.

For the fiscal year ended November 30, 1995, the Company paid
a total of $94,175 to its officers and trustees in all capacities, of which
$64,500 was allocated to MuniFund and $28,800 was allocated to MuniCash. In
addition, the Company contributed $2,534 for its last fiscal year to its
retirement plan for employees (who included Mr. Roach), of which $1,685 was
allocated to MuniFund and $828 was allocated to MuniCash. Drinker Biddle &
Reath, of which Mr. Jones is a partner, receives legal fees as counsel to the
Company. No employee of PDI, PIMC, PFPC or PNC Bank acts as an officer or
trustee of the Company. The trustees and officers of the Company as a group
beneficially own less than 1% of the shares of each of the Company's
portfolios.

By virtue of the responsibilities assumed by PDI, PFPC, PIMC,
and PNC Bank under their respective agreements with the Company, the Company
itself requires only one part-time employee in addition to its officers.

The table below sets forth the compensation actually received
from the Fund Complex of which the Fund is a part by the trustees for the
fiscal year ended November 30, 1995:

<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits from Registrant
Accrued Estimated and Fund
Aggregate as Part of Annual Complex(1)
Compensation Fund Benefits Upon Paid to
Name of Person, Position from Registrant Expenses Retirement Trustees
<S> <C> <C> <C> <C>
Philip E. Coldwell, $ 10,800.00 0 N/A (3)(2) 43,600.00
Trustee

Robert R. Fortune, 10,800.00 0 N/A (5)(2) 63,600.00
Trustee

Rodney D. Johnson, 10,800.00 0 N/A (5)(2) 55,850.00
Trustee
</TABLE>

-16-
<PAGE> 77

<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Benefits from Registrant
Accrued Estimated and Fund
Aggregate as Part of Annual Complex(1)
Compensation Fund Benefits Upon Paid to
Name of Person, Position from Registrant Expenses Retirement Trustees
<S> <C> <C> <C> <C>
G. Willing Pepper, Trustee and 19,100.00 0 N/A (6)(2) 96,250.00
Chairman

David R. Wilmerding, Jr.,(3) 12,466.68 0 N/A (5)(2) 60,600.04
Trustee

Anthony M. Santomero,(4) 10,800.00 0 N/A (4)(2) 49,900.00
Trustee ---------- ---------

$74,766.68 $369,800.04
- --------------------------
</TABLE>

1. A Fund Complex means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investor services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies.

2. Total number of such other investment companies trustee serves on
within the Fund Complex.

3. Mr. Wilmerding resigned as trustee of the Company on January 4, 1996.

4. Mr. Santomero resigned as trustee of the Company on January 4, 1996.

INVESTMENT ADVISER AND SUB-ADVISER

The advisory and sub-advisory services provided by PIMC and
PNC Bank are described in the Funds' Prospectuses. With respect to MuniFund
and MuniCash, for the advisory services provided and expenses assumed by it,
PIMC is entitled to receive fees, computed daily and payable monthly, at the
following annual rates:

<TABLE>
<CAPTION>
Annual Fee A Fund's Average Net Assets
---------- ---------------------------
<S> <C>
.175% . . . . . . . . . . . . . . . of the first $1 billion
.150% . . . . . . . . . . . . . . . of the next $1 billion
.125% . . . . . . . . . . . . . . . of the next $1 billion
.100% . . . . . . . . . . . . . . . of the next $1 billion
.095% . . . . . . . . . . . . . . . of the next $1 billion
.090% . . . . . . . . . . . . . . . of the next $1 billion
.085% . . . . . . . . . . . . . . . of the next $1 billion
.080% . . . . . . . . . . . . . . . of amounts in excess of $7
billion.
</TABLE>

-17-
<PAGE> 78
PIMC and PNC Bank also serve as adviser and sub-adviser, respectively, for the
Company's Intermediate Municipal Fund portfolio.

PIMC, and the administrators may from time to time reduce
their fees to ensure that the Funds' ordinary operating expenses (excluding
interest, taxes, brokerage fees, fees paid to Service Organizations pursuant to
Servicing Agreements, and extraordinary expenses) do not exceed a specified
percentage of the average net assets. PIMC and the administrators have agreed
that if, in any fiscal year, the expenses borne by a Fund exceed the applicable
expense limitations imposed by the securities regulations of any state in which
shares of that Fund are registered or qualified for sale to the public, they
will each reimburse that Fund for a portion of any such excess expense in an
amount equal to the portion that the administration fees otherwise payable by
the Fund to the administrators bear to the total amount of the investment
advisory and administration fees otherwise payable to the Fund. To each Fund's
knowledge, of the expense limitations in effect on the date of this Statement
of Additional Information, none is more restrictive than two and one-half
percent (2-1/2%) of the first $30 million of a Fund's average annual net
assets, two percent (2%) of the next $70 million of the average annual net
assets, and one and one-half percent (1-1/2%) of the remaining average annual
net assets.

For the fiscal years ended November 30, 1993, 1994 and 1995,
MuniFund paid fees for advisory services aggregating $948,898, $866,146 and
$800,406, respectively. For the same periods, PIMC waived payment of
additional advisory fees totalling $777,192, $658,668 and $540,756,
respectively, although the expense limitations then in effect were not
exceeded. For the fiscal years ended November 30, 1993, 1994 and 1995,
MuniCash paid fees for advisory services aggregating $397,197, $267,690 and
$231,399, respectively. For the same periods, PIMC waived payment of
additional advisory fees totalling $659,379, $477,176 and $424,828,
respectively, although the expense limitations then in effect were not
exceeded.

BANKING LAWS

Certain banking laws and regulations with respect to
investment companies are discussed in each Fund's Prospectus. PIMC, PNC Bank
and PFPC believe that they may perform the services for the Funds contemplated
by their respective agreements, Prospectuses and this Statement of Additional
Information without violation of applicable banking laws or regulations. It
should be noted, however, that future changes in legal requirements relating to
the permissible activities of banks and their affiliates, as well as further
interpretations of present requirements, could prevent PIMC and PFPC from

-18-
<PAGE> 79
continuing to perform such services for the Funds and PNC Bank from continuing
to perform such services for PIMC and the Funds. If PIMC, PFPC, or PNC Bank
were prohibited from continuing to perform such services, it is expected that
the Company's Board of Trustees would recommend that the Funds enter into new
agreements with other qualified firms. Any new advisory agreement would be
subject to shareholder approval.

In addition, state securities laws on this issue may differ
from the interpretations of federal laws expressed herein and bank and
financial institutions may be required to register as dealers pursuant to state
law.

ADMINISTRATORS

As the Funds' administrators, PFPC and PDI have agreed to
provide the following services: (i) assist generally in supervising a Fund's
operations, including providing a Wilmington, Delaware order-taking facility
with toll-free IN-WATS telephone lines, providing for the preparing,
supervising, and mailing of purchase and redemption order confirmations to
shareholders of record, providing and supervising the operation of an automated
data processing system to process purchase and redemption orders, maintaining a
back-up procedure to reconstruct lost purchase and redemption data, providing
information concerning each Fund to its shareholders of record, handling
shareholder problems, providing (through PDI) the services of employees to
preserve and strengthen shareholder relations and monitoring the arrangements
pertaining to a Fund's agreements with Service Organizations; (ii) assure that
persons are available to receive and transmit purchase and redemption orders;
(iii) participate in the periodic updating of the Funds' Prospectuses; (iv)
assist in maintaining the Funds' Wilmington, Delaware office; (v) perform
administrative services in connection with the Funds' computer access program
maintained to facilitate shareholder access to a Fund; (vi) accumulate
information for and coordinate the preparation of reports to a Fund's
shareholders and the SEC; (vii) provide the services of certain persons who may
be elected as trustees or appointed as officers of the Company by the Board of
Trustees; and, (viii) review and provide advice with respect to all sales
literature of the Funds; and (ix) assist in the monitoring of regulatory and
legislative development which may affect the Company, participate in counseling
and assisting the Company in relation to routine regulatory examinations and
investigations, and work with the Company's counsel in connection with
regulatory matters and litigation.

For their administrative services, the administrators are
entitled jointly to receive fees from the MuniFund and MuniCash portfolios,
respectively, computed daily and payable monthly, determined in the same manner
as PIMC's advisory fee set forth above. As stated in their Prospectuses, each
administrator

-19-
<PAGE> 80
is also reimbursed for its reasonable out-of-pocket expenses incurred by it in
connection with the Funds' computer access program. For information regarding
the administrator's obligation to reimburse a Fund in the event its expenses
exceed certain prescribed limits, see "Investment Adviser and Sub-Adviser"
above.

For the fiscal year ended November 30, 1995, the Company paid
fees (net of waivers) for administration fees aggregating $800,406 with respect
to MuniFund and $231,399 with respect to MuniCash. For the same fiscal year,
PFPC and PDI voluntarily waived administration fees aggregating $540,756 with
respect to MuniFund and $424,828 with respect to MuniCash. For the fiscal year
ended, November 30, 1994, MuniFund and MuniCash paid administration fees
totalling $866,146 and $267,690, respectively. For the same period,
administration fees of $658,668 with respect to MuniFund and $477,176 with
respect to MuniCash were voluntarily waived. For the period from January 18,
1993 through November 30, 1993, the Company paid fees for administrative
services to PFPC and PDI (formerly called MFD Group, Inc.), its administrators,
aggregating $770,956 with respect to MuniFund and $325,964 with respect to
MuniCash. For the same period, administration fees of $707,391 with respect to
MuniFund and $561,587 with respect to MuniCash were voluntarily waived. For
the period from December 1, 1992 through January 17, 1993 the Company paid fees
to Boston Advisors totalling $177,942 with respect to MuniFund and $71,233 with
respect to MuniCash. Administration fees payable by MuniFund and MuniCash of
$69,801 and $97,792, respectively, were voluntarily waived by Boston Advisors
during this period.

PFPC, a wholly owned, indirect subsidiary of PNC Bank,
provides advisory, administrative or, in some cases sub-advisory and/or
sub-administrative services to investment companies which are distributed by
PDI. PFPC and PDI also serve as administrators of the Company's Intermediate
Municipal Fund Portfolio.

DISTRIBUTOR

PDI acts as the distributor of the Funds' shares. The Funds'
shares are sold on a continuous basis by the distributor as agent, although it
is not obliged to sell any particular amount of shares. The distributor pays
the cost of printing and distributing prospectuses to persons who are not
shareholders of the Funds (excluding preparation and printing expenses
necessary for the continued registration of the Funds' shares). The
distributor shall prepare or review, provide advice with respect to and file
with the federal and state agencies or other organization as required by
federal, state, or other applicable laws and regulations, all sales literature
(advertising brochures and shareholder communications) for each of the Funds
and any

-20-
<PAGE> 81
class or subclass thereof. No compensation is payable by the Funds to the
distributor for its distribution services. PDI is a Delaware corporation, with
its principal place of business located at 259 Radnor-Chester Road, Suite 120,
Radnor, Pennsylvania 19087.

CUSTODIAN AND TRANSFER AGENT

Pursuant to a Custodian Agreement, PNC Bank serves as the
Funds' custodian, holding a Fund's portfolio securities, cash, and other
property. Under the Agreement, PNC Bank has agreed to provide the following
services: (i) maintain a separate account or accounts in the name of a Fund;
(ii) hold and disburse portfolio securities on account of a Fund; (iii) collect
and make disbursements of money on behalf of a Fund; (iv) collect and receive
all income and other payments and distributions on account of a Fund's
portfolio securities; and, (v) make periodic reports to the Board of Trustees
concerning a Fund's operations. PNC Bank also serves as custodian for the
Company's Intermediate Municipal Fund portfolio.

PFPC also serves as transfer agent, registrar, and dividend
disbursing agent to each Fund pursuant to a Transfer Agency Agreement. Under
the Agreement, PFPC has agreed to provide the following services: (i) maintain
a separate account or accounts in the name of the Funds; (ii) issue, transfer,
and redeem Fund shares of the Funds; (iii) transmit all communications by the
Fund to its shareholders of record, including reports to its shareholders,
dividend and distribution notices, and proxy material for its meetings of
shareholders; (iv) respond to correspondence by shareholders, security brokers,
and others relating to its duties; (v) maintain shareholder accounts and
sub-accounts; (vi) provide installation and other services in connection with
the Funds' computer access program maintained to facilitate shareholder access
to a Fund; (vii) send each shareholder of record a monthly statement showing
the total number of shares owned as of the last business day of the month (as
well as the dividends paid during the current month and year); and, (viii)
provide each shareholder of record with a daily transaction report for each day
on which a transaction occurs in the shareholder's Master Account with a Fund.
Further, an institution establishing sub-accounts with PFPC is provided with a
daily transaction report for each day on which a transaction occurs in a
sub-account and, as of the last calendar day of each month, a report which sets
forth the share balances for the sub-accounts at the beginning and end of the
month and income paid or reinvested during the month. Finally, PFPC provides
each shareholder of record with copies of all information which is required to
be filed with the Internal Revenue Service and other appropriate taxing
authorities. PFPC also serves as transfer agent for the Company's Intermediate
Municipal Fund portfolio.

-21-
<PAGE> 82
PNC Bank is also authorized to select one or more banks or
trust companies to serve as sub-custodian on behalf of a Fund, provided that
PNC Bank shall remain responsible for the performance of all of its duties
under the Custodian Agreement and shall hold each Fund harmless from the acts
and omissions of any bank or trust company serving as sub-custodian.

Pursuant to the Custodian Agreement, each Fund pays PNC Bank
an annual fee, calculated daily on the average daily gross assets and paid
monthly, at the rate of $.25 for each $1000 of the first $250 million, $.20 for
each $1000 on the next $250 million, $.15 for each $1000 on the next $500
million, $.09 for each $1000 on the next $2 billion, and $.08 for each $1000 on
amounts over $3 billion, plus $15.00 for each purchase, sale, or delivery of
fixed income securities (other than "Money Market" obligations) and $40 for
each interest collection or claim item. For transfer agency and dividend
disbursing services, each Fund pays to PFPC fees at the annual rate of $12.00
per account and sub-account maintained by PFPC plus $1.00 for each purchase or
redemption transaction by an account (other than a purchase transaction made in
connection with the automatic reinvestment of dividends). Payments to PFPC for
sub-accounting services provided by others are limited to the amount which PFPC
pays to others for such services. In addition, each Fund reimburses PNC Bank
and PFPC for out-of-pocket expenses related to such services. PNC Bank's
principal business address is Broad and Chestnut Streets, Philadelphia,
Pennsylvania 19102.

SERVICE ORGANIZATIONS

As stated in the Funds' Prospectuses, each Fund will enter
into an agreement with each Service Organization which purchases Dollar shares
requiring it to provide support services to its customers who beneficially own
Dollar shares in consideration of the Fund's payment of .25% (on an annualized
basis) of the average daily net asset value of that Fund's Dollar shares held
by the Service Organization for the benefit of customers. Such services
include: (i) aggregating and processing purchase and redemption requests from
customers and placing net purchase and redemption orders with PFPC; (ii)
providing customers with a service that invests the assets of their accounts in
a Fund's Dollar shares; (iii) processing dividend payments from a Fund on
behalf of customers; (iv) providing information periodically to customers
showing their positions in a Fund's Dollar shares; (v) arranging for bank
wires; (vi) responding to customer inquiries relating to the services performed
by the Service Organization; (vii) providing sub-accounting with respect to
Dollar shares beneficially owned by customers or the information necessary for
sub-accounting; (viii) forwarding shareholder communications from the Funds
(such as proxies, shareholder reports, annual and semi-annual financial
statements, and dividend, distribution and tax notices) to

-22-
<PAGE> 83
customers, if required by law; and, (ix) other similar services if requested by
the Funds. For the fiscal year ended November 30, 1995, the Company paid
$270,786 in servicing fees for the Portfolios. $249,022 was paid by MuniCash,
3.6% of which was paid to affiliates of the Company's advisor. $21,685 was
paid by MuniFund, 55.5% of which was paid to an affiliate.

Each Fund's agreements with Service Organizations are governed
by a Shareholder Services Plan (the "Plan") that has been adopted by the
Company's Board of Trustees pursuant to an exemptive order granted by the SEC
in connection with the offering of a Fund's Dollar shares. Pursuant to the
Plan, the Board of Trustees reviews, at least quarterly, a written report of
the amounts expended under each Fund's agreements with Service Organizations
and the purposes for which the expenditures were made. In addition, a Fund's
arrangements with Service Organizations must be approved annually by a majority
of the Company's trustees, including a majority of the trustees who are not
"interested persons" of the Company as defined in the 1940 Act and have no
direct or indirect financial interest in such arrangements (the "Disinterested
Trustees").

The Board of Trustees has approved each Fund's arrangements
with Service Organizations based on information provided by the Company's
service contractors that there is a reasonable likelihood that the arrangements
will benefit such Fund and its shareholders by affording the Fund greater
flexibility in connection with the servicing of the accounts of the beneficial
owners of its shares in an efficient manner. Any material amendment to a
Fund's arrangements with Service Organizations must be approved by a majority
of the Company's Board of Trustees (including a majority of the Disinterested
Trustees). So long as a Fund's arrangements with Service Organizations are in
effect, the selection and nomination of the members of the Company's Board of
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Company will be committed to the discretion of such non-interested trustees.

EXPENSES

Each Fund's expenses include taxes, interest, fees, and
salaries of the Company's trustees and officers who are not directors,
officers, or employees of the Funds' service contractors, SEC fees, state
securities qualification fees, costs of preparing and printing prospectuses for
regulatory purposes and for distribution to shareholders, advisory and
administration fees, charges of the custodian and of the transfer and dividend
disbursing agent, Service Organization fees, certain insurance premiums,
outside auditing and legal expenses, costs of the Funds' computer access
program, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. The Funds

-23-
<PAGE> 84
also pay for brokerage fees and commissions (if any) in connection with the
purchase and sale of portfolio securities.

ADDITIONAL INFORMATION CONCERNING TAXES

The following summarizes certain additional tax considerations
generally affecting a Fund and its shareholders that are not described in the
Funds' Prospectuses. No attempt is made to present a detailed explanation of
the tax treatment of a Fund or its shareholders or possible legislative
changes, and the discussion here and in the applicable Prospectuses is not
intended as a substitute for careful tax planning. Investors should consult
their tax advisors with specific reference to their own tax situation.

