PROVIDENT INSTITUTIONAL FUNDS
497, 2000-05-10
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<PAGE>

                         PROVIDENT INSTITUTIONAL FUNDS
                              CASH RESERVE SHARES

                                  PROSPECTUS

                                  MARCH 1, 2000


                                   PROVIDENT
                                 INSTITUTIONAL
                                     FUNDS

  THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUNDS' 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>
HOW TO FIND THE INFORMATION YOU NEED.......................................  1
TEMPFUND...................................................................  2
T-FUND..................................................................... 11
MUNIFUND................................................................... 18
CALIFORNIA MONEY FUND...................................................... 26
MANAGEMENT OF THE FUND..................................................... 36
SHAREHOLDER INFORMATION.................................................... 37
     Price of Fund Shares.................................................. 37
     Purchase of Shares.................................................... 37
     Redemption of Shares.................................................. 37
     Cash Reserve Shareholder Service Plan................................. 38
     Dividends and Distributions........................................... 38
     Federal Taxes......................................................... 38
     State and Local Taxes................................................. 39
</TABLE>

                                      -i-
<PAGE>

HOW TO FIND THE INFORMATION YOU NEED

- -------------------------------------------------------------------------------

     Welcome to the new Provident Institutional Funds Prospectus for Cash
Reserve Shares.

     The prospectus has been written to provide you with information you need to
make an informed decision about whether to invest in Cash Reserve Shares of the
Provident Institutional Funds (the "Trust").

     This prospectus contains information about the four portfolios (the
"Funds") of the Trust that offer Cash Reserve Shares.  To save you time, the
prospectus has been organized so that each Fund has its own short section.  All
you have to do is turn to the section for any particular Fund.  Once you read
the important facts about the Funds that interest you, read the sections that
tell you about buying and selling shares, certain fees and expenses, shareholder
services and your rights as a shareholder.  These sections apply to all the
Funds.

     Cash Reserve Shares are sold to institutions that have entered into
servicing agreements with the Trust in connection with their investments.

     The Funds are 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.

                                      -1-
<PAGE>

                                   TEMPFUND

- --------------------------------------------------------------------------------

                              RISK/RETURN SUMMARY


Investment Goal:                        The Fund seeks current income with
                                        liquidity and stability of principal.

Investment Policies:                    The Fund invests in a broad range of
                                        money market instruments, including
                                        government, bank, and commercial
                                        obligations and repurchase agreements
                                        relating to such obligations.

Principal Risks of Investing:           Although the Fund invests in money
                                        market instruments which 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 Invest in the Fund:     The Fund is designed for institutional
                                        investors seeking current income and
                                        stability of principal.

                                      -2-
<PAGE>

Performance Information

         The Bar Chart and the Table below indicate the risks of investing in
the Fund by showing: how the performance of Dollar Shares of the Fund has varied
from year to year; and the average annual return for Dollar Shares of the Fund.
The Table shows how the average annual return for Dollar Shares of the Fund 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.

                          [Bar Chart Appears Here]/1/



                                    TempFund

                            1990      8.02
                            1991      5.99
                            1992      3.64
                            1993      2.87
                            1994      3.94
                            1995      5.74
                            1996      5.17
                            1997      5.35
                            1998      5.27
                            1999      4.90


          During the ten-year period shown in the bar chart, the highest
quarterly return was 8.12% (for the quarter ended June 30, 1990) and the lowest
quarterly return was 2.83% (for the quarter ended June 30, 1993).

                                      -3-
<PAGE>

     The Fund's Average Annual Total Return for Periods Ended December 31, 1999

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
                                                                        1 Year         5 Years       10 Years
- ---------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>            <C>
TempFund Dollar Shares/1/                                                 4.90%          5.28%          5.08%
- ---------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:   First Tier Institutions - Only Money           4.95%          5.21%          4.95%
Fund Average*
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
                                                                                     7 Day Yield
                                                                                As of December 31, 1999
- ----------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>
TempFund Dollar Shares/1/                                                              5.23%
- ----------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:  First Tier                                                   5.49%
Institutions - Only Money Fund Average*
- ----------------------------------------------------------------------------------------------------------
</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.

________________________
/1/ Because the Cash Reserve Shares of the Fund have not yet commenced
operations, the performance is the performance of the Dollar Shares of the Fund,
which are offered by a separate prospectus. Dollar Shares and Cash Reserve
Shares of the Fund should have returns and seven day yields that are
substantially the same because they represent interests in the same portfolio
securities and differ only to the extent that they bear different expenses. The
performance of Cash Reserve Shares will be lower than Dollar Shares because they
bear different expenses.

*   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.

                                      -4-
<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)
- -------------------------------------------------------------------------------

                                                        TempFund
                                                   Cash Reserve Shares
                                                   -------------------
                                                       (estimated)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees                                              .09%
Other Expenses                                               .51%
     Administration Fees                                             .09%
     Shareholder Servicing Fees                                      .25%
     Miscellaneous                                                   .17%

Total Annual Fund
     Operating Expenses(1)                                   .60%
                                                             ===
- -------------------------------------------------------------------------------
(1) 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.  As a result of fee
waivers, "Management Fees," "Other Expenses" and "Total Annual Fund Operating
Expenses" of the Fund actually incurred are set forth below. The Adviser and
PFPC expect to continue such fee waivers, but can terminate the waivers upon 120
days prior written notice to the Fund.

