<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
Temporary Investment Fund, 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:
- --------------------------------------------------------------------------------
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<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 GRAPHIC]
November 23, 1998
Dear Shareholder:
The Board of Directors of Temporary Investment Fund, Inc. is pleased to announce
a special meeting of shareholders on Thursday, January 28, 1999, at 10:00 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 unanimously 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 Funds into Provident Institutional
Funds, a Delaware business trust;
- - Changes in the fundamental investment limitations in order to modernize and
make uniform among the Funds 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 Funds to adopt a master-feeder structure.
The Funds have always been managed with a conservative approach, thereby
providing shareholders with high-quality money market funds that produce 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 Funds and lead to improved efficiencies
across several fronts.
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<PAGE> 4
The Board of Directors recognizes the shareholder benefits described herein and
unanimously 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.
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<PAGE> 5
TEMPORARY INVESTMENT FUND, 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
TEMPORARY INVESTMENT FUND, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of each of the funds listed below (each, a "Fund" and collectively,
the "Funds") of Temporary Investment Fund, Inc. (the "Company") will be held on
January 28, 1999, at 10:00 a.m. (Eastern time), in the Fourth Floor Conference
Room, Bellevue Park Corporate Center, 400 Bellevue Parkway, Wilmington, DE
19809.
The Funds of the Company are: TempFund and TempCash.
The Meeting will be held with respect to the Funds 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 September 30, 1999.
PROPOSAL 3. To approve an Agreement and Plan of
Reorganization pursuant to which each 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
Funds:
(a) limitation on borrowing and senior securities;
(b) limitation on underwriting activities;
(c) limitation on real estate related transactions;
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<PAGE> 6
(d) limitation on investment in commodities;
(e) limitation on loans; and
(f) limitation regarding concentration (TempCash only).
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 acquiring voting securities or
acquiring securities of other investment companies;
and
(c) limitation on purchasing securities on margin, making
short sales or maintaining a short position.
PROPOSAL 6. To approve a new fundamental investment limitation
to permit each 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 UNANIMOUSLY RECOMMEND
THAT YOU VOTE IN FAVOR OF THE PROPOSALS.
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<PAGE> 7
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY CARD OR CARDS WHICH ARE 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
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<PAGE> 8
TEMPORARY INVESTMENT FUND, 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 Temporary Investment Fund, 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 10:00
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 or cards will first be mailed on or about
November 23, 1998.
The Company currently offers two (2) investment portfolios which are
each referred to herein as a "Fund" and collectively, as the "Funds." The Funds
of the Company are: TempFund and TempCash.
Only shareholders of record of the Funds 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 TempFund and __________ shares
of TempCash 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 Funds' shares are referred to
herein as "Shares."
The following table summarizes the Proposals to be voted on at the
Meeting and indicates those shareholders who are being solicited with respect to
each Proposal:
TABLE
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
1. To elect seven (7) Each Fund of the Company. All
directors. shareholders of each Fund of
the Company will vote together.
SEE PROPOSAL 1 (P. __)
-1-
<PAGE> 9
PROPOSAL SHAREHOLDERS SOLICITED
-------- ----------------------
2. To ratify the selection Each Fund of the Company. All
of PricewaterhouseCoopers shareholders of each Fund of
LLP as the Company's the Company will vote together.
independent accountants
for its fiscal year
ending September 30,
1999.
SEE PROPOSAL 2 (P. __)
3. To approve an Agreement Each Fund, voting separately
and Plan of as a Fund.
Reorganization pursuant
to which each Fund will
be reorganized as a
separate series of
Provident Institutional
Funds, a Delaware
business trust.
SEE PROPOSAL 3 (P. __)
4. To approve changes to the Each Fund, voting separately
following fundamental as a Fund, except for 4(f)
investment limitations of which is applicable to
the Funds: TempCash only.
(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
(f) limitation regarding (TempCash only.)
concentration.
SEE PROPOSAL 4 (P. __)
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<PAGE> 10
PROPOSAL SHAREHOLDERS SOLICITED
5. To approve a change in Each Fund, voting separately
the following fundamental as a Fund.
investment limitations to
make such limitations
non-fundamental:
(a) limitation on
eligible investments;
(b) limitation on
acquiring voting
securities or acquiring
securities of other
investment companies; and
(c) limitation on
purchasing securities on
margin, making short
sales or maintaining a
short position.
SEE PROPOSAL 5 (P. __)
6. To approve a new Each Fund, voting separately
fundamental investment as a Fund.
limitation to permit each
Fund to invest
substantially all of its
assets in another open-end
investment company.
SEE PROPOSAL 6 (P. __)
Although Shares of each of the Funds have been divided into two classes
("Classes"), which Classes differ primarily with respect to the expenses borne
solely by the Dollar Shares Class under a shareholder service plan, 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 $6,000. Blackrock
Institutional Management Corporation ("BIMC"), the investment adviser for the
Funds, 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.
