<PAGE> 1
TempCash
An Investment Portfolio Offered by
Temporary Investment Fund, Inc.
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption orders
400 Bellevue Parkway, Suite 100 only call: 800-441-7450 (in Delaware:
Wilmington, DE 19809 302-791-5350). For yield information
call: 800-821-6006 (TempCash Shares
code: 21; TempCash Dollar Shares
code: 23).
For other information call:
800-821-7432.
</TABLE>
Temporary Investment Fund, Inc. (the "Company") is a no-load, diversified,
open-end investment company presently offering shares in two separate money
market portfolios. The shares described in this Prospectus represent interests
in the TempCash portfolio (the "Fund").
The Fund's investment objective is to seek current income and stability of
principal. The Fund invests in a portfolio consisting of a broad range of money
market instruments, including government, U.S. and foreign bank and commercial
obligations and repurchase agreements relating to such obligations. Under normal
market conditions, at least 25% of the Fund's total assets will be invested in
obligations of issuers in the banking industry and repurchase agreements
relating to such obligations.
Fund shares may not be purchased by individuals directly, but institutional
investors may purchase shares for accounts maintained by individuals. In
addition to TempCash Shares, investors may purchase TempCash "Dollar" Shares
which accrue daily dividends in the same manner as TempCash Shares but bear all
fees payable by the Fund to institutional investors for certain services they
provide to the beneficial owners of such Shares. (See "Management of the
Fund--Service Organizations.")
PNC Institutional Management Corporation ("PIMC") and PNC Bank, National
Association ("PNC Bank") serve as the Fund's investment adviser, and
sub-adviser, respectively. PFPC Inc. ("PFPC") and Provident Distributors, Inc.
("PDI") serve as the Fund's administrators. PDI also serves as the Fund's
distributor.
------------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED, ENDORSED,
OR OTHERWISE SUPPORTED BY PNC BANK CORP. OR ITS AFFILIATES, OR THE U.S.
GOVERNMENT, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THERE CAN BE NO ASSURANCE THAT IT WILL
BE ABLE TO MAINTAIN ITS NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information currently dated January
31, 1997, has been filed with the Securities and Exchange Commission and is
available to investors without charge by calling the Fund at 800-821-7432. The
Statement of Additional Information, as amended from time to time, is
incorporated in its entirety by reference into this Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
January 31, 1997
<PAGE> 2
BACKGROUND AND EXPENSE INFORMATION
The Company was incorporated in Maryland on February 8, 1973 and commenced
operations of the Fund in February 1984. The Fund presently offers two separate
classes of shares--TempCash Shares and TempCash Dollar Shares ("Dollar Shares").
Shares of each class represent equal, pro rata interests in the Fund and accrue
daily dividends in the same manner except that Dollar Shares bear fees payable
by the Fund (at the rate of .25% per annum) to institutional investors for
services they provide to the beneficial owners of such shares. (See "Management
of the Fund--Service Organizations.")
EXPENSE SUMMARY
<TABLE>
<CAPTION>
TEMPCASH
TEMPCASH DOLLAR
SHARES SHARES
---------------- ------------------
<S> <C> <C> <C> <C>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (net of waivers)............................. .08% .08%
Other Expenses............................................... .10% .35%
Administration Fees (net of waivers)...................... .08% .08%
Shareholder Servicing Fees................................ -- .25%
Miscellaneous............................................. .02% .02%
Total Fund Operating Expenses(net of waivers)................ .18% .43%
=== ===
</TABLE>
- ---------------
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return; and (2) redemption at the
end of each time period with respect to the following shares:
TempCash Shares: $2 $ 6 $10 $ 23
TempCash Dollar Shares: $4 $14 $24 $ 54
</TABLE>
THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES AND RATE OF RETURN MAY BE GREATER OR
LESS THAN THOSE SHOWN.
The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. In addition, institutional investors may charge
fees for providing administrative services in connection with their customers'
investment in TempCash Dollar Shares. (For more complete descriptions of the
various costs and expenses, see "Management of the Fund" in this Prospectus and
the Statement of Additional Information.) Total Fund operating expenses for
TempCash Shares and Dollar Shares for the fiscal year ended September 30, 1996,
absent fee waivers, would have been .33% and .58%, respectively, of the Fund's
average net assets. The investment adviser and administrators may from time to
time waive the investment advisory and administration fees otherwise payable to
them or may reimburse the Fund for its operating expenses. The foregoing table
reflects anticipated waivers and has not been audited by the Fund's independent
accountants.
