<PAGE> 1
- -------------------------------------------------------------------------------
-
PROVIDENT
- -------------------------------------------------------------------------------
INSTITUTIONAL
FUNDS
-
------------------------------------------------------------------
400 Bellevue Parkway, Wilmington, DE 19809 - Phone:
302-792-2555 - Fax: 302-792-5876
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
March 19, 1998
Dear Shareholder:
We are pleased to present the Annual Report to Shareholders of Municipal
Fund for California Investors, Inc. for the period ended January 31, 1998.
Commentary of California's improving economy and on recent developments in
our Fund are contained in the accompanying Investment Adviser's Report.
Provident Institutional Funds offer a variety of high quality Taxable and
Tax-Exempt Money Market Funds to meet the varied needs of our investors. Please
contact your account representative or call our Client Service Center at (800)
821-7432 to discuss your investment options. We welcome the opportunity to serve
you.
Sincerely,
/s/ G. Willing Pepper
G. Willing Pepper
Chairman
<PAGE> 2
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
ANNUAL REPORT OF THE INVESTMENT ADVISER
California's robust economic expansion continued as employment reached a
record high of 15.1 million in December 1997, up nearly 500,000 from a year
earlier. Construction was the fastest growing sector in 1997, rising 10%.
Residential home building is finally joining the construction upturn. New
housing permits are at a seven-year high and home prices are up 10%
year-over-year. Although construction employment tapered off in November, it is
believed to be due to El Nino-related weather factors. Unemployment in
California, while still above the national rate, reached a seven-year low of
5.9% in November.
California depends on exports more than the U.S. economy as a whole, and is
more vulnerable to the recent Asian financial turmoil. To date, California has
not suffered any major ill effects from the crisis. Trade volume indicates that
the State's manufacturing, agriculture, and tourism industries are most exposed
to a slowdown in Asian growth. Foreign trade patterns already appear to be
changing. The ports of Los Angeles and Long Beach are seeing increases in
imports at a rate that is outpacing the declines in export tonnage. Los Angeles
Airport has experienced similar growth in total air cargo volume. Significantly,
Mexico has been developing into a far more important trading partner, which may
serve as a counterweight to the Asian decline. Growth in exports to Mexico
comprised 99% of all California export growth in the first half of 1997.
California's fiscal position is benefiting from strong economic
performance. A $900 million operating surplus is projected for fiscal 1998. The
Governor's 1999 budget proposal is based on conservative assumptions,
anticipating continued but moderating growth. The improved fiscal position has
been recognized in the positive outlook assigned to the State's credit rating by
both Moody's and Standard & Poors.
During most of the year, the short-term tax-exempt market experienced a
lack of supply of tax-exempt fixed-rate California securities. Under this
scenario, market conditions placed downward pressure on yields offering little
incentive to extend. Therefore, the strategy for the Fund was to purchase more
liquid variable rate demand notes, instead of locking into fixed rate
securities. This strategy increased flexibility to react to changing market
conditions and positioned the Fund with a shorter average weighted maturity than
its peers. Due to the recent developments in the Pacific Rim, the Fund has
further restricted its exposure to Japanese credit enhancements, limiting
purchases to maturities of seven days or less. The Fund continued to emphasize
portfolio credit quality, ending the period with over 91% of securities rated AA
or better, as rated by Moody's and S&P. Prudent selection of high quality
securities will remain a primary objective in the management of the Fund's
portfolio.