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<PAGE> 11
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 SEPTEMBER 30, 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: Trust for Federal Securities ("Fed"),
Municipal Fund for Temporary Investment ("Muni"), Municipal Fund for California
Investors, Inc. ("Cal Muni") and Municipal Fund for New York Investors ("NY
Muni"). BIMC serves as investment adviser for each of these investment
companies. Additionally, each investment company has the same service providers
and offers shares of 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 Fed, Muni, Cal Muni and NY Muni. After such reorganization, each
Fund will have the same investment adviser, other service providers, the same
fee and expense structures, and the same investment objectives, 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 each investment portfolio to attract additional investment dollars.
Each of the proposals is discussed in greater detail below.
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<PAGE> 12
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.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE DURING PAST 5 YEARS
- ---- --------- --- -------------------
<S> <C> <C> <C>
G. Nicholas Beckwith, III 1996 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;
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE DURING PAST 5 YEARS
- ---- --------- --- -------------------
<S> <C> <C> <C>
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 1996 56 President and Chief
Executive Officer, VWR
Scientific Products Corp.;
Director or Trustee
of two other investment
companies advised by BIMC.
Rodney D. Johnson 1987 57 President, Fairmount Capital
Advisors, Inc.; Director
or Trustee of five other
investment companies advised
by BIMC.
Joseph P. Platt, Jr.(1) N/A 51 Partner, Amarna Partners
(private investment
company); formerly,
a Director and
Executive Vice
President of Johnson &
Higgins.
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(1) N/A 46 Managing Partner, Urish
Popeck & Co. LLC (accountants
and consultants).
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION
NAME SINCE AGE DURING PAST 5 YEARS
- ---- --------- --- -------------------
<S> <C> <C> <C>
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 1994 until April 14, 1998, Mr. Robb was a director of PNC Bank.
Mr. Johnson was most recently elected by the shareholders on June 12,
1987. Messrs. Beckwith and Harris have served as directors since March 22, 1996
when they were elected by the other directors. Messrs. Coldwell, Fortune and
Pepper, who currently serve as directors of the Company, are not standing for
re-election at this Meeting.
During the fiscal year ended September 30, 1998, the directors held
four regular Board Meetings and one Special Board Meeting. All incumbent
directors, except for Mr. Beckwith, attended at least 75% of all meetings held.
The Company has an Executive Committee, comprised of Messrs. Coldwell,
Fortune and Pepper, which may, during the interval between meetings of the
Board, exercise the authority of the Board of Directors in the management of the
Company's business to the extent permitted by law. The Executive Committee did
not hold any meetings during the fiscal year ended September 30, 1998.
The Company has an Audit Committee, comprised of Messrs. Coldwell,
Fortune and Johnson. 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 each Fund's financial statements, recommend
to the Board of Directors the selection of 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 September 30, 1998,
and all members of the Audit Committee were present.
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<PAGE> 15
The Company has a Nominating Committee comprised of Messrs. Coldwell,
Fortune and Johnson. 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 September 30,
1998.
As Messrs. Coldwell, Fortune and Pepper 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 $12,500 plus $900 for each
Board meeting attended and are reimbursed for reasonable expenses incurred in
attending meetings. The Chairman of the Board, Mr. Pepper, receives an
additional $9,000 per annum for his services in such capacity. In addition,
Committee members are entitled to $900 for each Committee meeting attended which
is not held in conjunction with a Board meeting of the Company. Messrs.
Coldwell, Fortune and Pepper, in connection with their retirement from the Board
and from other boards in the Fund Complex, will receive payments of $33,880,
$33,880 and $63,333, 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 Company and less than 1% of the outstanding Shares of
each of the Funds.
The following chart provides certain information for the fiscal year
ended September 30, 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.
-8-
<PAGE> 16
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
AGGREGATE BENEFITS ESTIMATED COMPANY AND
COMPENSATION ACCRUED AS ANNUAL FUND COMPLEX(1)
NAME OF PERSON, FROM PART OF FUND BENEFITS UPON PAID TO
POSITION COMPANY EXPENSES RETIREMENT DIRECTORS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
G. Nicholas Beckwith, III, $17,000 n/a n/a $44,000(3)(2)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
Philip E. Coldwell, $17,000 n/a n/a $44,000(3)(2)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
Robert R. Fortune, $17,000 n/a n/a $44,000(5)(2)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
Jerrold B. Harris, $17,000 n/a n/a $44,000(3)(2)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
Rodney D. Johnson, $17,000 n/a n/a $56,500(5)(2)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
G. Willing Pepper,(3) $26,000 n/a n/a $82,250(6)(2)
Chairman of the Board
- ----------------------------------------------------------------------------------------------------------------------------------
</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 September 30, 1998.
3. Mr. Pepper was President of the Company and certain other investment
companies in the Fund Complex until December 19, 1997.
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 September 30, 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 L.L.P., 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
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<PAGE> 17
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.