As stated in each Prospectus, each Fund of the Company is
treated as a separate corporate entity under the Code and intends to qualify
each year as a regulated investment company under the Code. In order to so
qualify for a taxable year, a Fund must satisfy the distribution requirement
described in the Prospectuses, derive at least 90% of its gross income for the
year from certain qualifying sources, comply with certain diversification
requirements, and derive less than 30% of its gross income for the year from
the sale or other disposition of securities and certain other investments held
for less than three months. Interest (including original issue discount and
accrued market discount) received by a Fund at maturity or disposition of a
security held for less than three months will not be treated as gross income
derived from the sale or other disposition of such security within the meaning
of the 30% requirement. However, any other income which is attributable to
realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.

As described above and in the Funds' Prospectuses, each Fund
is designed to provide institutions with current tax-exempt interest income.
Neither Fund is intended to constitute a balanced investment program nor is
designed for investors seeking capital appreciation or maximum tax-exempt
income irrespective of fluctuations in principal. Shares of a Fund would not
be suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, H.R. 10 plans and individual
retirement accounts because such plans and accounts are generally tax-exempt
and, therefore, not only would not gain any additional benefit from a Fund's
dividends being tax-exempt but also such dividends would be taxable when
distributed to the beneficiary. In addition, a Fund may not be an appropriate
investment for entities which are "substantial users" of facilities financed by
private activity bonds or "related persons" thereof. "Substantial user" is
defined under U.S. Treasury Regulations to include a non-exempt person who

-24-
<PAGE> 85
regularly uses a part of such facilities in his or her trade or business and
whose gross revenues derived with respect to the facilities financed by the
issuance of bonds are more than 5% of the total revenues derived by all users
of such facilities, or who occupies more than 5% of the usable area of such
facilities or for whom such facilities or a part thereof were specifically
constructed, reconstructed or acquired. "Related persons" include certain
related natural persons, affiliated corporations, a partnership and its
partners, and an S Corporation and its shareholders.

In order for a Fund to pay exempt-interest dividends for any
taxable year, at the close of each quarter of its taxable year at least 50% of
the aggregate value of that Fund's assets must consist of exempt-interest
obligations. After the close of its taxable year, each Fund will notify its
shareholders of the portion of the dividends paid by that Fund which
constitutes an exempt-interest dividend with respect to such taxable year.
However, the aggregate amount of dividends so designated by a Fund cannot
exceed the excess of the amount of interest exempt from tax under Section 103
of the Code received by that Fund for the taxable year over any amounts
disallowed as deductions under Sections 265 and 171(a)(2) of the Code. The
percentage of total dividends paid by a Fund with respect to any taxable year
which qualifies as federal tax exempt-interest dividends will be the same for
all shareholders of such Fund receiving dividends for such year.

Interest on indebtedness incurred by a shareholder to purchase
or carry a Fund's shares generally is not deductible for federal income tax
purposes if that Fund distributes exempt-interest dividends during the
shareholder's taxable year.

While each Fund does not expect to realize long-term capital
gains, any net realized long-term capital gains will be distributed at least
annually. A Fund will generally have no tax liability with respect to such
gains, and the distributions will be taxable to a Fund's shareholders as
long-term capital gains, regardless of how long a shareholder has held a Fund's
shares. Such distributions will be designated as a capital gain dividend in a
written notice mailed by a Fund to its shareholders not later than 60 days
after the close of the Fund's taxable year.

Similarly, while each Fund does not expect to earn any
investment company taxable income, taxable income earned by a Fund will be
distributed to its shareholders. In general, a Fund's investment company
taxable income will be its taxable income (for example, any short-term capital
gains) subject to certain adjustments and excluding the excess of any net
long-term capital gain for the taxable year over the net short-term capital
loss, if any, for such year. Each Fund will be taxed on any undistributed
investment company taxable income of that Fund. To

-25-
<PAGE> 86
the extent such income is distributed by a Fund (whether in cash or additional
shares), it will be taxable to such Fund's shareholders as ordinary income.

A 4% nondeductible excise tax is imposed on regulated
investment companies that fail currently to distribute an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). Each Fund intends to
make sufficient distributions or deemed distributions of any ordinary taxable
income and any capital gain net income prior to the end of each calendar year
to avoid liability for this excise tax.

If for any taxable year a Fund does not qualify for tax
treatment as a regulated investment company, all of that Fund's taxable income
will be subject to tax at regular corporate rates without any deduction for
distributions to Fund shareholders. In such event, dividend distributions to
shareholders would be taxable to shareholders to the extent of that Fund's
earnings and profits and would be eligible for the dividends received deduction
for corporations.

Each Fund will be required in certain cases to withhold and
remit to the U.S. Treasury 31% of taxable dividends or 31% of gross proceeds
realized upon sale paid to its shareholders which have failed to provide a
correct tax identification number in the manner required, which is subject to
withholding by the Internal Revenue Service for failure properly to include on
its return payments of taxable interest or dividends, or which has failed to
certify to the Fund that it is not subject to backup withholding when required
to do so or that it is an "exempt recipient."

Although each Fund expects to qualify as a "regulated
investment company" and to be relieved of all or substantially all federal
income taxes, depending upon the extent of its activities in states and
localities in which its offices are maintained, in which its agents or
independent contractors are located or in which they are otherwise deemed to be
conducting business, a Fund may be subject to the tax laws of such states or
localities.

The foregoing discussion is based on federal tax laws and
regulations which are in effect on the date of this Statement of Additional
Information, such laws and regulations may be changed by legislative or
administrative action.

-26-
<PAGE> 87
DIVIDENDS

GENERAL

Each Fund's net investment income for dividend purposes
consists of (i) interest accrued and discount earned on that Fund's assets,
(ii) less amortization of market premium on such assets, accrued expenses
directly attributable to that Fund, and the general expenses (e.g. legal,
accounting and trustees' fees) of the Company prorated to such Fund on the
basis of its relative net assets. The amortization of market discount on a
Fund's assets is not included in the calculation of net income. Realized and
unrealized gains and losses on portfolio securities are reflected in net asset
value. In addition, a Fund's Dollar shares bear exclusively the expense of
fees paid to Service Organizations. (See "Management of the Funds--Service
Organizations.")

As stated, the Company uses its best efforts to maintain the
net asset value per share of each Fund at $1.00. As a result of a significant
expense or realized or unrealized loss incurred by either Fund, it is possible
that the Fund's net asset value per share may fall below $1.00.

ADDITIONAL YIELD INFORMATION

The "yields", "effective yields" and "tax-equivalent yields"
are calculated separately for MuniFund and MuniFund Dollar shares and for
MuniCash and MuniCash Dollar shares. The seven-day yield for each series of
shares in a Fund is calculated by determining the net change in the value of a
hypothetical pre-existing account in a Fund which has a balance of one share of
the series involved at the beginning of the period, dividing the net change by
the value of the account at the beginning of the period to obtain the base
period return, and multiplying the base period return by 365/7. The net change
in the value of an account in a Fund includes the value of additional shares
purchased with dividends from the original share and dividends declared on the
original share and any such additional shares, net of all fees charged to all
shareholder accounts in proportion to the length of the base period and the
Fund's average account size, but does not include gains and losses or
unrealized appreciation and depreciation. In addition, the effective yield
quotations may be computed on a compounded basis (calculated as described
above) by adding 1 to the base period return for the series involved, raising
that sum to a power equal to 365/7, and subtracting 1 from the result. A
tax-equivalent yield for each series of a Fund's shares is computed by dividing
the portion of the yield (calculated as above) that is exempt from federal
income tax by one minus a stated federal income tax rate and adding that figure
to that portion, if any, of the yield that is

-27-
<PAGE> 88
not exempt from federal income tax. Similarly, based on the calculations
described above, 30-day (or one-month) yields, effective yields and
tax-equivalent yields may also be calculated.

For the seven-day period ended November 30, 1995, the yield,
effective yield, and tax-equivalent yield for MuniFund shares were 3.52%,
3.58%, and 5.77%, respectively; the yield, effective yield, and tax-equivalent
yield on MuniFund Dollar shares were 3.27%, 3.32%, and 5.36%, respectively.
During this seven-day period, MuniFund's investment adviser and administrator
voluntarily waived a portion of the advisory and administration fees payable by
the Fund. Without these waivers, for the same period the yield and effective
yield on MuniFund shares would have been 3.38% and 3.44%, respectively; the
yield and effective yield on MuniFund Dollar shares would have been 3.13% and
3.18%, respectively.

For the same periods, the yield, effective yield, and
tax-equivalent yield for MuniCash shares were 3.81%, 3.88% and 6.25%,
respectively; the yield, effective yield, and tax-equivalent yield for MuniCash
Dollar shares were 3.56%, 3.62% and 5.84%, respectively. During this seven-day
period, MuniCash's investment adviser and administrator voluntarily waived a
portion of the advisory and administration fees payable by the Fund. Without
these waivers, for the same period the yield and effective yield on MuniCash
shares would have been 3.58% and 3.64%, respectively; the yield and effective
yield on MuniCash Dollar shares would have been 3.33% and 3.38%, respectively.

YIELDS WILL FLUCTUATE, AND ANY QUOTATION OF YIELD SHOULD NOT
BE CONSIDERED AS REPRESENTATIVE OF THE FUTURE PERFORMANCE OF THE FUND. Since
yields fluctuate, yield data for any of the Funds cannot necessarily be used to
compare an investment in a Fund's shares with bank deposits, savings accounts,
and similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance and yield are generally functions of kind and quality of the
investments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any fees charged by banks with respect to customer accounts
in investing in shares of a Fund will not be included in yield calculations;
such fees, if charged, would reduce the actual yield from that quoted.

The Funds may also from time to time include in
advertisements, sales literature, communications to shareholders and other
materials ("Materials"), discussions or illustrations of the effects of
compounding. "Compounding" refers to the fact that, if dividends or other
distributions on an investment are reinvested by being paid in additional
Portfolio shares, any future income or capital appreciation of a Fund would
increase the value, not only of the original investment, but also of the
additional shares received through reinvestment. As a result, the value of the
Fund investment would increase more quickly than if dividends or other
distributions had been paid in cash.

In addition, the Funds may also include in Materials
discussions and/or illustrations of the potential investment goals of a
prospective investor, investment management strategies, techniques, policies or
investment suitability of a Fund, economic conditions, the relationship between
sectors of the economy and the economy as a whole, various securities markets,
the effects of inflation, and historical performance of various asset classes,
including but not limited to, stocks, bonds and Treasury securities. From time
to time, Materials may summarize the substance of information contained in
shareholder reports (including the investment composition of a Fund), as well
as the views of the advisers as to current market, economic, trade and interest
rate trends, legislative, regulatory and monetary developments, investment
strategies and related matters believed to be of relevance to a Fund. The
Funds may also include in Materials charts, graphs or drawings which compare
the investment objective, return potential, relative stability and/or growth
possibilities of the Funds and/or other mutual funds, or illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to, stocks, bonds, Treasury securities and shares of
a Fund and/or other mutual funds. Materials may include a discussion of certain
attributes or benefits to be derived by an investment in a Fund and/or other
mutual funds (such as value investing, market timing, dollar cost averaging,
asset allocation, constant ratio transfer, automatic accounting rebalancing and
the advantages and disadvantages of investing in tax-deferred and taxable
investments), shareholder profiles and hypothetical investor scenarios, timely
information on financial management, designations assigned a Fund by various
rating or ranking organizations, Fund identifiers (such as CUSIP numbers or
NASDAQ symbols), tax and retirement planning and investment alternatives to
certificates of deposit and other financial instruments. Such Materials may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein.

ADDITIONAL DESCRIPTION CONCERNING SHARES

-28-
<PAGE> 89
will call for a meeting of shareholders to consider the removal of one or more
trustees and other certain matters. To the extent required by law, the Company
will assist in shareholder communication in such matters.

As stated in the Funds' Prospectuses, holders of shares in a
Fund will vote in the aggregate and not by class or series on all matters,
except where otherwise required by law and except that only a Fund's Dollar
shares will be entitled to vote on matters submitted to a vote of shareholders
pertaining to that Fund's arrangements with Service Organizations. (See
"Management of the Funds -- Service Organizations.") Further, shareholders of
all of the Company's portfolios will vote in the aggregate and not by portfolio
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular portfolio. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted by the provisions of such Act or applicable
state law, or otherwise, to the holders of the outstanding securities of an
investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each portfolio affected by the matter. Rule 18f-2
further provides that a portfolio shall be deemed to be affected by a matter
unless it is clear that the interests of each portfolio in the matter are
identical or that the matter does not affect any interest of the portfolio.
Under the Rule, the approval of an investment advisory agreement or any change
in a fundamental investment policy would be effectively acted upon with respect
to a portfolio only if approved by the holders of a majority of the outstanding
voting securities of such portfolio. However, the Rule also provides that the
ratification of the selection of independent certified public accountants, the
approval of principal underwriting contracts, and the election of trustees are
not subject to the separate voting requirements and may be effectively acted
upon by shareholders of the investment company voting without regard to
portfolio.

COUNSEL

Drinker Biddle & Reath, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496, of which Morgan R.
Jones, Secretary of the Company, is a partner, serves as counsel of the Company
and will pass upon the legality of the shares offered hereby.

AUDITORS

The audited Financial Statements and the financial highlights
of the Company, which are included in this Statement

-29-
<PAGE> 90
of Additional Information, have been included in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, which report
also appears in this Statement of Additional Information, and upon the
authority of said firm as experts in accounting and auditing. KPMG Peat
Marwick LLP has offices at 1600 Market Street, Philadelphia, Pennsylvania
19103.

MISCELLANEOUS

SHAREHOLDER VOTE

As used in this Statement of Additional Information and the
Funds' Prospectuses, a "majority of the outstanding shares" of a Fund or of any
other portfolio means with respect to the approval of an investment advisory
agreement, a distribution plan or a change in a fundamental investment policy,
the vote of the lesser of (1) 67% of that Fund's shares (irrespective of class
or series) or of the portfolio represented at a meeting at which the holders of
more than 50% of the outstanding shares of that Fund or such portfolio are
present in person or by proxy, or (2) more than 50% of the outstanding shares
of a Fund (irrespective of class or series) or of the portfolio.

CERTAIN RECORD HOLDERS

On March 13, 1996, the name, address, and percentage of
ownership of each institutional investor that owned of record 5% or more of the
outstanding shares of MuniFund portfolio were as follows:

Deutsche Bank Securities 55,839,045.280 6.52%
Attn: Anthony M. Fiore
1290 Avenue of The Americas
New York, New York 10104

Chase Manhattan Bank 103,884,427.000 12.13%
GSS As Agent
Stuart Freeman/Sec Code Dept
2 Chase Plaza, 4th Floor
New York, New York 10081

First Interstate Bank California 82,923,297.320 9.68%
Attn: Fund Accounting, ACM Desk
26610 W. Agoura Road

-30-
<PAGE> 91
Calabasas, California 91302

Bank of America NT & SA 66,305,988.750 7.74%
The Private Bank #8329
Common Trust Funds Unit 8329
P.O. Box 3577 Terminal Annex
Los Angeles, California 90051

Chemical Bank 166,749,898.060 19.47%
Administrative Services
Attn: Sevan Marinos
AIS Section 31-270
270 Park Avenue
New York, New York 10017

On March 13, 1996, the name, address and percentage of
ownership of each institutional investor that owned of record 5% or more of the
outstanding shares of the Company's MuniCash portfolio were as follows:

Laird Norton Trust Company 25,622,010.000 7.50%
Norton Building, 16th Floor
801 2nd Avenue
Seattle, Washington 98104

Harris Trust Bank Arizona 36,014,667.090 10.55%
Attn: Trust Operations
6263 N. Scottsdale Road
Scottsdale, Arizona 85250

BHC Securities 20,699,476.760 6.06%
Attn: Jean Marie Beokers
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, Pennsylvania 19103

Synopsys Inc. 20,249,680.000 5.93%
Attn: Beverly Silva, Treasury Dept.
700 E. Middlefield Road
Mountainview, California 94043

BHC Securities 59,594,496.080 17.46%
Attn: Jean Marie Beokers
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, Pennsylvania 19103

Laird Norton Trust Company 28,132,792.000 8.24%
Norton Building/16th Floor
801 2nd Avenue
Seattle, Washington 98104

-31-
<PAGE> 92
SHAREHOLDER AND TRUSTEE LIABILITY

The Company is organized as a trust under the laws of the
Commonwealth of Pennsylvania. Shareholders of such a trust may, under certain
circumstances, be held personally liable (as if they were partners) for the
obligations of the trust. The Declaration of Trust of the Company provides
that shareholders shall not be subject to any personal liability for the acts
or obligations of the Company and that every note, bond, contract, order, or
other undertaking made by the Company shall contain a provision to the effect
that the shareholders are not personally liable thereunder. The Declaration of
Trust provides for indemnification out of the trust property of any shareholder
held personally liable solely by reason of being or having been a shareholder
and not because of any acts or omissions or some other reason. The Declaration
of Trust also provides that the Company shall, upon request, assume the defense
of any claim made against any shareholder for any act or obligation of the
Company and satisfy any judgment thereon. Thus, the risk of a shareholder's
incurring financial loss beyond the amount invested on account of shareholder
liability is limited to circumstances in which the Company itself would be
unable to meet its obligations.

The Company's Declaration of Trust provides further that no
trustee of the Company shall be personally liable for or on account of any
contract, debt, tort, claim, damage, judgment, or decree arising out of or
connected with the administration or preservation of the trust estate or the
conduct of any business of the Company, nor shall any trustee be personally
liable to any person for any action or failure to act except by reason of bad
faith, willful misfeasance, gross negligence in the performance of any duties,
or by reason of reckless disregard for the obligations and duties as trustee.
It also provides that all persons having any claim against the trustees or the
Company shall look solely to the trust property for payment. With the
exceptions stated, the Declaration of Trust provides that the trustee is
entitled to be indemnified against all liabilities and expenses reasonably
incurred in connection with the defense or disposition of any proceeding in
which the trustee may be involved or may be threatened with by reason of being
or having been a trustee, and that the trustees have the power, but not the
duty, to indemnify officers and employees of the Company unless such persons
would not be entitled to indemnification had he or she been a trustee.

