<PAGE> 1
As filed with the Securities and Exchange Commission on March 30, 1998
Registration No. 2-64358
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 23
on
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
-------------------------
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center GARY M. GARDNER
400 Bellevue Parkway, Suite 100 Bellevue Park Corporate Center
Wilmington, Delaware 19809 400 Bellevue Parkway, Suite 100
(Address of Principal Executive Offices) Wilmington, Delaware 19809
Registrant's Telephone Number: (Name and Address of
(302) 792-2555 Agent for Service)
Copy to:
W. BRUCE McCONNEL, III
Drinker Biddle & Reath LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[x] on March 30, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
Title of Securities Being Registered: Shares of Beneficial Interest
<PAGE> 3
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
(MuniFund)
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
- -------------- ------------------
<S> <C>
1. Cover Page............................. Cover Page
2. Synopsis............................... Background and Expense
Information
3. Condensed Financial
Information.......................... Financial Highlights;
Yields
4. General Description of
Registrant........................... Cover Page; Financial
Highlights; Investment
Objective and
Policies; Description
of Shares and
Miscellaneous
5. Management of the Fund................. Management of the
Fund; Dividends
6. Capital Stock and Other
Securities........................... Cover Page; Financial
Highlights; Dividends;
Taxes; Description of
Shares and
Miscellaneous
7. Purchase of Securities Being
Offered.............................. Management of the
Fund; Purchase and
Redemption of Shares
8. Redemption or Repurchase............... Purchase and
Redemption of Shares
9. Pending Legal Proceedings.............. Inapplicable
</TABLE>
<PAGE> 4
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
or visit our web site at www.pif.com.
</TABLE>
Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company that currently offers shares in two
separate investment portfolios. The two classes of 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
("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.
------------------------
BlackRock Institutional Management Corporation ("BIMC"), formerly PNC
Institutional Management Corporation ("PIMC"), serves as the Fund's investment
adviser. 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, 1998, has been filed with the Securities and Exchange Commission ("SEC") and
is available to investors without charge by calling the Fund at 800-821-7432.
The Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). 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, 1998
<PAGE> 5
BACKGROUND AND EXPENSE INFORMATION
Two classes of Shares are offered by this Prospectus: 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 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....................... .00% .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' 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.) Absent
fee waivers and expense reimbursements for such period, the estimated "Total
Fund Operating Expenses" for MuniFund Shares and Dollar Shares for the fiscal
year ended November 30, 1997 would have been .41% and .66%, respectively, of the
average daily net assets of the MuniFund portfolio. The investment adviser and
administrators may from time to time waive the advisory and administration fees
otherwise payable to them or may reimburse the Fund for its operating expenses.
The Fund has received a No-Action Letter from the SEC in connection with
receiving credits from its custodian, an affiliate
2
<PAGE> 6
of the Fund's investment adviser, for certain cash balances held by the
custodian. If implemented, such credit may reduce custodian fees payable by the
Fund but may not reduce the Fund's total operating expense ratio. The foregoing
table has not been audited by the Fund's independent accountants.
3
<PAGE> 7
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, 1997, 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 incorporated herein and into the Statement of Additional Information by
reference. The tables should be read in conjunction with the financial
statements and related notes incorporated by reference into 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,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- ---------- ---------- ---------- --------
<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........... .0338 .0326 .0360 .0255 .0224 .0285 .0437
-------- -------- -------- ---------- ---------- ---------- --------
Less distributions:
Dividends to shareholders from
net investment income......... (.0338) (.0326) (.0360) (.0255) (.0224) (.0285) (.0437)
-------- -------- -------- ---------- ---------- ---------- --------
Net asset value, end of
period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========== ========== ========== ========
Total return.................... 3.43% 3.31% 3.66% 2.58% 2.27% 2.89% 4.46%
Ratios/Supplemental data:
Net assets, end of period
(000s)........................ 536,794 530,204 720,318 687,895 1,019,749 1,006,324 1,060,468
Ratio of expenses to average
daily net assets(1)........... .27% .27% .27% .26% .25% .30% .30%
Ratio of net investment income
to average daily net assets... 3.38% 3.26% 3.59% 2.53% 2.24% 2.86% 4.40%
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------------
1990 1989 1988(2)
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
period........................ $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------
Income from investment
operations:
Net investment income........... .0562 .0602 .0494
---------- ---------- ----------
Less distributions:
Dividends to shareholders from
net investment income......... (.0562) (.0602) (.0494)
---------- ---------- ----------
Net asset value, end of
period........................ $ 1.00 $ 1.00 $ 1.00
========== ========== ==========
Total return.................... 5.77% 6.19% 5.21%
Ratios/Supplemental data:
Net assets, end of period
(000s)........................ 988,069 1,075,732 1,662,051
Ratio of expenses to average
daily net assets(1)........... .30% .30% .29%
Ratio of net investment income
to average daily net assets... 5.62% 6.01% 4.91%
</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%, 0.41%,
0.41%, 0.41%, 0.41%, 0.41%, 0.42%, 0.40% and 0.38% for the years ended
November 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and 1988,
respectively.
(2) Total return data has not been audited.
4
<PAGE> 8
MUNIFUND DOLLAR SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988(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.............. .0313 .0301 .0335 .0230 .0199 .0260 .0412 .0537 .0577 .0469
------- ------- ------ ------ ------ ------ ------- ------ ------- -------
Less distributions:
Dividends to shareholders from net
investment income................ (.0313) (.0301) (.0335) (.0230) (.0199) (.0260) (.0412) (.0537) (.0577) (.0469)
------- ------- ------ ------ ------ ------ ------- ------ ------- -------
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....................... 3.18% 3.06% 3.41% 2.33% 2.02% 2.64% 4.21% 5.52% 5.94% 4.96%
Ratios/Supplemental data:
Net assets, end of period (000s)... 67,387 61,396 6,474 2,785 6,783 1,414 26,418 2,187 10,680 18,243
Ratio of expenses to average daily
net assets(1).................... .52% .52% .52% .51% .50% .55% .55% .55% .55% .54%
Ratio of net investment income to
average daily net assets......... 3.13% 3.01% 3.34% 2.28% 1.99% 2.61% 4.15% 5.37% 5.76% 4.66%
</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%, 0.66%,
0.66%, 0.66%, 0.66%, 0.66%, 0.67%, 0.65% and 0.63% for the years ended
November 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and 1988,
respectively.
(2) Total return data has not been audited.
5
<PAGE> 9
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 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, generally, determined by the Fund's investment adviser pursuant to
guidelines approved by the Company's Board of Trustees. First Tier Eligible
Securities consist of the following types of securities: (i) securities that
have short-term debt ratings at the time of purchase in the highest rating
category 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); (ii) securities that are issued by an issuer
(or, in certain cases guaranteed by an issuer) with such ratings; or (iii)
securities without such short-term ratings that have been determined to be of
comparable quality 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
6
<PAGE> 10
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 full list of the complete 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.
Pursuant to SEC Rule 2a-7 under the 1940 Act, the Fund may not invest more
than 5% of its assets, measured at the time of purchase, in the securities of
any one issuer other than U.S. Government Securities, repurchase agreements
collateralized by such securities and securities subject to certain guarantees.
The Fund may, however, invest up to 25% of its assets in First Tier Securities
of a single issuer for a period of up to three business days after the purchase
thereof, although the Fund may not make more than one such investment at a time.
The Fund's compliance with the diversification requirements of SEC Rule 2a-7
will be deemed compliance with the Fund's diversification restriction above.
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.
7
<PAGE> 11
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
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.
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 a guarantee in accordance with SEC Rule 2a-7.
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
8
<PAGE> 12
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.
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.
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
acceptance 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 accepted 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.
9
<PAGE> 13
Orders accepted after 12:00 noon and before 2:30 P.M., Eastern time (or orders
accepted 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 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 Funds 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."
10
<PAGE> 14
OTHER MATTERS
The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by BIMC as of 12:00 noon and 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 (observed), Independence Day, Labor Day, Columbus Day (observed), Veterans
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 customer 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.
INVESTMENT ADVISER AND SUB-ADVISER
BIMC, a wholly-owned, indirect subsidiary of PNC Bank, serves as the Fund's
investment adviser. BIMC is one of the largest bank managers of mutual funds,
with assets currently under management in excess of $39 billion. BIMC 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 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 1600 Market Street, Philadelphia, Pennsylvania 19103.
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. PNC Bank also
serves as the Fund's custodian. BIMC also serves as investment adviser,
respectively, to the Company's MuniCash portfolio.
11
<PAGE> 15
PNC Bank Corp., a multi-bank holding company 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, real estate banking, mortgage banking and
asset management.
As investment adviser, BIMC manages the Fund's portfolio and is responsible
for all purchases and sales of the Fund's portfolio securities. BIMC also
maintains certain of the Fund's financial accounts and records and computes the
Fund's net asset value and net income. For the investment advisory services
provided and expenses assumed by it, BIMC is entitled to receive a fee, computed
daily and payable monthly, based on the Fund's average daily net assets. BIMC
and the administrators may from time to time reduce the investment advisory and
administration fees otherwise payable to them or may reimburse the Fund for its
operating expenses. Any fees waived or expenses reimbursed by BIMC and the
administrators with respect to a particular fiscal year are not recoverable. For
the fiscal year ended November 30, 1997, the Fund paid investment advisory fees
aggregating .10% of the Fund's average daily net assets.
PNC Bank, as sub-advisor to the Fund, provided research, credit analysis
and recommendations with respect to the Fund's investments, and supplied certain
computer facilities, personnel and other services. The personnel and facilities
related to these services have been transferred to BIMC and BIMC has assumed PNC
Bank's responsibilities under the sub-advisory agreement. For its sub-advisory
services, PNC Bank was entitled to receive from PIMC an amount equal to 75% of
the investment advisory fee paid by the Fund to PIMC (subject to adjustment in
certain circumstances). The sub-advisory fees paid by PIMC to PNC Bank had no
effect on the investment advisory fees payable by the Fund to PIMC. The services
provided by BIMC and the fees payable by the Fund for these services are
described further in the Statement of Additional Information under "Management
of the Fund."
ADMINISTRATORS
PFPC, whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809, and PDI, whose principal business address is Four Falls
Corporate Center, 6th Floor, West Conshohocken, Pennsylvania 19428, serve as
administrators. PFPC is an indirect, wholly-owned subsidiary of PNC Bank Corp.
All of the outstanding stock of PDI is owned by PDI's chief executive officer.
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, based on the Fund's
average net assets. (For information regarding the administrators' fee 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
12
<PAGE> 16
year ended November 30, 1997, the Fund paid administration fees aggregating .10%
of its average daily net assets.
PFPC also serves as transfer agent, registrar and dividend disbursing
agent. PFPC's address as transfer agent 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, whose principal business address is set forth above under
"Administrators," also serves as distributor of the Fund's shares. 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
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 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 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 subaccounting 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, 1997, the Fund's total
expenses for MuniFund Shares and Dollar Shares were .27% and .52% of the average
daily net assets. With regard to fees paid exclusively by Dollar Shares, see
"Service Organizations" above.
13
<PAGE> 17
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, BIMC 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
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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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.
Dividends are determined in the same manner for each class of shares of the
Fund but may differ in amount because of the difference in the expenses paid by
each class.
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.
14
<PAGE> 18
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 applicable to corporations.
Corporate shareholders must also take all exempt-interest dividends into account
in determining certain adjustments for federal alternative minimum tax purposes.
Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.
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. 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.
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.
15
<PAGE> 19
PERFORMANCE
From time to time, the "total return", "yields", "effective yields", and
"tax-equivalent yields" for MuniFund Shares and Dollar Shares may be quoted in
advertisements or in reports to shareholders. Performance quotations are
computed separately for each separate class or sub-class of 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 performance 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 performance 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 performance figures for a particular class or sub-class of
shares represent the Fund's past performances, will fluctuate, and should not be
considered as representative of future results. The performance 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 performance; 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 four classes of shares designated as MuniFund,
16
<PAGE> 20
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 MUNICASH MAY OBTAIN A
SEPARATE PROSPECTUS DESCRIBING THAT PORTFOLIO BY CALLING 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.
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
period.) 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
obligation 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 reasons of being or having been a shareholder and
not because of any acts or omissions or some other reason.
17
<PAGE> 21
[This page intentionally left blank.]
<PAGE> 22
[This page intentionally left blank.]
<PAGE> 23
- --------------------------------------------------------------------------------
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........... 4
Investment Objective and
Policies..................... 6
Purchase and Redemption of
Shares....................... 9
Management of the Fund......... 11
Dividends...................... 14
Taxes.......................... 15
Performance.................... 16
Description of Shares and
Miscellaneous................ 16
</TABLE>
PIF-P-009
MUNIFUND
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR
TEMPORARY INVESTMENT
[PROVIDENT INSTITUTIONAL FUNDS LOGO]
Prospectus
March 30, 1998
- --------------------------------------------------------------------------------
<PAGE> 24
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
(MuniFund Dollar Shares)
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
- -------------- ------------------
<S> <C>
1. Cover Page............................. Cover Page
2. Synopsis............................... Background and Expense
Information
3. Condensed Financial
Information.......................... Financial Highlights;
Yields
4. General Description of
Registrant........................... Cover Page; Financial
Highlights; Investment
Objective and
Policies; Description
of Shares and
Miscellaneous
5. Management of the Fund................. Management of the
Fund; Dividends
6. Capital Stock and Other
Securities........................... Cover Page; Financial
Highlights; Dividends;
Taxes; Description of
Shares and
Miscellaneous
7. Purchase of Securities Being
Offered.............................. Management of the
Fund; Purchase and
Redemption of Shares
8. Redemption or Repurchase............... Purchase and
Redemption of Shares
9. Pending Legal Proceedings.............. Inapplicable
</TABLE>
<PAGE> 25
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
or visit our website at www.pif.com.
