<PAGE>
TEMPCASH
An investment portfolio offered by
Provident Institutional Funds
Supplement dated November 30, 1999 to Prospectus
dated February 10, 1999
This Supplement to the Prospectus provides new and additional information
beyond that contained in the Prospectus and should be retained and read in
conjunction with the Prospectus.
* * * * *
(1) In the Risk/Return Summary of the Prospectus--
the following sentence is added under the bar chart in the Performance
Information section on page 4:
As of September 30, 1999, the year to date return was 5.01%
(annualized).
the following footnote replaces footnote 1 under ANNUAL FUND OPERATING
EXPENSES on page 6:
(1) Total Annual Fund Operating Expenses for TempCash Shares and
TempCash Dollar Shares for the fiscal year ended September 30, 1999,
with fee waivers, were .18% and .43%, respectively, of the Classes'
average net assets. The Adviser and PFPC Inc., the Fund's co-
administrator, may from time to time waive the investment advisory and
administration fees otherwise payable to them or may reimburse the Fund
for its operating expenses. The Adviser and PFPC expect to continue such
fee waivers but can terminate the waivers upon 120 days prior written
notice to the Fund.
* * * * *
(2) In the Management of the Fund section of the Prospectus--
the second sentence of the section entitled "Investment Adviser" on page 11
is modified as follows:
The Adviser and its affiliates are one of the largest U.S. bank managers
of mutual funds, with assets currently under management in excess of $54
billion.
the fifth sentence of the second paragraph of this section on page 12 is
modified as follows:
For the fiscal year ended September 30, 1999, the Fund paid investment
advisory fees and administration fees each aggregating .08% (net of
waivers) of its average net assets.
* * * * *
(3) In the Shareholder Information section of the Prospectus--
the following paragraph is added after the existing paragraph in the
section entitled "Price of Fund Shares" on page 12:
On any business day when the Bond Market Association ("BMA") recommends
that the securities markets close early, the Fund reserves the right to
close at or prior to the BMA recommended closing time. If the Fund does so,
it will cease granting same business day credit for purchase and redemption
orders received after the Fund's closing time and credit will be granted to
the next business day.
the following sentence is added to the first paragraph of the section
entitled "Taxes" on page 15:
The one major exception to these tax principles is that distributions
on, and sales, exchanges and redemptions of, shares held in an IRA (or
other tax qualified plan) will not be currently taxable.
the last sentence of this section on page 15 is modified as follows:
You should also consult your tax adviser for further information
regarding the federal, state, local and/or foreign tax consequences with
respect to your specific situation.
* * * * *
A-1
PIF-Supp-002
<PAGE>
(4) The section entitled "Financial Highlights" on pages 16 and 17 of the
Prospectus is replaced with the following:
Financial Highlights
The financial highlights tables are intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are incorporated by reference into the
Statement of Additional Information and included in the Annual Report, each of
which is available upon request.
A-2
<PAGE>
TEMPCASH SHARES
The table below sets forth selected financial data for a TempCash Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended September 30
----------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income From Investment
Operations
Net Investment
Income............... .0496 .0552 .0541 .0542 .0575
---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends to
Shareholders from Net
Investment Income....... (.0496) (.0552) (.0541) (.0542) (.0575)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return............ 5.07% 5.66% 5.55% 5.56% 5.90%
Ratios/Supplemental
Data:
Net Assets, End of
Year $(000).......... 1,968,626 2,499,114 1,991,037 1,835,326 1,316,166
Ratios of Expenses to
Average Daily Net
Assets(1)............ .18% .18% .18% .18% .16%
Ratios of Net
Investment Income to
Average Daily Net
Assets............... 4.95% 5.52% 5.41% 5.42% 5.75%
</TABLE>
- --------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempCash Shares would have been
.30%, .32%, .30%, .33% and .30% for the years ended September 30, 1999,
1998, 1997, 1996 and 1995, respectively.
A-3
<PAGE>
TEMPCASH DOLLAR SHARES
The table below sets forth selected financial data for a TempCash Dollar
Share outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended January 31,
------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment
Operations
Net Investment Income...... .0471 .0527 .0516 .0517 .0550
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders
from Net Investment Income... (.0471) (.0527) (.0516) (.0517) (.0550)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return................. 4.82% 5.41% 5.29% 5.31% 5.65%
Ratios/Supplemental Data:
Net Assets, End of Period
$(000).................... 378,010 503,809 401,529 527,830 454,156
Ratios of Expenses to
Average Daily Net
Assets(1)................. .43% . 43% .43% .43% .41%
Ratios of Net Investment
Income to Average Daily
Net Assets................ 4.70% 5.27% 5.16% 5.17% 5.50%
</TABLE>
- --------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempCash Dollar Shares would have
been .55%, .57%, .55%, .58% and .55% for the years ended September 30,
1999, 1998, 1997, 1996 and 1995, respectively.
A-4
<PAGE>
TempCash
An investment portfolio offered by
Provident Institutional Funds
Prospectus
February 10, 1999
Bellevue Park For purchase and redemption orders only call: 800-441-
Corporate Center 7450 (in Delaware: 302-791-5350). For yield
400 Bellevue Parkway information call: 800-821-6006 (TempCash Shares code:
Wilmington, DE 19809 21; TempCash Dollar Shares code: 23). For other
information call: 800-821-7432 or visit our web site
at www.pif.com.
Investment Adviser
BlackRock Institutional Management Corporation
The Securities and Exchange Commission has not approved or disapproved the
Fund's shares or determined if this prospectus is accurate or complete. It is a
criminal offense to state otherwise.
<PAGE>
Table of Contents ______________________________________________________________
<TABLE>
<CAPTION>
Page
----
<S> <C>
Risk/Return Summary........................................................ 3
Investment Goal.......................................................... 3
Investment Policies...................................................... 3
Principal Risks of Investing............................................. 3
Who May Want to Invest in the Fund....................................... 3
Performance Information.................................................. 4
Fees and Expenses........................................................ 6
Investment Strategies and Risk Disclosure.................................. 7
Management of the Fund..................................................... 11
Shareholder Information.................................................... 12
Price of Fund Shares..................................................... 12
Purchase of Shares....................................................... 12
Redemption of Shares..................................................... 13
Shareholder Service Plan................................................. 14
Dividends and Distributions.............................................. 15
Taxes.................................................................... 15
Financial Highlights....................................................... 16
</TABLE>
2
<PAGE>
Risk/Return ____________________________________________________________
Summary
Investment The Fund seeks current income with liquidity and stability
Goal: of principal.
Investment The Fund invests in a broad range of money market
Policies: instruments, including government, U.S. and foreign bank and
commercial obligations and repurchase agreements relating to
such obligations. Under normal market conditions, at least
25% of the Fund's total assets will be invested in
obligations of issuers in the financial services industry
and repurchase agreements relating to such obligations.
Principal Risks Although the Fund invests in money market instruments which
of Investing: the investment adviser, BlackRock Institutional Management
Corporation ("BIMC," or the "Adviser") believes present
minimal credit risks at the time of purchase, there is a
risk that an issuer may not be able to make principal and
interest payments when due. The Fund is also subject to
risks related to changes in prevailing interest rates, since
generally, a fixed-income security will increase in value
when interest rates fall and decrease in value when interest
rates rise.
Because of its concentration in the financial services
industry, the Fund 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. In addition, securities issued by foreign
entities, including foreign banks and corporations may
involve additional risks. Examples of these risks are the
lack of available public information about the foreign
issuer, and international economic or political developments
which could affect the payment of principal and interest
when due.
An investment in the Fund is not a deposit in PFPC Trust
Company or PNC Bank, N.A. and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the
value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund.
Who May Want to The Fund is designed for institutional investors seeking
Invest in the current income and stability of principal. The Fund is
Fund: particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term
funds for their own accounts or for the accounts of their
customers.
3
<PAGE>
Performance Information
The Bar Chart and the Table below indicate the risks of investing in the Fund
by showing how the performance of the Fund has varied from year to year. The
Table shows how the Fund's average annual return for one, five and ten years
compares to that of a selected market index. The Bar Chart and the Table assume
reinvestment of dividends and distributions. The Fund's past performance does
not necessarily indicate how it will perform in the future.
TempCash Shares
[CHART APPEARS HERE]
Year Annualized Returns
1989 9.56
1990 8.42
1991 6.27
1992 3.83
1993 3.15
1994 4.30
1995 6.02
1996 5.44
1997 5.62
1998 5.55
During the ten-year period shown in the bar chart, the highest quarterly
return was 10.15% (for the quarter ended June 30, 1989) and the lowest
quarterly return was 3.07% (for the quarter ended March 31, 1993).
4
<PAGE>
The Fund's Average Annual Total Return For Periods Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C> <C>
TempCash Shares...................................... 5.55% 5.29% 5.74%
TempCash Dollar Shares............................... 5.30% 5.04% 5.49%
IBC's Money Fund Report: First Tier Institutions--
Only Money Fund Average*............................ 5.33% 5.16% 5.67%
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
7 Day Yield as of
December 31, 1998
-----------------
<S> <C>
TempCash Shares............................................ 5.05%
TempCash Dollar Shares..................................... 4.80%
IBC's Money Fund Report: First Tier Institutions--Only
Money Fund Average*....................................... 4.87%
- -------------------------------------------------------------------------------
</TABLE>
Current Yield: You may obtain the Fund's current 7-day yield by calling 1-800-
821-7432 or by visiting its web site at www.pif.com.
- -------
* IBC's Money Fund Report: First Tier Institutions--Only Money Fund Average is
comprised of institutional money market funds investing in First Tier
Eligible money market instruments.
5
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
TempCash
-----------------------
TempCash TempCash
Shares Dollar Shares
--------- -------------
<S> <C> <C> <C> <C>
Management Fees......................................... .15% .15%
Other Expenses.......................................... .17% .42%
Administration Fees.................................... .15% .15%
Shareholder Servicing Fees............................. -- .25%
Miscellaneous.......................................... .02% .02%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses(1)................. .32% .57%
- --------------------------------------------------------------------------------
</TABLE>
(1) Total Annual Fund Operating Expenses for TempCash Shares and TempCash
Dollar Shares for the fiscal year ended September 30, 1998, with fee
waivers, were .18% and .43%, respectively, of the Fund's average net
assets. The Adviser and PFPC Inc., the Fund's co-administrator, may from
time to time waive the investment advisory and administration fees
otherwise payable to them or may reimburse the Fund for its operating
expenses. The Adviser and PFPC expect to continue such fee waivers, but can
terminate the waivers upon 120 days prior written notice to the Fund.
EXAMPLE
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
TempCash
----------------------
TempCash TempCash
Shares Dollar Shares
-------- -------------
<S> <C> <C>
One Year................................................. $ 33 $ 58
Three years.............................................. $103 $183
Five Years............................................... $180 $318
Ten Years................................................ $406 $714
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Investment
Strategies and
Risk Disclosure ________________________________________________________________
The Fund is a money market fund. The investment objective of
the Fund is to seek current income and stability of
principal. The Fund's investment objective may be changed by
the Board of Trustees without shareholder approval. The Fund
invests in a broad range of money market instruments,
including government, U.S. and foreign bank and commercial
obligations and repurchase agreements relating to such
obligations. At least 25% of the Fund's total assets will be
invested in obligations of issuers in the financial services
industry and repurchase agreements relating to such
obligations, unless the Fund is in a temporary defensive
position.
The Fund invests in securities maturing within 13 months
or less from the date of purchase, with certain exceptions.
For example, certain government securities held by the Fund
may have remaining maturities exceeding 13 months if such
securities provide for adjustments in their interest rates
not less frequently than every 13 months. The securities
purchased by the Fund are also subject to the quality,
diversification, and other requirements of Rule 2a-7 under
the Investment Company Act of 1940, as amended, and other
rules of the Securities and Exchange Commission. Pursuant to
Rule 2a-7, the Fund generally will limit its purchases of
any one issuer's securities (other than U.S. Government
obligations, repurchase agreements collateralized by such
securities and securities subject to certain guarantees or
otherwise providing a right to demand payment) to 5% of the
Fund's total assets, except that up to 25% of its total
assets may be invested in securities of one issuer for a
period of up to three business days; provided that the Fund
may not invest more than 25% of its total assets in the
securities of more than one issuer in accordance with the
foregoing at any one time.
The Fund will only purchase securities that present
minimal credit risk as determined by the Adviser pursuant to
guidelines approved by the Board of Trustees of Provident
Institutional Funds. Securities purchased by the Fund (or
the issuers of such securities) will be First Tier Eligible
Securities. First Tier Eligible Securities are:
. securities that have ratings at the time of purchase (or
which are guaranteed or in some cases otherwise supported
by guarantees or other credit supports with such ratings)
in the highest rating category by at least two
unaffiliated nationally recognized statistical rating
organizations ("NRSROs"), or one NRSRO, if the security or
guarantee was only rated by one NRSRO;
. securities that are issued or guaranteed by a person with
such ratings;
7
<PAGE>
. securities without such short-term ratings that have been
determined to be of comparable quality by the Adviser
pursuant to guidelines approved by the Board of Trustees;
. securities issued or guaranteed as to principal or
interest by the U.S. Government or any of its agencies or
instrumentalities; or
. securities issued by other open-end investment Companies
that invest in the type of obligations in which the Fund
may invest.
- --------------------------------------------------------------------------------
Investments The Fund's investments may include the following:
U.S. Government The Fund may purchase obligations issued or guaranteed by
Obligations the U.S. Government or its agencies and instrumentalities
and related custodial receipts.
Bank Obligations The Fund may purchase obligations of issuers in the banking
industry, such as bank holding company obligations and
certificates of deposit, bankers' acceptances, bank notes
and time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or
foreign banks or savings institutions having total assets at
the time of purchase in excess of $1 billion. The Fund may
invest substantially in obligations of foreign banks or
foreign branches of U.S. banks where the Adviser deems the
instrument to present minimal credit risks. The Fund may
also make interest-bearing savings deposits in commercial
and savings banks in amounts not in excess of 5% of its
assets.
Commercial Paper The Fund may invest in commercial paper and short-term notes
and corporate bonds that meet the Fund's quality and
maturity restrictions. Commercial paper purchased by the
Fund may include instruments issued by foreign issuers, such
as Canadian Commercial Paper, which is U.S. dollar-
denominated commercial paper issued by a Canadian
corporation or a Canadian counterpart of a U.S. corporation,
and in Europaper, which is U.S. dollar-denominated
commercial paper of a foreign issuer.
Asset-Backed The Fund may invest in asset-backed securities which are
Obligations backed by mortgages, installment sales contracts, credit
card receivables or other assets and collateralized mortgage
obligations ("CMOs") issued or guaranteed by U.S. Government
agencies and instrumentalities or issued by private
companies. Purchasable mortgage-related securities also
include adjustable rate securities. The Fund currently
intends to hold CMOs only as collateral for repurchase
agreements.
8
<PAGE>
Investment The Fund may invest in securities issued by other open-end
Company investment companies that invest in the type of obligations
Securities in which the Fund may invest and that determine their net
asset value per share based upon the amortized cost or penny
rounding method. Investments in the securities of other
investment companies will cause the Fund (and, indirectly
the Fund's shareholders) to bear proportionately the costs
incurred in connection with the other investment companies'
operations.
Municipal The Fund may, when deemed appropriate by the Adviser in
Obligations light of the Fund's investment objective, invest in high
quality, short-term obligations issued by state and local
governmental issuers which carry yields that are competitive
with those of other types of money market instruments of
comparable quality.
Guaranteed The Fund may make investments in obligations, such as
Investment guaranteed investment contracts and similar funding
Contracts agreements (collectively "GICs"), issued by highly rated
U.S. insurance companies. GIC investments that do not
provide for payment within seven days after notice are
subject to the Fund's policy regarding investments in
illiquid securities.
Variable The Fund may purchase variable or floating rate notes, which
and Floating are instruments that provide for adjustments in the interest
Rate Instruments rate on certain reset dates or whenever a specified interest
rate index changes, respectively.
Repurchase The Fund may enter into repurchase agreements.
Agreements
Reverse The Fund may enter into reverse repurchase agreements. The
Repurchase Fund is permitted to invest up to one-third of its total
Agreements assets in reverse repurchase agreements. The Fund may also
and Securities lend its securities with a value of up to one-third of its
Lending total assets (including the value of the collateral for the
loan) to qualified brokers, dealers, banks and other
financial institutions for the purpose of realizing
additional net investment income through the receipt of
interest on the loan. Investments in reverse repurchase
agreements and securities lending transactions will be
aggregated for purposes of this investment limitation.
Borrowing The Fund is authorized to issue senior securities or borrow
money from banks or other lenders on a temporary basis. The
Fund will borrow money when the Adviser believes that the
return from securities purchased with borrowed funds will be
greater than the cost of the borrowing. Such borrowings will
be unsecured. The Fund will not purchase portfolio
securities while borrowings in excess of 5% of the Fund's
total assets are outstanding.
9
<PAGE>
When-Issued and The Fund may purchase securities on a "when-issued" or
Delayed "delayed settlement" basis. The Fund expects that
Settlement commitments to purchase when-issued or delayed settlement
Transactions securities will not exceed 25% of the value of its total
assets absent unusual market conditions. The Fund does not
intend to purchase when-issued or delayed settlement
securities for speculative purposes but only in furtherance
of its investment objective. The Fund receives no income
from when-issued or delayed settlement securities prior to
delivery of such securities.
Illiquid The Fund will not invest more than 10% of the value of its
Securities total assets in illiquid securities, including time deposits
and repurchase agreements having maturities longer than
seven days. Securities that have readily available market
quotations are not deemed illiquid for purposes of this
limitation.
Other Types of This Prospectus describes the Fund's principal investment
Investments strategies, and the particular types of securities in which
the Fund principally invests. The Fund may, from time to
time, make other types of investments and pursue other
investment strategies in support of its overall investment
goal. Any other types of investments will comply with the
Fund's quality and maturity guidelines. These supplemental
investment strategies are described in detail in the
Statement of Additional Information, which is referred to on
the back cover of this Prospectus.
Risk Factors The principal risks of investing in the Fund are also
described above in the Risk/Return Summary. The following
supplements that description.
Interest Rate Generally, a fixed-income security will increase in value
Risk when interest rates fall and decrease in value when interest
rates rise. As a result, if interest rates were to change
rapidly, there is a risk that the change in market value of
the Fund's assets may not enable the Fund to maintain a
stable net asset value of $1.00 per share.
Credit Risk The risk that an issuer will be unable to make principal and
interest payments when due is known as "credit risk." U.S.
Government securities are generally considered to be the
safest type of investment in terms of credit risk, with
municipal obligations and corporate debt securities
presenting somewhat higher credit risk. Credit quality
ratings published by an NRSRO are widely accepted measures
of credit risk. The lower a security is rated by an NRSRO,
the more credit risk it is considered to represent.
Other Risks Certain investment strategies employed by the Fund may
involve additional investment risk. Liquidity risk involves
certain securities which may be difficult or impossible to
sell at the time and the price that the Fund would like.
Reverse
10
<PAGE>
repurchase agreements, securities lending transactions and
when-issued or delayed delivery transactions may involve
leverage risk. Leverage risk is associated with securities
or practices that multiply small market movements into
larger changes in the value of the Fund's investment
portfolio. The fund does not currently intend to employ
investment strategies that involve leverage risk.
Concentration The Fund intends to concentrate more than 25% of its total
assets in the obligations of issuers in the financial
services industry and repurchase agreements relating to such
obligations. Because the Fund concentrates its assets in the
financial services industry it 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.
Foreign Exposure Securities issued by foreign entities, including foreign
banks and corporations, may involve additional risks and
considerations. Extensive public information about the
foreign issuer may not be available, and unfavorable
political, economic or governmental developments in the
foreign country involved could affect the payment of
principal and interest.
Year 2000 Like other mutual funds, financial and business
organizations and individuals around the world, the Fund
could be adversely affected if the computer systems used by
the Adviser and the Fund's other service providers, or
persons with whom they deal, do not properly process and
calculate date-related information and data from and after
January 1, 2000. This possibility is commonly known as the
"Year 2000 Problem." The Fund has been advised by the
Adviser, the co-administrator and the custodian that they
are actively taking steps to address the Year 2000 Problem
with respect to the computer systems that they use and to
obtain assurances that comparable steps are being taken by
the Fund's other major service providers. While there can be
no assurance that the Fund's service providers will be Year
2000 compliant, the Fund's service providers expect that
their plans to be compliant will be achieved.
Management of the Fund _________________________________________________________
Investment The Adviser, a majority-owned indirect subsidiary of PNC
Adviser Bank, serves as the Fund's investment adviser. The Adviser
and its affiliates are one of the largest U.S. bank managers
of mutual funds, with assets currently under management in
excess of $46 billion. BIMC (formerly known as PNC
Institutional Management Corporation or "PIMC") was
organized in 1977 by PNC Bank to perform advisory services
for investment companies and has its principal offices at
Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809.
11
<PAGE>
As investment adviser, BIMC manages the Fund and is
responsible for all purchases and sales of the Fund's
securities. For the investment advisory services provided
and expenses assumed by it, BIMC is entitled to receive a
fee, computed daily and payable monthly, based on the Fund's
average net assets. BIMC and PFPC, the co-administrator, may
from time to time reduce the investment advisory and
administration fees otherwise payable to them or may
reimburse the Fund for its operating expenses. Any fees
waived and any expenses reimbursed by BIMC and PFPC with
respect to a particular fiscal year are not recoverable. For
the fiscal year ended September 30, 1998, the Fund paid
investment advisory fees and administration fees each
aggregating .08% (net of waivers) of its average net assets.
The services provided by BIMC and the fees payable by the
Fund for these services are described further in the
Statement of Additional Information under "Management of the
Funds."
Shareholder Information ________________________________________________________
Price of Fund The Fund's net asset value per share for purposes of pricing
Shares purchase and redemption orders is determined by PFPC Inc.
("PFPC"), the Funds co-administrator, as of 12:00 noon and
4:00 P.M., Eastern time, on each day on which both the New
York Stock Exchange and the Federal Reserve Bank of
Philadelphia are open for business (a "Business Day"). The
net asset value per share of each class of the Fund's shares
is calculated by adding the value of all securities and
other assets of the Fund that are allocable to a particular
class, subtracting liabilities charged to such class, and
dividing the result by the total number of outstanding
shares of such class. In computing net asset value, the Fund
uses the amortized cost method of valuation as described in
the Statement of Additional Information under "Additional
Purchase and Redemption Information." Under the 1940 Act,
the Fund may postpone the date of payment of any redeemable
security for up to seven days.
Purchase of Fund shares are sold at the net asset value per share next
Shares determined after confirmation of a purchase order by PFPC,
which also serves as the Fund's transfer agent. Purchase
orders for shares are accepted only on Business Days and
must be transmitted to PFPC in Wilmington, Delaware by
telephone (800-441-7450; in Delaware: 302-791-5350) or
through the Fund's computer access program. Orders accepted
before 12:00 noon, Eastern time, for which payment has been
received by PNC Bank, N.A. ("PNC Bank"), an agent of the
Fund's custodian, PFPC Trust Company, will be executed at
12:00 noon. Orders accepted after 12:00 noon and before 3:00
P.M., Eastern time (or orders accepted earlier in the same
day for which
12
<PAGE>
payment has not been received by 12:00 noon), will be
executed at 4:00 P.M., Eastern time, if payment has been
received by PNC Bank by that time. Orders received at other
times, and orders for which payment has not been received
by 4:00 P.M., Eastern time, will not be accepted, and
notice thereof will be given to the institution placing the
order. (Payment for orders which are not received or
accepted will be returned after prompt inquiry to the
sending institution.) The Fund may in its discretion reject
any order for shares.
Payment for Fund shares may be made only in federal
funds or other funds immediately available to PNC Bank. The
minimum initial investment by an institution is $3 million
for TempCash Shares and $5,000 for TempCash Dollar Shares;
however, broker-dealers and other institutional investors
may set a higher minimum for their customers. There is no
minimum subsequent investment. The Fund, at its discretion,
may reduce the minimum initial investment for TempCash
Shares for specific institutions whose aggregate
relationship with the Provident Institutional Funds is
substantially equivalent to this $3 million minimum and
warrants this reduction.
Fund shares are sold and redeemed without charge by the
Fund. Institutional investors purchasing or holding Fund
shares for their customer accounts may charge customer fees
for cash management and other services provided in
connection with their accounts. A customer should,
therefore, consider the terms of its account with an
institution before purchasing Fund shares. An institution
purchasing or redeeming Fund shares on behalf of its
customers is responsible for transmitting orders to the
Fund in accordance with its customer agreements.
Conflict of interest restrictions may apply to an
institution's receipt of compensation paid by the Fund in
connection with the investment of fiduciary funds in
TempCash Dollar Shares. (See also "Management of the Fund--
Service Organizations," as described in the Statement of
Additional Information.) Institutions, including banks
regulated by the Comptroller of the Currency and investment
advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state
securities commissions, are urged to consult their legal
advisors before investing fiduciary funds in TempCash
Dollar Shares. (See also "Management of the Fund--Banking
Laws," as described in the Statement of Additional
Information.)
Redemption of Redemption orders must be transmitted to PFPC in
Shares Wilmington, Delaware in the manner described under
"Purchase of Shares." Shares are redeemed at the net asset
value per share next determined after PFPC's receipt of the
redemption order. While the Fund intends to use its best
efforts to maintain its net asset value per share at $1.00,
the proceeds paid to a shareholder upon redemption may be
more or less than
13
<PAGE>
the amount invested depending upon a share's net asset value
at the time of redemption. Call 1-800-441-7450 (in Delaware:
302-791-5350) to place redemption orders.
Payment for redeemed shares for which a redemption order
is received by PFPC by 3:00 P.M., Eastern time, on a
Business Day is normally made in federal funds wired to the
redeeming shareholder on the same day. Payment for
redemption orders which are received between 3:00 P.M. and
4:00 P.M., Eastern time, or on a day when PNC Bank is
closed, is normally wired in federal funds on the next day
following redemption that PNC Bank is open for business.
The Fund shall have the right to redeem shares in any
TempCash Shares account if the value of the account is less
than $100,000, and in any TempCash Dollar Shares account if
the value of the account is less than $1,000, after sixty-
days' prior written notice to the shareholder. Any such
redemption shall be effected at the net asset value next
determined after the redemption order is entered. If during
the sixty-day period the shareholder increases the value of
its TempCash Shares account to $100,000 or more or its
TempCash Dollar Shares account to $1,000 or more, no such
redemption shall take place. In addition, the Fund may also
redeem shares involuntarily under certain special
circumstances described in the Statement of Additional
Information under "Additional Purchase and Redemption
Information."
Shareholder Institutional investors, such as banks, savings and loan
Service Plan associations and other financial institutions, including
affiliates of PNC Bank Corp. ("Service Organizations"), may
purchase Dollar Shares. TempCash Dollar Shares are identical
in all respects to TempCash Shares except that they bear the
service fees described below and enjoy certain exclusive
voting rights on matters relating to these fees. The Fund
will enter into an agreement with each Service Organization
which purchases Dollar Shares requiring it to provide
support services to its customers who are the beneficial
owners of such shares in consideration of the Fund's payment
of .25% (on an annualized basis) of the average daily net
asset value of the Dollar Shares held by the Service
Organization for the benefit of customers. Such services,
which are described more fully in the Statement of
Additional Information under "Management of the Fund Service
Organizations," include aggregating and processing purchase
and redemption requests from customers and placing net
purchase and redemption orders with PFPC; processing
dividend payments from the Fund on behalf of customers;
providing information periodically to customers showing
their positions in Dollar Shares; and providing sub-
accounting or the information necessary for sub-accounting
with respect to Dollar Shares beneficially owned by
customers. Under the terms of the agreements, Service
Organizations are required to provide to their customers a
14
<PAGE>
schedule of any fees that they may charge customers in
connection with their investments in Dollar Shares. TempCash
Shares are sold to institutions that have not entered into
servicing agreements with the Fund in connection with their
investments.
Dividends and The Fund declares dividends daily and distributes
Distributions substantially all of its net investment income to
shareholders monthly. Shares begin accruing dividends on the
day the purchase order for the shares is effected and
continue to accrue dividends through the day before such
shares are redeemed. Dividends are paid monthly by check, or
by wire transfer if requested in writing by the shareholder,
within five business days after the end of the month or
within five business days after a redemption of all of a
shareholder's shares of a particular class.
Dividends are determined in the same manner for each
class of shares of the Fund. TempCash Dollar Shares bear all
the expense of fees paid to Service Organizations, and as a
result, at any given time, the dividend on TempCash Dollar
Shares will be approximately .25% lower than the dividend on
TempCash Shares.
Institutional shareholders may elect to have their
dividends reinvested in additional full and fractional
shares of the same class of shares with respect to which
such dividends are declared at the net asset value of such
shares on the payment date. Reinvested dividends receive the
same tax treatment as dividends paid in cash. Reinvestment
elections, and any revocations thereof, must be made in
writing to PFPC, the Fund's transfer agent, at P.O. Box
8950, Wilmington, Delaware 19885-9628 and will become
effective after its receipt by PFPC with respect to
dividends paid.