FINANCIAL STATEMENTS

The audited financial statements for the MuniFund and MuniCash
Portfolios and notes thereto in the Fund's Annual Report to Shareholders for
the fiscal year ended November 30, 1995 (the "1995 Annual Report") are
incorporated in this Statement of Additional Information by reference. No
other parts of the 1995 Annual Report are incorporated by reference herein.
The financial statements included in the 1995 Annual Report have been audited
by the Fund's independent accountants, KPMG Peat Marwick LLP, whose reports
thereon are incorporated herein by reference. Such financial statements have
been incorporated herein in reliance upon such report given upon their
authority as experts in accounting and auditing. Additional copies of the 1995
Annual Report may be obtained at no charge by telephoning the Fund at the
telephone number appearing on the front page of this Statement of Additional
Information.

-32-
<PAGE> 93

APPENDIX A

COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. The following summarizes the rating categories used by
Standard and Poor's for commercial paper:

"A-1" - Issue's degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted "A-1+."

"A-2" - Issue's capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."

"A-3" - Issue has an adequate capacity for timely payment. It
is, however, somewhat more vulnerable to the adverse effects of changes and
circumstances than an obligation carrying a higher designation.

"B" - Issue has only a speculative capacity for timely
payment.

"C" - Issue has a doubtful capacity for payment.

"D" - Issue is in payment default.

Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:

"Prime-1" - Issuer or related supporting institutions are
considered to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning coverage of fixed financial charges and high internal cash
generation; and well established

A-1
<PAGE> 94
access to a range of financial markets and assured sources of alternate
liquidity.

"Prime-2" - Issuer or related supporting institutions are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.

"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.

"Not Prime" - Issuer does not fall within any of the Prime
rating categories.

The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff &
Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:

"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.

"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.

"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

"D-2" - Debt possesses good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.

A-2
<PAGE> 95
"D-3" - Debt possesses satisfactory liquidity, and other
protection factors qualify issue as investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.

"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.

"D-5" - Issuer has failed to meet scheduled principal and/or
interest payments.

Fitch short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:

"F-1+" - Securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.

"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."

"F-2" - Securities possess good credit quality. Issues
assigned this rating have a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as the "F-1+" and "F-1"
categories.

"F-3" - Securities possess fair credit quality. Issues
assigned this rating have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.

"F-S" - Securities possess weak credit quality. Issues
assigned this rating have characteristics suggesting a minimal degree of
assurance for timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.

"D" - Securities are in actual or imminent payment default.

Fitch may also use the symbol "LOC" with its short-term
ratings to indicate that the rating is based upon a letter of credit issued by
a commercial bank.

A-3
<PAGE> 96
Thomson BankWatch short-term ratings assess the likelihood of
an untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which is issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-dealers. The following summarizes the ratings used by Thomson
BankWatch:

"TBW-1" - This designation represents Thomson BankWatch's
highest rating category and indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.

"TBW-2" - This designation indicates that while the degree of
safety regarding timely payment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1."

"TBW-3" - This designation represents the lowest investment
grade category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
capacity to service principal and interest in a timely fashion is considered
adequate.

"TBW-4" - This designation indicates that the debt is regarded
as non-investment grade and therefore speculative.

IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:

"A1+" - Obligations supported by the highest capacity for
timely repayment.

"A1" - Obligations are supported by a strong capacity for
timely repayment.

"A2" - Obligations are supported by a satisfactory capacity
for timely repayment, although such capacity may be susceptible to adverse
changes in business, economic or financial conditions.

"A3" - Obligations are supported by a satisfactory capacity
for timely repayment. Such capacity is more susceptible to adverse changes in
business, economic or financial conditions than for obligations in higher
categories.

A-4
<PAGE> 97
"B" - Obligations for which the capacity for timely repayment
is susceptible to adverse changes in business, economic or financial
conditions.

"C" - Obligations for which there is an inadequate capacity to
ensure timely repayment.

"D" - Obligations which have a high risk of default or which
are currently in default.

CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS

The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:

"AAA" - This designation represents the highest rating
assigned by Standard & Poor's to a debt obligation and indicates an extremely
strong capacity to pay interest and repay principal.

"AA" - Debt is considered to have a very strong capacity to
pay interest and repay principal and differs from AAA issues only in small
degree.

"A" - Debt is considered to have a strong capacity to pay
interest and repay principal although such issues are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
debt in higher-rated categories.

"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.

"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

"BB" - Debt has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The
"BB" rating

A-5
<PAGE> 98
category is also used for debt subordinated to senior debt that is assigned an
actual or implied "BBB-" rating.

"B" - Debt has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.

"CCC" - Debt has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.

"CC" - This rating is typically applied to debt subordinated
to senior debt that is assigned an actual or implied "CCC" rating.

"C" - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.

"CI" - This rating is reserved for income bonds on which no
interest is being paid.

"D" - Debt is in payment default. This rating is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S & P believes such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.

PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC"
may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.

"r" - This rating is attached to highlight derivative, hybrid,
and certain other obligations that S & P believes may experience high
volatility or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or interest return
is indexed to equities, commodities, or currencies; certain swaps and options;
and interest only and principal only mortgage securities.

A-6
<PAGE> 99
The following summarizes the ratings used by Moody's for
corporate and municipal long-term debt:

"Aaa" - Bonds are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

"Aa" - Bonds are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities 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.

"A" - Bonds possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.

"Baa" - Bonds considered medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of
these ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be
in default.

Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes

A-7
<PAGE> 100
probable credit stature upon completion of construction or elimination of basis
of condition.

Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the issuer 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 issuer ranks at the lower end of its generic rating
category.

The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:

"AAA" - Debt is considered 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" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.

"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.

"BBB" - Debt possesses below average protection factors but
such protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.

"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when
due. Debt rated "B" possesses the risk that obligations will not be met when
due. Debt rated "CCC" is well below investment grade and has considerable
uncertainty as to timely payment of principal, interest or preferred dividends.
Debt rated "DD" is a defaulted debt obligation, and the rating "DP" represents
preferred stock with dividend arrearages.

To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major
categories.

The following summarizes the highest four ratings used by
Fitch for corporate and municipal bonds:

A-8
<PAGE> 101
"AAA" - Bonds 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.

"AA" - Bonds 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." Because
bonds rated in the "AAA" and "AA" categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."

"A" - Bonds considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

"BBB" - Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.

"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - Bonds that
possess one of these ratings are considered by Fitch to be speculative
investments. The ratings "BB" to "C" represent Fitch's assessment of the
likelihood of timely payment of principal and interest in accordance with the
terms of obligation for bond issues not in default. For defaulted bonds, the
rating "DDD" to "D" is an assessment of the ultimate recovery value through
reorganization or liquidation.

To provide more detailed indications of credit quality, the
Fitch ratings from and including "AA" to "C" may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within these major
rating categories.

IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:

"AAA" - Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of

A-9
<PAGE> 102
principal and interest is substantial such that adverse changes in business,
economic or financial conditions are unlikely to increase investment risk
substantially.

"AA" - 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.

"A" - Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic or financial conditions
may lead to increased investment risk.

"BBB" - Obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in higher categories.

"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one
of these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree
of speculation and indicates that the obligations are currently in default.

IBCA may append a rating of plus (+) or minus (-) to a rating
to denote relative status within major rating categories.

Thomson BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:

"AAA" - This designation represents the highest category
assigned by Thomson BankWatch to long-term debt and indicates that the ability
to repay principal and interest on a timely basis is extremely high.

"AA" - This designation indicates a very strong ability to
repay principal and interest on a timely basis with limited

A-10
<PAGE> 103
incremental risk compared to issues rated in the highest category.

"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.

"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.

"BB," "B," "CCC," and "CC," - These designations are assigned
by Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.

"D" - This designation indicates that the long-term debt is in
default.

PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.

MUNICIPAL NOTE RATINGS

A Standard and Poor's rating reflects the liquidity concerns
and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's Ratings Group for
municipal notes:

"SP-1" - The issuers of these municipal notes exhibit very
strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a plus (+)
designation.

"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest.

"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.

Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable

A-11
<PAGE> 104
Moody's Investment Grade ("VMIG"). Such ratings recognize the differences
between short-term credit risk and long-term risk. The following summarizes the
ratings by Moody's Investors Service, Inc. for short-term notes:

"MIG-1"/"VMIG-1" - Loans bearing this designation are of the
best quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

"MIG-2"/"VMIG-2" - Loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.

"MIG-3"/"VMIG-3" - Loans bearing this designation are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Liquidity and cash flow protection
may be narrow and market access for refinancing is likely to be less well
established.

"MIG-4"/"VMIG-4" - Loans bearing this designation are of
adequate quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.

"SG" - Loans bearing this designation are of speculative
quality and lack margins of protection.

Fitch and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.

A-12
<PAGE> 105

INTERMEDIATE MUNICIPAL FUND
An Investment Portfolio Offered by
MUNICIPAL FUND FOR TEMPORARY INVESTMENT

<TABLE>
<S> <C>
400 Bellevue Parkway For purchase and redemption orders only call:
Suite 100 800-441-7450 (in Delaware: 302-791-6350).
Wilmington, DE 19809 For yield information call: 800-821-6006
(Intermediate Municipal Fund shares code: 51;
Intermediate Municipal Fund Dollar shares code:
49).
For other information call: 800-821-7432.
</TABLE>

Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company that currently offers shares in three
separate investment portfolios. The shares described in this Prospectus
represent interests in the Intermediate Municipal Fund portfolio (the "Fund").
The Fund's investment objective is to seek a high level of current interest
income which is exempt from federal income taxes, consistent with prudent
investment risk. The Fund invests substantially all of its assets in tax-exempt
obligations having remaining maturities of ten years or less.

Fund shares may not be purchased by individuals directly, but institutional
investors may purchase shares for accounts maintained by individuals. In
addition to Intermediate Municipal Fund Shares, investors may purchase
Intermediate Municipal Fund Dollar Shares "Dollar Shares" which accrue daily
dividends in the same manner as Intermediate Municipal Fund shares but bear all
fees payable by the Fund to institutional investors for certain services they
provide to the beneficial owners of such shares. (See "Management of the
Fund--Service Organizations.")

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

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.
------------------------

March 30, 1996

<PAGE> 106

BACKGROUND AND EXPENSE INFORMATION

Two classes of shares are offered by this Prospectus: Intermediate
Municipal Fund shares and Intermediate Municipal Fund Dollar Shares ("Dollar
Shares"). Shares of each class represent equal, pro rata interests in the
Intermediate Municipal Fund portfolio and accrue daily dividends in the same
manner except that the Dollar Shares bear fees payable by the Fund (at the rate
of .25% per annum) to institutional investors for services they provide to the
beneficial owners of such shares. (See "Management of the Fund--Service
Organizations.")

EXPENSE SUMMARY

<TABLE>
<CAPTION>
INTERMEDIATE
INTERMEDIATE MUNICIPAL
MUNICIPAL DOLLAR
SHARES SHARES
------------ ------------
<S> <C> <C> <C> <C>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
- ------------------------------------------------------------------
(as a percentage of average net assets)
Management Fees (net of waivers)............................. .10% .10%
Other Expenses............................................... .30% .55%
Administration Fees (net of waivers).................... .10% .10%
Shareholder Servicing Fees.............................. 0% .25%
Miscellaneous........................................... .20% .20%
---- ---- ---- ----
Total Fund Operating Expenses (net of waivers)............... .40% .65%
==== ====
</TABLE>

<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming: (1) a 5% annual return; and (2) redemption at the
end of each time period with respect to the following
shares:
Intermediate Municipal Fund shares: $4 $13 $22 $ 51
Dollar Shares: $7 $21 $36 $ 81
</TABLE>

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES AND RATE OF RETURN MAY BE GREATER OR
LESSER THAN THOSE SHOWN.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. In addition, institutional investors may charge
fees for providing services in connection with their customers' investments in
Dollar Shares. (For more complete descriptions of the various costs and
expenses, see "Management of the Fund" in this Prospectus and the Statement of
Additional Information and the financial statements and related notes contained
in the Statement of Additional Information.) For the fiscal year ended November
30, 1995, absent fee waivers, management and administration fees would each have
been 20% of the Fund's average daily net assets. The investment adviser and
administrators have agreed to waive the advisory and administration fees
otherwise payable to them and to reimburse the Fund for its operating expenses
to the extent necessary to ensure that the operating expense ratio for the Fund
(excluding fees paid to Service Organizations pursuant to Servicing Agreements)
does not exceed 40% of the Fund's average daily net assets. These waivers may be
terminated upon 120-days' written notice to the Fund. Absent such fee waivers

2
<PAGE> 107

and expense reimbursements for such period, the estimated "Total Fund Operating
Expenses" for Intermediate Municipal Fund shares and Dollar Shares would be .60%
and .85%, respectively, of the average daily net assets of the Fund. The
foregoing table reflects expenses (net of waivers) incurred by the Fund during
the fiscal year ended November 30, 1994. The foregoing table has not been
audited by the Fund's independent accountants.

FINANCIAL HIGHLIGHTS

The following financial highlights for Intermediate Municipal Fund Shares
have been derived from the financial statements of the Fund for the fiscal year
ended November 30, 1995, and for each of the nine preceding fiscal years, and
for Intermediate Municipal Fund Dollar Shares for the fiscal year ended November
30, 1995, and for each of the eight preceding fiscal years, and the fiscal
period ended November 30, 1986 (commencement of operations). The financial
highlights for the fiscal years set forth below have been audited by KPMG Peat
Marwick LLP, independent accountants whose report in the financial statements
and financial highlights (for the most recent five years) of the Fund is
included in the Statement of Additional Information. The tables should be read
in conjunction with the financial statements and related notes included in the
Statement of Additional Information. Further information about the performance
of the Fund is available in the annual report to shareholders, which may be
obtained without charge by calling 800-821-7432.

INTERMEDIATE MUNICIPAL FUND SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988(2) 1987(2) 1986(2)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period..................... $ 10.39 $ 11.18 $ 10.88 $ 10.54 $ 10.26 $ 10.15 $ 10.04 $ 10.00 $ 10.44 $ 10.12
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income........ .5256 .5053 .5315 .5609 .6093 .6262 .6021 .5729 .5757 .5690
Net realized and unrealized
gain (loss) on
investments................ .7200 (.7900) .3000 .3400 .2800 .1100 .1100 .0400 (.4400) .3200
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment
operations........... 1.2456 (.2847) .8315 .9009 .8893 .7362 .7121 .6129 .1357 .8890
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends to shareholders
from net investment
income..................... (.5256) (.5053) (.5315) (.5609) (.6093) (.6262) (.6021) (.5729) (.5757) (.5690)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period..................... $ 11.11 $ 10.39 $ 11.18 $ 10.88 $ 10.54 $ 10.26 $ 10.15 $ 10.04 $ 10.00 $ 10.44
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return................. 12.22% (2.63)% 7.76% 8.74% 8.89% 7.53% 7.31% 6.22% 1.33% 9.50%
Ratios/Supplemental data:
Net assets, end of
period (000s).............. $ 6,228 16,507 22,350 29,911 33,479 35,728 43,568 52,908 78,372 60,044
Ratio of expenses to average
daily net assets(1)........ .40% .40% .40% .40% .40% .40% .40% .40% .38% .28%
Ratio of net investment
income to average daily net
assets..................... 4.87% 4.64% 4.79% 5.20% 5.87% 6.19% 5.99% 5.64% 5.64% 5.89%
Portfolio turnover rate...... 47% 40% 50% 64% 79% 78% 66% 24% 43% 13%
</TABLE>

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

(1) Without the waiver of advisory and administrative fees, the ratios of
expenses to average daily net assets would have been 0.60%, 0.53%, 0.51%,
0.50%, 0.50%, 0.52%, 0.51%, 0.51%, 0.48%, 0.49% and 0.56% for the years
ended November 30, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987 and
1986, respectively.

(2) Total return data has not been audited.

3
<PAGE> 108

INTERMEDIATE MUNICIPAL FUND DOLLAR SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)

<TABLE>
<CAPTION>
---------------------------------------------------
YEAR ENDED NOVEMBER 30,
---------------------------------------------------
1995 1994 1993 1992 1991(4)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period....... $ 10.39 $ 11.18 $ 10.88 $ 10.54 $ 10.26
------- ------- ------- ------- -------
Income from investment
operations:
Net investment income....... .4985 .4782 .5037 .5339 .2881
Net realized and unrealized
gain (loss) on
investments............... .7200 (.7900) .3000 .3400 .2800
------- ------- ------- ------- -------
Total from investment
operations............ 1.2185 (.3118) .8037 .8739 .5681
------- ------- ------- ------- -------
Less distributions:
Dividends to shareholders
from
net investment income..... (.4985) (.4782) (.5037) (.5339) (.2881)
------- ------- ------- ------- -------
Net asset value, end of
period.................... $ 11.11 $ 10.39 $ 11.18 $ 10.88 $ 10.54
======= ======= ======= ======= =======
Total return................ 11.97% (2.88)% 7.51% 8.49% 8.64%(2)
Ratios/Supplemental data:
Net assets, end of
period (000s)............. 33 29 30 27 26
Ratio of expenses to average
daily net assets(3)....... .65% .65% .65% .65% .65%(2)
Ratio of net investment
income to average daily
net
assets.................... 4.62% 4.39% 4.54% 4.95% 5.62%(2)
Portfolio turnover rate..... 47% 40% 50% 64% 79%(2)

MARCH
6,
1986(1,5)
TO
NOVEMBER
1990(4) 1989(4) 1988(5) 1987(5) 30, 1986
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period....... $ 10.15 $ 10.04 $ 10.00 $ 10.44 $10.38
------- ------- ------- ------- -------
Income from investment
operations:
Net investment income....... .2065 .2048 .5475 .5502 .4248
Net realized and unrealized
gain (loss) on
investments............... .1100 .1100 .0400 (.4400) .0600
------- ------- ------- ------- -------
Total from investment
operations............ .3165 .3148 .5875 .1102 .4848
------- ------- ------- ------- -------
Less distributions:
Dividends to shareholders
from
net investment income..... (.2065) (.2048) (.5475) (.5502) (.4248 )
------- ------- ------- ------- -------
Net asset value, end of
period.................... $ 10.26 $ 10.15 $ 10.04 $ 10.00 $10.44
======= ======= ======= ======= =================
Total return................ 7.28%(2) 7.06%(2) 5.97% 1.08% 9.25%(2)
Ratios/Supplemental data:
Net assets, end of
period (000s)............. 6 0 0 2 1
Ratio of expenses to average
daily net assets(3)....... .65%(2) .65%(2) .65% .63% .53%(2)
Ratio of net investment
income to average daily
net
assets.................... 5.94%(2) 5.74%(2) 5.39% 5.39% 5.64%(2)
Portfolio turnover rate..... 78%(2) 66%(2) 24% 43% 13%(2)
</TABLE>

- ---------------
(1) Commencement of operations.
(2) Annualized.