</TABLE>
Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company that currently offers shares in two
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.
------------------------
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.
------------------------
BlackRock Institutional Management Corporation ("BIMC"), formerly PNC
Institutional Management Corporation ("PIMC"), serves as the Fund's investment
adviser. 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.")
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, 1998, has been filed with the Securities and Exchange Commission ("SEC") and
is available to investors without charge by calling the Fund at 800-821-7432.
The Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). 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, 1998
<PAGE> 26
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
ESTIMATED ANNUAL FUND OPERATING EXPENSES SHARES
---------------------------------------- ------------
<S> <C> <C>
(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.) Absent fee waivers
and expense reimbursements for such period, the estimated "Total Fund Operating
Expenses" for Dollar Shares for the fiscal year ended November 30, 1997 would
have been .66% of the average daily net assets of the MuniFund portfolio. The
investment adviser and administrators may from time to time waive the advisory
and administration fees otherwise payable to them or may reimburse the Fund for
its operating expenses. The Fund has received a No-Action Letter from the SEC in
connection with receiving credit from its custodian, an affiliate of the Fund's
investment adviser, for certain cash balances held by the custodian. If
implemented, such credits may reduce custodian fees payable by the Fund but may
not reduce the Fund's total operating expense ratio. The foregoing table has not
been audited by the Fund's independent accountants.
2
<PAGE> 27
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, 1997, 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 incorporated herein and into the Statement of Additional Information by
reference. The tables should be read in conjunction with the financial
statements and related notes incorporated by reference into 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,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- ---------- ---------- ----------
<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.................. .0338 .0326 .0360 .0255 .0224 .0285 .0437
-------- -------- -------- -------- ---------- ---------- ----------
Less distributions:
Dividends to shareholders from net
investment income.................... (.0338) (.0326) (.0360) (.0255) (.0224) (.0285) (.0437)
-------- -------- -------- -------- ---------- ---------- ----------
Net asset value, end of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========== ========== ==========
Total return........................... 3.43% 3.31% 3.66% 2.58% 2.27% 2.89% 4.46%
Ratios/Supplemental data:
Net assets, end of period (000s)....... 536,794 530,204 720,318 687,895 1,019,749 1,006,324 1,060,468
Ratio of expenses to average daily net
assets(1)............................ .27% .27% .27% .26% .25% .30% .30%
Ratio of net investment income to
average daily net assets............. 3.38% 3.26% 3.59% 2.53% 2.24% 2.86% 4.40%
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------
1990 1989 1988(2)
-------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period... $ 1.00 $ 1.00 $ 1.00
-------- ---------- ----------
Income from investment operations:
Net investment income.................. .0562 .0602 .0494
-------- ---------- ----------
Less distributions:
Dividends to shareholders from net
investment income.................... (.0562) (.0602) (.0494)
-------- ---------- ----------
Net asset value, end of period......... $ 1.00 $ 1.00 $ 1.00
======== ========== ==========
Total return........................... 5.77% 6.19% 5.21%
Ratios/Supplemental data:
Net assets, end of period (000s)....... 988,069 1,075,732 1,662,051
Ratio of expenses to average daily net
assets(1)............................ .30% .30% .29%
Ratio of net investment income to
average daily net assets............. 5.62% 6.01% 4.91%
</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%, 0.41%,
0.41%, 0.41%, 0.41%, 0.41%, 0.42%, 0.40% and 0.38% for the years ended
November 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and 1988,
respectively.
(2) Total return data has not been audited.
3
<PAGE> 28
MUNIFUND DOLLAR SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
-------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------- -------
<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............... .0313 .0301 .0335 .0230 .0199 .0260 .0412
------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends to shareholders from Net
investment income................. (.0313) (.0301) (.0335) (.0230) (.0199) (.0260) (.0412)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= =======
Total return........................ 3.18% 3.06% 3.41% 2.33% 2.02% 2.64% 4.21%
Ratios/Supplemental data:
Net assets, end of period (000s).... 67,387 61,396 6,474 2,785 6,783 1,414 26,418
Ratio of expenses to average daily
net assets(1)..................... .52% .52% .52% .51% .50% .55% .55%
Ratio of net investment income to
average daily net assets.......... 3.13% 3.01% 3.34% 2.28% 1.99% 2.61% 4.15%
<CAPTION>
YEAR ENDED NOVEMBER 30,
-----------------------------
1990 1989 1988(2)
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of
period............................ $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations:
Net investment income............... .0537 .0577 .0469
------- ------- -------
Less distributions:
Dividends to shareholders from Net
investment income................. (.0537) (.0577) (.0469)
------- ------- -------
Net asset value, end of period...... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return........................ 5.52% 5.94% 4.96%
Ratios/Supplemental data:
Net assets, end of period (000s).... 2,187 10,680 18,243
Ratio of expenses to average daily
net assets(1)..................... .55% .55% .54%
Ratio of net investment income to
average daily net assets.......... 5.37% 5.76% 4.66%
</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%, 0.66%,
0.66%, 0.66%, 0.66%, 0.66%, 0.67%, 0.65% and 0.63% for the years ended
November 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and 1988,
respectively.
(2) Total return data has not been audited.
4
<PAGE> 29
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 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 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 "First Tier
Eligible Securities" (as defined by the SEC) and which present minimal credit
risks as, generally, determined by the Fund's investment adviser pursuant to
guidelines approved by the Company's Board of Trustees. First Tier Eligible
Securities consist of the following types of securities: (i) securities that
have short-term debt ratings at the time of purchase in the highest rating
category 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); (ii) securities that are issued by an issuer
(or, in certain cases guaranteed by an issuer) with such ratings; or (iii)
securities without such short-term ratings that have been determined to be of
comparable quality 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> 30
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.
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 full list of the complete 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.
Pursuant to SEC Rule 2a-7 under the 1940 Act, the Fund may not invest more
than 5% of its assets, measured at the time of purchase, in the securities of
any one issuer other than U.S. Government Securities subject to certain
guarantees. The Fund may, however, invest up to 25% of its assets in First Tier
Securities of a single issuer for a period of up to three business days after
the purchase thereof, although the Fund may not make more than one such
investment at a time. The Fund's compliance with the diversification
requirements of SEC Rule 2a-7 will be deemed compliance with the Fund's
diversification restriction above.
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.
6
<PAGE> 31
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
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.
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 a guarantee in accordance with SEC Rule 2a-7.
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
7
<PAGE> 32
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.
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.
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
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
8
<PAGE> 33
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 acceptance of a purchase order by PFPC.
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 accepted 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 accepted after 12:00 noon and
before 2:30 P.M., Eastern time (or orders accepted 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.
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
9
<PAGE> 34
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. In addition, the Fund also may 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 BIMC 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), Veterans 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.
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.
10
<PAGE> 35
INVESTMENT ADVISER AND SUB-ADVISER
BIMC, a wholly-owned, indirect subsidiary of PNC Bank, serves as the Fund's
investment adviser. BIMC is one of the largest U.S. bank managers of mutual
funds, with assets currently under management in excess of $39 billion. 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 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 1600 Market Street, Philadelphia, Pennsylvania 19103.
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. PNC Bank also
serves as the Fund's custodian. BIMC also serves as investment adviser to the
Company's MuniCash portfolio.
PNC Bank Corp., a multi-bank holding company 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, real estate banking, mortgage banking and
asset management.
As investment adviser, BIMC manages the Fund's portfolio and is responsible
for all purchases and sales of the Fund's portfolio securities. BIMC also
maintains certain of the Fund's financial accounts and records and computes the
Fund's net asset value and net income. For the investment advisory services
provided and expenses assumed by it, BIMC is entitled to receive a fee, computed
daily and payable monthly, based on the Fund's average daily net assets. BIMC
and the administrators may from time to time reduce the investment advisory and
administration fees otherwise payable to them or may reimburse the Fund for its
operating expenses. Any fees waived or expenses reimbursed by BIMC and the
administrators with respect to a particular fiscal year are not recoverable. For
the fiscal year ended November 30, 1997, the Fund paid investment advisory fees
aggregating .10% of the Fund's average daily net assets.
PNC Bank, as sub-adviser to the Fund, provided research, credit analysis
and recommendations with respect to the Fund's investments, and supplied certain
computer facilities, personnel and other services. The personnel and facilities
related to these services have been transferred to BIMC and BIMC has assumed PNC
Bank's responsibilities under the sub-advisory agreement. For its sub-advisory
services, PNC Bank was entitled to receive from PIMC an amount equal to 75% of
the investment advisory fee paid by the Fund to PIMC (subject to adjustment in
certain circumstances). The sub-advisory fees paid by PIMC to PNC Bank had no
effect on the investment advisory fees payable by the Fund to PIMC. The services
provided by BIMC 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
PFPC, whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809, and PDI, whose principal business address is Four Falls
Corporate Center, 6th Floor, West Conshohocken, Pennsylvania 19428, serve as
administrators. PFPC is an indirect, wholly-owned subsidiary of PNC Bank Corp.
All of the outstanding stock of PDI is owned by PDI's chief executive officer.
The administrative services provided by the administrators, which are described
11
<PAGE> 36
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, based on the Fund's
average net assets. (For information regarding the administrators' fee 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, 1997, the Fund paid administrative fees
aggregating .10% of its average daily net assets.
PFPC also serves as transfer agent, registrar and dividend disbursing
agent. PFPC's address as transfer agent 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 Fund."
DISTRIBUTOR
PDI, whose principal business address is set forth above under
"Administrators," also serves as distributor of the Fund's shares. 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
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
12
<PAGE> 37
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, 1997, the Fund's total
expenses for Dollar Shares were .52% of the average daily net assets. 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, BIMC 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
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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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.
Dividends are determined in the same manner for each class of shares of the
Fund but may differ in amount because of the difference in the expenses paid by
each class.
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
13
<PAGE> 38
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 applicable to corporations.
Corporate shareholders must also take all exempt-interest dividends into account
in determining certain adjustments for federal alternative minimum tax purposes.
Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.
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. 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.
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.
14
<PAGE> 39
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.
PERFORMANCE
From time to time, the "total return", "yields", "effective yields", and
"tax-equivalent yields" for MuniFund Shares and Dollar Shares may be quoted in
advertisements or in reports to shareholders. Performance quotations are
computed separately for each separate class or sub-class of 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 performance 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 performance 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 performance figures for a particular class or sub-class of
shares represent the Fund's past performance, will fluctuate, and should not be
considered as representative of future results. The performance 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' performance; 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.
15
<PAGE> 40
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 Company commenced operations of
the Fund 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 four classes of shares designated as 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 RELATES PRIMARILY TO THE DOLLAR SHARES OF THE FUND AND
DESCRIBES ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS, AND
OTHER MATTERS RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN SIMILAR
INFORMATION REGARDING MUNICASH MAY OBTAIN A SEPARATE PROSPECTUS DESCRIBING THAT
PORTFOLIO BY CALLING 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.
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."
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.
16
<PAGE> 41
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 42
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 43
- --------------------------------------------------------------------------------
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
Performance.................... 15
Description of Shares and
Miscellaneous................ 16
</TABLE>
PIF-P-023
MUNIFUND
DOLLAR SHARES
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR
TEMPORARY INVESTMENT
[PROVIDENT INSTITUTIONAL FUNDS LOGO]
Prospectus
March 30, 1998
- --------------------------------------------------------------------------------
<PAGE> 44
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
(MuniCash)
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
- -------------- ------------------
<S> <C>
1. Cover Page............................. Cover Page
2. Synopsis............................... Background and Expense
Information
3. Condensed Financial
Information.......................... Financial Highlights;
Yields
4. General Description of
Registrant........................... Cover Page; Financial
Highlights; Investment
Objective and
Policies; Description
of Shares and
Miscellaneous
5. Management of the Fund................. Management of the
Fund; Dividends
6. Capital Stock and Other
Securities........................... Cover Page; Financial
Highlights; Dividends;
Taxes; Description of
Shares and
Miscellaneous
7. Purchase of Securities Being
Offered.............................. Management of the
Fund; Purchase and
Redemption of Shares
8. Redemption or Repurchase............... Purchase and
Redemption of Shares
9. Pending Legal Proceedings.............. Inapplicable
</TABLE>
<PAGE> 45
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 or
visit our web site at www.pif.com.
</TABLE>
Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company that currently offers shares in two
separate investment portfolios. The two classes of 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
("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.
------------------------
BlackRock Institutional Management Corporation ("BIMC"), formerly PNC
Institutional Management Corporation ("PIMC"), serves as the Fund's investment
adviser. 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, 1998, has been filed with the Securities and Exchange Commission ("SEC") and
is available to investors without charge by calling the Fund at 800-821-7432.
The Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). 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, 1998
<PAGE> 46
BACKGROUND AND EXPENSE INFORMATION
Two classes of Shares are offered by this Prospectus: MuniCash 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 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........................ .00% .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.) Absent
fee waivers and expense reimbursements for such period, the estimated "Total
Fund Operating Expenses" for MuniCash Shares and Dollar Shares for the fiscal
year ended November 30, 1997 would have been .41% and .66%, respectively, of the
average daily net assets of the MuniCash portfolio. The investment adviser and
administrators may from time to time waive the advisory and administration fees
otherwise payable to them or may reimburse the Fund for its operating expenses.
The Fund has received a No-Action Letter from the SEC in connection with
receiving credits from its custodian, an affiliate of the Fund's investment
adviser, for certain cash balances held by the custodian. If implemented, such
audits may reduce custodian fees payable by the Fund but may not reduce the
Fund's total operating expense ratio. The foregoing table has not been audited
by the Fund's independent accountants.
2
<PAGE> 47
FINANCIAL HIGHLIGHTS
The following financial highlights for MuniCash Shares and Dollar Shares
have been derived from the financial statements of the Fund for the fiscal year
ended November 30, 1997, 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 incorporated herein and by reference into the Statement of Additional
Information. The tables should be read in conjunction with the financial
statements and related notes incorporated by reference into 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,
--------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
<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.............. .0358 .0350 .0382 .0266 .0235 .0300 .0453
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends to shareholders from
net investment income............ (.0358) (.0350) (.0382) (.0266) (.0235) (.0300) (.0453)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Total return....................... 3.63% 3.56% 3.89% 2.69% 2.38% 3.04% 4.62%
Ratios/Supplemental data:
Net assets, end of period (000s)... 397,681 281,544 321,642 273,439 572,482 857,812 361,280
Ratio of expenses to average daily
net assets(1).................... .18% .18% .18% .19% .20% .20% .20%
Ratio of net investment income to
average daily net assets......... 3.58% 3.50% 3.83% 2.59% 2.36% 2.90% 4.58%
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------
1990 1989 1988(2)
------- ------- --------
<S> <C> <C> <C>
Net asset value, beginning
of period........................ $ 1.00 $ 1.00 $ 1.00
------- ------- --------
Income from investment
operations:
Net investment income.............. .0577 .0613 .0506
------- ------- --------
Less distributions:
Dividends to shareholders from
net investment income............ (.0577) (.0613) (.0506)
------- ------- --------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00
======= ======= ========
Total return....................... 5.93% 6.31% 5.18%
Ratios/Supplemental data:
Net assets, end of period (000s)... 352,614 60,312 37,702
Ratio of expenses to average daily
net assets(1).................... .15% .24% .24%
Ratio of net investment income to
average daily net assets......... 5.76% 6.10% 5.05%
</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%, 0.41%,
0.42%, 0.42%, 0.40%, 0.43%, 0.43%, 0.44% and 0.43% for the years ended
November 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and 1988,
respectively.
(2) Total return data has not been audited.
3
<PAGE> 48
MUNICASH DOLLAR SHARES
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- ------- ------- ------- -------
<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................... .0333 .0325 .0357 .0241 .0210 .0275 .0428
-------- -------- -------- ------- ------- ------- -------
Less distributions:
Dividends to shareholders from net
investment income..................... (.0333) (.0325) (.0357) (.0241) (.0210) (.0275) (.0428)
-------- -------- -------- ------- ------- ------- -------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= ======= ======= =======
Total return............................ 3.38% 3.31% 3.64% 2.44% 2.13% 2.79% 4.37%
Ratios/Supplemental data:
Net assets, end of period (000s)........ 150,089 101,528 101,424 99,688 95,225 81,669 49,582
Ratio of expenses to average daily net
assets(1)............................. .43% .43% .43% .44% .45% .45% .45%
Ratio of net investment income to
average daily net assets.............. 3.33% 3.25% 3.58% 2.34% 2.11% 2.65% 4.33%
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------
1990 1989 1988(2)
------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations:
Net investment income................... .0552 .0588 .0483
------- ------- -------
Less distributions:
Dividends to shareholders from net
investment income..................... (.0552) (.0588) (.0483)
------- ------- -------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return............................ 5.68% 6.06% 4.93%
Ratios/Supplemental data:
Net assets, end of period (000s)........ 52,213 40,102 52,773
Ratio of expenses to average daily net
assets(1)............................. .40% .49% .47%
Ratio of net investment income to
average daily net assets.............. 5.51% 5.87% 4.82%
</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%, 0.66%,
0.67%, 0.67%, 0.65%, 0.68%, 0.68%, 0.69% and 0.66%, for the years ended
November 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and 1988,
respectively.
(2) Total return data has not been audited.
4
<PAGE> 49
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 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, participation, 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,
generally, determined by the Fund's investment adviser pursuant to guidelines
approved by the Company's Board of Trustees. Eligible Securities consist of the
following types of securities: (i) securities that have short-term debt ratings
at the time of purchase in the two highest rating categories 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); (ii) securities that are issued by an issuer (or, in certain cases
guaranteed by an issuer) with such ratings; or (iii) securities without such
short-term ratings that have been determined to be of comparable quality 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> 50
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.
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 full list of the complete 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 obligations the interest on
which is exempt from federal income tax, which may have put options.
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.
Pursuant to SEC Rule 2a-7 under the 1940 Act, the Fund may not invest more
than 5% of its assets, measured at the time of purchase, in the securities of
any one issuer other than U.S. Government Securities, repurchase agreements
collateralized by such securities and securities subject to certain guarantees.
The Fund may, however, invest up to 25% of its assets in First Tier Securities
of a single issuer for a period of up to three business days after the purchase
thereof, although the Fund may not invest more than one such investment at a
time. The Fund's compliance with the diversification requirements of SEC Rule
2a-7 will be deemed compliance with the Fund's diversification restriction
above.
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.
6
<PAGE> 51
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
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.
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 an Eligible
Security, the Fund will require that the issuer's obligation to pay the
principal of the note be backed by a guarantee in accordance with SEC Rule 2a-7.
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
7
<PAGE> 52
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.
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.
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 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
acceptance 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
8
<PAGE> 53
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 accepted 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 accepted after 12:00 noon and
before 2:30 P.M., Eastern time (or orders accepted 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
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 Funds 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 MuniCash
Shares account falls below an average of $100,000 in any particular calendar
month, the account may be
9
<PAGE> 54
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 BIMC as of 12:00 noon and 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 (observed), Independence Day, Labor Day, Columbus Day (observed), Veterans
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.
INVESTMENT ADVISER AND SUB-ADVISER
BIMC, a wholly-owned, indirect subsidiary of PNC Bank, serves as the Fund's
investment adviser. BIMC is one of the largest U.S. bank managers of mutual
funds with assets currently under management in excess of $39 billion. BIMC 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 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 1600 Market Street, Philadelphia, Pennsylvania 19103.
In 1973, Provident National Bank (a predecessor to PNC Bank) commenced advising
the first institutional money market mutual fund--a U.S. dollar-denominated
10
<PAGE> 55
constant net asset value fund--offered in the United States. PNC Bank also
serves as the Fund's custodian. BIMC also serves as investment adviser to the
Company's MuniFund portfolio.
PNC Bank Corp., a multi-bank holding company 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, real estate banking, mortgage banking and
asset management.
As investment adviser, BIMC manages the Fund's portfolio and is responsible
for all purchases and sales of the Fund's portfolio securities. BIMC also
maintains certain of the Fund's financial accounts and records and computes the
Fund's net asset value and net income. For the investment advisory services
provided and expenses assumed by it, BIMC is entitled to receive a fee, computed
daily and payable monthly, based on the Fund's average daily net assets. BIMC
and the administrators may from time to time reduce the investment advisory and
administration fees otherwise payable to them or may reimburse the Fund for its
operating expenses. Any fees waived or expenses reimbursed by BIMC and the
administrators with respect to a particular fiscal year are not recoverable. For
the fiscal year ended November 30, 1997, the Fund paid investment advisory fees
aggregating .10% of the Fund's average daily net assets.
PNC Bank, as sub-adviser to the Fund, provided research, credit analysis
and recommendations with respect to the Fund's investments, and supplied certain
computer facilities, personnel and other services. The personnel and facilities
related to these services have been transferred to BIMC and BIMC has assumed PNC
Bank's responsibilities under the sub-advisory agreement. For its sub-advisory
services, PNC Bank was entitled to receive from PIMC an amount equal to 75% of
the investment advisory fee paid by the Fund to PIMC (subject to adjustment in
certain circumstances). The sub-advisory fees paid by PIMC to PNC Bank had no
effect on the investment advisory fees payable by the Fund to PIMC. The services
provided by BIMC 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
PFPC, whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809, and PDI, whose principal business address is Four Falls
Corporate Center, 6th Floor, West Conshohocken, Pennsylvania 19428, serve as
administrators. PFPC is an indirect, wholly-owned subsidiary of PNC Bank Corp.
All of the outstanding stock of PDI is owned by PDI's chief executive officer.
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, based on the Fund's
average net assets. (For information regarding the administrators' fee waivers
and expense reimbursements, see "Investment Adviser
11
<PAGE> 56
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, 1997, the Fund
paid administrative fees aggregating .10% of its average daily net assets.
PFPC also serves as transfer agent, registrar and dividend disbursing
agent. PFPC's address as transfer agent 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 Fund."
DISTRIBUTOR
PDI, whose principal business address is set forth above under
"Administrators," also serves as distributor of the Fund's shares. 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
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 MuniCash 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 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 subaccounting 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, 1997, the Fund's total
expenses for MuniCash Shares and Dollar Shares were .18% and .43% of the
12
<PAGE> 57
average daily net assets. 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, BIMC 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
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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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.
Dividends are determined in the same manner for each class of shares of the
Fund but may differ in amount because of the difference in the expenses paid by
each class.
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.
13
<PAGE> 58
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 applicable to corporations.
Corporate shareholders must also take all exempt-interest dividends into account
in determining certain adjustments for federal alternative minimum tax purposes.
Shareholders receiving Social Security benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.
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. 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.
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.
14
<PAGE> 59
PERFORMANCE
From time to time, the "total return", "yields", "effective yields" and
"tax-equivalent yields" for MuniCash Shares and Dollar Shares may be quoted in
advertisements or in reports to shareholders. Performance quotations are
computed separately for each separate class or sub-class of 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".
The Fund's performance 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 performance 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 performance figures for a particular class or sub-class of
shares represent the Fund's past performance, will fluctuate, and should not be
considered as representative of future results. The performance 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 performance; 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 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 Company commenced operations of
the Fund on February 23, 1984.
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
15
<PAGE> 60
Board of Trustees has authorized the issuance of four classes of shares
designated as MuniCash, MuniCash Dollar, MuniFund and MuniFund 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 MAY OBTAIN A
SEPARATE PROSPECTUS DESCRIBING THAT PORTFOLIO BY CALLING 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.
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."
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.
16
<PAGE> 61
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 62
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 63
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 64
- --------------------------------------------------------------------------------
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
Performance.................... 15
Description of Shares and
Miscellaneous................ 15
</TABLE>
PIF-P-010
MUNICASH
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR
TEMPORARY INVESTMENT
[MUNICASH LOGO]
Prospectus
March 30, 1998
- --------------------------------------------------------------------------------
<PAGE> 65
MUNIFUND AND MUNICASH
Investment Portfolios Offered By
Municipal Fund for Temporary Investment
Statement of Additional Information
March 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COMPANY............................................................................................. 2
INVESTMENT OBJECTIVE AND POLICIES....................................................................... 2
MUNICIPAL OBLIGATIONS................................................................................... 9
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.......................................................... 12
MANAGEMENT OF THE FUNDS................................................................................. 14
ADDITIONAL INFORMATION CONCERNING TAXES................................................................. 23
DIVIDENDS............................................................................................... 26
ADDITIONAL YIELD INFORMATION............................................................................ 26
ADDITIONAL DESCRIPTION CONCERNING SHARES................................................................ 29
COUNSEL................................................................................................. 30
AUDITORS................................................................................................ 30
MISCELLANEOUS........................................................................................... 30
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, 1998, 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> 66
THE COMPANY
Municipal Fund for Temporary Investment (the "Company") is a no-load,
diversified, open-end investment company presently offering two separate
investment portfolios--MuniFund and MuniCash (individually, a "Fund";
collectively, the "Funds").
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 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,
BlackRock Institutional Management Corporation ("BIMC"), 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, BIMC seeks to obtain the
best net price and the most favorable execution of orders. To the extent that
the execution and price
-2-
<PAGE> 67
offered by more than one dealer are comparable, BIMC 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 BIMC 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 BIMC. 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 BIMC 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, BIMC 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 BIMC, 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> 68
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 BIMC, 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 long-term 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> 69
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> 70
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> 71
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> 72
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> 73
12. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition or reorganization.
Pursuant to SEC Rule 2a-7 under the 1940 Act, each Fund may not invest
more than 5% of its assets, measured at the time of purchase, in the securities
of any one issuer other than U.S. Government securities, repurchase agreements
collateralized by such securities and securities subject to certain guarantees.
