<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Municipal Fund for New York Investors, Inc.
-------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
<PAGE> 2
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 3
[PROVIDENT INSTITUTIONAL FUNDS LOGO]
November 23, 1998
Dear Shareholder:
The Board of Directors of Municipal Fund for New York Investors, Inc. is pleased
to announce a special meeting of shareholders on Thursday, January 28, 1999, at
11:00 a.m. (Eastern time) in the Fourth Floor Conference Room, Bellevue Park
Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware, to address a
number of issues that are pertinent to you.
As part of our continuing effort to provide the highest level of quality and
commitment, we are recommending a series of changes to the overall fund
structure as well as the modernization of certain investment limitations. The
Board of Directors has approved the proposed changes, outlined in detail in the
enclosed proxy materials, which include the approval of:
- - The election of directors;
- - Ratification of the selection of PricewaterhouseCoopers LLP as the
independent accountants;
- - Approval of the plan to reorganize the Fund into Provident Institutional
Funds, a Delaware business trust;
- - Changes in the fundamental investment limitations in order to modernize and
make uniform the fundamental investment limitations;
- - Changes in the classification of certain fundamental investment limitations
to make such limitations non-fundamental; and
- - The adoption of a new fundamental investment limitation which would permit,
at the director's discretion, the Fund to adopt a master-feeder structure.
The Fund has always been managed with a conservative approach, thereby providing
shareholders with a high-quality money market fund that produces safety of
principal, while preserving the critical elements of liquidity and return.
Consistent with our investment philosophy and approach, which has been our
strength for 25 years, we believe the proposals set forth in this proxy will
improve the competitiveness of the Fund and lead to improved efficiencies across
several fronts.
<PAGE> 4
The Board of Directors recognizes the shareholder benefits described herein
and recommends your approval of the proposed changes and enhancements. We
value your relationship and look forward to your vote in favor of the
attached proposals.
Sincerely,
Thomas H. Nevin
President
(800) 768-2836
PLEASE REVIEW THE ENCLOSED MATERIAL AND COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD. IT IS IMPORTANT YOU RETURN THE PROXY CARD TO ENSURE YOUR
SHARES WILL BE REPRESENTED AT THE SHAREHOLDER MEETING TO BE HELD ON JANUARY 28,
1999.
- 2 -
<PAGE> 5
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 28, 1999
NOVEMBER 23, 1998
TO THE SHAREHOLDERS OF
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of the New York Money Fund (the "Fund") of Municipal Fund for New
York Investors, Inc. (the "Company") will be held on January 28, 1999, at 11:00
a.m. (Eastern time), in the Fourth Floor Conference Room, Bellevue Park
Corporate Center, 400 Bellevue Parkway, Wilmington, DE 19809.
The Meeting will be held with respect to the Fund for the following
purposes, and to transact such other business as may properly come before the
Meeting or any adjournment thereof:
PROPOSAL 1. To elect seven (7) directors.
PROPOSAL 2. To ratify the selection of
PricewaterhouseCoopers LLP as the Company's
independent accountants for its fiscal year
ending July 31, 1999.
PROPOSAL 3. To approve an Agreement and Plan of
Reorganization pursuant to which the Fund
will be reorganized as a separate series of
Provident Institutional Funds, a Delaware
business trust.
PROPOSAL 4. To approve changes to the following
fundamental investment limitations of the
Fund:
(a) limitation on borrowing and senior securities;
(b) limitation on underwriting activities;
(c) limitation on real estate related transactions;
(d) limitation on investment in commodities;
<PAGE> 6
(e) limitation on loans; and
(f) limitation regarding concentration.
PROPOSAL 5. To approve a change in the following fundamental
investment limitations to make such limitations
non-fundamental:
(a) limitation on eligible investments;
(b) limitation on issuer diversification;
(c) limitation on acquiring securities of other investment
companies;
(d) limitation on purchasing securities on margin, making short
sales or maintaining a short position; and
(e) limitation on investing in illiquid securities.
PROPOSAL 6. To approve a new fundamental investment limitation to
permit the Fund to invest substantially all of its
assets in another open-end investment company.
The Proposals stated above are discussed in detail in the attached Proxy
Statement. Shareholders of record as of the close of business on November 13,
1998 are entitled to notice of, and to vote at, the Meeting or any adjournment
thereof.
YOUR DIRECTORS RECOMMEND
THAT YOU VOTE IN FAVOR OF THE PROPOSALS.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY THE COMPANY'S
BOARD OF DIRECTORS. THIS IS IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM AT
THE MEETING. A PROXY MAY BE REVOKED BY ANY SHAREHOLDER AT ANY TIME BEFORE IT IS
EXERCISED BY EXECUTING AND SUBMITTING A REVISED PROXY, BY GIVING WRITTEN NOTICE
OF REVOCATION TO THE COMPANY'S SECRETARY, OR BY WITHDRAWING THE PROXY AND VOTING
IN PERSON AT THE MEETING.
-----------------------------------
W. Bruce McConnel, III
Secretary
November 23, 1998
- 2 -
<PAGE> 7
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Municipal Fund for New York Investors, Inc.
(the "Company") for use at a Special Meeting of Shareholders of the Company and
any adjournment(s) thereof (the "Meeting") to be held on January 28, 1999 at
11:00 a.m. (Eastern time), in the Fourth Floor Conference Room, Bellevue Park
Corporate Center, 400 Bellevue Parkway, Wilmington, DE 19809 This Proxy
Statement and accompanying proxy card will first be mailed on or about November
23, 1998.
The Company currently offers one (1) investment portfolio, the New York
Money Fund, which is referred to herein as the "Fund."
Only shareholders of record of the Fund at the close of business on
November 13, 1998 will be entitled to notice of, and to vote at the Meeting. On
November 13, 1998 there were __________ shares of New York Money Fund entitled
to notice of, and to vote at, the Meeting. Each shareholder of record on that
date is entitled to one vote for each full share held and a proportionate
fractional vote for any fractional shares held as to each proposal on which such
shareholder is entitled to vote. The Fund's shares are referred to herein as
"Shares."
Shares of the Fund have been divided into three classes ("Classes"), New
York Money Shares (the "Money Share Class"), New York Money Dollar Shares (the
"Dollar Shares Class") and New York Money Plus Shares (the "Plus Shares Class").
The Classes differ primarily with respect to expenses. The Dollar Shares Class
alone bears the expense of a shareholder service plan and the Plus Shares Class
alone bears the expense of a 12b-1 Plan. However, none of the proposals to be
presented at the Meeting, as described in this Proxy Statement, involve a
separate vote by a single Class of Shares.
Proxy solicitations will be made primarily by mail. The Company's officers
and employees of the investment adviser may also solicit proxies personally or
by telephone or telefax. ADP has been retained to solicit proxies in connection
with the Meeting for a fee of approximately $650. BlackRock Institutional
Management Corporation ("BIMC"), the investment adviser for the Fund, will bear
all proxy solicitation costs. Any shareholder submitting a proxy may revoke it
at any time before it is exercised by submitting to the Company a written notice
of revocation or a subsequently executed proxy or by attending the Meeting and
voting in person.
<PAGE> 8
Signed proxies received by the Company in time for voting and not so
revoked will be voted in accordance with the directions specified therein. The
Board of Directors recommends a vote FOR the election of directors, as listed;
and FOR each of the matters listed. If no specification is made, the proxy will
be voted FOR the election of directors and FOR such matters.
THE COMPANY WILL FURNISH TO SHAREHOLDERS UPON REQUEST, WITHOUT CHARGE,
COPIES OF ITS ANNUAL REPORT TO SHAREHOLDERS, CONTAINING AUDITED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED JULY 31, 1998. REQUESTS FOR COPIES OF THE
ANNUAL REPORT SHOULD BE DIRECTED TO THE COMPANY AT THE ADDRESS AT THE BEGINNING
OF THIS DOCUMENT OR BY TELEPHONE AT 1-800-821-7432. THE ANNUAL REPORT IS NOT TO
BE REGARDED AS PROXY SOLICITING MATERIAL.
INTRODUCTION
The Company is one of a family of five investment companies which
currently offer ten separate money market portfolios to institutional investors.
The other four investment companies are: Temporary Investment Fund, Inc.
("Temp"), Trust for Federal Securities ("Fed"), Municipal Fund for Temporary
Investment ("Muni") and Municipal Fund for California Investors, Inc. ("Cal
Muni"). BIMC serves as investment adviser for each of these investment
companies. Additionally, each investment company has the same service providers
and offer shares of one or more similar classes. Each investment company has
similar, but not the same, fundamental investment limitations. Each of the money
market portfolios has historically been marketed together as the Provident
Institutional Funds.
At this Meeting, shareholders of the Company are being asked to approve
proposals designed to reorganize the five investment companies into one
investment company. Similar proposals are also being submitted to the
shareholders of Temp, Fed, Muni and Cal Muni. After such reorganization, the
Fund will have the same investment adviser, other service providers, the same
fee and expense structure, and the same investment objective, policies and
limitations as it currently has, subject to any changes approved at this
Meeting. The directors believe that the proposed changes are in the best
interests of the shareholders. If the proposals are approved, the directors
believe that the proposed changes will improve operations, simplify disclosure
and position the Fund to attract additional investment dollars. Each of the
proposals is discussed in greater detail below.
- 2 -
<PAGE> 9
PROPOSAL 1: ELECTION OF DIRECTORS
BACKGROUND.
At the Meeting, shareholders will be asked to elect seven directors, who
will constitute the entire Board of the Company. If elected, each director will
serve until the next annual meeting of shareholders, or special meeting in lieu
thereof, and until the election and qualification of his or her successor, or
until the director's status as a director is sooner terminated as provided in
the Company's By-laws. Additionally, if the Agreement and Plan of Reorganization
is approved as described in Proposal 3 below, the directors elected here will
also serve as the trustees of the newly formed Delaware business trust.
Normally, there will be no annual meeting of shareholders to elect directors (or
trustees of the Delaware business trust), except as required by the Investment
Company Act of 1940 (the "1940 Act").
The persons named as proxies in the accompanying proxy have been
designated by the Board of Directors and intend to vote for the nominees named
below. All Shares represented by valid proxies will be voted in the election of
directors for each nominee named below, unless authority to vote for a
particular nominee is withheld. Each nominee has consented to being named in
this Proxy Statement and to serve if elected. Should any nominee withdraw from
the election or otherwise be unable to serve, the named proxies will vote for
the election of such substitute nominee as the Board of Directors may recommend
unless a decision is made to reduce the number of directors serving on the
Board. The following table sets forth the nominees, their ages, principal
occupations for the past five years, and any other directorships they hold in
companies which are subject to the reporting requirements of the Securities
Exchange Act of 1934 or are registered as investment companies under the 1940
Act.
- 3 -
<PAGE> 10
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE DURING PAST 5 YEARS
- ---- --------- --- -------------------
<S> <C> <C> <C>
G. Nicholas Beckwith, III N/A 53 President and Chief
Executive Officer,
Beckwith Machinery
Company; First Vice
Chairman of the Board of
Trustees, University of
Pittsburgh Medical
Center -
Shadyside/Presbyterian
Hospitals; Second Vice
Chairman of the Board of
Trustees, University of
Pittsburgh Medical
Center Health System;
Board of Overseers,
Brown University School
of Medicine; Board of
Trustees, Shadyside
Academy; Trustee, Claude
Worthington Benedum
Foundation; Trustee,
Chatham College;
Director or Trustee of
two other investment
companies advised by
BIMC.
Jerrold B. Harris N/A 56 President and Chief
Executive Officer, VWR
Scientific Products
Corp.; Director or
Trustee of two other
investment companies
advised by BIMC.
Rodney D. Johnson* 1993 57 President, Fairmount
Capital Advisors, Inc.;
Director or Trustee of
five other investment
companies advised by
BIMC.
Joseph P. Platt, Jr. N/A 51 Partner, Amarna Partners
(private investment
company); formerly, a
Director and Executive
Vice President of
Johnson & Higgins.
</TABLE>
- 4 -
<PAGE> 11
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE DURING PAST 5 YEARS
- ---- --------- --- -------------------
<S> <C> <C> <C>
Robert C. Robb, Jr.(1) N/A 52 Partner, Lewis, Eckert,
Robb & Company; Trustee,
EQK Realty Investors;
Director, Tamaqua Cable
Products Company;
Director, Brynwood
Partners; former
Director, PNC Bank.