Taxes The Fund's distributions will generally be taxable to
shareholders. The Fund expects that all, or substantially
all, of its distributions will consist of ordinary income.
You will be subject to income tax on these distributions
regardless whether they are paid in cash or reinvested in
additional shares.
PFPC, as transfer agent, will send each Fund shareholder
or its authorized representative an annual statement
designating the amount, if any, of any dividends and
distributions made during each year and their federal tax
treatment.
Dividends declared in December or any year, and payable
to shareholders of record on a specified date in December,
will be deemed to have been received by the shareholders and
paid by the Fund on December 31 of such year in the event
such dividends are actually paid during January of the
following year.
You should consult your tax adviser for further
information regarding the federal, state and local tax
consequences with respect to your specific situation.
15
<PAGE>
Financial Highlights ___________________________________________________________
The financial highlights tables are intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are incorporated by reference into the
Statement of Additional Information and included in the Annual Report, each of
which is available upon request.
TempCash Shares
The table below sets forth selected financial data for a TempCash Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------
Income from Investment
Operations
Net Investment Income .0552 .0541 .0542 .0575 .0370
Net Gains or Losses on
Securities (both
realized and
unrealized) -- -- -- -- --
- -------------------------------------------------------------------------------------------------
Total From Investment
Operations .0552 .0541 .0542 .0575 .0370
- -------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.0552) (.0541) (.0542) (.0575) (.0370)
Distributions (from
capital gains) -- -- -- -- --
- -------------------------------------------------------------------------------------------------
Total Distributions (.0552) (.0541) (.0542) (.0575) (.0370)
- -------------------------------------------------------------------------------------------------
Net Asset Value End of
Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Total Return 5.66% 5.55% 5.56% 5.90% 3.76%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Ratios/Supplement Data
Net Assets, End of Year
(000's) $2,499,114 $1,991,037 $1,835,326 $1,316,166 $2,330,456
Ratio of Expenses to
Average Daily Net
Assets .18%(1) .18%(1) .18%(1) .16%(1) .16%(1)
Ratio of Net Investment
Income to Average Daily
Net Assets 5.52% 5.41% 5.42% 5.75% 3.70%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempCash Shares would have been
.32% for the year ended September 30, 1998, .30% for the year ended
September 30, 1997, .33% for the year ended September 30, 1996, .30% for
the year ended September 30, 1995 and .33% for the year ended September 30,
1994.
16
<PAGE>
Financial Highlights (Continued) _______________________________________________
TempCash Dollar Shares
The table below sets forth selected financial data for a TempCash Dollar Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------
Income from Investment
Operations
Net Investment Income .0527 .0516 .0517 .0550 .0345
Net Gains or Losses on
Securities (both
realized and
unrealized) -- -- -- -- --
- ------------------------------------------------------------------------------------
Total From Investment
Operations .0527 .0516 .0517 .0550 .0345
- ------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.0527) (.0516) (.0517) (.0550) (.0345)
Distributions (from
capital gains) -- -- -- -- --
- ------------------------------------------------------------------------------------
Total Distributions (.0527) (.0516) (.0517) (.0550) (.0345)
- ------------------------------------------------------------------------------------
Net Asset Value End of
Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Total Return 5.41% 5.29% 5.31% 5.65% 3.51%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Ratios/Supplement Data
Net Assets, End of
Year (000's) $503,809 $401,529 $527,830 $454,156 $397,948
Ratio of Expenses to
Average Daily Net
Assets .43%(1) .43%(1) .43%(1) .41%(1) .41%(1)
Ratio of Net
Investment Income to
Average Daily Net
Assets 5.27% 5.16% 5.17% 5.50% 3.45%
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempCash Dollar Shares would have
been .57% for the year ended September 30, 1998, .55% for the year ended
September 30, 1997, .58% for the year ended September 30, 1996, .55% for
the year ended September 30, 1995 and .58% for the year ended September 30,
1994.
17
<PAGE>
Where to Find More Information _______________________________________________
The Statement of Additional Information (the "SAI") includes additional
information about the Fund's investment policies, organization and management.
It is legally part of this prospectus (it is incorporated by reference). The
Annual and Semi-Annual Reports provide additional information about the Fund's
investments, performance and portfolio holdings.
Investors can get free copies of the above named documents, and make shareholder
inquiries, by calling 1-800-821-7432. Other information is available on the
Fund's web site at www.pif.com.
Information about the Fund (including the Fund's SAI) can be reviewed and copied
at the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. Information about the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. Reports and other information
about the Fund are available on the SEC's Internet site at http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing the Public Reference Section of the SEC, Washington, D.C. 20549-6009.
The Provident Institutional Funds 1940 Act File No. is 811-2354.
TempCash
An Investment Portfolio offered by
Provident Institutional Funds
[ARTWORK PROVIDENT
APPEARS HERE] INSTITUTIONAL
FUNDS
Prospectus
February 10, 1999
PIF-P-002
<PAGE>
TEMPFUND
An investment portfolio offered by
Provident Institutional Funds
Supplement dated November 30, 1999 to Prospectus
dated February 10, 1999
This Supplement to the Prospectus provides new and additional information
beyond that contained in the Prospectus and should be retained and read in
conjunction with the Prospectus.
* * * * *
(1) In the Risk/Return Summary of the Prospectus--
the following sentence is added under the bar chart in the Performance
Information section on page 4:
As of September 30, 1999, the year to date return was 5.00%
(annualized).
the following sentence replaces the sentence under the Annual Total Return
Table on page 5:
Administration Shares, Plus Shares and Cash Reserve Shares have not yet
commenced operations. Cash Management Shares have not completed a full
calendar year of operations. As such, no performance information has been
provided for these Classes.
the following footnote replaces footnote 1 under ANNUAL FUND OPERATING
EXPENSES on page 6:
(1) Total Annual Fund Operating Expenses for TempFund Shares, TempFund
Dollar Shares and TempFund Cash Management Shares for the fiscal year
ended September 30, 1999, with fee waivers, were .18%, .43% and .68%
(annualized), respectively, of the Classes' average net assets. Total
Annual Fund Operating Expenses for TempFund Administration Shares,
TempFund Plus Shares and TempFund Cash Reserve Shares for the fiscal
year ended September 30, 1999, with fee waivers, would have been .28%
(estimated), .43% (estimated), and .58% (estimated), respectively, of
the Classes' average net assets. The Adviser and PFPC Inc., the Fund's
co-administrator, may from time to time waive the investment advisory
and administration fees otherwise payable to them or may reimburse the
Fund for its operating expenses. The Adviser and PFPC expect to continue
such fee waivers but can terminate the waivers upon 120 days prior
written notice to the Fund.
* * * * *
(2) In the Management of the Fund section of the Prospectus--
the second section entitled "Investment Adviser" on page 10 is modified as
follows:
The Adviser and its affiliates are one of the largest U.S. bank managers
of mutual funds, with assets currently under management in excess of $54
billion.
the fifth sentence of the second paragraph of this section on page 11 is
modified as follows:
For the fiscal year ended September 30, 1999, the Fund paid investment
advisory fees and administration fees each aggregating .08% (net of
waivers) of its average net assets.
* * * * *
(3) In the Shareholder Information section of the Prospectus--
the following paragraph is added after the existing paragraph in the
section entitled "Price of Fund Shares" on page 11:
On any business day when the Bond Market Association ("BMA") recommends
that the securities markets close early, the Fund reserves the right to
close at or prior to the BMA recommended closing
B-1
PIF-Supp-001
<PAGE>
time. If the Fund does so, it will cease granting same business day credit
for purchase and redemption orders received after the Fund's closing time
and credit will be granted to the next business day.
the following sentence is added to the first paragraph of the section
entitled "Taxes," on page 14:
The one major exception of these tax principles is that distribution on,
and sales, exchanges and redemptions of, shares held in an IRA (or other
tax qualified plan) will not be currently taxable.
the last sentence of this section on page 15 is modified as follows:
You should also consult your tax adviser for further information
regarding the federal, state, local and/or foreign tax consequences with
respect to your specific situation.
* * * * *
(4) The section entitled "Financial Highlights" on pages 16 and 17 of the
Prospectus is replaced with the following:
Financial Highlights
The financial highlights tables are intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are incorporated by reference into the
Statement of Additional Information and included in the Annual Report, each of
which is available upon request. No Administration Shares, Cash Reserve Shares
or Plus Shares were issued or outstanding during the periods covered by these
financial highlights.
B-2
<PAGE>
TEMPFUND SHARES
The table below sets forth selected financial data for a TempFund Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------------------------------------
1999 1998 1997 1996 1995
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ---------- ---------- ---------- ----------
Income From Investment
Operations:
Net Investment
Income............... .0495 .0549 .0539 .0541 .0567
----------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends to
Shareholders from Net
Investment Income.... (.0495) (.0549) (.0539) (.0541) (.0567)
----------- ---------- ---------- ---------- ----------
Net Asset Value, End of
Period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ========== ========== ========== ==========
Total Return............ 5.06% 5.63% 5.53% 5.55% 5.82%
Ratios/Supplemental
Data:
Net Assets, End of
Period $(000).......... 12,045,566 9,686,491 8,060,501 5,715,004 5,351,346
Ratios of Expenses to
Average Daily Net
Assets(1).............. .18% .18% .18% .18% .24%
Ratios of Net Investment
Income to Average Daily
Net Assets............. 4.96% 5.50% 5.39% 5.41% 5.67%
</TABLE>
- --------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempFund Shares would have been
.22%, .23%, .24%, .26% and .27% for the years ended September 30, 1999,
1998, 1997, 1996 and 1995, respectively.
B-3
<PAGE>
TEMPFUND DOLLAR SHARES
The table below sets forth selected financial data for a TempFund Dollar
Share outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------
Income From Investment
Operations
Net Investment Income...... .0470 .0524 .0514 .0516 .0542
-------- -------- -------- -------- -------
Less Distributions:
Dividends to Shareholders
from Net Investment
Income.................... (.0470) (.0524) (.0514) (.0516) (.0542)
-------- -------- -------- -------- -------
Net Asset Value, End of
Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
Total Return................. 4.81% 5.38% 5.27% 5.30% 5.57%
Ratios/Supplemental Data:
Net Assets, End of Period
$(000)...................... 497,178 302,476 355,284 162,119 81,828
Ratios of Expenses to Average
Daily Net Assets(1)......... .43% .43% .43% .43% .49%
Ratios of Net Investment
Income to Average Daily Net
Assets...................... 4.71% 5.25% 5.14% 5.16% 5.42%
</TABLE>
- --------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempFund Dollar Shares would have
been .47%, .48%, .49%, .51% and .52% for the years ended September 30,
1999, 1998, 1997, 1996 and 1995, respectively.
B-4
<PAGE>
TEMPFUND CASH MANAGEMENT SHARES
The table below sets forth selected financial data for a TempFund Cash
Management Share outstanding throughout the period.
<TABLE>
<CAPTION>
For the Period
June 14, 1999(1)
Through
September 30,
1999
----------------
<S> <C>
Net Asset Value, Beginning of Period.......................... $ 1.00
-------
Income From Investment Operations
Net Investment Income....................................... .0135
-------
Less Distributions:
Dividends (from net investment income)........................ (.0135)
-------
Net Asset Value, End of Period................................ $ 1.00
=======
Total Return.................................................. 4.60%(2)
Ratios/Supplemental Data:
Net Assets, End of Period $(000).............................. 13,789
Ratios of Expenses to Average Daily Net Assets(3)............. .68%(2)
Ratios of Net Investment Income to Average Daily Net Assets... 4.57%(2)
</TABLE>
- --------
(1) Commencement of Operations.
(2) Annualized.
(3) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempFund Cash Management Shares
would have been .71% (annualized) for the period ended September 30, 1999.
B-5
<PAGE>
TempFund
An investment portfolio offered by
Provident Institutional Funds
Prospectus
February 10, 1999
Bellevue Park For purchase and redemption orders only call: 800-441-
Corporate Center 7450 (in Delaware: 302-791-5350). For yield
400 Bellevue Parkway information call: 800-821-6006 (TempFund Shares code:
Wilmington, DE 19809 34; TempFund Administration Shares code: H1; TempFund
Dollar Shares code: 20; TempFund Plus Shares code: H4;
TempFund Cash Reserve Shares code: H2; TempFund Cash
Management Shares code: H3). For other information
call: 800-821-7432 or visit our web site at
www.pif.com.
Investment Adviser
BlackRock Institutional Management Corporation
The Securities and Exchange Commission has not approved or disapproved the
Fund's shares or determined if this prospectus is accurate or complete. It is a
criminal offense to state otherwise.
<PAGE>
Table of Contents ______________________________________________________________
<TABLE>
<CAPTION>
Page
----
<S> <C>
Risk/Return Summary........................................................ 3
Investment Goal.......................................................... 3
Investment Policies...................................................... 3
Principal Risks of Investing............................................. 3
Who May Want to Invest in the Fund....................................... 3
Performance Information.................................................. 4
Fees and Expenses........................................................ 6
Investment Strategies and Risk Disclosure.................................. 7
Management of the Fund..................................................... 10
Shareholder Information.................................................... 11
Price of Fund Shares..................................................... 11
Purchase of Shares....................................................... 11
Redemption of Shares..................................................... 12
Distribution and Shareholder Service Plans............................... 13
Dividends and Distributions.............................................. 14
Taxes.................................................................... 14
Financial Highlights....................................................... 16
</TABLE>
2
<PAGE>
Risk/Return Summary ____________________________________________________________
Investment The Fund seeks current income with liquidity and stability
Goal: of principal.
Investment The Fund invests in a broad range of money market
Policies: instruments, including government, bank, and commercial
obligations and repurchase agreements relating to such
obligations.
Principal Risks Although the Fund invests in money market instruments which
of Investing: the investment adviser, BlackRock Institutional Management
Corporation ("BIMC," or the "Adviser") believes present
minimal credit risks at the time of purchase, there is a
risk that an issuer may not be able to make principal and
interest payments when due. The Fund is also subject to
risks related to changes in prevailing interest rates, since
generally, a fixed-income security will increase in value
when interest rates fall and decrease in value when interest
rates rise.
An investment in the Fund is not a deposit in PFPC Trust
Company or PNC Bank, N.A. and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the
value of your investment at $1.00 per share, it is possible
to lose money by investing in the Fund.
Who May Want to The Fund is designed for institutional investors seeking
Invest in the current income and stability of principal. The Fund is
Fund: particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term
funds for their own accounts or for the accounts of their
customers.
3
<PAGE>
Performance Information
The Bar Chart and the Table below indicate the risks of investing in the Fund
by showing how the performance of the Fund has varied from year to year. The
Table shows how the Fund's average annual return for one, five and ten years
compares to that of a selected market index. The Bar Chart and the Table assume
reinvestment of dividends and distributions. The Fund's past performance does
not necessarily indicate how it will perform in the future.
TempFund Shares
[CHART APPEARS HERE]
Year Annualized Returns
1989 9.39
1990 8.27
1991 6.24
1992 3.89
1993 3.12
1994 4.19
1995 5.99
1996 5.42
1997 5.60
1998 5.52
During the ten-year period shown in the bar chart, the highest quarterly
return was 9.89% (for the quarter ended June 30, 1989) and the lowest quarterly
return was 3.08% (for the quarter ended June 30, 1993).
4
<PAGE>
The Fund's Average Annual Total Return for Periods Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C> <C>
TempFund Shares...................................... 5.52% 5.24% 5.70%
TempFund Dollar Shares............................... 5.27% 4.99% 5.45%
IBC's Money Fund Report: First Tier Institutions--
Only Money Fund Average*............................ 5.33% 5.16% 5.67%
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
7 Day Yield as of
December 31, 1998
-----------------
<S> <C>
TempFund Shares............................................ 5.01%
TempFund Dollar Shares..................................... 4.76%
IBC's Money Fund Report: First Tier Institutions--Only
Money Fund Average*....................................... 4.87%
- -------------------------------------------------------------------------------
</TABLE>
Administration Shares, Plus Shares, Cash Reserve Shares and Cash Management
Shares have not yet commenced operations, therefore no performance information
has been provided for these classes.
Current Yield: You may obtain the Fund's current 7-day yield by calling 1-800-
821-7432 or by visiting its web site at www.pif.com.
- -------
* IBC's Money Fund Report: First Tier Institutions--Only Money Fund Average is
comprised of institutional money market funds investing in First Tier
Eligible money market instruments.
5
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
- --------------------------------------------------------------------------------------------------------
<CAPTION>
TempFund
--------
TempFund TempFund
TempFund TempFund TempFund Cash Cash
TempFund Administration Dollar Plus Reserve Management
Shares Shares Shares Shares Shares Shares
--------- --------------- --------- ----------- ----------- -----------
(estimated) (estimated) (estimated) (estimated)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees............. .11% .11% .11% .11% .11% .11%
Distribution (12b-1) Fees... -- -- -- .25% -- --
Other Expenses.............. .12% .22% .37% .12% .52% .62%
Administration Fees........ .11% .11% .11% .11% .11% .11%
Shareholder Servicing Fees. -- -- .25% -- .25% .25%
Miscellaneous.............. .01% .11% .01% .01% .16% .26%
- --------------------------------------------------------------------------------------------------------
Total Annual Fund Operating
Expenses(1)................ .23% .33% .48% .48% .63% .73%
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total Annual Fund Operating Expenses for TempFund Shares and TempFund
Dollar Shares for the fiscal year ended September 30, 1998, with fee
waivers, were .18% and .43%, respectively, of the Fund's average net
assets. Total Annual Fund Operating Expenses for TempFund Administration
Shares, TempFund Plus Shares, TempFund Cash Reserve Shares and TempFund
Cash Management Shares for the fiscal year ended September 30, 1998, with
fee waivers, would have been .28% (estimated), .43% (estimated), .58%
(estimated) and .68% (estimated), respectively, of the Fund's average net
assets. The Adviser and PFPC Inc., the Fund's co-administrator, may from
time to time waive the investment advisory and administration fees
otherwise payable to them or may reimburse the Fund for its operating
expenses. The Adviser and PFPC expect to continue such fee waivers, but can
terminate the waivers upon 120 days prior written notice to the Fund.
EXAMPLE
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
TempFund
--------
TempFund TempFund
TempFund TempFund TempFund Cash Cash
TempFund Administration Dollar Plus Reserve Management
Shares Shares Shares Shares Shares Shares
-------- -------------- -------- ----------- ----------- -----------
(estimated) (estimated) (estimated) (estimated)
<S> <C> <C> <C> <C> <C> <C>
One Year................ $ 24 $ 34 $ 49 $ 49 $ 64 $ 75
Three Years............. $ 74 $106 $154 $154 $202 $233
Five Years.............. $130 $185 $269 $269 $351 $406
Ten Years............... $293 $418 $604 $604 $786 $906
- ---------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Investment
Strategies and
Risk Disclosure ________________________________________________________________
The Fund is a money market fund. The investment objective of
the Fund is to seek current income and stability of
principal. The Fund's investment objective may be changed by
the Board of Trustees without shareholder approval. The Fund
invests in a broad range of money market instruments,
including government, bank, and commercial obligations and
repurchase agreements relating to such obligations.
The Fund invests in securities maturing within 13 months
or less from the date of purchase, with certain exceptions.
For example, certain government securities held by the Fund
may have remaining maturities exceeding 13 months if such
securities provide for adjustments in their interest rates
not less frequently than every 13 months. The securities
purchased by the Fund are also subject to the quality,
diversification, and other requirements of Rule 2a-7 under
the Investment Company Act of 1940, as amended, and other
rules of the Securities and Exchange Commission. Pursuant to
Rule 2a-7, the Fund will generally limit its purchases of
any one issuer's securities (other than U.S. Government
obligations, repurchase agreements collateralized by such
securities and securities subject to certain guarantees or
otherwise providing a right to demand payment) to 5% of the
Fund's total assets, except that up to 25% of its total
assets may be invested in securities of one issuer for a
period of up to three business days; provided that the Fund
may not invest more than 25% of its total assets in the
securities of more than one issuer in accordance with the
foregoing at any one time.
The Fund will only purchase securities that present
minimal credit risk as determined by the Adviser pursuant to
guidelines approved by the Board of Trustees of Provident
Institutional Funds. Securities purchased by the Fund (or
the issuers of such securities) will be First Tier Eligible
Securities which are rated at the time of purchase in the
highest rating category by either Standard & Poor's Ratings
Group or Moody's Investors Services, Inc., and will be rated
in the highest rating category by any other nationally
recognized statistical rating organization ( a "NRSRO") that
rates such security (or its issuer).
- --------------------------------------------------------------------------------
Investments The Fund's investments may include the following:
U.S. Government The Fund may purchase obligations issued or guaranteed by
Obligations the U.S. Government or its agencies and instrumentalities
and related custodial receipts.
7
<PAGE>
Bank Obligations The Fund may purchase obligations of issuers in the banking
industry, such as bank holding company obligations,
certificates of deposit, bankers' acceptances and bank notes
issued or supported by the credit of domestic banks or
savings institutions having total assets at the time of
purchase in excess of $1 billion. The Fund may also make
interest-bearing savings deposits in domestic commercial and
savings banks in amounts not in excess of 5% of the Fund's
assets.
Commercial Paper The Fund may invest in commercial paper, short-term notes
and corporate bonds of domestic corporations that meet the
Fund's quality and maturity requirements.
Asset-Backed The Fund may invest in asset-backed securities which are
Obligations backed by mortgages, installment sales contracts, credit
card receivables or other assets.
Investment The Fund may invest in securities issued by other open-end
Company investment companies that invest in the type of obligations
Securities in which the Fund may invest and that determine their net
asset value per share based upon the amortized cost or penny
rounding method. Investments in the securities of other
investment companies will cause the Fund (and, indirectly
the Fund's shareholders) to bear proportionately the costs
incurred in connection with the other investment companies'
operations.
Municipal The Fund may, when deemed appropriate by the Adviser in
Obligations light of the Fund's investment objective, invest in high
quality, short-term obligations issued by state and local
governmental issuers which carry yields that are competitive
with those of other types of money market instruments of
comparable quality.
Variable and The Fund may purchase variable or floating rate notes, which
Floating Rate are instruments that provide for adjustments in the interest
Instruments rate on certain reset dates or whenever a specified interest
rate index changes, respectively.
Repurchase The Fund may enter into repurchase agreements.
Agreements
Reverse The Fund may enter into reverse repurchase agreements. The
Repurchase Fund is permitted to invest up to one-third of its total
Agreements and assets in reverse repurchase agreements. The Fund may also
Securities lend its securities with a value of up to one-third of its
Lending total assets (including the value of the collateral for the
loan) to qualified brokers, dealers, banks and other
financial institutions for the purpose of realizing
additional net investment income through the receipt of
interest on the loan. Investments in reverse repurchase
agreements and securities lending transactions will be
aggregated for purposes of this investment limitation.
8
<PAGE>
Borrowing The Fund is authorized to issue senior securities or borrow
money from banks or other lenders on a temporary basis. The
Fund will borrow money when the Adviser believes that the
return from securities purchased with borrowed funds will be
greater than the cost of the borrowing. Such borrowings will
be unsecured. The Fund will not purchase portfolio
securities while borrowings in excess of 5% of the Fund's
total assets are outstanding.
When-Issued and The Fund may purchase securities on a "when-issued" or
Delayed "delayed settlement" basis. The Fund expects that
Settlement commitments to purchase when-issued or delayed settlement
Transactions securities will not exceed 25% of the value of its total
assets absent unusual market conditions. The Fund does not
intend to purchase when-issued or delayed settlement
securities for speculative purposes but only in furtherance
of its investment objective. The Fund receives no income
from when-issued or delayed settlement securities prior to
delivery of such securities.
Illiquid The Fund will not invest more than 10% of the value of its
Securities total assets in illiquid securities, including time deposits
and repurchase agreements having maturities longer than
seven days. Securities that have readily available market
quotations are not deemed illiquid for purposes of this
limitation.
Other Types This Prospectus describes the Fund's principal investment
of Investments strategies, and the particular types of securities in which
the Fund principally invests. The Fund may, from time to
time, make other types of investments and pursue other
investment strategies in support of its overall investment
goal. Any other types of investments will comply with the
Fund's quality and maturity guidelines. These supplemental
investment strategies are described in detail in the
Statement of Additional Information, which is referred to on
the back cover of this Prospectus.
Risk Factors The principal risks of investing in the Fund are also
described above in the Risk/Return Summary. The following
supplements that description.
Interest Rate Generally, a fixed-income security will increase in value
Risk when interest rates fall and decrease in value when interest
rates rise. As a result, if interest rates were to change
rapidly, there is a risk that the change in market value of
the Fund's assets may not enable the Fund to maintain a
stable net asset value of $1.00 per share.
Credit Risk The risk that an issuer will be unable to make principal and
interest payments when due is known as "credit risk." U.S.
Government securities are generally considered to be the
safest type of investment in terms of credit risk, with
municipal obligations and
9
<PAGE>
corporate debt securities presenting somewhat higher credit
risk. Credit quality ratings published by an NRSRO are
widely accepted measures of credit risk. The lower a
security is rated by an NRSRO, the more credit risk it is
considered to represent.
Other Risks Certain investment strategies employed by the Fund may
involve additional investment risk. Liquidity risk involves
certain securities which may be difficult or impossible to
sell at the time and the price that the Fund would like.
Reverse repurchase agreements, securities lending
transactions and when-issued or delayed delivery
transactions may involve leverage risk. Leverage risk is
associated with securities or practices that multiply small
market movements into larger changes in the value of the
Fund's investment portfolio. The Fund does not currently
intend to employ investment strategies that involve leverage
risk.
Year 2000 Like other mutual funds, financial and business
organizations and individuals around the world, the Fund
could be adversely affected if the computer systems used by
the Adviser and the Fund's other service providers, or
persons with whom they deal, do not properly process and
calculate date-related information and data from and after
January 1, 2000. This possibility is commonly known as the
"Year 2000 Problem." The Fund has been advised by the
Adviser, the co-administrator and the custodian that they
are actively taking steps to address the Year 2000 Problem
with respect to the computer systems that they use and to
obtain assurances that comparable steps are being taken by
the Fund's other major service providers. While there can be
no assurance that the Fund's service providers will be Year
2000 compliant, the Fund's service providers expect that
their plans to be compliant will be achieved.
Management of the Fund ________________________________________________________
Investment The Adviser, a majority-owned indirect subsidiary of PNC
Adviser Bank, serves as the Fund's investment adviser. The Adviser
and its affiliates are one of the largest U.S. bank managers
of mutual funds, with assets currently under management in
excess of $46 billion. BIMC (formerly known as PNC
Institutional Management Corporation or "PIMC") was
organized in 1977 by PNC Bank to perform advisory services
for investment companies and has its principal offices at
Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809.
As investment adviser, BIMC manages the Fund and is
responsible for all purchases and sales of the Fund's
securities. For the investment advisory services provided
and expenses assumed by it, BIMC is entitled to receive a
fee, computed daily and payable monthly, based on the Fund's
average net assets. BIMC and PFPC,
10
<PAGE>
the co-administrator, may from time to time reduce the
investment advisory and administration fees otherwise
payable to them or may reimburse the Fund for its operating
expenses. Any fees waived and any expenses reimbursed by
BIMC and PFPC with respect to a particular fiscal year are
not recoverable. For the fiscal year ended September 30,
1998, the Fund paid investment advisory fees and
administration fees each aggregating .08% (net of waivers)
of its average net assets. The services provided by BIMC and
the fees payable by the Fund for these services are
described further in the Statement of Additional Information
under "Management of the Funds."
Shareholder Information ________________________________________________________
Price of Fund The Fund's net asset value per share for purposes of pricing
Shares purchase and redemption orders is determined by PFPC Inc.
("PFPC"), the Funds co-administrator, as of 12:00 noon and
5:30 P.M., Eastern time, on each day on which both the New
York Stock Exchange and the Federal Reserve Bank of
Philadelphia are open for business (a "Business Day"). The
net asset value per share of each class of the Fund's shares
is calculated by adding the value of all securities and
other assets of the Fund that are allocable to a particular
class, subtracting liabilities charged to such class, and
dividing the result by the total number of outstanding
shares of such class. In computing net asset value, the Fund
uses the amortized cost method of valuation as described in
the Statement of Additional Information under "Additional
Purchase and Redemption Information." Under the 1940 Act,
the Fund may postpone the date of payment of any redeemable
security for up to seven days.