2
<PAGE> 3
FINANCIAL HIGHLIGHTS
The following financial highlights for TempCash Shares and TempCash Dollar
Shares have been derived from the financial statements of the Fund for the
fiscal year ended September 30, 1996, and for each of the nine preceding fiscal
years. The financial highlights for the fiscal years ended September 30, 1996,
1995, 1994, 1993 and 1992 have been audited by Coopers & Lybrand L.L.P.,
independent accountants, whose report on the financial statements and financial
highlights of the Fund is incorporated by reference into the Statement of
Additional Information. The tables should be read in conjunction with the
financial statements and related notes incorporated by reference into the
Statement of Additional Information. Further information about the performance
of the Fund is available in the annual report to shareholders, which may be
obtained by calling (800) 821-7432.
TEMPCASH SHARES
The table below sets forth selected financial data for a TempCash Share
outstanding throughout each period presented.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income..................... .0542 .0575 .0370 .0310 .0432 .0676
Net Realized Gains on Investments......... -- -- -- -- .0008 --
-------- -------- -------- -------- -------- --------
Total From Investment Operations.......... .0542 .0575 .0370 .0310 .0432 .0676
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income).... (.0542) (.0575) (.0370) (.0310) (.0424) (.0676)
Distributions (From Capital Gains)........ -- -- -- -- (.0008) --
-------- -------- -------- -------- -------- --------
Total Distributions....................... (.0542) (.0575) (.0370) (.0310) (.0432) (.0676)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Year............... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ======== ========
Total Return.............................. 5.56% 5.90% 3.76% 3.14% 4.41% 6.97%
Ratios/Supplemental Data
Net Assets, End of Year (000's)........... $1,835,326 $1,316,166 $2,330,456 $1,479,035 $1,492,959 $1,528,637
Ratio of Expenses to Average Daily Net
Assets.................................. .18%(1) .16%(1) .16%(1) .19%(1) .20%(1) .20%(1)
Ratio of Net Investment Income to Average
Daily Net Assets........................ 5.42% 5.75% 3.70% 3.10% 4.14% 6.57%
<CAPTION>
1990 1989 1988 1987
---------- -------- -------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year......... $1.00 $1.00 $1.00 $1.00
-------- -------- -------- --------
Income From Investment Operations
Net Investment Income..................... .0830 .0911 .0723 .0622
Net Realized Gains on Investments......... -- -- -- --
-------- -------- -------- --------
Total From Investment Operations.......... .0830 .0911 .0723 .0622
-------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income).... (.0830) (.0911) (.0723) (.0622)
Distributions (From Capital Gains)........ -- -- -- --
-------- -------- -------- --------
Total Distributions....................... (.0830) (.0911) (.0723) (.0622)
-------- -------- -------- --------
Net Asset Value, End of Year............... $1.00 $1.00 $1.00 $1.00
======== ======== ======== ========
Total Return.............................. 8.62% 9.50% 7.45% 6.40%
Ratios/Supplemental Data
Net Assets, End of Year (000's)........... $1,179,276 $560,740 $319,267 $48,602
Ratio of Expenses to Average Daily Net
Assets.................................. .20%(1) .20%(1) .19%(1) .30%(1)
Ratio of Net Investment Income to Average
Daily Net Assets........................ 8.17% 9.17% 7.33% 6.26%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratios of
expenses to average daily net assets for TempCash shares would have been
.33%, .30%, .33%, .37%, .33%, .34%, .39%, 41%, .43%, and .43% for the years
ended September 30, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988 and
1987, respectively.