PNC INSTITUTIONAL MANAGEMENT CORPORATION
2
<PAGE> 3
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Statement of Net Assets
January 31, 1998
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
CALIFORNIA -- 89.22%
ABAG Finance Authority
Certificates of Participation
(Lucile Salter Packard
Childrens Hospital) DN (AMBAC
Insurance) (A-1+, VMIG-1)**
3.15%................. 02/07/98 $ 1,500 $ 1,500,000
Alameda-Contra Costa School
Financing Authority RB (Capital
Improvements Financing
Projects) Series D DN (A-1+)**
3.15%................. 02/07/98 5,000 5,000,000
California GO Notes Series B
TECP (Bayerische Landesbank
Girozentrale LOC) (A-1, P-1)
3.60%................. 02/12/98 5,500 5,500,000
California GO Notes Series B
TECP (Morgan Guaranty LOC)
(SP-1+, MIG-1)
3.60%................. 03/17/98 5,000 5,000,000
California GO Notes TECP
(Bayerische Landesbank
Girozentrale LOC) (A-1, P-1)
3.40%................. 03/10/98 5,000 5,000,000
California GO Notes Series 23 DN
(Bank of New York LOC) (A-1+,
VMIG-1)**
4.00%................. 02/01/98 5,000 5,000,000
California Health Facilities
Financing Authority (Adventist
Health System West-Sutter
Health) Series 1991B DN
(Toronto Dominion LOC) (A-1+,
VMIG-1)**
3.20%................. 02/07/98 2,500 2,500,000
California Health Facilities
Financing Authority (Pooled
Loan Program) Series 1987A DN
(Sanwa Bank LOC)(VMIG-1)**
3.15%................. 02/07/98 4,500 4,500,000
California Health Facilities
Financing Authority (Scripps
Memorial Hospital) Series 1985B
DN (MBIA Insurance) (A-1+,
VMIG-1)**
3.15%................. 02/07/98 2,800 2,800,000
California Health Facilities
Financing Authority (St.
Francis Hospital) DN (MBIA
Insurance) (A-1+, VMIG-1)**
3.05%................. 02/07/98 4,800 4,800,000
</TABLE>
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
California Health Facilities
Financing Authority (St.
Joseph's Health System) Series
1985B DN (A-1+, VMIG-1)**
3.65%................. 02/01/98 $ 3,860 $ 3,860,000
California Health Facilities
Financing Authority (Sutter
CHS) Series B DN (A-1+,
VMIG-1)**
3.65%................. 02/01/98 1,600 1,600,000
California Pollution Control
Financing Authority (Pacific
Gas & Electric Company) Series
1996D (Union Bank of
Switzerland LOC) (A-1+)
3.45%................. 04/06/98 1,000 1,000,000
California Pollution Control
Financing Authority DN (Societe
Generale LOC) (A-1+, VMIG-1)**
3.70%................. 02/17/98 2,800 2,800,000
California Pollution Control
Financing Authority PCRB
(Southern California Edison
Company) Series B DN (A-1+,
P-1)**
3.70%................. 02/01/98 2,200 2,200,000
California RAN Series 1997
(SP-1+, MIG-1)
4.50%................. 06/30/98 15,000 15,041,203
California Statewide Communities
Development Authority
Certificates of Participation
(Covenant Retirement
Communities, Inc.) DN (ABN-AMRO
Bank N.V. LOC) (A-1+, VMIG-1)**
3.35%................. 02/07/98 7,900 7,900,000
California Statewide Communities
Development Authority Series
1995A-2 DN (Federal National
Mortgage Association) (A-1+)**
3.15%................. 02/07/98 2,530 2,530,000
California Statewide Communities
Development Authority Series
1995A-4 DN (Federal National
Mortgage Association) (A-1+)**
3.15%................. 02/07/98 10,000 10,000,000