Each Fund may, however, invest up to 25% of its assets in First Tier Securities
of a single issuer for a period of up to three business days after the purchase
thereof, although a Fund may not make more than one such investment at a time. A
Fund's compliance with the diversification requirements of SEC Rule 2a-7 will be
deemed compliance with the Fund's diversification restriction above.
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.
The Fund will not invest more than 25% of its assets in private
activity bonds involving privately-operated facilities in the same industry.
This policy may be changed without the affirmative vote of the holders of a
majority of a Fund's outstanding shares.
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
-9-
<PAGE> 74
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 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
-10-
<PAGE> 75
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 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."
-11-
<PAGE> 76
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 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. A signature guarantee may be obtained from a domestic bank
or trust company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchange Medallion Signature Program
(MSP) and the New York Stock Exchange, Inc. Medallion Securities Program.
Signature guarantees that are not a part of these programs will not be accepted.
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> 77
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 each Fund's Prospectus, net asset value per share of each
class of shares in a particular Fund is calculated by adding the value of all of
the portfolio securities and other assets belonging to a Fund that are
attributable to a class, subtracting the Fund's liabilities attributable to the
class, and dividing the result by the number of the outstanding shares in the
class. "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 allocated among the classes of shares in the Fund in proportion to
the shares outstanding in each class, and 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 portfolios, and expenses of a class are
charged to that class. 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.
-13-
<PAGE> 78
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
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, ages,
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 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 a director of the International Dollar Reserve Fund ("IDR").
Each of the Company's officers holds like offices with Temp and Fed.
In addition, Mr.
-14-
<PAGE> 79
Pepper is Chairman of the Board of Cal Muni; and Mr. Fortune is President and
Chairman of the Boards of Chestnut and ISIS.
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
<S> <C> <C>
G. NICHOLAS BECKWITH, III Trustee President and Chief Executive Officer,
Beckwith Machinery Company Beckwith Machinery Company; Chairman of the
Post Office Box 8718 Board of Trustees, Shadyside Hospital; Vice
Pittsburgh, PA 15221 Chairman of the Board of Trustees, Shadyside
Age 53 Academy; Trustee, Claude Washington Benedum
Foundation; Trustee, Chatham College.
PHILIP E. COLDWELL(2,3,4) Trustee Economic Consultant; Chairman, Coldwell
Coldwell Financial Financial Consultants; Member of the Board
Consultants of Governors of the Federal Reserve System,
3330 Southwestern Blvd. 1974 to 1980; President, Federal Reserve
Dallas, TX 75225 Bank of Dallas, 1968 to 1974; Director,
Age: 75 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; Former Chairman,
2920 Ritter Lane President and Chief Executive Officer of
Allentown, PA 18104 Associated Electric & Gas Insurance Services
Age: 81 Limited 1984 to 1993; Member of the
Financial Executives Institute and American
Institute of Certified Public Accountants.
JERROLD B. HARRIS Trustee President and Chief
706 Haldane Drive Executive Officer, VWR
Kennett Square, PA 19348 Corporation 1990 to
Age 55 present.
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,
Age: 56 Board of Education, School
District of Philadelphia, 1983 to
1988.
</TABLE>
-15-
<PAGE> 80
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
- ---------------- ------------- -----------------------
<S> <C> <C>
G. WILLING PEPPER(1,2) Chairman of Retired; Chairman of the
128 Springton Lake Road the Board Board, The Institute
Media, PA 19063 and Trustee for Cancer Research until 1979;
Age: 89 Director, Philadelphia National
Bank until 1978; President, Scott
Paper Company, 1971 to 1973;
Chairman of the Board, Specialty
Composites Corp. until May 1984.
THOMAS H. NEVIN President President and Chief Investment
Bellevue Park Corporate Center Officer, BIMC.
400 Bellevue Parkway
Wilmington, DE 19809
Age: 50
LISA M. BUONO Treasurer Vice President, Provident
Bellevue Park Corporate Center Advisols, Inc. since 1997;
400 Bellevue Parkway prior hereto, Director of
Wilmington, DE 19809 Finance and Compliance, PDI
Age: 33 (1993 - 1996); Field Supervisor,
National Association of
Securities Dealers, Inc.
(1987 - 1993).
W. BRUCE MCCONNEL, IIT Secretary Partner of the law firm of
1345 Chestnut Street Drinker Biddle & Reath, LLP
PNB Building Philadelphia, Pennsylvania.
Philadelphia, PA 19107-3496
Age: 55
</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.
EACH OF THE INVESTMENT COMPANIES NAMED ABOVE RECEIVES VARIOUS ADVISORY
AND OTHER SERVICES FROM BIMC. OF THE ABOVE-MENTIONED FUNDS, PDI PROVIDES
DISTRIBUTION SERVICES TO TEMP, FED, CAL MUNI, NEW YORK MUNI AND IDR. OF THE
ABOVE-MENTIONED FUNDS, THE ADMINISTRATORS PROVIDE ADMINISTRATION SERVICES TO
TEMP, FED, CAL MUNI, NEW YORK MUNI AND IDR.
For the fiscal year ended November 30, 1997, the Company paid a total
of $128,840 to its officers and trustees in all capacities, of which $83,733 was
allocated to MuniFund and $45,107 was allocated to MuniCash. In addition, the
Company contributed $3,443 for its last fiscal year to its retirement plan for
employees, of which $2,072 was allocated to MuniFund and $1,371 was allocated to
MuniCash. Drinker Biddle & Reath LLP, of which Mr. McConnell is a partner,
receives legal fees as counsel to the Company. No employee of PDI, BIMC, 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.
-16-
<PAGE> 81
By virtue of the responsibilities assumed by PDI, PFPC, BIMC, and PNC
Bank under their respective agreements with the Company, the Company itself
requires no employees.
The table below sets forth the compensation actually received from the
Fund Complex of which the Company is a part by the trustees for the fiscal year
ended November 30, 1997:
<TABLE>
<CAPTION>
Total
Compensation
Pension or from Registrant
Retirement Estimated and Fund
Aggregate Benefits Received Annual Complex(1)
Compensation as Part of Benefits Paid to
Name of Person, Position from Registrant Fund Expenses Upon Retirement Trustees
------------------------ --------------- ----------------- --------------- --------
<S> <C> <C> <C> <C>
G. Nicholas Beckwith, III, Trustee $13,500 N/A N/A 44,000(3)(2)
Philip E. Coldwell, Trustee 13,500 N/A N/A 44,000(3)(2)
Robert R. Fortune, Trustee 13,500 N/A N/A 63,100(5)(2)
Jerrold B. Harris, Trustee 13,500 N/A N/A 44,000(3)(2)
Rodney D. Johnson, Trustee 13,500 N/A N/A 56,500(5)(2)
G. Willing Pepper,(3) Trustee and 22,500 N/A N/A 82,250(6)(2)
Chairman
</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 the trustee served on
within the Fund Complex during the fiscal year ended October 31, 1997.
(3.) Mr. Pepper was President of the Company, Temp, Muni and Cal Muni
during the fiscal year or period ended October 31, 1997.
-17-
<PAGE> 82
INVESTMENT ADVISER
The advisory services provided by BIMC are described in the
Funds' Prospectuses. With respect to MuniFund and MuniCash, for the advisory
services provided and expenses assumed by it, BIMC 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>
BIMC 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.
For the fiscal years ended November 30, 1995, 1996 and 1997, MuniFund
paid fees for advisory services aggregating $800,406, $752,680, and $717,070,
respectively. For the same periods, BIMC waived payment of additional advisory
fees totalling $540,756, $545,635 and $497,286, respectively, although the
expense limitations then in effect were not exceeded. For the fiscal years ended
November 30, 1995, 1996 and 1997, MuniCash paid fees for advisory services
aggregating $231,399, $238,520 and $268,834, respectively. For the same periods,
BIMC waived payment of additional advisory fees totalling $424,828, $488,851 and
$534,947, respectively,
-18-
<PAGE> 83
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. BIMC, 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 BIMC, PFPC and PNC Bank from continuing to
perform such services for the Funds. If BIMC, 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 as required by the 1940 Act.
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
-19-
<PAGE> 84
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 on the same basis as BIMC's
advisory fee set forth above. As stated in their Prospectuses, each
administrator 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, 1997, the Company paid fees (net
of waivers) for administration services aggregating $717,070 with respect to
MuniFund and $268,834 with respect to MuniCash. For the same fiscal year, PFPC
and PDI voluntarily waived administration fees aggregating $497,286 with respect
to MuniFund and $534,947 with respect to MuniCash. For the fiscal year ended
November 30, 1996, the Company paid fees (net of waivers) for administration
services aggregating $752,680 with respect to MuniFund and $238,520 with respect
to MuniCash. For the same fiscal year, PFPC and PDI voluntarily waived
administration fees aggregating $545,635 with respect to MuniFund and $488,851
with respect to MuniCash. For the fiscal year ended November 30, 1995, the
Company paid fees (net of waivers) for administration services 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.
PFPC, a wholly owned, indirect subsidiary of PNC Bank Corp. provides
administrative services to certain investment companies which are distributed by
PDI. PFPC and PDI also serve as administrators of the Company's Intermediate
Municipal Fund Portfolio.
-20-
<PAGE> 85
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 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 Four Falls Corporate Center, 6th Floor, West
Conshohocken, Pennsylvania 19428.
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
-21-
<PAGE> 86
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.
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 chosen by PNC
Bank.
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 1600 Market Street, Philadelphia, Pennsylvania 19103.
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
-22-
<PAGE> 87
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 customers,
if required by law; and, (ix) other similar services if requested by the Funds.
For the fiscal year ended November 30, 1997, the Company paid $436,893 in
servicing fees for the Portfolios. $150,996 was paid by MuniFund, .18% of which
was paid to affiliates of the Company's adviser. $285,897 was paid by MuniCash,
4.01% of which was paid to an affiliate of the Company's adviser.
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
-23-
<PAGE> 88
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 registration fees,
rating agency 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 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 Internal Revenue Code of 1986, as amended
(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.
-24-
<PAGE> 89
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
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.
Although each Fund does not expect to realize long-term capital gains,
any net realized long-term capital gains will be
-25-
<PAGE> 90
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 (20% or 28%, as applicable), 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, although 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 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 gross sale proceeds paid to any
shareholder who has failed to provide a correct tax identification number in the
manner required, who is subject to backup withholding for prior failure to
properly include on his return payments of taxable interest or dividends, or who
has failed to certify to the Fund when required to do so that he is not
subject to backup withholding or that he 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
-26-
<PAGE> 91
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.
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 PERFORMANCE INFORMATION
The "total return," "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,
-27-
<PAGE> 92
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 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, 1997, the yield, effective
yield, and tax-equivalent yield for MuniFund shares were 3.64%, 3.70%, and
5.06%, respectively; the yield, effective yield, and tax-equivalent yield on
MuniFund Dollar shares were 3.39%, 3.45%, and 4.71%, 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 3.50% and 3.56%, respectively; the yield and
effective yield on MuniFund Dollar shares would have been 3.25% and 3.30%,
respectively.
For the same periods, the yield, effective yield, and tax-equivalent
yield for MuniCash shares were 3.81%, 3.88% and 5.29%, respectively; the yield,
effective yield, and tax-equivalent yield for MuniCash Dollar shares were
3.56%, 3.62% and 4.94%, 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.
PERFORMANCE WILL FLUCTUATE, AND ANY QUOTATION OF PERFORMANCE SHOULD NOT
BE CONSIDERED AS REPRESENTATIVE OF THE FUTURE PERFORMANCE OF THE FUND. Since
performance fluctuates, performance 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 is generally a function of kind and quality of the investments
held
-28-
<PAGE> 93
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 performance calculations; such fees, if
charged, would reduce the actual performance 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
(including materials that describe general principles of investing,
questionnaires designed to help create a personal financial profile, worksheets
used to project savings needs based on certain assumptions and action plans
offering investment alternatives), 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, and hypothetical investment returns based on certain assumptions.
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. In addition, selected indices may be used to illustrate
historical performance of select asset classes. 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
-29-
<PAGE> 94
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.
Materials may include lists of representative clients of the Funds'
investment adviser, may include discussions of other products or services, may
contain information regarding average weighted maturity or other maturity
characteristics, and may contain information regarding the background,
expertise, etc. of the investment adviser or of a Fund's portfolio manager.
From time to time in advertisements, sales literature and
communications to shareholders, the Funds may compare their total returns to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, such
data is found in IBC/Donoghue's Money Fund Report and reports prepared by Lipper
Analytical Services, Inc. Total return is the change in value of an investment
in a Fund over a particular period, assuming that all distributions have been
reinvested. Such rankings represent the Funds' past performance and should not
be considered as representative of future results.
The following information has been provided by the Funds' distributor:
In managing each Fund's portfolio, the investment adviser utilizes a
"pure and simple" approach, which may include disciplined research,
stringent credit standards and careful management of maturities.