(3) Without the waiver of advisory and administrative fees, the ratios of
expenses to average daily net assets would have been 0.85%, 0.78%, 0.76%,
0.75%, 0.75% (annualized), 0.77% (annualized), 0.76% (annualized), 0.76%,
0.73% and 0.74% (annualized) for the years ended November 30, 1995, 1994,
1993, 1992, 1991, 1990, 1989, 1988, 1987 and the period ended November 30,
1986, respectively.

(4) No Dollar Shares were outstanding during the period April 11, 1989 to August
1, 1990 and the period January 7, 1991 to July 9, 1991.
(5) Total return data has not been audited.

4
<PAGE> 109

INVESTMENT OBJECTIVE AND POLICIES

IN GENERAL

The Fund's investment objective is to seek a high level of current interest
income which is exempt from federal income taxes, consistent with prudent
investment risk. There can be no assurance that the Fund will achieve its
investment objective.

In pursuing its investment objective, the Fund invests substantially all of
its assets in a diversified portfolio of obligations with remaining maturities
of ten years or less issued by or on behalf of states, territories, and
possessions of the United States, the District of Columbia, and their respective
authorities, agencies, instrumentalities, and political subdivisions and
tax-exempt derivative securities such as tender option bonds, participations,
beneficial interests in trusts and partnership interests (collectively,
"Municipal Obligations"), which meet the Fund's quality requirements set forth
below. The Fund will not knowingly purchase securities the interest on which is
subject to such tax. (See, however, "Taxes" below concerning treatment of
exempt-interest dividends paid by the Fund for purposes of the federal
alternative minimum tax applicable to particular classes of investors.) The
average weighted maturity of the Fund will be between three and ten years,
except during temporary defensive periods or during unusual market conditions.
The Fund's net asset value per share will fluctuate as the value of its
portfolio changes in response to changing market rates of interest and other
factors.

Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance, and opinions relating
to the validity of and the tax-exempt status of payments received by the Funds
from tax-exempt derivative securities are rendered by counsel to the respective
sponsors of such securities. The Fund and its investment adviser will rely on
such opinions and will not review independently the underlying proceedings
relating to the issuance of Municipal Obligations, the creation of any
tax-exempt derivative securities, or the bases for such opinions.

The Fund invests in long-term Municipal Obligations which are rated at the
time of purchase within the three highest rating categories assigned by an
unaffiliated nationally recognized statistical rating organization ("Rating
Agency"). The Fund may also invest in short-term Municipal Obligations such as
municipal notes, tax-exempt commercial paper and variable rate demand
obligations which are rated at the time of purchase in the highest rating
category assigned by a Rating Agency. Municipal Obligations unrated at the time
of purchase will be determined to be of comparable quality by the Fund's
investment adviser pursuant to guidelines approved by the Board of Trustees. The
Appendix to the Statement of Additional Information includes a description of
applicable ratings by Rating Agencies.

Except during periods of unusual market conditions or during temporary
defensive periods, the Fund will invest substantially all, but in no event less
than 80%, of its total assets in Municipal Obligations with remaining maturities
of ten years or less. The Fund may hold uninvested cash reserves pending
investment, during temporary defensive periods or if, in the opinion of the
Fund's investment adviser, suitable tax-exempt obligations are unavailable.
There is no percentage limitation on the amount of assets which may be held
uninvested. Uninvested cash reserves will not earn income.

5
<PAGE> 110

The Fund may not:

1. Purchase any securities other than Municipal Obligations and put
options with respect to such obligations.

2. Purchase the securities of any issuer if as a result more than 5%
of the value of the Fund's assets would be invested in the securities of
such issuer, except that up to 25% of the value of the Fund's assets may be
invested without regard to this 5% limitation.

3. Borrow money except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Fund's assets at the time
of such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. The Fund will not purchase portfolio
securities while any borrowing is outstanding.

4. Purchase securities, except securities issued by any state,
territory or possession of the United States, the District of Columbia or
their political subdivisions, agencies, instrumentalities or authorities,
if as a result 25% or more of the value of the Fund's assets would be
invested in securities of issuers conducting their principal business
activities in the same industry.

5. Knowingly invest more than 10% of the value of the Fund's assets in
securities with legal or contractual restrictions on resale.

In addition, without the affirmative vote of the holders of a majority of
the Fund's outstanding shares, the Fund may not change its policy of investing
at least 80% of its total assets in obligations the interest on which is exempt
from federal income tax (except during periods of unusual market conditions or
during temporary defensive periods). Securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities (including securities backed by
the full faith and credit of the United States) are not deemed to be subject to
the second investment limitation above. As of the date of this Prospectus, the
put options referred to above refer only to stand-by commitments as discussed
below.

6
<PAGE> 111

TYPES OF MUNICIPAL OBLIGATIONS

The two principal classifications of Municipal Obligations which may be
held by the Fund are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit, and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities include private activity bonds which
are not payable from the unrestricted revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved.

OTHER INVESTMENT PRACTICES

Municipal Obligations purchased by the Fund may include variable rate
demand notes. Such notes frequently are not rated by credit rating agencies but
unrated notes purchased by the Fund will be determined by the Fund's investment
adviser to be of comparable quality at the time of purchase to rated instruments
purchasable by the Fund. Where necessary to ensure that a note is of the
"highest quality," the Fund will require that the issuer's obligation to pay the
principal of the note be backed by an unconditional bank letter or line of
credit, guarantee, or commitment to lend. While there may be no active secondary
market with respect to a particular variable rate demand note purchased by the
Fund, the Fund may, upon notice, demand payment of principal at any time or
during specified periods not exceeding one year, depending upon the instrument
involved, and may resell the note at any time to a third party. The absence of
such an active secondary market, however, could make it difficult for the Fund
to dispose of a variable rate demand note if the issuer were to default on its
payment obligation or during periods that the Fund is not entitled to exercise
its demand rights, and the Fund could, for this or other reasons, suffer a loss
to the extent of the default.

The Fund may purchase Municipal Obligations on a "when-issued" basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield. The Fund will generally not pay for
such securities or start earning interest on them until they are received.
Securities purchased on a when-issued basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. The Fund expects that commitments to purchase when-issued securities will
not exceed 25% of the value of its total assets absent unusual market
conditions. The Fund does not intend to purchase when-issued securities for
speculative purposes but only in furtherance of its investment objective.

7
<PAGE> 112

rights thereunder for trading purposes. Stand-by commitments acquired by the
Fund may also be referred to as "put" options.

PURCHASE AND REDEMPTION OF SHARES

PURCHASE PROCEDURES

Fund shares are sold at the net asset value per share next determined after
receipt of a purchase order by PFPC, the Fund's transfer agent. Purchase orders
for shares are accepted until 4:00 P.M., Eastern time, only on days on which
both the New York Stock Exchange and the Federal Reserve Bank of Philadelphia
are open for business (a "Business Day") and must be transmitted to PFPC in
Wilmington, Delaware by telephone (800-441-7450; in Delaware: 302-791-5350); or
through the Fund's computer access program. Purchase orders received before 4:00
P.M., Eastern time, will be executed the following Business Day if payment has
been received by 4:00 P.M., Eastern time, on that day. Orders for which payment
has not been received by 4:00 P.M., Eastern time on the next Business Day
following receipt of the order will not be accepted, and notice thereof will be
given to the institution placing the order. (Payment for orders which are not
received or accepted will be returned after prompt inquiry to the sending
institution.) The Fund may in its discretion reject any order for shares.

Payment for Fund shares may be made only in federal funds or other funds
immediately available to PNC Bank, the Fund's custodian. The minimum initial
investment by an institution is $3 million for Intermediate Municipal Fund
Shares and $5,000 for Dollar Shares, however, broker-

8
<PAGE> 113

dealers and other institutional investors may set a higher minimum for their
customers. There is no minimum subsequent investment. The Fund, at its
discretion, may reduce the minimum initial investment for Intermediate Municipal
Fund Shares for specific institutions whose aggregate relationship with the
Provident Institutional Fund is substantially equivalent to this $3 million
minimum and warrants this reduction.

Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in Dollar Shares. (See also "Management of the Fund--Service
Organizations.") Institutions, including banks regulated by the Comptroller of
the Currency, and investment advisers and other money managers subject to the
jurisdiction of the Securities and Exchange Commission ("SEC"), the Department
of Labor or state securities commissions, should consult their legal advisors
before investing fiduciary funds in Dollar Shares. (See also "Management of the
Fund--Banking Laws.")

REDEMPTION PROCEDURES

Redemption orders must be transmitted to PFPC in Wilmington, Delaware in
the manner described under "Purchase Procedures." Redemption orders will be
priced at the net asset value per share determined as of 4:00 P.M., Eastern
time, on the day the order is received and will be executed on the following
Business Day. The proceeds paid to a shareholder upon redemption may be more or
less than the amount invested depending upon a share's net asset value at the
time of redemption.

Payment for redeemed shares is normally made in federal funds wired to the
redeeming shareholder on the next Business Day (the "execution date") following
receipt of the order. If a redemption order is placed on a day when PNC Bank is
closed, payment would normally be made on the second Business Day following
receipt of the order. The Fund reserves the right to wire redemption proceeds
within 7 days after receiving the redemption order if, in the judgment of the
Fund's investment adviser, an earlier payment could adversely affect the Fund.

The Fund shall have the right to redeem shares in any account at its net
asset value if the value of the account is less than $1,000 (for reasons other
than a decline in net asset value of Fund shares) after sixty-days' prior
written notice to the shareholder. Any such redemption shall be effected at the
net asset value per share next determined after the redemption order is entered.
If during the sixty-day period the shareholder increases the value of its
account to $1,000 or more, no such redemption shall take place. Moreover, if a
shareholder's Intermediate Municipal Fund Shares account falls below an average
of $100,000 in any particular calendar month, the account may be charged an
account maintenance fee with respect to that month. In addition, the Fund may
also redeem shares involuntarily or suspend the right of redemption or under
certain special circumstances described in the Statement of Additional
Information under "Additional Purchase and Redemption Information."

OTHER MATTERS

The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC as of 4:00 P.M., Eastern time, on each
day on which both the Federal Reserve Bank of Philadelphia and the New York
Stock Exchange are open for business. Currently, one or both of these
institutions are closed on the customary national business holidays of New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day

9
<PAGE> 114

(observed), Independence Day, Labor Day, Columbus Day (observed), Veteran's Day,
Thanksgiving Day and Christmas Day. The net asset value per share of each class
of the Fund is calculated by adding the value of all securities and other assets
belonging to the Fund, subtracting liabilities attributable to each class and
dividing the result by the total number of the Fund's outstanding shares of each
class. The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined independently of the net asset values of the
shares in the Company's other investment portfolios.

The net asset value of the Fund's shares will fluctuate as the value of its
portfolio changes in response to changing market rates of interest and other
factors. The value of the Fund's portfolio securities can be expected to vary
inversely with changes in prevailing interest rates. Municipal Obligations with
longer maturities tend to produce higher yields and are generally subject to
potentially greater capital appreciation and depreciation than obligations with
shorter maturities and lower yields. Thus, investing in Municipal Obligations
with longer maturities will cause greater fluctuations in the Fund's net asset
value than investing in obligations with shorter maturities.

Portfolio securities for which market quotations are readily available
(other than debt securities with remaining maturities of 60 days or less) are
valued at the mean between the most recent quoted bid and asked prices provided
by investment dealers. Other securities and assets for which market quotations
are not readily available are valued at their fair value in the best judgment of
PIMC under procedures established by, and under the supervision of, the
Company's Board of Trustees. Market or fair value may be determined by a matrix
pricing system which is used to determine the value of Municipal Obligations
based on factors such as yield, prices, maturities, call features, and ratings
on comparable securities.

Debt securities with remaining maturities of 60 days or less are valued on
an amortized cost basis (unless the Board determines that such basis does not
represent fair value at the time). Under this method, such securities are valued
initially at cost on the date of purchase or, in the case of securities
purchased with more than 60 days to maturity, are valued at their market or fair
value each day until the 61st day prior to maturity. Thereafter, absent unusual
circumstances, the Fund assumes a constant proportionate amortization of any
discount or premium until maturity of the security.

MANAGEMENT OF THE FUND

BOARD OF TRUSTEES

The business and affairs of the Fund are managed under the direction of the
Company's Board of Trustees. The trustees of the Company are as follows:

Philip E. Coldwell is an economic consultant and former Member of the
Board of Governors of the Federal Reserve System.

10
<PAGE> 115

Robert R. Fortune is a financial consultant and former Chairman,
President and Chief Executive Officer of Associated Electric & Gas
Insurance Services Limited.

Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.

G. Willing Pepper, Chairman of the Board and President of the Company,
is a retired President of Scott Paper Company.

Mr. Pepper is considered by the Company to be an "interested person" of the
Company as defined in the 1940 Act.

The other officers of the Company are as follows:

Edward J. Roach is Vice President and Treasurer of the Company.

Morgan R. Jones, Secretary of the Company, is a partner of the law
firm of Drinker Biddle & Reath, Philadelphia, Pennsylvania.

INVESTMENT ADVISER AND SUB-ADVISER

The Intermediate Municipal Fund's portfolio manager, W. Don Simmons, is the
person primarily responsible for the day-to-day management of the Portfolio's
investments. Mr. Simmons is Vice President and Senior Portfolio Manager at PIMC
where he has been employed since 1984. He is currently the Group Manager for all
tax-free fixed income portfolios.

11
<PAGE> 116

located in the United States and abroad. PNC provides custodial services for
approximately $210 billion in assets, including approximately $160 billion in
mutual fund assets.

As adviser, PIMC manages the Fund's portfolio and is responsible for all
purchases and sales of the Fund's portfolio securities. PIMC also maintains
certain of the Fund's financial accounts and records and computes the Fund's net
asset value and net income. For the advisory services provided and expenses
assumed by it, PIMC is entitled to receive a fee, computed daily and payable
monthly, based on the Fund's average daily net assets. PIMC and the
administrator may from time to time reduce the advisory and administration fees
otherwise payable to them or may reimburse the Fund for its operating expenses.
Any fees waived or expenses reimbursed by PIMC and the administrators with
respect to a particular fiscal year are not recoverable. For the fiscal year
ended November 30, 1995, the Fund paid investment advisory fees aggregating .10%
(net of waivers of .10%) of the Fund's average daily net assets.

ADMINISTRATORS

For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly, (For information regarding
the administrators' waivers and expense reimbursements, see "Investment Adviser
and Sub-Adviser" above.) The Fund also reimburses each administrator for its
reasonable out-of-pocket expenses incurred in connection with the Fund's
computer access program. For the fiscal year ended November 30, 1995, the Fund
paid administration fees aggregating .10% (net of waivers of .10%) of its
average daily net assets.

PFPC also serves as transfer agent, registrar and dividend disbursing
agent. PFPC's address is P.O. Box 8950, Wilmington, Delaware 19885-9628. The
services provided by PFPC and PDI and

12
<PAGE> 117

the fees payable by the Fund for these services are described further in the
Statement of Additional Information under "Management of the Funds."

DISTRIBUTOR

SERVICE ORGANIZATIONS

Institutional investors, such as banks, savings and loan associations and
other financial institutions, including affiliates of PNC Bank Corp. ("Service
Organizations"), may purchase Dollar Shares. Dollar Shares are identical in all
respects to Intermediate Municipal Fund Shares except that they bear the service
fees described below and enjoy certain exclusive voting rights on matters
relating to these fees. The Fund will enter into an agreement with each Service
Organization which purchases Dollar Shares requiring it to provide support
services to its customers who are the beneficial owners of Dollar Shares in
consideration of the Fund's payment of .25% (on an annualized basis) of the
average daily net asset value of the Dollar Shares held by the Service
Organization for the benefit of customers. Such services, which are described
more fully in the Statement of Additional Information under "Management of the
Funds--Service Organizations," include aggregating and processing purchase and
redemption requests from customers and placing net purchase and redemption
orders with PFPC; processing dividend payments from the Fund on behalf of
customers; providing information periodically to customers showing their
positions in Dollar Shares; and providing sub-accounting or the information
necessary for sub-accounting with respect to Dollar Shares beneficially owned by
customers. Under the terms of the agreements, Service Organizations are required
to provide to their customers a schedule of any fees that they may charge to the
customers in connection with their investments in Dollar Shares. Intermediate
Municipal Fund Shares are sold to institutions that have not entered into
servicing agreements with the Fund in connection with their investments.

EXPENSES

Except as noted above and in the Statement of Additional Information, the
Fund's service contractors bear all expenses in connection with the performance
of their services. Similarly, the Fund bears the expenses incurred in its
operations. The Fund also pays for brokerage fees and commissions (if any) in
connection with the purchase and sale of portfolio securities. For the fiscal
year ended November 30, 1995, the Fund's total expenses for Intermediate
Municipal Fund Shares and Dollar Shares were .40% and .65% of the average daily
net assets (net of fee waivers of .20% and .20%, respectively). With regard to
fees paid exclusively by Dollar Shares, see "Service Organizations" above.

BANKING LAWS

Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from

13
<PAGE> 118

sponsoring, organizing or controlling a registered, open-end investment company
engaged continuously in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities such as Fund
shares. Such banking laws and regulations do not prohibit such a holding company
or affiliate or banks generally from acting as investment adviser, transfer
agent or custodian to such an investment company or from purchasing shares of
such a company for or upon the order of customers. PNC Bank, PIMC and PFPC, as
well as some Service Organizations, are subject to such banking laws and
regulations, but believe they may perform the services for the Fund contemplated
by their respective agreements, this Prospectus and the Statement of Additional
Information without violating applicable banking laws or regulations.