                                                        TempFund
                                                   Cash Reserve Shares
                                                   -------------------
                                                       (estimated)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees                                             .08%
Other Expenses                                              .50%
     Administration Fees                                              .08%
     Shareholder Servicing Fees                                       .25%
     Miscellaneous                                                    .17%

Total Annual Fund Operating Expenses
 (after current waivers)                                    .58%
                                                            ====
- -------------------------------------------------------------------------------

                                      -5-
<PAGE>

Example

This Example is intended to help you compare the cost of investing in the Fund
(without the waivers) 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:

          --------------------------------------------
                 TempFund Cash Reserve Shares
                         (estimated)
          --------------------------------------------

          One Year                 $ 61
          Three Years              $192
          Five Years               $335
          Ten Years                $750
          --------------------------------------------

                                      -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.  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 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;

 .   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.

                                      -7-
<PAGE>

Investments.  The Fund's investments may include the following:

     U.S. Government Obligations.  The Fund may purchase obligations issued or
guaranteed by 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, certificates of
deposit, bankers' acceptances, bank notes and time deposits 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 Obligations.  The Fund may invest in asset-backed securities
which are backed by mortgages, installment sales contracts, credit card
receivables or other assets.

     Investment Company Securities.  The Fund may invest in securities issued by
other open-end investment companies that invest in the type of obligations 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 Obligations.  The Fund may, when deemed appropriate by the
Adviser in 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 Floating Rate Instruments.  The Fund may purchase variable or
floating rate notes, which are instruments that provide for adjustments in the
interest rate on certain reset dates or whenever a specified interest rate index
changes, respectively.

     Repurchase Agreements. The Fund may enter into repurchase agreements.

     Reverse Repurchase Agreements and Securities Lending.  The Fund may enter
into reverse  repurchase agreements.  The Fund is permitted to invest up to one-
third of its total assets in reverse repurchase agreements.  The Fund may also
lend its 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.
Investments in reverse repurchase

                                      -8-
<PAGE>

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.

     When-Issued and Delayed Settlement Transactions.  The Fund may purchase
securities on a "when-issued" or "delayed settlement" basis.  The Fund expects
that commitments to purchase when-issued or delayed settlement 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 Securities.  The Fund will not invest more than 10% of the value
of its 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 Investments.  This Prospectus describes the Fund's principal
investment 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 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 Risk.  Generally, a fixed-income security will increase in
value 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.

                                      -9-
<PAGE>

     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.

                                      -10-
<PAGE>

                                    T-FUND
- --------------------------------------------------------------------------------

                              RISK/RETURN SUMMARY

Investment Goal:                        The Fund seeks current income with
                                        liquidity and stability of principal.

Investment Policies:                    The Fund invests in U.S. Treasury bills,
                                        notes, trust receipts and direct
                                        obligations of the U.S. Treasury and
                                        repurchase agreements relating to direct
                                        Treasury obligations.

Principal Risks of Investing:           Securities issued or guaranteed by the
                                        U.S. Government have historically
                                        involved little risk of loss of
                                        principal if held to maturity. However,
                                        due to fluctuations in interest rates,
                                        the market value of such securities may
                                        vary during the period a shareholder
                                        owns shares of the Fund. The Fund is
                                        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 Invest in the Fund:     The Fund is designed for institutional
                                        investors seeking current income with
                                        liquidity and security of principal.

                                      -11-
<PAGE>

Performance Information

         The Bar Chart and the Table below indicate the risks of investing in
the Fund by showing: how the performance of Dollar Shares of the Fund has varied
from year to year; and the average annual return for Dollar Shares of the Fund.
The Table shows how the average annual return for Dollar Shares of the Fund 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.

                          [Bar Chart Appears Here]/1/


                                     T-Fund

                             1990     7.97
                             1991     5.96
                             1992     3.58
                             1993     2.82
                             1994     3.66
                             1995     5.61
                             1996     5.08
                             1997     5.19
                             1998     5.09
                             1999     4.64


          During the ten-year period shown in the bar chart, the highest
quarterly return was 8.08% (for the quarter ended June 30, 1990) and the lowest
quarterly return was 2.79% (for the quarter ended December 31, 1993).

                                      -12-
<PAGE>

The Fund's Average Annual Total Return for Periods Ended December 31, 1999

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
                                                                                  1 Year         5 Years       10 Years
- -------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>             <C>            <C>
T-Fund Dollar Shares/1/                                                            4.64%          5.12%          4.95%
- -------------------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:  Government Institutions - Only                           4.69%          5.02%          4.95%
Money Fund Average *
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
                                                                                                7 Day Yield
                                                                                          As of December 31, 1999
- -------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>
T-Fund Dollar Shares/1/                                                                           4.47%
- -------------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:  Government Institutions - Only Money Fund
Average*                                                                                          5.06%
- -------------------------------------------------------------------------------------------------------------------
</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.

________________________
/1/ Because the Cash Reserve Shares of the Fund have not yet commenced
operations, the performance is the performance of the Dollar Shares of the Fund,
which are offered by a separate prospectus. Dollar Shares and Cash Reserve
Shares of the Fund should have returns and seven day yields that are
substantially the same because they represent interests in the same portfolio
securities and differ only to the extent that they bear different expenses. The
performance of Cash Reserve Shares will be lower than Dollar Shares because they
bear different expenses.