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 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 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
-30-
<PAGE> 95
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 LLP, Philadelphia National Bank Building, 1345
Chestnut Street, Philadelphia, Pennsylvania 19107-3496, of which W. Bruce
McConnel, 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 Financial Statements and the Financial Highlights of the Company,
which are incorporated by reference into this Statement of Additional
Information, have been audited by KPMG Peat Marwick LLP, independent certified
public accountants. KPMG Peat Marwick LLP has offices at 1600 Market Street,
Philadelphia, Pennsylvania 19103.
-31-
<PAGE> 96
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 9, 1998, 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:
<TABLE>
<CAPTION>
Client Percentage
- ------ ----------
<S> <C>
Chase Manhattan Bank NA 19.32%
Administrative Services (IFG)
AIS Section 31-270, 33rd Floor
1211 Avenue Of The Americas
New York, NY 10036
Chase Manhattan Bank 17.38%
GSS As Agent
4 New York Plaza, 9th Floor
New York, NY 10004
Bankers Trust Company 5.18%
Sunshine State Government Commission
Dade County FL/Ins Reserve
4 Albany Street, 10th Floor
New York, NY 10006
</TABLE>
On March 9, 1998, 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:
-32-
<PAGE> 97
<TABLE>
<CAPTION>
Client Percentage
- ------ ----------
<S> <C>
Laird Norton Trust Company 11.91%
Norton Building, 16th Floor
801 2nd Avenue
Seattle, WA 98104
PCN Bank 7.85%
Saxon & Company/Cash Advisor
200 Stevens Drive
Lester, PA 19113
BHC Securities Inc. 8.09%
2005 Market Street
One Commerce Square, 11th Floor
Philadelphia, PA 19103
Computer Associates Intl. 12.71%
1 Computer Associates Plaza
Islandia, NY 11788
USAA Brokerage Services 12.87%
B5B Bldg
9800 Fredericksburgh Rd.
San Antonio, TX 78230
</TABLE>
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
-33-
<PAGE> 98
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 Company's Annual Report to Shareholders for the fiscal year ended
November 30, 1997 has been filed with the Securities and Exchange Commission.
The financial statements included in the Annual Report (the "Financial
Statements") for the fiscal year ended November 30, 1997 have been audited by
the Company's independent accountants, KPMG Peat Marwick LLP, whose report
thereon also appears in such Annual Report and is incorporated herein by
reference. The Financial Statements and the Financial Highlights in such Annual
Report in each Prospectus have been included herein in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
-34-
<PAGE> 99
APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's ("S&P") commercial paper rating is a
current assessment of the likelihood of timely payment of debt having an
original maturity of no more than 365 days. The following summarizes the rating
categories used by Standard and Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category
indicating that the obligor's capacity to meet its financial commitment is
strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations rated "A-1". However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
"B" - Obligations are regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and
are dependent on favorable business, financial, and economic conditions for the
obligor to meet its financial obligation.
"D" - Obligations are in payment default. The "D" rating
category is used when payments on an obligation 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. The "D" rating will also be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually senior debt obligations not having an original
maturity in excess of one year, unless explicitly noted. The following
summarizes the rating categories used by Moody's for commercial paper:
A-1
<PAGE> 100
"Prime-1" - Issuers (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong
ability for repayment of senior short-term debt 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, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an
acceptable ability for repayment of senior short-term debt obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuers do 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 the 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.
A-2
<PAGE> 101
Although ongoing funding needs may enlarge total financing requirements, access
to capital markets is good. Risk factors are small.
"D-3" - Debt possesses satisfactory liquidity and other
protection factors qualify issues 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 insure 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 IBCA short-term ratings apply to debt obligations that
have time horizons of less than 12 months for most obligations, or up to three
years for U.S. public finance securities. The following summarizes the rating
categories used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This
designation indicates the strongest capacity for timely payment of financial
commitments and may have an added "+" to denote any exceptionally strong credit
feature.
"F2" - Securities possess good credit quality. This
designation indicates a satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of
securities rated "F1".
"F3" - Securities possess fair credit quality. This
designation indicates that the capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.
"B" - Securities possess speculative credit quality. this
designation indicates minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.
"C" - Securities possess high default risk. This designation
indicates that the capacity for meeting financial commitments is solely reliant
upon a sustained, favorable business and economic environment.
"D" - Securities are in actual or imminent payment default.
Thomson BankWatch short-term ratings assess the likelihood of
an untimely payment of principal and interest of
A-3
<PAGE> 102
debt instruments with original maturities of one year or less. The following
summarizes the ratings used by Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's
highest category and indicates a very high likelihood that principal and
interest will be paid on a timely basis.
"TBW-2" - This designation represents Thomson BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment 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 Thomson BankWatch's
lowest investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.
"TBW-4" - This designation represents Thomson BankWatch's
lowest rating category and indicates that the obligation is regarded as
non-investment grade and therefore speculative.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating
assigned by Standard & Poor's. The obligor's capacity to meet its financial
commitment on the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
A-4
<PAGE> 103
"BB," "B," "CCC," "CC" and "C" - Debt is regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - Debt is less vulnerable to non-payment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
"B" - Debt is more vulnerable to non-payment than obligations
rated "BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial or economic conditions
will likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
"CCC" - Debt is currently vulnerable to non-payment, and is
dependent upon favorable business, financial and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial or economic conditions, the obligor is not likely to
have the capacity to meet its financial commitment on the obligation.
"CC" - An obligation rated "CC" is currently highly vulnerable
to non-payment.
"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
"D" - An obligation rated "D" is in payment default. This
rating is used when payments on an obligation are not made on the date due, even
if the applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. "D" rating is also used upon the
filing of a bankruptcy petition or the taking of similar action if payments on
an obligation 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. The absence of an "r"
symbol should not be taken as an indication
A-5
<PAGE> 104
that an obligation will exhibit no volatility or variability in total return.
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 are considered as 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 speculative elements; "B" indicates a general lack of characteristics
of desirable investment; "Caa" are of 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-6
<PAGE> 105
probable credit stature upon completion of construction or elimination of basis
of condition.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which
Moody's believes possess the strongest investment attributes are designated by
the symbols, Aa1, A1, Baa1, Ba1 and B1.
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 ratings used by Fitch IBCA for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the
highest credit quality. These ratings denote the lowest expectation of
investment risk and are assigned only in case of exceptionally strong capacity
for timely payment of financial commitments. This capacity is very unlikely to
be adversely affected by foreseeable events.
"AA" - Bonds considered to be investment grade and of very
high credit quality. These ratings denote a very low
A-7
<PAGE> 106
expectation of investment risk and indicate very strong capacity for timely
payment of financial commitments. This capacity is not significantly vulnerable
to foreseeable events.
"A" - Bonds considered to be investment grade and of high
credit quality. These ratings denote a low expectation of investment risk and
indicate strong capacity for timely payment of financial commitments. This
capacity may, nevertheless, be more vulnerable to adverse changes in
circumstances or in economic conditions than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of good
credit quality. These ratings denote that there is currently a low expectation
of investment risk. The capacity for timely payment of financial commitments is
adequate, but adverse circumstances and in economic conditions are more likely
to impair this category.
"BB" - Bonds considered to be speculative. These ratings
indicate that there is a possibility of credit risk developing, particularly as
the result of adverse economic changes over time; however, business or financial
alternatives may be available to allow financial commitments to be met.
Securities rated in this category are not investment grade.
"B" - Bonds are considered highly speculative. these ratings
indicate that significant credit risk is present, but a limited margin of safety
remains. Financial commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable business and
economic environment.
"CCC", "CC", "C" - Bonds have high default risk. Capacity for
meeting financial commitments is reliant upon sustained, favorable business or
economic developments. "CC" ratings indicate that default of some kind appears
probable, and "C" ratings signal imminent default.
"DDD," "DD" and "D" - Bonds are in default. Securities
are not meeting obligations and are extremely speculative. "DDD"
designates the highest potential for recovery on these
securities, and "D" represents the lowest potential for recovery.
To provide more detailed indications of credit quality, the
Fitch IBCA ratings from and including "AA" to "B" may be modified by the
addition of a plus (+) or minus (-) sign to show relative standing within these
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:
A-8
<PAGE> 107
"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 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 a strong
capacity to pay principal and interest. Those issues determined to possess very
strong characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.
"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.
A-9
<PAGE> 108
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:
"MIG-1"/"VMIG-1" - This designation denotes 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" - This designation denotes high quality, with
margins of protection ample although not so large as in the preceding group.
"MIG-3"/"VMIG-3" - This designation denotes 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" - This designation denotes adequate quality,
carrying specific risk but having protection commonly regarded as required of an
investment security and not distinctly or predominantly speculative.
"SG" - This designation denotes speculative quality and lack
of margins of protection.
Fitch IBCA and Duff & Phelps use the short-term ratings
described under Commercial Paper Ratings for municipal notes.
A-10
<PAGE> 109
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A hereof:
Financial Highlights for:
- MuniFund Shares
- MuniFund Dollar Shares
- MuniCash Shares
- MuniCash Dollar Shares
(2) Incorporated by reference in Part B hereof:
- The audited financial statements and related
notes thereto as well as the auditor's report
thereon for each of the MuniFund Portfolio,
MuniCash Portfolio for the fiscal year ended
November 30, 1997 are incorporated herein by
reference to the Annual Report to Shareholders
as filed with Securities and Exchange Commis-
sion (the "SEC") on January 27, 1998 pursuant to
Rule 30b2- 1 of the Investment Company Act of
1940 (the "1940 Act").
(b) Exhibits:
(1) Declaration of Trust dated March 30, 1981 is
incorporated herein by reference to Exhibit (1) of
Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A, filed with the SEC
on April 16, 1981.
(2) Amended and Restated Code of Regulations dated as of
August 13, 1993 is incorporated herein by reference
to Exhibit (2) of Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A,
filed with the SEC on March 23, 1994.
(3) None.
(4)(a) Specimen copy of share certificate for MuniFund units
of beneficial interest in MuniFund is incorporated
herein by reference to Exhibit (4)
<PAGE> 110
of Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A, filed on January 27,
1983.
(b) Specimen copy of share certificate for MuniCash units of
beneficial interest in MuniCash is incorporated herein by
reference to Exhibit (4)(c) of Post-Effective Amendment No.
4 to Registrant's Registration Statement on Form N-1A,
filed with the SEC on January 31, 1986.
(c) Specimen copy of share certificate for Dollar units of
beneficial interest in MuniFund is incorporated herein by
reference to Exhibit (4)(d) of Post-Effective Amendment No.
9 to Registrant's Registration Statement on Form N-1A,
filed with the SEC on January 31, 1986.
(d) Specimen copy of share certificate for Dollar units of
beneficial interest in MuniCash is incorporated herein by
reference to Exhibit (4)(f) of Post-Effective Amendment No.
4 to Registrant's Registration Statement on Form N-1A,
filed with the SEC on January 31, 1986.
(5)(a) Investment Advisory Agreement between Registrant and
Provident Institutional Management Corporation dated March
11, 1987 relating to Registrant's MuniFund and MuniCash
portfolios is incorporated herein by reference to Exhibit
(5)(a) of Post-Effective Amendment No. 11 to Registrant's
Registration Statement on Form N-1A, filed with the SEC on
March 30, 1988.
-2-
<PAGE> 111
(b) Sub-Advisory Agreement between PNC Institutional Management
Corporation and PNC Bank, N.A. dated March 11, 1987
relating to Registrant's MuniFund and MuniCash portfolios
is incorporated herein by reference to Exhibit (5)(c) of
Post-Effective Amendment No. 11 to Registrant's
Registration Statement on Form N-1A, filed with the SEC on
March 30, 1988.
(6) Distribution Agreement between Registrant and Provident
Distributors, Inc. dated as of January 31, 1994 relating to
Registrant's MuniFund and MuniCash portfolios is incorporated
herein by reference to Exhibit (6) of Post-Effective Amendment
No. 19 to Registrant's Registration Statement on Form N-1A,
filed with the SEC on March 23, 1994.
(7) Municipal Fund for Temporary Investment Fund Office Retirement
Profit-Sharing Plan and Trust Agreement as approved Fall of
1990 is incorporated herein by reference to Exhibit (7) of
Post-Effective Amendment No. 49 to Temporary Investment Fund,
Inc.'s Registration Statement on Form N-1A, filed with the SEC
on December 12, 1990.
(8)(a) Custodian Agreement between Registrant and PNC Bank,
National Association dated June 1, 1989 is incorporated
herein by reference to Exhibit (8)(a) of Post-Effective
Amendment No. 14 to Registrant's Registration Statement on
Form N-1A, filed with the SEC on February 27, 1990.
(b) Custodian Fee Agreement between Registrant and PNC Bank,
National Association dated June 1, 1989 is incorporated
herein by reference to Exhibit (8)(b) of Post-Effective
Amendment No. 14 to Registrant's Registration Statement on
Form N-1A, filed with the SEC on February 27, 1990.
(9)(a) Administration Agreement dated as of January 18, 1993
between Registrant and Provident Distributors, Inc. and
PFPC Inc. is incorporated herein by reference to Exhibit
9(b) of Post-Effective Amendment No. 18 to Registrant's
Registration Statement on Form N-1A, filed with the SEC on
January 15, 1993.