Kenneth L. Urish N/A 46 Managing Partner, Urish
Popeck & Co. LLC
(accountants and
consultants).
Frederick W. Winter N/A 53 Dean, Joseph M. Katz
School of Business -
University of
Pittsburgh; formerly,
Dean, School of
Management - State
University of New York
at Buffalo (1994-1997);
former Director, Rand
Capital (1996-1997);
former Director, Bell
Sports (1991-1998);
former Director, Alkon
Corporation (1992-1998).
</TABLE>
- -------------------
* Mr. Johnson is an "interested person" of Provident Institutional Funds,
as that term is defined in the 1940 Act, because he is an officer of Provident
Institutional Funds.
1. From !994 until April 14, 1998, Mr. Robb was a director of PNC Bank.
Mr. Johnson was most recently elected by shareholders on August 25, 1995.
Messrs. Drake, Melfe and Santomero, who currently serve as directors of the
Company, are not standing for re-election at this Meeting.
During the fiscal year ended July 31, 1998, the directors held four
regular Board Meetings. Mr. Johnson, the incumbent director, attended all the
meetings held.
The Company has an Audit Committee, comprised of Messrs. Drake, Johnson
and Melfe. The functions of the Audit Committee are to meet with the Company's
independent accountants to review the scope and findings of the annual audit,
discuss the Company's accounting policies, discuss any recommendations with
respect to the Company's management practices, review the impact of any changes
in accounting standards upon the Fund's financial statements, recommend to the
Board of Directors the selection of
- 5 -
<PAGE> 12
independent accountants, and to perform such other duties as may be requested by
the Board of Directors. The Audit Committee met one time during the fiscal year
ended July 31, 1998, and all members of the Audit Committee were present.
The Company has a Nominating Committee comprised of Messrs. Drake, Johnson
and Melfe. The Nominating Committee is responsible for the selection and
nomination of candidates to serve as directors. Although the Nominating
Committee expects to be able to find an adequate number of candidates to serve
as directors, the Nominating Committee is willing to consider nominations
received from shareholders at the address on the front of this Proxy Statement.
The Nominating Committee did not meet during the fiscal year ended July 31,
1998.
As Messrs. Drake, Melfe and Santomero will be retiring from the Board, the
new board is expected to reconstitute each of the Committees immediately after
the Meeting.
Each director receives an annual fee of $5,000 plus $250 for each Board
meeting attended and are reimbursed for reasonable expenses incurred in
attending meetings. The Chairman the Board, Mr. Melfe, receives an additional
$2,500 per annum for his services in such capacity. Messrs. Drake, Melfe and
Santomero, in connection with their retirement from the Board and from other
boards in the Fund Complex, will receive payments of $4,813, $6,738 and $3,375,
respectively, in recognition of their years of service to the Fund Complex.
These payments will be made by BIMC and are not an expense of the Company.
Drinker Biddle & Reath LLP, of which W. Bruce McConnel, III, Secretary of the
Company, is a partner, received fees from the Company for legal services. The
directors and officers of the Company own less than 1% of the outstanding Shares
of the Fund.
The following chart provides certain information for the fiscal year ended
July 31, 1998 about the fees received by the directors of the Company as
directors and/or officers of the Company and as directors and/or trustees of the
Fund Complex.
- 6 -
<PAGE> 13
<TABLE>
<CAPTION>
=========================================================================================
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM
AGGREGATE ACCRUED AS ANNUAL COMPANY AND
COMPENSATION PART OF BENEFITS FUND COMPLEX(1)
NAME OF PERSON, FROM FUND UPON PAID TO
POSITION COMPANY EXPENSES RETIREMENT DIRECTORS
-------- ------- -------- ---------- ---------
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas A. Melfe, Chairman
of the Board $8,750 n/a n/a $8,750(1)(2)
- -----------------------------------------------------------------------------------------
Rodney D. Johnson, $6,250 n/a n/a $56,500(5)(2)
Director
- -----------------------------------------------------------------------------------------
Francis E. Drake, $6,250 n/a n/a $6,250(1)(2)
Director
- -----------------------------------------------------------------------------------------
Anthony M. Santomero, $6,250 n/a n/a $12,500(3)(2)
Director
- -----------------------------------------------------------------------------------------
=========================================================================================
</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 investment companies a director served on within the Fund
Complex during the fiscal year ended July 31, 1998.
PROPOSAL 2: RATIFICATION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
A majority of the directors who are not "interested persons" of the
Company have selected PricewaterhouseCoopers LLP as independent accountants for
the Company for the fiscal year ending July 31, 1999. The ratification of the
selection of independent accountants is to be voted on at the Meeting and it is
intended that the persons named in the accompanying proxy will vote for
PricewaterhouseCoopers LLP unless contrary instructions are given. In addition,
subject to ratification at this Meeting, the trustees of the Delaware business
trust have selected PricewaterhouseCoopers LLP to serve as the independent
accountants for Provident Institutional Funds. PricewaterhouseCoopers LLP is the
successor by merger to Coopers & Lybrand LLP, and have been the Company's
independent accountants since the Company's organization. PricewaterhouseCoopers
LLP has informed the Company that it has no direct or material indirect
financial interest in the Company or Provident Institutional Funds. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
Meeting to make a statement if desired and to be available to respond to
appropriate questions.
- 7 -
<PAGE> 14
PROPOSAL 3: APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION
PURSUANT TO WHICH THE FUND WILL BE REORGANIZED INTO A
SERIES OF A DELAWARE BUSINESS TRUST
GENERAL.
The directors have approved, subject to shareholder approval, a proposal
for the Fund of the Company to effectuate the transactions set forth in an
Agreement and Plan of Reorganization (the "Plan of Reorganization") dated
November 15, 1998 between the Company and Provident Institutional Funds, a
Delaware business trust ("PIF"). The Plan of Reorganization is attached to this
Proxy Statement as Appendix A. The Plan of Reorganization provides for the
conversion (the "Conversion") of the Fund from a separate series of the Company
into a corresponding separate series of PIF. The series of the Company is
referred to in this Proposal as the "current Fund." It is also contemplated that
each of the investment portfolios of Temp, Fed, Muni and Cal Muni will also be
reorganized into a separate series of PIF.
The Conversions will entail organizing PIF as a Delaware business trust,
which will initially have one series, which corresponds to the current Fund of
the Company, and nine additional series that will match the investment
portfolios currently offered by Temp, Fed, Muni and Cal Muni. The series of PIF
that corresponds to the current Fund is referred to in this Proposal as the
"successor Fund." To effect the Conversion, the current Fund will transfer all
of its assets and liabilities to the successor Fund. As consideration for the
transfer of such assets and liabilities (together, "net assets"), the successor
Fund will issue shares of beneficial interest to the current Fund and the
current Fund will distribute such shares of beneficial interest pro rata to the
current Fund shareholders in exchange for their Shares.
Upon completion of the Conversion, each shareholder of the successor Fund
of PIF will be the owner of full and fractional shares of beneficial interest
equal in number and aggregate net asset value and of the same class as its
Shares of the current Fund as of the date of the Conversion. Following the
Conversion, the successor Fund will carry on the business of the current Fund.
The successor Fund will have the same investment adviser, other service
providers, the same fee and expense structure and investment objective, policies
and limitations as the current Fund. Any change in the composition of the Board
of Directors and fundamental investment limitations approved at the Meeting with
respect to the current Fund will also apply to the successor Fund. In addition,
approval of the Plan of Reorganization will constitute approval of a new
investment advisory agreement, identical in all material respects to the current
investment advisory agreement, except that PNC Bank, N.A. ("PNC Bank") will no
longer serve as sub-adviser (see "Service Providers," below).
- 8 -
<PAGE> 15
Approval of the Plan of Reorganization will also constitute approval to wind-up
the current Fund and the Company.
The Conversion will be accomplished on a tax-free basis and the dollar
value and number of Shares of each investor's investment will not change.
REASONS FOR THE PROPOSED CONVERSION.
The directors believe that a Delaware business trust as a form of
organization offers certain advantages for mutual funds over a Maryland
corporation. The directors believe that the Declaration of Trust of PIF (the
"Delaware Trust Instrument") is clearer and more modern than the Company's
organizational documents. Some of these same improvements could be achieved by
amending the Company's Articles of Incorporation, however, the directors have
concluded that, given the other advantages of a Delaware business trust, it is
preferable to enter into the Plan of Reorganization than to amend the current
organizational documents. For a summary comparison of the Articles of
Incorporation and the proposed Delaware Trust Instrument, see "Description of
Certain Provisions of the Delaware Trust Instrument" below.
The directors also believe that organizing the Fund and the other
investment portfolios offered by Temp, Fed, Muni and Cal Muni as separate series
of a single legal entity (PIF) will offer certain marketing and operational
advantages. These investment portfolios have, historically been marketed to
institutional clients as one fund complex although they have differing fiscal
years, differing Boards and differing legal jurisdictions governing their
operations. This reorganization will eliminate these differences, provide
operational efficiencies and enhance the ability of the portfolios to be
marketed as a single fund complex.
The directors also believe that the Delaware business trust form of
organization will enable the successor Funds to adopt new methods of operation
and employ new technologies that are expected to reduce costs of operation when,
and if, implemented. For example, Delaware law authorizes electronic or
telephonic communications between shareholders and a Delaware business trust.
The trustees of PIF may take advantage of this provision in the future to
improve shareholder voting procedures and to reduce associated costs.
The proposed Conversion also offer the potential for future cost savings,
although no immediate cost savings are expected to result from the Conversion.
Although neither a Delaware business trust nor a Maryland corporation is
required to hold an annual meeting of shareholders, Delaware law affords to the
trustees greater latitude to adapt PIF to future contingencies without holding a
special shareholders meeting. Under the Delaware
- 9 -
<PAGE> 16
Trust Instrument, the trustees have the power to amend the Delaware Trust
Instrument to dissolve the business trust; to incorporate PIF; to merge or
consolidate with another entity; to sell, lease, exchange, transfer, pledge or
otherwise dispose of all or any part of PIF's assets; to cause any series to
become a separate trust; and to change PIF's domicile, all without a shareholder
vote. Any such exercise of authority by the trustees will be subject to
applicable state and federal law.
The Board of Directors, after reviewing the above, determined that the
potential marketing advantages, coupled with the flexibility of a Delaware
business trust as a form of organization would help to assure that PIF operates
under the most advantageous structure and is able to take advantage of
opportunities to improve operations and to reduce the expense and frequency of
future shareholder meetings.
SUMMARY OF THE PLAN OF REORGANIZATION.
The following discussion summarizes certain terms of the Plan of
Reorganization. This summary of the Plan of Reorganization is qualified in its
entirety by the provisions of the Plan of Reorganization, which is attached to
this Proxy Statement as Appendix A.
The successor Fund will initially have only nominal assets and a net asset
value of $1.00 per share. On the closing date of the Conversion (the "Closing
Date"), the Fund will transfer all of its assets to the successor Fund in
exchange for the assumption by the successor Fund of all the liabilities of the
current Fund and the issuance to the current Fund of shares of beneficial
interest of the successor Fund equal to the value (as determined by using the
procedures in the current prospectuses) on the date of the exchange of the
current Fund's net assets. Immediately thereafter, the Fund will liquidate and
distribute shares of beneficial interest to the current Fund's account pro rata
in proportion to the current Fund shareholder's interest in the current Fund in
exchange for such Shares. In these exchanges, the successor Fund will issue the
appropriate number of shares of beneficial interest of each Class of Shares that
currently is outstanding, so that the current Fund will distribute, and holders
of a particular Class of current Fund Shares will receive, the same number of
shares of beneficial interest of the same Class. As soon as practicable after
this distribution of shares of beneficial interest, the current Fund will be
wound up. Certificates evidencing full or fractional shares of beneficial
interest will not be issued. Upon completion of the Conversion, each current
Fund shareholder will be the owner of full and fractional shares of beneficial
interest equivalent in number, Class and aggregate net asset value to the
shareholder's current Fund Shares immediately before the Conversion.
- 10 -
<PAGE> 17
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Conversion will become effective by January 31, 1999 or as
soon thereafter as possible.
If, at any time before the Closing Date of the Conversion, the directors
determine that it would not be in the best interest of the Company or the
shareholders to proceed with the Conversion, the Conversion will not go forward,
notwithstanding the approval of the Conversion by the shareholders at the
Meeting. The Company and PIF may at any time waive compliance with any of the
conditions contained in, or may amend, the Plan of Reorganization; provided that
such waiver or amendment does not materially adversely affect the interests of
current Fund shareholders.