*  IBC's Money Fund Report:  Government Institutions - Only Money Fund Average
is comprised of institutional money market funds investing in U.S. T-Bills,
Repurchase Agreements and/or Government Agencies.

                                      -13-
<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)
- -------------------------------------------------------------------------------
                                                         T-Fund
                                                   Cash Reserve Shares
                                                   -------------------
                                                       (estimated)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees                                             .12%
Other Expenses                                              .54%
   Administration Fees                                                .12%
   Shareholder Servicing Fees                                         .25%
   Miscellaneous                                                      .17%
Total Annual Fund
 Operating Expenses(1)                                      .66%
                                                            ====

- ------------------------------------------------------------
(1) BlackRock Institutional Management Corporation ("BIMC," or 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.  As a result of fee waivers,
"Management Fees," "Other Expenses" and "Total Annual Fund Operating Expenses"
of the Fund actually incurred are set forth below. The Adviser and PFPC expect
to continue such fee waivers, but can terminate the waivers upon 120 days prior
written notice to the Fund.

                                                         T-Fund
                                                   Cash Reserve Shares
                                                   -------------------
                                                       (estimated)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees                                             .09%
Other Expenses                                              .51%
     Administration Fees                                              .09%
     Shareholder Servicing Fees                                       .25%
     Miscellaneous                                                    .17%
Total Annual Fund
 Operating Expenses (after current waivers)                 .60%
                                                            ====

- -------------------------------------------------------------------------------

                                      -14-
<PAGE>

Example

This Example is intended to help you compare the cost of investing in the Fund
(without the waivers) 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:


               ------------------------------------
                T-Fund Cash Reserve Shares
                        (estimated)
               ------------------------------------
                One Year                $ 67
                Three Year              $211
                Five Year               $368
                Ten Year                $822
               ------------------------------------

                                      -15-
<PAGE>

                   INVESTMENT STRATEGIES AND RISK DISCLOSURE

    The Fund is a money market fund.  The investment objective of the Fund is to
seek current income with liquidity and security of principal.  The Fund's
investment objective may be changed by the Board of Trustees without shareholder
approval.  The Fund invests solely in direct obligations of the U.S. Treasury,
such as Treasury bills, notes, trust receipts and repurchase agreements relating
to direct Treasury 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.

Investments.  The Fund's investments may include the following:

    U.S. Treasury Obligations. The Fund may purchase direct obligations of the
U.S. Treasury. The Fund may invest in Treasury receipts where the principal and
interest components are traded separately under the Separate Trading of
Registered Interest and Principal of Securities program ("STRIPS").

    Investment Company Securities.  The Fund may invest in securities issued by
other open-end investment companies that invest in the type of obligations 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.

    Repurchase Agreements.   The Fund may enter into repurchase agreements.

    Reverse Repurchase Agreements and Securities Lending.  The Fund may enter
into reverse repurchase agreements.  The Fund is permitted to invest up to one-
third of its total assets in reverse repurchase agreements.  The Fund may also
lend its 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.
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

                                      -16-
<PAGE>

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 Delayed Settlement Transactions.  The Fund may purchase
securities on a "when-issued" or "delayed settlement" basis.  The Fund expects
that commitments to purchase when-issued or delayed settlement 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.

     Other Types of Investments.  This Prospectus describes the Fund's principal
investment 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 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 Risk.  Generally, a fixed-income security will increase in
value 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. Treasury securities
are considered to be the safest type of investment in terms of credit risk.

     Other Risks.  Certain investment strategies employed  by the Fund may
involve additional investment risk.  Reverse repurchase agreements, securities
lending transactions and when-issued or delayed settlement 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 risks.

                                      -17-
<PAGE>

                                   MUNIFUND

- --------------------------------------------------------------------------------

                              RISK/RETURN SUMMARY


Investment Goal:                        The Fund seeks as high a level of
                                        current interest income exempt from
                                        federal income tax as is consistent with
                                        relative stability of principal.

Investment Policies:                    The Fund invests in a broad range of
                                        short-term tax-exempt obligations issued
                                        by or on behalf of states, territories,
                                        and possessions of the United States,
                                        the District of Columbia, and their
                                        respective authorities, agencies,
                                        instrumentalities, and political
                                        subdivisions and tax-exempt derivative
                                        securities such as tender option bonds,
                                        participations, beneficial interests in
                                        trusts and partnership interests
                                        (collectively, "Municipal Obligations").

Principal Risks of Investing:           Although the Fund invests in money
                                        market instruments which 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.

                                      -18-
<PAGE>

Who May Want to Invest in The Fund:     The Fund is designed for institutional
                                        investors seeking as high a level of
                                        current interest income exempt from
                                        federal income tax as is consistent with
                                        relative stability of principal.


Performance Information

         The Bar Chart and the Table below indicate the risks of investing in
the Fund by showing: how the performance of Dollar Shares of the Fund has varied
from year to year; and the average annual return for Dollar Shares of the Fund.
The Table shows how the average annual return for Dollar Shares of the Fund 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.

