<PAGE>
PROVIDENT INSTITUTIONAL FUNDS
=============================
ADMINISTRATION 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
Administration Shareholder Service Plan.............................. 38
Dividends and Distributions.......................................... 38
Federal Taxes........................................................ 38
State and Local Taxes................................................ 39
</TABLE>
<PAGE>
HOW TO FIND THE INFORMATION YOU NEED
- --------------------------------------------------------------------------------
Welcome to the new Provident Institutional Funds Prospectus for
Administration Shares.
The prospectus has been written to provide you with information you need to
make an informed decision about whether to invest in Administration Shares of
the Provident Institutional Funds (the "Trust").
This prospectus contains information about the four portfolios (the
"Funds") of the Trust that offer Administration 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.
Administration 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.
<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).
<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 Fund Average* 4.95% 5.21% 4.95%
-------------------------------------------------------------------------------------------------------------
<CAPTION>
-------------------------------------------------------------------------------------------------------------
7 Day Yield
As of December 31, 1999
-------------------------------------------------------------------------------------------------------------
<S> <C>
TempFund Dollar Shares/1/ 5.23%
-------------------------------------------------------------------------------------------------------------
IBC's Money Fund Report: First Tier
Institutions - Only Money Fund Average* 5.49%
-------------------------------------------------------------------------------------------------------------
</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 Administration Shares of the Fund has 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 Administration
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 Administration Shares will be greater 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.
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TempFund
Administration Shares
---------------------
(estimated)
<S> <C> <C>
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees .09%
Other Expenses .21%
Administration Fees .09%
Miscellaneous .12%
Total Annual Fund
Operating Expenses(1) .30%
===
</TABLE>
________________________________________________________________________________
(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.
<TABLE>
<CAPTION>
TempFund
Administration Shares
---------------------
(estimated)
<S> <C> <C>
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees .08%
Other Expenses .20%
Administration Fees .08%
Miscellaneous .12%
Total Annual Fund Operating Expenses
(after current waivers) .28%
====
</TABLE>
- --------------------------------------------------------------------------------
-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 Administration Shares
(estimated)
----------------------------------
One Year $ 31
Three Years $ 97
Five Years $169
Ten Years $381
----------------------------------
-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 Administration Shares of the Fund has 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 Administration
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 Administration Shares will be greater 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
Administration Shares
---------------------
(estimated)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees .12%
Other Expenses .24%
Administration Fees .12%
Miscellaneous .12%
Total Annual Fund
Operating Expenses(1) .36%
====
- ------------------------------------------------------------------------------
(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
Administration Shares
---------------------
(estimated)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees .09%
Other Expenses .21%
Administration Fees .09%
Miscellaneous .12%
Total Annual Fund
Operating Expenses (after current waivers) .30%
====
- -------------------------------------------------------------------------------
-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 Administration Shares (estimated)
------------------------------------------------
One Year $ 37
Three Year $116
Five Year $202
Ten Year $456
------------------------------------------------
-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' 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.
Who May Want to Invest in The Fund is designed for institutional investors
The Fund: seeking as high a level of current interest
income exempt from federal income tax as is
consistent with relative stability of principal.
-18-
<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/
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 - 2.96% 3.22% 3.34%
Only 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 Administration Shares of the Fund has 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 Administration
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 Administration Shares will be greater 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)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
MuniFund
Administration Shares
----------------------------------------
(estimated)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<S> <C> <C>
Management Fees .17%
Other Expenses .34%
Administration Fees
.17%
Miscellaneous .17%
Total Annual Fund .51%
Operating Expenses (1) ===
- ---------------------------------------------------------------------------------------------
</TABLE>
(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
Administration Shares
--------------------------
(estimated)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees .07%
Other Expenses .23%
Administration Fees .07%
Miscellaneous .16%
Total Annual Fund .30%
Operating Expenses (after current waivers) ===
- -------------------------------------------------------------------------------
-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 Administration Shares
(estimated)
------------------------------------
One Year $ 52
Three years $164
Five years $285
Ten years $640
------------------------------------
-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
-24-
<PAGE>
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. 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-
-26-
<PAGE>
income security will increase in value when
interest rates fall and decrease in value
when interest rates rise.
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 The Fund is designed for California
Fund: 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
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*
- ------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
7 Day Yield
As of December 31, 1999
- ----------------------------------------------------------------------------------------------------
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 Administration Shares of the Fund has 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 Administration
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 Administration Shares will be greater 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
Administration
Shares
------
(estimated)
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees .20%
Other Expenses .35%
Administration Fees .20%
Miscellaneous .15%
Total Annual Fund
Operating Expenses(1) .55%
====
- --------------------------------------------------------------------------------
(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
Administration
Shares
------
(estimated)
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees .07%
Other Expenses .23%
Administration Fees .07%
Miscellaneous .16%
Total Annual Fund
Operating Expenses (after current waivers) .30%
====
- --------------------------------------------------------------------------------
-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
Administration Shares
(estimated)
-----------------------------------
One Year $ 56
Three years $176
Five Years $307
Ten Years $689
-----------------------------------
-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 (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 (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 Administration 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 Administration 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 Administration 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 Administration Shares is $5,000.00. (However,
institutional investors may set a higher minimum for their customers). There is
no minimum subsequent investment.
Administration Shares of the Funds are sold without charge by a Fund.
Institutional investors purchasing or holding Administration 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 Administration Shares of the Funds. An institution purchasing
Administration 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." Administration
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
Administration Shares of the Funds. Payment for redeemed Administration 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 Administration 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 Administration 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 Administration Share account to $5,000 or
more, no such redemption shall take place. If a shareholder's Administration
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 Administration 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 Administration 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 Administration
Shares.
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<PAGE>
Administration 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 Administration Shares. The Fund will enter into an
agreement with each Service Organization which purchases Administration 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 .10% (on an
annualized basis) of the average daily net asset value of the Administration
Shares held by the Service Organization for the benefit of customers. Such
services are described more fully in the Statement of Additional Information
under "Management of the Fund - Service Organization." Because fees associated
with the shareholder service plans are paid out of the Funds' assets on an
ongoing basis, over time, holders of the Administration Shares 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 Administration 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
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<PAGE>
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.
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.
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<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.
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<PAGE>
HOW TO CONTACT PROVIDENT
INSTITUTIONAL FUNDS
For purchase and redemption orders only call: 800-441-7450
For yield call: 800-821-6006
TempFund Administration Shares Code: H1
T-Fund Administration Shares Code: N1
MuniFund Administration Shares Code: K1
California Money Fund Administration Shares Code: R1
For other information call: 800-821-7432 or visit our website at www.pif.com.
Written correspondence may be sent to:
Provident Institutional Funds
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, DE 19809
<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.
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