EXPENSES OF THE CONVERSION.
BIMC will bear the expenses of this Meeting and of the Conversion.
TAX CONSEQUENCES OF THE CONVERSION.
It is a condition to the consummation of the Conversion that the Company
and PIF receive on or before the Closing Date an opinion from Drinker Biddle &
Reath LLP, counsel to the Company and PIF, substantially to the effect that,
among other things, for federal income tax purposes, the Conversion will
constitute a reorganization under Section 368(a)(1)(F) of the Internal Revenue
Code of 1986, as amended, and that no gain or loss will be recognized for
federal income tax purposes by the current Fund, the successor Fund, and the
shareholders of the current Fund upon (1) the transfer of the current Fund's
assets to the corresponding successor Fund in exchange solely for such shares of
beneficial interest and the assumption by the successor Fund of the current
Fund's liabilities or (2) the distribution in liquidation by the current Fund of
such shares of beneficial interest to the current Fund shareholders in exchange
for their Shares. The opinion will further provide, among other things, that in
counsel's view (i) the tax basis of the shares of beneficial interest to be
received by the current Fund shareholder will be the same as that of his or her
current Shares surrendered in exchange therefor and (ii) the current Fund
shareholder's tax holding period for his or her shares of beneficial interest
will include such shareholder's tax holding period for the current Fund Shares
surrendered in exchange therefor, provided that the current Fund Shares were
held as capital assets on the date of the exchange.
CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS.
PIF's transfer agent will establish accounts for all current Fund
shareholders containing the appropriate number and Class of shares of beneficial
interest to be received by that shareholder under the Plan of Reorganization.
Such accounts will be
- 11 -
<PAGE> 18
identical in all material respects to the accounts currently maintained by the
Fund for each shareholder.
INDEPENDENT ACCOUNTANTS.
PricewaterhouseCoopers LLP are presently the independent accountants for
the Company, and will continue to be the independent accountants for PIF
(subject to the required ratification discussed in Proposal 2) for its current
fiscal year.
SHAREHOLDER SERVICING AND DISTRIBUTION PLANS.
The trustees of PIF have adopted a shareholder servicing plan with respect
to Dollar Shares that is identical, in all material respects, to the current
shareholder servicing plan. The trustees of PIF have also adopted a 12b-1 Plan
with respect to Plus Shares of the Fund that is identical, in all material
respects, to the current 12b-1 Plan. In addition, PIF, on behalf of the
successor Fund, will assume the current Fund's obligations under shareholder
service plan and distribution plan agreements with institutional investors such
as banks, savings and loan associations and other financial institutions that
act as service organizations.
SERVICE PROVIDERS.
BIMC currently serves as investment adviser to the Fund. PFPC Inc.
("PFPC") and Provident Distributors, Inc. ("PDI") currently serve as
co-administrators to the Fund. In addition, PFPC currently serves as transfer
agent and dividend disbursing agent to the Fund and PDI serves as distributor to
the Fund. PNC Bank currently serves as sub-adviser and custodian to the Fund.
PIF will adopt investment advisory, co-administration, transfer agency and
dividend disbursing agent, distribution and custodian agreements with respect to
the successor Fund that will be substantially the same, in all material
respects, to the current agreements, except that PNC Bank will no longer serve
as sub-adviser, and PDI will no longer serve as co-administrator. BIMC will
serve as a co-administrator with PFPC.
PROPOSED NEW ADVISORY AGREEMENT.
If the Plan of Reorganization is approved, BIMC will enter into a new
Advisory Agreement with PIF dated January 31, 1999 (the "New Advisory
Agreement"). BlackRock Institutional Management Corporation (formerly, PNC
Institutional Management Corporation, "BIMC") serves as the Company's investment
adviser pursuant to an advisory agreement dated February 9, 1987 (the "Current
Advisory Agreement"). A copy of the New Advisory Agreement is attached as
Appendix B.
- 12 -
<PAGE> 19
The New Advisory Agreement omits PNC Bank as sub-adviser and recognizes
the fact that all investment advisory services are provided by BIMC. BIMC is an
indirect, majority owned subsidiary of PNC Bank. Prior to March 31, 1998, PNC
Bank, as sub-adviser to the Company, provided research, credit analysis and
recommendations with respect to the Fund's investments, and supplied certain
computer facilities, personnel and other services. On March 31, 1998, the
facilities, personnel, services and related expenses of PNC Bank were
transferred to BIMC; BIMC assumed PNC Bank's responsibilities under the
sub-advisory agreement; and BIMC's obligation to pay a portion of the advisory
fee to PNC Bank was terminated. The Current Advisory Agreement names PNC Bank as
sub-adviser, and provides for its termination upon the termination of the
sub-advisory agreement. The New Advisory Agreement would delete those
provisions, and BIMC would be the sole investment adviser. Additionally, the New
Advisory Agreement would also cover the investment portfolios of other
investment companies (i.e., the investment portfolios offered by Temp, Fed, Muni
and Cal Muni) involved in the Conversions described in this Proposal 3.
The Company's Current Advisory Agreement was last approved by the
directors on June 18, 1998, when the directors, including a majority of those
directors who are not "interested persons" of the Company, approved its
continuation for a twelve month period commencing August 1, 1998. The Current
Advisory Agreement was last approved by the shareholders on July 28, 1989.
DESCRIPTION OF THE PROVISIONS OF THE CURRENT ADVISORY AGREEMENT WHICH WILL
BE CHANGED IN THE NEW ADVISORY AGREEMENT. The terms of the New Advisory
Agreement are the same in all material respects as the terms of the Current
Advisory Agreement, except as follows:
1. ELIMINATION OF PROVISIONS RELATING TO PNC BANK AS SUB-ADVISER. Under
the Current Advisory Agreement PNC Bank is the sub-adviser. Additionally, the
Current Advisory Agreement calls for such agreement to terminate immediately if
the sub-advisory agreement with PNC Bank is terminated. The New Advisory
Agreement will have no such requirement. It will, however, permit PIF, on behalf
of a Fund, to employ a sub-adviser subject to any necessary approvals. PIF does
not currently anticipate employing PNC Bank as sub-adviser to the Funds.
2. ADDITION OF ADDITIONAL INVESTMENT PORTFOLIOS TO THE NEW ADVISORY
AGREEMENT. Several other investment portfolios advised by BIMC (i.e., the
investment portfolios offered by Temp, Fed, Muni and Cal Muni) are also expected
to convert assets into separate investment portfolios of PIF. These other
investment portfolios would be managed by BIMC under the New Advisory Agreement.
Their current advisory agreements are substantially the same as the Current
Advisory Agreement.
- 13 -
<PAGE> 20
3. TERM. If approved by the shareholders at this Meeting, the initial term
of the New Advisory Agreement will extend through March 31, 2000, and thereafter
shall continue in effect for successive one-year terms ending on March 31 of
each year. The term of the Current Advisory Agreement expires on July 31 of each
year.
4. MANAGEMENT. Under the Current Advisory Agreement BIMC is responsible
for computing the respective net asset value and net income for the Fund (and
each Class thereof). The New Advisory Agreement will have no such requirement.
This responsibility will shift to the co-administration agreement and will
become the duty of BIMC and PFPC as co-administrators.
5. INCIDENTAL AND CONFORMING CHANGES. Certain minor changes will be made
to the New Advisory Agreement to remove language that is obsolete and to make
conforming changes consistent with the changes described above.
DESCRIPTION OF THE PROVISIONS OF THE CURRENT ADVISORY AGREEMENT AND THE
NEW ADVISORY AGREEMENT WHICH WILL REMAIN UNCHANGED. Except as described above,
the terms and conditions of the New Advisory Agreement are the same in all
material respects as the Current Advisory Agreement. Set forth below is a
summary of the provisions that are the same in both agreements.
BIMC, subject to the supervision of the Company's directors or PIF's
trustees, manages the Fund's portfolio and is responsible for, makes decisions
with respect to and places orders for all purchases and sales of the Fund's
portfolio securities.
For the advisory services provided and expenses assumed by it, BIMC is
entitled to receive a fee, computed daily and payable monthly, at the annual
rate of .20% of the Fund's average net assets.
During the fiscal year ended July 31, 1998, the Fund paid advisory fees
(net of waivers) of $202,771.
The agreements provide that BIMC shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund except for a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of it in the performance of its duties or
from reckless disregard by it of its obligations and duties thereunder.
BIMC has agreed to bear all expenses incurred by it in connection with its
activities other than the cost of securities (including brokerage commissions,
if any) purchased for the Fund. BIMC may from time to time reduce the investment
advisory fees
- 14 -
<PAGE> 21
otherwise payable to it or may reimburse the Fund for its operating expenses. In
addition, BIMC, PFPC and PDI are required to reimburse a Fund if the expenses
borne by the Fund in any fiscal year exceed the applicable expense limitations
imposed by the securities regulations of any state in which Shares of the Fund
are registered or qualified for sale to the public. After the Conversion, PDI
will no longer be subject to this expense reimbursement provision.
Continuance of the agreements for successive one-year terms must be
specifically approved at least annually (i) by the vote of a majority of the
directors or trustees who are not parties to such advisory agreement or
"interested persons" (as that term is defined in the 1940 Act) of any such
party, and (ii) by a majority of directors or trustees or by a vote of a
majority of the outstanding Shares of the Company or PIF. Each agreement
provides for termination automatically upon assignment and each are terminable
at any time without penalty by the directors or trustees or by a vote of a
majority of a Fund's outstanding Shares, on 60 days' written notice to BIMC or
by BIMC on 90 days' written notice to the Company or PIF.
INFORMATION ON BIMC. BIMC's offices are located at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, Delaware 19809. All of the capital
stock of BIMC is owned by BlackRock Advisors, Inc. (formerly, PNC Asset
Management Group, Inc.). All of the capital stock of BlackRock Advisors, Inc.,
which has offices at 345 Park Avenue, New York, New York 10154, is owned by
BlackRock, Inc. A majority of the capital stock of BlackRock, Inc., which has
offices at 345 Park Avenue, New York, New York 10154 is owned by PNC Asset
Management, Inc. PNC Asset Management, Inc. is under the control of PNC Bank.
All of the capital stock of PNC Bank, which has banking offices at 1600 Market
Street, Philadelphia, Pennsylvania 19103, is owned by PNC Bancorp, Inc., which
has offices at 5th and Wood Streets, Pittsburgh, Pennsylvania 15265. All of the
capital stock of PNC Bancorp, Inc. is owned by PNC Bank Corp., a publicly-held
corporation with principal offices in Pittsburgh, Pennsylvania.
- 15 -
<PAGE> 22
The names, addresses and principal occupations of the principal executive
officer and each director of BIMC are as follows:
<TABLE>
<CAPTION>
POSITION WITH PRINCIPAL
BIMC NAME AND ADDRESS OCCUPATIONS
- -------------- ---------------- -----------
<S> <C> <C>
Director Walter E. Gregg, Jr. Senior Executive
249 Fifth Avenue Vice President,
Pittsburgh, PA 15222 PNC Bank Corp.
Director Helen P. Pudlin Vice President and General
249 Fifth Avenue Counsel, PNC Bank Corp.
Pittsburgh, PA 15222
Chairman, Director Laurence D. Fink Chairman and Chief Executive
and Chief Executive 345 Park Avenue Officer,
Officer New York, New York 10154 BlackRock Financial
Management, Inc.
Director James E. Rohr President, PNC Bank Corp.
249 Fifth Avenue
Pittsburgh, PA 15222
</TABLE>
OTHER ADVISORY CLIENTS. BIMC also acts as investment adviser and/or
sub-adviser to various other registered investment companies. The table below
sets forth certain information with respect to such investment portfolios which
have similar investment objectives to the Fund, excluding investment portfolios
which invest primarily in taxable securities:
- 16 -
<PAGE> 23
<TABLE>
<CAPTION>
ANNUAL RATE OF
INVESTMENT
ADVISORY/SUB-
ADVISORY FEES
NET ASSETS AS OF AS A PERCENTAGE
NAME OF FUND AUGUST 31, 1998 OF NET ASSETS
- ------------ --------------- --------------
<S> <C> <C>
Municipal Fund for California
Investors, Inc -
California Money Fund $640,879,283 .20%
Municipal Fund for Temporary
Investment -
.175% of the first
MuniFund $635,619,998 $1 billion(1)
MuniCash $489,970,430 .175% of the first
$1 billion(1)
The RBB Fund, Inc.-
Municipal Money Market $245,170,814 .35% of the first
$250 million(2)
New York Municipal $31,054,666 .35% of the first
$250 million(2)
BlackRock Funds -
Municipal Money Market $473,315,262 .40% of the first
$1 billion(3)
New Jersey Municipal .40% of the first
Money Market $155,568,720 $1 billion(3)
North Carolina Municipal .40% of the first
Money Market $162,734,891 $1 billion(3)
Ohio Municipal Money $121,991,766 .40% of the first
Market $1 billion(3)
Pennsylvania Municipal $510,384,830 .40% of the first
Money Market $1 billion(3)
Virginia Municipal $82,650,410 .40% of the first
Money Market $1 billion(3)
First Funds - .08% of the first
Municipal Money $42,753,092 $500 million(4)
Market
Warburg, Pincus $179,898,444 .25% of net assets
Counselors, Inc.