                          [Bar Chart Appears Here]/1/


                                    MuniFund

                             1990     5.15
                             1991     3.53
                             1992     2.23
                             1993     1.96
                             1994     2.36
                             1995     3.43
                             1996     3.02
                             1997     3.20
                             1998     3.03
                             1999     2.85


          During the ten-year period shown in the bar chart, the highest
quarterly return was 5.62% (for the quarter ended March 31, 1990) and the lowest
quarterly return was 1.84% (for the quarter ended December 31, 1993).

                                      -19-
<PAGE>

The Fund's Average Annual Total Return for Periods Ended December 31, 1999

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
                                                                  1 Year             5 Years            10 Years
- --------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                   <C>               <C>
MuniFund Dollar Shares/1/                                          2.85%             3.11%               3.07%
- --------------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:  Tax-Free Institutions - Only             2.96%             3.22%               3.34%
 Money Fund Average*
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
                                                                                7 Day Yield
                                                                           As of December 31, 1999
- -------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>
MuniFund Dollar Shares/1/                                                            3.41%
- -------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:  Tax-Free Institutions - Only
Money Fund Average*                                                                  3.85%
- -------------------------------------------------------------------------------------------------------------
</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.

________________________
/1/ Because the Cash Reserve Shares of the Fund have not yet commenced
operations, the performance is the performance of the Dollar Shares of the Fund,
which are offered by a separate prospectus. Dollar Shares and Cash Reserve
Shares of the Fund should have returns and seven day yields that are
substantially the same because they represent interests in the same portfolio
securities and differ only to the extent that they bear different expenses. The
performance of Cash Reserve Shares will be lower than Dollar Shares because they
bear different expenses.

*  IBC's Money Fund Report: Tax Free Institutions-Only Money Fund Average is
comprised of institutional money market funds investing in obligations of tax-
exempt entities, including state and municipal authorities.

                                      -20-
<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)
- -------------------------------------------------------------------------------

                                                       MuniFund
                                                   Cash Reserve Shares
                                                   -------------------
                                                      (estimated)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees                                             .17%
Other Expenses                                              .64%
     Administration Fees                                              .17%
     Shareholder Servicing Fees                                       .25%
     Miscellaneous                                                    .22%
Total Annual Fund
     Operating Expenses (1)                                 .81%
                                                            ===
- -------------------------------------------------------------------------------
(1) 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.  As a result of fee
waivers, "Management Fees," "Other Expenses" and "Total Annual Fund Operating
Expenses" of the Fund actually incurred are set forth below. The Adviser and
PFPC expect to continue such fee waivers, but can terminate the waivers upon 120
days prior written notice to the Fund.
- -------------------------------------------------------------------------------
                                                         MuniFund
                                                   Cash Reserves Shares
                                                   --------------------
                                                       (estimated)

ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees                                             .07%
Other Expenses                                              .53%
     Administration Fees                                              .07%
     Shareholder Servicing Fees                                       .25%
     Miscellaneous                                                    .21%
Total Annual Fund
     Operating Expenses (after current waivers)              .60%
                                                             ====
- -------------------------------------------------------------------------------

                                      -21-
<PAGE>

Example

This Example is intended to help you compare the cost of investing in the Fund
(without the waivers) 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:


               -------------------------------------
                   MuniFund Cash Reserve Shares
                            (estimated)
               -------------------------------------
               One Year               $   83
               Three years            $  259
               Five Years             $  450
               Ten Years              $1,002
               -------------------------------------

                                      -22-
<PAGE>

                   INVESTMENT STRATEGIES AND RISK DISCLOSURE

     The Fund is a money market fund.  The investment objective of the Fund is
to seek as high a level of current interest income exempt from federal income
tax as is consistent with relative stability of principal.  The Fund's
investment objective may be changed by the Board of Trustees without shareholder
approval.  The Fund invests substantially all its assets in a diversified
portfolio of Municipal Obligations.  The Fund will not knowingly purchase
securities the interest on which is subject to regular federal income tax.

     Except during periods of unusual market conditions or during temporary
defensive periods, the Fund invests substantially all, but in no event less than
80% of its total assets in Municipal Obligations with remaining maturities of 13
months or less as determined in accordance with the rules of the Securities and
Exchange Commission. 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. There is no percentage
limitation on the amount of assets which may be held uninvested. Uninvested cash
reserves will not earn income. 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
SEC. Pursuant to Rule 2a-7, the Fund generally will limit its purchase of any
one issuer's securities (other than U.S. Government securities, 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 the
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.
Applicable First Tier Eligible Securities are:

  .  securities that have short-term debt ratings at the time of purchase (or
     which are guaranteed or in some cases otherwise supported by 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 rated by only one
     NRSRO);

  .  securities that are issued or guaranteed by a person with such ratings; or

  .  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; and

  .  securities issued by other open-end investment companies that invest in the
     type of obligations in which the Fund may invest.

                                      -23-
<PAGE>

     Investments.  The Fund's investments may include the following:

     Municipal Obligations.  The Fund may purchase Municipal Obligations which
are classified as "general obligation" securities and "revenue" securities.
Revenue securities include private activity bonds which are not payable from the
unrestricted revenues of the issuer.  Consequently, the credit quality of
private activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved.  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" bonds.

     Investment Company Securities.  The Fund may invest in securities issued by
other open-end investment companies that invest in the type of obligations 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.