California Statewide Communities
Development Authority Series
1995A-5 DN (Federal National
Mortgage Association) (A-1+)**
3.15%................. 02/07/98 4,000 4,000,000
</TABLE>
3
<PAGE> 4
CALIFORNIA MONEY FUND
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
Chula Vista Multifamily Housing RB
(Terra Nova Association) Series A
DN (Industrial Bank of Japan
LOC)(A-1)**
4.00%................. 02/07/98 $ 5,000 $ 5,000,000
City of Stockton IDRB (La Quinta
Motor Inns) DN (NationsBank
LOC)(A-1)**
3.60%................. 02/07/98 1,625 1,625,000
Contra Costa Multifamily Housing
RB (Riverside Apartments)
Series 1992B DN (Federal
National Mortgage Association)
(A-1+)**
3.25%................. 02/07/98 3,900 3,900,000
Corona Multifamily Housing RB
(Country Hills Apartment
Project) Series 1995A DN (Bank
of America LOC)(A-1)**
3.15%................. 02/07/98 6,865 6,865,000
Eastern Municipal Water District
Facilities Corporation
Certificates of Participation
(Riverside County Project) DN
(FGIC Insurance) (A-1+,
VMIG-1)**
3.15%................. 02/07/98 900 900,000
Foothill Eastern Corridor Agency
(California Toll Road Project)
Series D DN (Industrial Bank of
Japan LOC)(A-1)**
3.85%................. 02/07/98 20,100 20,100,000
Fremont Multifamily Housing
Bonds (Creekside Village
Apartments) Series D DN
(Kredietbank LOC)(VMIG-1)**
3.20%................. 02/07/98 4,000 4,000,000
Golden Empire Schools Financing
Authority (Kern High School
District Project) Series B DN
(National Westminster LOC)
(A-1+)**
3.20%................. 02/07/98 4,700 4,700,000
Hayward Multifamily Housing
Bonds (Shorewood Apartment
Project) Series A DN (FGIC
Insurance)(VMIG-1)**
3.15%................. 02/07/98 12,000 12,000,000
Los Angeles County Asset Lease
Revenue Bonds TECP
(Westdeutsche Landesbank
Girozentrale LOC) (A-1+, P-1)
3.40%................. 03/13/98 12,000 12,000,000
3.60%................. 03/17/98 11,550 11,550,000
</TABLE>
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
Los Angeles County Metropolitan
Transportation Authority Second
Subordinate Sales Tax Revenue
Notes Series A (National
Westminster LOC) (A-1+, P-1)
3.40%................. 04/09/98 $ 3,000 $ 3,000,000
Los Angeles County TRAN (SP-1+,
MIG-1)
4.50%................. 06/30/98 39,500 39,603,540
Los Angeles County
Transportation Commission Sales
Tax Revenue Refunding Bonds
Series 1992 DN (FGIC Insurance)
(A-1+, VMIG-1)**
3.15%................. 02/07/98 4,200 4,200,000
Los Angeles County Union School
District TRAN Series 1997-98
(SP-1+, MIG-1)
4.50%................. 07/01/98 7,000 7,019,388
Los Angeles Wastewater Authority
TECP (Morgan Guaranty LOC)
(A-1+, P-1)
3.60%................. 02/12/98 10,000 10,000,000
Metropolitan Water District of
Southern California Series A DN
(ABN-AMRO Bank N.V. LOC) (A-1+,
VMIG-1)**
3.15%................. 02/07/98 1,000 1,000,000
Metropolitan Water District of
Southern California Series B
(A-1+, P-1)
3.65%................. 03/06/98 10,000 10,000,000
Northern California Public Power
Agency (Geothermal Project
#3-A) DN (Bank of Nova Scotia
LOC) (A-1+, VMIG-1)**
3.15%................. 02/07/98 15,800 15,800,000
Oakland Certificates of
Participation (Capital
Improvement Project) DN
(Mitsubishi Bank LOC) (A-1+,
VMIG-1)**
3.35%................. 02/07/98 15,400 15,400,000