New York Tax Exempt Fund
- --------------------------------------------------------------------------------
</TABLE>
1. Subsequent breakpoints are .15% of the next $1 billion; .125% of the next $1
billion; .10% of the next $1 billion; .095% of the next $1 billion; .09% of the
next $1 billion; .085% of the next $1 billion; and .08% of net assets over $7
billion.
2. Subsequent breakpoints are .30% of the next $250 million; and .25% of net
assets over $500 million.
3. Subsequent breakpoints are .35% of the next $1 billion; .325% of the next $3
billion; and .30% of net assets over $5 billion.
- 17 -
<PAGE> 24
4. Subsequent breakpoints are .06% of the next $500 million; and .05% of net
assets over $1 billion.
SERVICES TO THE FUND BY RELATED PARTIES. PFPC and PDI serve as
co-administrators to the Fund and jointly receive fees, computed daily and paid
monthly, at the same rate as BIMC's advisory fees described above under
"Description of the Provisions of the Current Advisory Agreement and the New
Advisory Agreement Which Will Remain Unchanged." During the fiscal year ended
July 31, 1998, the Fund paid PFPC and PDI administration fees (net of waivers)
of $202,771.
PFPC also serves as transfer agent and dividend disbursing agent to the
Fund. For transfer agency and dividend disbursing agent services, the Fund pays
PFPC fees at the annual rate of $12 per account plus $1 for each purchase or
redemption transaction by an account, and out-of-pocket expenses in connection
with such services. During the fiscal year ended July 31, 1998, the Fund paid
PFPC $16,907 in transfer agent fees and expenses.
Affiliates of BIMC may also receive fees under the shareholder service and
distribution agreements applicable to the Dollar Share and Plus Share Classes of
the Fund. During the fiscal year ended July 31, 1998, the Dollar Shares Class
paid $0 in service organization fees to affiliates of BIMC. During the fiscal
year ended July 31, 1998, the Plus Shares Class made no payments in distribution
fees to affiliates of BIMC because no such shares were outstanding.
PNC Bank serves as custodian to the Fund. Pursuant to the Custodian
Agreement, the Fund pays PNC Bank an annual fee, calculated daily on the average
daily gross assets and paid monthly, at the rate of $.25 for each $1000 of the
Fund's average gross assets. During the fiscal year ended July 1, 1998, the Fund
paid PNC Bank $79,868 in custodian fees and expenses.
DESCRIPTION OF CERTAIN PROVISIONS OF THE DELAWARE TRUST INSTRUMENT.
The following is a summary of certain provisions of the Delaware Trust
Instrument.
SERIES AND CLASSES. The Delaware Trust Instrument permits PIF to issue
series of its shares of beneficial interest which represent interests in
separate portfolios of investments, including the successor Fund. PIF is also
authorized to issue multiple classes of all series. The Company is also
permitted to issue separate series and classes of shares. Both the Company and
PIF may authorize the issuance of additional series or classes without prior
shareholder approval. No series is entitled to share in the assets of any other
series or is liable for the expenses or liabilities of any other series. The
- 18 -
<PAGE> 25
successor Fund would initially have the same Classes of shares as the current
Fund, and these Classes would have substantially the same attributes as the
Classes of the current Fund. Shares of the Company and PIF will have the same
redemption, liquidation and dividend rights. The Company's Shares have a par
value of $0.001 per share. The shares of beneficial interest of PIF have no par
value. Neither the Shares of the Company nor the shares of beneficial interest
of PIF have any preemptive rights. The directors believe that these differences
are immaterial.
LIMITATIONS ON DERIVATIVE ACTIONS. In addition to the requirements of
Delaware law, the Delaware Trust Instrument provides that a shareholder of PIF
may bring a derivative action on behalf of PIF only if the following conditions
are met: (a) shareholders eligible to bring such derivative action under
Delaware law who hold at least 10% of the outstanding shares of beneficial
interest of the Delaware business trust, or 10% of the outstanding shares of
beneficial interest of the series or class to which such action relates, must
join in the request for the trustees to commence such action; and (b) the
trustees must be afforded a reasonable amount of time to consider such
shareholder request and to investigate the basis of such claim. The Delaware
Trust Instrument also provides that no person, other than the trustees, who is
not a shareholder of a particular series or class shall be entitled to bring any
derivative action, suit or other proceeding on behalf of or with respect to such
series or class. The trustees will be entitled to retain counsel or other
advisers in considering the merits of the request and may require an undertaking
by the shareholders making such request to reimburse PIF for the expense of any
such advisers in the event that the trustees determine not to bring such action.
No similar provision is applicable to the Company.
SHAREHOLDER MEETINGS AND VOTING RIGHTS. PIF is not required to hold annual
meetings of shareholders and does not intend to hold such meetings. In the event
that a meeting of shareholders is held, each share of beneficial interest of PIF
will be entitled, as determined by the trustees without the vote or consent of
shareholders, to one vote for each share of beneficial interest on all matters
presented to shareholders, including the election of trustees. However, to the
extent required by the 1940 Act or otherwise determined by the trustees, series
and classes of PIF will vote separately from each other. Shareholders of PIF do
not have cumulative voting rights in the election of trustees. The Company has
the same policies regarding annual meetings and voting rights, except as noted
below. Meetings of shareholders of the Company, PIF, or any series or class
thereof, may be called by the directors, trustees, certain officers or upon the
written request of holders of 25% or more of the shares entitled to vote at such
meeting. The shareholders of PIF will have voting rights only with respect to
the limited number of matters specified in the Delaware Trust Instrument and
such other matters as the trustees may determine
- 19 -
<PAGE> 26
or may be required by law. With respect to the Company, whether a matter
requires shareholder approval is an issue of Maryland corporate law and the
Company's Articles of Incorporation cannot be amended without shareholder
approval.
INDEMNIFICATION. The Delaware Trust Instrument provides for
indemnification of trustees, officers and agents of PIF unless the recipient is
liable by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person's office. The
Company provides a similar degree of indemnification in its By-Laws.
The Delaware Trust Instrument provides that, if any shareholder or former
shareholder of any series is held personally liable solely by reason of being or
having been a shareholder and not because of the shareholder's acts or omissions
or for some other reason, the shareholder or former shareholder (or heirs,
executors, administrators, legal representatives or general successors) will be
entitled, out of the assets belonging to the applicable series, to be held
harmless from and indemnified against all loss and expense arising from such
liability. PIF, acting on behalf of any affected series, must, upon request by
such shareholder, assume the defense of any claim made against such shareholder
for any act or obligation of the series and satisfy any judgment thereon from
the assets of the series. Shareholders of the Company have no personal liability
for the Company's obligations.
ENDING THE TRUST. The Delaware Trust Instrument permits the winding up of
PIF or of any series or class of PIF (i) by a majority of the affected
shareholders at a meeting of shareholders of the series or class of PIF; or (ii)
by a majority of the trustees without shareholder approval if the trustees
determine that such action is in the best interest of PIF or its shareholders.
The winding up of the Company would be governed by Maryland corporate law and
would generally require shareholder approval.
MERGER, CONSOLIDATION, SALE OF ASSETS, ETC. The Delaware Trust Instrument
authorizes the trustees, without shareholder approval (except as stated in the
next paragraph), to cause PIF, or any series thereof, to merge or consolidate
with any corporation, association, trust or other organization or sell or
exchange all or substantially all of the property belonging to PIF, or any
series thereof. In addition, the trustees, without further shareholder approval
if Proposal 6 is approved, may adopt a master-feeder structure by investing
substantially all of the assets of a series of PIF in the securities of another
open-end investment company. A reorganization, including the conversion to a
master-feeder structure, would require shareholder approval by the Company.
- 20 -
<PAGE> 27
AMENDMENTS. The Delaware Trust Instrument permits the trustees to amend
the Delaware Trust Instrument without a shareholder vote. However, shareholders
of PIF have the right to vote on any amendment (i) that would adversely affect
the voting rights of shareholders; (ii) that is required by law to be approved
by shareholders; (iii) that would amend the voting provisions of the Delaware
Trust Instrument; or (iv) that the trustees determine to submit to shareholders.
Amendment to the Company's Articles of Incorporation requires shareholder
approval for any amendment changing the terms or contract rights, expressly set
forth in the Articles of Incorporation, of any of its outstanding stock by
classification, reclassification or otherwise.
SERIES TRUSTEES. The trustees may appoint separate trustees with respect
to one or more series or classes of PIF's shares of beneficial interest. The
Company's Articles of Incorporation do not permit the election of separate
directors for a series or class. The trustees of PIF do not currently intend to
appoint Series Trustees.
BOARD OF DIRECTOR'S EVALUATION AND RECOMMENDATION.
The directors discussed the proposed Conversion preliminarily at a meeting
held on September 11, 1998 and in more detail at a special meeting held on
October 22, 1998. The directors took into consideration the fact that the
Conversion may provide operational efficiencies and additional managerial
flexibility to the trustees of PIF. The directors considered the terms and
conditions of the Plan of Reorganization. They also considered the fact that the
Fund will have the same investment adviser, other service providers, and the
same fee and expense structures.
The directors also considered the terms of the New Advisory Agreement that
would be in place for PIF. With respect to the terms and conditions of the New
Advisory Agreement, which are the same in all material respects as those in the
Current Advisory Agreement, the directors considered, among other things, the
quality of the investment advisory services that have been provided in the past
by BIMC, and which are expected to continue to be provided after January 31,
1999 by substantially the same personnel. They discussed the impact of the
assumption of PNC Bank's duties by BIMC. They considered the Fund's performance
in relation to a selected group of other funds with a similar investment
objective, which comparison reflected very favorably on BIMC. After
consideration of all this information and such other items as were deemed
appropriate, the directors concluded that the New Advisory Agreement contained
terms, including the provisions for fees, that were fair and reasonable to PIF.
Based on the foregoing, the directors believe that the Conversion will be
beneficial to present shareholders of the Fund
- 21 -
<PAGE> 28
as well as to potential investors. At the meeting held on October 22, 1998,
after considering the matters discussed above, and the fact that the costs
associated with this Meeting and the proposed Conversion would be borne entirely
by BIMC, the directors approved the adoption of the Plan of Reorganization and
determined that the Conversion: (i) is in the best interest of the Fund and (ii)
will not result in dilution of the interests of the shareholders of the Fund. In
addition, the directors voted to recommend to the shareholders of the Fund that
they approve the Plan of Reorganization and the transactions contemplated
thereunder.
A vote FOR the Conversion will authorize the current Fund, as the sole
shareholder of its corresponding successor Fund: (i) to elect as trustees of PIF
(if Proposal 1 is approved) Messrs. Beckwith, Harris, Johnson, Platt, Robb,
Urish and Winter (see Proposal 1); (ii) to ratify the selection of
PricewaterhouseCoopers LLP as PIF's independent accountants (see Proposal 2);
(iii) to approve the New Advisory Agreement between PIF and BIMC; and (iv) to
approve the fundamental investment limitations for the successor Fund, which if
Proposals 4, 5 and 6 are approved, will be the same as the current fundamental
investment limitations in effect for the Fund, as amended by such Proposals. In
addition, if the Conversion is approved but Proposals 4, 5 and/or 6 are not
approved by a current Fund's shareholders, the current Fund, as sole shareholder
of the successor Fund, will establish only the existing fundamental investment
limitations, as the case may be.