3
<PAGE> 4
TEMPCASH DOLLAR SHARES
The table below sets forth selected financial data for a TempCash Dollar Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Year............... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net Investment
Income........... .0517 .0550 .0345 .0285 .0399 .0651 .0805 .0886 .0698 .0597
Net Realized Gains
on Investments... -- -- -- -- .0008 -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations....... .0517 .0550 .0345 .0285 .0407 .0651 .0805 .0886 .0698 .0597
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends (From Net
Investment
Income).......... (.0517) (.0550) (.0345) (.0285) (.0399) (.0651) (.0805) (.0886) (.0698) (.0597)
Distributions (From
Capital Gains)... -- -- -- -- (.0008) -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
Distributions.... (.0517) (.0550) (.0345) (.0285) (.0407) (.0651) (.0805) (.0886) (.0698) (.0597)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End
of Year............ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return....... 5.31% 5.65% 3.51% 2.89% 4.16% 6.72% 8.37% 9.25% 7.20% 6.15%
Ratios/Supplemental
Data
Net Assets, End of
Year (000's)..... $527,830 $454,156 $397,948 $307,239 $408,900 $438,721 $317,267 $209,507 $125,166 $135,866
Ratio of Expenses
to Average Daily
Net Assets....... .43%(1) .41%(1) .41%(1) .44%(1) .45%(1) .45%(1) .45%(1) .45%(1) .44%(1) .55%(1)
Ratio of Net
Investment Income
to Average Daily
Net Assets....... 5.17% 5.50% 3.45% 2.85% 3.89% 6.32% 7.92% 8.92% 7.08% 6.01%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratios of
expenses to average daily net assets for TempCash Dollar Shares would have
been .58%, .55%, .58%, .62%, .58%, .59%, .64%, .66%, .68% and .68% for the
years ended September 30, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989,
1988 and 1987, respectively.
4
<PAGE> 5
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek current income and stability of
principal. In pursuing its investment objective, the Fund invests in a broad
range of money market instruments, including government, U.S. and foreign bank
and commercial obligations that may be available in the money markets. The
following descriptions illustrate the types of instruments in which the Fund
invests.
Portfolio obligations held by the Fund have remaining maturities of 397
days (thirteen months) or less (with certain exceptions), subject to the
quality, diversification, and other requirements of Rule 2a-7 of the Investment
Company Act of 1940, as amended (the "1940 Act") and other rules of the
Securities and Exchange Commission (the "SEC"). Pursuant to Rule 2a-7, the Fund
will limit its purchases of any one issuer's securities (other than U.S.
Government obligations) 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.
The Fund will purchase only "First Tier Eligible Securities" (as defined by
the SEC) that present minimal credit risks as determined by the investment
adviser pursuant to guidelines approved by the Company's Board of Directors.
First Tier Eligible Securities consist of the following types of securities: (a)
securities that have ratings at the time of purchase in the highest rating
category by at least two unaffiliated nationally recognized statistical rating
organizations ("NRSROs") (or one NRSRO if the security was rated by only one
NRSRO); (b) securities that are issued by an issuer with such ratings; (c)
securities without such short-term ratings that have been determined to be of
comparable quality by the investment adviser pursuant to guidelines approved by
the Board of Directors; or (d) securities issued or guaranteed as to principal
or interest by the U.S. Government or any of its agencies or instrumentalities.
A description of applicable NRSRO ratings is in the Appendix to the Statement of
Additional Information.
The Fund may purchase obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government are backed by the full
faith and credit of the United States. Others are backed by the right of the
issuer to borrow from the U.S. Treasury or are backed only by the credit of the
agency or instrumentality issuing the obligation. Securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities 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.
Certain government securities held by the Fund may have remaining maturities
exceeding thirteen months if such securities provide for adjustments in their
interest rates not less frequently than every thirteen months. To the extent
consistent with its investment objectives, the Fund may invest in Treasury
receipts and other "stripped" securities issued or guaranteed by the U.S.
Government, where the principal and interest components are traded independently
under the Separate Trading of Registered Interest and Principal of Securities
program ("STRIPS"). Under the STRIPS program, the principal and interest
components are individually numbered and separately issued by the U.S. Treasury
at the request of depository financial institutions, which then trade the
component parts independently. Currently, the Fund only invests in "stripped"
securities issued or guaranteed by the U.S. Government which are registered
under the STRIPS program. The principal and interest components may exhibit
greater price volatility than ordinary debt securities because of the manner in
which their principal and interest are returned to investors.