PROPOSAL 3: APPROVAL OF AN AGREEMENT AND
PLAN OF REORGANIZATION PURSUANT TO WHICH
EACH FUND WILL BE REORGANIZED INTO A
SERIES OF A DELAWARE BUSINESS TRUST
GENERAL.
The directors have unanimously approved, subject to shareholder
approval, a proposal for each 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 each Fund from
a separate series of the Company into a corresponding separate series of PIF.
Each series of the Company is referred to in this Proposal as a "current Fund."
It is also contemplated that each of the investment portfolios of Fed, Muni, Cal
Muni and NY 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 two series, which correspond to the current
Funds of the Company, and eight additional series that will match the investment
portfolios currently offered by Fed, Muni, Cal Muni and NY Muni. Each series of
PIF that corresponds to a current Fund is referred to in this Proposal as a
"successor Fund." To effect the Conversion, each current Fund will transfer all
of its assets and liabilities to the corresponding successor Fund. As
consideration for the transfer of such assets and liabilities (together, "net
assets"), each successor Fund will issue shares of beneficial interest to the
current Fund whose net assets it has acquired and such 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 a 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 corresponding current Fund as of the date of the Conversion.
Following the Conversion, each successor Fund will carry on the business of the
corresponding current Fund. The successor Fund will have the same investment
adviser, other service providers, the same fee and expense structure and
investment objectives, policies and limitations as the corresponding current
Fund. Any
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<PAGE> 18
change in the composition of the Board of Directors and fundamental investment
limitations approved at the Meeting with respect to a current Fund will also
apply to the corresponding 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). Approval of the Plan of Reorganization will also
constitute approval to wind-up the current Funds and the Company.
The Conversions 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 Restatement, 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
Restatement and the proposed Delaware Trust Instrument, see "Description of
Certain Provisions of the Delaware Trust Instrument" below.
The directors also believe that organizing the Funds and the other
investment portfolios offered by Fed, Muni, Cal Muni and NY 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.
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<PAGE> 19
The proposed Conversions also offer the potential for future cost
savings, although no immediate cost savings are expected to result from the
Conversions. 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 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 Funds will initially have only nominal assets and a net
asset value of $1.00 per share. On the closing date of its Conversion (the
"Closing Date"), each current Fund will transfer all of its assets to its
corresponding successor Fund in exchange for the assumption by the successor
Fund of all the liabilities of that current Fund and the issuance to that
current Fund of shares of beneficial interest of that successor Fund equal to
the value (as determined by using the procedures in the current prospectuses) on
the date of the exchange of that current Fund's net assets. Immediately
thereafter, each current Fund will liquidate and distribute shares of beneficial
interest to each current Fund's account pro rata in proportion to such current
Fund shareholder's interest in the current Fund in exchange for such Shares. In
these exchanges, a 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
-12-
<PAGE> 20
beneficial interest, each 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.
Assuming the Plan of Reorganization is approved, it is currently
contemplated that the Conversions will become effective by January 31, 1999 or
as soon thereafter as possible.
If, at any time before the Closing Date of the Conversions, the
directors determine that it would not be in the best interest of the Company or
the shareholders to proceed with the Conversions, the Conversions will not go
forward, notwithstanding the approval of the Conversions 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 CONVERSIONS.
BIMC will bear the expenses of this Meeting and of the Conversions.
TAX CONSEQUENCES OF THE CONVERSIONS.
It is a condition to the consummation of the Conversions 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, each 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 each current Fund, each successor Fund, and the
shareholders of each current Fund upon (1) the transfer of a current Fund's
assets to the corresponding successor Fund in exchange solely for such shares of
beneficial interest and the assumption by such successor Fund of that 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 each current Fund shareholder will be the same as that of his or her
current Shares surrendered in exchange therefor and (ii) each 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
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<PAGE> 21
therefor, provided that such 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 identical in all material respects to the accounts
currently maintained by the Funds 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 PLANS.
The trustees of PIF have adopted a shareholder servicing plan with
respect to Dollar Shares of TempFund and TempCash that is identical, in all
material respects, to the current shareholder servicing plans. In addition, PIF,
on behalf of each successor Fund, will assume the corresponding current Fund's
obligations under 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 Funds. PFPC Inc.
("PFPC") and Provident Distributors, Inc. ("PDI") currently serve as
co-administrators to the Funds. In addition, PFPC currently serves as transfer
agent and dividend disbursing agent to the Funds and PDI serves as distributor
to the Funds. PNC Bank currently serves as sub-adviser and custodian to the
Funds. PIF will adopt investment advisory, co-administration, transfer agency
and dividend disbursing agent, distribution and custodian agreements with
respect to each 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
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<PAGE> 22
Corporation, "BIMC") serves as the Company's investment adviser pursuant to an
advisory agreement dated March 11, 1987 (the "Current Advisory Agreement"). A
copy of the New Advisory Agreement is attached as Appendix B.
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 each 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 Fed, Muni, Cal
Muni and NY Muni) involved in the Conversions described in this Proposal 3.