DIVIDENDS

Institutional shareholders may elect to have their dividends reinvested in
additional full and fractional shares of the same class of shares with respect
to which such dividends are declared at the net asset value of such shares on
the payment date. Reinvested dividends receive the same tax treatment as
dividends paid in cash. Such election, or any revocation thereof, must be made
in writing to PFPC at P.O. Box 8950, Wilmington, Delaware 19899-9628, and will
become effective after its receipt by PFPC with respect to dividends paid.

The Fund expects to distribute at least once each year any net realized
short and long-term capital gains. PFPC, as transfer agent, will send each Fund
shareholder or its authorized representative an annual statement designating the
amount, if any, of any dividends and distributions made during each year and
their federal tax qualification.

14
<PAGE> 119

TAXES

To the extent, if any, dividends paid to shareholders are derived from
taxable income or from long-term or short-term capital gains, such dividends
will not be exempt from federal income tax, whether such dividends are paid in
the form of cash or additional shares, and may also be subject to state and
local taxes. In addition, any capital gain distributions that are paid shortly
after a purchase of shares by a shareholder prior to the record date will have
the effect of reducing the per share net asset value of his or her shares by the
amount of the distributions. All or a portion of such payment, although in
effect a return of capital, may be subject to tax. Under state or local law, the
Fund's distributions of net investment income may be taxable to investors as
dividend income even though a substantial portion of such distributions may be
derived from interest on tax-exempt obligations which, if realized directly,
would be exempt from such income taxes.

15
<PAGE> 120

PERFORMANCE CALCULATIONS

From time to time, performance information such as total return and yield
data for the Fund may be quoted in advertisements or in communications to
shareholders. Performance quotations are computed separately for Intermediate
Municipal Fund Shares and Dollar Shares. The Fund's total return may be
calculated on an average annual total return basis and may also be calculated on
an aggregate total return basis, for various periods. Average annual total
return reflects the average annual percentage change in value of an investment
in a series of Fund shares over the particular measuring period. Aggregate total
return reflects the total percentage change in value over the measuring period.
Both methods of calculating total return assume that dividends and capital gain
distributions made by the Fund during the period are reinvested.

The yield of a class of Fund shares is computed based on its net income
during a 30-day (or one-month) period (the particular period will be identified
in connection with a given yield quotation). More specifically, the Fund's yield
is computed by dividing its net income per share during a 30-day (or one-month)
period by the net asset value per share on the last day of the period and
annualizing the result on a semiannual basis. The Fund's "tax-equivalent" yield
may also be quoted from time to time, which shows the level of taxable yield
needed to produce an after-tax equivalent to the Fund's tax-free yield. This is
done by increasing the Fund's yield (calculated as above) by the amount
necessary to reflect the pay of federal income tax at a stated tax rate.

The Fund's total return and yield information may be compared to those of
other mutual funds with similar investment objectives and to bond and other
relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
For example, the total return and yield of the Fund's shares may be compared to
data prepared by Lipper Analytical Services, Inc. Total return and yield data as
reported in national financial publications such as The Wall Street Journal and
The New York Times, or in publications of a local or regional nature may also be
used in comparing the performance of the Fund.

Performance quotations of the Fund represent the Fund's past performance,
will fluctuate, and should not be considered as representative of future
results. The investment return and principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Changes in the Fund's net asset value will affect
its yield for any period, and such changes should be considered together with
the Fund's yield in ascertaining the Fund's total return to shareholders for the
period. Since holders of Dollar Shares bear all service fees for support
services provided by Service Organizations pursuant to servicing agreements, the
net yield on such shares can be expected at any given time to be approximately
.25% lower than the net yield on Intermediate Municipal Fund shares. Any fees
charged by Service Organizations or other institutional investors directly to
their customer accounts in connection with investments in shares of the Fund
will not be included in the Fund's calculations of yield and total return. The
methods used to compute the Fund's performance quotations are described in more
detail in the Statement of Additional Information. Investors may call (800)
821-6006 (Intermediate Municipal Fund Shares code: 51; Dollar Shares code: 49)
to obtain current performance information.

16
<PAGE> 121

DESCRIPTION OF SHARES AND MISCELLANEOUS

The Company's Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of full and fractional shares of beneficial interest
in the Company and to classify or reclassify any unissued shares into one or
more classes of shares. Pursuant to such authority, the Board of Trustees has
authorized the issuance of six classes of shares designated as Intermediate
Municipal Fund, Intermediate Municipal Fund Dollar, MuniFund, MuniFund Dollar,
MuniCash and MuniCash Dollar. The Declaration of Trust further authorizes the
trustees to classify or reclassify any class of shares into one or more
sub-classes.

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE
AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS RELATING TO THE FUND.
INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING MUNIFUND OR MUNICASH
MAY OBTAIN SEPARATE PROSPECTUSES DESCRIBING THOSE PORTFOLIOS BY CALLING THE
DISTRIBUTOR AT 800-998-7633.

Holders of the Company's Intermediate Municipal Fund Shares and Dollar
Shares will vote in the aggregate and not by class on all matters, except where
otherwise required by law and except that only Dollar Shares will be entitled to
vote on matters submitted to a vote of shareholders pertaining to the Fund's
arrangements with Service Organizations. Further, shareholders of all of the
Company's portfolios will vote in the aggregate and not by portfolio except as
otherwise required by law or when the Board of Trustees determines that the
matter to be voted upon affects only the interests of the shareholders of a
particular portfolio. (See the Statement of Additional Information under
"Additional Description Concerning Fund Shares" for examples where the 1940 Act
requires voting by portfolio.) Shareholders of the Company are entitled to one
vote for each full share held (irrespective of class or portfolio) and
fractional votes for fractional shares held. Voting rights are not cumulative
and, accordingly, the holders of more than 50% of the aggregate shares of the
Company may elect all of the trustees.

For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."

17
<PAGE> 122

18
<PAGE> 123

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 124

---------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information.................. 2
Financial Highlights........... 3
Investment Objective and
Policies..................... 5
Purchase and Redemption of
Shares....................... 8
Management of the Fund......... 10
Dividends...................... 14
Taxes.......................... 15
Performance Calculations....... 16
Description of Shares and
Miscellaneous................ 17
</TABLE>

PIF-P-017

- --------------------------------------------------------------------------------
INTERMEDIATE
MUNICIPAL
FUND
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR
TEMPORARY INVESTMENT
LOGO

Prospectus

March 30, 1996

<PAGE> 125

INTERMEDIATE MUNICIPAL FUND

Investment Portfolio Offered By
Municipal Fund for Temporary Investment

Statement of Additional Information
March 30, 1996

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

MUNICIPAL OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ADDITIONAL INFORMATION CONCERNING TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ADDITIONAL INFORMATION ON PERFORMANCE CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ADDITIONAL DESCRIPTION CONCERNING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>

This Statement of Additional Information is meant to be read
in conjunction with the Prospectus for the Intermediate Municipal Fund
portfolio, dated March 30, 1996, and is incorporated by reference in its
entirety into that Prospectus. Because this Statement of Additional
Information is not itself a prospectus, no investment in shares of Intermediate
Municipal Fund should be made solely upon the information contained herein.
Copies of the Prospectus for Intermediate Municipal Fund may be obtained by
calling 800-821-7432. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.

<PAGE> 126
THE COMPANY

Municipal Fund for Temporary Investment (the "Company") is a
no-load, diversified, open-end investment company presently offering three
separate investment portfolios--Intermediate Municipal Fund, (the "Fund"), and
MuniFund and MuniCash.

Substantially all of the assets of Intermediate Municipal Fund
are invested in tax-exempt obligations (as defined in the prospectus) and
tax-exempt derivatives such as tender option bonds, participations, beneficial
interests in trusts and partnership interests ("Municipal Obligations") having
remaining maturities of ten years or less at the time of purchase.

THIS STATEMENT OF ADDITIONAL INFORMATION AND THE FUND'S
PROSPECTUS RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY THE INVESTMENT
OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS RELATING TO
THIS FUND. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING MUNIFUND
OR MUNICASH MAY OBTAIN SEPARATE PROSPECTUSES DESCRIBING THOSE PORTFOLIOS BY
CALLING THE DISTRIBUTOR AT 800-998-7633.

INVESTMENT OBJECTIVES AND POLICIES

As stated in the Fund's Prospectus, the investment objective
of the Fund is to seek a high level of current interest income which is exempt
from federal income tax consistent with prudent investment risk. The following
policies supplement the description of the Fund's investment objectives and
policies as contained in the prospectus.

PORTFOLIO TRANSACTIONS

Subject to the general control of the Company's Board of
Trustees, PNC Institutional Management Corporation ("PIMC"), the Fund's
investment adviser, is responsible for, makes decisions with respect to, and
places orders for all purchases and sales of portfolio securities for the Fund.
Purchases and sales of portfolio securities are usually principal transactions
without brokerage commissions. In making portfolio investments, PIMC seeks to
obtain the best net price and the most favorable execution of orders. To the
extent that the execution and price offered by more than one dealer are
comparable, PIMC may, in its discretion, effect transactions in portfolio
securities with dealers who provide the Company with research advice or other
services. Research advice and other services furnished by brokers through whom
the Fund effects securities transactions may be used by PIMC in servicing
accounts in addition to the Fund, and not all such services will necessarily
benefit the Fund.

-2-
<PAGE> 127
Transactions in the over-the-counter market are generally
principal transactions with dealers, and the costs of such transactions involve
dealer spreads rather than brokerage commissions. With respect to
over-the-counter transactions, a Fund, where possible, 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.

Investment decisions for the Fund are made independently from
those for another of the Company's portfolios or other investment company
portfolios or accounts managed by PIMC. Such other portfolios may invest in
the same securities as the Fund. When purchases or sales of the same security
are made at substantially the same time on behalf of such other portfolios,
transactions are averaged as to price, and available investments allocated as
to amount, in a manner which PIMC believes to be equitable to each portfolio,
including the Fund. In some instances, this investment procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtained for the Fund. To the extent permitted by law, PIMC may aggregate the
securities to be sold or purchased for the Fund with those to be sold or
purchased for such other portfolios in order to obtain best execution.

The Fund will not execute portfolio transactions through or
acquire portfolio securities issued by PIMC, PNC Bank, National Association
("PNC Bank"), Provident Distributors, Inc. ("PDI"), PFPC Inc. ("PFPC"), or any
affiliated person (as such term is defined in the Investment Company Act of
1940 (the "1940 Act") of any of them, except to the extent permitted by the
Securities and Exchange Commission ("the SEC"). In addition, the Fund will not
purchase Municipal Obligations during the existence of any underwriting or
selling group relating thereto of which PDI or PNC Bank or any affiliate
thereof is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these limitations
in comparison with other investment company portfolios which have a similar
investment objective but are not subject to such limitations. Furthermore,
with respect to such transaction and securities, the Fund will not give
preference to Service Organizations with whom the Fund enters into agreements
concerning the provision of support services to customers who beneficially own
Intermediate Municipal Dollar shares ("Dollar shares"). (See the Prospectus,
agement of the Fund--Service Organizations.")

The Fund may participate, if and when practicable, in bidding
for the purchase of Municipal Obligations directly from an issuer in order to
take advantage of the lower purchase price available to members of a bidding
group. The Fund will engage in

-3-
<PAGE> 128
this practice, however, only when PIMC, in its sole discretion, believes such
practice to be in the Fund's interest.

The Fund does not intend to seek profits through short-term
trading. The portfolio turnover rate for the Fund for the years ended November
30, 1995, 1994 and 1993 were 47%, 40% and 50%, respectively. The annual
portfolio turnover rates for the Fund is not normally expected to exceed 100%.
A higher portfolio turnover rate would result in correspondingly higher
transaction costs, which would be borne by the Fund and ultimately by its
shareholders.

ADDITIONAL INFORMATION ON INVESTMENT PRACTICES.

VARIABLE AND FLOATING RATE INSTRUMENTS. Municipal Obligations
purchased by the Fund may include variable and floating rate instruments, which
provide for adjustments in the interest rate on certain reset dates or whenever
a specified interest rate index changes, respectively. Variable and floating
rate instruments are subject to the credit quality standards described in the
Prospectus. In some cases the Fund may require that the obligation to pay the
principal of the instrument be backed by a letter or line of credit or
guarantee. Although a particular variable or floating rate demand instrument
may not be actively traded in a secondary market, in some cases, the Fund may
be entitled to principal on demand and may be able to resell such notes in the
dealer market.

Variable and floating rate demand instruments held by the Fund
may have maturities which exceed the maximum remaining maturity defined for the
Fund purchasing such securities, provided: (i) the Fund is entitled to the
payment of principal, at any time or during specified intervals within a
prescribed period after such Fund's demand for payment, and (ii) the rate of
interest on such instruments is adjusted at periodic intervals according to the
terms of the instrument.

In determining the Fund's average weighted portfolio maturity
and whether a variable or floating rate demand instrument has a remaining
maturity equal or less than the maximum remaining maturity as defined for the
Fund, each instrument will be deemed by the Fund to have a maturity equal to
the longer of the period remaining until its next interest rate adjustment or
the period remaining until the principal amount can be recovered through
demand.

Variable and floating rate notes that do not provide for
payment within seven days may be deemed illiquid and subject to the 10%
limitation on such investments.

WHEN-ISSUED SECURITIES. As stated in the Fund's Prospectus,
the Fund may purchase Municipal Obligations on a

-4-
<PAGE> 129
"when-issued" basis (i.e., for delivery beyond the normal settlement date at a
stated price and yield). When the Fund agrees to purchase when-issued
securities, the custodian will set aside cash or liquid portfolio securities
equal to the amount of the commitment in a separate account. Normally, the
custodian will set aside portfolio securities to satisfy a purchase commitment,
and in such a case the Fund may be required subsequently to place additional
assets in the separate account in order to ensure that the value of the account
remains equal to the amount of the Fund's commitment. It may be expected that
the Fund's net assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when it sets aside
cash. Because the Fund will set aside cash or liquid assets to satisfy its
purchase commitments in the manner described, the Fund's liquidity and ability
to manage its portfolio might be affected in the event its commitments to
purchase when-issued securities ever exceeded 25% of the value of its assets.
When the Fund engages in when-issued transactions, it relies on the seller to
consummate the trade. Failure of the seller to do so may result in the Fund
incurring a loss or missing an opportunity to obtain a price considered to be
advantageous. The Fund does not intend to purchase when-issued securities for
speculative purposes but only in furtherance of its investment objective. The
Fund reserves the right to sell the securities before the settlement date if it
is deemed advisable.

STAND-BY COMMITMENTS. The Fund may acquire "stand-by
commitments" with respect to Municipal Obligations held in its portfolio.
Under a stand-by commitment, a dealer would agree to purchase at the Fund's
option specified Municipal Obligations at a specified price. (Stand-by
commitments acquired by the Fund may also be referred to as "put" options.)
Stand-by commitments may be exercisable by the Fund at any time before the
maturity of the underlying Municipal Obligations and may be sold, transferred,
or assigned only with the instruments involved. The Fund's right to exercise
stand-by commitments will be unconditional and unqualified.

The amount payable to the Fund upon its exercise of a stand-by
commitment will normally be (i) the Fund's acquisition cost of the Municipal
Obligations (excluding any accrued interest which the Fund paid on their
acquisition), less any amortized market premium or plus any amortized market or
original issue discount during the period the Fund owned the securities, plus
(ii) all interest accrued on the securities since the last interest payment
date during that period.

The Fund expects that stand-by commitments will generally be
available without the payment of any direct or indirect consideration.
However, if necessary or advisable, the Fund may pay for a stand-by commitment
either separately in cash

-5-
<PAGE> 130
or by paying a higher price for portfolio securities which are acquired subject
to the commitment (thus reducing the yield to maturity otherwise available for
the same securities). The total amount paid in either manner for outstanding
stand-by commitments held by the Fund will not exceed 1/2 of 1% of the value of
the Fund's total assets calculated immediately after each stand-by commitment
is acquired.

The Fund intends to enter into stand-by commitments only with
dealers, banks, and broker-dealers which, in the investment adviser's opinion,
present minimal credit risks. A Fund's reliance upon the credit of these
dealers, banks, and broker-dealers will be secured by the value of the
underlying Municipal Obligations that are subject to the commitment.

The Fund would acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The acquisition of a stand-by commitment
would not affect the valuation or assumed maturity of the underlying Municipal
Obligations. Stand-by commitments acquired by the Fund would be valued at zero
in determining net asset value. Where the Fund paid any consideration directly
or indirectly for a stand-by commitment, its cost would be reflected as
unrealized depreciation for the period during which the commitment was held by
the Fund.

ILLIQUID SECURITIES. The Fund may not invest more than 10% of
its total net assets in illiquid securities, including securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation. The Fund's investment adviser will
monitor on an ongoing basis the liquidity of such restricted securities under
the supervision of the Board of Trustees.

Rule 144A under the Securities Act allows for a broader
institutional trading market for securities otherwise subject to restriction on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act for resales of certain
securities to qualified institutional buyers. The investment adviser
anticipates that the market for certain restricted securities such as
institutional municipal securities will expand further as a result of this
regulation and the development of automated systems for the trading, clearance,
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers.

-6-
<PAGE> 131
The Fund's investment adviser will monitor the liquidity of
restricted securities under the supervision of the Board of Trustees. In
reaching liquidity decisions, the investment adviser will consider, inter alia,
the following factors: (1) the unregistered nature of a Rule 144A security;
(2) the frequency of trades and quotes for the Rule 144A security; (3) the
number of dealers willing to purchase or sell the Rule 144A security and the
number of other potential purchasers; (4) dealer undertakings to make a market
in the Rule 144A security; (5) the trading markets for the Rule 144A security;
and (6) the nature of the Rule 144A security and the nature of marketplace
trades (including, the time needed to dispose of the Rule 144A security,
methods of soliciting offers, and mechanics of transfer).

The Appendix to this Statement of Additional Information
contains a description of the relevant rating symbols used by Rating Agencies
for Municipal Obligations that may be purchased by the Fund.