     Variable and Floating Rate Instruments.  The Fund may purchase variable or
floating rate notes, 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 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 Delayed Settlement Transactions.  The Fund may purchase
Municipal Obligations on a "when-issued" or "delayed settlement" basis.  The
Fund expects that commitments to purchase when-issued or delayed settlement
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.

     Stand-by Commitments.  The Fund may acquire "stand-by commitments" with
respect to 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.

     Illiquid Securities.  The Fund will not invest more than 10% of the value
of its 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.

                                      -24-
<PAGE>

     Other Types of Investments.  This Prospectus describes the Fund's principal
investment 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 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 Risk.  Generally, a fixed-income security will increase in
value 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.

     Municipal Obligations.  Opinions relating to the validity of Municipal
Obligations and to the exemption of interest thereon from federal income tax are
rendered by bond counsel to the respective issuers at the time of issuance, and
opinions relating to the validity of and the tax-exempt status of payments
received by the Fund 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.

                                      -25-
<PAGE>

                             CALIFORNIA MONEY FUND

- --------------------------------------------------------------------------------

                              RISK/RETURN SUMMARY

Investment Goal:                        The Fund seeks 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 California State personal income
                                        tax as is consistent with the
                                        preservation of capital and relative
                                        stability of principal.

Investment Policies:                    The Fund invests primarily in debt
                                        obligations issued by or on behalf of
                                        the State of California and 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 the interest
                                        on Municipal Obligations that is exempt
                                        from taxation under the Constitution or
                                        statutes of California ("California
                                        Municipal Obligations") are exempt from
                                        regular federal and California State
                                        personal income tax. California
                                        Municipal Obligations include municipal
                                        securities issued by the State of
                                        California and its political sub-
                                        divisions, as well as certain other
                                        governmental issuers such as the
                                        Commonwealth of Puerto Rico.

Principal Risks of Investing:           Although the Fund invests in money
                                        market instruments which 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.

                                      -26-
<PAGE>

                                        The Fund is non-diversified because it
                                        concentrates its investments in
                                        California Municipal Obligations. 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
                                        California Municipal Obligations are
                                        exempt from federal income tax but may
                                        be subject to California State 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 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 Invest in the Fund:     The Fund is designed for California
                                        institutional investors and their
                                        customers seeking as high a level of
                                        current interest income that is exempt
                                        from federal income tax and, to the
                                        extent possible, from California
                                        personal income tax as is consistent
                                        with the preservation of capital and
                                        relative stability of principal.

                                      -27-
<PAGE>

Performance Information

         The Bar Chart and the Table below indicate the risks of investing in
the Fund by showing: how the performance of Dollar Shares of the Fund has varied
from year to year; and the average annual return for Dollar Shares of the Fund.
The Table shows how the average annual return for Dollar Shares of the Fund 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.

                          [Bar Chart Appears Here]/1/


                                  California
                                     Money
                                     Fund

                              1990    5.04
                              1991    3.69
                              1992    2.36
                              1993    2.01
                              1994    2.48
                              1995    3.39
                              1996    2.96
                              1997    3.14
                              1998    2.88
                              1999    2.57


          During the ten-year period shown in the bar chart, the highest
quarterly return was 5.25% (for the quarter ended June 30, 1990) and the lowest
quarterly return was 1.88% (for the quarter ended March 31, 1993).

                                      -28-
<PAGE>

The Fund's Average Annual Total Return for Periods Ended December 31, 1999

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
                                                                         1 Year         5 Years        10 Years
- -----------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>           <C>             <C>
California Money Fund Dollar Shares/1/                                    2.57%           2.99%          3.05%
- -----------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:  California State Specific Tax-Free              2.74%           3.04%          3.17%
 Institutions-Only Money Fund Average*
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
                                                                                 7 Day Yield
                                                                           As of December 31, 1999
- ------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>
California Money Fund Dollar Shares/1/                                               3.08%
- ------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report:  California State Specific Tax-Free
Institutions - Only Money Fund Average                                               3.47%
- ------------------------------------------------------------------------------------------------------------
</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.

________________________
/1/ Because the Cash Reserve Shares of the Fund have not yet commenced
operations, the performance is the performance of the Dollar Shares of the Fund,
which are offered by a separate prospectus. Dollar Shares and Cash Reserve
Shares of the Fund should have returns and seven day yields that are
substantially the same because they represent interests in the same portfolio
securities and differ only to the extent that they bear different expenses. The
performance of Cash Reserve Shares will be lower than Dollar Shares because they
bear different expenses.

*  IBC's Money Fund Report:  California State Specific Tax-Free Institutions -
Only Money Fund Average is comprised of institutional money market funds
investing in tax-exempt obligations of California State.

                                      -29-
<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)
- -------------------------------------------------------------------------------
                                                    California
                                                    Money Fund
                                                   Cash Reserve
                                                      Shares
                                                      ------
                                                   (estimated)
Annual Fund Operating
 Expenses
(expenses that are deducted
from Fund assets)
Management Fees                                        .20%
Other Expenses                                         .65%
     Administration Fees                                         .20%
     Shareholder Servicing Fees                                  .25%
     Miscellaneous                                               .20%
Total Annual Fund
 Operating Expenses(1)                                 .85%
                                                       ====
- -------------------------------------------------------------------------------
(1)  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. As a result of fee
waivers, "Management Fees," "Other Expenses" and "Total Annual Fund Operating
Expenses" of the Fund actually incurred are set forth below. The Adviser and
PFPC expect to continue such fee waivers.