(b) Transfer Agency Agreement between Registrant and PFPC Inc.
dated June 1, 1989 is incorporated herein by reference to
Exhibit (9)(d) of
-3-
<PAGE> 112
Post-Effective Amendment No. 14 to Registrant's
Registration Statement on Form N-1A, filed with
the SEC on February 27, 1990.
(c) Transfer Agency Fee Agreement between Registrant and PFPC
Inc. dated June 1, 1989 is incorporated herein by reference
to Exhibit (9)(e) of Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A, filed
with the SEC on February 27, 1990.
(d) Sub-Transfer Agency Agreement between PNC Bank, National
Association and The Northern Trust Company dated November
18, 1987 is incorporated herein by reference to Exhibit
(8)(g) of Post-Effective Amendment No. 11 to Registrant's
Registration Statement on Form N-1A, filed with the SEC
on March 30, 1988.
(e) Revised Shareholder Servicing Agreement approved by the
Board on June 6, 1997.
(10) Opinion and Consent of Counsel.
(11) Consent of KPMG Peat Marwick LLP.
(12) None.
(13) None.
(14) None.
(15) None.
(16) Schedules of Performance Computations are incorporated
herein by reference to Exhibit (16) of Post-Effective
Amendment No. 15 to Registrant's Registration Statement
(No. 2-64358) relating to its MuniFund portfolio, Exhibit
(16) of Post-Effective Amendment No. 9 to Registrant's
Registration Statement (No. 2-87284) relating to its
MuniCash portfolio, each filed with the SEC on March 7,
1991.
(17) Financial Data Schedules for the fiscal year ended
November 30, 1997.
(18) None.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
-4-
<PAGE> 113
Registrant is controlled by its Board of Trustees. Each of Registrant's
trustees serves on the board of directors/trustees of certain other registered
investment companies. (See "Management of the Fund -- Trustees and Officers" in
Part B hereof.)
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following information is as of March 9, 1998:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
- -------------- --------------
<S> <C>
MuniFund Shares................................................................. 197
MuniFund Dollar Shares.......................................................... 21
MuniCash Shares................................................................. 78
MuniCash Dollar Shares.......................................................... 25
</TABLE>
ITEM 27. INDEMNIFICATION
Indemnification of Registrant's Principal Underwriter, Custodian and
Transfer Agent against certain stated liabilities is provided for in Section 6
of the Distribution Agreement, incorporated herein by reference as Exhibit (6),
and in Section 22 of the Custodian Agreement and in Section 17 of the Transfer
Agency Agreement, incorporated herein by reference as Exhibits (8)(a) and
(9)(d), respectively. Registrant has obtained from a major insurance carrier a
directors' and officers' liability policy covering certain types of errors and
omissions. In addition, Section 2 of Article X of Registrant's Declaration of
Trust dated March 30, 1981, incorporated herein by reference as Exhibit (1),
provides as follows:
10.2 Indemnification of Trustees, Representatives and Employees.
The Trust shall indemnify each of its Trustees against all
liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees) reasonably incurred by him
in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, in
which he may be involved or with which he may be threatened,
while as a Trustee or thereafter, by reason of his being or
having been such a Trustee except with respect to any matter
as to which he shall have been adjudicated to have acted in
bad faith, willful misfeasance, gross negligence or
-5-
<PAGE> 114
reckless disregard of his duties; provided, however, that as
to any matter disposed of by a compromise payment by such
person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other
expenses shall be provided unless the Trust shall have
received a written opinion from independent legal counsel
approved by the Trustees to the effect that if either the
matter of willful misfeasance, gross negligence or reckless
disregard of duty, or the matter of bad faith had been
adjudicated, it would in his opinion have been adjudicated
in favor of such person. The rights accruing to any person
under these provisions shall not exclude any other right to
which he may be lawfully entitled; provided that no person
may satisfy any right of indemnity or reimbursement except
out of the property of the Trust. The Trustees may make
advance payments in connection with the indemnification
under this Section 10.2, provided that the indemnified
person shall have given a written undertaking to reimburse
the Trust in the event it is subsequently determined that he
is not entitled to such indemnification.
The Trustees shall have the power, but not the duty, in their sole
discretion, to indemnify representatives and employees of the Trust to the same
extent that Trustees are entitled to indemnification hereunder.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such trustee, officer
or controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
BIMC performs investment advisory services for Registrant and certain
other investment companies.
-6-
<PAGE> 115
(a) To Registrant's knowledge, none of the directors or officers of
BIMC or PNC Bank, except those set forth below, is, or has been at any time
during Registrant's past two fiscal years, engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers and certain executives of BIMC and PNC Bank also hold
various positions with, and engage in business for, PNC Bank Corp, which owns
all the outstanding stock of BIMC and PNC Bank, or other subsidiaries of PNC
Bank Corp. Set forth below are the names and principal businesses of the
directors and certain executives of BIMC and PNC Bank who are engaged in any
other business, profession, vocation or employment of a substantial nature.
(b) The information required by this Item 28 with respect to each
director, officer and partner of BIMC is incorporated by reference to Schedules
A and D of Form ADV and Schedules A and D filed by BIMC with the Securities and
Exchange Commission pursuant to the Investment Advisers Act of 1940 (SEC File
No. 801-13304).
(c) Set forth below are the names and principal businesses of the
directors and certain executives of PNC Bank who are engaged in any other
business, profession, vocation or employment of a substantial nature.
PNC BANK, NATIONAL ASSOCIATION
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- -------- ---- -------------------------- -----------
<S> <C> <C> <C>
Director B.R. Brown Chairman, President and C.E.O. Coal
of Consol, Inc.
Consol Plaza
Pittsburgh, PA 15241
Director Constance E. Clayton Allegheny University of the Medical
Health Sciences
Belret Building
1505 Race St. - Mail Stop 660
Philadelphia, PA 19102
Director Eberhard Faber IV Chairman and C.E.O. Manufacturing
E.F.L., Inc.
</TABLE>
-7-
<PAGE> 116
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- -------- ---- -------------------------- -----------
<S> <C> <C> <C>
450 Hedge Road
P.O. Box 49
Bearcreek, PA 18602
Director Dr. Stuart Heydt President and C.E.O. Medical
Penn State Geisinger Health System
2601 Market Place
Commerce Court, Suite 300
Harrisburg, PA 17110-9603
Director Edward P. Junker, III Retired Vice Chairman Banking
PNC Bank, N.A.
901 State Street
Erie, PA 16553
Director Thomas A. McConomy Chairman, Calgon Carbon Manufacturing
Corporation
413 Woodland Road
Sewickley, PA 15143
Director Thomas H. O'Brien Chairman and CEO Banking
PNC Bank, Corp.
249 Fifth Avenue
Pittsburgh, PA 15265
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Select Medical Corporation, Inc.
4718 Old Gettysburg Rd.
P.O. Box 2034
Mechanicsburg, PA 17055
Director Robert C. Robb, Jr. President, Lewis, Eckert, Robb Financial
& Company Management
425 One Plymouth Meeting Consultants
Plymouth Meeting, PA 19462
Director James E. Rohr President and C.E.O. Banking
PNC Bank, National Association
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Daniel M. Rooney President, Pittsburgh Steelers Football
Football Club of the National
Football League
300 Stadium Circle
</TABLE>
-8-
<PAGE> 117
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- -------- ---- -------------------------- -----------
<S> <C> <C> <C>
Pittsburgh, PA 15212
Director Seth E. Schofield Chairman Security
Base International Consulting
1479 Painters Run Road
Pittsburgh, PA 15241
</TABLE>
-9-
<PAGE> 118
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
Name Position with PNC Bank
---- ----------------------
<S> <C>
James C. Altman Senior Vice President
Edward V. Arbaugh, III Senior Vice President
Robert Jones Arnold Senior Vice President
James N. Atteberry Senior Vice President
Lila M. Bachelier Senior Vice President
James C. Baker Senior Vice President
James R. Bartholomew Senior Vice President
Peter R. Begg Senior Vice President
Constance A. Bentsen Senior Vice President
Donald G. Berdine Senior Vice President
Ben Berzin, Jr. Senior Vice President
James H. Best Senior Vice President
Paul A. Best Senior Vice President
Michael J. Beyer Senior Vice President
R. Bruce Bickel Senior Vice President
Karen E. Blair Senior Vice President
Ronald R. Blankenbuehler Senior Vice President
Eva T. Blum Senior Vice President
Ronald L. Bovill Senior Vice President
Dennis P. Brenckle Regional President, Central PA Market
George Brikis Executive Vice President
Michael Brundage Senior Vice President
Donna L. Burge Senior Vice President
Jane Wilson Burke Senior Vice President
Douglas H. Burr Senior Vice President
David D. Burrow Senior Vice President
Anthony J. Cacciatore Senior Vice President
Richard C. Caldwell Executive Vice President
Craig T. Campbell Senior Vice President
J. Richard Carnall Executive Vice President
Donald R. Carroll Senior Vice President
Edward V. Caruso Executive Vice President
Kevin J. Cecil Senior Vice President
Rhonda S. Chatzkel Senior Vice President
Chaomei Chen Senior Vice President
Sandra Chickletti Assistant Secretary
Thomas P. Ciak Assistant Secretary
Peter K. Classen Regional President, Northeast, PA Market
Andra D. Cochran Senior Vice President
William Harvey Coggin Senior Vice President
Sharon Coghlan Coordinating Market Chief Counsel,
Philadelphia
John F. Colligan Senior Vice President
James P. Conley Senior Vice President
C. David Cook Senior Vice President
Robert F. Crouse Senior Vice President
</TABLE>
-10-
<PAGE> 119
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
Name Position with PNC Bank
---- ----------------------
<S> <C>
Peter M. Crowley Senior Vice President
Keith P. Crytzer Senior Vice President
Terry D'Amore Senior Vice President
John J. Daggett Senior Vice President
Peter J. Danchak Senior Vice President
Richard Devore Senior Vice President
James N. Devries Senior Vice President
Anuj Dhanda Senior Vice President
Victor M. DiBattista Chief Regional Counsel
Frank H. Dilenschneider Senior Vice President
Thomas C. Dilworth Senior Vice President
Alfred J. DiMatteis Senior Vice President
Robert D. Edwards Senior Vice President
Tawana L. Edwards Senior Vice President
David J. Egan Senior Vice President
Richard M. Ellis Senior Vice President
Lynn Fox Evans Senior Vice President & Controller
William E. Fallon Senior Vice President
James M. Ferguson, III Senior Vice President
Charles J. Ferrero Senior Vice President
John Fox Executive Vice President
Frederick C. Frank, III Executive Vice President
William J. Friel Executive Vice President
Brian K. Garlock Senior Vice President
Leigh Gerstenberger Senior Vice President
George D. Gonczar Senior Vice President
Richard C. Grace Senior Vice President
James S. Graham Executive Vice President
Craig Davidson Grant Senior Vice President
Barbara J. Griec Senior Vice President
Donald W. Griffin, Jr. Senior Vice President
Thomas M. Groneman Senior Vice President
Thomas Grundman Senior Vice President
John C. Hallar Regional President, Ohio Market
Michael J. Hannon Senior Vice President
Michael J. Harrington Senior Vice President
</TABLE>
-11-
<PAGE> 120
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
Name Position with PNC Bank
---- ----------------------
<S> <C>
Michael N. Harrold Regional President, Kentucky Market
Maurice H. Hartigan, II Executive Vice President
G. Thomas Hewes Senior Vice President
Gregory A. Hoeck Executive Vice President
Susan G. Holt Senior Vice President
Sylvan M. Holzer Regional Vice President, Pittsburgh Market
William D. Hummel Senior Vice President
John M. Infield Senior Vice President
S. Terry Irvin Executive Vice President
Philip C. Jackson Senior Vice President
Robert Greg Jenkins Senior Vice President
William J. Johns Controller
Craig M. Johnson Senior Vice President and Comptroller
William R. Johnson Audit Director
Robert D. Kane Senior Vice President
Jack Kelly Senior Vice President
Michael D. Kelsey Chief Compliance Counsel
Geoffrey R. Kimmel Senior Vice President
Randall C. King Senior Vice President
Christopher M. Knoll Senior Vice President
William Koch Executive Vice President
Richard C. Krauss Senior Vice President
Frank R. Krepp Senior Vice President & Chief Credit Policy
Officer
Kenneth P. Leckey Senior Vice President & Cashier
Marilyn R. Levins Senior Vice President
Carl J. Lisman Executive Vice President
Richard J. Lovett Senior Vice President
Stephen F. Lugarich Senior Vice President
Brian S. MacConnell Senior Vice President
Jane E. Madio Senior Vice President
Nicholas M. Marsini, Jr. Senior Vice President
John A. Martin Senior Vice President
</TABLE>
-12-
<PAGE> 121
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
Name Position with PNC Bank
---- ----------------------
<S> <C>
David O. Matthews Senior Vice President
Dennis McChesney Executive Vice President
Walter B. McClellan Senior Vice President
James F. McGowan Senior Vice President
Timothy McInerny Senior Vice President
Charlotte B. McLaughlin Senior Vice President
Kim D. McNeil Senior Vice President
Charles R. McNutt Senior Vice President
James C. Mendelson Senior Vice President
James W. Meighen Senior Vice President
Theodore Lang Merhoff Senior Vice President