The Company's Current Advisory Agreement was last approved by the
directors on March 13, 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 March 31, 1998. The Current
Advisory Agreement was last approved by the shareholders on June 12, 1987.
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 Fed, Muni, Cal Muni and NY Muni) are also
expected to convert assets into
-15-
<PAGE> 23
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.
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
March 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 each of the
Funds (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 each 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 fees, computed daily and payable monthly, at the following
annual rates:
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<PAGE> 24
TEMPFUND:
ANNUAL FEE AVERAGE NET ASSETS
- ---------- ------------------
.175% ............................ of the first $1 billion
.150% ............................ of the next $1 billion
.125% ............................ of the next $1 billion
.100% ............................ of the next $1 billion
.095% ............................ of the next $1 billion
.090% ............................ of the next $1 billion
.080% ............................ of the next $1 billion
.075% ............................ of the next $1 billion
.070% .................of amounts in excess of $8 billion.
TEMPCASH:
ANNUAL FEE AVERAGE NET ASSETS
- ---------- ------------------
.175% ............................ of the first $1 billion
.150% ............................ of the next $1 billion
.125% ............................ of the next $1 billion
.100% ............................ of the next $1 billion
.095% ............................ of the next $1 billion
.090% ............................ of the next $1 billion
.085% ............................ of the next $1 billion
.080% .................of amounts in excess of $7 billion.
During the fiscal year ended September 30, 1998, TempFund paid advisory
fees (net of waivers) of $8,126,927 and TempCash paid advisory fees (net of
waivers) of $2,385,597.
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 a Fund. BIMC has agreed that its investment
advisory fee for TempFund will be reduced by one-half the amount necessary to
ensure that ordinary operating expenses (excluding interest, taxes, brokerage,
payments to shareholder service organizations pursuant to its shareholder
service plan, and extraordinary expenses) do not exceed 0.45% of TempFund's
average net assets for any fiscal year. BIMC, PFPC and PDI have voluntarily
agreed to waive fees and/or reimburse the Funds to the extent the total expense
ratios (excluding shareholder service fees) exceed 0.25% for TempFund and 0.20%
for TempCash. This voluntary agreement is terminable
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<PAGE> 25
on 120 days prior written notice to the Funds. In addition, BIMC, PFPC and PDI
are required to reimburse a Fund if the expenses borne by such 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 Conversions, PDI will no longer be subject to
these expense reimbursement provisions.
Continuance of each agreement 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.
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<PAGE> 26
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 BlackRock Financial Management, Inc.
10154
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 Funds, excluding investment portfolios
which invest primarily U.S. Government or tax-free municipal securities:
<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>
Plan Investment Fund - $375,008,825 .20% of first
Money Market Portfolio $250 million(1)
The RBB Fund, Inc.- $2,315,561,301 .45% of first
Money Market $250 million(2)
BB&T Mutual Funds - $44,236,792 .09%
Prime Money Market Fund
BlackRock Funds - .40% of first
Money Market $2,915,975,786 $1 billion(3)
First Funds - $90,639,932 .08% of first
Cash Reserve $500 million(4)
</TABLE>
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<PAGE> 27
<TABLE>
<S> <C> <C>
Warburg, Pincus Counsellors, $555,508,230 .25%
Inc. - Cash Reserve Fund
</TABLE>
- --------------------------
1. Subsequent breakpoints are .15% of the next $250 million; .12% of the
next $250 million; .10% of the next $250 million; and .08% of net
assets over $1 billion.
2. Subsequent breakpoints are .40% of the next $250 million; and .35% 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 $3 billion.
4. Subsequent breakpoints are .06% of the next $500 million; and .05% of
net assets over $1 billion.
SERVICES TO THE FUNDS BY RELATED PARTIES. PFPC and PDI serve as
co-administrators to the Funds 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
September 30, 1998, TempFund paid PFPC and PDI administration fees (net of
waivers) of $8,126,927, and TempCash paid PFPC and PDI administration fees (net
of waivers) of $2,388,597.
PFPC also serves as transfer agent and dividend disbursing agent to the
Funds. For transfer agency and dividend disbursing agent services, each 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 September 30, 1998,
TempFund paid PFPC $638,408 in transfer agent fees and expenses, and TempCash
paid PFPC $128,345 in transfer agent fees and expenses.
Affiliates of BIMC may also receive fees under the shareholder service
agreements applicable to the Dollar Share Classes of TempFund and TempCash.
During the fiscal year ended September 30, 1998, TempFund Dollar Shares paid
$104,448 in service organization fees to affiliates of BIMC, and TempCash Dollar
Shares paid $27,566 in service organization fees to affiliates of BIMC.