PROPOSAL 4: TO APPROVE CHANGES TO THE FUNDAMENTAL INVESTMENT
LIMITATIONS OF THE FUND
Certain investment limitations of the Fund are matters of fundamental
policy and may not be changed with respect to the Fund without the approval of
its shareholders. BIMC, the Company's investment adviser, has recommended to the
Board of Directors that certain fundamental investment limitations be amended as
shown below. The proposed changes would modernize the limitations and conform
the fundamental investment limitations of the Fund to those of Temp, Fed, Muni
and Cal Muni. In addition, if approved at this Meeting, these fundamental
investment limitations will also apply to the successor Fund of PIF. This will
allow BIMC to manage its investment portfolios in a more streamlined and
efficient manner. These changes will also result in a clearer and simpler
statement of these investment limitations. Except as specifically noted below,
these changes do not reflect a change in the investment policies or techniques
of the Fund. Shareholders will vote either for or against Proposal 4 in its
entirety. The directors believe that the proposal is in the best interests of
the Fund's shareholders.
- 22 -
<PAGE> 29
(a) AMENDMENT TO THE FUND'S
FUNDAMENTAL INVESTMENT LIMITATION ON
BORROWING AND SENIOR SECURITIES
CURRENT PROPOSED
The Fund may not borrow money except A Fund may not borrow money or
from banks for temporary purposes and issue senior securities except
then in amounts not in excess of 10% to the extent permitted under
of the value of the Fund's assets at the 1940 Act.
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 intended for
investment leverage, but solely to
facilitate management of the Fund's
portfolio by enabling the Fund to meet
redemption requests when the
liquidation of portfolio securities is
deemed to be disadvantageous or
inconvenient, and hence the Fund may
not purchase any portfolio securities
while its borrowings are outstanding.)
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would modernize
and make the language of this limitation uniform among the money market funds
advised by BIMC. It will also expand the Fund's ability to borrow money from 10%
to 33 1/3% of its total assets at the time of borrowing.
- 23 -
<PAGE> 30
(b) AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT LIMITATION
ON UNDERWRITING ACTIVITIES
CURRENT PROPOSED
The Fund may not underwrite any A Fund may not act as an
issue of securities except to underwriter of securities. A
the extent that the purchase of Fund will not be an underwriter
debt obligations directly from for purposes of this limitation
the issuer thereof in accordance if it purchases securities in
with the Fund's investment transactions in which the Fund
objective, policies and would not be deemed to be an
limitations may be deemed to be underwriter for purposes of the
an underwriting. Securities Act of 1933.
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would modernize
and make the language of this limitation uniform among the money market funds
managed by BIMC.
(c) AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING REAL ESTATE RELATED TRANSACTIONS
CURRENT PROPOSED
The Fund may not purchase or A Fund may not purchase or sell
sell real estate except that the real estate. The purchase of
Fund may invest in debt securities secured by real
obligations secured by real estate or interests therein are
estate or interests therein. not considered to be a purchase
of real estate for purposes of
the limitation.
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would modernize
and make uniform the language of this limitation among the money market funds
managed by BIMC.
(d) AMENDMENT TO THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS
CONCERNING COMMODITIES
CURRENT PROPOSED
The Fund may not purchase or A Fund may not purchase or sell
sell commodities or commodity commodities or commodities
contracts, or invest in oil, gas contracts.
or mineral exploration or
development programs.
The Fund may not write or sell
puts, calls, straddles, spreads
or combinations thereof.
- 24 -
<PAGE> 31
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would combine and
make uniform the language of this limitation among the money market funds
managed by BIMC. Additionally, it would delete the language concerning
investments in oil, gas or mineral exploration or development programs. This
language was formerly required by various state securities laws, but is no
longer required. The Fund does not intend on investing in such securities.
(e) AMENDMENT TO THE FUND'S INVESTMENT LIMITATION
CONCERNING LOANS
CURRENT PROPOSED
The Fund may not make loans A Fund may not make loans. The
except that the Fund may purchase of debt obligations,
purchase or hold debt the lending of portfolio
obligations in accordance with securities and the entry into
its investment objective, repurchase agreements are not
policies and limitations. treated as the making of loans
for purposes of this limitation.
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would modernize
the language of this limitation. In addition, it would permit the Fund to engage
in securities lending transactions. If approved, the Fund may loan its
securities up to 33 1/3% of its total assets (including the value of collateral
for the loans) to qualified brokers, dealers, banks and other financial
institutions for the purposes of seeking additional net investment income
through the receipt of interest on the loans. Such loans would involve risks of
delay in receiving additional collateral in the event the collateral decreased
below the value of the securities loaned or of delay in recovering the
securities loaned or even loss of rights in the collateral should the borrower
of the securities fail financially.
- 25 -
<PAGE> 32
(f) AMENDMENT TO THE FUND'S INVESTMENT LIMITATION
CONCERNING CONCENTRATION
CURRENT PROPOSED
The Fund may not purchase any A Fund may not purchase any
securities except securities securities which would cause 25%
issued by the United States, any or more of the Fund's total
state territory or possession of assets at the time of purchase
the United States, the District to be invested in the securities
of Columbia or any of their of one or more issuers
authorities, agencies, conducting their principal
instrumentalities or political business activities in the same
subdivisions, which would cause industry, provided that there is
more than 25% of the value of no limitation with respect to
the Fund's total assets at the obligations issued or guaranteed
time of purchase to be invested by the U.S. government, any
in the securities of issuers state or territory of the United
conducting their principal States, or any of their
business activities in the same agencies, instrumentalities or
industry. political subdivisions.
Notwithstanding the above limitation,
there is no limitation with respect to
investments by the Fund in repurchase
agreements, domestic bank obligations
and certain bank obligations
considered to be issued by domestic
banks pursuant to regulations or
pronouncements of the SEC or its
staff.
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would modernize
the language of this limitation.
PROPOSAL 5: TO APPROVE A CHANGE IN THE FOLLOWING FUNDAMENTAL
INVESTMENT LIMITATIONS OF THE FUND TO MAKE SUCH
LIMITATIONS NON-FUNDAMENTAL
The following proposals would change certain fundamental investment
limitations of the Fund to non-fundamental investment limitations. Unlike a
fundamental limitation, a non-fundamental investment limitation may be changed
without the approval of shareholders. Neither the 1940 Act nor state securities
laws require such limitations to be fundamental. The proposed changes would give
the directors greater flexibility in responding to regulatory or market
developments. Except as noted below, the directors have no present intention of
changing the investment limitations of the Fund; however, if this proposal is
approved, the Board of Directors may do so in the future. Additionally, if
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<PAGE> 33
approved at this Meeting, these limitations will also apply to the successor
Fund of PIF. Shareholders will vote either for or against Proposal 5 in its
entirety. The directors believe that the proposal is in the best interests of
the Fund's shareholders.
(a) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
LIMITATION ON ELIGIBLE SECURITIES
CURRENT PROPOSED
The Fund may not invest less This limitation would be made
than 80% of its assets in non-fundamental.
securities the interest on which
is exempt from federal income
tax, except during defensive
periods or during periods of
unusual market conditions.
(b) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
LIMITATION ON ISSUER DIVERSIFICATION
CURRENT PROPOSED
The Fund may not purchase the This limitation would be made
securities of any issuer if as a non-fundamental.
result more than 5% of the value
of the Fund's total assets would
be invested in the securities of
such issuer, except that (a) up
to 50% of the value of the
Fund's total assets may be
invested without regard to this
5% limitation provided that no
more than 25% of the value of
the Fund's total assets are
invested in the securities of
any one issuer and (b) this 5%
limitation does not apply to
securities issued or guaranteed
by the U.S. Government, its
agencies or instrumentalities.
For purposes of this limitation,
a security is considered to be
issued by the governmental
entity (or entities) whose
assets and revenues back the
security, or, with respect to a
private activity bond that is
backed only by the assets and
revenues
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<PAGE> 34
of a non-governmental user,
by such non-governmental user. In
certain circumstances, the
guarantor of a guaranteed
security may also be considered
to be an issuer in connection
with such guarantee, except
that a guarantee of a security
shall not be deemed to be a
security issued by the
guarantor when the value of all
securities issued and
guaranteed by the guarantor,
and owned by the Fund, does not
exceed 10% of the value of the
Fund's total assets.
EXPLANATION OF THE PROPOSED CHANGE: The Fund is classified as a
non-diversified investment company under the 1940 Act. The current limitation is
not required by the 1940 Act and is a recital of the Internal Revenue Code's
requirements for non-diversified investment companies. The Fund will still be
subject to the requirements of Rule 2a-7 under the 1940 Act with respect to its
issuer diversification requirements.
(c) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT LIMITATION
REGARDING ACQUIRING SECURITIES OF OTHER INVESTMENT COMPANIES
CURRENT PROPOSED
The Fund may not purchase This limitation would be made
securities of other investment non-fundamental and restated as
companies except in connection follows:
with a merger, consolidation,
acquisition or reorganization. The Fund may not acquire any
other investment company or
investment company security
except in connection with a
merger, consolidation,
reorganization or acquisition
of assets or where otherwise
permitted by the 1940 Act.
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would modernize
the language and modify the restriction to permit investments in other
investment companies within the limits established by the 1940 Act. This would
permit the Fund to invest in other money market funds with similar investment
objectives, policies and limitations. Additionally, as a non-fundamental policy,
future changes to this limitation would not require a shareholder vote.
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<PAGE> 35
(d) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT LIMITATION ON
PURCHASING SECURITIES ON MARGIN, MAKING SHORT SALES OR
MAINTAINING A SHORT POSITION
CURRENT PROPOSED
The Fund may not purchase This limitation would be made
securities on margin, make short non-fundamental and deleted.
sales of securities or maintain
a short position.
(e) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT LIMITATION ON
PURCHASING ILLIQUID SECURITIES
CURRENT PROPOSED
The Fund may not invest more This limitation would be made
than 10% of the value of the non-fundamental.
Fund's total assets in illiquid
securities which may be illiquid
due to legal or contractual
restrictions on resale or the
absence of readily available
market quotations.
PROPOSAL 6: TO APPROVE A NEW FUNDAMENTAL INVESTMENT LIMITATION
TO PERMIT THE FUND TO INVEST SUBSTANTIALLY ALL OF ITS ASSETS IN
ANOTHER OPEN-END INVESTMENT COMPANY
GENERAL.
The directors have approved, subject to shareholder approval, the adoption
of a new fundamental investment limitation that would permit the Fund to pool
its assets with other funds, in a single portfolio (the "Pooled Portfolio"). The
Delaware Trust Instrument permits investment of all of a Fund's assets in a
Pooled Portfolio, but if the proposal to adopt this new fundamental investment
policy is not adopted, the Fund would not be able to take advantage of such
flexibility. If the proposal is approved, the Fund will be authorized to invest
substantially all of its assets in a corresponding Pooled Portfolio that would
invest in the same type of securities (and have substantially the same
objective, restrictions and policies) as the Fund. The primary purpose of
pooling would be to achieve operational efficiencies.
BACKGROUND. Several mutual funds have developed so-called master-feeder
structures under which they invest all their assets in a single pooled
investment. For example, funds offering
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<PAGE> 36
different types of shareholder services might pool their investments for
investment purposes but retain different distribution systems and cost
structures. This structure allows several funds with different features, but the
same investment objective, restrictions and policies, to combine their
investment instead of managing them separately. The Fund would combine its
investments with those of other funds by investing all of its assets in the same
Pooled Portfolio, which would be organized and registered as an open-end
management investment company (a mutual fund).
PURPOSE OF THE PROPOSAL. BIMC regularly reviews various options for
structuring mutual funds to take maximum advantage of potential efficiencies.
The Fund currently take advantage of the ability to issue multiple classes of
shares, which offer many of the same advantages as investing in a Pooled
Portfolio. While neither the directors nor BIMC have determined that the Fund
should invest in a Pooled Portfolio, the directors believe that it could in the
future be in the best interests of the Fund to adopt such a structure to allow
for investing by the Fund in a Pooled Portfolio without the cost of again
obtaining shareholder approval.
At present, some of the Fund's fundamental investment limitations prevent
the Fund from investing all of its assets in another investment company, and
require a vote of shareholders of the Fund before such a master-feeder structure
could be adopted. To avoid the costs associated with a subsequent shareholder
meeting, the directors recommend that shareholders of the Fund vote to permit
the assets of the Fund to be invested in a Pooled Portfolio, without an
additional vote of Fund shareholders, if the directors (or trustees of PIF)
determine the adoption of a master-feeder structure to be in the best interest
of the Fund and its shareholders. If shareholders approve this Proposal, any
fundamental and non-fundamental limitations of the Fund that currently prohibit
investment in shares of a single investment company would be subject to
modification to the extent necessary to permit investment in Pooled Portfolios.