INVESTMENT LIMITATIONS

The Fund's Prospectus summarizes certain investment
limitations that may not be changed without the affirmative vote of the holders
of a majority of the Fund's outstanding shares (as defined below under
"Miscellaneous"). Below is a complete list of the Fund's investment
limitations that may not be changed without such a vote of shareholders.

The Fund may not:

1. Purchase any securities other than Municipal
Obligations and put options with respect to such obligations.

2. Purchase the securities of any issuer if as a result
more than 5% of the value of the Fund's assets would be invested in the
securities of such issuer, except that up to 25% of the value of the Fund's
assets may be invested without regard to this 5% limitation.

3. Borrow money except from banks for temporary purposes
and then in amounts not in excess of 10% of the value of the Fund's assets at
the time of such borrowing; or mortgage, pledge or hypothecate any assets
except in connection with any such borrowing and in amounts not in excess of
the lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. The Fund will not purchase portfolio
securities while any borrowings are outstanding.

4. Knowingly invest more than 10% of the value of the
Fund's assets in securities with legal or contractual restrictions on resale.

-7-
<PAGE> 132
5. Make loans except that the Fund may purchase or hold
debt obligations in accordance with its investment objective, policies and
limitations.

7. Purchase or sell real estate except that the Fund may
invest in Municipal Obligations secured by real estate or interests therein.

8. Purchase securities on margin, make short sales of
securities or maintain a short position.

9. Write or sell puts, calls, straddles, spreads or
combinations thereof.

10. Purchase or sell commodities or commodity contracts,
or invest in oil, gas or mineral exploration or development programs.

11. Invest in industrial revenue bonds where the payment
of principal and interest are the responsibility of a company (including its
predecessors) with less than 3 years of continuous operation.

12. Purchase securities of other investment companies
except in connection with a merger, consolidation, acquisition or
reorganization.

13. Purchase securities, except securities issued by any
state, territory or possession of the United States, the District of Columbia
or their political subdivisions, agencies, instrumentalities or authorities, if
as a result 25% or more of the value of the Fund's assets would be invested in
securities of issuers conducting their principal business activities in the
same industry. In the case of an industrial development bond, if that bond is
backed only by the assets and revenues of the non-governmental user, such
non-governmental user would be deemed to be the sole issuer. However, a
guarantee of such a security would be considered a separate security issued by
the guarantor.

-8-
<PAGE> 133
the full faith and credit of the United States) are not deemed to be subject to
the second investment limitation above.

In order to permit the sale of Fund shares in certain states,
the Fund may make commitments more restrictive than the investment policies and
limitations above. Should the Fund determine that any such commitment is no
longer in its best interests, it will revoke the commitment by terminating
sales of its shares in the state involved.

MUNICIPAL OBLIGATIONS

Municipal Obligations include debt obligations issued by
governmental entities to obtain funds for various public purposes, including
the construction of a wide range of public facilities, the refunding of
outstanding obligations, the payment of general operating expenses, and the
extension of loans to public institutions and facilities. Private activity
bonds that are or were issued by or on behalf of public authorities to finance
various privately-operated facilities are included within the term Municipal
Obligations if the interest paid thereon is exempt from federal income tax.
Opinions relating to the validity of Municipal Obligations and to the exemption
of interest thereon from federal income taxes are rendered by counsel to the
issuers or bond counsel to the respective issuing authorities at the time of
issuance. Neither the Fund nor its investment adviser will review the
proceedings relating to the issuance of Municipal Obligations or the bases for
such opinions.

The Fund may hold tax-exempt derivatives which may be in the
form of tender option bonds, participations, beneficial interests in a trust,
partnership interests or other forms. A number of different structures have
been used. For example, interests in long-term fixed-rate Municipal
Obligations, held by a bank as trustee or custodian, are coupled with tender
option, demand and other features when the tax-exempt derivatives are created.
Together, these features entitle the holder of the interest to tender (or put)
the underlying Municipal Obligation to a third party at periodic intervals and
to receive the principal amount thereof. In some cases, Municipal Obligations
are represented by custodial receipts evidencing rights to receive specific
future interest payments, principal payments, or both, on the underlying
municipal securities held by the custodian. Under such arrangements, the
holder of the custodial receipt has the option to tender the underlying
municipal securities at its face value to the sponsor (usually a bank or broker
dealer or other financial institution), which is paid periodic fees equal to
the difference between the bond's fixed coupon rate and the rate that would
cause the bond, coupled with the tender option, to trade at par on the date of
a rate adjustment. The Fund may hold tax-exempt derivatives, such as

-9-
<PAGE> 134
participation interests and custodial receipts, for Municipal Obligations which
give the holder the right to receive payment of principal subject to the
conditions described above. The Internal Revenue Service has not ruled on
whether the interest received on tax-exempt derivatives in the form of
participation interests or custodial receipts is tax-exempt, and accordingly,
purchases of any such interests or receipts are based on the opinion of counsel
to the sponsors of such derivative securities. Neither the Fund nor its
investment adviser will review independently the underlying proceedings related
to the creation of any tax-exempt derivatives or the bases for such opinion.

As described in the Fund's Prospectus, the two principal
classifications of Municipal Obligations consist of "general obligation" and
"revenue" issues, and the Fund's portfolio may include "moral obligation"
issues, which are normally issued by special purpose authorities. There are,
of course, variations in the quality of Municipal Obligations both within a
particular classification and between classifications, and the yields on
Municipal Obligations depend upon a variety of factors, including general money
market conditions, the financial condition of the issuer, general conditions of
the municipal bond market, the size of a particular offering, the maturity of
the obligation, and the rating of the issue. The ratings of Rating Agencies
represent their opinions as to the quality of Municipal Obligations. It should
be recognized, however, that ratings are general and are not absolute standards
of quality, and Municipal Obligations with the same maturity, interest rate,
and rating may have different yields while Municipal Obligations of the same
maturity and interest rate with different ratings may have the same yield.
Subsequent to its purchase by the Fund, an issue of Municipal Obligations may
cease to be rated or its rating may be reduced below the minimum rating
required for purchase by the Fund. The Fund's investment adviser will consider
such an event in determining whether the Fund should continue to hold the
obligation.

Among other instruments, the Fund may purchase short-term
General Obligation Notes, Tax Anticipation Notes, Bond Anticipation Notes,
Revenue Anticipation Notes, Tax-Exempt

-10-
<PAGE> 135
Commercial Paper, Construction Loan Notes, and other forms of short-term loans.
Such notes are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements, or other revenues. In addition,
the Fund may invest in other types of tax-exempt instruments such as municipal
bonds, private activity bonds, and pollution control bonds, provided they have
remaining maturities equal or less than the maximum remaining maturity defined
for the Fund (if any) in its Prospectus at the time of purchase.

The payment of principal and interest on most securities
purchased by the Fund will depend upon the ability of the issuers to meet their
obligations. The District of Columbia, each state, each of their political
subdivisions, agencies, instrumentalities, and authorities and each multi-state
agency of which a state is a member is a separate "issuer" as that term is used
in this Statement of Additional Information and the Fund's Prospectus. The
non-governmental user of facilities financed by private activity bonds is also
considered to be an "issuer."

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

IN GENERAL

Information on how to purchase and redeem the Fund's shares is
included in the Prospectus. The issuance of the Fund's shares is recorded on
the Fund's books, and share certificates are not issued unless expressly
requested in writing. Certificates are not issued for fractional shares.

The regulations of the Comptroller of the Currency provide
that funds held in a fiduciary capacity by a national bank approved by the
Comptroller to exercise fiduciary powers must be invested in accordance with
the instrument establishing the fiduciary relationship and local law. The
Company believes that the purchase of the Fund's shares by such national banks
acting on behalf of their fiduciary accounts is not contrary to applicable
regulations if consistent with the particular account and proper under the law
governing the administration of the account.

Prior to effecting a redemption of shares represented by
certificates, PFPC, the Company's transfer agent, must have received such
certificates at its principal office. All such certificates must be endorsed
by the redeeming shareholder or accompanied by a signed stock power, in each
instance with the signature guaranteed by a commercial bank, a member of a
major stock exchange or other eligible guarantor institution, unless other
arrangements satisfactory to the Fund have previously been made. The Fund may
require any additional information reasonably

-11-
<PAGE> 136
necessary to evidence that a redemption has been duly authorized.

Under the 1940 Act, the Fund may suspend the right of
redemption or postpone the date of payment upon redemption for any period
during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or during which trading on said Exchange is
restricted, or during which (as determined by the SEC by rule or regulation) an
emergency exists as a result of which disposal or valuation of portfolio
securities is not reasonably practicable, or for such other periods as the SEC
may permit. (The Fund may also suspend or postpone the recordation of the
transfer of its shares upon the occurrence of any of the foregoing conditions.)
In addition, the Fund may redeem shares involuntarily in certain other
instances if the Board of Trustees determines that failure to redeem may have
material adverse consequences to the Fund's shareholders in general. If the
Board of Trustees determines that conditions exist which make payment of
redemption proceeds wholly in cash unwise or undesirable, the Fund may make
payment wholly or partly in securities or other property. See "Net Asset
Value" below for an example when such form of payment might be appropriate.

Any institution purchasing shares on behalf of separate
accounts will be required to hold the shares in a single nominee name (a
"Master Account"). Institutions investing in more than one of the Company's
portfolios or series of shares must maintain a separate Master Account for each
portfolio or series of shares. Institutions may also arrange with PFPC for
certain sub-accounting services (such as purchase, redemption and dividend
recordkeeping). Sub-accounts may be established by name or number either when
the Master Account is opened or later.

NET ASSET VALUE

As stated in the Fund's Prospectus, the Fund's net asset value
per share is calculated by adding the value of all of the Fund's portfolio
securities and other assets belonging to the Fund, subtracting the liabilities
attributable to each class, and dividing the result by the total number of the
outstanding shares of each class outstanding. Assets belonging to the Fund
consist of the consideration received upon the issuance of Fund shares together
with all income, earnings, profits, and proceeds derived from the investment
thereof, including any proceeds from the sale, exchange, or liquidation of such
investments, any funds or payments derived from any reinvestment of such
proceeds, and a portion of any general assets of the Company not belonging to a
particular portfolio. Assets belonging to the Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Company allocated on a daily basis in proportion to the relative net assets of
the Fund and the Company's other portfolios. Determinations made in good faith

-12-
<PAGE> 137
and in accordance with generally accepted accounting principles by the
Company's Board of Trustees as to the allocation of any assets or liabilities
with respect to the Fund are conclusive.

PIMC may use a pricing service to value certain portfolio
securities where the prices provided are believed to reflect the fair market
value of such securities. In valuing the Fund's securities, the pricing
service would normally take into consideration such factors as yield, risk,
quality, maturity, type of issue, trading characteristics, special
circumstances, and other factors it deems relevant in determining valuations
for normal institutionalized trading units of debt securities and would not
rely exclusively on quoted prices. The methods used by the pricing service and
the valuations so established will be reviewed by PIMC under the general
supervision of the Company's Board of Trustees. Several pricing services are
available, and one or more of which may be used by PIMC at its own expense from
time to time.

MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS

Each of the Company's officers, with the exception of Mr.
Jones, holds like offices with Temp, Fed, and PIF. In addition, Mr. Roach is
Treasurer of Chestnut, President and Treasurer of The RBB Fund, Inc. and New
York Muni and Vice President and Treasurer of ISIS, and Cal Muni; Mr. Pepper is
President and Chairman of the Board of Cal Muni and PIF; Mr. Fortune is
President and Chairman of Chestnut and ISIS and, Mr. Jones is Secretary of
Chestnut, Cal Muni, and New York Muni. Each of the investment companies named
above, receives various advisory and other services from PIMC and PNC Bank. Of
the

-13-
<PAGE> 138
above-mentioned funds, PDI provides distribution services to Temp, Fed,
PIF, Cal Muni, New York Muni, PIF and IDR. Of the above-referenced funds, PFPC
and PDI provide administrative services to Temp, Fed, PIF, Cal Muni, and New
York Muni.

<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ------------- -----------------------
<S> <C> <C>
PHILIP E. COLDWELL(2,3,4) Trustee Economic Consultant;
Coldwell Financial Chairman, Coldwell
Consultants Financial Consultants,
3330 Southwestern Blvd. Member of the Board of
Dallas, TX 75225 Governors of the Federal
Reserve System, 1974 to
Age 73 1980; President, Federal
Reserve Bank of Dallas,
1968 to 1974; Director,
Maxus Energy Corporation
(energy products) 1989 to
1993; Director, Diamond
Shamrock Corp. (energy and
chemical products) until
1987.

ROBERT R. FORTUNE(2,3,4) Trustee Financial Consultant;
2920 Ritter Lane Chairman, President
Allentown, PA 18104 and Chief Executive Officer
of Associated Electric &
Age 79 Gas Insurance Services
Limited 1984 to 1993;
Member of the Financial
Executives Institute and
American Institute of
Certified Public
Accountants; Director,
Prudential Utility Fund,
Inc., and Prudential
Structured Maturity Fund,
Inc.

RODNEY D. JOHNSON(3,4) Trustee President, Fairmount
Fairmount Capital Capital Advisors, Inc.
Advisors, Inc. (financial advising)
1435 Walnut Street since 1987; Treasurer
Drexel Building, North Philadelphia Health
3rd Floor System (formerly Girard
Philadelphia, PA 19102 Medical Center), 1988 to
1992, Vice President for
Age 54 Financial Affairs and
Treasurer, Temple
University, 1983 to 1987;
Member, Board of Education,
School District of
Philadelphia, 1983 to 1988.

G. WILLING PEPPER(1,2) Chairman of Retired; Chairman of the
128 Springton Lake Road the Board, Board, The Institute
Media, PA 19063 President and for Cancer Research until

Age 87
</TABLE>

-14-
<PAGE> 139
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ------------- -----------------------
<S> <C> <C>
Trustee 1979; Director,
Philadelphia National Bank
until 1978; President,
Scott Paper Company, 1971
to 1973; Chairman of the
Board, Specialty Composites
Corp. until May 1984.

EDWARD J. ROACH Vice President Certified Public
400 Bellevue Parkway and Treasurer Accountant; Vice
Suite 100 Chairman of the Board,
Wilmington, DE 19809 Fox Chase Cancer Center;
Trustee Emeritus,
Age 71 Pennsylvania School for the
Deaf, Trustee Emeritus
Immaculata College,
Director, The Bradford
Funds, Inc.

MORGAN R. JONES Secretary Partner of the law firm of
PNB Building Drinker Biddle & Reath,
1345 Chestnut Street Philadelphia,
Philadelphia, PA 19107-3496 Pennsylvania.

Age 56
</TABLE>

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

(1) This trustee is considered by the Company to be an "interested person"
of the Company as defined in the 1940 Act.

(2) Executive Committee Member.

(3) Audit Committee Member.

(4) Nominating Committee Member.

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

During intervals between meetings of the Board, the Executive
Committee may exercise the authority of the Board of Trustees in the management
of the Company's business to the extent permitted by law.

For the Company's fiscal year ended November 30, 1995, the
Company paid a total of $94,175 to its officers and trustees in all capacities,
of which $875 was allocated to the Fund. In addition, the Company contributed
$2,534 during its last fiscal year to its retirement plan for employees (who
included Mr. Roach), of which $21 was allocated to the Fund. Drinker Biddle &
Reath, of which Mr. Jones is a partner, receives legal fees as counsel to the
Company. No employee of PDI, PFPC, PIMC, or PNC Bank receives any compensation
from the Company for acting as an

-15-
<PAGE> 140
officer or trustee of the Company. The trustees and officers of the Company as
a group beneficially own less than 1% of the shares of each of the Company's
portfolios.

The table below sets forth the compensation actually received
from the Fund Complex of which the Fund is a part by the trustees for the
fiscal year ended November 30, 1995:

<TABLE>
<CAPTION>
Total
Compensation
Pension or from Registrant
Retirement and Fund
Aggregate Benefits Accrued Estimated Annual Complex(1)
Compensation as Part of Fund Benefits Upon Paid to
Name of Person, Position from Registrant Expenses Retirement Trustees
<S> <C> <C> <C> <C>
Philip E. Coldwell, Trustee $ 10,800.00 0 N/A (3)(2)$43,600.00
Robert R. Fortune, Trustee 10,800.00 0 N/A (5)(2) 63,600.00

Rodney D. Johnson, Trustee 10,800.00 0 N/A (5)(2) 55,850.00

G. Willing Pepper, Trustee and 19,100.00 0 N/A (6)(2) 96,250.00
Chairman
David R. Wilmerding, Jr.(3), 12,466.68 0 N/A (5)(2) 60,600.04
Trustee

Anthony M. Santomero(4), Trustee 10,800.00 0 N/A (4)(2) 49,900.00
---------- ---------

$74,766.68 $369,800.04
</TABLE>

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

(1) A Fund Complex means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investor services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies.

(2) Total number of such other investment companies trustee serves on within
the Fund Complex.

(3) Mr. Wilderding resigned as trustee of the Company on January 4, 1996.

(4) Mr. Santomero resigned as trustee of the Company on January 4, 1996.

-16-
<PAGE> 141
INVESTMENT ADVISER AND SUB-ADVISER

The advisory and sub-advisory services provided by PIMC and
PNC Bank are described in the Fund's Prospectus. For the advisory services
provided and expenses assumed by it, PIMC is entitled to receive fees, computed
daily and payable monthly, based on the average net assets of the Fund. (See
"Management of the Fund -- Investment Adviser and Sub-Adviser" in the Fund's
Prospectus for the fee schedule.)

PIMC, and the administrators have each agreed to reduce their
fees to the extent necessary to ensure that the Fund's operating expenses
(excluding interest, taxes, brokerage fees, fees paid to Service Organizations
pursuant to Servicing Agreements, and extraordinary expenses) do not exceed
.40% of the average net assets for the Portfolio. PIMC and the administrators
have also agreed that if, in any fiscal year, the expenses borne by the Fund
exceed the applicable expense limitations imposed by the securities regulations
of any state in which shares of the Fund are registered or qualified for sale
to the public, they will each reimburse the Fund for a portion of any such
excess expense in an amount equal to the portion that the administration fees
otherwise payable by the Fund to the administrators bear to the total amount of
the investment advisory and administration fees otherwise payable to the Fund.
To the Fund's knowledge, of the expense limitations in effect on the date of
this Statement of Additional Information, none is more restrictive than two and
one-half percent (2-1/2%) of the first $30 million of the Fund's average annual
net assets, two percent (2%) of the next $70 million of the average annual net
assets, and one and one-half percent (1-1/2%) of the remaining average annual
net assets.