PNC Bank serves as custodian to each Fund. Pursuant to the Custodian
Agreement, each Fund pays PNC Bank an annual fee, calculated daily on the
average daily gross assets and paid monthly, at the rate of $.25 for each $1000
of the first $250 million, $.20 for each $1000 on the next $250 million, $.15
for each $1000 on the next $500 million, $.09 for each $1000 on the next $2
billion, and $.08 for each $1000 on amounts over $3 billion, plus $15.00 for
each purchase, sale, or delivery of
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<PAGE> 28
fixed income securities (other than "Money Market" obligations) and $40 for each
interest collection or claim item. During the fiscal year ended September 30,
1998, TempFund paid PNC Bank $947,925 in custodian fees and expenses, and
TempCash paid PNC Bank $372,331 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 Funds. 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
successor Funds would initially have the same Classes of shares as the current
Funds, and these Classes would have substantially the same attributes as the
Classes of the current Funds. 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
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<PAGE> 29
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
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 Restatement 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 the Articles of
Restatement.
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.
-22-
<PAGE> 30
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.
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 Restatement requires shareholder
approval.
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 Restatement 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 Conversions 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
Conversions 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
Funds will have the same investment
-23-
<PAGE> 31
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 each Fund's performance
in relation to a selected group of other funds with similar investment
objectives, 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 Conversions will
be beneficial to present shareholders of the Funds 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 Conversions would be borne entirely by BIMC, the
directors unanimously approved the adoption of the Plan of Reorganization and
determined that the Conversions: (i) are in the best interest of the Funds and
(ii) will not result in dilution of the interests of the shareholders of any
Fund. In addition, the directors unanimously voted to recommend to the
shareholders of each Fund that they approve the Plan of Reorganization and the
transactions contemplated thereunder.
The Plan of Reorganization provides that in the event that the Plan of
Reorganization is approved with respect to one but not all of the Funds, the
Board of Directors of the Company may, in the exercise of its sole discretion,
determine to either abandon the Plan of Reorganization with respect to all of
the Funds or direct that the transactions thereunder be consummated to the
extent it deems advisable and to the degree the transactions may be lawfully
effected.
A vote FOR the Conversion will authorize each 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 Funds, which if
Proposals 4, 5 and 6 are approved, will be the same as the current fundamental
investment limitations in effect for the Funds, as amended by
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<PAGE> 32
such Proposals. In addition, if the Conversions are approved but Proposals 4,
5 and/or 6 are not approved by a current Fund's shareholders, a 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 FUNDS
Certain investment limitations of the Funds are matters of fundamental
policy and may not be changed with respect to a particular 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 Funds to
those of Fed, Muni, Cal Muni and NY Muni. In addition, if approved at this
Meeting, these fundamental investment limitations will also apply to the
successor Funds 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 Funds. Shareholders will vote either
for or against Proposal 4 in its entirety. The directors believe that the
proposal is in the best interests of each Fund's shareholders.
(a) AMENDMENT TO THE FUNDS'
FUNDAMENTAL INVESTMENT LIMITATION ON
BORROWING AND SENIOR SECURITIES
For each of the Funds:
<TABLE>
<CAPTION>
CURRENT PROPOSED
------- --------
<S> <C>
A Fund may not borrow money, except from banks for A Fund may not borrow money or
temporary purposes and then in amounts not in excess issue senior securities except
of 10% of the value of a Fund's assets at the time of to the extent permitted under
such borrowing; or mortgage, pledge or hypothecate the 1940 Act.
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 (A
loan limitation in excess of 5% is generally
associated with a leveraged fund, but since a
</TABLE>
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<PAGE> 33
CURRENT PROPOSED
------- --------
Fund anticipates paying interest on borrowed money at
rates comparable to its yield, the potential for
improving income by such borrowing is remote. This
borrowing provision is included solely to facilitate
the orderly sale of portfolio securities to
accommodate abnormally heavy redemption requests if
they should occur and is not for leverage purposes.)
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 a Fund's ability to borrow money from 10%
to 33 1/3% of its total assets at the time of borrowing.
(b) AMENDMENT TO THE FUNDS' FUNDAMENTAL INVESTMENT LIMITATION
ON UNDERWRITING ACTIVITIES
For each of the Funds:
CURRENT PROPOSED
------- --------
<TABLE>
<S> <C>
A Fund may not act as an A Fund may not act as an underwriter of
underwriter of securities. securities. A Fund will not be an
underwriter for purposes of this limitation
if it purchases securities in transactions
in which the Fund would not be deemed to be
an underwriter for purposes of the
Securities Act of 1933.
</TABLE>
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.
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<PAGE> 34
(c) AMENDMENT TO THE FUNDS' FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING REAL ESTATE RELATED TRANSACTIONS
For each of the Funds:
CURRENT PROPOSED
------- --------
A Fund may not purchase or sell A Fund may not purchase or sell
real estate. However, each real estate. The purchase of
Fund may purchase commercial securities secured by real
paper issued by companies which estate or interests therein are
invest in real estate or not considered to be a purchase
invests therein. 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 FUNDS' FUNDAMENTAL INVESTMENT LIMITATION
CONCERNING COMMODITIES
For each of the Funds:
CURRENT PROPOSED
------- --------
A Fund may not purchase or sell A Fund may not purchase or sell
commodities or commodity commodities or commodities
contracts, or invest in oil, contracts.
gas or mineral exploration or
development programs.