Pico Rivera Redevelopment Agency
Multifamily Housing RB (Ranier
Corss Roads Plaza Project) DN
(Citibank LOC) (A-1, VMIG-1)**
3.25%................. 02/07/98 7,000 7,000,000
</TABLE>
4
<PAGE> 5
CALIFORNIA MONEY FUND
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
Redlands City Multifamily Revenue
Refunding Bonds (Parkview Terrace
Project) Series 1991A DN (Bank of
America LOC) (VMIG-1)**
3.20%................. 02/07/98 $ 3,000 $ 3,000,000
Riverside County Certificates of
Participation (Riverside County
Public Facility) Series 1985A
DN (Sanwa Bank LOC) (A-1+,
VMIG-1)**
3.20%................. 02/07/98 2,800 2,800,000
Riverside County Certificates of
Participation (Riverside County
Public Facility) Series 1985B
DN (Sanwa Bank LOC) (A-1+,
VMIG-1)**
3.25%................. 02/07/98 16,925 16,925,000
Riverside County Multifamily
Housing Bonds (Sierra Pines
Apartments Project) Series
1991A DN (Swiss Bank
LOC)(A-1+)**
3.20%................. 02/07/98 4,715 4,715,000
Rohnert Park Multifamily Housing
Bonds (Crossbrook Apartments)
Series A DN (Federal National
Mortgage Association) (A-1+)**
3.25%................. 02/07/98 2,500 2,500,000
Sacramento Municipal Utility
District Series I TECP
(Bayerische Landesbank
Girozentrale LOC) (A-1+, P-1)
3.65%................. 03/09/98 10,279 10,279,000
San Diego County Metropolitan
Water Authority TECP (A-1+,
P-1)
3.35%................. 02/11/98 6,600 6,600,000
San Diego Multifamily Housing
Bonds (Las Flores Project)
Series 1991A DN (Swiss Bank
LOC) (A-1+)**
3.20%................. 02/07/98 14,000 14,000,000
San Diego Multifamily Housing RB
DN (Bank of America LOC) (A-1,
VMIG-1)**
3.20%................. 02/07/98 1,100 1,100,000
San Francisco City & County
Housing Authority Multifamily
Housing RB (Winterland Project)
Series 1985C DN (Citibank LOC)
(A-1, VMIG-1)**
3.25%................. 02/07/98 7,400 7,400,000
</TABLE>
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
San Francisco City & County
Redevelopment Agency
Multifamily Housing RB (Bayside
Village Project) Series B DN
(Industrial Bank of Japan
LOC)(A-1+, VMIG-1)**
3.75%................. 02/07/98 $ 6,400 $ 6,400,000
San Francisco City & County
Redevelopment Agency
Multifamily Housing RB (South
Harbor Project) DN (VMIG-1)**
3.325%................ 02/07/98 12,300 12,300,000
San Jose Multifamily Housing
Bonds (Fairway Glen Project)
Series A DN (FGIC Insurance)
(VMIG-1)**
3.15%................. 02/07/98 4,980 4,980,000
San Jose Multifamily Housing
Bonds (Timberwood Apartments
Project) Series 1995A DN (Wells
Fargo Bank LOC)(VMIG-1)**
3.20%................. 02/07/98 4,065 4,065,000
San Juan-Modesto-Santa Clara-
Redding Public Power Agency
(San Juan Project) Subordinate
Lien RB Series 1995B DN (AMBAC
Insurance) (A-1+, VMIG-1)**
3.20%................. 02/07/98 8,000 8,000,000
San Juan-Modesto-Santa Clara-
Redding Public Power Agency
(San Juan Project) Subordinate
Lien RB Series 1997D DN
(National Westminster LOC)
(A-1+, VMIG-1)**
3.20%................. 02/07/98 21,500 21,500,000
San Juan-Modesto-Santa Clara-
Redding Public Power Agency
(San Juan Project) Subordinate
Lien RB Series 1997E DN
(National Westminster
LOC)(A-1+, VMIG-1)**
3.20%................. 02/07/98 19,600 19,600,000
Santa Clara Multifamily Housing
Bonds (Fox Chase Project) DN