Purchase of Fund shares are sold at the net asset value per share next
Shares determined after confirmation of a purchase order by PFPC,
which also serves as the Fund's transfer agent. Purchase
orders for shares are accepted only on Business Days and
must be transmitted to PFPC in Wilmington, Delaware by
telephone (800-441-7450; in Delaware: 302-791-5350) or
through the Fund's computer access program. Orders accepted
before 12:00 noon, Eastern time, for which payment has been
received by PNC Bank, N.A. ("PNC Bank"), an agent of the
Fund's custodian, PFPC Trust Company, will be executed at
12:00 noon. Orders accepted after 12:00 noon and before 5:30
P.M., Eastern time (or orders accepted earlier in the same
day for which payment has not been received by 12:00 noon),
will be executed at 5:30 P.M., Eastern time, if payment has
been received by PNC Bank by that time. Orders received at
other times, and orders for which payment has not been
received by 5:30 P.M., Eastern time, will not be accepted,
and notice thereof will be given to the institution placing
the order. (Payment for orders which are not received or
accepted
11
<PAGE>
will be returned after prompt inquiry to the sending
institution.) Between 3:00 P.M. and 5:30 P.M., Eastern time,
purchase orders may only be transmitted by telephone, and
the Fund reserves the right to limit the amount of such
orders. The Fund may in its discretion reject any order for
shares.
Payment for Fund shares may be made only in federal funds
or other funds immediately available to PNC Bank. The
minimum initial investment by an institution is $3 million
for TempFund Shares; there is no minimum initial investment
for TempFund Administration Shares, TempFund Dollar Shares,
TempFund Plus Shares, TempFund Cash Reserve Shares or
TempFund Cash Management Shares, however, broker-dealers and
other institutional investors may set a minimum for their
customers. There is no minimum subsequent investment. The
Fund, at its discretion, may reduce the minimum initial
investment for TempFund Shares for specific institutions
whose aggregate relationship with the Provident
Institutional Funds is substantially equivalent to this $3
million minimum and warrants this reduction.
Fund shares are sold and redeemed without charge by the
Fund. Institutional investors purchasing or holding Fund
shares for their customer accounts may charge customer fees
for cash management and other services provided in
connection with their accounts. A customer should,
therefore, consider the terms of its account with an
institution before purchasing Fund shares. An institution
purchasing or redeeming Fund shares on behalf of its
customers is responsible for transmitting orders to the Fund
in accordance with its customer agreements.
Conflict of interest restrictions may apply to an
institution's receipt of compensation paid by the Fund in
connection with the investment of fiduciary funds in
TempFund Administration Shares, TempFund Dollar Shares,
TempFund Plus Shares, TempFund Cash Reserve Shares or
TempFund Cash Management Shares. (See also "Management of
the Fund--Service Organizations," as described in the
Statement of Additional Information.) Institutions,
including banks regulated by the Comptroller of the Currency
and investment advisers and other money managers subject to
the jurisdiction of the SEC, the Department of Labor or
state securities commissions, are urged to consult their
legal advisors before investing fiduciary funds in TempFund
Administration Shares, TempFund Dollar Shares, TempFund Plus
Shares, TempFund Cash Reserve Shares or TempFund Cash
Management Shares. (See also "Management of the Fund--
Banking Laws," as described in the Statement of Additional
Information.)
Redemption of Redemption orders must be transmitted to PFPC in Wilmington,
Shares Delaware in the manner described under "Purchase of Shares."
Shares are redeemed at the net asset value per share next
determined after PFPC's receipt of the redemption order.
12
<PAGE>
Telephone instructions for redemptions received between 3:00
P.M. and 5:30 P.M., Eastern time, on a Business Day are
received for execution on that same day, however, the Fund
reserves the right to make payment for such redemptions the
next Business Day. While the Fund intends to use its best
efforts to maintain its net asset value per share at $1.00,
the proceeds paid to a shareholder upon redemption may be
more or less than the amount invested depending upon a
share's net asset value at the time of redemption. Call 1-
800-441-7450 (in Delaware: 302-791-5350) to place redemption
orders.
Payment for redeemed shares for which a redemption order
is received by PFPC by 5:30 P.M., Eastern time, on a
Business Day is normally made in federal funds wired to the
redeeming shareholder on the same day. Payment for
redemption orders which are received on a day when PNC Bank
is closed is normally wired in federal funds on the next day
following redemption that PNC Bank is open for business.
The Fund shall have the right to redeem shares in any
account if the value of the account is less than $1,000
after sixty-days' prior written notice to the shareholder.
Any such redemption shall be effected at the net asset value
next determined after the redemption order is entered. If
during the sixty-day period the shareholder increases the
value of its account to $1,000 or more, no such redemption
shall take place. In addition, the Fund may also redeem
shares involuntarily under certain special circumstances
described in the Statement of Additional Information under
"Additional Purchase and Redemption Information."
Distribution The Fund offers six classes of shares. The difference
and Shareholder between the classes of shares is the fees borne by a class
Service Plans of shares pursuant to separate fees plans adopted by each
class. TempFund Shares do not bear any fees for
distribution, servicing, shareholder servicing, sweep fees
or cash sweep marketing services. The fees borne by the
other classes are as follows:
-------------------------------------------------------------
<TABLE>
<CAPTION>
Cash
Shareholder 12b- Cash Sweep
Service Service 1 Sweep Marketing Total
Class Fee Fee Fee Fee Fee Fees
------------------------ ------- ----------- ---- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Administration Shares... .10% -- -- -- -- .10%
Dollar Shares........... -- .25% -- -- -- .25%
Plus Shares............. -- -- .25% -- -- .25%
Cash Reserve Shares..... .10% .25% -- .05% -- .40%
Cash Management Shares.. .10% .25% -- .05% .10% .50%
------------------------------------------------------------------
</TABLE>
Service Fees are paid for general shareholder liaison
services. Shareholder Service Fees are paid for services
relating to the processing and administration of
13
<PAGE>
shareholder accounts. The Fund has adopted a plan pursuant
to Rule 12b-1. 12b-1 Fees are paid for distribution and
sales support, and shareholder services. Cash Sweep Fees are
paid for providing a sweep service into the Fund. Cash Sweep
Marketing Fees are paid for providing marketing
administrative activities in connection with the sweep
program.
Shares of the Fund are not sold to individuals, but may
be sold to the following entities, which hold the shares for
the accounts of their customers.
Administration Shares, Dollar Shares, Cash Reserve Shares
and Cash Management Shares are sold to institutional
investors such as banks, saving and loan associations, and
other financial institutions, including affiliates of PNC
Bank Corp. ("Service Organizations"). Plus Shares are sold
to broker-dealers. Because fees associated with the
distribution and/or shareholder service plans are paid out
of the Fund's assets on an outgoing basis, over time holders
of the share classes described above may pay more than the
economic equivalent of the maximum front-end sales charge
permitted by NASD Regulation, Inc.
Dividends and The Fund declares dividends daily and distributes
Distributions substantially all of its net investment income to
shareholders monthly. Shares begin accruing dividends on the
day the purchase order for the shares is effected and
continue to accrue dividends through the day before such
shares are redeemed. Dividends are paid monthly by check, or
by wire transfer if requested in writing by the shareholder,
within five business days after the end of the month or
within five business days after a redemption of all of a
shareholder's shares of a particular class.
Institutional shareholders may elect to have their
dividends reinvested in additional full and fractional
shares of the same class of shares with respect to which
such dividends are declared at the net asset value of such
shares on the payment date. Reinvested dividends receive the
same tax treatment as dividends paid in cash. Reinvestment
elections, and any revocations thereof, must be made in
writing to PFPC, the Fund's transfer agent, at P.O. Box
8950, Wilmington, Delaware 19885-9628 and will become
effective after its receipt by PFPC with respect to
dividends paid.
Taxes The Fund's distributions will generally be taxable to
shareholders. The Fund expects that all, or substantially
all, of its distributions will consist of ordinary income.
You will be subject to income tax on these distributions
regardless whether they are paid in cash or reinvested in
additional shares.
14
<PAGE>
PFPC, as transfer agent, will send each Fund shareholder
or its authorized representative an annual statement
designating the amount, if any, of any dividends and
distributions made during each year and their federal tax
treatment.
Dividends declared in December of any year, and payable
to shareholders of record on a specified date in December,
will be deemed to have been received by the shareholders and
paid by the Fund on December 31 of such year in the event
such dividends are actually paid during January of the
following year.
You should consult your tax adviser for further
information regarding the federal, state and local tax
consequences with respect to your specific situation.
15
<PAGE>
Financial Highlights ___________________________________________________________
The financial highlights tables are intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are incorporated by reference into the
Statement of Additional Information and included in the Annual Report, each of
which is available upon request. Administration Shares, Plus Shares, Cash
Reserve Shares and Cash Management Shares of the Fund have not yet commenced
operations, therefore no financial information has been provided for these
classes.
TempFund Shares
The table below sets forth selected financial data for a TempFund Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------
Income from Investment Op-
erations
Net Investment Income .0549 .0539 .0541 .0567 .0360
Net Gains or Losses on
Securities (both
realized and
unrealized) -- -- -- -- --
- -------------------------------------------------------------------------------------------------
Total From Investment Op-
erations .0549 .0539 .0541 .0567 .0360
- -------------------------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.0549) (.0539) (.0541) (.0567) (.0360)
Distributions (from
capital gains) -- -- -- -- --
- -------------------------------------------------------------------------------------------------
Total Distributions (.0549) (.0539) (.0541) (.0567) (.0360)
- -------------------------------------------------------------------------------------------------
Net Asset Value End of
Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Total Return 5.63% 5.53% 5.55% 5.82% 3.66%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Ratios/Supplement Data
Net Assets, End of Year
(000's) $9,686,491 $8,060,501 $5,715,004 $5,351,346 $4,480,851
Ratio of Expenses to
Average Daily Net
Assets .18%(1) .18%(1) .18%(1) .24%(1) .25%(1)
Ratio of Net Investment
Income to Average Daily
Net Assets 5.50% 5.39% 5.41% 5.67% 3.60%
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempFund Shares would have been
.23% for the year ended September 30, 1998, .24% for the year ended
September 30, 1997, .26% for the year ended September 30, 1996 and .27% for
the years ended September 30, 1995 and 1994, respectively.
16
<PAGE>
Financial Highlights (Continued) _______________________________________________
TempFund Dollar Shares
The table below sets forth selected financial data for a TempFund Dollar Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------------------------
1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------
Income from Investment
Operations
Net Investment Income .0524 .0514 .0516 .0542 .0335
Net Gains or Losses on
Securities (both
realized and
unrealized) -- -- -- -- --
- -----------------------------------------------------------------------------------
Total From Investment
Operations .0524 .0514 .0516 .0542 .0335
- -----------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.0524) (.0514) (.0516) (.0542) (.0335)
Distributions (from
capital gains) -- -- -- -- --
- -----------------------------------------------------------------------------------
Total Distributions (.0524) (.0514) (.0516) (.0542) (.0335)
- -----------------------------------------------------------------------------------
Net Asset Value, End of
Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Total Return 5.38% 5.27% 5.30% 5.57% 3.41%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Ratios/Supplement Data
Net Assets, End of
Year (000's) $302,476 $355,284 $162,119 $81,828 $102,105
Ratio of Expenses to
Average Daily Net
Assets .43%(1) .43%(1) .43%(1) .49%(1) .50%(1)
Ratio of Net
Investment Income to
Average Daily Net
Assets 5.25% 5.14% 5.16% 5.42% 3.35%
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempFund Dollar Shares would have
been .48% for the year ended September 30, 1998, .49% for the year ended
September 30, 1997, .51% for the year ended September 30, 1996 and .52% for
the years ended September 30, 1995 and 1994, respectively.
17
<PAGE>
Where to Find More Information _________________________________________________
The Statement of Additional Information ("the SAI") includes additional
information about the Fund's investment policies, organization and management.
It is legally part of this prospectus (it is incorporated by reference). The
Annual and Semi-Annual Reports provide additional information about the Fund's
investments, performance and portfolio holdings.
Investors can get free copies of the above named documents, and make
shareholder inquiries, by calling 1-800-821-7432. Other information is
available on the Fund's web site at www.pif.com.
Information about the Fund (including the Fund's SAI) can be reviewed and
copied at the Securities and Exchange Commission's Public Reference Room in
Washington, D.C. Information about the operation of the Public Reference Room
may be obtained by calling the SEC at 1-800-SEC-0330. Reports and other
information about the Fund are available on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, upon payment of
a duplicating fee, by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-6009.
The Provident Institutional Funds 1940 Act File No. is 811-2354
TempFund
An Investment Portfolio offered by
Provident Institutional Funds.
[ARTWORK PROVIDENT
APPEARS HERE] INSTITUTIONAL
FUNDS
Prospectus
February 10, 1999
PIF-P-001
<PAGE>
NEW YORK MONEY FUND
An investment portfolio offered by
Provident Institutional Funds
Supplement dated November 30, 1999 to Prospectus
dated February 10, 1999
This Supplement to the Prospectus provides new and additional information
beyond that contained in the Prospectus and should be retained and read in
conjunction with the Prospectus.
* * * * *
(1) In the Risk/Return Summary of the Prospectus--
the first sentence of the second paragraph of the section entitled
"Principal Risks of Investing" on page 3 is modified as follows:
The Fund is non-diversified because it concentrates its investments in
New York Municipal Obligations.
the following sentence is added under the bar chart in the Performance
Information section on page 4:
As of September 30, 1999, the year to date return was 2.86%
(annualized).
the following footnote replaces footnote 1 under ANNUAL FUND OPERATING
EXPENSES on page 6:
(1) Total Annual Fund Operating Expenses for New York Shares for the
fiscal year ended July 31, 1999, with fee waivers, was .20% of the
average net assets of the Class. Total Annual Fund Operating Expenses
for New York Dollar Shares and New York Plus Shares for the fiscal year
ended July 31, 1999, with fee waivers, would have been .45% (estimated)
and .45% (estimated) respectively of the Classes' average net assets.
The Adviser and PFPC Inc., the Fund's co-administrator, may from time to
time waive the investment advisory and administration fees otherwise
payable to them or may reimburse the Fund for its operating expenses.
The Adviser and PFPC expect to continue such fee waivers.
* * * * *
(2) In the Management of the Fund section of the Prospectus--
the second sentence of the section entitled "Investment Adviser" on page 11
is modified as follows:
The Adviser and its affiliates are one of the largest U.S. bank managers
of mutual funds, with assets currently under management in excess of $54
billion.
the fifth sentence of the second paragraph of this section on page 11 is
modified as follows:
For the fiscal year ended July 31, 1999, the Fund paid investment
advisory fees and administration fees each aggregating .06% (net of
waivers) of its average net assets.
* * * * *
(3) In the Shareholder Information section of the Prospectus--
the following paragraph is added after the existing paragraph in the
section entitled "Price of Fund Shares" on pages 11 and 12:
On any business day when the Bond Market Association ("BMA") recommends
that the securities markets close early, the Fund reserves the right to
close at or prior to the BMA recommended closing time. If the Fund does so,
it will cease granting same business day credit for purchase and redemption
orders received after the Fund's closing time and credit will be granted to
the next business day.
C-1
PIF-Supp-012
<PAGE>
the last sentence of the section entitled "Taxes" on pages 14 and 15 of this
section is modified as follows:
You should also consult your tax adviser for further information
regarding the federal, state, local and/or foreign tax consequences with
respect to your specific situation.
* * * * *
(4) The section entitled "Financial Highlights" on pages 16 through 18 of
the Prospectus is replaced with the following:
Financial Highlights
The financial highlights tables are intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are incorporated by reference into the
Statement of Additional Information and included in the Annual Report, each of
which is available upon request. No Dollar Shares or Plus Shares were issued or
outstanding during the fiscal year ended July 31, 1999.
C-2
<PAGE>
NEW YORK MONEY SHARES
The table below sets forth selected financial data for a New York Money
Share outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment
Operations
Net Investment Income...... .0289 .0336 .0334 .0339 .0338
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders
from Net Investment
Income.................... (0.0289) (0.0336) (0.0334) (0.0339) (0.0338)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return................. 2.93% 3.41% 3.39% 3.44% 3.43%
Ratios/Supplemental Data:
Net Assets, End of Period
$(000).................... 295,728 318,091 269,821 272,145 246,650
Ratios of Expenses to
Average Daily Net
Assets(1)................. .20% .20% 0.20% 0.20% 0.20%
Ratios of Net Investment
Income to Average Daily
Net Assets................ 2.87% 3.35% 3.34% 3.37% 3.36%
</TABLE>
- --------
(1) Operating expense ratios before waivers of fees by the Investment Adviser
and Administrator for Money Shares for the years ended July 31, 1999, 1998,
1997, 1996 and 1995 were .48%, .48%, .49%, .50% and .49%, respectively.
C-3
<PAGE>
NEW YORK DOLLAR SHARES
The table below sets forth selected financial data for a New York Dollar
Share outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------------------------
1999(3) 1998(3) 1997 1996(3) 1995(3)
------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period................. $1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
----- -------- -------- -------- -----
Income From Investment
Operations
Net Investment Income.... -- .0303 .0309 .0089 --
----- -------- -------- -------- -----
Less Distributions:
Dividends to Shareholders
From Net Investment
Income.................. -- (0.0303) (0.0309) (0.0089) --
----- -------- -------- -------- -----
Net Asset Value, End of
Period.................... $1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
===== ======== ======== ======== =====
Total Return............... -- 3.16%(2) 3.14% 3.05%(2) --
Ratios/Supplemental Data:
Net Assets, End of Period
$(000).................. -- -- 1,148 20 --
Ratios of Expenses to
Average Daily Net
Assets(1)............... -- .45%(2) .45% .45%(2) --
Ratios of Net Investment
Income to Average Daily
Net Assets.............. -- 3.11%(2) 3.09% 3.07%(2) --
</TABLE>
- --------
(1) Operating expense ratios before waivers of fees by the Investment Adviser
and Administrators for Dollar Shares for the years ended July 31, 1998,
1997 and 1996 were .73% (annualized), .74% and .75% (annualized)
respectively.
(2) Annualized.
(3) There were no Dollar Shares outstanding during the periods March 28, 1994
to April 14, 1996 and July 21, 1998 to July 31, 1999.
C-4
<PAGE>
NEW YORK PLUS SHARES
The table below sets forth selected financial data for a New York Plus Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended July 31,
----------------------------------------
1999(3) 1998(3) 1997(3) 1996(3) 1995(3)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $1.00 $1.00 $1.00 $1.00 $ 1.00
----- ----- ----- ----- --------
Income From Investment Operations
Net Investment Income........... -- -- -- -- .0090
----- ----- ----- ----- --------
Less Distributions:
Dividends to Shareholders From
Net Investment Income.......... ( -- ) ( -- ) ( -- ) ( -- ) (0.0090)
----- ----- ----- ----- --------
Net Asset Value, End of Period.... $1.00 $1.00 $1.00 $1.00 $ 1.00
===== ===== ===== ===== ========
Total Return...................... -- -- -- -- 2.69%(2)
Ratios/Supplemental Data:
Net Assets, End of Period
$(000)......................... -- -- -- -- --
Ratios of Expenses to Average
Daily Net Assets(1)............ -- -- -- -- 0.45%(2)
Ratios of Net Investment Income
to Average Daily Net Assets.... -- -- -- -- 2.64%(2)
</TABLE>
- --------
(1) Operating expense ratios before waivers of fees by the Investment Adviser
and Administrator for Plus Shares for the year ended July 31, 1995 was .73%
(annualized).
(2) Annualized.
(3) There were no Plus Shares outstanding during the period from December 2,
1994 to July 31, 1999.
C-5
<PAGE>
New York Money Fund
An investment portfolio offered by
Provident Institutional Funds
Prospectus
February 10, 1999
Bellevue Park For purchase and redemption orders only call: 800-441-
Corporate Center 7450 (in Delaware: 302-791-5350). For yield
400 Bellevue Parkway information call: 800-821-6006 (New York Money Shares
Wilmington, DE 19809 code: 53; New York Dollar Shares code: 55; New York
Plus Shares code: 56). For other information call:
800-821-7432 or visit our web site at www.pif.com.
Investment Adviser
BlackRock Institutional Management Corporation
The Securities and Exchange Commission has not approved or disapproved the
Fund's shares or determined if this prospectus is accurate or complete. It is a
criminal offense to state otherwise.
<PAGE>
Table of Contents ______________________________________________________________
<TABLE>
<CAPTION>
Page
----
<S> <C>
Risk/Return Summary........................................................ 3
Investment Goal.......................................................... 3
Investment Policies...................................................... 3
Principal Risks of Investing............................................. 3
Who May Want to Invest in the Fund....................................... 4
Performance Information.................................................. 4
Fees and Expenses........................................................ 6
Investment Strategies and Risk Disclosure.................................. 7
Management of the Fund..................................................... 11
Shareholder Information.................................................... 11
Price of Fund Shares..................................................... 11
Purchase of Shares....................................................... 12
Redemption of Shares..................................................... 13
Shareholder Service and Distribution Plans............................... 13
Dividends and Distributions.............................................. 14
Taxes.................................................................... 14
Financial Highlights....................................................... 16
</TABLE>
2
<PAGE>
Risk/Return Summary ____________________________________________________________
Investment The Fund seeks to provide investors with as high a level of
Goal: current interest income that is exempt from federal income
tax and, to the extent possible, from New York State and New
York City personal income taxes as is consistent with the
preservation of capital and relative stability of principal.
Investment The Fund invests primarily in debt obligations issued by or
Policies: on behalf of the State of New York. We may also invest in
debt obligations issued by or on behalf of other states,
territories, and possessions of the United States, the
District of Columbia, and their respective authorities,
agencies, instrumentalities and political subdivisions, and
tax-exempt derivative securities such as tender option
bonds, participations, beneficial interests in trusts and
partnership interests ("Municipal Obligations"). Dividends
paid by the Fund that are derived from interest on
obligations that is exempt from taxation under the
Constitution or statutes of New York ("New York Municipal
Obligations") are exempt from regular federal, New York
State and New York City personal income tax. New York
Municipal Obligations include municipal securities issued by
the State of New York and its political sub-divisions, as
well as certain other governmental issuers such as the
Commonwealth of Puerto Rico.
Principal Risks Although the Fund invests in money market instruments which
of Investing: the investment adviser, BlackRock Institutional Management
Corporation ("BIMC," or the "Adviser") believes present
minimal credit risks at the time of purchase, there is a
risk that an issuer may not be able to make principal and
interest payments when due. The Fund is also subject to
risks related to changes in prevailing interest rates, since
generally, a fixed-income security will increase in value
when interest rates fall and decrease in value when interest
rates rise.
Because the Fund concentrates its investments in New York
Municipal Obligations, it is classified as non-diversified.
This means that it may invest a greater percentage of its
assets in a particular issuer, and that its performance will
be dependent upon a smaller category of securities than a
diversified portfolio. Accordingly, the Fund may experience
greater fluctuations in net asset value and may have greater
risk of loss.
Dividends derived from interest on Municipal Obligations
other than New York Municipal Obligations are exempt from
federal income tax but may be subject to New York State and
New York City personal income tax.
An investment in the Fund is not a deposit in PFPC Trust
Company or PNC Bank, N.A. and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve
3
<PAGE>
the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
Who May Want to The Fund is designed for institutional investors and their
Invest in the customers seeking as high a level of current interest income
Fund: that is exempt from federal income tax and, to the extent
possible, from New York State and New York City personal
income taxes as is consistent with the preservation of
capital and relative stability of principal. The Fund is
particularly suitable for banks, corporations and other
financial institutions that seek investment of short-term
funds for their own accounts or for the accounts of their
customers.
Performance Information
The Bar Chart and the Table below indicate the risks of investing in the Fund
by showing how the performance of the Fund has varied from year to year. The
Table shows how the Fund's average annual return for one, five and ten years
compares to that of a selected market index. The Bar Chart and the Table assume
reinvestment of dividends and distributions. The Fund's past performance does
not necessarily indicate how it will perform in the future.
New York Money Shares
[PERFORMANCE CHART APPEARS HERE]
Year Annualized Returns
1989 5.80
1990 5.40
1991 3.89
1992 2.66
1993 2.22
1994 2.63
1995 3.69
1996 3.30
1997 3.48
1998 3.22
4
<PAGE>
During the ten-year period shown in the bar chart, the highest quarterly
return was 6.22% (for the quarter ended June 30, 1989) and the lowest quarterly
return was 2.09% (for the quarter ended March 31, 1994).
The Fund's Average Annual Total Return for Periods Ended December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C> <C>
New York Money Shares................................. 3.22% 3.26% 3.62%
New York Dollar Shares................................ 2.97% 3.01% 3.37%
New York Plus Shares (estimated)...................... 2.97% 3.01% 3.37%
IBC's Money Fund Report: New York State Specific Tax-
Free Institutions--Only Money Fund Average*.......... 2.96% 3.06% 3.55%
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
7 Day Yield as of
December 31, 1998
-----------------
<S> <C>
New York Money Shares....................................... 3.43%
New York Dollar Shares...................................... 3.18%
New York Plus Shares (estimated)............................ 3.18%
IBC's Money Fund Report: New York State Specific Tax-Free
Institutions--Only Money Fund Average*..................... 3.05%
- -------------------------------------------------------------------------------
</TABLE>
Current Yield: You may obtain the Fund's current 7-day yield by calling 1-800-
821-7432 or by visiting its web site at www.pif.com.
- -------
* IBC'S Money Fund Report: New York State Specific Tax-Free Institutions--Only
Money Fund Average is comprised of institutional money market funds
investing in tax-exempt obligations of New York State
5
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
New York Money Fund
-------------------
Money Dollar
Shares Shares Plus Shares
------ ------ -----------
(estimated)
<S> <C> <C> <C> <C> <C> <C>
Management Fees................................. .20% .20% .20%
Distribution (12b-1) Fees....................... -- -- .25%
Other Expenses.................................. .28% .53% .28%
Administration Fees............................ .20% .20% .20%
Shareholder Servicing Fees..................... -- .25% --
Miscellaneous.................................. .08% .08% .08%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses(1)......... .48% .73% .73%
- --------------------------------------------------------------------------------
</TABLE>
(1) Total Annual Fund Operating Expenses for New York Money Shares, New York
Dollar Shares and New York Plus Shares for the fiscal year ended July 31,
1998, with fee waivers, were .20%, .45% and .45% (estimated),
respectively, of the Fund's average net assets. The Adviser and PFPC Inc.,
the Fund's co-administrator, may from time to time waive the investment
advisory and administration fees otherwise payable to them or may
reimburse the Fund for its operating expenses. The Adviser and PFPC expect
to continue such fee waivers.
EXAMPLE
- --------------------------------------------------------------------------------
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that
the Fund's operating expenses remain the same. Although your actual costs may
be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
New York Money Fund
-------------------
Money Dollar Plus
Shares Shares Shares
------ ------ ------
(estimated)
<S> <C> <C> <C>
One Year.............................................. $ 49 $ 75 $ 75
Three years........................................... $154 $233 $233
Five Years............................................ $269 $406 $406
Ten Years............................................. $604 $906 $906
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
InvestmentStrategies andRisk Disclosure ________________________________________
The Fund is a money market fund. The investment objective of
the Fund is to provide investors with as high a level of
current interest income that is exempt from federal income
tax and, to the extent possible, from New York State and New
York City personal income taxes as is consistent with the
preservation of capital and relative stability of principal.
The Fund's investment objective may be changed by the Board
of Trustees without shareholder approval. The Fund invests
primarily in New York Municipal Obligations.
Substantially all of the Fund's assets are invested in
Municipal Obligations. The Fund expects that, except during
temporary defensive periods or when acceptable securities
are unavailable for investment by the Fund, the Fund's
assets will be invested primarily in New York Municipal
Obligations, although the amount of the Fund's assets
invested in such securities will vary from time to time. The
Fund will not knowingly purchase securities the interest on
which is subject to regular federal income tax; however, the
Fund may hold uninvested cash reserves pending investment
during temporary defensive periods or, if in the opinion of
the Adviser, suitable tax-exempt obligations are
unavailable. Uninvested cash reserves will not earn income.
The securities purchased by the Fund are subject to the
quality, diversification, and other requirements of Rule 2a-
7 under the Investment Company Act of 1940, as amended, and
other rules of the Securities and Exchange Commission. The
Fund will only purchase securities that present minimal
credit risk as determined by the Adviser pursuant to
guidelines approved by the Board of Trustees of Provident
Institutional Funds. Securities purchased by the Fund (or
the issuers of such securities) will be Eligible Securities.
Applicable Eligible Securities are:
. instruments which are rated at the time of purchase (or
which are guaranteed or in some cases otherwise supported
by guarantees or other credit supports with such ratings)
in one of the top two rating categories by two
unaffiliated nationally recognized statistical rating
organizations ("NRSROs") (or one NRSRO if the security or
guarantee was rated by only one NRSRO);
. instruments issued or guaranteed by persons with short-
term debt having such ratings;
. unrated instruments determined by the Adviser, pursuant to
procedures approved by the Board of Trustees, to be of
comparable quality to such instruments; and
7
<PAGE>
. shares of other open-end investment companies that invest
in the type of obligation in which the Fund may invest.
- --------------------------------------------------------------------------------
Investments The Fund's investments may include the following:
Municipal They may purchase Municipal Obligations which are classified
Obligations as "general obligation" securities and "revenue" securities.