These policies include, for example, the Fund's restrictions on investments in
the securities of any one issuer, and issuers in any one industry, as well as
the restriction concerning acting as an underwriter.
At present, the directors are not considering any proposal to adopt a
master-feeder structure. The directors (or trustees of PIF) will authorize
investing the Fund's assets in a Pooled Portfolio only if they determine that
pooling is in the best interests of the Fund and its shareholders and if they
determine that the investment will not have material adverse tax or other
consequences to the Fund or the shareholders. In determining whether the Fund
should invest in a Pooled Portfolio, the directors (or trustees of PIF) will
consider, among other things, the opportunity to reduce costs and to achieve
operational
- 30 -
<PAGE> 37
efficiencies. There is no assurance that cost reductions or increased
efficiencies will be achieved.
BIMC or its affiliates may benefit from the use of a Pooled Portfolio if
overall assets are increased, since BIMC's fees under the existing and proposed
advisory agreements are based on assets under management. Also, BIMC's or its
affiliates' expenses of providing investment and other services to the Fund may
be reduced. If the Fund's investment in a Pooled Portfolio were to reduce the
expenses of BIMC or its affiliates (as the case may be) materially, the
directors (or trustees of PIF) would consider whether a reduction of the
management fee paid to BIMC or its affiliates (as the case may be) would be
appropriate.
PROPOSED FUNDAMENTAL LIMITATION.
In order to permit the Fund to invest in a Pooled Portfolio at a future
date, the directors recommend that the shareholders of the Fund adopt the
following fundamental policy:
A Fund may, notwithstanding any other fundamental investment limitations,
invest all of its assets in a single open-end investment company or series
thereof with substantially the same investment objectives, restrictions and
policies as the Fund.
BOARD OF DIRECTORS' AND TRUSTEES' EVALUATION AND RECOMMENDATION.
At meetings held on October 22, 1998, after considering the matters
discussed above and other matters deemed to be relevant, the directors and
trustees adopted and voted to recommend to the shareholders that they adopt the
proposed new fundamental investment limitation that would permit the Fund,
subject to future review by the Boards, as described above, to invest all of its
assets in an open-end investment company with substantially the same investment
objectives, restrictions and policies as the Fund. In taking such action and
making such recommendations, the directors and trustees took into consideration
that the proposed modifications may provide operational efficiencies and
facilitate the introduction of new PIF mutual funds and thereby increase the
investment options available to shareholders. The directors and trustees believe
that the ability to use a master-feeder structure may be beneficial to present
shareholders of the Fund as well as potential investors.
OTHER MATTERS
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to adjournment of the Meeting, the persons
named a proxies will vote thereon according to their best judgment in the
interests of the Company and its shareholders.
- 31 -
<PAGE> 38
VOTES REQUIRED FOR THE ELECTION OF DIRECTORS AND
APPROVAL OF MATTERS AT THE MEETING
A quorum for the transaction of business at the Meeting is constituted by
the presence in person or by proxy of holders of a majority of the outstanding
voting securities of the Fund. If a Proxy is properly executed and returned
accompanied by instructions to withhold authority, or is marked with an
abstention, the shares represented thereby will be considered to be present at
the Meeting for purposes of determining the existence of a quorum for the
transaction of business. In the election of directors, the six nominees
receiving the highest number of votes cast at the Meeting will be elected. The
withholding of voting authority with respect to the election of a director means
that the shares withheld will not be counted. Approval of Proposal 2 requires
the affirmative vote of the holders of a majority of the votes cast at the
Meeting. Approval of Proposals 3-6 requires the affirmative vote of a "majority
of the outstanding voting securities" of the Fund. The term "majority of the
outstanding voting securities" means the vote of (a) 67% or more of the voting
securities of the Fund present at such meeting, if the holders of more than 50%
of the outstanding voting securities of such Fund are present or represented by
proxy; or (b) more than 50% of the outstanding voting securities of the Fund,
whichever is less. Under Maryland law, abstentions do not constitute a vote
"for" or "against" a matter and will be disregarded in determining the "votes
cast" on an issue. Broker "non-votes" (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be deemed to be abstentions. Shares for which there has been an abstention will
be treated as present for the purpose of determining the existence of a quorum
but will have no effect (i.e. will not be considered a vote "for" or "against")
with respect to Proposal 2, and will have the effect of a vote against Proposals
3-6.
A vote FOR the Conversion will authorize the Fund, as the sole shareholder
of its corresponding successor Fund: (i) to elect as trustees of PIF (if
Proposal 1 is approved) Messrs. Beckwith, Harris, Johnson, Platt, Robb, Urish
and Winters (see Proposal 1); (ii) to ratify the selection of
PricewaterhouseCoopers LLP as PIF's independent accountants (see Proposal 2);
(iii) to approve the New Advisory Agreement between PIF and BIMC; and (iv) to
approve the fundamental investment limitations for the successor Fund, which if
Proposals 4, 5 and 6 are approved, will be the same as the current fundamental
investment limitations in effect for the Fund, as amended by such Proposals. In
addition, if the Conversion is approved but Proposals 4, 5 and/or 6 are not
approved by a current Fund's shareholders, the current Fund, as sole shareholder
of the
- 32 -
<PAGE> 39
successor Fund, will establish only the existing fundamental investment
limitations, as the case may be.
ADDITIONAL INFORMATION
MANAGEMENT.
Officers of the Company are elected and appointed by the directors and
hold office until they resign or are removed. The following table sets forth
certain information about the Company's officers:
<TABLE>
<CAPTION>
OFFICER PRINCIPAL OCCUPATION
NAME AGE SINCE POSITION DURING PAST 5 YEARS
- ---- --- ------ -------- -------------------
<S> <C> <C> <C> <C>
Thomas H. Nevin 51 1997 President Managing Director
of BIMC since 1997;
prior thereto
President and Chief
Investment Officer,
BIMC
Lisa M. Buono 33 1997 Treasurer Vice President,
Provident Advisors,
Inc. since 1997;
prior thereto,
Director of Finance
and Compliance,
Provident Distributors,
Inc.
W. Bruce McConnel, III 55 1997 Secretary Partner, law firm
of Drinker Biddle &
Reath LLP
</TABLE>
INVESTMENT ADVISER AND SUB-ADVISER.
BIMC serves as investment adviser for the Fund. BIMC is located at
Bellevue Park Corporate Center, 400 Bellevue Parkway, Wilmington, DE 19809. PNC
Bank is the sub-adviser for the Fund. PNC Bank is located at 1600 Market Street,
Philadelphia, PA 19103.
CO-ADMINISTRATORS AND DISTRIBUTOR.
PFPC and PDI serve as the co-administrators for the Fund. PDI also serves
as the distributor for the Fund. PFPC is located at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809. PDI is located at Four Falls
Corporate Center, 6th Floor, West Conshohocken, PA 19428.
BENEFICIAL OWNERS OF THE COMPANY.
The beneficial owners of more than 5% of the outstanding shares of the
Fund as of November 13, 1998, the record date, are as follows:
- 33 -
<PAGE> 40
<TABLE>
<CAPTION>
NAME AND
ADDRESS OF
NAME OF BENEFICIAL NUMBER OF PERCENTAGE
CLASS OWNER SHARES OWNED OF FUND
- ----- ----------- ------------ ----------
<S> <C> <C> <C>
</TABLE>
SHAREHOLDER PROPOSALS
The Company does not hold annual meetings of shareholders. It is not
expected the PIF will hold annual meetings of shareholders, except as required
by the 1940 Act. Any proposal by a shareholder for consideration at a subsequent
meeting of shareholders should be sent in writing to Thomas H. Nevin, President,
Municipal Fund for New York Investors, Inc., Bellevue Park Corporate Center, 400
Bellevue Parkway, Wilmington, DE 19809.
November 23, 1998
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
- 34 -
<PAGE> 41
APPENDIX A
AGREEMENT AND PLAN OF
REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made as of the 15th day of
November, 1998, by and between Municipal Fund for New York Investors, Inc. (the
"Company"), a Maryland corporation, on behalf of New York Money Fund (the
"Fund"), and Provident Institutional Funds (the "Trust"), a Delaware business
trust.
This Agreement is intended to be and is adopted as a plan of
reorganization within the meaning of Section 368(a)(1)(F) of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"), and is intended to effect the
reorganization (a "Reorganization") of the Fund as a new series of the Trust
(the "Successor Fund"). Each Reorganization will include the transfer of all of
the assets of the Fund to the Successor Fund of the Trust solely in exchange for
(1) the assumption by the Successor Fund of all liabilities of the Fund and (2)
the issuance by the Trust to the Fund of shares of beneficial interest of the
Successor Fund. The aggregate number of shares of beneficial interest of each
class of the Successor Fund issued to the Fund will be equal to the number of
full and fractional shares of common stock ("Shares") of the Fund class
outstanding immediately before the Reorganization. These transactions will be
promptly followed by a pro rata distribution by the Fund of the shares of
beneficial interest it receives in the exchange described above to the holders
of the Fund Shares in exchange for those Fund Shares, in liquidation of the
Fund, and the cancellation of the Fund's Shares, all upon the terms and
conditions hereinafter set forth in this Agreement.
In consideration of the promises and of the covenants and agreements
hereinafter set forth, the parties hereto covenant and agree as follows.
1. TRANSFER OF ASSETS OF THE FUND IN EXCHANGE FOR ASSUMPTION OF LIABILITIES
AND ISSUANCE OF SHARES OF BENEFICIAL INTEREST
1.1 Subject to the terms and conditions set forth herein and on the basis
of the representations and warranties contained herein, the Fund agrees to
transfer all of its assets (as described in paragraph 1.2) and to assign and
transfer all of its liabilities to the Successor Fund organized solely for the
purpose of acquiring all of the assets and assuming all of the liabilities of
the Fund. The Trust, on behalf of the Successor Fund, agrees that in exchange
for all of the assets of the Fund: (1) the Successor Fund shall assume all of
the liabilities of the Fund, whether contingent or otherwise, then existing, and
(2) the Trust shall issue shares of beneficial interest to the Fund. The
-1-
<PAGE> 42
number of shares of beneficial interest of each class to be issued by the Trust
on behalf of the Successor Fund will be identical to the number of full and
fractional Shares of the corresponding class of the Fund outstanding on the
Closing Date provided for in paragraph 3.1. Such transactions shall take place
at the Closing provided for in paragraph 3.1.
1.2 The assets of the Fund to be acquired by the Successor Fund shall
include, without limitation, all cash, cash equivalents, securities, receivables
(including interest and dividends receivable), any tax operating losses, any
claims or rights of action or rights to register Shares under applicable
securities laws, any books or records of the Fund and other property owned by
the Fund and any deferred or prepaid expenses shown as assets on the books of
the Fund on the Closing Date provided for in paragraph 3.1.
1.3 Immediately after delivery to the Fund of corresponding shares of
beneficial interest, a duly authorized officer of the Company shall cause the
Fund, as the sole shareholder of the Successor Fund, to (i) elect the trustees
of the Trust; (ii) ratify the selection of the Trust's independent accountants;
(iii) adopt investment limitations which are substantially identical to those of
the Fund immediately prior to the Closing of the reorganization, including any
changes thereto approved by the shareholders of the Fund at the meeting of
shareholders to be held on January 28, 1999; and (iv) approve the investment
advisory agreement between the Trust and BlackRock Institutional Management
Corporation.
1.4 On the Closing Date, the Fund will distribute in liquidation the shares
of beneficial interest of each class to each shareholder of record, determined
as of the close of business on the Closing Date, of the corresponding class of
the Fund pro rata in proportion to such shareholder's beneficial interest in
that class and in exchange for that shareholder's Shares. Such distribution will
be accomplished by the transfer of the shares of beneficial interest then
credited to the account of the Fund on the records of the Trust to open accounts
on those records in the names of the Fund shareholders and representing the
respective pro rata number of each class of the shares of beneficial interest
received from the Successor Fund which is due to the Fund shareholders.
Fractional shares of beneficial interest shall be rounded to the third place
after the decimal point.
1.5 Ownership of the shares of beneficial interest by the Successor Fund
shareholder shall be recorded separately on the books of PFPC Inc., as the
Trust's transfer agent.
1.6 Any transfer taxes payable upon the issuance of shares of beneficial
interest in a name other than the registered holder of the Fund Shares on the
books of the Fund shall be paid by the person to whom such shares of beneficial
interest are to be distributed as a condition of such transfer.