For the fiscal years ended November 30, 1993, 1994 and 1995,
the Fund paid fees for advisory services aggregating $35,786, $27,271 and
$9,476, respectively. For the same years, PIMC waived payment of additional
advisory fees totalling $14,319, $12,584 and $9,766, respectively. PIMC and
PNC Bank also serve as adviser and sub-adviser, respectively, to the Company's
MuniFund and MuniCash portfolios.

BANKING LAWS

Certain banking laws and regulations with respect to
investment companies are discussed in the Fund's Prospectus. PIMC, PNC Bank
and PFPC believe that they may perform the services for the Fund contemplated
by respective agreements, the Prospectus, and this Statement of Additional
Information without violation of applicable banking laws or regulations. It
should be noted, however, that future changes in legal requirements relating to
the permissible activities of banks and their

-17-
<PAGE> 142
affiliates, as well as further interpretations of present requirements, could
prevent PIMC and PFPC from continuing to perform such services for the Fund and
PNC Bank from continuing to perform such services for PIMC and the Fund. If
PIMC, PFPC, or PNC Bank were prohibited from continuing to perform such
services, it is expected that the Company's Board of Trustees would recommend
that the Fund enter into new agreements with other qualified firms. Any new
advisory agreement would be subject to shareholder approval.

In addition, state securities laws on this issue may differ
from the interpretations of federal laws expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.

ADMINISTRATORS

As the Fund's administrators, PFPC and PDI have agreed to
provide the following services: (i) assist generally in supervising the Fund's
operations, including providing a Wilmington, Delaware order-taking facility
with toll-free IN-WATS telephone lines, providing for the preparing,
supervising, and mailing of purchase and redemption order confirmations to
shareholders of record, providing and supervising the operation of an automated
data processing system to process purchase and redemption orders, maintaining a
back-up procedure to reconstruct lost purchase and redemption data, providing
information concerning the Fund to its shareholders of record, handling
shareholder problems, providing (through PDI) the services of employees to
preserve and strengthen shareholder relations and monitoring the arrangements
pertaining to the Fund's agreements with Service Organizations; (ii) assure
that persons are available to receive and transmit purchase and redemption
orders; (iii) participate in the periodic updating of the Fund's Prospectus;
(iv) assist in maintaining the Fund's Wilmington, Delaware office; (v) perform
administrative services in connection with the Fund's computer access program
maintained to facilitate shareholder access to the Fund; (vi) accumulate
information for and coordinate the preparation of reports to the Fund's
shareholders and the SEC; (vii) provide the services of certain persons who may
be elected as trustees or appointed as officers of the Company by the Board of
Trustees; (viii) maintain the registration or qualification of the Fund's
shares for sale under state securities laws; (ix) review and provide advice
with respect to all sales literature of the Fund; and (x) assist in the
monitoring of regulatory and legislative developments which may affect the
Company, participate in counseling and assisting the Company in relation to
routine regulatory examinations and investigations, and work with the Company's
counsel in connection with regulatory matters and litigation.

-18-
<PAGE> 143
For their administrative services, the administrators are
entitled jointly to receive a fee, computed daily and payable monthly,
determined in the same manner as PIMC's advisory fee set forth above. The Fund
also reimburses each administrator for its reasonable out-of-pocket expenses
incurred in connection with the Fund's computer access program. For
information regarding the administrators' obligation to reimburse the Fund in
the event its expenses exceed certain prescribed limits, see "Investment
Adviser and Sub-Adviser" above.

For the fiscal year ended November 30, 1995, the Company paid
fees (net of waivers) for administration fees aggregating $9,476 with respect to
the Fund. For the same fiscal year, PFPC and PDI voluntarily waived
administration fees aggregating $9,766 with respect to the Fund. For the
fiscal year ended, November 30, 1994, the Fund paid administration fees
aggregating $27,271. For the same year, the administrator waived fees
totalling $12,584. For the period from January 18, 1993 through November 30,
1993, the Company paid fees for administrative services to PFPC and Provident
Distributors, Inc. ("PDI") (formerly called MFD Group, Inc.), its
administrators, aggregating $30,181 with respect to the Fund. For the same
period, administration fees of $12,254 payable by the Fund were voluntarily
waived. For the period from December 1, 1992 through January 17, 1993, the
Company paid fees to Boston Advisors totalling $5,605 with respect to the Fund.
Administration fees of $2,065 payable by the Fund were waived by Boston
Advisors during this period.

PFPC, a wholly owned, indirect subsidiary of PNC Bank,
provides advisory, administrative or, in some cases sub-advisory and/or
sub-administrative services to investment companies which are distributed by
PDI. PFPC and PDI also serve as the administrators of the Company's MuniFund
and MuniCash portfolios.

DISTRIBUTOR

PDI acts as the distributor of the Fund's shares. The Fund's
shares are sold on a continuous basis by PDI, the distributor, as agent,
although it is not obliged to sell any particular amount of shares. The
distributor pays the cost of printing and distributing prospectuses to persons
who are not shareholders of the Fund (excluding preparation and printing
expenses necessary for the continued registration of Fund shares). The
distributor shall prepare or review, provide advice with respect to, and file
with the federal and state agencies or other organization as required by
federal, state, or other applicable laws and regulations, all sales literature
(advertisements, brochures and shareholder communications) for the Fund and any
class or subclass thereof. No compensation is payable by the Fund to the
distributor for its distribution services. PDI also serves as the distributor
for the Company's

-19-
<PAGE> 144
MuniFund and MuniCash portfolios. PDI is a Delaware corporation, with its
principal place of business located at 259 Radnor-Chester Road, Suite 120,
Radnor, Pennsylvania 19087.

CUSTODIAN AND TRANSFER AGENT

Pursuant to a Custodian Agreement, PNC Bank serves as the
Fund's custodian. Under the Agreement, PNC Bank has agreed to provide the
following services: (i) maintain a separate account or accounts in the name of
the Fund; (ii) hold and disburse portfolio securities on account of the Fund;
(iii) collect and make disbursements of money on behalf of the Fund; (iv)
collect and receive all income and other payments and distributions on account
of the Fund's portfolio securities; and, (v) make periodic reports to the Board
of Trustees concerning the Fund's operations. PNC Bank also serves as
custodian for the Company's MuniFund and MuniCash portfolios.

PFPC also serves as transfer agent, registrar, and dividend
disbursing agent to the Fund pursuant to a Transfer Agency Agreement. Under
the Agreement, PFPC has agreed to provide the following services: (i) maintain
a separate account or accounts in the name of the Fund; (ii) issue, transfer,
and redeem Fund shares; (iii) transmit all communications by the Fund to its
shareholders of record, including reports to shareholders, dividend and
distribution notices, and proxy material for its meetings of shareholders; (iv)
respond to correspondence by shareholders, security brokers, and others
relating to its duties; (v) maintain shareholder accounts and sub-accounts;
(vi) provide installation and other services in connection with the Fund's
computer access program maintained to facilitate shareholder access to the
Fund; (vii) send each shareholder of record a monthly statement showing the
total number of shares owned as of the last business day of the month (as well
as the dividends paid during the current month and year); and, (viii) provide
each shareholder of record with a daily transaction report for each day on
which a transaction occurs in the shareholder's Master Account with the Fund.
Further, an institution establishing sub-accounts with PFPC is provided with a
daily transaction report for each day on which a transaction occurs in a
sub-account and, as of the last calendar day of each month, a report which sets
forth the share balances for the sub-accounts at the beginning and end of the
month and income paid or reinvested during the month. Finally, PFPC provides
each shareholder of record with copies of all information which is required to
be filed with the Internal Revenue Service and other appropriate taxing
authorities. PFPC also serves as transfer agent for the Company's MuniFund and
MuniCash portfolios.

PNC Bank is also authorized to select one or more banks or
trust companies to serve as sub-custodian on behalf of the Fund, provided that
PNC Bank shall remain responsible for the

-20-
<PAGE> 145
performance of all of its duties under the Custodian Agreement and shall hold
the Fund harmless from the acts and omissions of any bank or trust company
serving as sub-custodian.

Under the Transfer Agency Agreement, the Fund pays PNC Bank an
annual fee, calculated daily on the average daily gross assets and paid
monthly, at the rate of $.25 for each $1000 of the first $250 million, $.20 for
each $1000 on the next $250 million, $.15 for each $1000 on the next $500
million, $.09 for each $1000 on the next $2 billion, and $.08 for each $1000 on
amounts over $3 billion, plus $15.00 for each purchase, sale, or delivery of
fixed income securities (other than "Money Market" obligations) and $40 for
each interest collection or claim item. For transfer agency and dividend
disbursing services, the Fund pays fees to PFPC at the annual rate of $12.00
per account and sub-account maintained by PFPC plus $1.00 for each purchase or
redemption transaction by an account (other than a purchase transaction made in
connection with the automatic reinvestment of dividends). Payments to PFPC for
sub-accounting services provided by others are limited to the amounts which
PFPC pays to others for such services. In addition, the Fund reimburses PNC
Bank and PFPC for out-of-pocket expenses related to such services. PNC Bank's
principal business address is Broad and Chestnut Streets, Philadelphia,
Pennsylvania 19102.

SERVICE ORGANIZATIONS

As stated in the Fund's Prospectus, the Fund will enter into
an agreement with each Service Organization which purchases Dollar shares
requiring it to provide support services to its customers who beneficially own
Dollar shares in consideration of the Fund's payment of .25% (on an annualized
basis) of the average daily net asset value of the Dollar shares held by the
Service Organization for the benefit of customers. Such services include: (i)
aggregating and processing purchase and redemption requests from customers and
placing net purchase and redemption orders with PFPC; (ii) providing customers
with a service that invests the assets of their accounts in Dollar shares;
(iii) processing dividend payments from the Fund on behalf of customers; (iv)
providing information periodically to customers showing their positions in
Dollar shares; (v) arranging for bank wires; (vi) responding to customer
inquiries relating to the services performed by the Service Organization; (vii)
providing sub-accounting with respect to the Fund's Dollar shares beneficially
owned by customers or the information necessary for sub-accounting; (viii)
forwarding shareholder communications from the Fund (such as proxies,
shareholder reports, annual and semi-annual financial statements, and dividend,
distribution, and tax notices) to customers, if required by law; and, (ix)
other similar services if requested by the Fund. During the fiscal year ended
November 30, 1995, the Company paid servicing fees of $270,786 which the Fund
paid $79.

-21-
<PAGE> 146
The Fund's agreements with Service Organizations are governed
by a Shareholder Services Plan (the "Plan") that has been adopted by the
Company's Board of Trustees pursuant to an exemptive order granted by the SEC
in connection with the creation of the Dollar shares. Pursuant to each Plan,
the Board of Trustees reviews, at least quarterly, a written report of the
amounts expended under the Fund's agreements with Service Organizations and the
purposes for which the expenditures were made. In addition, the Fund's
arrangements with Service Organizations must be approved annually by a majority
of the Company's trustees, including a majority of the trustees who are not
"interested persons" of the Company as defined in the 1940 Act and have no
direct or indirect financial interest in such arrangements (the "Disinterested
Trustees").

The Board of Trustees has approved the Fund's arrangements
with Service Organizations based on information provided by the Fund's service
contractors that there is a reasonable likelihood that the arrangements will
benefit the Fund and their shareholders by affording the Fund greater
flexibility in connection with the servicing of the accounts of the beneficial
owners of their shares in an efficient manner. Any material amendment to the
Fund's arrangements with Service Organizations must be approved by a majority
of the Company's Board of Trustees (including a majority of the Disinterested
Trustees). So long as the Fund's arrangements with Service Organizations are
in effect, the selection and nomination of the members of the Company's Board
of Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Company will be committed to the discretion of such non-interested
trustees.

EXPENSES

The Fund's expenses include taxes, interest, fees, and
salaries of the Company's trustees and officers, SEC fees, state securities
qualification fees, Standard & Poor's rating fees, costs of preparing and
printing prospectuses for regulatory purposes and for distribution to
shareholders, advisory and administration fees, charges of the custodian,
transfer agent and dividend disbursing agent, Service Organization fees,
certain insurance premiums, outside auditing and legal expenses, costs of the
Fund's computer access program, costs of shareholder reports and shareholder
meetings, and any extraordinary expenses. The Fund also pays for brokerage
fees and commissions (if any) in connection with the purchase and sale of
portfolio securities.

ADDITIONAL INFORMATION CONCERNING TAXES

The following summarizes certain additional tax considerations
generally affecting the Fund and its shareholders

-22-
<PAGE> 147
that are not described in the Fund's Prospectus. No attempt is made to present
a detailed explanation of the tax treatment of the Fund or its shareholders or
possible legislative changes, and the discussion here and in the Fund's
Prospectus is not intended as a substitute for careful tax planning. Investors
should consult their tax advisors with specific reference to their own tax
situation.

As stated in the Prospectus, the Fund is treated as a separate
corporate entity under the Code and intends to qualify as a regulated
investment company under the Code. In order to so qualify for a taxable year,
the Fund must satisfy the distribution requirement described in the Prospectus,
derive at least 90% of its gross income for the year from certain qualifying
sources, comply with certain diversification requirements and derive less than
30% of its gross income for the year from the sale or other disposition of
securities and certain other investments held for less than three months.
Interest (including original issue discount and accrued market discount)
received by the Fund at maturity or disposition of a security held for less
than three months will not be treated as gross income derived from the sale or
other disposition of such security within the meaning of the 30% requirement.
However, any other income which is attributable to realized market appreciation
will be treated as gross income from the sale or other disposition of
securities for this purpose.

As described above and in the Fund's Prospectus, the Fund is
designed to provide institutions with current tax-exempt interest income. The
Fund is not intended to constitute a balanced investment program nor is it
designed for investors seeking capital appreciation or maximum tax-exempt
income irrespective of fluctuations in principal. Shares of the Fund would not
be suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, H.R. 10 plans and individual
retirement accounts because such plans and accounts are generally tax-exempt
and, therefore, not only would not gain any additional benefit from the Fund's
dividends being tax-exempt but also such dividends would be taxable when
distributed to the beneficiary. In addition, the Fund may not be an
appropriate investment for entities which are "substantial users" of facilities
financed by private activity bonds or "related persons" thereof. "Substantial
user" is defined under U.S. Treasury Regulations to include a non-exempt person
who regularly uses a part of such facilities in his or her trade or business
and whose gross revenues derived with respect to the facilities financed by the
issuance of bonds are more than 5% of the total revenues derived by all users
of such facilities, or who occupies more than 5% of the usable area of such
facilities or for whom such facilities or a part thereof were specifically
constructed, reconstructed or acquired. "Related persons" include certain
related natural persons, affiliated

-23-
<PAGE> 148
corporations, a partnership and its partners, and an S Corporation and its
shareholders.

In order for the Fund to pay exempt-interest dividends for any
taxable year, at the close of each quarter of its taxable year at least 50% of
the aggregate value of the Fund's assets must consist of exempt-interest
obligations. After the close of its taxable year, the Fund will notify its
shareholders of the portion of the dividends paid by the Fund which constitutes
an exempt-interest dividend with respect to such taxable year. However, the
aggregate amount of dividends so designated by the Fund cannot exceed the
excess of the amount of interest exempt from tax under Section 103 of the Code
received by the Fund for the taxable year over any amounts disallowed as
deductions under Sections 265 and 171(a)(2) of the Code. The percentage of
total dividends paid by the Fund with respect to any taxable year which
qualifies as federal tax-exempt-interest dividends will be the same for all
shareholders of the Fund receiving dividends for such year.

Interest on indebtedness incurred by a shareholder to purchase
or carry the Fund's shares generally is not deductible for federal income tax
purposes if the Fund distributes exempt-interest dividends during the
shareholder's taxable year.

Any net realized long-term capital gains will be distributed
at least annually. The Fund will generally have no tax liability with respect
to such gains, and the distributions will be taxable to the Fund's shareholders
as long-term capital gains, regardless of how long a shareholder has held the
Fund's shares. Such distributions will be designated as a capital gain
dividend in a written notice mailed by the Fund to shareholders not later than
60 days after the close of the Fund's taxable year.

While the Fund does not expect to earn any investment company
taxable income, any taxable income earned by the Fund will be distributed to
its shareholders. In general, the Fund's investment company taxable income
will be its taxable income (for example, any short-term capital gains) subject
to certain adjustments and excluding the excess of any net long-term capital
gain for the taxable year over the net short-term capital loss, if any, for
such year. The Fund will be taxed on any of its undistributed investment
company taxable income. To the extent such income is distributed by the Fund
(whether in cash or additional shares), it will be taxable to the Fund's
shareholders as ordinary income.

-24-
<PAGE> 149
losses). The Fund intends to make sufficient distributions or deemed
distributions of any ordinary taxable income and any capital gain net income
prior to the end of each calendar year to avoid liability for this excise tax.

If for any taxable year the Fund does not qualify for tax
treatment as a regulated investment company, all of the Fund's taxable income
will be subject to tax at regular corporate rates without any deduction for
distributions to Fund shareholders. In such event, dividend distributions to
shareholders would be taxable to shareholders to the extent of the Fund's
earnings and profits and would be eligible for the dividends received deduction
allowed to corporations.

The Fund will be required in certain cases to withhold and
remit to the U.S. Treasury 31% of taxable dividends or gross proceeds realized
upon sale paid to shareholders which have failed to provide a correct tax
identification number in the manner required, which is subject to withholding
by the Internal Revenue Service for failure properly to include on their return
payments of taxable interest or dividends, or which has failed to certify to
the Fund that it is not subject to backup withholding when required to do so or
that it is an "exempt recipient."

Although the Fund expects to qualify as a "regulated
investment company" and to be relieved of all or substantially all federal
income taxes, depending upon the extent of its activities in states and
localities in which offices are maintained, in which agents or independent
contractors are located or in which they are otherwise deemed to be conducting
business, the Fund may be subject to the tax laws of such states or localities.