The Fund may purchase obligations of issuers in the banking industry, such
as bank holding company obligations and certificates of deposit, bankers'
acceptances and time deposits, including U.S.
5
<PAGE> 6
dollar-denominated instruments issued or supported by the credit of U.S. or
foreign banks or savings institutions having total assets at the time of
purchase in excess of $1 billion. The Fund may invest substantially in
obligations of foreign banks or foreign branches of U.S. banks where the
investment adviser deems the instrument to present minimal credit risks. Such
investments may nevertheless entail risks that are different from those of
investments in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. The Fund may also
make interest-bearing savings deposits in commercial and savings banks in
amounts not in excess of 5% of its assets.
The Fund may invest in commercial paper and short-term notes and corporate
bonds that meet the Fund's quality and maturity restrictions. Commercial paper
purchased by the Fund may include instruments issued by foreign issuers, such as
Canadian Commercial Paper, which is U.S. dollar-denominated commercial paper
issued by a Canadian corporation or a Canadian counterpart of a U.S.
corporation, and in Europaper, which is U.S. dollar-denominated commercial paper
of a foreign issuer, subject to the criteria stated above for other commercial
paper issuers.
The Fund may purchase variable or floating rate notes, which are unsecured
instruments that provide for adjustments in the interest rate on certain reset
dates or whenever a specified interest rate index changes, respectively. Such
notes may not be actively traded in a secondary market but, in some cases, the
Fund may be entitled to payment of principal on demand and may be able to
re-sell such notes in the dealer market. Variable and floating rate notes are
not typically rated by credit rating agencies, but their issuers must satisfy
the same criteria as set forth above for issuers of commercial paper. If an
issuer of such a note were to default on its payment obligation, the Fund might
be unable to dispose of the note because of the absence of an active secondary
market and might, for this or other reasons, suffer a loss to the extent of the
default. The Fund invests in variable or floating rate notes only when the
investment adviser deems the investment to involve minimal credit risk. Variable
and floating rate notes that do not provide for settlement within seven days may
be deemed illiquid and subject to the 10% limitation on such investments.
The Fund may purchase money market instruments from financial institutions,
such as banks and broker-dealers, subject to the seller's agreement to
repurchase them at an agreed upon time and price ("repurchase agreements"). The
securities subject to a repurchase agreement may bear maturities exceeding
thirteen months, provided the repurchase agreement itself matures in one year or
less. The seller under a repurchase agreement will be required to maintain the
value of the securities subject to the agreement at not less than the repurchase
price. Default by the seller would, however, expose the Fund to possible loss
because of adverse market action or delay in connection with the disposition of
the underlying obligations.
The Fund may also purchase securities on a "when-issued" basis. When-issued
securities are securities purchased for delivery beyond the normal settlement
date at a stated price and yield. The Fund will generally not pay for such
securities or start earning interest on them until they are received. Securities
purchased on a when-issued basis are recorded as an asset and are subject to
changes in value based upon changes in the general level of interest rates. The
Fund expects that commitments to purchase when-issued 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 securities for speculative purposes but
only in furtherance of its investment objective.
The Fund may invest in asset-backed securities which are backed by
mortgages, installment sales contracts, credit card receivables or other assets
and collateralized mortgage obligations ("CMOs")
6
<PAGE> 7
issued or guaranteed by U.S. Government agencies and instrumentalities or issued
by private companies. Purchasable mortgage-related securities also include
adjustable rate securities. The estimated life of certain asset-backed
securities varies with the prepayment experience with respect to the underlying
debt instruments. For this and other reasons, an asset-backed security's stated
maturity may be shortened, and the security's total return may be difficult to
predict precisely. CMOs sometimes demonstrate an additional level of volatility
and may, in certain circumstances, be less liquid than other money market
instruments. The Fund currently intends to hold CMOs only as collateral for
repurchase agreements.
In addition, the Fund may, when deemed appropriate by its investment
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.
The Fund may make investments in obligations, such as guaranteed investment
contracts and similar funding agreements (collectively "GICs"), issued by highly
rated U.S. insurance companies. A GIC is a general obligation of the issuing
insurance company and not a separate account. The Fund's investments in GIC's
are not expected to exceed 5% of its total assets at the time of purchase absent
unusual market conditions. GIC investments are subject to the Fund's policy
regarding investments in illiquid securities.