- 2 -
<PAGE> 43
1.7 The legal existence of the Fund and the Company shall be terminated as
promptly as reasonably practicable after the Closing Date. After the Closing
Date, the Fund and the Company shall not conduct any business except in
connection with its liquidation and termination.
2. VALUATION
2.1 The value of the Fund's assets to be acquired by the Trust on behalf of
the Successor Fund hereunder shall be the net asset value computed as of the
valuation time provided in the Fund's prospectus(es) on the Closing Date using
the valuation procedures set forth in the Fund's current prospectus(es) and
statement of additional information.
2.2 The value of full and fractional shares of beneficial interest of each
class to be issued in exchange for the Fund's assets shall be equal to the value
of the net assets of the corresponding class of the Fund on the Closing Date,
and the number of such shares of beneficial interest of each class shall equal
the number of full and fractional Fund Shares outstanding on the Closing Date.
2.3 All computations of value shall be made by PFPC Inc., as
co-administrator for the Funds and the Trust.
3. CLOSING AND CLOSING DATE
3.1 The transfer of the Fund's assets in exchange for the assumption by the
Successor Fund of the Fund's liabilities and the issuance of shares of
beneficial interest to the Fund, as described above, together with related acts
necessary to consummate such acts (the "Closing"), shall occur at Bellevue Park
Corporate Center, 400 Bellevue Parkway, Wilmington, DE 19809 on January 31, 1999
("Closing Date"), or at such other place or date as the parties may agree in
writing.
3.2 At the Closing each party shall deliver to the other such bills of
sale, checks, assignments, stock certificates, receipts or other documents as
such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Company represents and warrants, on behalf of itself and the Fund,
as follows:
4.1.A. At the Closing Date, the Company, on behalf of the Fund, will
have good and marketable title to the assets to be
- 3 -
<PAGE> 44
transferred to the Trust, on behalf of the Successor Fund, pursuant to paragraph
1.1, and will have full right, power and authority to sell, assign, transfer and
deliver such assets hereunder. Upon delivery and in payment for such assets, the
Trust on behalf of the Successor Fund will acquire good and marketable title
thereto subject to no restrictions on the full transfer thereof, including such
restrictions as might arise under the Securities Act of 1933, as amended (the
"1933 Act");
4.1.B. The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Company. This Agreement constitutes a valid and binding
obligation of the Company and the Fund enforceable in accordance with its terms,
subject to the approval of the Fund's shareholders;
4.1.C. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Company, on
behalf of the Fund, of the transactions contemplated herein, except such as
shall have been obtained prior to the Closing Date; and
4.1.D. The Company will file with the Securities and Exchange
Commission ("SEC") proxy materials (the "Proxy Statement") complying in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended, the Investment Company Act of 1940 (the "1940 Act"), and applicable
rules and regulations thereunder, relating to a meeting of its shareholders to
be called to consider and act upon the transactions contemplated herein.
4.2 The Trust represents and warrants, on behalf of itself and the
Successor Fund, as follows:
4.2.A. Shares of beneficial interest issued in connection with the
transactions contemplated herein will be duly and validly issued and outstanding
and fully paid and non-assessable by the Trust;
4.2.B. The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of the Trust, and this
Agreement constitutes a valid and binding obligation of the Trust and the
Successor Fund enforceable against the Trust and the Successor Fund in
accordance with its terms;
4.2.C. No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Trust or the
Successor Fund of the transactions contemplated herein, except such as shall
have been obtained prior to the Closing Date; and
- 4 -
<PAGE> 45
4.2.D. The Trust, on behalf of the Successor Fund, shall use all
reasonable efforts to obtain the approvals and authorizations required by the
1933 Act, the 1940 Act and such state securities laws as it may deem appropriate
in order to operate after the Closing Date.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY, THE
FUND, THE TRUST AND THE SUCCESSOR FUND
The obligations of the Company, the Fund, the Trust and the Successor Fund
are each subject to the conditions that on or before the Closing Date:
5.1 This Agreement and the transactions contemplated herein shall have
been approved by the directors of the Company and the trustees of the Trust and
by the requisite vote of the Company's shareholders in accordance with
applicable law;
5.2 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the SEC and of state securities authorities) deemed necessary by the Company or
the Trust to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Company, the Fund, the Trust or the
Successor Fund, provided that either party hereto may waive any of such
conditions for itself or its respective series;
5.3 The Company and the Trust shall have received on or before the Closing
Date an opinion of Drinker Biddle & Reath LLP satisfactory to them,
substantially to the effect that for federal income tax purposes:
5.3.A. The acquisition of all of the assets of the Fund by the
Successor Fund solely in exchange for the issuance of shares of beneficial
interest to the Fund and the assumption by the Successor Fund of all of the
liabilities of the Fund, followed by the distribution in liquidation by the Fund
of such shares of beneficial interest to the Fund shareholders in exchange for
their Fund Shares and the termination of the Fund, will constitute a
reorganization within the meaning of Section 368(a)(1)(F) of the Code, and the
Fund and the Successor Fund will each be "a party to a reorganization" within
the meaning of Section 368(b) of the Code;
5.3.B. No gain or loss will be recognized by the Fund upon (i) the
transfer of all of its assets to the Successor Fund solely in exchange for the
issuance of shares of beneficial interest to the Fund and the assumption by the
Successor Fund of
- 5 -
<PAGE> 46
the Fund's liabilities and (ii) the distribution by the Fund of such shares of
beneficial interest to the Fund shareholders;
5.3.C. No gain or loss will be recognized by the Successor Fund upon
its receipt of all of the Fund's assets solely in exchange for the issuance of
the shares of beneficial interest to the Fund and the assumption by the
Successor Fund of all of the liabilities of the Fund;
5.3.D. The tax basis of the assets acquired by a Successor Fund from
the Fund will be, in each instance, the same as the tax basis of those assets in
the Fund's hands immediately prior to the transfer;
5.3.E. The tax holding period of the assets of the Fund in the hands
of the Successor Fund will, in each instance, include the Fund's tax holding
period for those assets;
5.3.F. The Fund's shareholders will not recognize gain or loss upon
the exchange of all of their Shares of the Fund solely for shares of beneficial
interest as part of the transaction;
5.3.G. The tax basis of the shares of beneficial interest received by
Fund shareholders in the transaction will be, for each shareholder, the same as
the tax basis of the Fund Shares surrendered in exchange therefor; and
5.3.H. The tax holding period of the shares of beneficial interest
received by Fund Shareholders will include, for each shareholder, the tax
holding period for the Fund Shares surrendered in exchange therefor, provided
that the Fund Shares were held as capital assets on the date of the exchange.
The Company and the Trust each agree to make and provide representations
with respect to the Fund and the Successor Fund, respectively, which are
reasonably necessary to enable Drinker Biddle & Reath LLP to deliver an opinion
substantially as set forth in this paragraph 5.3, which opinion may address such
other federal income tax consequences, if any, that Drinker Biddle & Reath LLP
believes to be material to the Reorganization.
6. BROKERAGE FEES
The Company and the Trust, on behalf of the Fund and the Successor Fund,
each represent and warrant to the other that there are no broker's or finder's
fees payable in connection with the transactions contemplated hereby.
- 6 -
<PAGE> 47
7. TERMINATION
This Agreement may be terminated by the mutual agreement of the Company
and the Trust, and the parties may abandon the reorganization contemplated
hereby, notwithstanding approval thereof by the shareholders of the Company, at
any time prior to Closing, if circumstances should develop that, in the parties
judgment, make proceeding with the Agreement inadvisable.
8. AMENDMENT
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties; provided, however, that
following the approval of this Agreement by the Fund's shareholders, no such
amendment may have the effect of changing the provisions for determining the
number of shares of beneficial interest to be paid to the Fund's shareholders
under this Agreement to the detriment of the Fund shareholders without their
further approval.
9. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; SURVIVAL; WAIVER
9.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
9.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
9.4 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm or corporation other than the parties hereto and their
respective successors and assigns any rights or remedies under or by reason of
this Agreement.
9.5 All persons dealing with the Company, the Fund, the Trust or the
Successor Fund must look solely to the property of the Company, the Fund, the
Trust or the Successor Fund, respectively, for the enforcement of any claims
against the Company, the Fund, the Trust or the Successor Fund, as neither the
directors, trustees, officers, agents nor shareholders of the Company or the
Trust assume any personal liability for obligations entered into on behalf of
the Company or the Trust respectively. Neither the series of the Company nor the
Trust, nor any class within the series, shall be responsible for any
- 7 -
<PAGE> 48
obligations assumed by or on behalf of any other series, or class within such
series, of the Company or the Trust under this Agreement.
9.6 The representations, warranties, covenants and agreements of the
parties contained herein shall not survive the Closing Date, except for the
provisions of Sections 1.7 and 9.8.
9.7 The Company or the Trust, after consultation with their respective
counsel and by consent of their respective Boards of Directors, Trustees,
Executive Committees or an officer authorized by such Boards of Directors or
Trustees, may waive any condition to their respective obligations hereunder if,
in their or such officer's judgment, such waiver will not have a material
adverse effect on the interests of the shareholders of the Company and the
Trust.
9.8 From and after the Closing Date, the Trust will assume and honor any
obligation as provided for or permitted by applicable federal and state law in
effect immediately prior to the Closing Date with respect to the indemnification
of each person who is now, or has been at any time prior to the date hereof or
who becomes prior to the Closing Date, a director or officer of the Company (for
the purposes of this Section, the "Indemnified Parties") to the maximum extent
available and permitted by applicable law or regulation against any and all
losses in connection with or arising out of any claim which is based upon,
arises out of or in any way relates to any actual or alleged act or omission
occurring at or prior to the Closing Date, including any actions taken to
approve and implement this Agreement and the transactions contemplated hereby,
in the Indemnified Parties' capacities as director or officer (whether elected
or appointed), of the Company. This Section 9.8 will be construed as an
agreement as to which the Indemnified Parties are intended to be third-party
beneficiaries.
10. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Company or the Trust,
each at Bellevue Park Corporate Center, 400 Bellevue Parkway, Wilmington, DE
19809, Attention: President.
- 8 -
<PAGE> 49
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer.
MUNICIPAL FUND FOR NEW YORK
INVESTORS, INC.
---------------------------------------
Name:
Title:
PROVIDENT INSTITUTIONAL FUNDS
---------------------------------------
Name:
Title:
- 9 -
<PAGE> 50
APPENDIX B
ADVISORY AGREEMENT
AGREEMENT made as of January 31, 1999 between PROVIDENT
INSTITUTIONAL FUNDS, a Delaware business trust (the "Trust"), and BLACKROCK
INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation (the "Investment
Adviser"), registered as an investment adviser under the Investment Advisers Act
of 1940.
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act") and
presently offers shares representing interests in ten separate investment
portfolios; and
WHEREAS, the Trust desires to retain the Investment Adviser to
render investment advisory services to the Trust, and the Investment Adviser is
willing to so render such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Trust hereby appoints the Investment Adviser to act as
investment adviser to the following portfolios of the Trust: TempFund, TempCash,
FedFund, T-Fund, Federal Trust Fund, Treasury Trust Fund, MuniFund, MuniCash,
California Money Fund and New York Money Fund (each a "Portfolio," and
collectively, the "Portfolios") for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
(b) In the event that the Trust establishes one or more
portfolios other than the Portfolios with respect to which it desires to retain
the Investment Adviser to act as investment adviser hereunder, the Trust shall
notify the Investment Adviser in writing. If the Investment Adviser is willing
to render such services it shall notify the Trust in writing whereupon, subject
to such shareholder approval as may be required pursuant to Paragraph 9 hereof,
such portfolio shall become a Portfolio hereunder and the compensation payable
by such new Portfolio to the Investment Adviser will be as agreed in writing at
the time.
-1-
<PAGE> 51
2. MANAGEMENT. Subject to the supervision of the Board of Trustees
of the Trust, the Investment Adviser will provide a continuous investment
program for each of the Portfolios, including investment research and management
with respect to all securities, investments, cash and cash equivalents in the
Portfolios. The Investment Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Trust for each of its Portfolios. The Investment Adviser will provide the
services rendered by it hereunder in accordance with the investment objective
and policies of each of the Portfolios as stated in their respective
Prospectuses. The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission (herein called the "Rules"), and will in
addition conduct its activities under this Agreement in accordance with all
other applicable laws;
(b) will maintain all books and records with respect to the
securities transactions of the Portfolios, keep their respective books of
account and will render to the Trust's Board of Trustees such periodic and
special reports as the Board may request; and
(c) will treat confidentiality and as proprietary information of
the Trust all records and other information relative to the Trust and prior,
present or potential shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Trust which approval shall not be unreasonably withheld and may not be withheld
where the Investment Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust.