                                                    California
                                                    Money Fund
                                                   Cash Reserve
                                                      Shares
                                                      ------
                                                   (estimated)
Annual Fund Operating
 Expenses
(expenses that are deducted
from Fund assets)
Management Fees                                        .07%
Other Expenses                                         .53%
     Administration Fees                                         .07%
     Shareholder Servicing Fees                                  .25%
     Miscellaneous                                               .21%
Total Annual Fund
 Operating Expenses (after current waivers)            .60%
                                                       ====
- -------------------------------------------------------------------------------

                                      -30-
<PAGE>

Example

This Example is intended to help you compare the cost of investing in the Fund
(without the waivers) 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:

                    -------------------------------
                          California Money Fund
                           Cash Reserve Shares
                               (estimated)
                    -------------------------------

                    One Year               $   88
                    Three years            $  274
                    Five Years             $  477
                    Ten Years              $1,061
                    -------------------------------

                                      -31-
<PAGE>

                   INVESTMENT STRATEGIES AND RISK 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 California State
personal income tax 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 California 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 California Municipal Obligations. At
least 50% of the Fund's assets must be invested in obligations which, when held
by an individual, the interest therefrom is exempt from California personal
income taxation (i.e., California Municipal Obligations and certain U.S.
Government obligations) at the close of each quarter of its taxable year so as
to permit the Fund to pay dividends that are exempt from California State
personal income tax. Dividends, regardless of their source, may be subject to
local taxes. 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 Fund invests in Municipal Obligations which are determined by the
Adviser to present minimal credit risk pursuant to guidelines approved by the
Board of Trustees of Provident Institutional Funds pursuant to 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 is
authorized to purchase instruments that are determined to have minimum credit
risk and are 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 credit supports with
     such ratings) in one of the top two rating categories by two unaffiliated
     nationally recognized statistical rating organizations ("NRSRO") (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

  .  shares of other open-end investment companies that invest in the type of
     obligations in which the Fund may invest and securities issued by the U.S.
     government or any agency or instrumentality.

                                      -32-
<PAGE>

Investments. The Fund's investments may include the following:

     Municipal Obligations.  The Fund may purchase Municipal Obligations which
are classified 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 Floating Rate Instruments. The Fund may purchase variable or
floating rate notes issued by industrial development authorities and other
governmental 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 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 Delayed Settlement Transactions. The Fund may purchase
securities on a "when-issued" or "delayed settlement" basis. The Fund expects
that commitments to purchase when-issued or delayed settlement 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 Commitments. The Fund may acquire "stand-by commitments" with
respect to 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.

     Investment Company Securities.  The Fund may invest in securities issued by
other open-end investment companies that invest in the type of obligations 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.

                                      -33-
<PAGE>

     Illiquid Securities.  The Fund will not invest more than 10% of the value
of its 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 of Investments.  This Prospectus describes the Fund's principal
investment 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 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 Risk.  Generally, a fixed-income security will increase in
value 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 a NRSRO are widely accepted measures of credit
risk.  The lower a security is rated by a 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.

     Municipal Obligations.  Opinions relating to the validity of Municipal
Obligations and to the exemption of interest thereon from federal income tax are
rendered by bond counsel to the respective issuers at the time of issuance, and
opinions relating to the validity of and the tax-exempt status of payments
received by the Fund 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.

     Special Considerations Affecting the Fund. The Fund is concentrated in
securities issued by the State of California or entities within the State of
California and therefore, investment in the Fund may be riskier than an
investment in other types of money market funds. The Fund's ability to achieve
its investment objective is dependent upon the ability of the issuers of

                                      -34-
<PAGE>

California Municipal Obligations to timely meet their continuing obligations
with respect to the Municipal Obligations. Any reduction in the creditworthiness
of issuers of California Municipal Obligations could adversely affect the market
values and marketability of California Municipal Obligations, and, consequently,
the net asset value of the Fund's portfolio.

     General obligation bonds of the state of California are currently rated AA-
and AA3, respectively, by Standard & Poor's Ratings Services and Moody's
Investors Service, Inc.

     Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives could result
in certain adverse consequences affecting California Municipal Obligations.
Significant financial and other considerations relating to the Fund's
investments in California Municipal Obligations are summarized in the Statement
of Additional Information.

     The Fund may invest more than 25% of its assets in Municipal Obligations
the interest on which is paid solely from revenues of similar projects if such
investment is deemed necessary or appropriate by the Fund's Adviser.  To the
extent that the Fund's assets are concentrated in Municipal Obligations payable
from revenues on similar projects, the Fund will be subject to the peculiar
risks presented by such projects to a greater extent than it would be if the
Fund's assets were not so concentrated.

                                      -35-
<PAGE>

                            MANAGEMENT OF THE FUND

Investment Adviser

     The Adviser, a majority-owned indirect subsidiary of PNC Bank, serves as
the Company'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 $58 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 each Fund and is responsible for all
purchases and sales of Funds' 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 each 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 a 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 October 31, 1999, TempFund, T-Fund, MuniFund and California
Money Fund paid investment advisory fees and administration fees each
aggregating .08%, .09%, .07% and .07%, respectively, (net of waivers) of their
average net assets. The services provided by BIMC and the fees payable by each
Fund for these services are described further in the Statement of Additional
Information under "Management of the Funds."