Revenue securities may include private activity bonds which
are not payable from the unrestricted revenues of the
issuer. Consequently, the credit quality of private activity
bonds is usually directly related to the credit standing of
the corporate user of the facility involved. While interest
paid on private activity bonds will be exempt from regular
federal income tax, it may be treated as a specific tax
preference item under the federal alternative minimum tax.
The portfolio may also include "moral obligation"
securities.
Variable and The Fund may purchase variable or floating rate notes issued
Floating Rate by industrial development authorities and other governmental
Instruments entities, which are instruments that provide for adjustments
in the interest rate on certain reset dates or whenever a
specified interest rate index changes, respectively.
Borrowing The Fund is authorized to issue senior securities or borrow
money from banks or other lenders on a temporary basis. The
Fund will borrow money when the Adviser believes that the
return from securities purchased with borrowed fund will be
greater than the cost of the borrowing. Such borrowings will
be unsecured. The Fund will not purchase portfolio
securities while borrowings in excess of 5% of the Fund's
total assets are outstanding.
When-Issued and The Fund may purchase securities on a "when-issued" or
Delayed "delayed settlement" basis. The Fund expects that
Settlement commitments to purchase when-issued or delayed settlement
Transactions securities will not exceed 25% of the value of its total
assets absent unusual market conditions and that commitments
by the Fund to purchase when-issued securities will not
exceed 45 days. The Fund does not intend to purchase when-
issued or delayed settlement securities for speculative
purposes but only in furtherance of its investment
objective. The Fund receives no income from when-issued or
delayed settlement securities prior to delivery of such
securities.
Stand-by The Fund may acquire "stand-by commitments" with respect to
Commitments Municipal Obligations held in its portfolio. The Fund will
acquire stand-by commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights
thereunder for trading purposes.
8
<PAGE>
Investment The Fund may invest in securities issued by other open-end
Company investment companies that invest in the type of obligations
Securities in which the Fund may invest and that determine their net
asset value per share based upon the amortized cost or penny
rounding method. Investments in the securities of other
investment companies will cause the Fund (and, indirectly
the Fund's shareholders) to bear proportionately the costs
incurred in connection with the other investment companies'
operations.
Illiquid The Fund will not invest more than 10% of the value of its
Securities total assets in illiquid securities, which may be illiquid
due to legal or contractual restrictions on resale or the
absence of readily available market quotations. Securities
that have readily available market quotations are not deemed
illiquid for purposes of this limitation.
Other Types This Prospectus describes the Fund's principal investment
of Investments strategies, and the particular types of securities in which
the Fund principally invests. The Fund may, from time to
time, make other types of investments and pursue other
investment strategies in support of its overall investment
goal. These supplemental investment strategies are described
in detail in the Statement of Additional Information, which
is referred to on the back cover of this Prospectus.
Risk Factors The principal risks of investing in the Fund are also
described above in the Risk/Return Summary. The following
supplements that description.
Interest Rate Generally, a fixed-income security will increase in value
Risk when interest rates fall and decrease in value when interest
rates rise. As a result, if interest rates were to change
rapidly, there is a risk that the change in market value of
the Fund's assets may not enable the Fund to maintain a
stable net asset value of $1.00 per share.
Credit Risk The risk that an issuer will be unable to make principal and
interest payments when due is known as "credit risk." U.S.
government securities are generally considered to be the
safest type of investment in terms of credit risk. Municipal
obligations generally rank between U.S. government
securities and corporate debt securities in terms of credit
safety. Credit quality ratings published by an NRSRO are
widely accepted measures of credit risk. The lower a
security is rated by an NRSRO, the more credit risk it is
considered to represent.
Other Risks Certain investment strategies employed by the Fund may
involve additional investment risk. Liquidity risk involves
certain securities which may be difficult or impossible to
sell at the time and the price that the Fund would like.
9
<PAGE>
Special The Fund's ability to achieve its investment objective is
Considerations dependent upon the ability of the issuers of New York
Affecting Municipal Obligations to meet their continuing obligations
the Fund for the payment of principal and interest.
Certain substantial issuers of New York Municipal
Obligations (including issuers whose obligations may be
acquired by the Fund) have experienced serious financial
difficulties in recent years. These difficulties have at
times jeopardized the credit standing and impaired the
borrowings abilities of all New York issuers and have
generally contributed to higher interest costs for their
borrowing and fewer markets for their outstanding debt
obligations. Although, several different issues of municipal
securities of New York State and its agencies and
instrumentalities and of New York City have been downgraded
by Standard & Poor's Ratings Services ("S&P") and Moody's
Investors Service, Inc. ("Moody's"), in recent years, the
most recent actions of S&P and Moody's have been to place
the debt obligations of New York State and New York City on
Credit Watch with positive implications and to upgrade the
debt obligations of New York City respectively. Strong
demand for New York Municipal Obligations has also at times
had the effect of permitting New York Municipal Obligations
to be issued with yields relatively lower, and after
issuance, to trade in the market at prices relatively
higher, than comparably rated municipal obligations issued
by other jurisdictions. A recurrence of the financial
difficulties previously experienced by certain issuers of
New York Municipal Obligations could result in defaults or
declines in the market values of those issuers' existing
obligations and, possibly, in the obligations of other
issuers of New York Municipal Obligations. Although as of
the date of this Prospectus, no issuers of New York
Municipal Obligations are in default with respect to the
payment of their Municipal Obligations, the occurrence of
any such default could affect adversely the market values
and marketability of all New York Municipal Obligations and,
consequently, the net asset value of the Fund's portfolio.
Municipal Opinions relating to the validity of Municipal Obligations
Obligations and to the exemption of interest thereon from federal income
tax (and, with respect to New York Municipal Obligations, to
the exemption of interest thereon from New York State and
New York City personal income taxes) are rendered by bond
counsel to the respective issuers at the time of issuance,
and opinions relating to the validity of and the tax-exempt
status of payments received by the Fund for tax-exempt
derivative securities are rendered by counsel to the
respective sponsors of such securities. The Adviser will
rely on such opinions and will not review independently the
underlying proceedings relating to the issuance of Municipal
Obligations, the creation of any tax-exempt derivative
securities, or the bases for such opinions.
10
<PAGE>
Year 2000 Like other mutual funds, financial and business
organizations and individuals around the world, the Fund
could be adversely affected if the computer systems used by
the Adviser and the Fund's other service providers, or
persons with whom they deal, do not properly process and
calculate date-related information and data from and after
January 1, 2000. This possibility is commonly known as the
"Year 2000 Problem." The Fund has been advised by the
Adviser, the co-administrator and the custodian that
they are actively taking steps to address the year 2000
Problem with respect to the computer systems that they use
and to obtain assurances that comparable steps are being
taken by the Fund's other service providers. While there can
be no assurance that the Fund's service providers will by
Year 2000 compliant, the Fund's service providers expect
that their plans to be compliant will be achieved.
Management of the Fund _________________________________________________________
Investment The Adviser, a majority-owned indirect subsidiary of PNC
Adviser Bank, serves as the Fund's investment adviser. The Adviser
and its affiliates are one of the largest U.S. bank managers
of mutual funds, with assets currently under management in
excess of $46 billion. BIMC (formerly known as PNC
Institutional Management Corporation or "PIMC") was
organized in 1977 by PNC Bank to perform advisory services
for investment companies and has its principal offices at
Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809.
As investment adviser, BIMC manages the Fund and is
responsible for all purchases and sales of the Fund's
securities. For the investment advisory services provided
and expenses assumed by it, BIMC is entitled to receive a
fee, computed daily and payable monthly, based on the Fund's
average net assets. BIMC and PFPC, the co-administrator, may
from time to time reduce the investment advisory and
administration fees otherwise payable to them or may
reimburse the Fund for its operating expenses. Any fees
waived and any expenses reimbursed by BIMC and PFPC with
respect to a particular fiscal year are not recoverable. For
the fiscal year ended July 31, 1998, the Fund paid
investment advisory fees and administration fees each
aggregating .06% (net of waivers) of its average net assets.
The services provided by BIMC and the fees payable by the
Fund for these services are described further in the
Statement of Additional Information under "Management of the
Funds."
Shareholder Information ________________________________________________________
Price of The Fund's net asset value per share for purposes of pricing
Fund Shares purchase and redemption orders is determined by BIMC, the
Funds adviser, as of 12:00 noon and 4:00 P.M., Eastern time,
on each day on which both the New York Stock Exchange and
the
11
<PAGE>
Federal Reserve Bank of Philadelphia are open for business
(a "Business Day"). The net asset value per share of each
class of the Fund's shares is calculated by adding the value
of all securities and other assets of the Fund that are
allocable to a particular class, subtracting liabilities
charged to such class, and dividing the result by the total
number of outstanding shares of such class. In computing net
asset value, the Fund uses the amortized cost method of
valuation as described in the Statement of Additional
Information under "Additional Purchase and Redemption
Information." Under the 1940 Act, the Fund may postpone the
date of payment of any redeemable security for up to seven
days.
Purchase Fund shares are sold at the net asset value per share next
of Shares determined after confirmation of a purchase order by PFPC,
which also serves as the Fund's transfer agent. Purchase
orders for shares are accepted only on Business Days and
must be transmitted to PFPC in Wilmington, Delaware by
telephone (800-441-7450; in Delaware: 302-791-5350) or
through the Fund's computer access program. Orders accepted
by 12:00 noon, Eastern time, for which payment has been
received by PNC Bank, N.A. ("PNC Bank"), an agent of the
Fund's custodian, PFPC Trust Company, by 4:00 P.M., Eastern
Time, will be executed the same day. Orders received after
12:00 noon Eastern Time and orders for which payment has not
been received by 4:00 P.M. Eastern Time, will not be
accepted, and notice thereof will be given to the
institution placing the order. (Payment for orders which are
not received or accepted will be returned after prompt
inquiry to the sending institution.)
Payment for Fund shares may be made only in federal funds
or other funds immediately available to PNC Bank. The
minimum initial investment by an institution is $5,000;
however, broker-dealers and other institutional investors
may set a higher minimum for their customers. There is no
minimum subsequent investment. The Fund, at its discretion,
may limit or reject any order for shares.
Fund shares are sold and redeemed without charge by the
Fund. Institutional investors purchasing or holding Fund
shares for their customer accounts may charge customer fees
for cash management and other services provided in
connection with their accounts. A customer should,
therefore, consider the terms of its account with an
institution before purchasing Fund shares. An institution
purchasing or redeeming Fund shares on behalf of its
customers is responsible for transmitting orders to the Fund
in accordance with its customer agreements.
Conflict of interest restrictions may apply to an
institution's receipt of compensation paid by the Fund in
connection with the investment of fiduciary funds in New
York Dollar Shares or New York Plus Shares. (See also
"Management of the Fund--Service Organizations," as
described in the Statement of Additional
12
<PAGE>
Information.) Institutions, including banks regulated by the
Comptroller of the Currency and investment advisers and
other money managers subject to the jurisdiction of the SEC,
the Department of Labor or state securities commissions, are
urged to consult their legal advisors before investing
fiduciary funds in New York Dollar Shares or New York Plus
Shares. (See also "Management of the Fund--Banking Laws," as
described in the Statement of Additional Information.)
Redemption Redemption orders must be transmitted to PFPC in Wilmington,
of Shares Delaware in the manner described under "Purchase of Shares."
Shares are redeemed at the net asset value per share next
determined after PFPC's receipt of the redemption order.
While the Fund intends to use its best efforts to maintain
its net asset value per share at $1.00, the proceeds paid to
a shareholder upon redemption may be more or less than the
amount invested depending upon a share's net asset value at
the time of redemption. Call 1-800-441-7450 (in Delaware:
302-791-5350) to place redemption orders.
Payment for redeemed shares for which a redemption order
is accepted by PFPC prior to Noon, Eastern time, on a
Business Day is normally made in federal funds wired to the
redeeming shareholder on the same day. Payment for
redemption orders which are received after Noon, Eastern
time or on a day when PNC Bank is closed, is normally wired
in federal funds on the next day following redemption that
PNC Bank is open for business.
The Fund shall have the right to redeem shares in any
Fund account if the value of the account is less than
$4,000, after sixty-days' prior written notice to the
shareholder. Any such redemption shall be effected at the
net asset value next determined after the redemption order
is entered. If during the sixty-day period the shareholder
increases the value of its Fund account to $4,000 or more,
no such redemption shall take place. In addition, the Fund
may also redeem shares involuntarily under certain special
circumstances described in the Statement of Additional
Information under "Additional Purchase and Redemption
Information."
Shareholder Institutional investors, such as banks, savings and loan
Service and associations and other financial institutions, including
Distribution affiliates of PNC Bank Corp. ("Service Organizations"), may
Plans purchase New York Dollar or New York Plus Shares. New York
Dollar and New York Plus Shares are identical in all
respects to Money Shares except that they bear the service
fees described below and enjoy certain exclusive voting
rights on matters relating to these fees. The Fund will
enter into an agreement with each Service Organization which
purchases New York Dollar Shares or New York Plus Shares
requiring it to provide support services to its customers
who are the beneficial owners
13
<PAGE>
of such shares in consideration of the Fund's payment of
.25% (on an annualized basis) of the average daily net asset
value of the New York Dollar Shares or New York Plus Shares
held by the Service Organization for the benefit of
customers. Such services, which are described more fully in
the Statement of Additional Information under "Management of
the Fund Service Organizations," include aggregating and
processing purchase and redemption requests from customers
and placing net purchase and redemption orders with PFPC;
processing dividend payments from the Fund on behalf of
customers; providing information periodically to customers
showing their positions in New York Dollar or New York Plus
Shares; and providing sub-accounting or the information
necessary for sub-accounting with respect to New York Dollar
or New York Plus Shares beneficially owned by customers. In
addition, broker-dealers purchasing New York Plus Shares may
be requested to provide from time to time assistance (such
as the forwarding of sales literature and advertising to
their customers) in connection with the distribution of New
York Plus Shares. Under the terms of the agreements, Service
Organizations are required to provide to their customers a
schedule of any fees that they may charge customers in
connection with their investments in New York Dollar or New
York Plus Shares. New York Money Shares are sold to
institutions that have not entered into servicing agreements
with the Fund in connection with their investments.
Dividends and The Fund declares dividends daily and distributes
Distributions substantially all of its net investment income to
shareholders monthly. Shares begin accruing dividends on the
day the purchase order for the shares is effected and
continue to accrue dividends through the day before such
shares are redeemed. Dividends are paid monthly by check, or
by wire transfer if requested in writing by the shareholder,
within five business days after the end of the month or
within five business days after a redemption of all of a
shareholder's shares of a particular class.
Institutional shareholders may elect to have their
dividends reinvested in additional full and fractional
shares of the same class of shares with respect to which
such dividends are declared at the net asset value of such
shares on the payment date. Reinvested dividends receive the
same tax treatment as dividends paid in cash. Reinvestment
elections, and any revocations thereof, must be made in
writing to PFPC, the Fund's transfer agent, at P.O. Box
8950, Wilmington, Delaware 19885-9628 and will become
effective after its receipt by PFPC with respect to
dividends paid.
Taxes The Fund's distributions will generally constitute tax-
exempt income for shareholders for federal income tax
purposes. It is possible, depending upon the Fund's
14
<PAGE>
investments, that a portion of the Fund's distributions
could be taxable to shareholders as ordinary income or
capital gains, but the Fund does not expect that this will
be the case.
You should note that a portion of the exempt-interest
dividends paid by the Fund may constitute an item of tax
preference for purposes of determining federal alternative
minimum tax liability. Exempt-interest dividends will also
be considered along with other adjusted gross income in
determining whether any Social Security or railroad
retirement payments received by you are subject to federal
income taxes.
The Fund intends to comply with certain state tax
requirements so that the exempt-interest dividends derived
from interest on New York Municipal Obligations will be
exempt from New York State and New York City personal income
taxes (but not corporate franchise taxes.) Interest on
indebtedness incurred by a shareholder to purchase or carry
shares of the Fund is not deductible for Federal, New York
State or New York City personal income tax purposes. Except
as noted with respect to New York State and New York City
personal income taxes, dividends and distributions paid to
shareholders that are derived from income on Municipal
Obligations may be taxable income under state or local law
even though all or a portion of such dividends or
distributions may be derived from interest on tax-exempt
obligations that, if paid directly to shareholders, would be
tax-exempt income.
PFPC, as transfer agent, will send each Fund shareholder
or its authorized representative an annual statement
designating the amount, if any, of any dividends and
distributions made during each year and their federal, New
York State and New York City tax treatment.
Dividends declared in December of any year, and payable
to shareholders of record on a specified date in December,
will be deemed to have been received by the shareholders and
paid by the Fund on December 31 of such year in the event
such dividends are actually paid during January of the
following year.
You should also consult your tax adviser for further
information regarding the federal, state and local tax
consequences with respect to your specific situation.
15
<PAGE>
Financial Highlights ___________________________________________________________
The financial highlights tables are intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's financial statements, are incorporated by reference into the
Statement of Additional Information and included in the Annual Report, each of
which is available upon request.
New York Money Shares
The table below sets forth selected financial data for a New York Money Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
Income From Investment
Operations
Net Investment Income .0336 .0334 .0339 .0338 .0226
Net Gains or Losses on
Securities (both re-
alized and
unrealized) -- -- -- -- --
- -------------------------------------------------------------------------------
Total From Investment
Operations .0336 .0334 .0339 .0338 .0226
- -------------------------------------------------------------------------------
Less Distributions
Dividends (from net
investment income) (.0336) (.0334) (.0339) (.0338) (.0226)
Distributions (from
capital gains) -- -- -- -- --
- -------------------------------------------------------------------------------
Total Distributions (.0336) (.0334) (.0339) (.0338) (.0226)
- -------------------------------------------------------------------------------
Net Asset Value, End of
Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total Return 3.41% 3.39% 3.44% 3.43% 2.29%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Ratios/Supplemental Da-
ta:
Net Assets, End of
Year $(000's) 318,091 269,821 272,145 246,650 279,483
Ratios of Expenses to
Average Net Assets .20%(1) .20%(1) .20%(1) .20%(1) .20%(1)
Ratios of Net Invest-
ment Income to Aver-
age Daily Net Assets 3.35% 3.34% 3.37% 3.36% 2.28%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for New York Money Shares would have
been .48% for the year ended July 31, 1998, .49% for the year ended July
31, 1997, .50% for the year ended July 31, 1996, .49% for the year ended
July 31, 1995 and .48% for the year ended July 31, 1994.
16
<PAGE>
Financial Highlights (Continued) _______________________________________________
New York Dollar Shares
The table below sets forth selected financial data for a New York Dollar Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------
1998(3) 1997 1996(3) 1995(3) 1994(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Income From Investment Opera-
tions
Net Investment Income .0303 .0309 .0089 .0000 .0127
Net Gains or Losses on Se-
curities (both realized
and unrealized) -- -- -- -- --
- --------------------------------------------------------------------------------
Total From Investment Opera-
tions .0303 .0309 .0089 .0000 .0127
- --------------------------------------------------------------------------------
Less Distributions
Dividends (from net invest-
ment income) (.0303) (.0309) (.0089) .0000 (.0127)
Distributions (from capital
gains) -- -- -- -- --
- --------------------------------------------------------------------------------
Total Distributions (.0303) (.0309) (.0089) .0000 (.0127)
- --------------------------------------------------------------------------------
Net Asset Value, End of Pe-
riod $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Return 3.16%(2) 3.14% 3.05%(2) -- 1.96%(2)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Year
$(000's) -- 1,148 20 -- --
Ratios of Expenses to Aver-
age Net Assets(1) .45%(2) .45% .45%(2) -- .45%(2)
Ratios of Net Investment
Income to Average Daily
Net Assets 3.11%(2) 3.09% 3.07%(2) -- 1.94%(2)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for New York Dollar Shares would have
been .73% (annualized) for the year ended July 31, 1998, .74% for the year
ended July 31, 1997, .75% (annualized) for the year ended July 31, 1996
and .76% (annualized) for the year ended July 31, 1994.
(2) Annualized.
(3) There were no New York Dollar shares outstanding during the period from
March 28, 1994 to April 14, 1996 and July 21, 1998 to July 31, 1998.
17
<PAGE>
Financial Highlights (Continued) _______________________________________________
New York Plus Shares
The table below sets forth selected financial data for a New York Plus Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------
1998(3) 1997(3) 1996(3) 1995(3) 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Pe-
riod $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
Income From Investment Operations
Net Investment Income .0000 .0000 .0000 .0090 .0201
Net Gains or Losses on Securi-
ties (both realized and
unrealized) -- -- -- -- --
- --------------------------------------------------------------------------------
Total From Investment Operations .0000 .0000 .0000 .0090 .0201
- --------------------------------------------------------------------------------
Less Distributions
Dividends (from net investment
income) (.0000) (.0000) (.0000) (.0090) (.0201)
Distributions (from capital
gains) -- -- -- -- --
- --------------------------------------------------------------------------------
Total Distributions (.0000) (.0000) (.0000) (.0090) (.0201)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total Returns -- -- -- 2.69%(2) 2.04%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net Assets, End of Year
$(000's) -- -- -- -- 435
Ratios of expenses to Average
Net Assets(1) -- -- -- .45%(2) .45%
Ratios of Net Investment Income
to Average Daily Net Assets -- -- -- 2.64%(2) 2.03%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for New York Plus Shares would have
been .73% (annualized) for the year ended July 31, 1995 and .73% for the
year ended July 31, 1994.
(2) Annualized.
(3) There were no New York Plus Shares outstanding during the period from
December 2, 1994 to July 31, 1998.
18
<PAGE>
Where to Find More Information________________________________________________
The Statement of Additional Information (the "SAI") includes additional
information about the Fund's investment policies, organization and management.
It is legally part of this prospectus (it is incorporated by reference). The
Annual and Semi-Annual Reports provide additional information about the Fund's
investments, performance and portfolio holdings.
Investors can get free copies of the above named documents, and make shareholder
inquiries, by calling 1-800-821-7432. Other information is available on the
Fund's web site at www.pif.com.
Information about the Fund (including the Fund's SAI) can be reviewed and copied
at the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. Information about the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. Reports and other information
about the Fund are available on the SEC's Internet site at http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by writing the Public Reference Section of the SEC, Washington, D.C. 20549-6009.
The Provident Institutional Funds 1940 Act File No. is 811-2354.
NewYork
Money Fund
An Investment Portfolio offered by
Provident Institutional Funds
[ARTWORK PROVIDENT
APPEARS HERE] INSTITUTIONAL
FUNDS
Prospectus
February 10, 1999
PIF-P-012
<PAGE>
PROVIDENT INSTITUTIONAL FUNDS
TempCash
TempFund
New York Money Fund
Statement of Additional Information
November 30, 1999
This Statement of Additional Information is not a Prospectus and should be
read in conjunction with the current Prospectuses as supplemented on November
30, 1999 for TempFund, TempCash and New York Money Fund, of Provident
Institutional Funds ("PIF" or the "Company"), as they may from time to time be
supplemented or revised. No investment in shares should be made without reading
the Prospectuses of the Funds. This Statement of Additional Information is
incorporated by reference in its entirety into each Prospectus. Copies of the
Prospectuses and Annual Reports of each of the Funds may be obtained, without
charge, by writing PIF at Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, DE 19809 or calling PIF at 1-800-821-7432. The financial statements
included in the Annual Reports of each of the Funds are incorporated by
reference into this Statement of Additional Information.
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL INFORMATION.................................................. 1
INVESTMENT STRATEGIES, RISKS AND POLICIES............................ 2
Portfolio Transactions............................................. 2
Investment Instruments and Policies................................ 3
Variable and Floating Rate Instruments............................. 3
Repurchase Agreements.............................................. 4
Securities Lending................................................. 4
Reverse Repurchase Agreements...................................... 4
When-Issued and Delayed Settlement Transactions.................... 5
U.S. Government Obligations........................................ 5
Mortgage-Related and Other Asset-Backed Securities................. 6
Banking Industry Obligations....................................... 8
Special Considerations Regarding Foreign Investments............... 8
Guaranteed Investment Contracts.................................... 8
Investment Company Securities...................................... 9
Municipal Obligations.............................................. 9
Restricted and Other Illiquid Securities........................... 11
Stand-By Commitments............................................... 12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL OBLIGATIONS.... 13
INVESTMENT LIMITATIONS............................................... 28
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION....................... 30
In General......................................................... 30
Net Asset Value.................................................... 31
MANAGEMENT OF THE FUNDS.............................................. 32
Trustees and Officers.............................................. 32
Investment Adviser................................................. 36
Co-Administrators.................................................. 39
Distributor........................................................ 42
Custodian and Transfer Agent....................................... 42
Service Organizations.............................................. 44
Expenses........................................................... 48
ADDITIONAL INFORMATION CONCERNING TAXES.............................. 49
DIVIDENDS............................................................ 50
General............................................................ 50
ADDITIONAL YIELD AND OTHER PERFORMANCE INFORMATION................... 50
ADDITIONAL DESCRIPTION CONCERNING SHARES............................. 55
COUNSEL.............................................................. 56
AUDITOR.............................................................. 56
FINANCIAL STATEMENTS................................................. 56
MISCELLANEOUS........................................................ 57
Shareholder Vote................................................... 57
Securities Holdings of Brokers..................................... 57
Certain Record Holders............................................. 57
APPENDIX A........................................................... A-1
</TABLE>
<PAGE>
GENERAL INFORMATION
PIF was organized as a Delaware business trust on October 21, 1998. It
is the successor to the following five investment companies: (1) Temporary
Investment Fund, Inc. ("Temp"); (2) Trust for Federal Securities ("Fed"); (3)
Municipal Fund for Temporary Investment ("Muni"); (4) Municipal Fund for
California Investors, Inc. ("Cal Muni") and (5) Municipal Fund for New York
Investors, Inc. ("NY Muni") (each a "Predecessor Company," collectively the
"Predecessor Companies"). The Predecessor Companies were comprised of the
following portfolios (each, a "Predecessor Fund," collectively, the "Predecessor
Funds"): Temp - TempFund and TempCash, Fed- FedFund, T-Fund, Federal Trust Fund
and Treasury Trust Fund; Muni - MuniFund and MuniCash, Cal Muni - California
Money Fund and NY Muni - New York Money Fund.
This Statement of Additional Information relates only to TempFund,
TempCash and New York Money Fund (each a "Fund", collectively the "Funds").
The Funds commenced operations as follows: TempFund - October 1973;
TempCash - February 1984 and New York Money Fund - March 1983.
The fiscal year end for Temp and NY Muni and their respective Funds
was as follows: TempFund and TempCash - September 30 and New York Money Fund -
July 31. This Statement of Additional Information contains various charts with
respect to fees and performance information of the Predecessor Companies and/or
Predecessor Funds.
On February 10, 1999, each of the Predecessor Funds was reorganized
into a separate series of PIF. PIF is a no-load open-end management investment
company. Currently, PIF offers shares of the Funds. Each Fund is a diversified
fund, with the exception of the New York Money Fund which is classified as a
non-diversified investment company under the 1940 Act. Each of the Funds offers
a class of Shares to institutional investors. Each of the Funds also offers to
institutional investors, such as banks, savings and loan associations and other
financial institutions ("Service Organizations"), a separate class of shares,
Dollar Shares. Additionally, TempFund offers to Service Organizations the
following separate classes of Shares: Administration Shares, Cash Reserve Shares
and Cash Management Shares. TempFund and New York Money Fund also offer to
broker dealers, who provide assistance in the sale of shares and institutional
services to their customers, a separate class of shares, Plus Shares.
<PAGE>
INVESTMENT STRATEGIES, RISKS AND POLICIES
Portfolio Transactions
Subject to the general control of the Board of Trustees, BlackRock
Institutional Management Corporation ("BIMC," or the "Adviser"), the Company's
investment adviser, is responsible for, makes decisions with respect to, and
places orders for all purchases and sales of portfolio securities for a Fund.
BIMC purchases portfolio securities for the Funds either directly from the
issuer or from dealers who specialize in money market instruments. Such
purchases are usually without brokerage commissions. In making portfolio
investments, BIMC seeks to obtain the best net price and the most favorable
execution of orders. To the extent that the execution and price offered by more
than one dealer are comparable, BIMC may, in its discretion, effect transactions
in portfolio securities with dealers who provide the Funds with research advice
or other services.
With respect to TempFund and TempCash, BIMC may seek to obtain an
undertaking from issuers of commercial paper or dealers selling commercial paper
to consider the repurchase of such securities from a Fund prior to their
maturity at their original cost plus interest (interest may sometimes be
adjusted to reflect the actual maturity of the securities) if BIMC believes that
the Fund's anticipated need for liquidity makes such action desirable. Certain
dealers (but not issuers) have charged and may in the future charge a higher
price for commercial paper where they undertake to repurchase prior to maturity.