The Fund will not knowingly 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. (See "Investment Objectives and Policies--Illiquid Securities" in
the Statement of Additional Information.)
INVESTMENT LIMITATIONS
The Fund's investment objective and policies described above are not
fundamental and may be changed by the Company's Board of Directors without a
vote of shareholders. If there is a change in the investment objective,
shareholders should consider whether the Fund remains an appropriate investment
in light of their then current financial position and needs. The Fund's
investment limitations summarized below may not be changed without the
affirmative vote of the holders of a majority of its outstanding shares. (A
complete list of the investment limitations that cannot be changed without a
vote of shareholders is contained in the Statement of Additional Information
under "Investment Objectives and Policies.")
THE FUND MAY NOT:
1. Purchase any securities other than so-called money market
instruments, some of which may be subject to repurchase agreements, but the
Fund may make interest-bearing savings deposits in amounts not in excess of
5% of the value of the Fund's assets and may make time deposits.
2. Borrow money, except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Fund's assets at the time
of such borrowing; or pledge any assets except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the Fund's assets at the time of such
borrowing.
7
<PAGE> 8
3. Purchase any securities which would cause, at the time of purchase,
less than 25% of the value of its total assets to be invested in
obligations of issuers in the banking industry or in obligations, such as
repurchase agreements, secured by such obligations (unless the Fund is in a
temporary defensive position) or which would cause, at the time of
purchase, 25% or more of the value of its total assets to be invested in
the obligations of issuers in any other industry.
4. Purchase securities of any one issuer, other than the federal
government, if immediately after such purchase more than 5% of the value of
its total assets would be invested in such issuer, except that up to 25% of
the value of the Fund's total assets may be invested without regard to such
5% limitation.
PURCHASE AND REDEMPTION OF SHARES
PURCHASE PROCEDURES
Fund shares are sold at the net asset value per share next determined after
acceptance of a purchase order by PFPC, the Fund's transfer agent. Purchase
orders for shares are accepted only on days on which both the New York Stock
Exchange and the Federal Reserve Bank of Philadelphia are open for business (a
"Business Day") and must be transmitted to PFPC in Wilmington, Delaware by
telephone (800-441-7450; in Delaware: 302-791-5350) or through the Fund's
computer access program. Orders accepted before 12:00 noon, Eastern time, for
which payment has been received by PNC Bank, the Fund's custodian, will be
executed at 12:00 noon. Orders accepted after 12:00 noon and before 3:00 P.M.,
Eastern time (or orders accepted earlier in the same day for which payment has
not been received by 12:00 noon), will be executed at 4:00 P.M., Eastern time,
if payment has been received by PNC Bank by that time. Orders received at other
times, and orders for which payment has not been received by 4:00 P.M., Eastern
time, will not be accepted, and notice thereof will be given to the institution
placing the order. (Payment for orders which are not received or accepted will
be returned after prompt inquiry to the sending institution.) The Fund may in
its discretion reject any order for shares.
Payment for Fund shares may be made only in federal funds immediately
available to PNC Bank. The minimum initial investment by an institution is $3
million for TempCash Shares and $5,000 for TempCash Dollar Shares; however,
broker-dealers and other institutional investors may set a higher minimum for
their customers. There is no minimum subsequent investment. The Fund, at its
discretion, may reduce the minimum initial investment for TempCash Shares for
specific institutions whose aggregate relationship with the Provident
Institutional Funds is substantially equivalent to this minimum $3 million and
warrants this reduction.
Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in Dollar Shares. (See also "Management of the Fund--Service
Organizations.") Institutions, including banks regulated by the Comptroller of
the Currency and investment advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state securities
commissions, are urged to consult their legal advisors before investing
fiduciary funds in Dollar Shares. (See also "Management of the Fund--Banking
Laws.")
8
<PAGE> 9
REDEMPTION PROCEDURES
Redemption orders must be transmitted to PFPC in Wilmington, Delaware in
the manner described under "Purchase Procedures." Shares are redeemed at the net
asset value per share next determined after PFPC's receipt of the redemption
order. While the Fund intends to use its best efforts to maintain its net asset
value per share at $1.00, the proceeds paid to a shareholder upon redemption may
be more or less than the amount invested depending upon a share's net asset
value at the time of redemption.