                                      -36-
<PAGE>

                            SHAREHOLDER INFORMATION

Price of Fund Shares

     A Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PFPC Inc. ("PFPC"), the Trust's co-
administrator, twice 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 of MuniFund and California Money Fund is determined as of
12:00 Noon and 4:00 P.M., Eastern Time (9:00 A.M., and 1:00 P.M. Pacific time).
The net asset value of TempFund and T-Fund is determined as of 12:00 Noon and
5:30 P.M. Eastern time. The net asset value per share of each class of a Fund's
shares is calculated by adding the value of all securities and other assets of a
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, each 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, a
Fund may postpone the date of payment of any redeemable security for up to seven
days.

     On any business day when the Bond Market Association ("BMA") recommends
that the securities markets close early, each Fund reserves the right to close
at or prior to the BMA recommended closing time. If a Fund does so, it will
cease granting same business day credits for purchase and redemption orders
received after the Fund's closing time and credit will be granted to the next
business day.

Purchase of Shares

     Shares of each of the Funds are sold at the net asset value per share next
determined after confirmation of a purchase order by PFPC, which also serves as
the Trust's transfer agent.  Purchase orders for shares are accepted only on
Business Days and must be transmitted to the Funds' Office in Wilmington,
Delaware by telephone (800-441-7450; in Delaware:  302-797-2350) or until 3:00
PM, Eastern Time, through the Fund's internet-based order entry program, MA2000.

     The chart below outlines the cut-off times for when purchase orders are
executed. Purchase orders accepted by PFPC by the cut-off time and for which
payment has been received by PNC Bank, N.A. ("PNC Bank"), an agent of the
Trust's custodian, PFPC Trust Company, by 4:00 PM, Eastern Time for MuniFund and
California Money Fund or 5:30 PM, Eastern Time, for TempFund and T-Fund will be
executed that day. Purchase orders received after the cut-off times, and orders
for which payment has not been received by 4:00 PM, Eastern Time for Munifund
and California Money Fund or 5:30 PM, Eastern Time, for TempFund and T-Fund will
not be accepted, and notice thereof will be given to the institution placing the
order. Payment for purchase orders which are not received or accepted will be
returned after prompt inquiry to the sending institution. Each of the Funds may
at their discretion reject any purchase order for Cash Reserve Shares.


          Portfolio                                 Time
          ---------                                 ----
     TempFund*                              5:30 PM Eastern Time
     T-Fund*                                5:30 PM Eastern Time
     MuniFund                               2:30 PM Eastern Time
     California Money Fund**               12:00 Noon Eastern Time


     *Purchase orders placed between 3:00 PM and 5:30 PM, Eastern Time, may only
be transmitted by telephone, and TempFund and T-Fund reserve the right to limit
the amount of such orders.

     **Purchase orders for Cash Reserve Shares of the California Money Fund will
be accepted between 12:00 Noon Eastern Time and 1:00 PM Eastern Time up to a
maximum order of $1 million per account. The Fund reserves the right to limit
the amount of such orders.

     Payment for Cash Reserve Shares of a Fund may be made only in federal funds
or other funds immediately available to PNC Bank. The minimum initial investment
by an institution for Cash Reserve Shares is $5,000.00. (However, institutional
investors may set a higher minimum for their customers.) There is no minimum
subsequent investment.

     Cash Reserve Shares of the Funds are sold without charge by a Fund.
Institutional investors purchasing or holding Cash Reserve Shares of the Funds
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 Cash Reserve Shares of the Funds. An institution purchasing Cash
Reserve Shares of the Fund on behalf of its customers is responsible for
transmitting orders to a Fund in accordance with its customer agreements.

Redemption of Shares

     Redemption orders must be transmitted to the Funds' Office in Wilmington,
Delaware in the manner described under "Purchase of Shares." Cash Reserve Shares
are redeemed without charge by a Fund at the net asset value per share next
determined after PFPC's receipt of the redemption request.

     The chart below outlines the cut-off times for the redemption of Cash
Reserve Shares of the Funds. Payment for redeemed Cash Reserve Shares of the
Funds for which redemption requests are received by PFPC by the established cut-
off times on a Business Day is normally made in federal funds wired to the
redeeming shareholder on the same day. Payment of redemption requests which are
received after the established cut-off times, 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.

          Portfolio                                Time
          ---------                                ----
     TempFund*                             5:30 PM Eastern Time
     T-Fund*                               5:30 PM Eastern Time
     MuniFund                             12:00 Noon Eastern Time
     California Money Fund**              12:00 Noon Eastern Time


     *Redemption orders placed between 3:00 PM and 5:30 PM, Eastern Time, may
only be transmitted by telephone. TempFund and T-Fund reserve the right to limit
the amount of such orders.

     **Redemption orders for Cash Reserve Shares of the California Money Fund
will be accepted between 12:00 Noon Eastern Time and 1:00 PM Eastern Time for a
maximum order of $1 million per account. The Fund reserves the right to limit
the amount of such orders.