Darryl Metsger Senior Vice President
Scott C. Meves Senior Vice President
Ralph S. Michael, III Executive Vice President
James P. Mikula Senior Vice President
Robert J. Miller, Jr. Senior Vice President
Melanie Millican Senior Vice President
J. William Mills Senior Vice President
Robert G. Mills Assistant Secretary
Francine Miltenberger Senior Vice President
Chester A. Misbach Senior Vice President
Barbara A. Misner Senior Vice President
D. Bryant Mitchell, II Executive Vice President
Michael D. Moll Senior Vice President
Thomas R. Moore Vice President and Secretary
Marlene D. Mosco Senior Vice President
Peter F. Moylan Senior Vice President
Ronald J. Murphy Executive Vice President
Saiyid T. Naqvi Executive Vice President
Michael B. Nelson Executive Vice President
Thomas J. Nist Senior Vice President
John L. Noelcke Senior Vice President
Thomas H. O'Brien Chairman
Cynthia G. Osofsky Senior Vice President
Thomas E. Paisley, III Senior Vice President
Daniel J. Pavlick Senior Vice President
David M. Payne Senior Vice President
John Pendergrass Senior Vice President
W. David Pendl Senior Vice President
Stephen D. Penn Senior Vice President
Frank Pomor Senior Vice President
Helen P. Pudlin Senior Vice President
Wayne Pulliam Senior Vice President
Arthur F. Radman, III Senior Vice President
Gordon L. Ragan Senior Vice President
Edward E. Randall Senior Vice President
Jesse S. Reinhardt Senior Vice President
Ronald J. Retzler Senior Vice President
Richard C. Rhoades Senior Vice President
Rodger L. Rickenbrode Senior Vice President
Bryan W. Ridley Senior Vice President
</TABLE>
-13-
<PAGE> 122
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
Name Position with PNC Bank
---- ----------------------
<S> <C>
W. Alton Roberts Senior Vice President
James E. Rohr President and Chief Executive Officer
James C. Rooks Senior Vice President
Peter M. Ross Senior Vice President
Gerhard Royer Senior Vice President
Robert T. Saltarelli Senior Vice President
Robert V. Samartino Senior Vice President
William Sayre, Jr. Senior Vice President
Stephen C. Schatteman Senior Vice President
Richard A. Seymour Senior Vice President
Timothy G. Shack Senior Vice President
Douglas E. Shaffer Senior Vice President
Bruce Shipley Senior Vice President
Alfred A. Silva Executive Vice President
George R. Simon Senior Vice President
J. Max Smith Senior Vice President
Richard L. Smoot President and CEO of PNC Bank, Philadelphia
Timothy N. Smyth Senior Vice President
Darcel H. Steber Senior Vice President
Melvin A. Steele Senior Vice President
Richard Stegemaier Senior Vice President
Ted K. Stirgwolt Senior Vice President
Donald N. Stolper Senior Vice President
Connie Bard Stuart Senior Vice President
Lon E. Susak Senior Vice President
Stephen L. Swanson Senior Vice President
Ronald L. Tassone Senior Vice President
Frank A. Taucher Senior Vice President
John T. Taylor Senior Vice President
Peter W. Thompson Senior Vice President
Jane B. Tompkins Senior Vice President
Alex T. Topping Senior Vice President
Kevin M. Tucker Senior Vice President
William M. Turner Regional President,
Northern New Jersey Market
William Thomps Tyrrell Senior Vice President
Alan P. Vail Senior Vice President
Michael B. Vairin Senior Vice President
Ellen G. Van der Horst Executive Vice President
Ronald H. Vicari Senior Vice President
Patrick M. Wallace Senior Vice President
</TABLE>
-14-
<PAGE> 123
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
Name Position with PNC Bank
---- ----------------------
<S> <C>
Bruce E. Walton Executive Vice President
Annette M. Ward-Kredel Senior Vice President
Robert S. Warth Senior Vice President
Leonard A. Watkins Senior Vice President
Mark F. Wheeler Senior Vice President
Frances A. Wilkinson Assistant Secretary
Gary G. Wilson Senior Vice President
Nancy B. Wolcott Executive Vice President
Arlene M. Yocum Senior Vice President
Carole Yon Senior Vice President
George L. Ziminski, Jr. Senior Vice President
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITER
(a) Provident Distributors, Inc. currently acts as distributor for, in
addition to the Company, Temporary Investment Fund, Inc., Trust for Federal
Securities, Municipal Fund for California Investors and Municipal Fund for New
York Investors.
(b) The information required by this Item 29 with respect to each
director, officer or partner of Provident Distributors, Inc. is incorporated by
reference to Schedule A of Form BD filed by Provident Distributors, Inc. with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934 (SEC File No. 8-46564).
(c) The following represents all commissions and other compensation
received by each principal underwriter who is not an affiliated person of the
registrant:
<TABLE>
<CAPTION>
Name of Net underwriting Compensation
principal discounts and redemption and Brokerage Other
underwriter commissions repurchase commission compensation
----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Provident
Distributors, Inc. $0 $0 $0 $0
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
(1) PNC Bank, National Association, 1600 Market Street,
Philadelphia, Pennsylvania 19103 (records relating to
its functions as sub-adviser).
(2) PNC Bank, National Association, 200 Stevens Drive,
Suite 440, Lester, Pennsylvania 19113 (records
relating to its functions as custodian).
(3) Provident Distributors, Inc., Four Falls Corporate
Center, 6th Floor, West Conshohocken,
-15-
<PAGE> 124
Pennsylvania 19428 (records relating to its functions
as distributor).
(4) BlackRock Institutional Management Corporation, 400
Bellevue Parkway, Wilmington, Delaware 19809 (records
relating to its functions as investment adviser).
(5) PFPC Inc., 400 Bellevue Parkway, Wilmington,
Delaware 19809 (records relating to its functions as
administrator, transfer agent and dividend disbursing
agent).
(6) Drinker Biddle & Reath LLP, Philadelphia National
Bank Building, 1345 Chestnut Street, Philadelphia,
Pennsylvania 19107 (Registrant's Declaration of
Trust, Code of Regulations and Minute Books).
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes to furnish its Annual Report to
Shareholders upon request and without charge to any person to whom a prospectus
is delivered.
-16-
<PAGE> 125
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 23 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 23 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Wilmington, and State of Delaware, on March 13,
1998.
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
/s/ Thomas H. Nevin
------------------------------
Thomas H. Nevin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 23 to Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
*G. Nicholas Beckwith, III Trustee February 9, 1998
- --------------------------
G. Nicholas Beckwith, III
* Philip E. Coldwell Trustee March 1, 1998
- --------------------------
Philip E. Coldwell
* Robert R. Fortune Trustee March 1, 1998
- --------------------------
Robert R. Fortune
*Jerrold B. Harris Trustee March 13, 1998
- --------------------------
Jerrold B. Harris
* Rodney D. Johnson Trustee February 10, 1998
- --------------------------
Rodney D. Johnson
* G. Willing Pepper Chairman of February 8, 1998
- -------------------------- the Board
G. Willing Pepper
/s/ Thomas H. Nevin President March 13, 1998
- --------------------------
Thomas H. Nevin
/s/ Lisa M. Buono Treasurer March 13, 1998
- -------------------------- (Principal Financial and
Lisa M. Buono Accounting Officer
*By: /s/ W. Bruce McConnel
- --------------------------
W. Bruce McConnel
Attorney-in-Fact
</TABLE>
<PAGE> 126
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
POWER OF ATTORNEY
I hereby appoint W. Bruce McConnel or Vernon Stanton, Jr. attorney for
me, with full power of substitution, and in my name and on my behalf as a
director to sign any Registration Statement or Amendment thereto of MUNICIPAL
FUND FOR TEMPORARY INVESTMENT (Registration No. 2-64358) to be filed with the
Securities and Exchange Commission under the Securities Act of 1933, and
generally to do and perform all things necessary to be done in that connection.
I have signed this Power of Attorney on February 9, 1998.
/s/ G. Nicholas Beckwith, III
-----------------------------
G. Nicholas Beckwith, III
<PAGE> 127
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
POWER OF ATTORNEY
I hereby appoint W. Bruce McConnel or Vernon Stanton, Jr. attorney for
me, with full power of substitution, and in my name and on my behalf as a
director to sign any Registration Statement or Amendment thereto of MUNICIPAL
FUND FOR TEMPORARY INVESTMENT (Registration No. 2-64358) to be filed with the
Securities and Exchange Commission under the Securities Act of 1933, and
generally to do and perform all things necessary to be done in that connection.
I have signed this Power of Attorney on March 1, 1998.*
/s/ Philip E. Coldwell
----------------------
Philip E. Coldwell
* With the understanding that all amendments will be sent to
me in advance.
<PAGE> 128
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
POWER OF ATTORNEY
I hereby appoint W. Bruce McConnel or Vernon Stanton, Jr. attorney for
me, with full power of substitution, and in my name and on my behalf as a
director to sign any Registration Statement or Amendment thereto of MUNICIPAL
FUND FOR TEMPORARY INVESTMENT (Registration No. 2-64358) to be filed with the
Securities and Exchange Commission under the Securities Act of 1933, and
generally to do and perform all things necessary to be done in that connection.
I have signed this Power of Attorney on March 13, 1998.
/s/ Jerrold B. Harris
---------------------
Jerrold B. Harris
<PAGE> 129
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
POWER OF ATTORNEY
I hereby appoint W. Bruce McConnel or Vernon Stanton, Jr. attorney for
me, with full power of substitution, and in my name and on my behalf as a
director to sign any Registration Statement or Amendment thereto of MUNICIPAL
FUND FOR TEMPORARY INVESTMENT (Registration No. 2-64358) to be filed with the
Securities and Exchange Commission under the Securities Act of 1933, and
generally to do and perform all things necessary to be done in that connection.
I have signed this Power of Attorney on February 10, 1998.
/s/ Rodney D. Johnson
---------------------
Rodney D. Johnson
<PAGE> 130
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
POWER OF ATTORNEY
I hereby appoint W. Bruce McConnel or Vernon Stanton, Jr. attorney for
me, with full power of substitution, and in my name and on my behalf as a
director to sign any Registration Statement or Amendment thereto of MUNICIPAL
FUND FOR TEMPORARY INVESTMENT (Registration No. 2-64358) to be filed with the
Securities and Exchange Commission under the Securities Act of 1933, and
generally to do and perform all things necessary to be done in that connection.
I have signed this Power of Attorney on March 1, 1998.
/s/ Robert R. Fortune
---------------------
Robert R. Fortune
<PAGE> 131
EXHIBIT INDEX
EXHIBIT NO. Description Page No.
- ----------- ----------- --------
(9)(i) Revised Shareholder Servicing Agreement
(10) Opinion and Consent of Counsel
(11) Consent of KPMG Peat Marwick LLP
(17) Financial Data Schedules
<PAGE> 1
EXHIBIT 9(i)
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
(the "Companies")
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
SERVICING AGREEMENT
(Dollar Shares)
Ladies and Gentlemen:
This is a Servicing Agreement between each of the registered investment
companies which has executed this Agreement (each a "Company") and whose name
is set forth below and you as the Servicer named below concerning the provision
of support services to your customers and customers of affiliated banks
(collectively, "customers") who may from time to time beneficially own Dollar
Shares of one or more of a Company's investment portfolios (individually, a
"Fund" and collectively, the "Funds"). Each of the Funds whose shares are
currently being offered are listed on Appendix A. As used herein, "you" means
the Servicer which has executed this Agreement and "we" (or "us") means each
Company which has executed this Agreement singly and not as a group, and each
Company shall for all purposes have responsibilities hereunder only with respect
to the Dollar Shares of its Fund or Funds and under no circumstances have any
liability or obligation with respect to any other Fund or Company,
notwithstanding the use of the word "us" or "we."
The terms and conditions of this Servicing Agreement are as follows:
Section 1. You agree to provide the following support services to customers who
may from time to time beneficially own a Fund's Dollar Shares: (i) answering
client inquiries regarding account status and history, the manner in which
purchases, exchanges and redemptions of shares may be effected and certain
other matters pertaining to the clients' investments; (ii) assisting clients in
designating and changing dividend options, account designations and addresses;
(iii) arranging for bank wires; (iv) responding to customer inquiries relating
to the services performed by you; (v) implementing marketing and promotional
activities, including direct mail; (vi) distributing sales literature; (vii)
providing for sales support services such as for telephone facilities; and
(viii) paying commissions, incentive compensation or other compensation, and
expenses of, account executives or other employees of Service Organization,
attributable to sales support activities;
<PAGE> 2
and (ix) providing such other similar services as we may reasonably request to
the extent you are permitted to do so under applicable statutes, rules or
regulations. You will provide to customers a schedule of all fees that you may
charge to them relating to the investment of their assets in a Fund's Dollar
Shares.
SECTION 2. You will provide such office space and equipment, telephone and
personnel (which may be any part of the space, equipment and facilities
currently used in your business, or any personnel employed by you) as may be
reasonably necessary or beneficial in order to provide the aforementioned
services to customers.