Payment for redeemed shares for which a redemption order is received by
PFPC by 3:00 P.M., Eastern time, on a Business Day is normally made in federal
funds wired to the redeeming shareholder on the same day. Payment for redemption
orders which are received between 3:00 P.M. and 4:00 P.M., Eastern time, or on a
day when PNC Bank is closed, is normally wired in federal funds on the next day
following redemption that PNC Bank is open for business.
The Fund shall have the right to redeem shares in any TempCash Shares
account if the value of the account is less than $100,000, and in any TempCash
Dollar Shares account if the value of the account is less than $1,000, after
sixty-days' prior written notice to the shareholder. Any such redemption shall
be effected at the net asset value next determined after the redemption order is
entered. If during the sixty-day period the shareholder increases the value of
its TempCash Shares account to $100,000 or more or its TempCash Dollar Shares
account to $1,000 or more, no such redemption shall take place. In addition, the
Fund may redeem shares involuntarily under certain special circumstances
described in the Statement of Additional Information under "Additional Purchase
and Redemption Information."
OTHER MATTERS
The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC as of 12:00 noon and 4:00 P.M., Eastern
time, on each Business Day (excluding holidays on which either the Federal
Reserve Bank of Philadelphia or the New York Stock Exchange are closed).
Currently, one or both of these institutions are closed on the customary
national business holidays of New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day (observed), Independence Day, Labor
Day, Columbus Day (observed), Veterans' Day, Thanksgiving Day, and Christmas
Day. The net asset value per share of each class of the Fund's shares is
calculated by adding the value of all securities and other assets of the Fund
that are allocable to a particular class, subtracting liabilities charged to
such class, and dividing the result by the total number of outstanding shares of
such class. In computing net asset value, the Fund uses the amortized cost
method of valuation as described in the Statement of Additional Information
under "Additional Purchase and Redemption Information." The Fund's net asset
value per share for purposes of pricing purchase and redemption orders is
determined independently of the net asset value of the Company's TempFund
portfolio.
Fund shares are sold and redeemed without charge by the Fund. Institutional
investors purchasing or holding Fund shares for their customer accounts may
charge customers fees for cash management and other services provided in
connection with their accounts. A customer should, therefore, consider the terms
of its account with an institution before purchasing Fund shares. An institution
purchasing or redeeming Fund shares on behalf of its customers is responsible
for transmitting orders to the Fund in accordance with its customer agreements.
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MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The business and affairs of the Fund are managed under the direction of the
Company's Board of Directors.
INVESTMENT ADVISER AND SUB-ADVISER
PIMC, a wholly-owned indirect subsidiary of PNC Bank, serves as the Fund's
investment adviser. PIMC is one of the largest bank managers of mutual funds,
with assets currently under management in excess of $30 billion. 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. PNC Bank serves as the Fund's
sub-adviser. PNC Bank is one of the largest bank managers of investments for
individuals in the United States, and together with its predecessors, has been
in the business of managing the investments of fiduciary and other accounts
since 1847. PNC Bank is a wholly-owned, indirect subsidiary of PNC Bank Corp.,
and has principal offices at 1600 Market Street, Philadelphia, Pennsylvania
19103. In 1973, Provident National Bank (predecessor to PNC Bank) commenced
advising the first institutional money market mutual fund--a U.S.
dollar-denominated constant net asset value fund--offered in the United States.
PIMC and PNC Bank also serve as investment adviser and sub-adviser,
respectively, to the Company's TempFund portfolio.
PNC Bank Corp., a multi-bank holding company headquartered in Pittsburgh,
Pennsylvania, is one of the largest financial services organizations in the
United States, with banking subsidiaries in Pennsylvania, New Jersey, Delaware,
Ohio, Kentucky, Indiana, Massachusetts and Florida. Its major businesses include
corporate banking, consumer banking, real estate banking, mortgage banking and
asset management.