The foregoing discussion is based on federal tax laws and
regulations which are in effect on the date of this Statement of Additional
Information; such laws and regulations may be changed by legislative or
administrative action.

DIVIDENDS

GENERAL

The Fund's net investment income for dividend purposes
consists of (i) interest accrued and discount earned on the Fund's assets, (ii)
less amortization of market premium on such assets, accrued expenses directly
attributable to the Fund, and the general expenses (e.g. legal, accounting and
trustees' fees) of the Company prorated to the Fund on the basis of its
relative net assets. The amortization of market discount on the Fund's assets
is not included in the calculation of net income. Realized and unrealized gains
and losses on portfolio securities

-25-
<PAGE> 150
are reflected in net asset value. In addition, the Fund's Dollar shares bear
exclusively the expense of fees paid to Service Organizations. (See
"Management of the Fund--Service Organizations.")

ADDITIONAL INFORMATION ON PERFORMANCE CALCULATIONS

From time to time, the yields and total return of the Fund may
be quoted in advertisements, shareholder reports, or other communications to
shareholders. Yields and total returns are calculated separately for
Intermediate Municipal Fund and Intermediate Municipal Fund Dollar shares.

YIELD CALCULATIONS. The yield for a series of shares in the
Fund is calculated by dividing the net investment income per share (as
described below) earned by the Fund during a 30-day (or one-month) period by
the net asset value per share on the last day of the period and annualizing the
result on a semi-annual basis by adding one to the quotient, raising the sum to
the power of six, subtracting one from the result, and then doubling the
difference. The Fund's net investment income per share earned during the
period is based on the average daily number of shares outstanding during the
period entitled to receive dividends and includes dividends and interest earned
during the period minus expenses accrued for the period, net of reimbursements.
This calculation can be expressed as follows:

a-b 6
Yield = 2 [(----- + 1) - 1]
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of
reimbursements).

c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.

d = net asset value per share on the last
day of the period.

Except as noted below, for the purpose of determining net
investment income earned during the period (variable "a" in the formula),
interest earned on debt obligations held by the Fund is calculated by computing
the yield to maturity of each obligation held by the Fund based on the market
value of the obligation (including actual accrued interest) at the close of
business on the last business day of each month, or, with respect

-26-
<PAGE> 151
to obligations purchased during the month, the purchase price (plus actual
accrued interest) and dividing the result by 360 and multiplying the quotient
by the market value of the obligation (including actual accrued interest) in
order to determine the interest income on the obligation for each day of the
subsequent month that the obligation is held by the Fund. For purposes of this
calculation, it is assumed that each month contains 30 days. The maturity of an
obligation with a call provision is the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date.

Interest earned on tax-exempt obligations that are issued
without original issue discount and have a current market discount is
calculated by using the coupon rate of interest instead of the yield to
maturity. In the case of tax-exempt obligations that are issued with original
issue discount but which have discounts based on current market value that
exceed the then-remaining portion of the original issue discount (market
discount), the yield to maturity is the imputed rate based on the original
issue discount calculation. On the other hand, in the case of tax-exempt
obligations that are issued with original issue discount but which have
discounts based on current market value that are less than the then-remaining
portion of the original issue discount (market premium), the yield to maturity
is based on the market value.

Undeclared earned income will be subtracted from the net asset
value per share (variable "d" in the formula). Undeclared earned income is the
net investment income which, at the end of the base period, has not been
declared as a dividend, but is reasonably expected to be and is declared as a
dividend shortly thereafter.

Based on the foregoing calculations, the yield for the month
of November 1995 was 4.03% for the Fund's shares and 3.78% for the Fund's
Dollar Shares and the "tax-equivalent" yield was 5.60% for the Fund's shares
and 5.25% for the Fund's Dollar Shares. The "tax-equivalent" yield is computed
by: (a) dividing the portion of the yield (calculated as above) that is exempt
from Federal income tax by one minus a stated Federal income tax rate; and
adding that figure to that portion, if any, of the yield that is not exempt
from Federal income tax. During the periods cited above, all of the Fund's
yield was exempt from Federal income tax, and the Federal income tax rate used
in calculating the "tax-equivalent" yield was 28%.

TOTAL RETURN CALCULATIONS. The average annual total return
for the Fund's series of shares is calculated by determining the average annual
compounded rates of return during specified periods that equate the initial
amount invested to the ending redeemable value of such investment. This is
done by dividing the ending redeemable value of a hypothetical $1,000

-27-
<PAGE> 152
initial payment by $1,000and raising the quotient to a power equal to one
divided by the number of years (or fractional portion thereof) covered by the
computation and subtracting one from the result. This calculation can be
expressed as follows:

ERV 1/n
T = [(-----) - 1]
P

Where: T = average annual total return.

ERV = ending redeemable value at the end of
the period covered by the computation of
a hypothetical $1,000 payment made at
the beginning of the period.

P = hypothetical initial payment of $1,000.

n = period covered by the computation,
expressed in terms of years.

The aggregate total returns are computed by determining the
aggregate compounded rates of return during specified periods that likewise
equate the initial amount invested to the ending redeemable value of such
investment. The formula for calculating aggregate total return is as follows:

ERV
Aggregate Total Return = [(-----) - 1]
P

The calculations of average annual total return and aggregate
total return assume the reinvestment of all dividends and capital gain
distributions on the reinvestment dates during the period. The ending
redeemable value (variable "ERV" in each formula) is determined by assuming
complete redemption of the hypothetical investment and deduction of all
nonrecurring charges at the end of the period covered by the computations.

YIELDS AND PERFORMANCE RESULTS WILL FLUCTUATE, AND ANY
QUOTATION OF YIELD OR PERFORMANCE DATA SHOULD NOT BE CONSIDERED REPRESENTATIVE
OF THE FUTURE PERFORMANCE OF THE FUND. Since yields and performance data will
fluctuate, such data for the Fund cannot necessarily be used to compare an
investment in the Fund's shares with bank deposits, savings accounts, and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
yield and performance data are generally a function of the kind and quality of
the instruments held in a portfolio, portfolio maturity, operating expenses net
of fee waivers and expense reimbursements, if any, and market conditions. Any
fees charged by banks with respect to customer

-28-
<PAGE> 153
accounts in investing in shares of the Fund will not be included in yield
calculations, such fees, if charged, would reduce the actual yield from that
quoted.

Based on the foregoing calculations, the average annual total
returns for the Fund's shares for the one-year period ended November 30, 1995,
for the five-year period ended November 30, 1995, and for the period December
2, 1982 to November 30, 1995 were 12.22%, 6.87% and 6.58%, respectively. The
aggregate total returns for the Fund's shares for the same three periods were
12.22%, 39.43% and 129.15%, respectively. For the Fund's Dollar Shares the
average annual total return for the one year period ended November 30, 1995,
for the five-year period ended November 30, 1995 and for the period March 6,
1986 to November 30, 1995 were 11.97%, 6.62% and 6.33%, respectively. No
Intermediate Municipal Dollar shares were outstanding for the period from April
11, 1989 to August 1, 1990 and the period from January 7, 1991 to July 9, 1991.

In addition, the Funds may also include in Materials
discussions and/or illustrations of the potential investment goals of a
prospective investor, investment management strategies, techniques, policies or
investment suitability of a Fund, economic conditions, the relationship between
sectors of the economy and the economy as a whole, various securities markets,
the effects of inflation, and historical performance of various asset classes,
including but not limited to, stocks, bonds and Treasury securities. From time
to time, Materials may summarize the substance of information contained in
shareholder reports (including the investment composition of a Fund), as well
as the views of the advisers as to current market, economic, trade and interest
rate trends, legislative, regulatory and monetary developments, investment
strategies and related matters believed to be of relevance to a Fund. The
Funds may also include in Materials charts, graphs or drawings which compare
the investment objective, return potential, relative stability and/or growth
possibilities of the Funds and/or other mutual funds, or illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to, stocks, bonds, Treasury securities and shares of
a Fund and/or other mutual funds. Materials may include a discussion of certain
attributes or benefits to be derived by an investment in a Fund and/or mutual
funds (such as value investing, market timing, dollar cost averaging, asset
allocation, constant ratio transfer, automatic accounting rebalancing and the
advantages and disadvantages of investing in tax-deferred and taxable
investments), shareholder profiles and hypothetical investor scenarios, timely
information on financial management, designations assigned by a Fund by
various rating or ranking organizations, Fund identifiers (such as CUSIP
numbers or NASDAQ symbols), tax and retirement planning and investment
alternatives to certificates of deposit and other financial instruments. Such
Materials may include symbols, headlines or other material which highlight or
summarize the information discussed in more detail therein.

ADDITIONAL DESCRIPTION CONCERNING SHARES

The Company does not presently intend to hold annual meetings
of shareholders except as required by the 1940 Act or other applicable law.
Upon the written request of shareholders owning at least twenty percent of the
Company's shares, the Company will call for a meeting of shareholders to
consider the removal of one or more trustees and other certain matters. To the
extent required by law, the Company will assist in shareholder communication in
such matters.

As stated in the Fund's Prospectus, holders of shares in the
Fund will vote in the aggregate and not by class or series on all matters,
except where otherwise required by law and except that only the Fund's Dollar
shares will be entitled to vote on matters submitted to a vote of shareholders
pertaining to the Fund's arrangements with Service Organizations. (See
"Management of the Fund -- Service Organizations.") Further, shareholders of
all of the Company's portfolios will vote in the aggregate and not by portfolio
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular portfolio. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted by the provisions of such Act or applicable
state law, or otherwise, to the holders of the outstanding securities of an
investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each portfolio affected by the matter. Rule 18f-2
further provides that a portfolio shall be deemed to be affected by a matter
unless it is clear that the interests of each portfolio in the matter are
identical or that the matter does not

-29-
<PAGE> 154
affect any interest of the portfolio. Under the Rule the approval of an
investment advisory agreement or any change in a fundamental investment policy
would be effectively acted upon with respect to a portfolio only if approved by
the holders of a majority of the outstanding voting securities of such
portfolio. However, the Rule also provides that the ratification of the
selection of independent certified public accountants, the approval of
principal underwriting contracts and the election of trustees are not subject
to the separate voting requirements and may be effectively acted upon by
shareholders of the investment company voting without regard to portfolio.

COUNSEL

Drinker Biddle & Reath, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496, of which Morgan R.
Jones, Secretary of the Company, is a partner, serves as counsel to the Company
and will pass upon the legality of the shares offered hereby.

AUDITORS

The audited Financial Statements and the financial highlights
of the Company, which are included in this Statement of Additional Information,
have been included in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, which report also appears in this
Statement of Additional Information, and upon the authority of said firm as
experts in accounting and auditing. KPMG Peat Marwick LLP has offices at
1600 Market Street, Philadelphia, Pennsylvania 19103.

MISCELLANEOUS

SHAREHOLDER VOTE

As used in this Statement of Additional Information and the
Fund's Prospectus, a "majority of the outstanding shares" of the Fund or of any
other portfolio means with respect to the approval of an investment advisory
agreement, a distribution plan or a change in a fundamental investment policy,
the vote of the lesser of (1) 67% of the Fund's shares (irrespective of Class
or series) or of the portfolio represented at a meeting at which the holders of
more than 50% of the outstanding shares of the Fund or such portfolio are
present in person or by proxy, or (2) more than 50% of the outstanding shares
of the Fund (irrespective of Class or series) or of the portfolio.

-30-
<PAGE> 155
CERTAIN RECORD HOLDERS

On March 13, 1996, the name, address, and percentage of
ownership of each institutional investor that owned of record 5% or more of the
outstanding shares of the Fund were as follows:

Barnett Bank Trust Company NA 103,972.287 18.89%
Attn: Income Collections Dept.
P.O. Box 40200
Jacksonville, Florida 32231

American National Bank 88,343.999 16.05%
Opus and Company
Department 77-3272
Chicago, Illinois 60678

First of America Trust Co. 198,134.416 36.00%
Attn: Mutual Funds
P.O. Box 4042
Kalamezoo, Michigan 49007

First Interstate Bank Arizona 28,443.062 5.16%
Tanfir & Co.
Mutual Funds Dept A-88-4
P.O. Box 9800
Calabasa, California 91312

Bank of America NT & SA 30,274.225 5.50%
PACO
Attn: Mutual Funds #8615
P.O. Box 3577 Terminal Annex
Los Angeles, California 90051

SHAREHOLDER AND TRUSTEE LIABILITY

-31-
<PAGE> 156
liable thereunder. The Declaration of Trust provides for indemnification out
of the trust property of any shareholder held personally liable solely by
reason of being or having been a shareholder and not because of any acts or
omissions or some other reason. The Declaration of Trust also provides that
the Company shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Company and satisfy any
judgment thereon. Thus, the risk of a shareholder's incurring financial loss
beyond the amount invested on account of shareholder liability is limited to
circumstances in which the Company itself would be unable to meet its
obligations.

The Company's Declaration of Trust provides further that no
trustee of the Company shall be personally liable for or on account of any
contract, debt, tort, claim, damage, judgment, or decree arising out of or
connected with the administration or preservation of the trust estate or the
conduct of any business of the Company, nor shall any trustee be personally
liable to any person for any action or failure to act except by reason of bad
faith, willful misfeasance, gross negligence in performing duties, or by reason
of reckless disregard of the obligations and duties as trustee. It also
provides that all persons having any claim against the trustees or the Company
shall look solely to the trust property for payment. With the exceptions
stated, the Declaration of Trust provides that a trustee is entitled to be
indemnified against all liabilities and expenses reasonably incurred in
connection with the defense or disposition of any proceeding in which the
trustee may be involved or may be threatened with by reason of being or having
been a trustee, and that the trustees have the power, but not the duty, to
indemnify officers and employees of the Company unless such persons would not
be entitled to indemnification if they were in the position of trustee.

FINANCIAL STATEMENTS

The audited financial statements for the Intermediate
Municipal Fund Portfolio and notes thereto in the Fund's Annual Report to
Shareholders for the fiscal year ended November 30, 1995 (the "1995 Annual
Report") are incorporated in this Statement of Additional Information by
reference. No other parts of the 1995 Annual Report are incorporated by
reference herein. The financial statements included in the 1995 Annual Report
have been audited by the Fund's independent accountants, KPMG Peat Marwick LLP,
whose reports thereon are incorporated herein by reference. Such financial
statements have been incorporated herein in reliance upon such report given
upon their authority as experts in accounting and auditing. Additional copies
of the 1995 Annual Report may be obtained at no charge by telephoning the Fund
at the telephone number appearing on the front page of this Statement of
Additional Information.

-32-
<PAGE> 157

APPENDIX A

COMMERCIAL PAPER RATINGS

"A-1" - Issue's degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted "A-1+."

"A-2" - Issue's capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."

"B" - Issue has only a speculative capacity for timely
payment.

"C" - Issue has a doubtful capacity for payment.

"D" - Issue is in payment default.

A-1

<PAGE> 158
access to a range of financial markets and assured sources of alternate
liquidity.

"Not Prime" - Issuer does not fall within any of the Prime
rating categories.

"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.

"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

A-2

<PAGE> 159
"D-3" - Debt possesses satisfactory liquidity, and other
protection factors qualify issue as investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.

"D-5" - Issuer has failed to meet scheduled principal and/or
interest payments.

"F-1+" - Securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.

"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."

"D" - Securities are in actual or imminent payment default.

Fitch may also use the symbol "LOC" with its short-term
ratings to indicate that the rating is based upon a letter of credit issued by
a commercial bank.

A-3

<PAGE> 160
Thomson BankWatch short-term ratings assess the likelihood of
an untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which is issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-dealers. The following summarizes the ratings used by Thomson
BankWatch:

"TBW-1" - This designation represents Thomson BankWatch's
highest rating category and indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.

"TBW-4" - This designation indicates that the debt is regarded
as non-investment grade and therefore speculative.

"A1+" - Obligations supported by the highest capacity for
timely repayment.

"A1" - Obligations are supported by a strong capacity for
timely repayment.

"A2" - Obligations are supported by a satisfactory capacity
for timely repayment, although such capacity may be susceptible to adverse
changes in business, economic or financial conditions.

A-4

<PAGE> 161
"B" - Obligations for which the capacity for timely repayment
is susceptible to adverse changes in business, economic or financial
conditions.

"C" - Obligations for which there is an inadequate capacity to
ensure timely repayment.

"D" - Obligations which have a high risk of default or which
are currently in default.

CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS

The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:

"AAA" - This designation represents the highest rating
assigned by Standard & Poor's to a debt obligation and indicates an extremely
strong capacity to pay interest and repay principal.

"AA" - Debt is considered to have a very strong capacity to
pay interest and repay principal and differs from AAA issues only in small
degree.

A-5

<PAGE> 162
category is also used for debt subordinated to senior debt that is assigned an
actual or implied "BBB-" rating.

"CC" - This rating is typically applied to debt subordinated
to senior debt that is assigned an actual or implied "CCC" rating.

"CI" - This rating is reserved for income bonds on which no
interest is being paid.

PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC"
may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.

A-6

<PAGE> 163
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

A-7

<PAGE> 164
probable credit stature upon completion of construction or elimination of basis
of condition.

The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:

"AAA" - Debt is considered 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" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.

"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.

The following summarizes the highest four ratings used by
Fitch for corporate and municipal bonds:

"AAA" - Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally

A-8

<PAGE> 165
strong ability to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.

"AAA" - 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 substantially.

A-9

<PAGE> 166
"AA" - 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.

IBCA may append a rating of plus (+) or minus (-) to a rating
to denote relative status within major rating categories.

"AA" - This designation indicates a very strong ability to
repay principal and interest on a timely basis with limited incremental risk
compared to issues rated in the highest category.

"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could

A-10

<PAGE> 167
be more vulnerable to adverse developments (both internal and external) than
obligations with higher ratings.

"D" - This designation indicates that the long-term debt is in
default.

PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.

MUNICIPAL NOTE RATINGS

"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest.

"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.

Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit
risk and long-term risk. The following summarizes the ratings by Moody's
Investors Service, Inc. for short-term notes:

A-11

<PAGE> 168
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the
best quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

"MIG-2"/"VMIG-2" - Loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.

"SG" - Loans bearing this designation are of speculative
quality and lack margins of protection.

Fitch and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.

A-12