SECTION 3. Neither you nor any of your officers, employees or agents are
authorized to make any representations concerning us or a Fund's Dollar Shares
except those contained in our then current prospectus for such shares, copies
of which will be supplied by us to you, or in such supplemental literature or
advertising as may be authorized by us in writing.
SECTION 4. For all purposes of this Agreement you will be deemed to be an
independent contractor, and will have no authority to act as agent for us in any
matter or in any respect. By your written acceptance of this Agreement, you
agree to and do release, indemnify and hold us harmless from and against any and
all direct liabilities or losses resulting from requests, directions, actions or
inactions of or by you or your officers, employees or agents regarding your
responsibilities hereunder or the purchase, redemption, transfer or registration
of Dollar Shares by or on behalf of customers. You and your employees will, upon
request, be available during normal business hours to consult with us or our
designees concerning the performance of your responsibilities under this
Agreement.
SECTION 5. In consideration of the services and facilities provided by you
hereunder, we will pay to you, and you will accept as full payment therefor, a
fee at the annual rate of .25 of 1% of the average daily net asset value of a
Fund's Dollar Shares held of record by you from time to time on behalf of
customers (the "customers' Dollar Shares"), which fee will be computed daily
and payable monthly. For purposes of determining the fees payable under this
Section 5, the average daily net asset value of the customers' Dollar Shares
will be computed in the manner specified in our registration statement (as the
same is in effect from time to time) in connection with the computation of the
net asset value of a Fund's Dollar Shares for purposes of purchases and
redemptions. The fee rate stated above may be prospectively increased or
decreased by us, in our sole discretion, at any time upon notice to you.
Further, we may, in our discretion and without notice, suspend or withdraw the
sale of such Dollar Shares, including the sale of such shares to you for the
account of any customer(s).
SECTION 6. Any person authorized to direct the disposition of monies paid or
payable by us pursuant to this Agreement will provide to the respective Board
of Directors/Trustees, and the Directors/Trustees will review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made. In addition, you will furnish us or our
designees with such information as we or
2
<PAGE> 3
they may reasonably request (including, without limitation, periodic
certifications confirming the provision to customers of the services described
herein), and will otherwise cooperate with us and our designees (including,
without limitation, any auditors designated by us), in connection with the
preparation of reports to our Board of Directors/Trustees concerning this
Agreement and the monies paid or payable by us pursuant hereto, as well as any
other reports or filings that may be required by law.
SECTION 7. We may enter into other similar Servicing Agreements with any other
person or persons without your consent.
SECTION 8. By your written acceptance of this Agreement, you represent, warrant
and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of any shares issued by
us; and (ii) the compensation payable to you hereunder, together with any other
compensation you receive from customers for services contemplated by this
Agreement, will not be excessive or unreasonable under the laws and instruments
governing your relationships with customers.
SECTION 9. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until the March 31 next occurring
after the date hereof, and thereafter will continue automatically for
successive annual periods provided such continuance is specifically approved at
least annually by us in the manner described in Section 12 hereof. This
Agreement is terminable, without penalty, at any time by us (which termination
may be by vote of a majority of our Disinterested Directors/Trustees as
defined in Section 12 hereof) or by you upon notice to the other party hereto
(or parties, as the case may be).
SECTION 10. All notices and other communications to either you or us will be
duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address shown above.
SECTION 11. This Agreement will be construed in accordance with the laws of the
State of Delaware and is non-assignable by the parties hereto.
SECTION 12. This Agreement has been approved by vote of a majority of (i) a
Company's Board of Directors/Trustees and (ii) those Directors/Trustees who are
not "interested persons" (as defined in the Investment Company Act of 1940) of
the Company and have no direct or indirect financial interest in the operation
of the Restated Shareholder Services Plan adopted by us regarding the provision
of support services to the beneficial owners of Dollar Shares or in any
agreements related thereto ("Disinterested Directors/Trustees"), cast in person
at a meeting called for the purpose of voting on such approval.
SECTION 13. All persons dealing with "Trust for Federal Securities," "Municipal
Fund For Temporary Investment," "Municipal Fund For California Investors,
Inc.," "Municipal Fund For New York Investors, Inc.," or the "Trustees" of
any such Company must look solely to that
3
<PAGE> 4
Company's property for the enforcement of any claims against the Company, as
neither the Trustees, officers, agents nor shareholders assume any personal
liability for obligations entered into on a Company's behalf.
If you agree to be legally bound by the provisions of this Agreement, please
sign a copy of this letter where indicated below and promptly return it to us,
PFPC INC., c/o RHONDA STANFORD AT BELLEVUE CORPORATE CENTER, 400 BELLEVUE
PARKWAY, SECOND FLOOR, WILMINGTON, DE 19809.
Very truly yours,
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES, INC.
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
ACCEPTED AND AGREED TO:
BY:
-------------------------
Provident Advisors, Inc.
DATE:
-----------------------
4
<PAGE> 5
APPENDIX A
Please check the appropriate boxes to indicate the Funds of the
Companies for which you wish to act as a Service Organization with respect to
Dollar Shares:
TEMPORARY INVESTMENT FUND, INC.
TempFund Dollar Shares (Class B - Special Series 1)
----------
TempCash Dollar Shares (Class C Shares)
----------
TRUST FOR FEDERAL SECURITIES
FedFund Dollar Shares
----------
T-Fund Dollar Shares
----------
FedCash Dollar Shares
----------
T-Cash Dollar Shares
----------
Federal Trust Dollar Shares
----------
X Treasury Trust Dollar Shares
----------
Short Government Dollar Shares
----------
Intermediate Government Dollar Shares
----------
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
MuniFund Dollar Shares
----------
MuniCash Dollar Shares
----------
Intermediate Municipal Dollar Shares
----------
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
New York Money Dollar Shares
----------
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
California Money Dollar Shares
----------
California Intermediate Dollar Shares
----------
SIGNED:
----------------------- COMPANY:
(TITLE) --------
DATED:
-----------------------
5
<PAGE> 1
March 24, 1998
Municipal Fund for Temporary Investment
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, DE 19809
Re: Municipal Fund for Temporary Investment
(Registration No. 2-64358)
Gentlemen:
We have acted as counsel for Municipal Fund for Temporary
Investment, a Pennsylvania common law trust (the "Fund") in connection with the
preparation and filing with the Securities and Exchange Commission of
Post-Effective Amendment No. 23 to the Fund's Registration Statement under the
Securities Act of 1933, as amended (the "Registration Statement").
The Fund is an open-end investment company authorized to issue
an unlimited number of shares of beneficial interest, without par value. The
Board of Trustees of the Fund has the power to designate one or more classes
("Portfolios") of shares of beneficial interest and to designate separate series
of Shares within the same Portfolio. The Board of Trustees has previously
authorized the issuance of shares of beneficial interest of two Portfolios and
of series of shares within such Portfolios (the "Shares") as follows:
MuniFund Portfolio
MuniFund Shares
MuniFund Dollar Shares
MuniCash Portfolio
MuniCash Shares
MuniCash Dollar Shares
We have reviewed the Fund's Declaration of Trust, its Code of
Regulations, resolutions adopted by its Board of Trustees and shareholders and
such other legal and factual matters as we have deemed appropriate. We assume
that the Shares have been or will be issued against payment therefor pursuant to
and for the
<PAGE> 2
March 24, 1998
Page 2
consideration provided for in the Fund's Registration Statement, and that the
total number of Shares issued in any series does not exceed the number
authorized for such series by the Board of Trustees.
We express no opinion concerning the laws of any jurisdiction
other than the Commonwealth of Pennsylvania and the federal law of the United
States of America.
Under Pennsylvania law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given in
any written agreement, undertaking or obligation made or issued on behalf of the
Fund. The Declaration of Trust provides for indemnification out of the assets of
the Fund for all loss and expense of any shareholder held personally liable
solely by reason of his or her being or having been a shareholder. Thus, the
risk of a shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would be unable
to meet its obligations.
Based upon the foregoing, it is our opinion that all of the Shares
issued by the Fund since December 1, 1996 that were not included in our opinions
dated January 1, 1997 and March 27, 1997, were validly issued, fully paid and
non-assessable by the Fund, and further, that the Shares issued after the date
hereof pursuant to and for the consideration provided for in the Registration
Statement will be, when so issued, validly issued, fully paid and non-assessable
by the Fund.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to Post- Effective Amendment
No. 23 to the Fund's Registration Statement.
Very truly yours,
/s/ DRINKER BIDDLE & REATH LLP
DRINKER BIDDLE & REATH LLP
<PAGE> 1
EXHIBIT 11
INDEPENDENT AUDITOR'S CONSENT
To the Trustees
Municipal Fund for Temporary Investment:
We consent to the use of our report dated January 9, 1998 incorporated by
reference herein and to the references to our firm under the heading "Financial
Highlights" in the Prospectuses and under the headings "Auditors" and "Financial
Statements" in the Statements of Additional Information in the Registration
Statement.
/s/ KPMG Peat Marwick LLP
Philadelphia, PA
March 27, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000311241
<NAME> MUNICIPAL FUND FOR TEMPORARY INVESTMENT
<SERIES>
<NUMBER> 011
<NAME> MUNI FUND - MAIN CLASS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 619600691
<INVESTMENTS-AT-VALUE> 619600691
<RECEIVABLES> 3475894
<ASSETS-OTHER> 25705
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 623102290
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18921676
<TOTAL-LIABILITIES> 18921676
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 604263599
<SHARES-COMMON-STOCK> 604263599
<SHARES-COMMON-PRIOR> 820348806
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (82985)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 604180614
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 25337633
<OTHER-INCOME> 0
<EXPENSES-NET> 2023891
<NET-INVESTMENT-INCOME> 23313742
<REALIZED-GAINS-CURRENT> (12899)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 23300843
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 23313742
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6510103572
<NUMBER-OF-SHARES-REDEEMED> 6502501131
<SHARES-REINVESTED> 4991057
<NET-CHANGE-IN-ASSETS> 12593498
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1214356
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3018464
<AVERAGE-NET-ASSETS> 633117813
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .034
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .034
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000311241
<NAME> MUNICIPAL FUND FOR TEMPORARY INVESTMENT
<SERIES>
<NUMBER> 012
<NAME> MUNI FUND - DOLLAR CLASS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 619600691
<INVESTMENTS-AT-VALUE> 619600691
<RECEIVABLES> 3475894
<ASSETS-OTHER> 25705
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 623102290
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18921676
<TOTAL-LIABILITIES> 18921676
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 604263599
<SHARES-COMMON-STOCK> 604263599
<SHARES-COMMON-PRIOR> 820348806
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (82985)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 604180614
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 25337633
<OTHER-INCOME> 0
<EXPENSES-NET> 2023891
<NET-INVESTMENT-INCOME> 23313742
<REALIZED-GAINS-CURRENT> (12899)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 23300843
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 23313742
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6510103572
<NUMBER-OF-SHARES-REDEEMED> 6502501131
<SHARES-REINVESTED> 4991057
<NET-CHANGE-IN-ASSETS> 12593498
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1214356
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3018464
<AVERAGE-NET-ASSETS> 60398497
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .031
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .031
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000311241
<NAME> MUNICIPAL FUND FOR TEMPORARY INVESTMENT
<SERIES>
<NUMBER> 021
<NAME> MUNI CASH - MAIN CLASS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 561681793
<INVESTMENTS-AT-VALUE> 561681793
<RECEIVABLES> 3680707
<ASSETS-OTHER> 91189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 565453689
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17683653
<TOTAL-LIABILITIES> 17683653
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 547918617
<SHARES-COMMON-STOCK> 547918617
<SHARES-COMMON-PRIOR> 585029814
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (148581)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 547770036
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17260748
<OTHER-INCOME> 0
<EXPENSES-NET> 1112424
<NET-INVESTMENT-INCOME> 16148324
<REALIZED-GAINS-CURRENT> 18102
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 16166426
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16148324
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6354866941
<NUMBER-OF-SHARES-REDEEMED> 6197916583
<SHARES-REINVESTED> 7730075
<NET-CHANGE-IN-ASSETS> 164680433
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 803781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2182319
<AVERAGE-NET-ASSETS> 344944132
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .036
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .036
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000311241
<NAME> MUNICIPAL FUND FOR TEMPORARY INVESTMENT
<SERIES>
<NUMBER> 022
<NAME> MUNI CASH - DOLLAR CLASS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 561681793
<INVESTMENTS-AT-VALUE> 561681793
<RECEIVABLES> 3680707
<ASSETS-OTHER> 91189
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 565453689
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17683653
<TOTAL-LIABILITIES> 17683653
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 547918617
<SHARES-COMMON-STOCK> 547918617
<SHARES-COMMON-PRIOR> 585029814
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (148581)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 547770036
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 17260748
<OTHER-INCOME> 0
<EXPENSES-NET> 1112424
<NET-INVESTMENT-INCOME> 16148324
<REALIZED-GAINS-CURRENT> 18102
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 16166426
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16148324
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6354866941
<NUMBER-OF-SHARES-REDEEMED> 6197916583
<SHARES-REINVESTED> 7730075
<NET-CHANGE-IN-ASSETS> 164680433
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 803781
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2182319
<AVERAGE-NET-ASSETS> 114359534
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .033
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .033
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