The payment of a higher price in order to obtain such an undertaking reduces the
yield which might otherwise be received by a Fund on the commercial paper. The
Company's Board of Trustees has authorized BIMC to pay a higher price for
commercial paper where it secures such an undertaking if BIMC believes that the
prepayment privilege is desirable to assure a Fund's liquidity and such an
undertaking cannot otherwise be obtained.
Investment decisions for each Fund are made independently from those
for another of the Company's portfolios or other investment company portfolios
or accounts advised or managed by BIMC. Such other portfolios may also invest in
the same securities as the Funds. When purchases or sales of the same security
are made at substantially the same time on behalf of such other portfolios,
transactions are averaged as to price, and available investments allocated as to
amount, in a manner which BIMC believes to be equitable to each Fund and its
customers who also are acquiring securities, including the Fund. In some
instances, this investment procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained for a Fund. To the
extent permitted by law, BIMC may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for such other
portfolios in order to obtain best execution.
The Funds will not execute portfolio transactions through or acquire
portfolio securities issued by BIMC, PNC Bank, National Association ("PNC
Bank"), PFPC Inc. ("PFPC"), and Provident Distributors, Inc. ("PDI"), or any
affiliated person (as such term is defined in the Investment Company Act of 1940
(the "1940 Act")) of any of them, except to the extent permitted by the
Securities and Exchange Commission (the "SEC"). In addition, with respect to
such transactions, securities, deposits and agreements, the Funds will not give
-2-
<PAGE>
preference to Service Organizations with whom a Fund enters into agreements
concerning the provision of support services to customers who beneficially own
Dollar Shares, Administration Shares, Cash Reserve Shares, Cash Management
Shares and Plus Shares.
The Funds do not intend to seek profits through short-term trading.
Each Fund's annual portfolio turnover will be relatively high, but is not
expected to have a material effect on its net income. Each Fund's portfolio
turnover rate is expected to be zero for regulatory reporting purposes.
Investment Instruments and Policies
The following supplements the description of the investment
instruments and/or policies which are applicable to the Funds. In such cases
where an instrument or policy is utilized only by a specific Fund or Funds, its
applicability to the specific Fund is noted below:
Variable and Floating Rate Instruments. The Funds may purchase
variable and floating rate instruments. Variable and floating rate instruments
are subject to the credit quality standards described in the Prospectuses. In
some cases, the Funds may require that the obligation to pay the principal of
the instrument be backed by a letter of credit or guarantee. Such instruments
may carry stated maturities in excess of 13 months provided that the maturity-
shortening provisions stated in Rule 2a-7 are satisfied. Although a particular
variable or floating rate demand instrument may not be actively traded in a
secondary market, in some cases, a Fund may be entitled to principal on demand
and may be able to resell such notes in the dealer market.
Variable and floating rate demand instruments held by a Fund may have
maturities of more than 13 months provided: (i) the Fund is entitled to the
payment of principal and interest at any time, or during specified intervals not
exceeding 13 months, upon giving the prescribed notice (which may not exceed 30
days), and (ii) the rate of interest on such instruments is adjusted at periodic
intervals which may extend up to 13 months. Variable and floating rate notes
that do not provide for payment within seven days may be deemed illiquid and
subject to a 10% limitation on such investments.
In determining a Fund's average weighted portfolio maturity and
whether a long-term variable rate demand instrument has a remaining maturity of
13 months or less, the instrument will be deemed by a Fund to have a maturity
equal to the longer of the period remaining until its next interest rate
adjustment or the period remaining until the principal amount can be recovered
through demand. In determining a Fund's average weighted portfolio maturity and
whether a long-term floating rate demand instrument has a remaining maturity of
13 months or less, the instrument will be deemed by a Fund to have a maturity
equal to the period remaining until the principal amount can be recovered
through demand. Variable and floating notes are not typically rated by credit
rating agencies, but their issuers must satisfy the Fund's quality and maturity
requirements. If an issuer of such a note were to default on its payment
obligation, the Fund might be unable to dispose of the note because of the
absence of an active secondary market and might, for this or other reasons,
suffer a loss. The Fund invests in variable or floating rate notes only when the
Adviser deems the investment to involve minimal credit risk.
-3-
<PAGE>
Repurchase Agreements. TempFund and TempCash may purchase repurchase
agreements. In a repurchase agreement, a Fund purchases money market instruments
from financial institutions, such as banks and broker-dealers, subject to the
seller's agreement to repurchase them at an agreed upon time and price,
reflecting interest on the repurchase price for the securities subject to the
repurchase agreement. The securities subject to a repurchase agreement may bear
maturities exceeding 13 months, provided the repurchase agreement itself matures
in 13 months or less. The seller under a repurchase agreement will be required
to maintain the value of the securities subject to the agreement at not less
than the repurchase price. Default by the seller would, however, expose the Fund
to possible loss because of adverse market action or delay in connection with
the disposition of the underlying securities. Collateral for a repurchase
agreement may include cash items, obligations issued by the U.S. Government or
its agencies or instrumentalities or obligations rated in the highest category
by at least two nationally recognized statistical rating organizations (an
"NRSRO") (or by the only NRSRO providing a rating). The ratings by NRSROs
represent their respective opinions as to the quality of the obligations they
undertake to rate. Ratings, however, are general and are not absolute standards
of quality. Consequently, obligations with the same rating, maturity, and
interest rate may have different market prices. The Appendix to this Statement
of Additional Information contains a description of the relevant rating symbols
used by NRSROs for commercial paper that may be purchased by each Fund. The
repurchase price under the repurchase agreements described in the Funds'
Prospectuses generally equals the price paid by that Fund plus interest
negotiated on the basis of current short-term rates (which may be more or less
than the rate on the securities underlying the repurchase agreement). Securities
subject to repurchase agreements will be held by the Company's custodian or sub-
custodian, or in the Federal Reserve/Treasury book-entry system. Repurchase
agreements are considered to be loans by the Funds under the 1940 Act.
Securities Lending. TempFund and TempCash may lend their securities
with a value of up to one-third of its total assets (including the value of the
collateral for the loan) to qualified brokers, dealers, banks and other
financial institutions for the purpose of realizing additional net investment
income through the receipt of interest on the loan. Such loans would involve
risks of delay in receiving additional collateral in the event the value of 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. Loans will only be made to
borrowers deemed by the Adviser to be creditworthy.
Reverse Repurchase Agreements. TempFund and TempCash may enter into
reverse repurchase agreements. In a reverse repurchase agreement a Fund sells a
security and simultaneously commits to repurchase that security at a future date
from the buyer. In effect, the Fund is temporarily borrowing money at an agreed
upon interest rate from the purchaser of the security, and the security sold
represents collateral for the loan.
A Fund's investment of the proceeds of a reverse repurchase agreement
involves the speculative factor known as leverage. A Fund may enter into a
reverse repurchase
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<PAGE>
agreement only if the interest income from investment of the proceeds is greater
than the interest expense of the transaction and the proceeds are invested for a
period no longer than the term of the agreement. A Fund will maintain in a
segregated account, liquid securities at least equal to its purchase obligations
under these agreements. The Adviser will evaluate the creditworthiness of the
other party in determining whether a Fund will enter into a reverse repurchase
agreement. The use of reverse repurchase agreements involves certain risks. For
example, the securities acquired by a Fund with the proceeds of such an
agreement may decline in value, although the Fund is obligated to repurchase the
securities sold to the counter party at the agreed upon price. In addition, the
market value of the securities sold by a Fund may decline below the repurchase
price to which the Fund remains committed.
TempFund and TempCash are permitted to invest up to one-third of their
respective total assets in reverse repurchase agreements and securities lending
transactions. Investments in reverse repurchase agreements and securities
lending transaction will be aggregated for purposes of this investment
limitation.
When-Issued and Delayed Settlement Transactions. The Funds may utilize
when-issued and delayed settlement transactions. When-issued securities are
securities purchased for delivery beyond the normal settlement date at a stated
price and yield. Delayed settlement describes settlement of a securities
transaction in the secondary market sometime in the future. The Fund will
generally not pay for such securities or start earning interest on them until
they are received. Securities purchased on a when-issued or delayed settlement
basis are recorded as an asset and are subject to changes in value based upon
changes in the general level of interest rates. When a Fund agrees to purchase
when-issued or delayed settlement securities, the custodian will set aside cash
or liquid portfolio securities equal to the amount of the commitment in a
separate account. Normally, the custodian will set aside portfolio securities to
satisfy a purchase commitment, and in such a case that Fund may be required
subsequently to place additional assets in the separate account in order to
ensure that the value of the account remains equal to the amount of such Fund's
commitment. It may be expected that the market value of the Fund's net assets
will fluctuate to a greater degree when it sets aside portfolio securities to
cover such purchase commitments than when it sets aside cash. A Fund's liquidity
and ability to manage its portfolio might be affected when it sets aside cash or
portfolio securities to cover such purchase commitments. When a Fund engages in
when-issued or delayed settlement transactions, it relies on the seller to
consummate the trade. Failure of the seller to do so may result in a Fund's
incurring a loss or missing an opportunity to obtain a price considered to be
advantageous. The Funds do not intend to purchase when-issued or delayed
settlement securities for speculative purposes but only in furtherance of a
Fund's investment objective. Each Fund reserves the right to sell these
securities before the settlement date if it is deemed advisable.
U.S. Government Obligations. Examples of the types of U.S. Government
obligations that may be held by the Funds include U.S. Treasury Bills, Treasury
Notes, and Treasury Bonds and the obligations of the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
Federal National Mortgage Association, Federal Financing Bank, General Services
Administration, Student Loan Marketing Association, Central
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Bank for Cooperatives, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks, Federal Farm
Credit Banks, Maritime Administration, Tennessee Valley Authority, Washington
D.C. Armory Board, and International Bank for Reconstruction and Development.
The Funds may also invest in mortgage-related securities issued or guaranteed by
U.S. Government agencies and instrumentalities, including such instruments as
obligations of the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC").
Mortgage-Related and Other Asset-Backed Securities. TempFund and
TempCash may purchase mortgage-related and other asset-backed securities.
Mortgage-related securities include fixed and adjustable Mortgage Pass-Through
Certificates, which provide the holder with a pro-rata share of interest and
principal payments on a pool of mortgages, ordinarily on residential properties.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Pass-Through Certificates guaranteed
by GNMA (also known as "Ginnie Maes") are guaranteed as to the timely payment of
principal and interest by GNMA, whose guarantee is backed by the full faith and
credit of the United States. Mortgage-related securities issued by FNMA include
FNMA guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are guaranteed as to timely payment of principal and interest by FNMA.
They are not backed by or entitled to the full faith and credit of the United
States, but are supported by the right of the FNMA to borrow from the Treasury.
Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs"). Freddie Macs are not guaranteed by
the United States or by any Federal Home Loan Banks and do not constitute a debt
or obligation of the United States or of any Federal Home Loan Bank. Freddie
Macs entitle the holder to timely payment of interest, which is guaranteed by
the FHLMC. FHLMC guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. When FHLMC does not
guarantee timely payment of principal, FHLMC is required to remit the amount due
on account of its guarantee of ultimate payment of principal no later than one
year after it becomes payable.
A Fund from time to time may purchase in the secondary market (i)
certain mortgage pass-through securities packaged and master serviced by PNC
Mortgage Securities Corp. ("PNC Mortgage") (or Sears Mortgage if PNC Mortgage
succeeded to the rights and duties of Sears Mortgage) or Midland Loan Services,
Inc. ("Midland"), or (ii) mortgage-related securities containing loans or
mortgages originated by PNC Bank, National Association ("PNC Bank") or its
affiliates). It is possible that under some circumstances, PNC Mortgage, Midland
or other affiliates could have interests that are in conflict with the holders
of these mortgage-backed securities, and such holders could have rights against
PNC Mortgage, Midland or their affiliates. For example, if PNC Mortgage, Midland
or their affiliates engaged in negligence or willful misconduct in carrying out
its duties as a master servicer, then any holder of the mortgage-backed security
could seek recourse against PNC Mortgage, Midland or their affiliates, as
applicable. Also, as a master servicer, PNC Mortgage, Midland or their
affiliates may make certain representations and warranties regarding he quality
of the mortgages and properties underlying a mortgage-backed security. If one or
more of those representations or warranties is false, then the holders of the
mortgage-backed securities could trigger an obligation of PNC
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<PAGE>
Mortgage, Midland or their affiliates, as applicable, to repurchase the
mortgages from the issuing trust. Finally, PNC Mortgage, Midland or their
affiliates may own securities that are subordinate to the senior mortgage-backed
securities owned by a Fund.
TempCash only may also invest in classes of collateralized mortgage
obligations ("CMOs") deemed to have a remaining maturity of 13 months or less in
accordance with the requirements of Rule 2a-7 under the 1940 Act. Each class of
a CMO, which frequently elect to be taxed as a real estate mortgage investment
conduit ("REMIC"), represents an ownership interest in, and the right to receive
a specified portion of, the cash flow consisting of interest and principal on a
pool of residential mortgage loans or mortgage pass-through securities
("Mortgage Assets"). CMOs are issued in multiple classes, each with a specified
fixed or floating interest rate and a final distribution date. The relative
payment rights of the various CMO classes may be structured in many ways. In
most cases, however, payments of principal are applied to the CMO classes in the
order of their respective stated maturities, so that no principal payments will
be made on a CMO class until all other classes having an earlier stated maturity
date are paid in full. These multiple class securities may be issued or
guaranteed by U.S. Government agencies or instrumentalities, including GNMA,
FNMA and FHLMC, or issued by trusts formed by private originators of, or
investors in, mortgage loans. Classes in CMOs which TempCash may hold are known
as "regular" interests. CMOs also issue "residual" interests, which in general
are junior to and more volatile than regular interests. TempCash does not intend
to purchase residual interests.
TempFund and TempCash may also invest in non-mortgage asset-backed
securities (e.g., backed by installment sales contracts, credit card
----
receivables or other assets). Asset-backed securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in an underlying pool of assets, or as debt instruments, which are
also known as collateralized obligations, and are generally issued as the debt
of a special purpose entity organized solely for the purpose of owning such
assets and issuing such debt.
The yield characteristics of certain mortgage-related and asset-backed
securities may differ from traditional debt securities. One such major
difference is that all or a principal part of the obligations may be prepaid at
any time because the underlying assets (i.e., loans) may be prepaid at any time.
----
As a result, a decrease in interest rates in the market may result in increases
in the level of prepayments as borrowers, particularly mortgagors, refinance and
repay their loans. An increased prepayment rate with respect to a mortgage-
related or asset-backed security subject to such a prepayment feature will have
the effect of shortening the maturity of the security. If a Fund has purchased
such a mortgage-related or asset-backed security at a premium, a faster than
anticipated prepayment rate could result in a loss of principal to the extent of
the premium paid. Conversely, an increase in interest rates may result in
lengthening the anticipated maturity of such a security because expected
prepayments are reduced. A prepayment rate that is faster than expected will
reduce the yield to maturity of such a security, while a prepayment rate that is
slower than expected may have the opposite effect of increasing yield to
maturity.
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<PAGE>
In general, the assets supporting non-mortgage asset-backed securities
are of shorter maturity than the assets supporting mortgage-related securities.
Like other fixed-income securities, when interest rates rise the value of an
asset-backed security generally will decline; however, when interest rates
decline, the value of an asset-backed security with prepayment features may not
increase as much as that of other fixed-income securities, and, as noted above,
changes in market rates of interest may accelerate or retard prepayments and
thus affect maturities.
These characteristics may result in a higher level of price volatility
for asset-backed securities with prepayment features under certain market
conditions. In addition, while the trading market for short-term mortgages and
asset backed securities is ordinarily quite liquid, in times of financial stress
the trading market for these securities sometimes becomes restricted.
Banking Industry Obligations. For purposes of TempCash's investment
policies with respect to obligations of issuers in the financial services
industry, the assets of a bank or savings institution will be deemed to include
the assets of its domestic and foreign branches. Obligations of foreign banks in
which TempCash may invest include Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar-denominated certificates of deposit issued by offices of
foreign and domestic banks located outside the United States; Eurodollar Time
Deposits ("ETDs") which are U.S. dollar-denominated deposits in a foreign branch
of a U.S. bank or a foreign bank; Canadian Time Deposits ("CTDs") which are
essentially the same as ETDs except they are issued by Canadian offices of major
Canadian banks; and Yankee Certificates of Deposit ("Yankee CDs") which are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the United States.
Special Considerations Regarding Foreign Investments. TempCash's
investments in the obligations of foreign issuers, including foreign
governments, foreign banks and foreign branches of U.S. banks, may subject
TempCash to investment risks that are different in some respects from those of
investments in obligations of U.S. domestic issuers. These risks may include
future unfavorable political and economic developments, possible withholding
taxes on interest income, seizure or nationalization of foreign deposits,
interest limitations, the possible establishment of exchange controls, or other
governmental restrictions which might affect the payment of principal or
interest on the securities held by the Fund. Additionally, foreign branches of
U.S. banks and foreign banks may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and recordkeeping
requirements than those applicable to domestic branches of U.S. banks. TempCash
will acquire U.S. dollar-denominated securities issued by foreign issuers,
including foreign governments, foreign banks and foreign branches of U.S. banks,
only when the Fund's investment adviser believes that the risks associated with
such instruments are minimal.
Guaranteed Investment Contracts. TempCash may invest in guaranteed
investment contracts and similar funding agreements ("GICs"). In connection with
this, TempCash makes cash contributions to a deposit fund of the insurance
company's general account. The insurance company then credits to the Fund on a
monthly basis guaranteed interest which is based on an index (in most cases this
index is expected to be the Salomon Brothers CD Index). The GICs provide that
this guaranteed interest will not be less than a certain
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<PAGE>
minimum rate. The purchase price paid for a GIC becomes part of the general
assets of the insurance company, and the contract is paid from the general
assets of the insurance company. TempCash will only purchase GICs from insurance
companies which, at the time of purchase, are rated "A+" by A.M. Best Company,
have assets of $1 billion or more and meet quality and credit standards
established by the adviser under guidelines approved by the Board of Trustees.
Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies, and an active secondary market in some GICs does
not currently exist.
Investment Company Securities. The Funds may invest in securities
issued by other open-end investment companies that invest in the type of
obligations in which such Fund may invest and that determine their net asset
value per share based upon the amortized cost or penny rounding method.
Investments in the other investment companies will cause a Fund (and,
indirectly, the Fund's shareholders) to bear proportionately the costs incurred
in connection with the other investment companies' operations. Except as
otherwise permitted under the 1940 Act, each Fund currently intends to limit its
investments in other investment companies so that, as determined immediately
after a securities purchase is made: (a) not more that 5% of the value of its
total assets will be invested in the securities of any one investment company;
(b) not more than 10% of its total assets will be invested in the aggregate in
securities of investment companies as a group; and (c) not more than 3% of the
outstanding voting securities of any one investment company will be owned by the
Fund. A Fund, as discussed below in "Investment Limitations" may invest all of
its assets in an open-end investment company or series thereof with
substantially the same investment objectives, restrictions and policies as the
Fund.
Municipal Obligations. New York Money Fund, TempFund and TempCash may
purchase municipal obligations. Municipal Obligations include debt obligations
issued by governmental entities to obtain funds for various public purposes,
including the construction of a wide range of public facilities, the refunding
of outstanding obligations, the payment of general operating expenses and the
extension of loans to public institutions and facilities. Private activity bonds
that are issued by or on behalf of public authorities to finance various
privately-operated facilities are included within the term Municipal Obligations
if the interest paid thereon is (subject to the federal alternative minimum tax)
exempt from regular federal income tax.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax exemption for
interest on Municipal Obligations. For example, under the Tax Reform Act of
1986, enacted in October 1986, interest on certain private activity bonds must
be included in an investor's alternative minimum taxable income, and corporate
investors must include all tax-exempt interest in the calculation of adjusted
current earnings for purposes of determining the corporation's alternative
minimum tax liability. The Company cannot predict what legislation or
regulations, if any, may be proposed in Congress or promulgated by the
Department of Treasury as regards the federal income tax exemption of interest
on such obligations or the impact of such legislative and regulatory activity on
such exemption.
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<PAGE>
The two principal classifications of Municipal Obligations which may
be held by the Funds are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's pledge of
its full faith, credit, and taxing power for the payment of principal and
interest. Revenue securities are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities include private activity bonds which
are not payable from the unrestricted revenues of the Municipal issuer.
Consequently, the credit quality of private activity bonds is usually related to
the credit standing of the corporate user of the facility involved.
The Funds' portfolios may also include "moral obligation" bonds, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation bonds is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
There are, of course, variations in the quality of Municipal
Obligations, both within a particular classification and between
classifications, and the yields on Municipal Obligations depend upon a variety
of factors, including general money market conditions, the financial condition
of the issuer, general conditions of the municipal bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
The ratings of Moody's and S&P represent their opinions as to the quality of
Municipal Obligations. It should be emphasized, however, that ratings are
general and are not absolute standards of quality, and Municipal Obligations
with the same maturity, interest rate and rating may have different yields while
Municipal Obligations of the same maturity and interest rate with different
ratings may have the same yield. Subsequent to its purchase by the Funds, an
issue of Municipal Obligations may cease to be rated or its rating may be
reduced below the minimum rating required for purchase by the Funds. The Adviser
will consider such an event in determining whether the Funds should continue to
hold the obligation.
An issuer's obligations under its Municipal Obligations are subject to
the provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the federal Bankruptcy Code, and laws, if any,
which may be enacted by federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations or upon the ability of municipalities to levy
taxes. The power or ability of an issuer to meet its obligations for the payment
of interest on and principal of its Municipal Obligations may be materially
adversely affected by litigation or other conditions.
Among other types of Municipal Obligations, the Funds may purchase
short-term General Obligation Notes, Tax Anticipation Notes, Bond Anticipation
Notes, Revenue Anticipation Notes, Tax-Exempt Commercial Paper, Construction
Loan Notes and other forms of short-term loans. Such instruments are issued with
a short-term maturity in anticipation of the receipt of tax funds, the proceeds
of bond placements or other revenues. In addition, the Funds may invest in other
types of tax-exempt instruments, including general obligation and private
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<PAGE>
activity bonds, provided they have remaining maturities of 13 months or less at
the time of purchase.
New York Money Fund may hold tax-exempt derivatives which may be in
the form of tender option bonds, participations, beneficial interests in a
trust, partnership interests or other forms. A number of different structures
have been used. For example, interests in long-term fixed-rate Municipal
Obligations, held by a bank as trustee or custodian, are coupled with tender
option, demand and other features when the tax-exempt derivatives are created.
Together, these features entitle the holder of the interest to tender (or put)
the underlying Municipal Obligation to a third party at periodic intervals and
to receive the principal amount thereof. In some cases, Municipal Obligations
are represented by custodial receipts evidencing rights to receive specific
future interest payments, principal payments, or both, on the underlying
municipal securities held by the custodian. Under such arrangements, the holder
of the custodial receipt has the option to tender the underlying municipal
security at its face value to the sponsor (usually a bank or broker dealer or
other financial institution), which is paid periodic fees equal to the
difference between the bond's fixed coupon rate and the rate that would cause
the bond, coupled with the tender option, to trade at par on the date of a rate
adjustment. The Fund may hold tax-exempt derivatives, such as participation
interests and custodial receipts, for Municipal Obligations which give the
holder the right to receive payment of principal subject to the conditions
described above. The Internal Revenue Service has not ruled on whether the
interest received on tax-exempt derivatives in the form of participation
interests or custodial receipts is tax-exempt, and accordingly, purchases of any
such interests or receipts are based on the opinion of counsel to the sponsors
of such derivative securities. Neither the Fund nor the Adviser will
independently review the underlying proceedings related to the creation of any
tax-exempt derivatives or the bases for such opinion.
Before purchasing a tax-exempt derivative for New York Money Fund, the
Adviser is required by the Fund's procedures to conclude that the tax-exempt
security and the supporting short-term obligation involve minimal credit risks
and are Eligible Securities under the Fund's Rule 2a-7 procedures. In evaluating
the creditworthiness of the entity obligated to purchase the tax-exempt
security, the Adviser will review periodically the entity's relevant financial
information. Currently, the Adviser may purchase tax-exempt derivatives for the
Fund so long as after any purchase not more than 25% of the Fund's assets are
invested in such securities.
Restricted and Other Illiquid Securities. The SEC has adopted Rule
144A under the Securities Act of 1933 (the "1933 Act") that allows for a broader
institutional trading market for securities otherwise subject to restriction on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. The Adviser anticipates that the market for
certain restricted securities such as institutional commercial paper will expand
further as a result of this regulation and the development of automated systems
for the trading, clearance and settlement of unregistered securities of domestic
and foreign issuers, such as the PORTAL System sponsored by the National
Association of Securities Dealers.
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<PAGE>
The Adviser will monitor the liquidity of restricted and other
illiquid securities under the supervision of the Board of Trustees. In reaching
liquidity decisions, the Adviser will consider, inter alia, the following
----- ----
factors: (1) the unregistered nature of a Rule 144A security; (2) the frequency
of trades and quotes for the Rule 144A security; (3) the number of dealers
wishing to purchase or sell the Rule 144A security and the number of other
potential purchasers; (4) dealer undertakings to make a market in the Rule 144A
security; (5) the trading markets for the Rule 144A security; and (6) the nature
of the Rule 144A security and the nature of the marketplace trades (e.g., the
----
time needed to dispose of the Rule 144A security, the method of soliciting
offers and the mechanics of the transfer).
Stand-By Commitments. New York Money Fund may acquire stand-by
commitments. Under a stand-by commitment, a dealer would agree to purchase at
New York Money Fund's option specified Municipal Obligations at their amortized
cost value to the Fund plus accrued interest, if any. (Stand-by commitments
acquired by the Fund may also be referred to as "put" options.) Stand-by
commitments may be exercisable by the Fund at any time before the maturity of
the underlying Municipal Obligations and may be sold, transferred, or assigned
only with the instruments involved. The Fund's right to exercise stand-by
commitments will be unconditional and unqualified.
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SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL OBLIGATIONS
Some of the significant financial considerations relating to the New
York Tax Exempt Fund's investments in New York Municipal Securities are
summarized below. This summary information is not intended to be a complete
description and is principally derived from the Annual Information Statement of
the State of New York as supplemented and contained in official statements
relating to issues of New York Municipal Securities that were available prior to
the date of this Statement of Additional Information. The accuracy and
completeness of the information contained in those official statements have not
been independently verified.
State Economy. New York is one of the most populous states in the
-------------
nation and has a relatively high level of personal wealth. The State's economy
is diverse with a comparatively large share of the nation's finance, insurance,
transportation, communications and services employment, and a very small share
of the nation's farming and mining activity. The State's location and its
excellent air transport facilities and natural harbors have made it an important
link in international commerce. Travel and tourism constitute an important part
of the
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economy. Like the rest of the nation, New York has a declining
proportion of its workforce engaged in manufacturing, and an increasing
proportion engaged in service industries.
State per capita personal income has historically been significantly
higher than the national average, although the ratio has varied substantially.
Because New York City (the "City") is a regional employment center for a multi-
state region, State personal income measured on a residence basis understates
the relative importance of the State to the national economy and the size of the
base to which State taxation applies.
There can be no assurance that the State economy will not
experience worse-than-predicted results, with corresponding material and adverse
effects on the State's projections of receipts and disbursements.
State Budget. The State Constitution requires the governor (the
------------
"Governor") to submit to the State legislature (the "Legislature") a balanced
executive budget which contains a complete plan of expenditures for the ensuing
fiscal year and all moneys and revenues estimated to be available therefor,
accompanied by bills containing all proposed appropriations or reappropriations
and any new or modified revenue measures to be enacted in connection with the
executive budget. The entire plan constitutes the proposed State financial plan
for that fiscal year. The Governor is required to submit to the Legislature
quarterly budget updates which include a revised cash-basis state financial
plan, and an explanation of any changes from the previous state financial plan.
State law requires the Governor to propose a balanced budget each
year. In recent years, the State has closed projected budget gaps of $5.0
billion (1995-96), $3.9 billion (1996-97), $2.3 billion (1997-98), and less than
$1 billion (1998-99).
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The State's current fiscal year began on April 1, 1999 and ends on
March 31, 2000. On March 31, 1999, the State adopted the debt service portion of
the State budget for the 1999-2000 fiscal year; four months later, on August 4,
1999, it enacted the remainder of the budget. The Governor approved the budget
as passed by the Legislature. Prior to passing the budget in its entirety for
the current fiscal year, the State enacted appropriations that permitted the
State to continue its operations.
In 1999-2000, General Fund disbursements, including transfer to
support capital projects, debt service and other funds, are estimated at $37.36
billion, an increase of $868 million or 2.38 percent over 1998-99. Projected
spending under the 1999-2000 enacted budget is $215 million above the Governor's
Executive Budget recommendations, including 30-day amendments. This change is
the net result of spending actions that occurred during negotiations on the
Budget. The increase in General Fund spending is comprised of $1.1 billion in
legislative additions to the Executive Budget (primarily in education), offset
by various actions, including re-estimates of required spending based on year-
to-date results and the identification of certain other resources that offset
spending, such as $250 million from commencing the process of privatizing the
Medical Malpractice Insurance Association (MMIA), $250 million from the
retention of the Debt Reduction Reserve Fund within the General Fund and about
$100 million in excess fund balances. The MMIA was established in 1983 to
provide excess liability insurance to doctors and medical providers.