As investment adviser, PIMC manages the Fund's portfolio and is responsible
for all purchases and sales of the Fund's portfolio securities. PIMC also
maintains certain of the Fund's financial accounts and records and computes the
Fund's net asset value and net income. For the investment advisory services
provided and expenses assumed by it, PIMC is entitled to receive a fee, computed
daily and payable monthly, based on the Fund's average net assets. PIMC and the
administrators may from time to time reduce the investment advisory and
administration fees otherwise payable to them or may reimburse the Fund for its
operating expenses. Any fees waived and any expenses reimbursed by PIMC and the
administrators with respect to a particular fiscal year are not recoverable. For
the fiscal year ended September 30, 1996, the Fund paid investment advisory fees
aggregating .08% of its average net assets.
As sub-adviser, PNC Bank provides research, credit analysis and
recommendations with respect to the Fund's investments and supplies PIMC with
certain computer facilities, personnel and other services. For its sub-advisory
services, PNC Bank is entitled to receive from PIMC an amount equal to 75% of
the advisory fees paid by the Fund to PIMC (subject to adjustment in certain
circumstances). The sub-advisory fees paid by PIMC to PNC Bank have no effect on
the investment advisory fees payable by the Fund to PIMC. PNC Bank also serves
as the Fund's custodian. The services provided by PNC Bank and PIMC and the fees
payable by the Fund for these services are described further in the Statement of
Additional Information under "Management of the Fund."
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ADMINISTRATORS
PFPC, whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809, and PDI, whose principal business address is set forth below
under "The Distributor," serve as administrators. PFPC is an indirect
wholly-owned subsidiary of PNC Bank Corp. A majority of the outstanding stock of
PDI is owned by its officers. The administrative services provided by the
administrators, which are described more fully in the Statement of Additional
Information, include providing and supervising the operation of an automated
data processing system to process purchase and redemption orders; assisting in
maintaining the Fund's Wilmington, Delaware office; performing administrative
services in connection with the Fund's computer access program maintained to
facilitate shareholder access to the Fund; accumulating information for and
coordinating the preparation of reports to the Fund's shareholders and the SEC;
and, maintaining the registration of the Fund's shares for sale under state
securities laws. PFPC and PDI are jointly and severally responsible for carrying
out the duties undertaken pursuant to the Administration Agreement with the
Fund.
For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly, based on the Fund's
average net assets. (For information regarding the administrators'
administrative fee waivers and expense reimbursements, see "Investment Adviser
and Sub-Adviser" above.) The Fund also reimburses each administrator for its
reasonable out-of-pocket expenses incurred in connection with the Fund's
computer access program. For the fiscal year ended September 30, 1996, the Fund
paid administrative fees aggregating .08% of its average net assets.
PFPC also serves as transfer agent, registrar and dividend disbursing
agent. PFPC's address as transfer agent is P.O. Box 8950, Wilmington, Delaware
19885-9628. The services provided by PFPC and PDI and the fees payable by the
Fund for these services are described further in the Statement of Additional
Information under "Management of the Funds."
THE DISTRIBUTOR
PDI also serves as distributor of the Fund's shares. Its principal offices
are located at Four Falls Corporate Center, 6th Floor, West Conshohocken,
Pennsylvania 19428. Fund shares are sold on a continuous basis by the
distributor as agent. The distributor pays the cost of printing and distributing
prospectuses to persons who are not shareholders of the Fund (excluding
preparation and printing expenses necessary for the continued registration of
the Fund's shares) and of printing and distributing all sales literature. No
compensation is payable by the Fund to the distributor for its distribution
services.
SERVICE ORGANIZATIONS
Institutional investors, such as banks, savings and loan associations and
other financial institutions, including affiliates of PNC Bank Corp. ("Service
Organizations"), may purchase Dollar Shares. TempCash Dollar Shares are
identical in all respects to TempCash Shares except that they bear the service
fees described below and enjoy certain exclusive voting rights on matters
relating to these fees. The Fund will enter into an agreement with each Service
Organization which purchases Dollar Shares requiring it to provide support
services to its customers who are the beneficial owners of such shares in
consideration of the Fund's payment of .25% (on an annualized basis) of the
average daily net asset value of the Dollar Shares held by the Service
Organization for the benefit of customers. Such services, which are described
more fully in the Statement of Additional Information under "Management of the
Fund--Service Organizations," include aggregating and processing purchase and
redemption re-
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quests from customers and placing net purchase and redemption orders with PFPC;
processing dividend payments from the Fund on behalf of customers; providing
information periodically to customers showing their positions in Dollar Shares;
and, providing sub-accounting or the information necessary for sub-accounting
with respect to Dollar Shares beneficially owned by customers. Under the terms
of the agreements, Service Organizations are required to provide to their
customers a schedule of any fees that they may charge customers in connection
with their investments in Dollar Shares. TempCash shares are sold to
institutions that have not entered into servicing agreements with the Fund in
connection with their investments.