(FGIC Insurance) (VMIG-1)**
3.15%................. 02/07/98 1,600 1,600,000
</TABLE>
5
<PAGE> 6
CALIFORNIA MONEY FUND
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
Southeast California Lease Revenue
Refunding Bonds (Resource Recovery
Facility Authority) DN (Industrial
Bank of Japan LOC) (A-1, VMIG-1)**
4.10%................. 02/07/98 $ 9,800 $ 9,800,000
Southern California Public Power
Authority Subordinated
Refunding RB (Palo Verde
Project) Series 1996B DN
(Morgan Guaranty LOC) (A-1+,
VMIG-1)**
3.15%................. 02/07/98 9,400 9,400,000
Southern California Public Power
Authority Subordinated
Refunding RB (Palo Verde
Project) Series 1996C DN (AMBAC
Insurance) (A-1, VMIG-1)**
3.15%................. 02/07/98 12,600 12,600,000
Southern California Public Power
Authority Subordinated
Refunding RB (Southern
Transmission Project) Series B
DN (FSA Insurance)(A-1+,
VMIG-1)**
3.20%................. 02/07/98 24,300 24,300,000
Southern California Public Power
Authority Subordinated
Refunding RB (Southern
Transmission Project) Series
1991 DN (FGIC Insurance)(A-1+,
VMIG-1)**
3.15%................. 02/07/98 6,700 6,700,000
Ventura County TRAN Series 1997
(SP-1+, MIG-1)
4.50%................. 07/01/98 10,000 10,025,661
West Basin Municipal Water
Authority (Phase II Recycled
Water Project) Series B DN
(Bayerische Landesbank
Girozentrale LOC) (VMIG-1)**
3.10%................. 02/07/98 18,400 18,400,000
------------
527,183,792
------------
PUERTO RICO -- 10.52%
Commonwealth of Puerto Rico TRAN
Series A (SP-1+, MIG-1)
4.50%................. 07/30/98 7,500 7,527,019
</TABLE>
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
-------------- -------- ------- ------------
<S> <C> <C> <C>
Puerto Rico Government
Development Bank Series 1985 DN
(Credit Suisse LOC) (A-1+,
VMIG-1)**
3.25%................. 02/07/98 $ 5,900 $ 5,900,000
Puerto Rico Government
Development Bank TECP (A-1+)
3.30%................. 02/02/98 20,500 20,500,000
3.30%................. 02/05/98 12,843 12,843,000
3.60%................. 02/13/98 8,630 8,630,000
3.50%................. 02/26/98 6,756 6,756,000
------------
62,156,019
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost $589,339,811*)........... 99.74% 589,339,811
OTHER ASSETS IN EXCESS OF
LIABILITIES.................... 0.26 1,546,637
------ ------------
NET ASSETS (Equivalent to $1.00
per share based on 460,483,852
California Money Shares and
130,551,549 California Dollar
Shares outstanding)............ 100.00% $590,886,448
====== ============
NET ASSET VALUE OFFERING AND
REDEMPTION PRICE PER SHARE
($590,886,448 / 591,035,401)............. $1.00
=====
- -------------
* Aggregate cost for federal income tax purposes is
$589,342,548.
** Variable rate demand notes -- the interest rate shown
is as of January 31, 1998, and the maturity date shown
is the longer of (i) the next interest readjustment
date or (ii) the date on which the principal amount
owed can be recovered through demand.
The Moody's Investor Service, Inc. and Standard &
Poor's Ratings Service ratings are believed to be the
most recent ratings available at January 31, 1998. The
ratings have not been verified by the Independent
Accountants and, therefore, are not covered by the
Report of the Independent Accountants.