Legislation enacted with the 1999-2000 budget initiates the process of MMIA
privatization and transfers excess fund balances to the State.
The 1999-2000 enacted budget provides for $831 million in new funding
for public schools, the largest year-to-year increase in State history. The
budget also enacts several new tax cuts valued at $375 million when fully phased
in by 2003-04. None of the $1.82 billion cash surplus from 1998-99 is assumed
to support spending in 1999-2000, but instead is reserved to help offset the
costs of previously enacted tax cuts that take effect after 1999-2000.
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<PAGE>
The 1999-2000 Financial Plan projects a closing balance of $2.85
billion in the General Fund. The balance is comprised of the $1.82 billion
surplus from 1998-99 that has been set aside to finance already-enacted tax
cuts, $473 million in the Tax Stabilization Reserve Fund (TSRF), $250 million in
the Debt Reduction Reserve Fund (DRRF), $107 million in the Contingency Reserve
Fund (CRF), and $200 million in the Community Projects Fund (CPF), which
finances legislative initiatives. The State expects to close 1999-2000 with
cash balances in these funds at their highest level ever.
Preliminary analysis by Division of Budget ("DOB") indicates that the
State will have a 2000-01 budget gap of approximately $1.9 billion, or about
$300 million above the 1999-2000 Executive Budget estimate (after adjusting for
the projected costs of collective bargaining). This estimate includes an
assumption for the projected costs of new collective bargaining agreements, $500
million in assumed operating efficiencies, as well as the planned application of
approximately $615 million of the $1.82 billion tax reduction reserve. In
recent years, the State has closed projected budget gaps which DOB estimates at
$5.0 billion (1995-96), $3.9 billion (1996-97), $2.3 billion (1997-98), and less
than $1 billion (1998-99). DOB will formally update its projections of receipts
and disbursements for future years as part of the Governor's 2000-01 Executive
Budget submission. The revised expectations for these years will reflect the
cumulative impact of tax reductions and spending commitments enacted over the
last several years as well as new 2000-01 Executive Budget recommendations.
The General Fund is the principal operating fund of the State and is
used to account for all financial transactions except those required to be
accounted for in another fund. It is the State's largest fund and received
almost all State taxes and other resources not dedicated to particular purposes.
In the State's 1999-2000 fiscal year, the General Fund (exclusive of transfers)
is expected to account for approximately 47.1 percent of all Governmental Funds
disbursements and 69.3 percent of total State Funds disbursements. General Fund
moneys are also transferred to other funds, primarily to support certain capital
projects and debt service payments in other fund types.
Total receipts and transfers from other funds are projected to be
$39.31 billion in 1999-2000, an increase of $2.57 billion over 1998-99. Total
General Fund disbursements and transfers to other funds are projected to be
$37.36 billion, an increase of $868 million over 1998-99. Total General Fund
receipts and transfers in 1999-2000 are now projected to be $39.31 billion, an
increase of $2.57 billion from the $36.74 billion recorded in 1998-99. This
total includes $35.93 billion in tax receipts, $1.36 billion in miscellaneous
receipts, and $2.02 billion in transfers from other funds. The transfer of the
$1.82 billion surplus recorded in 1998-99 to the 1999-2000 fiscal period has the
effect of exaggerating the growth in State receipts from year to year by
depressing reported 1998-99 figures and inflating 1999-2000 projections.
Receipts from user taxes and fees are projected to total $7.35
billion, an increase of $105 million from reported collections in the prior
year. The sales tax component of this category accounts for virtually all of
the 1999-2000 growth. Growth in base sales tax yield, after adjusting for tax
law and other changes, is projected at 5.6
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percent. Modest increases in motor fuel and auto rental tax receipts over 1998-
99 levels are also expected. However, receipts from other user taxes and fees
are estimated to decline by $177 million.
The yield of other excise taxes in this category, particularly the
cigarette and alcoholic beverage taxes, show long-term declining trends.
General Fund declines in 1999-2000 motor vehicle fee receipts, in contrast,
reflect statutory fee reductions and an increased amount of collections
earmarked to the Dedicated Highway and Bridge Trust Fund.
Significant statutory changes in this category during the 1999-2000
legislative session include: delaying until March 1, 2000 the implementation of
the exemption from State sales tax of clothing and footwear priced under $110;
providing week-long sales tax exemptions in September 1999 and January 2000 for
clothing and footwear priced under $500; enactment of a variety of small sales
tax exemptions including certain equipment used in providing telecommunications
service for sale, property and services used in theatrical productions, computer
hardware used to design Internet web sites, and building materials used in
farming; a reduction in the beer tax rate; and an expanded exemption from the
alcoholic beverage tax for small brewers.
Following the pattern of the last two fiscal years, education programs
receive the largest share of new funding contained in the 1999-2000 Financial
Plan. School aid is expected to grow by $831 million or 8.58 percent over 1998-
99 levels (on a State fiscal year basis). Outside of education, the largest
growth in spending is for State Operations ($207 million, including $100 million
reserved for possible collective bargaining costs); Debt Service ($183 million),
and mental hygiene programs, including funding for a cost of living increase for
care providers ($114 million). These increases were offset, in part, by
spending reductions or actions in health and social welfare ($280 million), and
in general State charges ($222 million).
Under the 1999-2000 enacted budget, General Fund spending on school
aid is projected at $10.52 billion on a State fiscal year basis, an increase of
$831 million from the prior year. The budget provides additional funding for
operating aid, building aid, and several other targeted aid programs. It also
funds the balance of aid payable for the 1998-99 school year that is due
primarily in the first quarter of the 1999-2000 fiscal year. For all other
educational programs, disbursements are projected to grow by $78 million to
$2.99 billion.
Many complex political, social and economic forces influence the
State's economy and finances, which may in turn affect the State's Financial
Plan. These forces may affect the State unpredictably from fiscal year to
fiscal year and are influenced by governments, institutions, and organizations
that are not subject to the State's control. The State Financial Plan is also
necessarily based upon forecasts of national and State economic activity.
Economic forecasts have frequently failed to predict accurately the timing and
magnitude of changes in the national and the State economies. The DOB believes
that its projections of receipts and disbursements relating to the current State
Financial Plan, and the assumptions on which they are
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based, are reasonable. The projections assume no changes in federal tax law,
which could substantially alter the current receipts forecast. In addition,
these projections do not include funding for new collective bargaining
agreements after the current contracts expire. Actual results, however, could
differ materially and adversely from their projections, and those projections
may be changed materially and adversely from time to time.
Debt Limits and Outstanding Debt. There are a number of methods by
--------------------------------
which the State of New York may incur debt. Under the State Constitution, the
State may not, with limited exceptions for emergencies, undertake long-term
general obligation borrowing (i.e., borrowing for more than one year) unless the
borrowing is authorized in a specific amount for a single work or purpose by the
Legislature and approved by the voters. There is no limitation on the amount of
long-term general obligation debt that may be so authorized and subsequently
incurred by the State.
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The State may undertake short-term borrowings without voter approval
(i) in anticipation of the receipt of taxes and revenues, by issuing tax and
revenue anticipation notes, and (ii) in anticipation of the receipt of proceeds
from the sale of duly authorized but unissued general obligation bonds, by
issuing bond anticipation notes. The State may also, pursuant to specific
constitutional authorization, directly guarantee certain obligations of the
State of New York's authorities and public benefit corporations ("Authorities").
Payments of debt service on New York State general obligation and New York
State-guaranteed bonds and notes are legally enforceable obligations of the
State of New York.
The State employs additional long-term financing mechanisms, lease-
purchase and contractual-obligation financings, which involve obligations of
public authorities or municipalities that are State-supported but are not
general obligations of the State. Under these financing arrangements, certain
public authorities and municipalities have issued obligations to finance the
construction and rehabilitation of facilities or the acquisition and
rehabilitation of equipment, and expect to meet their debt service requirements
through the receipt of rental or other contractual payments made by the State.
Although these financing arrangements involve a contractual agreement by the
State to make payments to a public authority, municipality or other entity, the
State's obligation to make such payments is generally expressly made subject to
appropriation by the Legislature and the actual availability of money to the
State for making the payments. The State has also entered into a contractual-
obligation financing arrangement with the LGAC to restructure the way the State
makes certain local aid payments.
Sustained growth in the State's economy could contribute to closing
projected budget gaps over the next several years, both in terms of higher-than-
projected tax receipts and in lower-than-expected entitlement spending. The
State assumes that the 2000-01 Financial Plan will achieve $500 million in
savings from initiatives by State agencies to deliver services more efficiently,
workforce management efforts, maximization of federal and non-General Fund
spending offsets, and other actions necessary to help bring projected
disbursements and receipts into balance. The projections do not assume any gap-
closing benefit from the potential settlement of State claims against the
tobacco industry.
Spending from Debt Service Funds are estimated at $3.64 billion in
1999-2000, up $370 million or 11.31 percent from 1998-99. Transportation
purposes, including debt service on bonds issued for State and local highway and
bridge programs financed through the New York State Thruway Authority and
supported by the Dedicated Highway and Bridge Trust Fund, account for $124
million of the year-to-year growth. Debt service for educational purposes,
including State and City University programs financed through the Dormitory
Authority, will increase by $80 million. The remaining growth is for a variety
of programs in mental health and corrections, and for general obligation
financings.
On January 13, 1992, Standard & Poor's Ratings Services ("S&P")
reduced its ratings on the State's general obligation bonds from A to A- and, in
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addition, reduced its ratings on the State's moral obligation, lease purchase,
guaranteed and contractual obligation debt. On August 28, 1997, S&P revised its
ratings on the State's general obligation bonds from A- to A and revised its
ratings on the State's moral obligation, lease purchase, guaranteed and
contractual obligation debt. On March 5, 1999, S&P affirmed its A rating on the
State's outstanding bonds.
On January 6, 1992, Moody's Investors Service, Inc. ("Moody's")
reduced its ratings on outstanding limited-liability State lease purchase and
contractual obligations from A to Baa1. On February 28, 1994, Moody's
reconfirmed its A rating on the State's general obligation long-term
indebtedness. On March 20, 1998, Moody's assigned the highest commercial paper
rating of P-1 to the short-term notes of the State. On March 5, 1999, Moody's
affirmed its A2 rating with a stable outlook to the State's general
obligations.
New York State has never defaulted on any of its general obligation
indebtedness or its obligations under lease-purchase or contractual-obligation
financing arrangements and has never been called upon to make any direct
payments pursuant to its guarantees.
Litigation. Certain litigation pending against New York State or its
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officers or employees could have a substantial or long-term adverse effect on
New York State finances.
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Among the more significant of these cases are those that involve (1) the
validity of agreements and treaties by which various Indian tribes transferred
title to New York State of certain land in central and upstate New York; (2)
certain aspects of New York State's Medicaid policies, including its rates,
regulations and procedures; (3) challenges to the constitutionality of Public
Health Law 2807-d, which imposes a gross receipts tax from certain patient care
services; (4) action seeking enforcement of certain sales and excise taxes and
tobacco products and motor fuel sold to non-Indian consumers on Indian
reservations; (5) a challenge to the Governor's application of his
constitutional line item veto authority; and (6) a challenge to the enactment of
the Clean Water/Clean Air Bond Act of 1996.
Several actions challenging the constitutionality of legislation
enacted during the 1990 legislative session which changed actuarial funding
methods for determining state and local contributions to state employee
retirement systems have been decided against the State. As a result, the
Comptroller developed a plan to restore the State's retirement systems to prior
funding levels. Such funding is expected to exceed prior levels by $116 million
in fiscal 1996-97, $193 million in fiscal 1997-98, peaking at $241 million in
fiscal 1998-99. Beginning in fiscal 2001-02, State contributions required under
the Comptroller's plan are projected to be less than that required under the
prior funding method. As a result of the United States Supreme Court decision
in the case of State of Delaware v. State of New York, on January 21, 1994, the
State entered into a settlement agreement with various parties. Pursuant to all
agreements executed in connection with the action, the State was required to
make aggregate payments of $351.4 million. Annual payments to the various
parties will continue through the State's 2002-03 fiscal year in amounts which
will not exceed $48.4 million in any fiscal year subsequent to the State's 1994-
95 fiscal year. Litigation challenging the constitutionality of the treatment
of certain moneys held in a reserve fund was settled in June 1996 and certain
amounts in a Supplemental Reserve Fund previously credited by the State against
prior State and local pension contributions were paid in 1998.
The legal proceedings noted above involve State finances, State
programs and miscellaneous cure rights, tort, real property and contract claims
in which the State is a defendant and the monetary damages sought are
substantial, generally in excess of $100 million. These proceedings could
affect adversely the financial condition of the State in the current fiscal year
or thereafter. Adverse developments in these proceedings, other proceedings for
which there are unanticipated, unfavorable and material judgments, or the
initiation of new proceedings could affect the ability of the State to maintain
a balanced financial plan. An adverse decision in any of these proceedings
could exceed the amount of the reserve established in the State's financial plan
for the payment of judgments and, therefore, could affect the ability of the
State to maintain a balanced financial plan.
Although other litigation is pending against New York State, except as
described herein, no current litigation involves New York State's authority, as
a matter of law, to contract
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indebtedness, issue its obligations, or pay such indebtedness when it matures,
or affects New York State's power or ability, as a matter of law, to impose or
collect significant amounts of taxes and revenues.
Authorities. The fiscal stability of New York State is related, in
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part, to the fiscal stability of its Authorities, which generally have
responsibility for financing, constructing and operating revenue-producing
public benefit facilities. Authorities are not subject to the constitutional
restrictions on the incurrence of debt which apply to the State itself, and may
issue bonds and notes within the amounts of, and as otherwise restricted by,
their legislative authorization. The State's access to the public credit
markets could be impaired, and the market price of its outstanding debt may be
materially and adversely affected, if any of the Authorities were to default on
their respective obligations, particularly with respect to debt that is State-
supported or State-related.
Authorities are generally supported by revenues generated by the
projects financed or operated, such as fares, user fees on bridges, highway
tolls and rentals for dormitory rooms and housing. In recent years, however,
New York State has provided financial assistance through appropriations, in some
cases of a recurring nature, to certain of the Authorities for operating and
other expenses and, in fulfillment of its commitments on moral obligation
indebtedness or otherwise, for debt service. This operating assistance is
expected to continue to be required in future years. In addition, certain
statutory arrangements provide for State local assistance payments otherwise
payable to localities to be made under certain circumstances to certain
Authorities. The State has no obligation to provide additional assistance to
localities whose local assistance payments have been paid to Authorities under
these arrangements. However, in the event that such local assistance payments
are so diverted, the affected localities could seek additional State funds.
In February 1997, the Job Development Authority ("JDA") issued
approximately $85 million of State-guaranteed bonds to refinance certain of its
outstanding bonds and notes in order to restructure and improve JDA's capital
structure. Due to concerns regarding the economic viability of its programs,
JDA's loan and loan guarantee activities had been suspended since 1995. As a
result of the structural imbalances in JDA's capital structure, and defaults in
its loan portfolio and loan guarantee program incurred between 1991 and 1996,
JDA would have experienced a debt service cash flow shortfall had it not
completed its recent refinancing. JDA anticipates that it will transact
additional refinancings in 1999, 2000 and 2003 to complete its long-term plan of
finance and further alleviate cash flow imbalances which are likely to occur in
future years. JDA recently resumed its lending activities under a revised set
of lending programs and underwriting guidelines.
New York City and Other Localities. The fiscal health of the State
----------------------------------
may also be impacted by the fiscal health of its localities, particularly the
City, which has required and continues to require significant financial
assistance from the State. The City depends on State aid both to enable the
City to balance its budget and to meet its cash requirements. There can be no
assurance that there will not be reductions in State aid to the City from
amounts currently projected or that State budgets will be adopted by the April 1
statutory deadline or that any such reductions or delays will not have adverse
effects on the City's cash flow or expenditures. In
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addition, the Federal budget negotiation process could result in a reduction in
or a delay in the receipt of Federal grants which could have additional adverse
effects on the City's cash flow or revenues.
In 1975, New York City suffered a fiscal crisis that impaired the
borrowing ability of both the City and New York State. In that year the City
lost access to the public credit markets. The City was not able to sell short-
term notes to the public again until 1979. In 1975, S&P suspended its A rating
of City bonds. This suspension remained in effect until March 1981, at which
time the City received an investment grade rating of BBB from S&P.
On July 2, 1985, S&P revised its rating of City bonds upward to BBB+
and on November 19, 1987, to A-. On February 3, 1998 and again on May 27, 1998,
S&P assigned a BBB+ rating to the City's general obligation debt and placed the
ratings on CreditWatch with positive implications. On March 9, 1999, S&P
assigned its A- rating to Series 1999H of New York City general obligation bonds
and affirmed the A- rating on various previously issued New York City
bonds.
Moody's ratings of City bonds were revised in November 1981 from B (in
effect since 1977) to Ba1, in November 1983 to Baa, in December 1985 to Baa1, in
May 1988 to A and again in February 1991 to Baa1. On February 25, 1998, Moody's
upgraded approximately $28 billion of the City's general obligations from Baa1
to A3. On June 9, 1998, Moody's affirmed its A3 rating to the City's general
obligations and stated that its outlook was stable.
On March 8, 1999, Fitch IBCA upgraded New York City's $26 billion
outstanding general obligation bonds from A- to A.
New York City is heavily dependent on New York State and federal
assistance to cover insufficiencies in its revenues. There can be no assurance
that in the future federal and State assistance will enable the City to make up
its budget deficits. To help alleviate the City's financial difficulties, the
Legislature created the Municipal Assistance Corporation ("MAC") in 1975. Since
its creation, MAC has provided, among other things, financing assistance to the
City by refunding maturing City short-term debt and transferring to the City
funds received from sales of MAC bonds and notes. MAC is authorized to issue
bonds and notes payable from certain stock transfer tax revenues, from the
City's portion of the State sales tax derived in the City and, subject to
certain prior claims, from State per capita aid otherwise payable by the State
to the City. Failure by the State to continue the imposition of such taxes, the
reduction of the rate of such taxes to rates less than those in effect on July
2, 1975, failure by the State to pay such aid revenues and the reduction of such
aid revenues below a specified level are included among the events of default in
the resolutions authorizing MAC's long-term debt. The occurrence of an event of
default may result in the acceleration of the maturity of all or a portion of
MAC's debt. MAC bonds and notes constitute general obligations of MAC and do
not constitute an enforceable obligation or debt of either the State or the
City.
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Since 1975, the City's financial condition has been subject to
oversight and review by the New York State Financial Control Board (the "Control
Board") and since 1978 the City's financial statements have been audited by
independent accounting firms. To be eligible for guarantees and assistance, the
City is required during a "control period" to submit annually for Control Board
approval, and when a control period is not in effect for Control Board review, a
financial plan for the next four fiscal years covering the City and certain
agencies showing balanced budgets determined in accordance with GAAP. New York
State also established the Office of the State Deputy Comptroller for New York
City ("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the City satisfied the statutory
requirements for termination of the control period. This means that the Control
Board's powers of approval are suspended, but the Board continues to have
oversight responsibilities.
On June 10, 1997, the City submitted to the Control Board the
Financial Plan (the "1998-2001 Financial Plan") for the 1998 through 2001 fiscal
years, relating to the City, the Board of Education ("BOE") and City University
of New York ("CUNY") and reflected the City's expense and capital budgets for
the 1998 fiscal year, which were adopted on June 6, 1997. The 1998-2001
Financial Plan projected revenues and expenditures for the 1998 fiscal year
balanced in accordance with GAAP. The 1998-99 Financial Plan projected General
Fund receipts (including transfers from other funds) of $36.22 billion, an
increase of $1.02 billion over the estimated 1997-1998 level. Recurring growth
in the State General Fund tax base is projected to be approximately six percent
during 1998-99, after adjusting for tax law and administrative changes. This
growth rate is lower than the rates for 1996-97 or 1997-98, but roughly
equivalent to the rate for 1995-96.
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Although the City has consistently maintained balanced budgets and is
projected to achieve balanced operating results for the current fiscal year,
there can be no assurance that the gap-closing actions proposed in the 1998-2001
Financial Plan can be successfully implemented or that the City will maintain a
balanced budget in future years without additional State aid, revenue increases
or expenditure reductions. Additional tax increases and reductions in essential
City services could adversely affect the City's economic base.
The projections set forth in the 1998-2001 Financial Plan were based
on various assumptions and contingencies which are uncertain and which may not
materialize. Changes in major assumptions could significantly affect the City's
ability to balance its budget as required by State law and to meet its annual
cash flow and financing requirements. Such assumptions and contingencies
include the condition of the regional and local economies, the impact on real
estate tax revenues of the real estate market, wage increases for City employees
consistent with those assumed in the 1998-2001 Financial Plan, employment
growth, the ability to implement proposed reductions in City personnel and other
cost reduction initiatives, the ability of the Health and Hospitals Corporation
and the BOE to take actions to offset reduced revenues, the ability to complete
revenue generating transactions, provision of State and Federal aid and mandate
relief and the impact on City revenues and expenditures of Federal and State
welfare reform and any future legislation affecting Medicare or other
entitlements.
Implementation of the 1998-2001 Financial Plan is also dependent upon
the City's ability to market its securities successfully. The City's financing
program for fiscal years 1998 through 2001 contemplates the issuance of $5.7
billion of general obligation bonds and $5.7 billion of bonds to be issued by
the proposed New York City Transitional Finance Authority (the "Finance
Authority") to finance City capital projects. The Finance Authority, was
created as part of the City's effort to assist in keeping the City's
indebtedness within the forecast level of the constitutional restrictions on the
amount of debt the City is authorized to incur. Despite this additional
financing mechanism, the City currently projects that, if no further action is
taken, it will reach its debt limit in City fiscal year 1999-2000. Indebtedness
subject to the constitutional debt limit includes liability on capital contracts
that are expected to be funded with general obligation bonds, as well as general
obligation bonds. On June 2, 1997, an action was commenced seeking a
declaratory judgment declaring the legislation establishing the Transitional
Finance Authority to be unconstitutional. If such legislation which is
currently on appeal to the Court of Appeals were voided, projected contracts for
the City capital projects would exceed the City's debt limit. Future
developments concerning the City or entities issuing debt for the benefit of the
City, and public discussion of such developments, as well as prevailing market
conditions and securities credit ratings, may affect the ability or cost to sell
securities issued by the City or such entities and may also affect the market
for their outstanding securities.
The City Comptroller and other agencies and public officials have
issued reports and made public statements which, among other things, state that
projected revenues and expenditures may be different from those forecast in the
City's financial plans. It is reasonable to
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expect that such reports and statements will continue to be issued and to
engender public comment.
The City since 1981 has fully satisfied its seasonal financing needs
in the public credit markets, repaying all short-term obligations within their
fiscal year of issuance. Although the City's 1998 fiscal year financial plan
projected $2.4 billion of seasonal financing, the City expected to undertake
only approximately $1.4 billion of seasonal financing. The City issued $2.4
billion of short-term obligations in fiscal year 1997. The delay in the adoption
of the State's budget in certain past fiscal years has required the City to
issue short-term notes in amounts exceeding those expected early in such fiscal
years.
Certain localities, in addition to the City, have experienced
financial problems and have requested and received additional New York State
assistance during the last several State fiscal years. The potential impact on
the State of any future requests by localities for additional assistance is not
included in the State's projections of its receipts and disbursements for the
fiscal year.
Fiscal difficulties experienced by the City of Yonkers ("Yonkers")
resulted in the re-establishment of the Financial Control Board for the City of
Yonkers (the "Yonkers Board") by New York State in 1984. The Yonkers Board is
charged with oversight of the fiscal affairs of Yonkers. Future actions taken by
the State to assist Yonkers could result in increased State expenditures for
extraordinary local assistance.
On June 30, 1998, the City of Yonkers satisfied the statutory
conditions for ending the supervision of its finances by a State-ordered control
board. Pursuant to State law, the control board's powers over City finances
lapsed six months after the satisfaction of these conditions, on December 31,
1998.
Beginning in 1990, the City of Troy experienced a series of budgetary
deficits that resulted in the establishment of a Supervisory Board for the City
of Troy in 1994. The Supervisory Board's powers were increased in 1995, when
Troy MAC was created to help Troy avoid default on certain obligations. The
legislation creating Troy MAC prohibits the city of Troy from seeking federal
bankruptcy protection while Troy MAC bonds are outstanding. Troy MAC has issued
bonds to effect a restructuring of the City of Troy's obligations.
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The 1998-99 budget included $29.4 million in unrestricted aid targeted
to 57 municipalities across the State. Other assistance for municipalities with
special needs totals more than $25.6 million. Twelve upstate cities received
$24.2 million in one-time assistance from a cash flow acceleration of State aid.
Municipalities and school districts have engaged in substantial short-
term and long-term borrowings. State law requires the Comptroller to review and
make recommendations concerning the budgets of those local government units
other than New York City that are authorized by State law to issue debt to
finance deficits during the period that such deficit financing is outstanding.
From time to time, federal expenditure reductions could reduce, or in
some cases eliminate, federal funding of some local programs and accordingly
might impose substantial increased expenditure requirements on affected
localities. If the State, the City or any of the Authorities were to suffer
serious financial difficulties jeopardizing their respective access to the
public credit markets, the marketability of notes and bonds issued by localities
within the State could be adversely affected. Localities also face anticipated
and potential problems resulting from certain pending litigation, judicial
decisions and long-range economic trends. Long-range potential problems of
declining urban population, increasing expenditures and other economic trends
could adversely affect localities and require increasing the State assistance in
the future.
Year 2000 Compliance. The State is currently addressing Year 2000
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("Y2K") data processing compliance issues. Since its inception, the computer
industry has used a two-digit date convention to represent the year. In the
year 2000, the date field will contain "00" and, as a result, many computer
systems and equipment may not be able to process dates properly or may fail
since they may not be able to distinguish between the years 1900 and 2000. The
Year 2000 issue not only affects computer programs, but also the hardware,
software and networks on which they operate. In addition, any system or
equipment that is dependent on an embedded chip, such as telecommunication
equipment and security systems, may also be adversely affected.
In April 1999 the State Comptroller released an audit on the State's
Year 2000 compliance. The audit, which reviewed the State's Y2K compliance
activities through October 1998, found that the State had made progress in
achieving Y2K compliance, but needed to improve its activities in several areas,
including data interchanges and contingency planning.
The Office for Technology (OFT) will continue to monitor
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compliance progress for the States mission-critical and high-priority systems
and is reporting compliance progress to the Governor's Office on a quarterly
basis. The 1999-2000 enacted budget allocates $19 million for priority embedded
systems and $20 million for unanticipated expenses related to bringing
technology into Y2K compliance. OFT reports that as of June 1999, the State had
completed over 98 percent of the overall compliance effort for its mission-
critical systems; 55 of the 56 systems are now Year 2000 compliant. As of June
1999, the State had completed 87 percent of the overall compliance effort on the
high-priority systems; 236 systems are now Year 2000 compliant. The State has
also procured independent validation and verification services from a qualified
vendor to perform an automated review of code that has been fixed and a testing
review process for all mission-critical systems which is scheduled to be
completed by September 1999.
While New York State is taking what it believes to be appropriate
action to address Year 2000 compliance, there can be no guarantee that all of
the State's systems and equipment will be Year 2000 compliant and that there
will not be an adverse impact upon State operations or finances as a result.
Since Year 2000 compliance by outside parties is beyond the State's control to
remediate, the failure of outside parties to achieve Year 2000 compliance could
have an adverse impact on State operations or finances as well.
INVESTMENT LIMITATIONS
The following is a complete list of investment limitations and
policies applicable to each of the Funds or, as indicated below, to specific
Funds, that may not be changed without the affirmative votes of the holders of a
majority of each Fund's outstanding shares (as defined below under
"Miscellaneous"):
1. A Fund may not borrow money or issue senior securities except to
the extent permitted under the 1940 Act.
2. A Fund may not act as an underwriter of 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.
3. A Fund may not make loans. The purchase of debt obligations, the
lending of portfolio securities and the entry into repurchase agreements are not
treated as the making of loans for purposes of this limitation.
4. A Fund may not purchase or sell real estate. The purchase of
securities secured by real estate or interests therein are not considered to be
a purchase of real estate for the purposes of the limitation.
5. A Fund may not purchase or sell commodities or commodities
contracts.
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6. A Fund may, notwithstanding any other fundamental investment
limitations, invest all of its assets in a single open-end investment company or
series thereof with substantially the same investment objectives, restrictions
and policies as the Fund.
7. TempFund and TempCash: A Fund may not purchase the securities of
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any issuer if as a result more than 5% of the value of the Fund's assets would
be invested in the securities of such issuer except that up to 25% of the
value of the Fund's assets may be invested without regard to this 5% limitation.