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would 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 Funds do not
intend on investing in such securities.
(e) AMENDMENT TO THE FUNDS' INVESTMENT LIMITATION
CONCERNING LOANS
For each of the Funds:
CURRENT PROPOSED
------- --------
A Fund many not make loans, A Fund may not make loans. The
except that a Fund may purchase purchase of debt obligations,
or hold debt instruments in the lending of portfolio
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<PAGE> 35
accordance with its investment securities and the entry into
objective and policies, and may repurchase agreements are not
enter into repurchase treated as the making of loans
agreements with respect to for purposes of this
commercial paper, certificates limitation.
of deposit and obligations
issued or guaranteed by the
U.S. Government, its agencies
or instrumentalities.
EXPLANATION OF THE PROPOSED CHANGE: The proposed change would modernize
the language of this limitation. In addition, it would permit the Funds to
engage in securities lending transactions. If approved, a 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. The Funds have indicated that if this change
is approved, they may engage in such transactions.
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<PAGE> 36
(f) AMENDMENT TO TEMPCASH'S INVESTMENT LIMITATION
CONCERNING CONCENTRATION
For TempCash only:
CURRENT PROPOSED
------- --------
TempCash may not purchase any TempCash may not purchase any
securities which would cause, securities which would cause,
at the time of purchase, less at the time of purchase, less
than 25% of the value of its than 25% of the value of its
total assets to be invested in total assets to be invested in
obligations of issuers in the obligations of issuers in the
banking industry or in financial services industry or
obligations, such as repurchase in obligations, such as
agreements, secured by such repurchase agreements, secured
obligations (unless the Fund is by such obligations (unless the
in a temporary defensive Fund is in a temporary
position) or which would cause, defensive position) or which
at the time of purchase, 25% or would cause, at the time of
more of the value of its total purchase, 25% or more of the
assets to be invested in the value of its total assets to be
obligations of issuers in any invested in the obligations of
other industry, provided that issuers in any other industry,
(a) there is no limitation with provided that (a) there is no
respect to investments in U.S. limitation with respect to
Treasury Bills and other investments in U.S. Treasury
obligations issued or Bills and other obligations
guaranteed by the federal issued or guaranteed by the
government, its agencies and federal government, its
instrumentalities and (b) agencies and instrumentalities
neither all finance companies, and (b) neither all finance
as a group, nor all utility companies, as a group, nor all
companies, as a group, are utility companies, as a group,
considered a single industry are considered a single
for purposes of this policy. industry for purposes of this
policy.
EXPLANATION OF THE PROPOSED CHANGE: The proposed policy is almost
identical to the current limitation, except that, instead of concentrating 25%
of TempCash's assets in the banking industry, 25% of the Fund's assets will be
invested in the financial services industry. The financial services industry is
a broader category which includes money market obligations issued by domestic
and foreign banks, savings and loan associations, consumer and industrial
finance companies, securities brokerage companies and a variety of firms in the
insurance field. Because of its concentration in the financial services
industry, TempCash will be exposed to the risks associated with that industry,
such as government regulation, the availability and cost of capital funds, and
general economic conditions.
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<PAGE> 37
PROPOSAL 5: TO APPROVE A CHANGE IN THE FOLLOWING FUNDAMENTAL
INVESTMENT LIMITATIONS OF THE FUNDS TO MAKE SUCH
LIMITATIONS NON-FUNDAMENTAL
The following proposals would change certain fundamental investment
limitations of the Funds 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 any Fund; however, if this proposal is
approved, the Board of Directors may do so in the future. Additionally, if
approved at this Meeting, these limitations will also apply to the successor
Funds 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
each Fund's shareholders.
(a) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT
LIMITATION ON ELIGIBLE SECURITIES
For each of the Funds:
CURRENT PROPOSED
------- --------
A Fund may not purchase any This limitation would be made
securities other than so-called non-fundamental.
money market instruments,
including U.S. Treasury Bills;
other obligations issued or
guaranteed by the federal
government, its agencies or
instrumentalities; certificates
of deposit; bankers'
acceptances; and commercial
paper (including variable rate
demand notes); some of which
may be subject to repurchase
agreements, but each Fund may
make interest-bearing savings
deposits in commercial and
savings bank in amounts not in
excess of 5% of the value of
the Fund's assets, and TempCash
may make time deposits.
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<PAGE> 38
(b) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT LIMITATION
REGARDING ACQUISITION OF VOTING SECURITIES OR ACQUIRING
SECURITIES OF OTHER INVESTMENT COMPANIES
For each of the Funds:
CURRENT PROPOSED
------- --------
A Fund may not acquire voting This limitation would be made
securities of any issuer or non-fundamental and restated as
acquire securities of other follows:
investment companies.