</TABLE>
6
<PAGE> 7
CALIFORNIA MONEY FUND
Statement of Net Assets (Concluded)
- ---------------------------------------------------------
CALIFORNIA MONEY FUND
SUPPLEMENTARY INFORMATION
Maturity Schedule of Portfolio
January 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
MATURITY
PERIOD PER PERCENTAGE
---------- ------------ ----------
<S> <C> <C>
1-30 Days $452,294,000 76.8%
31-60 Days 53,829,000 9.1%
61-90 Days 4,000,000 0.7%
121-150 Days 54,500,000 9.2%
Over 150 Days 24,500,000 4.2%
</TABLE>
Average Weighted Maturity of
Portfolio -- 31 days
- --------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ABBREVIATIONS:
<S> <C>
DN Demand Notes(Variable Rate)
GO General Obligation
IDRB Industrial Development Revenue Bond
LOC Letter of Credit
PCRB Pollution Control Revenue Bond
RAN Revenue Anticipation Notes
RB Revenue Bonds
TECP Tax-Exempt Commercial Paper
TRAN Tax and Revenue Anticipation Notes
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 8
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Statement of Operations
Year Ended January 31,1998
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $19,506,795
-----------
Expenses:
Investment advisory fee................................... 1,103,323
Administration fee........................................ 1,103,323
Custodian fees............................................ 138,717
Legal fees................................................ 30,001
Transfer agent fees....................................... 37,106
Audit fees................................................ 49,355
Directors' and officer's fees and expenses................ 54,053
Registration and filing fees.............................. 6,001
Printing.................................................. 15,568
Other..................................................... 24,082
-----------
2,561,529
Fees waived by Investment Adviser and Administrators...... (1,458,216)
-----------
1,103,313
Service Organization fees: Dollar Shares.................. 308,298
-----------
Total expenses......................................... 1,411,611
-----------
Net investment income................................ 18,095,184
Realized gain (loss) on investments:
Net realized loss on investments sold..................... (14,860)
-----------
Net increase in net assets resulting from operations........ $18,080,324
===========
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JANUARY 31, 1998 JANUARY 31, 1997
---------------- ----------------
<S> <C> <C>
Net investment income....................................... $ 18,095,184 $ 13,841,009
Net realized gain (loss) on investments..................... (14,860) 3,647
------------ ------------
Net increase in net assets resulting from operations........ 18,080,324 13,844,656
------------ ------------
Distributions to shareholders from:
Net investment income:
Money Shares........................................... (14,302,548) (11,634,731)
Dollar Shares.......................................... (3,792,636) (2,206,278)
------------ ------------
Total distributions......................................... (18,095,184) (13,841,009)
------------ ------------
Increase in net assets from capital share transactions...... 138,059,151 31,792,547
------------ ------------
Net increase in net assets.................................. 138,044,291 31,796,194
Net assets:
Beginning of period....................................... 452,842,157 421,045,963
------------ ------------
End of period............................................. $590,886,448 $452,842,157
============ ============
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY SHARES
--------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
01/31/98 01/31/97 01/31/96 01/31/95 01/31/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income............................... 0.0334 0.0316 0.0356 0.0281 0.0223
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders From Net Investment
Income............................................ (0.0334) (0.0316) (0.0356) (0.0281) (0.0223)
-------- -------- -------- -------- --------
Net Asset Value, End of Period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return............................................. 3.39% 3.21% 3.62% 2.84% 2.25%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)....................... 460,339 326,521 389,883 385,824 356,501
Ratio of Expenses to Average Daily Net Assets(1)....... .20% .20% .20% .20% .20%
Ratio of Net Investment Income to Average Daily Net
Assets.............................................. 3.34% 3.15% 3.55% 2.79% 2.23%
</TABLE>
- ---------------
(1) Operating expense ratios before waivers of Investment Adviser and
Administrators fees for Money Shares for the years ended January 31, 1998,
1997, 1996, 1995 and 1994 were .46%, .48%, .48%, .48% and .49%,
respectively.
See accompanying notes to financial statements.
10
<PAGE> 11
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
DOLLAR SHARES
--------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
01/31/98 01/31/97 01/31/96 01/31/95 01/31/94
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income............................... 0.0309 0.0291 0.0331 0.0256 0.0198
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders From Net Investment
Income............................................ (0.0309) (0.0291) (0.0331) (0.0256) (0.0198)
-------- -------- -------- -------- --------
Net Asset Value, End of Period........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return............................................. 3.14% 2.96% 3.37% 2.59% 2.00%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)....................... 130,547 126,321 31,163 11,026 19,098
Ratio of Expenses to Average Daily Net Assets(1)....... .45% .45% .45% .45% .45%
Ratio of Net Investment Income to Average Daily Net
Assets.............................................. 3.09% 2.90% 3.30% 2.54% 1.98%
</TABLE>
- ---------------
(1) Operating expense ratios before waivers of Investment Adviser and
Administrators fees for Dollar Shares for the years ended January 31, 1998,
1997, 1996, 1995 and 1994 were .71%, .73%, .73%, .73% and .74%,
respectively.
See accompanying notes to financial statements.