8. TempFund. TempFund may not purchase any securities which would
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cause 25% or more of the value of its total assets at the time of such
purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that (a)
there is no limitation with respect to investments in U.S. Treasury Bills,
other obligations issued or guaranteed by the federal government, its agencies
and instrumentalities, certificates of deposit, and bankers' acceptances and
(b) neither all finance companies, as a group, nor all utility companies, as a
group, are considered a single industry for purposes of this policy. The Fund
interprets the exception for "certificates of deposit, and bankers'
acceptances" in this fundamental policy to include other similar obligations of
domestic banks.
9. TempCash: TempCash may not purchase any securities which would
--------
cause, at the time of purchase, less than 25% of the value of its total assets
to be invested in obligations of issuers in the financial services industry or
in obligations, such as repurchase agreements, secured by such obligations
(unless the Fund is in a temporary defensive position) or which would cause,
at the time of purchase, 25% or more of the value of its total assets to be
invested in the obligations of issuers in any other industry, provided that
(a) there is no limitation with respect to investments in U.S. Treasury Bills
and other obligations issued or guaranteed by the federal government, its
agencies and instrumentalities and (b) neither all finance companies, as a
group, nor all utility companies, as a group, are considered a single industry
for purposes of this policy.
10. New York Money Fund: The Fund may not purchase any securities
-------------------
which would cause 25% or more of the Fund's total assets at the time of
purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that there
is no limitation with respect to obligations issued or guaranteed by the U.S.
government, any state or territory of the United States, or any of their
agencies, instrumentalities or political subdivisions.
The following is a list of non-fundamental investment limitations
applicable to each of the Funds or, as indicated below, to specific Funds.
Unlike a fundamental limitation, a non-fundamental investment limitation may be
changed without the approval of shareholders.
1. 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.
-29-
<PAGE>
2. TempFund and TempCash and NY Money: The Fund may not invest
----------------------------------
more than 10% of the value of the Fund's total assets in illiquid securities
which may be illiquid due to legal or contractual restrictions on resale or the
absence of readily available market quotations.
3. NY Money: The Fund may not invest less than 80% of its assets in
--------
securities the interest on which is exempt from Federal income taxes, except
during defensive periods or during periods of unusual market conditions.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
In General
Information on how to purchase and redeem each Fund's shares is
included in the applicable Prospectuses. The issuance of shares is recorded on
a Fund's books, and share certificates are not issued unless expressly requested
in writing. Certificates are not issued for fractional shares.
The regulations of the Comptroller of the Currency provide that funds
held in a fiduciary capacity by a national bank approved by the Comptroller to
exercise fiduciary powers must be invested in accordance with the instrument
establishing the fiduciary relationship and local law. The Company believes
that the purchase of shares of the Funds by such national banks acting on behalf
of their fiduciary accounts is not contrary to applicable regulations if
consistent with the particular account and proper under the law governing the
administration of the account.
Prior to effecting a redemption of shares represented by certificates,
PFPC, the Company's transfer agent, must have received such certificates at its
principal office. All such certificates must be endorsed by the redeeming
shareholder or accompanied by a signed stock power, in each instance the
signature must be guaranteed. A signature guarantee may be obtained from a
domestic bank or trust company, broker, dealer, clearing agency or savings
association who are participants in a medallion program recognized by the
Securities Transfer Association. The three recognized medallion programs are
Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion
Signature Program (MSP) and the New York Stock Exchange, Inc. Medallion
Securities Program. Signature guarantees that are not part of these programs
will not be accepted. A Fund may require any additional information reasonably
necessary to evidence that a redemption has been duly authorized.
Under the 1940 Act, a Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the New
York Stock Exchange is closed, other than customary weekend and holiday
closings, or during which trading on said
-30-
<PAGE>
Exchange is restricted, or during which (as determined by the SEC by rule or
regulation) an emergency exists as a result of which disposal or valuation of
portfolio securities is not reasonably practicable, or for such other periods as
the SEC may permit. (A Fund may also suspend or postpone the recordation of the
transfer of its shares upon the occurrence of any of the foregoing conditions.)
In addition, if, in the opinion of the directors of the Company,
ownership of shares has or may become concentrated to an extent which would
cause a Fund to be deemed a personal holding company, a Fund may compel the
redemption of, reject any order for or refuse to give effect on the books of a
Fund to the transfer of a Fund's shares in an effort to prevent that
consequence. A Fund may also redeem shares involuntarily if such redemption
appears appropriate in light of a Fund's responsibilities under the 1940 Act or
otherwise. If the Company's Board of Directors determines that conditions exist
which make payment of redemption proceeds wholly in cash unwise or undesirable,
a Fund may make payment wholly or partly in securities or other property. In
certain instances, a Fund may redeem shares pro rata from each shareholder of
record without payment of monetary consideration.
Any institution purchasing shares on behalf of separate accounts will
be required to hold the shares in a single nominee name (a "Master Account").
Institutions investing in more than one of the portfolios, or classes of shares,
must maintain a separate Master Account for each Fund's class of shares.
Institutions may also arrange with PFPC for certain sub-accounting services
(such as purchase, redemption, and dividend recordkeeping). Sub-accounts may be
established by name or number either when the Master Account is opened or later.
Net Asset Value
Net asset value per share of each share in a particular Fund is
calculated by adding the value of all portfolio securities and other assets
belonging to a Fund, subtracting the Fund's liabilities, and dividing the result
by the number of outstanding shares in the Fund. "Assets belonging to" a Fund
consist of the consideration received upon the issuance of Fund shares together
with all income, earnings, profits and proceeds derived from the investment
thereof, including any proceeds from the sale of such investments, any funds or
payments derived from any reinvestment of such proceeds, and a portion of any
general assets not belonging to a particular portfolio. Assets belonging to a
Fund are charged with the direct liabilities of that Fund and with a share of
the general liabilities of the Company allocated on a daily basis in proportion
to the relative net assets of each of the portfolios. Determinations made in
good faith and in accordance with generally accepted accounting principles by
the Board of Trustees as to the allocation of any assets or liabilities with
respect to a Fund are conclusive. The expenses that are charged to a Fund are
borne equally by each share of the Fund, and payments to Service Organizations
are borne solely by the Dollar Shares, Plus Shares, Administration Shares, Cash
Reserve Shares and Cash Management Shares, respectively.
In computing the net asset value of its shares for purposes of sales
and redemptions, each Fund uses the amortized cost method of valuation pursuant
to Rule 2a-7. Under this method, a Fund values each of its portfolio securities
at cost on the date of purchase and thereafter assumes a constant proportionate
amortization of any discount or premium until
-31-
<PAGE>
maturity of the security. As a result, the value of a portfolio security for
purposes of determining net asset value normally does not change in response to
fluctuating interest rates. While the amortized cost method seems to provide
certainty in portfolio valuation, it may result in valuations of a Fund's
securities which are higher or lower than the market value of such securities.
In connection with its use of amortized cost valuation, each Fund
limits the dollar-weighted average maturity of its portfolio to not more than 90
days and does not purchase any instrument with a remaining maturity of more than
13 months (with certain exceptions). The Board of Trustees has also established
procedures, pursuant to rules promulgated by the SEC, that are intended to
stabilize each Fund's net asset value per share for purposes of sales and
redemptions at $1.00. Such procedures include the determination, at such
intervals as the Board deems appropriate, of the extent, if any, to which a
Fund's net asset value per share calculated by using available market quotations
deviates from $1.00 per share. In the event such deviation exceeds 1/2 of 1%,
the Board will promptly consider what action, if any, should be initiated. If
the Board believes that the amount of any deviation from a Fund's $1.00
amortized cost price per share may result in material dilution or other unfair
results to investors or existing shareholders, it will take such steps as it
considers appropriate to eliminate or reduce to the extent reasonably
practicable any such dilution or unfair results. These steps may include
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten a Fund's average portfolio maturity, redeeming shares in
kind, reducing or withholding dividends, or utilizing a net asset value per
share determined by using available market quotations.
MANAGEMENT OF THE FUNDS
Trustees and Officers
The business and affairs of the Company are managed under the
direction of the Board of Trustees. The Trustees and executive officers, their
addresses, ages, principal occupations during the past five years and other
affiliations are as follows:
<TABLE>
<CAPTION>
Position with Principal Occupation
Name the Company Age During Past 5 Years
- ------------------------------------ ----------- --- -------------------
<S> <C> <C> <C>
G. Nicholas Beckwith, III Trustee 54 President and Chief Executive
Beckwith Machinery Company Officer, Beckwith Machinery
4565 William Penn Highway Company; First Vice Chairman of
Murrysville, PA 15668 the Board of Directors,
University of Pittsburgh Medical
Center -Shadyside/Presbyterian
Hospitals; Second Vice Chairman of
the Board of Directors, University
of Pittsburgh Medical Center
Health System; Board of Overseers,
Brown University
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
Position with Principal Occupation
Name the Company Age During Past 5 Years
- ---- ----------- --- -------------------
<S> <C> <C> <C>
School of Medicine; Board of Trustees,
Shady Side Academy; Trustee, Claude
Worthington Benedum Foundation;
Trustee, Chatham College; Director
or Trustee of two other investment
companies advised by BIMC.
Jerrold B. Harris Trustee 57 President and Chief Executive
VWR Scientific Products Corp. Officer, VWR Scientific Products
1310 Goshen Parkway Corp.; Director or Trustee of two
West Chester, PA 19380 other investment companies advised
by BIMC.
Rodney D. Johnson* Trustee, 58 President, Fairmount Capital
Fairmount Capital Advisors, Inc. President and Advisors, Inc.; Director or
1435 Walnut Street, Suite 300 Treasurer Trustee of five other investment
Philadelphia, PA 19102-3222 companies advised by BIMC.
Joseph P. Platt, Jr. Trustee 52 Partner, Amarna Partners (private
Amarna Partners investment company); formerly, a
One Oxford Centre, Suite 4260 Director and Executive Vice
Pittsburgh, PA 15219 President of Johnson & Higgins.
Robert C. Robb, Jr./1/ Trustee 54 Partner, Lewis, Eckert, Robb &
Lewis, Eckert, Robb & Co. Company (management and financial
425 One Plymouth Meeting consulting firm); Trustee, EQK
Plymouth Meeting, PA 19462 Realty Investors; Director,
Tamaqua Cable Products Company;
Director, Brynwood Partners;
former Director, PNC Bank.
Kenneth L. Urish Trustee 48 Managing Partner, Urish Popeck &
Urish Popeck & Co. Co. LLC (certified public
Three Gateway Center, Suite 2400 accountants and
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
Position with Principal Occupation
Name the Company Age During Past 5 Years
- ---- ----------- --- -------------------
<S> <C> <C> <C>
Pittsburgh, PA 15222 consultants).
Frederick W. Winter Trustee 54 Dean, Joseph M. Katz School of
Dean-Katz Graduate School of Business - University of
Business Pittsburgh; formerly, Dean, School
University of Pittsburgh of Management - State University
372 Mervis Hall of New York at Buffalo
Pittsburgh, PA 15260 (1994-1997); former Director, Rand
Capital (1996-1997); former
Director, Bell Sports (1991-1998);
former Director, Alkon Corporation
(1992-1998).
W. Bruce McConnel, III Secretary 56 Partner of the law firm of
Drinker Biddle & Reath LLP Drinker Biddle & Reath LLP,
One Logan Square Philadelphia, Pennsylvania
18th and Cherry Streets
Philadelphia, PA 19103-6996
</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 the
Company.
1. From 1994 until April 14, 1998, Mr. Robb was a director of PNC Bank.
The following provides certain information about the fees received by
the trustees/directors of the Predecessor Companies and/or the Company and as
directors/trustees of the Fund Complex for the fiscal year ending September 30,
1999.
-34-
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
Pension or Total
Retirement Compensation from
Aggregate Benefits Company and/or
Compensation Accrued as Part Predecessor
From Of Company and/or Estimated Companies and
Company and/or Predecessor Annual Fund Complex/1/
Name of Person, Predecessor Companies Benefits upon Paid to
Position Companies Expenses Retirement Trustees
-------- --------- -------- ---------- --------
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
G. Nicholas Beckwith, III, Trustee $46,000.00 n/a n/a $0
- ---------------------------------------------------------------------------------------------------------
Jerrold B. Harris, Trustee $46,000.00 n/a n/a $0
- ---------------------------------------------------------------------------------------------------------
Rodney D. Johnson*, Trustee, $56,000.00 n/a n/a $0
President and Treasurer
- ---------------------------------------------------------------------------------------------------------
Joseph P. Platt, Jr., Trustee $46,000.00 n/a n/a $0
- ---------------------------------------------------------------------------------------------------------
Robert C. Robb, Jr., /1/ Trustee $46,000.00 n/a n/a $0
- ---------------------------------------------------------------------------------------------------------
Kenneth L. Urish, Trust $46,000.00 n/a n/a $0
- ---------------------------------------------------------------------------------------------------------
Frederick W. Winter, Trustee $46,000.00 n/a n/a $0
=========================================================================================================
</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.
* This trustee is considered by the Company to be an "interested person" of
the Company as defined by the 1940 Act.
Until February 10, 1999, when the Predecessor Companies were
reorganized into the Company, G. Willing Pepper was director/trustee and
Chairman of the Board of Temp, Fed and Cal Muni. William R. Howell and Rudolph
A. Peterson were each directors of Cal Muni. Anthony Santomero was a director of
Cal Muni and NY Muni. Philip E. Coldwell and Robert F. Fortune were
directors/trustees of Temp, Fed and Muni. Thomas A. Melfe and Francis E. Drake
were each directors of NY Muni. Mr. Melfe was also Chairman of the Board of NY
Muni.
Drinker Biddle & Reath LLP, of which Mr. McConnel is a partner,
receives legal fees as counsel to the Predecessor Companies and receives legal
fees as counsel to the Company. No employee of PDI, BIMC, PFPC or PNC Bank
receives any compensation from the Predecessor Companies for acting as an
officer or director of the Predecessor Companies. The directors and officers of
the Predecessor Companies as a group owned less than 1% of the shares of each of
the Predecessor Funds.
-35-
<PAGE>
Investment Adviser
The advisory services provided by BIMC are described in the Funds'
Prospectuses. 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:
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.
-36-
<PAGE>
New York Money Fund:
-------------------
Annual Fee Average Net Assets
---------- ------------------
.20%......................... of the total net assets
PFPC, as described below under "Co-Administrators," and BIMC are co-
administrators of the Fund. They may from time to time reduce their fees to
ensure that the ordinary operating expenses (excluding interest, taxes,
brokerage fees, fees paid to Service Organizations pursuant to Servicing
Agreements, and extraordinary expenses) do not exceed a specified percentage of
each Funds' average net assets.
The following chart provides information with respect to the advisory
fees paid (net of waivers) and advisory fees waived during the fiscal year of
each Fund ended in 1997, 1998 and 1999.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
FUND 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
ADVISORY ADVISORY ADVISORY ADVISORY ADVISORY
FEES FEES FEES FEES FEES FEES
PAID WAIVED PAID WAIVED PAID WAIVED
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TempFund $10,104,652 $2,385,355 $8,126,927 $2,315,278 $6,560,502 $2,576,521
- ------------------------------------------------------------------------------------------------------------------
TempCash 2,818,513 2,151,177 2,388,597 2,096,653 2,176,446 2,041,599
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-37-
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New York
Money 189,703 463,604 202,770 450,544 150,755 420,034
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________
The Funds' fiscal year ends were as follows: TempFund and TempCash -
September 30 and New York Money Fund - July 31.
-38-
<PAGE>
Co-Administrators
BIMC and PFPC serve as the Company's co-administrators. PFPC has its
principal business address at 400 Bellevue Parkway, Wilmington, Delaware 19809
and is an indirect, wholly-owned subsidiary of PNC Bank Corp. and is an
affiliate of BIMC. As the Company's co-administrators, BIMC and PFPC have agreed
to provide the following services: (i) assist generally in supervising the
Funds' operations, including providing a Wilmington, Delaware order-taking
facility with toll-free IN-WATS telephone lines, providing for the preparing,
supervising and mailing of purchase and redemption order confirmations to
shareholders of record, providing and supervising the operation of an automated
data processing system to process purchase and redemption orders, maintaining a
back-up procedure to reconstruct lost purchase and redemption data, providing
information concerning the Funds to their shareholders of record, handling
shareholder problems, providing the services of employees to preserve and
strengthen shareholder relations and monitoring the arrangements pertaining to
the Funds' agreements with Service Organizations; (ii) assure that persons are
available to receive and transmit purchase and redemption orders; (iii)
participate in the periodic updating of the Funds' prospectuses; (iv) assist in
the Funds' Wilmington, Delaware office; (v) accumulate information for and
coordinate the preparation of reports to the Funds' shareholders and the SEC;
(vi) maintain the registration of the Funds' shares for sale under state
securities laws; (vii) review and provide advice with respect to all sales
literature of the Funds; and (viii) assist in the monitoring of regulatory and
legislative developments which may affect the Company, participate in counseling
and assisting the Company in relation to routine regulatory examinations and
investigations, and work with the Company's counsel in connection with
regulatory matters and litigation.
For their administrative services, the co-administrators are entitled
jointly to receive fees, computed daily and payable monthly, as described above
determined in the same manner as BIMC's advisory fee set forth above. For
information regarding the administrators' obligation to reimburse the Funds in
the event their expenses exceed certain prescribed limits, see "Investment
Adviser" above. Any fees waived by the administrators with respect to a
particular fiscal year are not recoverable.
The following chart provides information with respect to the
administration fees (net of waivers) paid and administration fees waived during
the fiscal years for each Fund ended in 1997, 1998 and 1999.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
FUND 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------
ADMINISTRATION ADMINISTRATION ADMINISTRATION ADMINISTRATION ADMINISTRATION ADMINISTRATION
FEES PAID FEES WAIVED FEES PAID FEES WAIVED FEES PAID FEES WAIVED
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TempFund $10,104,652 $2,385,356 $8,126,927 $2,315,278 $6,560,502 $2,576,521
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-39-
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TempCash 2,818,513 2,151,178 2,388,597 2,096,653 2,176,446 2,041,599
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-40-
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New York 189,703 463,605 202,770 450,544 150,755 420,034
Money
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
-41-
<PAGE>
The Funds' fiscal year ends were as follows: TempFund and TempCash -September 30
and New York Money Fund - July 31.
Distributor
Provident Distributors, Inc. ("PDI") acts as the distributor of the
Company's shares. PDI is a Delaware corporation and has its principal business
address at Four Falls Corporate Center, 6th Floor, West Conshohocken,
Pennsylvania 19428. Each Fund's shares are sold on a continuous basis by the
distributor as agent, although it is not obliged to sell any particular amount
of shares. The distributor pays the cost of printing and distributing
prospectuses to persons who are not shareholders of the Funds (excluding
preparation and printing expenses necessary for the continued registration of
the Fund shares). The distributor prepares or reviews, provides advice with
respect to, and files with the federal and state agencies or other organizations
as required by federal, state or other applicable laws and regulations, all
sales literature (advertisements, brochures and shareholder communications) for
each of the Funds and any class or subclass thereof. No compensation is payable
by the Company to the distributor for its distribution services.
Custodian and Transfer Agent
Pursuant to a Custodian Agreement, PFPC Trust Company, an affiliate of
the Adviser, serves as each Fund's custodian, holding a Fund's portfolio
securities, cash and other property. PFPC Trust Company has its principal
offices at 400 Bellevue Parkway, Wilmington, Delaware 19809, with an additional
custodial services location at 200 Stevens Drive, Suite 410, Lester,
Pennsylvania 19113. Under the Custodian Agreement, PFPC Trust Company has agreed
to provide the following services: (i) maintain a separate account or accounts
in the name of a Fund; (ii) hold and disburse portfolio securities on account of
a Fund; (iii) collect and make disbursements of money on behalf of a Fund; (iv)
collect and receive all income and other payments and distributions on account
of a Fund's portfolio securities; and (v) make periodic reports to the Board of
Trustees concerning a Fund's operations.
PFPC Trust Company is also authorized to select one or more banks or
trust companies to serve as sub-custodian or agent on behalf of a Fund, provided
that PFPC Trust Company shall remain responsible for the performance of all of
its duties under the Custodian Agreement and shall hold each Fund harmless from
the acts and omissions of any bank or trust company serving as sub-custodian or
agent chosen by PFPC Trust Company. Currently, PFPC Trust Company has chosen PNC
Bank to serve as agent.
-42-
<PAGE>
Under the Custodian Agreement, each Fund pays PFPC Trust Company an
annual fee equal to $.25 for each $1,000 of each Fund's average daily gross
assets. With respect to TempFund and TempCash, such fee declines as each such
Fund's average daily gross assets increase. In addition, each Fund pays the
custodian certain types of transaction charges, and reimburses the custodian for
out-of-pocket expenses incurred on behalf of the Fund. The fees of PNC Bank are
paid by PFPC Trust Company and not the Funds.
PFPC also serves as transfer agent, registrar and dividend disbursing
agent to each Fund pursuant to a Transfer Agency Agreement. Under the Agreement,
PFPC has agreed to provide the following services: (i) maintain a separate
account or accounts in the name of a Fund; (ii) issue, transfer and redeem Fund
shares; (iii) transmit all communications by a Fund to its shareholders of
record, including reports to shareholders, dividend and distribution notices and
proxy material for its meetings of shareholders; (iv) respond to correspondence
by shareholders, security brokers and others relating to its duties; (v)
maintain shareholder accounts and sub-accounts; (vi) provide installation and
other services in connection with the Funds' computer access program maintained
to facilitate shareholder access to a Fund; (vii) send each shareholder of
record a monthly statement showing the total number of a Fund's shares owned as
of the last business day of the month (as well as the dividends paid during the
current month and year); and (viii) provide each shareholder of record with a
daily transaction report for each day on which a transaction occurs in the
shareholder's Master Account with a Fund. Further, an institution establishing
sub-accounts with PFPC is provided with a daily transaction report for each day
on which a transaction occurs in a sub-account and, as of the last calendar day
of each month, a report which sets forth the share balances for the sub-accounts
at the beginning and end of the month and income paid or reinvested during the
month. Finally, PFPC provides each shareholder of record with copies of all
information relating to dividends and distributions which is required to be
filed with the Internal Revenue Service and other appropriate taxing
authorities.
For transfer agency and dividend disbursing services, each Fund pays
PFPC fees at the annual rate of $12.00 per account and sub-account maintained by
PFPC plus $1.00 for each purchase or redemption transaction by an account (other
than a purchase transaction made in connection with the automatic reinvestment
of dividends). Payments to PFPC for sub-accounting services provided by others
are limited to the amount which PFPC pays to others for such services. In
addition, each Fund reimburses PNC Bank and PFPC for out-of-pocket expenses
related to such services.
-43-
<PAGE>
Service Organizations
The Funds may enter into agreements with institutional investors
("Service Organizations") requiring them to provide certain services to their
customers who beneficially own shares of the Funds. Each of the Funds may enter
into agreements with Service Organizations requiring them to provide services to
their customers who beneficially own Dollar Shares in consideration of .25% (on
an annualized basis) of the average daily net asset value of the Dollar Shares
held by the Service Organizations for the benefit of their customers. Such
services provided by a Service Organization may include (i) answering
shareholder inquiries regarding account status and history, the manner in which
purchases, exchanges and redemption of shares may be effected and certain other
matters pertaining to the shareholders' investments; (ii) assisting shareholders
in designating and changing dividend options, account designations and
addresses; (iii) aggregating and processing purchase and redemption requests
from shareholders and placing net purchase and redemption orders with the
distributor; (iv) providing shareholders with a service that invests the assets
of their accounts in shares pursuant to specific or pre-authorized instructions;
(v) processing dividend payments from the particular Series on behalf of
shareholders; (vi) providing information periodically to shareholders showing
their positions in Dollar Shares; (vii) arranging for bank wires; (viii)
responding to shareholder inquiries relating to a particular Series or the
services performed by the Service Organization; (ix) providing sub-accounting
with respect to a Series of shares beneficially owned by shareholders or the
information necessary for sub-accounting; (x) if required by law, forwarding
shareholder communications from the particular Series (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to shareholders; and (xi) other similar services
to the extent permitted under applicable statutes, rules or regulations.
TempFund and NY Money Fund may enter into agreements with Service
Organizations requiring them to provide certain sales and support services to
their shareholders who beneficially own Plus Shares in consideration of .25% (on
an annualized basis) of the average daily net asset value of the Plus Shares
held by the Service Organization for the benefit of shareholders. Sales and
support
-44-
<PAGE>
services provided by the Service Organizations may include: (a) reasonable
assistance in connection with the distribution of Plus Shares to shareholders as
requested from time to time by the distributor, which assistance may include
forwarding sales literature and advertising provided by the distributor for
shareholders; and (b) the following support services to shareholders who may
from time to time acquire and beneficially own Plus Shares: (i) establishing and
maintaining accounts and records relating to shareholders that invest in Plus
Shares; (ii) processing dividend and distribution payments from a particular
series on behalf of shareholders; (iii) providing information periodically to
shareholders showing their positions in Plus Shares; (iv) arranging for bank
wires; (v) responding to shareholder inquiries relating to the services
performed by the Service Organization; (vi) responding to routine inquiries from
shareholders concerning their investments in Plus Shares; (vii) providing
subaccounting with respect to Plus Shares beneficially owned by shareholders or
the information to the Company necessary for subaccounting; (viii) if required
by law, forwarding shareholder communications from a particular series (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to shareholders; (ix) assisting in
processing purchase, exchange and redemption requests from shareholders and in
placing such orders with service contractors; (x) assisting shareholders in
changing dividend options, account designations and addresses; (xi) providing
shareholders with a service that invests the assets of their accounts in Plus
Shares pursuant to specific or pre-authorized instructions; and (xii) providing
such other similar services as the distributor may reasonably request to the
extent the Service Organization is permitted to do so under applicable statutes,
rules and regulations.
TempFund may also enter into agreements with Service Organizations
requiring them to provide certain services to their shareholders who
beneficially own Administration Shares, in consideration of .10% (on an
annualized basis) of the average daily net asset value of the Administration
Shares held by the Service Organization for the benefit of their shareholders.
Services provided by the Service Organizations may include: (i) answering
shareholder inquiries regarding account status and history, the manner in which
purchases, exchanges and redemption of shares may be effected and certain other
matters pertaining to the shareholders' investments; and (ii) assisting
shareholders in designating and changing dividend options, account designations
and addresses.
TempFund may also enter into agreements with Service Organizations
requiring them to provide certain services to their shareholders who
beneficially own Cash Reserve Shares, in consideration of a total of .40% (on an
annualized basis) of the average net asset value of the Cash Reserve Shares held
by the Service Organization for the benefit of their shareholders. An initial
.10% (on an annual basis) of the average daily net asset value of such Shares
will be paid to Service Organizations for providing administrative services
which may include the services provided for Administrative Shares as described
above. Another .25% (on an annual basis) of the average daily net asset value of
such Shares will be paid to Service Organizations for providing support services
which may include the services provided for Dollar Shares as described in sub-
sections (iii) through (xi) above. Another .5% (on an annual basis) of the
average daily net asset value of such Shares will be paid to Service
Organizations for providing sweep services ("Sweep Services") which may include:
(i) providing the necessary computer hardware and software which links the
Service Organization's DDA system to an account management system; (ii)
providing
-45-
<PAGE>
software that aggregates the shareholders orders and establishes an
order to purchase or redeem shares of a Series based on established target
levels for the shareholder's demand deposit accounts; (iii) providing periodic
statements showing a shareholder's account balance and, to the extent
practicable, integrating such information with other shareholder transactions
otherwise effected through or with the Service Organization; and (iv) furnishing
(either separately or an integrated basis with other reports sent to a
shareholder by a Service Organization) monthly and year-end statements and
confirmations of purchases, exchanges and redemptions.
TempFund may also enter into agreements with Service Organizations
requiring them to provide support services to their shareholders who
beneficially own Cash Management Shares, in consideration of a total of .50% (on
an annualized basis) of the average net asset value of the Cash Management
Shares held by the Service Organization for the benefit of their shareholders.
An initial .10% (on an annual basis) of the average daily net asset value of
such Shares will be paid to Service Organizations for providing administrative
services which may include the services provided for Administration Shares as
described above. Another .25% (on an annual basis) of the average daily net
asset value of such Shares will be paid to Service Organizations for providing
services which may include the services provided for Dollar Shares as described
in sub-sections (iii) through (xi) above. Another .5% (on an annual basis) of
the average daily net asset value of such Shares will be paid to Service
Organizations for providing Sweep Services as described above. Another .10% (on
an annual basis) of the average daily net asset value of such Shares will be
paid to Service Organizations for providing the sweep marketing services which
may include (i): marketing and activities, including direct mail promotions that
promote the Sweep Service, (ii) expenditures for other similar marketing support
such as for telephone facilities and in-house telemarketing, (iii) distribution
of literature promoting Sweep Services, (iv) travel, equipment, printing,
delivery and mailing costs overhead and other office expenses attributable to
the marketing of the Sweep Services.