A 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 Funds 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.
(c) RECLASSIFICATION OF THE FUNDAMENTAL INVESTMENT LIMITATION ON
PURCHASING SECURITIES ON MARGIN, MAKING SHORT SALES OR
MAINTAINING A SHORT POSITION
For each of the Funds:
CURRENT PROPOSED
------- --------
A Fund may not purchase This limitation would be made
securities on margin, make non-fundamental and deleted.
short sales of securities or
maintain a short position.
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<PAGE> 39
PROPOSAL 6: TO APPROVE A NEW
FUNDAMENTAL INVESTMENT LIMITATION TO PERMIT
EACH 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 each 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 Funds would not be able to take advantage of such
flexibility. If the proposal is approved, each 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 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. A
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 Funds 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 any Fund
should invest in a Pooled Portfolio, the directors believe that it could in the
future be in the best interests of the Funds to adopt such a structure to allow
for investing by one or more of the Funds in a Pooled Portfolio without the cost
of again obtaining shareholder approval.
At present, some of the Funds' fundamental investment limitations prevent
a 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
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<PAGE> 40
meeting, the directors recommend that shareholders of each Fund vote to permit
the assets of such 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 Funds 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 Funds' 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 a Fund's assets in a Pooled Portfolio only if they determine that
pooling is in the best interests of a 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 a 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 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 a Fund may be
reduced. If a 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 one or both of the Funds to invest in a Pooled
Portfolio at a future date, the directors recommend that the shareholders of
each Fund adopt the following fundamental policy:
Each 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.
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<PAGE> 41
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 unanimously adopted and voted to recommend to the shareholders that
they adopt the proposed new fundamental investment limitation that would permit
any 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 Funds 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.
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 each 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 a Fund. The term "majority of the
outstanding voting securities" means the vote of (a) 67% or more of the voting
securities of a Fund present at such meeting, if the holders of more than 50% of
the outstanding
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<PAGE> 42
voting securities of such Fund are present or represented by proxy; or (b) more
than 50% of the outstanding voting securities of such 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 each 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 Funds, which if
Proposals 4, 5 and 6 are approved, will be the same as the current fundamental
investment limitations in effect for the Funds, as amended by such Proposals. In
addition, if the Conversions are approved but Proposals 4, 5 and/or 6 are not
approved by a current Fund's shareholders, a current Fund, as sole shareholder
of the 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:
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<PAGE> 43
OFFICER PRINCIPAL OCCUPATION
NAME AGE SINCE POSITION DURING PAST 5 YEARS
- ---- --- ----- -------- -------------------
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 1977 Secretary Partner, law firm of
Drinker Biddle & Reath
LLP
INVESTMENT ADVISER AND SUB-ADVISER.
BIMC serves as investment adviser for each Fund. BIMC is located at
Bellevue Park Corporate Center, 400 Bellevue Parkway, Wilmington, DE 19809. PNC
Bank is the sub-adviser for each 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 each Fund. PDI also serves
as the distributor for each 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 any
Fund as of November 13, 1998, the record date, are as follows:
NAME AND
ADDRESS OF
NAME OF BENEFICIAL NUMBER OF PERCENTAGE
FUND/CLASS OWNER SHARES OWNED OF FUND
- ---------- ----- ------------ -------
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<PAGE> 44
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,
Temporary Investment Fund, 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.
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<PAGE> 45
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 Temporary Investment Fund, Inc. (the "Company"),
a Maryland corporation, on behalf of each of its series (each a "Fund" and
collectively the "Funds"), 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 each Fund as a new series of the Trust
(each a "Successor Fund" and collectively the "Successor Funds"). Each
Reorganization will include the transfer of all of the assets of a Fund to a
corresponding 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 corresponding Fund
class outstanding immediately before the Reorganization. These transactions will
be promptly followed by a pro rata distribution by each Fund of the shares of
beneficial interest it receives in the exchange described above to the holders
of corresponding Fund Shares in exchange for those Fund Shares, in liquidation
of each Fund, and the cancellation of each 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 FUNDS 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, each Fund agrees to
transfer all of its assets (as described in paragraph 1.2) and to assign and
transfer all of its liabilities to a corresponding Successor Fund organized
solely for the purpose of acquiring all of the assets and assuming all of the
liabilities of that Fund. The Trust, on behalf of each Successor Fund, agrees
that in exchange for all of the assets of the corresponding Fund: (1) the
Successor Fund shall assume all
-1-
<PAGE> 46
of the liabilities of such Fund, whether contingent or otherwise, then existing,
and (2) the Trust shall issue shares of beneficial interest to the Fund. The
number of shares of beneficial interest of each class to be issued by the Trust
on behalf of each Successor Fund will be identical to the number of full and
fractional Shares of the corresponding class and 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 each Fund to be acquired by the corresponding 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 each Fund of corresponding shares of
beneficial interest, a duly authorized officer of the Company shall cause each
Fund, as the sole shareholder of the corresponding 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 an investment advisory agreement between the Trust and BlackRock
Institutional Management Corporation.