3. SERVICES NOT EXCLUSIVE. The investment management services
rendered by the Investment Adviser hereunder are not to be deemed exclusive, and
the Investment Adviser shall be free to render similar services to others so
long as its services under this Agreement are not impaired thereby.
4. SUB-ADVISER. It is understood that the Investment Adviser may, if
it deems it desirable, from time to time employ such person or persons as the
Investment Adviser believes to be capable of assisting in the performance of its
obligations under this Agreement (each a "Sub-Adviser") and to terminate the
services of any such person; provided, however, that the compensation of such
person or persons shall be paid by the Investment Adviser and that the
Investment Adviser shall be as fully responsible to the Trust for the acts and
omissions of any
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<PAGE> 52
such person as it is for its own acts and omissions; and provided further, that
the retention of any Sub-Adviser shall be approved by the trustees and
shareholders to the extent required by the 1940 Act.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 of the Rules, the Investment Adviser hereby agrees that all records which
it maintains for each Portfolio are the property of the Trust and further agrees
to surrender promptly to the Trust any of such records upon the Trust's request.
The Investment Adviser further agrees to preserve for the periods prescribed by
Rule 31a-2 the records required to be maintained by Rule 31a-1 of the Rules.
6. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of (including brokerage commissions, if
any) securities purchased for the Portfolios.
In addition, if the expenses borne by any Portfolio in any fiscal
year exceed the applicable expense limitations imposed by the securities
regulations of any state in which the Shares are registered or qualified for
sale to the public, the Investment Adviser shall reimburse such Portfolio for
one-half of any excess up to the amount of the fees payable by the particular
Portfolio to it during such fiscal year pursuant to Paragraph 7 hereof;
provided, however, that notwithstanding the foregoing, the Investment Adviser
shall reimburse such Portfolio for one-half of such excess expenses regardless
of the amount of such fees payable to it during such fiscal year to the extent
that the securities regulations of any state in which the Shares are registered
or qualified for sale so require.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust, on behalf of each Portfolio, will pay the
Investment Adviser and the Investment Adviser will accept as full compensation
therefor a fee, computed daily and payable monthly, as described in the fee
schedule attached as Appendix A. The fee attributable to each Portfolio shall be
the several (and not joint or joint and several) obligation of each such
Portfolio.
8. LIMITATION OF LIABILITY OF THE INVESTMENT Adviser. The Investment
Adviser shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Trust in connection with the matters to which this
Agreement relates, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Adviser in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
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<PAGE> 53
9. DURATION AND TERMINATION. This Agreement shall become effective
with respect to a Portfolio upon approval of this Agreement by vote of a
majority of the outstanding voting securities of such Portfolio and, unless
sooner terminated as provided herein, shall continue with respect to such
Portfolio until March 31, 2000. Thereafter, if not terminated, this Agreement
shall continue with respect to a Portfolio for successive annual periods ending
on March 31, provided such continuance is specifically approved at least
annually (a) by the vote of a majority of those members of the Board of Trustees
of the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of such Portfolio; provided, however, that
this Agreement may be terminated with respect to a Portfolio by the Trust at any
time, without the payment of any penalty, by the Board of Trustees of the Trust
or by vote of a majority of the outstanding voting securities of such Portfolio,
on 60 days' written notice to the Investment Adviser, or by the Investment
Adviser at any time, without payment of any penalty, on 90 days' written notice
to the Trust. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested person" and "assignment" shall have the same
meaning as such terms have in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought, and no amendment of this Agreement affecting a
Portfolio shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of such Portfolio.
11. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
12. LIMITATION OF LIABILITY. Reference is hereby made to the
Declaration of Trust which contains certain provisions limiting the liability of
the Board of Trustees, shareholders, officers, employees and agents of the
Trust. The obligations of the Trust created hereunder are not personally binding
upon, nor shall resort be had to the property of, any of the Board of Trustees,
shareholders, officers, employees or agents of the
<PAGE> 54
Trust. In addition, only the Trust property included in the Portfolio which
incurs any liability shall be used to pay such liability.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year first
above written.
PROVIDENT INSTITUTIONAL FUNDS
Attest:
- -------------------------- ------------------------------------
By: By:
Title: Title:
BLACKROCK INSTITUTIONAL
MANAGEMENT CORPORATION
Attest:
- -------------------------- ------------------------------------
By: By:
Title: Title:
- 5 -
<PAGE> 55
APPENDIX A
FEE SCHEDULE
TEMPFUND.
For the services provided and the expenses assumed pursuant to this
Advisory Agreement with respect to TempFund, the Trust will pay the Investment
Adviser from the assets of TempFund and the Investment Adviser will accept as
full compensation therefor a fee, computed daily and payable monthly at the
following annual rate: .175% of the first $1 billion of TempFund's average net
assets, plus .15% of its next $1 billion of its average net assets, plus .125%
of its next $1 billion of its average net assets, plus .1% of its next $1
billion of average net assets, plus .095% of its next $1 billion of average its
average net assets, plus .09% of the next $1 billion of its average net assets,
plus .08% of its next $1 billion of its average net assets, plus .075% of the
next $1 billion of its average net assets, plus .07% of its average net assets
over $8 billion. The fee will be reduced by one-half of the amount necessary to
ensure that the ordinary operating expenses (excluding interest, taxes,
brokerage, payments to Service Organizations pursuant to Servicing Agreements
and extraordinary expenses) of TempFund do not exceed .45% of TempFund's average
net assets for any fiscal year.
TEMPCASH AND MUNICASH.
For the services provided and the expenses assumed pursuant to this
Advisory Agreement with respect to TempCash and MuniCash, the Trust will pay the
Investment Adviser from the assets belonging to either TempCash or MuniCash, as
applicable, and the Investment Adviser will accept as full compensation therefor
a fee, computed daily and payable monthly, at the following rate: .175% of the
first $1 billion of such Portfolio's average net assets, plus .15% of its next
$1 billion of average net assets, plus .125% of its next $1 billion of average
net assets, plus .1% of its next $1 billion of average net assets, plus .095% of
its next $1 billion of average net assets, plus .09% of its next $1 billion of
average net assets, plus .085% of its next $1 billion of average net assets,
plus .08% of its average net assets over $7 billion.
FEDFUND, T-FUND, FEDERAL TRUST FUND AND TREASURY TRUST FUND.
For the services provided and the expenses assumed pursuant to the
Advisory Agreement with respect to FedFund, T-Fund, Federal Trust Fund and
Treasury Trust Fund, the Trust will pay the Investment Adviser from the assets
belonging to FedFund, T-Fund, Federal Trust Fund and Treasury Trust Fund (in
proportion to each such Portfolio's average net assets) and the Investment
Adviser will accept as full compensation therefor a fee, computed
<PAGE> 56
daily and payable monthly, at the following annual rate: .175% of the first $1
billion of the combined average net assets of FedFund, T-Fund, Federal Trust
Fund and Treasury Trust Fund; plus .150% of its next $1 billion of their
combined average net assets, plus .125% of its next $1 billion of their combined
average net assets, plus .100% of the next $1 billion of their combined average
net assets, plus .095% of the next $1 billion of their combined average net
assets, plus .090% of the next $1 billion of their combined average net assets,
plus .085% of the next $1 billion of their combined average net assets, plus
.080% of their combined average net assets over $7 billion. The fee will be
reduced by one-half of the amount necessary to ensure that the ordinary
operating expenses (excluding interest, taxes, brokerage, payments to Service
Organizations pursuant to Servicing Agreements and extraordinary expenses) of
FedFund, T-Fund, Federal Trust Fund and Treasury Trust Fund do not exceed .45%
of each such Portfolio's average net assets for any fiscal year.
MUNI FUND.
For the services provided and the expenses assumed pursuant to this
Advisory Agreement with respect to MuniFund, the Trust will pay the Investment
Adviser from the assets belonging to MuniFund and the Investment Adviser will
accept as full compensation therefor a fee, computed daily and payable monthly,
at the following annual rate: .175% of the first $1 billion of MuniFund's
average net assets, plus .15% of its next $1 billion of average net assets, plus
.125% of its next $1 billion of average net assets, plus .1% of its next $1
billion of average net assets, plus .095% of its next $1 billion of average net
assets, plus .09% of its next $1 billion of average net assets, plus .085% of
its next $1 billion of average net assets, plus .08% of its average net assets
over $7 billion. The fee will be reduced by one-half of the amount necessary to
ensure that the ordinary operating expenses (excluding interest, taxes,
brokerage, payments to Service Organizations pursuant to Servicing Agreements
and extraordinary expenses) of MuniFund do not exceed .45% of MuniFund's average
net assets for any fiscal year.
CALIFORNIA MONEY FUND AND NEW YORK MONEY FUND.
For the services provided and the expenses assumed pursuant to this
Advisory Agreement, California Money Fund and New York Money Fund, as
applicable, will pay the Investment Adviser and the Investment Adviser will
accept as full compensation therefor a fee, computed daily and payable monthly,
at an annual rate of .20% of such Portfolio's average net assets.
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<PAGE> 57
VOTE THIS PROXY CARD TODAY!
MUNICIPAL FUND FOR NEW YORK INVESTORS, INC
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
NEW YORK MONEY FUND SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF MUNICIPAL FUND FOR NEW YORK
INVESTORS, INC. (THE "COMPANY") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS OF
THE ABOVE-REFERENCED FUND OF THE COMPANY TO BE HELD ON JANUARY 28, 1999 AT 11:00
A.M. (EASTERN TIME) IN THE FOURTH FLOOR CONFERENCE ROOM, BELLEVUE PARK CORPORATE
CENTER, 400 BELLEVUE PARKWAY, WILMINGTON, DE 19809.
The undersigned hereby appoints Lisa M. Buono and Thomas H. Nevin and each of
them, with full power of substitution, as proxies of the undersigned to vote at
the above-referenced Special Meeting of Shareholders, and at all adjournments
thereof, all shares of common stock of the Fund held of record by the
undersigned on the record date for the Special Meeting, upon the following
matters, and at their discretion upon any other matter which may properly come
before the Special Meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE
TAKEN ON THE FOLLOWING PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS
PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors
[ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY to vote
as marked to the contrary below). for all nominees listed below.
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through
his name in the list below:
G. Nicholas Beckwith, III, Jerrold B. Harris, Rodney D. Johnson, Joseph P. Platt, Jr.,
Robert C. Robb, Jr., Kenneth L. Urish, Frederick M. Winter
FOR AGAINST ABSTAIN
2. To ratify the selection of PricewaterhouseCoopers LLP as the Company's independent accountants
for its fiscal year ending July 31, 1999. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. To approve an Agreement and Plan of Reorganization pursuant to which the Fund will be
reorganized as a separate series of Provident Institutional Funds, a Delaware business trust. [ ] [ ] [ ]
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
4. To approve changes to the following fundamental investment limitations of [ ] [ ] [ ]
the Fund:
a) limitation on borrowing and senior securities;
b) limitation on underwriting activities;
c) limitation on real estate related transactions;
d) limitation on investment in commodities;
e) limitation on loans; and
e) limitation regarding concentration.
5. To approve a change in the following fundamental investment limitations to [ ] [ ] [ ]
make such limitations non-fundamental:
a) limitation on eligible investments;
b) limitation on isser diversification;
c) limitation on acquiring securities of other investment companies; and
d) limitation on purchasing securities on margin, making short sales or
maintaining a short position; and
e) limitation on investing in illiquid securities.
6. To approve a new fundamental investment limitation to permit the Fund to [ ] [ ] [ ]
invest substantially all of its assets in another open-end investment
company.
</TABLE>
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<PAGE> 59
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS OF THE COMPANY AND THE PROXY STATEMENT DATED NOVEMBER 23, 1998.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
--------------------------------------------
--------------------------------------------
Signature(s), (Title(s), if applicable)
Please sign above exactly as name(s)
appear(s) hereon. Corporate or partnership
proxies should be signed in full corporate
or partnership name by an authorized
officer. Each joint owner should sign
personally. When signing as a fiduciary,
please give full title as such.
DATE:____________________, 199__
-3-