The Company's agreements with Service Organizations are governed by
Plans (called "Shareholder Services Plan" for the Dollar, Administration, Cash
Reserves and Cash Management Shares and "Distribution and Services Plan" for the
Plus shares), which have been adopted by the Company's Board of Trustees
pursuant to applicable rules and regulations of the SEC. Pursuant to the Plans,
the Board of Trustees reviews, at least quarterly, a written report of the
amounts expended under the Company's agreements with Service Organizations and
the purposes for which the expenditures were made. In addition, the Company's
arrangements with Service Organizations must be approved annually by a majority
of the Company's trustees, including a majority of the trustees who are not
"interested persons" of the Company as defined in the 1940 Act and have no
direct or indirect financial interest in such arrangements.
The Board of Trustees have approved the Company's arrangements with
Service Organizations based on information provided to the Board that there is a
reasonable likelihood that the arrangements will benefit the Class of Shares of
the Fund charged with such fees and its shareholders. Any material amendment to
the Company's arrangements with Service Organizations must be made in a manner
approved by a majority of the Company's Board of Trustees (including a majority
of the Non-Interested Trustees), and any amendment to increase materially the
costs under the Distribution and Services Plan adopted by the Board with respect
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<PAGE>
to Plus shares must be approved by the holders of a majority of the outstanding
Plus shares. (It should be noted that while the annual service fee with respect
to Plus shares is currently set at .25%, the Plan adopted by the Board of
Trustees with respect to New York Money Fund permits the Board to increase this
fee to .40% without shareholder approval.) So long as the Company's
arrangements with Service Organizations are in effect, the selection and
nomination of the members of the Company's Board of Trustees who are not
"interested persons" (as defined in the 1940 Act) of the Company will be
committed to the discretion of such non-interested directors.
The following chart provides information with respect to the fees paid
to Service Organizations , including the amounts paid to affiliates of BIMC
during the fiscal year for each Fund ended in 1997, 1998 and 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
FUND 1999 1998 1997
- --------------------------------------------------------------------------------------------------
Total Fees/Fees to Total Fees/Fees to Total Fees/Fees to
Affiliates Affiliates Affiliates
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TempFund Administration $0/0 $0/0 $0/0
- --------------------------------------------------------------------------------------------------
TempFund Dollar $998,538/99,384 $772,304/$104,448 $ 863,301/$617,378
- --------------------------------------------------------------------------------------------------
TempFund Plus $0/0 $0/0 $0/0
- --------------------------------------------------------------------------------------------------
TempFund Cash Reserve $0/0 $0/0 $0/0
- --------------------------------------------------------------------------------------------------
TempFund Cash Management 12,627/0 0/0 0/0
- --------------------------------------------------------------------------------------------------
TempCash Dollar 1,059,560/29,363 1,088,006/27,566 1,214,833/380,851
- --------------------------------------------------------------------------------------------------
</TABLE>
-47-
<PAGE>
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
New York Money Dollar 0/0 504/0 8,458/8,408
- --------------------------------------------------------------------------------------------------
New York Money Plus 0/0 0/0 0/0
- --------------------------------------------------------------------------------------------------
</TABLE>
________________
The Funds' fiscal year ends were as follows: TempFund and TempCash -
September 30 and New York Money Fund - July 31.
Expenses
A Fund's expenses include taxes, interest, fees and salaries of the
Company's Trustees and officers who are not Trustees, officers or employees of
the Company's service contractors, SEC fees, state securities registration fees,
costs of preparing and printing prospectuses for regulatory purposes and for
distribution to shareholders, advisory and administration fees, charges of the
custodian and of the transfer and dividend disbursing agent, Service
Organization fees, costs of the Funds' computer access program, certain
insurance
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<PAGE>
premiums, outside auditing and legal expenses, costs of shareholder
reports and shareholder meetings and any extraordinary expenses. A Fund also
pays for brokerage fees and commissions (if any) in connection with the purchase
and sale of portfolio securities.
ADDITIONAL INFORMATION CONCERNING TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, and to distribute out its income to
shareholders each year, so that each Fund itself will be relieved of federal
income and excise taxes. If a Fund were to fail to so qualify: (1) the Fund
would be taxed at regular corporate rates without any deduction for
distributions to shareholders; and (2) shareholders would be taxed as if they
received ordinary dividends, although corporate shareholders could be eligible
for the dividends received deduction.
A 4% nondeductible excise tax is imposed on regulated investment
companies that fail currently to distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and any
capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
Each Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends or 31% of gross proceeds paid to a
shareholder who has failed to provide a correct tax identification number in the
manner required, is subject to withholding by the Internal Revenue Service for
failure properly to include on his return payments of taxable interest or
dividends, or has failed to certify to the Fund that he is not subject to backup
withholding when required to do so or that it is an "exempt recipient."
The following is applicable to New York Money Fund only:
As described above and in the Fund's Prospectus, the Fund is designed
to provide institutions with current tax-exempt interest income. The Fund is
not intended to constitute a balanced investment program nor is it designed for
investors seeking capital appreciation or maximum tax-exempt income irrespective
of fluctuations in principal. Shares of the Fund would not be suitable for tax-
exempt institutions and may not be suitable for retirement plans qualified under
Section 401 of the Code, H.R. 10 plans and individual retirement accounts
because such plans and accounts are generally tax-exempt and, therefore, not
only would not gain any additional benefit from the Fund's dividends being tax-
exempt but also such dividends would be taxable when distributed to the
beneficiary. In addition, the Fund may not be an appropriate investment for
entities which are "substantial users" of facilities financed by private
activity bonds or "related persons" thereof. "Substantial user" is defined
under U.S. Treasury Regulations to include a non-exempt person who regularly
uses a part of such facilities in his or her trade or business and whose gross
revenues derived with respect to the
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<PAGE>
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, or who occupies more than 5%
of the usable area of such facilities or for whom such facilities or a part
thereof were specifically constructed, reconstructed or acquired. "Related
persons" include certain related natural persons, affiliated corporations, a
partnership and its partners, and an S Corporation and its shareholders.
In order for the Fund to pay exempt-interest dividends for any taxable
year, at least 50% of the aggregate value of the Fund's assets must consist of
exempt-interest obligations.
DIVIDENDS
General
Each Fund's net investment income for dividend purposes consists of
(i) interest accrued and original issue discount earned on that Fund's assets,
(ii) plus the amortization of market discount and minus the amortization of
market premium on such assets and (iii) less accrued expenses directly
attributable to that Fund and the general expenses (e.g. legal, accounting and
Trustees' fees) of the Company prorated to such Fund on the basis of its
relative net assets. Any realized short-term capital gains may also be
distributed as dividends to Fund shareholders. In addition, a Fund's Dollar
Shares and/or Plus Shares bear exclusively the expense of fees paid to Service
Organizations. (See "Management of the Funds -- Service Organizations.")
As stated, the Company uses its best efforts to maintain the net asset
value per share of each Fund at $1.00. As a result of a significant expense or
realized or unrealized loss incurred by a Fund, it is possible that the Fund's
net asset value per share may fall below $1.00.
ADDITIONAL YIELD AND OTHER PERFORMANCE INFORMATION
The "yields" and "effective yields" are calculated separately for each
Fund. The seven-day yield for each class or sub-class of shares in a Fund is
calculated by determining the net change in the value of a hypothetical pre-
existing account in a Fund having a balance of one share of the class involved
at the beginning of the period, dividing the net change by the value of the
account at the beginning of the period to obtain the base period return, and
multiplying the base period return by 365/7. The net change in the value of an
account in a Fund includes the value of additional shares purchased with
dividends from the original share and dividends declared on the original share
and any such additional shares, net of all fees charged to all shareholder
accounts in proportion to the length of the base period and the Fund's average
account size, but does not include gains and losses or unrealized appreciation
and depreciation. In addition, the effective annualized yield may be computed on
a compounded basis (calculated as described above) by adding 1 to the base
period return, raising the sum to a power equal to 365/7, and subtracting 1 from
the result. Similarly, based on the calculations described above, 30-day (or
one-month) yields and effective yields may also be calculated.
-50-
<PAGE>
The following chart provides information with respect to the yields as
of each Fund's most recent fiscal year or period.*
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
7 DAY 30 DAY
- --------------------------------------------------------------------------------------------------------------
YIELD COMPOUNDED YIELD COMPOUNDED
EFFECTIVE EFFECTIVE
YIELD YIELD
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TempFund 5.23 5.37 5.18 5.31
- --------------------------------------------------------------------------------------------------------------
TempFund Dollar 4.98 5.10 4.93 5.05
- --------------------------------------------------------------------------------------------------------------
TempFund Cash Management 4.73 4.84 4.68 4.79
- --------------------------------------------------------------------------------------------------------------
TempCash 5.14 5.27 5.09 5.22
- --------------------------------------------------------------------------------------------------------------
</TABLE>
-51-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
TempCash Dollar 4.89 5.01 4.84 4.96
- --------------------------------------------------------------------------------------------------
</TABLE>
-52-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
New York Money Fund 2.77 2.81 2.67 2.71
- -------------------------------------------------------------------------------------------------
</TABLE>
The Funds' fiscal year ends were as follows: TempFund and TempCash -
September 30 and New York Money Fund - July 31.
* No information is provided regarding the yields with respect to the
Administration, Plus and Cash Reserves Classes of TempFund and Dollar and
Plus Classes of New York Money Fund because such Classes had no Shares
outstanding on September 30, 1999. The information provided regarding the
yields with respect to Cash Management Shares of TempFund, which commenced
operations on June 14, 1999, has been annualized.
From time to time, in reports to shareholders or otherwise, a Fund's
yield or total return may be quoted and compared to that of other money market
funds or accounts with similar investment objectives, to stock or other relevant
indices and to other reports or analyses that relate to yields, interest rates,
total return, market performance, etc. For example, the yield of the Fund may
be compared to the IBC/Donoghue's Money Fund Average, which is an average
----- ---- -------
compiled by IBC/Donoghue's MONEY FUND REPORT(R) of Holliston, MA 01746, a
widely recognized independent publication that monitors the performance of money
market funds, or to the average yields reported by the Bank Rate Monitor from
---- ---- -------
money market deposit accounts offered by the 50 leading banks and thrift
institutions in the top five standard metropolitan statistical areas.
Yield and return will fluctuate, and any quotation of yield or return
should not be considered as representative of the future performance of the
Fund. Since yields and returns fluctuate, performance data cannot necessarily
be used to compare an investment in a Fund's shares with bank deposits, savings
accounts, and similar investment alternatives which often provide an agreed or
guaranteed fixed yield for a stated period of time. Shareholders should
remember that performance and yield are generally functions of the kind and
quality of the investments held in a fund, portfolio maturity, operating
expenses and market conditions. Any fees charged by banks with respect to
customer accounts in investing in shares of a Fund will not be included in yield
or return calculations; such fees, if charged, would reduce the actual yield or
return from that quoted.
The Funds may also from time to time include in advertisements, sales
literature, communications to shareholders and other materials ("Materials"),
discussions or illustrations of the effects of compounding. "Compounding"
refers to the fact that, if dividends or other distributions on an investment
are reinvested by being paid in additional Portfolio shares, any
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<PAGE>
future income or capital appreciation of a Fund would increase the value, not
only of the original investment, but also of the additional shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid in
cash.
In addition, the Funds may also include in Materials discussions
and/or illustrations of the potential investment goals of a prospective investor
(including materials that describe general principles of investing,
questionnaires designed to help create a personal financial profile, worksheets
used to project savings needs based on certain assumptions and action plans
offering investment alternatives), investment management strategies, techniques,
policies or investment suitability of a Fund, economic and political conditions,
the relationship between sectors of the economy and the economy as a whole,
various securities markets, the effects of inflation and historical performance
of various asset classes, including but not limited to, stocks, bonds and
Treasury securities, and hypothetical investment returns based on certain
assumptions. From time to time, Materials may summarize the substance of
information contained in shareholder reports (including the investment
composition of a Fund), as well as the views of the advisers as to current
market, economic, trade and interest rate trends, legislative, regulatory and
monetary developments, investment strategies and related matters believed to be
of relevance to a Fund. In addition, selected indices may be used to illustrate
historical performance of select asset classes. The Funds may also include in
Materials charts, graphs or drawings which compare the investment objective,
return potential, relative stability and/or growth possibilities of the Funds
and/or other mutual funds, or illustrate the potential risks and rewards of
investment in various investment vehicles, including but not limited to, stocks,
bonds, Treasury securities and shares of a Fund and/or other mutual funds.
Materials may include a discussion of certain attributes or benefits to be
derived by an investment in a Fund and/or other mutual funds (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer, automatic accounting rebalancing and the advantages and
disadvantages of investing in tax-deferred and taxable investments), shareholder
profiles and hypothetical investor scenarios, timely information on financial
management, tax and retirement planning and investment alternatives to
certificates of deposit and other financial instruments, designations assigned a
Fund by various rating or ranking organizations, and Fund identifiers (such as
CUSIP numbers or NASDAQ symbols). Such Materials may include symbols, headlines
or other material which highlight or summarize the information discussed in more
detail therein.
Materials may include lists of representative clients of the Funds'
investment adviser, may include discussions of other products or services, may
contain information regarding average weighted maturity or other maturity
characteristics, and may contain information regarding the background,
expertise, etc. of the investment adviser or of a Fund's portfolio manager.
From time to time in advertisements, sales literature and
communications to shareholders, the Funds may compare their total returns to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, such
data is found in IBC/Donoghue's Money Fund Report and reports prepared by Lipper
Analytical Services, Inc. Total return is the change in value of an investment
in a Fund over a particular period, assuming that all distributions have been
reinvested. Such rankings
-54-
<PAGE>
represent the Funds' past performance and should not be considered as
representative of future results.
The following information has been provided by the Funds' distributor:
In managing each Fund's portfolio, the investment adviser utilizes a "pure and
simple" approach, which may include disciplined research, stringent credit
standards and careful management of maturities.
ADDITIONAL DESCRIPTION CONCERNING SHARES
The Company was organized as a Delaware business trust on October 21,
1998. The Company's Declaration of Trust authorizes the Board of Trustees to
issue an unlimited number of full and fractional shares of beneficial interest
in the Company and to classify or reclassify any unissued shares into one or
more series of shares. Pursuant to such authority, the Board of Trustees has
authorized the issuance of ten series of shares designated as TempFund,
TempCash, FedFund, T-Fund, Federal Trust Fund, Treasury Trust Fund, MuniFund,
MuniCash, California Money Fund and New York Money Fund. The Declaration of
Trust further authorizes the trustees to classify or reclassify any series of
shares into one or more classes. Currently, the classes authorized are Dollar,
Plus, Administration, Cash Reserves and Cash Management.
The Company does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. Upon
the written request of shareholders owning at least 25% of the Company's shares,
the Company will call for a meeting of shareholders to consider the removal of
one or more Trustees and other certain matters. To the extent required by law,
the Company will assist in shareholder communication in such matters.
Holders of shares in a Fund in the Company will vote in the aggregate
and not by class or sub-class on all matters, except as described above, and
except that each Fund's Dollar, Plus, Administration, Cash Reserves and Cash
Management Shares, as described in "Service Organizations" above, shall be
entitled to vote on matters submitted to a vote of shareholders pertaining to
that Fund's arrangements with its Service Organizations. Further, shareholders
of each of the Company's portfolios will vote in the aggregate and not by
portfolio except as otherwise required by law or when the Board of Trustees
determines that the matter to be voted upon affects only the interests of the
shareholders of a particular portfolio. Rule 18f-2 under the 1940 Act provides
that any matter required to be submitted by the provisions of such Act or
applicable state law, or otherwise, to the holders of the outstanding securities
of an investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each portfolio affected by the matter. Rule 18f-2 further
provides that a portfolio shall be deemed to be affected by a matter unless it
is clear that the interests of each portfolio in the matter are identical or
that the matter does not affect any interest of the portfolio. Under the Rule,
the approval of an investment advisory agreement or any change in a fundamental
investment policy would be effectively acted upon with respect to a portfolio
only if approved by the holders of a majority of the outstanding voting
securities of such portfolio. However, the Rule also provides that the
ratification of the selection of independent accountants, the approval of
principal underwriting contracts, and the
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<PAGE>
election of Trustees are not subject to the separate voting requirements and may
be effectively acted upon by shareholders of the investment company voting
without regard to portfolio.
Notwithstanding any provision of Delaware law requiring a greater vote
of shares of the Company's Common Stock (or of any class voting as a class) in
connection with any corporate action, unless otherwise provided by law (for
example by Rule 18f-2 discussed above) or by the Company's Charter, the Company
may take or authorize such action upon the favorable vote of the holders of more
than 50% of all of the outstanding shares of Common Stock voting without regard
to class (or portfolio).
COUNSEL
Drinker Biddle & Reath LLP, One Logan Square, 18/th/ and Cherry
Streets, Philadelphia, Pennsylvania 19103, of which W. Bruce McConnel, III,
Secretary of the Company, is a partner, has passed upon the legality of the
shares offered hereby.
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53/rd/ Street,
New York, New York 10022, acts as special New York Counsel for the Company and
has reviewed the portions of this Statement of Additional Information and the
New York Money Fund's Prospectus concerning New York taxes and the description
of special considerations relating to New York Municipal Obligations.
AUDITOR
PricewaterhouseCoopers LLP, with offices at 2400 Eleven Penn Center,
Philadelphia, Pennsylvania 19103 has been selected as the independent
accountants of each Fund for the fiscal year ended October 31, 1999.
FINANCIAL STATEMENTS
The Annual Reports to Shareholders of TempFund and TempCash for their
fiscal year ended September 30, 1999 and the Annual Report to Shareholders of
New York Money Fund for the fiscal year ended July 31, 1999 have been filed with
the Securities and Exchange Commission. The financial statements in such Annual
Reports ("the Financial Statements") are incorporated by reference into this
Statement of Additional Information. The Financial Statements for Temp and NY
Muni have been audited by such Companies independent accountant,
PricewaterhouseCoopers LLP, whose reports thereon also appear in the applicable
Annual Reports and are incorporated herein by reference.
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<PAGE>
MISCELLANEOUS
Shareholder Vote
As used in this Statement of Additional Information, a "majority of
the outstanding shares" of a Fund or of a particular portfolio means, with
respect to the approval of an investment advisory agreement, a distribution plan
or a change in a fundamental investment policy, the lesser of (1) 67% of that
Fund's shares (irrespective of class or subclass) or of the portfolio
represented at a meeting at which the holders of more than 50% of the
outstanding shares of that Fund or portfolio are present in person or by proxy,
or (2) more than 50% of the outstanding shares of a Fund (irrespective of class
or subclass) or of the portfolio.
Securities Holdings of Brokers
As of November 18, 1999, the value of TempFund's aggregate holdings of
the securities of each of its regular brokers or dealers or their parents was:
Morgan Stanley & Co., $840,000,000; Goldman Sachs & Co., $660,000,000 and
Merrill Lynch; $550,000,000.
As of November 18, 1999, the value of TempCash's aggregate holdings of
the securities of each of its regular brokers or dealers or their parent was:
Morgan Stanley & Co., $100,000,000 and Goldman Sachs & Co., $100,000,000.
Certain Record Holders
As of November 5, 1999, there were no institutional investors that
owned of record 5% or more of the outstanding shares of TempFund Money
Shares.
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<PAGE>
As of November 5, 1999, the name, address and percentage of ownership
of each institutional investor that owned of record 5% or more of the
outstanding shares of TempFund Dollar Shares were as follows: Sanbarco, Santa
Barbara Bank & Trust, Attn: Mutual Funds, 820 State Street, Santa Barbara, CA
93101 (5.71%); For the Exclusive Benefit of Neuberger Berman LLC Customers,
Attn: Steve Gallaro/OFS Control, 55 Water Street, 27th Floor, New York, NY 10041
(6.28%); FBO Managed Omnibus, First American Trust Company, 421 North Main
Street, Santa Ana, CA 92701 (8.46%). The Company does not know whether such
persons also beneficially own such shares.
As of November 5, 1999, the name, address and percentage of ownership
of each institutional investor that owned of record 5% or more of the
outstanding shares of TempFund Cash Management Shares were as follows: Broadway
National Bank, Sweep Omnibus Account, Attn: Eleanor Thomas, P.O. Box 17001, San
Antonio, TX 78217 (10.60%); C/O Vermont National Bank, Vernat Company, P.O. Box
669, Rutland, VT 05702 (6.67%); PNC Advisors (Connecticut), Attn: Susan
Skalandunas, 125 East Putnam Avenue, Greenwich, CT 06830 (6.81%). The Company
does not know whether such persons also beneficially own such shares.
As of November 5, 1999, the name, address and percentage of ownership
of each institutional investor that owned of record 5% or more of the
outstanding shares of TempCash Money Shares were as follows: Saxon & Company,
PNC Bank, Attn: Lawrence Lockwood, ACI Dept./Reorg F3-076-02-2 200 Stevens
Drive, Suite 260A, Lester, PA 19113 (17.63%); Obie 7 Co., Chase Bank of Texas,
Attn: STIF Unit, Mail Code 18HCB340, P.O. Box 2558, Houston, TX 77252 (6.73%);
USAA Brokerage Services, Attn: Karl Borgerding, BSB/Brokerage OPS/A03S, 9800
Fredericksburg Road, San Antonio, TX 78230 (12.32%); Portfolio Ventures Inc.,
Attn: Susan T. Dubb, 1105 N. Market Street, Ste. 1412, Wilmington, DE 19801
(5.06). The Company does not know whether such persons also beneficially own
such shares.
As of November 5, 1999, the name, address and percentage of ownership
of each institutional investor that owned of record 5% or more of the
outstanding shares of TempCash Dollar Shares were as follows: Cash Balance
Sweeps, BHC Securities Inc., Attn: Jeanmarie Beukers, 2005 Market Street, One
Commerce Square - 11th Fl., Philadelphia, PA 19103 (33.46%); Citibank NA, IC&D-
Cash Management, Attn: Denise Stanley, 3800 Citibank Center Tampa, Tampa, FL
33610 (17.31%); Norwest Investment Services, Inc., Attn: Pamela Siner, 608 2nd,
Avenue South - 8th Fl., Minneapolis, MN 55479 (12.75%); Cash Balance Sweeps,
Hilliard Lyons, Attn: Barbara O'Neal, 501 Hilliard Lyons Center, Louisville, KY
40202 (18.67%). The Company does not know whether such persons also beneficially
own such shares.
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<PAGE>
As of November 5, 1999, the name, address and percentage of ownership
of each institutional investor that owned of record 5% or more of the
outstanding shares of New York Money Fund were as follows: Trulin & Co., Chase
Manhattan Bank NA, Attn: Pooled Funds, P.O. Box 1412, Rochester, NY 14603
(23.05%); HSBC Bank Gen Acct #10, HSBC Bank USA, Collective TR Funds - 17th
Floor, Attn: Christine Mincel, P.O. Box 4203, Buffalo, NY 14240 (11.55%); Fleet
New York, Fleet Investment Services, Attn: Barbara Lumba, 159 East Main St.
NY/RO/T03C, Rochester, NY 14638 (17.40%); Administrative Services (IFG), Chase
Manhattan Bank, Client Service Dept., Attn: Sevan Marinos - 16th Fl., 1 Chase
Manhattan Plaza, New York, NY 10005 (26.80%). The Company does not know whether
such persons also beneficially own such shares.
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<PAGE>
APPENDIX A
Commercial Paper Ratings
- ------------------------
A Standard & Poor's commercial paper rating is a current opinion of
the creditworthiness of an obligor with respect to financial obligations having
an original maturity of no more than 365 days. The following summarizes the
applicable rating categories used by Standard and Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that
the obligor's capacity to meet its financial commitment on the obligation is
strong. Within this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its financial
commitment on these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually senior debt obligations not having an original
maturity in excess of one year, unless explicitly noted. The following
summarizes the applicable rating categories used by Moody's for commercial
paper:
"Prime-1" - Issuers (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
"Prime-2" - Issuers (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
The applicable rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1"and "D-2". Duff & Phelps employs
three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the applicable rating categories used by Duff
& Phelps for commercial paper:
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"D-1+" - Debt possesses the highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
Fitch IBCA short-term ratings apply to debt obligations that have time
horizons of less than 12 months for most obligations, or up to three years for
U.S. public finance securities. The following summarizes the applicable rating
categories used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This designation
indicates the best capacity for timely payment of financial commitments and may
have an added "+" to denote any exceptionally strong credit feature.
"F2" - Securities possess good credit quality. This designation
indicates a satisfactory capacity for timely payment of financial commitments,
but the margin of safety is not as great as in the case of the higher ratings.
Thomson Financial BankWatch short-term ratings assess the likelihood
of an untimely payment of principal and interest of debt instruments with
original maturities of one year or less. The following summarizes the applicable
ratings used by Thomson Financial BankWatch:
"TBW-1" - This designation represents Thomson Financial BankWatch's
highest category and indicates a very high likelihood that principal and
interest will be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment of principal and interest is strong, the relative degree of
safety is not as high as for issues rated "TBW-1."
Corporate and Municipal Long-Term Debt Ratings
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A-1
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The following summarizes the applicable ratings used by Standard &
Poor's for corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
PLUS (+) OR MINUS (-) - The ratings "AA" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
"c" - The 'c' subscript is used to provide additional information to
investors that the bank may terminate its obligation to purchase tendered bonds
if the long-term credit rating of the issuer is below an investment-grade level
and/or the issuer's bonds are deemed taxable.
"p" - The letter 'p' indicates that the rating is provisional. A
provisional rating assumes the successful completion of the project financed by
the debt being rated and indicates that payment of debt service requirements is
largely or entirely dependent upon the successful, timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of or the risk of
default upon failure of such completion. The investor should exercise his own
judgment with respect to such likelihood and risk.
* Continuance of the ratings is contingent upon Standard & Poor's
receipt of an executed copy of the escrow agreement or closing documentation
confirming investments and cash flows.
"r" - The 'r' highlights derivative, hybrid, and certain other
obligations that Standard & Poor's believes may experience high volatility or
high variability in expected returns as a result of noncredit risks. Examples of
such obligations are securities with principal or interest return indexed to
equities, commodities, or currencies; certain swaps and options; and interest-
only and principal-only mortgage securities. The absence of an 'r' symbol should
not be taken as an indication that an obligation will exhibit no volatility or
variability in total return.
N.R. Not rated. Debt obligations of issuers outside the United
States and its territories are rated on the same basis as domestic corporate and
municipal issues. The ratings measure the creditworthiness of the obligor but do
not take into account currency exchange and related uncertainties.
A-2
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The following summarizes the applicable ratings used by Moody's for
corporate and municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the "Aaa"
securities.
Note: Moody's applies numerical modifiers 1, 2, and 3 in the generic
rating classification for the "Aa" category. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of its generic rating category.
The following summarizes the applicable long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
To provide more detailed indications of credit quality, the "AA" and
"A" ratings may be modified by the addition of a plus (+) or minus (-) sign to
show relative standing within these major categories.
The following summarizes the applicable ratings used by Fitch IBCA for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. These ratings denote the lowest expectation of credit risk and
are assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. These ratings denote a very low expectation of credit risk and indicate
very strong capacity for timely payment of financial commitments. This capacity
is not significantly vulnerable to foreseeable events.
A-3
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To provide more detailed indications of credit quality, the Fitch IBCA
ratings of "AA" may be modified by the addition of a plus (+) or minus (-) sign
to denote relative standing within these major rating categories.
'NR' indicates the Fitch IBCA does not rate the issuer or issue in
question.
'Withdrawn': A rating is withdrawn when Fitch IBCA deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.
RatingAlert: Ratings are placed on RatingAlert to notify investors
that there is a reasonable probability of a rating change and the likely
direction of such change. These are designated as "Positive," indicating a
potential upgrade, "Negative," for a potential downgrade, or "Evolving," if
ratings may be raised, lowered or maintained. RatingAlert is typically resolved
over a relatively short period.
Thomson Financial BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the rating categories used by Thomson BankWatch for long-term debt
ratings:
"AAA" - This designation indicates that the ability to repay principal
and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis, with limited incremental risk compared
to issues rated in the highest category.
PLUS (+) OR MINUS (-) - The above ratings may include a plus or minus
sign designation which indicates where within the respective category the issue
is placed.
Municipal Note Ratings
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A Standard and Poor's note rating reflects the liquidity factors and
market access risks unique to notes due in three years or less. The following
summarizes the applicable ratings used by Standard & Poor's for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess a
very strong capacity to pay debt service are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest, with some vulnerability to adverse
financial and economic changes over the term of the notes.
A-4
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Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - This designation denotes best quality. There is
present strong protection by established cash flows, superior liquidity support
or demonstrated broad-based access to the market for refinancing.
"MIG-2"/"VMIG-2" - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
Fitch IBCA and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.
A-5