1.4 On the Closing Date, each 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 each Fund on the records of the Trust
to open accounts on those records in the names of such Fund shareholders and
representing the respective pro rata number of each class of the shares of
beneficial interest received from the Successor Funds which is due to such 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 each 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
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<PAGE> 47
of the Fund Shares on the books of any Fund shall be paid by the person to whom
such shares of beneficial interest are to be distributed as a condition of such
transfer.
1.7 The legal existence of each Fund and the Company shall be terminated as
promptly as reasonably practicable after the Closing Date. After the Closing
Date, each Fund and the Company shall not conduct any business except in
connection with its liquidation and termination.
2. VALUATION
2.1 The value of each Fund's assets to be acquired by the Trust on behalf
of the corresponding 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 each Fund's assets shall be equal to the
value of the net assets of the corresponding class of such 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 each Fund's assets in exchange for the assumption by
the corresponding 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 each Fund,
as follows:
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<PAGE> 48
4.1.A. At the Closing Date, the Company, on behalf of the Funds, will
have good and marketable title to the assets to be transferred to the Trust, on
behalf of the Successor Funds, 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 Funds 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 each Fund enforceable in accordance with its
terms, subject to the approval of each 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 Funds, 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 each
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 each
Successor Fund enforceable against the Trust and each 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 Funds of the
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<PAGE> 49
transactions contemplated herein, except such as shall have been obtained prior
to the Closing Date; and
4.2.D. The Trust, on behalf of the Successor Funds, 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 FUNDS, THE TRUST
AND THE SUCCESSOR FUNDS
The obligations of the Company, the Funds, the Trust and the Successor
Funds 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 Funds, the Trust or the
Successor Funds, 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 each Fund by its
corresponding 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 any Fund upon (i) the
transfer of all of its assets to its corresponding
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<PAGE> 50
Successor Fund solely in exchange for the issuance of shares of beneficial
interest to the Fund and the assumption by the Successor Fund of 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 any Successor Fund upon
its receipt of all of the corresponding 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
its corresponding 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 each Fund in the hands
of its corresponding Successor Fund will, in each instance, include the Fund's
tax holding period for those assets;
5.3.F. Each 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 such 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 Funds and the Successor Funds, 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 Funds and the Successor Funds,
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.
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<PAGE> 51
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 any 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 that Fund's shareholders
under this Agreement to the detriment of such Fund shareholders without their
further approval. Without limiting the foregoing, in the event shareholder
approval of this Agreement and the transactions contemplated herein is obtained
with respect to one or more Funds but not with respect to other Funds, with the
result that the transactions contemplated by this Agreement may be consummated
with respect to one or more, but not all, of the Funds, the Board of Directors
of the Company may, in the exercise of its sole and unilateral discretion,
determine to either abandon this Agreement with respect to all of the Funds or
direct that the transactions described herein be consummated to the degree the
Board deems advisable and to the degree such transactions may be lawfully
effected.
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
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<PAGE> 52
successors and assigns any rights or remedies under or by reason of this
Agreement.
9.5 All persons dealing with the Company, the Funds, the Trust or the
Successor Funds must look solely to the property of the Company, the Funds, the
Trust or the Successor Funds, respectively, for the enforcement of any claims
against the Company, the Funds, the Trust or the Successor Funds, 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. No series of the Company or the Trust, or
any class within a series, shall be responsible for any 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
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<PAGE> 53
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.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer.
TEMPORARY INVESTMENT FUND, INC.
----------------------------------------
Name:
Title:
PROVIDENT INSTITUTIONAL FUNDS
----------------------------------------
Name:
Title:
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<PAGE> 54
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.
<PAGE> 55
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> 56
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> 57
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
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<PAGE> 58
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:
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<PAGE> 59
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
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<PAGE> 60
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> 61
VOTE THIS PROXY CARD TODAY!
TEMPORARY INVESTMENT FUND, INC.
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
TEMPFUND SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF TEMPORARY INVESTMENT FUND,
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 10:00
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.
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 September 30, 1999.
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.
<PAGE> 62
FOR AGAINST ABSTAIN
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; and
e) limitation on loans.
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 acquiring voting securities or
acquiring securities of other investment
companies; and
c) limitation on purchasing securities on margin,
making short sales or maintaining a short
position.
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 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__
<PAGE> 63
VOTE THIS PROXY CARD TODAY!
TEMPORARY INVESTMENT FUND, INC.
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
TEMPCASH SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF TEMPORARY INVESTMENT FUND,
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 10:00
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.
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 September 30, 1999.
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.
<PAGE> 64
FOR AGAINST ABSTAIN
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
f) 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 acquiring voting securities or
acquiring securities of other investment
companies; and
c) limitation on purchasing securities on margin,
making short sales or maintaining a short
position.
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 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__