11
<PAGE> 12
Notes to Financial Statements
1. General Information
Municipal Fund for California Investors, Inc. (the "Company") is a no-load,
non-diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Company offers three series of
shares: California Money ("Money"), California Money Dollar ("Dollar"), and
California Money Plus ("Plus"). Shares of each series represent equal pro rata
interests in a single investment portfolio and are identical in all respects
except that the Dollar and Plus Shares bear the service fees described below and
are entitled to vote separately on matters relating to these fees. The
California Intermediate Municipal Fund Portfolio was liquidated on April 17,
1997.
Dollar Shares are sold pursuant to a non-12b-1 shareholder services plan to
institutions other than broker/dealers, and Plus Shares are sold pursuant to a
12b-1 services plan only to broker/dealers which enter into agreements with the
Company requiring them to provide certain support services to their customers in
consideration of the Company's payment of .25% (on an annualized basis) of the
average daily net asset value of such shares held by the institutions on behalf
of their customers. Dividends paid to Plus and Dollar shareholders are reduced
by such fees. In addition, broker/dealers purchasing Plus Shares may be
requested to provide assistance in connection with the distribution of such
shares. Money Shares are sold to institutional investors who choose not to enter
into such servicing agreements with the company. Only 100 Plus Shares were
outstanding during the period from December 1, 1992 to July 12, 1995. Since July
13, 1995 no Plus Shares have been outstanding.
Certain California municipal obligations in the Company's portfolio may be
obligations of issuers which rely in whole or in part on California State
revenues, real property taxes, revenues from health care institutions, or
obligations secured by mortgages on real property. Consequently, the possible
effect of economic conditions in California or of California law on these
obligations must be considered.
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statement and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates. The following is a summary of significant accounting policies
consistently followed by the Company in the preparation of its financial
statements.
Portfolio valuation: Portfolio securities are valued at amortized cost
which approximates market value. Amortized cost valuation involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium.
Securities transactions and investment income: Securities transactions are
recorded on the trade date. Realized gains and losses on investments sold are
recorded on the identified cost basis. Interest income is recorded on the
accrual basis.
Dividends and distributions to shareholders: It is the policy of the
Company to declare dividends from net investment income daily and to pay such
dividends within five business days of the end of each month. Net realized
capital gains, if any, are distributed at least annually.
Federal taxes: No provision is made for federal income or excise taxes
because the Company intends to continue to qualify as a regulated investment
company by complying with the applicable requirements of the Internal Revenue
Code and by distributing all of its earnings to its shareholders.
12
<PAGE> 13
3. Investment Advisory Fee, Administration Fee and Other Related Party
Transactions
The Company has entered into an Investment Advisory Agreement with PNC
Institutional Management Corporation (the "Investment Adviser"), an indirect
wholly-owned subsidiary of PNC Bank, National Association ("PNC Bank"). PNC Bank
serves as the Company's sub-investment adviser pursuant to a Sub-Advisory
Agreement between the Investment Adviser and PNC Bank. Under the Investment
Advisory Agreement, the Investment Adviser is entitled to receive a fee from the
Company, computed daily and payable monthly, at an annual rate of .20% of
Company's average daily net assets.
In March 1998, PNC Institutional Management Corporation, which changed its
name to BlackRock Institutional Management Corporation ("BIMC"), assumed the
responsibilities of PNC Bank, as sub-adviser, to provide research, credit
analysis and recommendations with respect to the Fund's investments and supply
certain computer facilities, personnel and other services. The personnel and
facilities related to these services are being transferred to BIMC and BIMC's
obligation to pay to PNC Bank a portion of the advisory fee has been terminated.
Provident Distributors, Inc. ("PDI"), serves as the Company's distributor.
No compensation is payable by the Company to PDI for its distribution services.
The Company has entered into an Administration Agreement with PFPC Inc.
("PFPC"), an indirect wholly-owned subsidiary of PNC Bank, and PDI (the
"Administrators"), for certain administrative services. Pursuant to their
administrative agreement with the Company, PFPC and PDI jointly are entitled to
receive a fee at an annual rate of .20% of the Company's average daily net
assets.