     The Funds shall have the right to redeem shares in any Cash Reserve Share
account if the value of the account is less than $5,000, after sixty days' prior
written notice to the shareholder. If during the sixty-day period the
shareholder increases the value of its Cash Reserve Share account to $5,000 or
more, no such redemption shall take place. If a shareholder's Cash Reserve Share
account falls below an average of $5,000 in any particular calendar month, the
account may be charged an account maintenance fee with respect to that month
(with the exception of TempFund). Any such redemption shall be effected at the
net asset value next determined after the redemption order is entered. In
addition, a Fund may redeem shares involuntarily under certain special
circumstances described in the Statement of Additional Information under
"Additional Purchase and Redemption Information." An institution redeeming
shares of the Fund on behalf of its customers is responsible for transmitting
orders to a Fund in accordance with its customers agreements.

     Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Funds in connection with the investment of fiduciary
funds in Cash Reserve 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 investment fiduciary funds in Cash Reserve
Shares.

                                      -37-
<PAGE>

Cash Reserve Shareholder Service Plan

     Institutional investors, such as banks, savings and loan associations and
other financial institutions, including affiliates of PNC Bank Corp. ("Service
Organizations"), may purchase Cash Reserve Shares. The Fund will enter into an
agreement with each Service Organization which purchases Cash Reserve Shares
requiring it to provide services to its customers who are the beneficial owners
of such shares in consideration of the Fund's payment of up to .40% (on an
annualized basis) of the average daily net asset value of the Cash Reserve
Shares held by the Service Organization for the benefit of customers. Such
services are described more fully in the Statement of Additional Information
under "Management of the Fund - Service Organizations." Because fees associated
with the Shareholder service plans are paid out of the Funds' assets on an
ongoing basis, over time, holders of the Cash Reserve Class may pay more than
the economic equivalent of the maximum front-end sales charge permitted by NASD
Regulation Inc. 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 Cash Reserve Shares.

Dividends and Distributions

     Each Fund declares dividends daily and distributes 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.

Federal Taxes

     Distributions paid by TempFund and T-Fund will generally be taxable to
shareholders. Each 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. The one major exception to 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.

                                      -38-
<PAGE>

     Tax Exempt Funds -- MuniFund and California Money Fund (the "Tax-Exempt
     ----------------
Funds") anticipate that substantially all of their income dividends will be
"exempt interest dividends," which are exempt from federal income taxes.
Interest on indebtedness incurred by a shareholder to purchase or carry shares
of a Tax-Exempt Fund generally will not be deductible for federal income tax
purposes. You should note that a portion of the exempt-interest dividends paid
by a Tax-Exempt 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.

State and Local Taxes

     Shareholders may also be subject to state and local taxes on distributions.
State income taxes may not apply however, to the portions of each Fund's
distributions, if any, that are attributable to interest on federal securities
or interest on securities of the particular state or localities within the
state.

     Dividends that are paid by California Money Fund to non-corporate
shareholders and are derived from interest on California Municipal Obligations
or certain U.S. Government obligations are also exempt from California state
personal income tax, provided that at least 50% of the aggregate value of the
Fund's assets consist of exempt-interest obligations. However, dividends paid to
corporate shareholders subject to California state franchise tax or California
state corporate income tax will be taxed as ordinary income to such
shareholders, notwithstanding that all or a portion of such dividends is exempt
from California state personal income tax. Moreover, to the extent that the
Fund's dividends are derived from interest on debt obligations other than
California Municipal Obligations or certain U.S. Government obligations such
dividends will be subject to California state personal income tax, even though
such dividends may be exempt for Federal income tax purposes.

     Dividends paid by California Money Fund derived from U.S. Government
obligations generally will be exempt from state and local tax as well. However,
except as noted with respect to California state personal income tax, in some
situations distributions of net investment income may be taxable to investors
under state or local law as dividend income even though all or a portion of such
distributions may be derived from interest on tax-exempt obligations which, if
realized directly, would be exempt from such income taxes.

                                    *  *  *

     PFPC, as transfer agent, will send each of the Funds shareholder or their
authorized representative an annual statement designating the amount, if any, of
any dividends and distributions made during each year and their federal tax
treatment. Additionally, PFPC will send California Money Fund and New York Money
Funds' shareholders or their authorized representatives an annual statement
regarding, as applicable California, New York State and New York City tax
treatment.

                                      -39-
<PAGE>

     The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships, may be subject to different United States federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.

                                      -40-
<PAGE>

How to Contact Provident
Institutional Funds



For purchases and redemption orders only call: 800-441-7450

For yield information call: 800-821-6006
        TempFund Cash Reserve Shares Code: H2
        T-Fund Cash Reserve Shares Code: N2
        MuniFund Cash Reserve Shares Code: K2
        California Money Fund Cash Reserve Shares Code: R2

For other information call: 800-821-7432 or visit our website at www.pif.com
                                                                 -----------

Written correspondence may be set to:
        Provident Institutional Funds
        Bellevue Park Corporate Center
        400 Bellevue Parkway
        Wilmington, DE 19809

                                      -41-
<PAGE>

Where to Find More Information

The Statement of Additional Information (the "SAI") includes additional
information about the Trust'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 each 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
Trust's web site at www.pif.com.

Information about the Trust (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C., and information on the
operation of the Public Reference Room may be obtained by calling the SEC at 1-
202-942-8090. Reports and other information about the Trust are available on the
EDGAR Database on the SEC's Internet site at http://www.sec.gov; copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: [email protected], or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.

The Provident Institutional Funds 1940 Act File No. is 811-2354.

                                      -42-



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