The Investment Adviser and the Administrators have agreed to reduce the
advisory and administration fees otherwise payable to them and to reimburse the
Company for its operating expenses to the extent necessary to ensure that its
annual operating expense ratio (excluding fees paid to Service Organizations
pursuant to Servicing Agreements) does not exceed .20% of the Company's average
daily net assets.
For the year ended January 31, 1998, the Investment Adviser and the
Administrators voluntarily waived fees, on an equal basis, totaling $1,458,216.
Expenses include legal fees paid to counsel to the Company, a partner of
which is secretary of the Company.
PNC Bank is the Company's custodian and PFPC is transfer agent.
Service Organization fees of $428 were paid to affiliates of PNC Bank for
the year ended January 31, 1998.
4. Fund Shares
Since the Company has sold, issued as reinvestments of dividends and
redeemed shares only at a constant net asset value of $1.00 per share, the
number of shares represented by such sales, reinvestments and redemptions is the
same as the dollar amounts shown below for such transactions.
<TABLE>
<CAPTION>
CALIFORNIA MONEY FUND
---------------------------------
YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Sold
Money Shares................. $ 2,337,571,092 $ 1,314,241,799
Dollar Shares................ 559,243,481 509,290,689
Issued as reinvestments of
dividends
Money Shares................. 1,014,667 1,127,557
Dollar Shares................ -- --
Redeemed
Money Shares................. (2,204,755,948) (1,378,733,746)
Dollar Shares................ (555,014,141) (414,133,752)
--------------- ---------------
Net increase.................. $ 138,059,151 $ 31,792,547
=============== ===============
</TABLE>
The authorized capital of the Company consists of 2.3 billion Money Shares,
300 million Dollar Shares, and 300 million Plus Shares, each with a par value of
$.001 per share.
On January 31, 1998, three shareholders held approximately 49% of the
outstanding shares of the California Money Fund.
13
<PAGE> 14
5. Capital Loss Carryover
At January 31, 1998, California Money Fund had a capital loss carryover
amounting to $146,216 expiring at various times from 2001 to 2006, and is
available to offset possible future capital gains.
6. Net assets
At January 31, 1998, net assets consisted of the following:
<TABLE>
<S> <C>
Paid-in capital.............. $591,035,401
Accumulated net realized loss
on investments............. (148,953)
------------
Total Net Assets............. $590,886,448
============
</TABLE>
14
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Municipal Fund For California Investors, Inc.:
We have audited the accompanying statement of net assets of Municipal Fund
for California Investors, Inc. (the "Fund") as of January 31, 1998 and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
January 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Municipal Fund for California Investors, Inc. as of January 31, 1998, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
[Coopers & Lybrand Signature]
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 6, 1998
15
<PAGE> 16
Directors
G. Willing Pepper
Chairman
William R. Howell
Rodney D. Johnson
Rudolph A. Peterson
Anthony M. Santomero
Officers
Thomas H. Nevin
President
Lisa M. Buono
Treasurer
W. Bruce McConnel, III
Secretary
Investment Adviser
BlackRock Institutional Management Corporation
400 Bellevue Parkway
Wilmington, DE 19809
Co-Administrators
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
Provident Distributors, Inc.
Four Falls Corporate Center
6th Floor
West Conshohocken, PA 19428
Distributor
Provident Distributors, Inc.
Four Falls Corporate Center
6th Floor
West Conshohocken, PA 19428
Transfer Agent
PFPC Inc.
P.O. Box 8950
Wilmington, DE 19885-9628
This report is submitted for the general information of the shareholders of the
Company. It is not authorized for distribution to prospective investors unless
accompanied or preceded by effective prospectuses for each portfolio of the
Company, which contain information concerning the investment policies of the
portfolios as well as other pertinent information.
PIF-A-011
CALIFORNIA MONEY FUND
An Investment Portfolio
Offered by
Municipal Fund for
California Investors, Inc.
Provident Institutional Funds Logo
Annual Report to Shareholders
January 31, 1998