EXPENSES
Except as noted above and in the Statement of Additional Information, the
Fund's service contractors bear all expenses in connection with the performance
of their services. Similarly, the Fund bears the expenses incurred in its
operations. For the fiscal year ended September 30, 1996, the Fund's total
expenses with respect to TempCash Shares were .18% of the average net assets of
the TempCash Shares and the Fund's total expenses with respect to Dollar Shares
were .43% of the average net assets of the Dollar Shares. With regard to fees
paid exclusively by Dollar Shares, see "Service Organizations" above.
BANKING LAWS
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, or controlling a
registered, open-end investment company engaged continuously in the issuance of
its shares and prohibit banks generally from issuing, underwriting, selling or
distributing securities such as Fund shares. Such banking laws and regulations
do not prohibit such a holding company or affiliate or banks generally from
acting as investment adviser, transfer agent or custodian to such an investment
company or from purchasing shares of such a company for and upon the order of
customers. PNC Bank, PIMC and PFPC, as well as some Service Organizations, are
subject to such banking laws and regulations, but believe they may perform the
services for the Fund contemplated by their respective agreements, this
Prospectus and the Statement of Additional Information without violating
applicable banking laws or regulations.
Should future legislative, judicial, or administrative action prohibit or
restrict the activities of bank Service Organizations in connection with the
provision of support services to their customers, the Fund might be required to
alter or discontinue its arrangements with Service Organizations and change its
method of operations with respect to Dollar Shares. It is not anticipated,
however, that any change in the Fund's method of operations would affect its net
asset value per share or result in a financial loss to any customer.
DIVIDENDS
Shareholders of the Fund are entitled to dividends and distributions
arising only from the net investment income and capital gains, if any, earned on
investments held by the Fund. The Fund's net investment income is declared daily
as a dividend to shares held of record at the close of business on the day of
declaration. 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,
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<PAGE> 13
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.
The Fund does not expect to realize net long-term capital gains.
Dividends are determined in the same manner for each class of shares of the
Fund. Dollar Shares bear all the expense of fees paid to Service Organizations,
and as a result, at any given time, the dividend on Dollar Shares will be
approximately .25% lower than the dividend on TempCash Shares.
Institutional shareholders may elect to have their dividends reinvested in
additional full and fractional shares of the same class of shares with respect
to which such dividends are declared at the net asset value of such shares on
the payment date. Reinvested dividends receive the same tax treatment as
dividends paid in cash. Such election, or any revocation 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.
PFPC, as transfer agent, will send each Fund shareholder or its authorized
representative an annual statement designating the amount, if any, of any
dividends and distributions made during each year and their federal tax
qualification.
TAXES
The Fund qualified in its last taxable year and intends to qualify in
future years as a "regulated investment company" under the Internal Revenue Code
of 1986, as amended (the "Code"). A regulated investment company generally is
exempt from federal income tax on amounts distributed to its shareholders.
Qualification as a regulated investment company under the Code for a
taxable year requires, among other things, that the Fund distribute to its
shareholders at least 90% of its investment company taxable income for such
year. In general, the Fund's investment company taxable income will be its
taxable income (including dividends and short-term capital gains, if any)
subject to certain adjustments and excluding the excess of any net long-term
capital gain for the taxable year over any net short-term capital loss for such
year. The Fund intends to distribute substantially all of its investment company
taxable income each year. Such distributions will be taxable as ordinary income
to Fund shareholders which are not currently exempt from federal income taxes,
whether such income is received in cash or reinvested in additional shares.
(Federal income taxes for distributions to an IRA or a qualified retirement plan
are deferred under the Code.) It is anticipated that none of the Fund's
distributions will be eligible for the dividends received deduction for
corporations. The Fund does not expect to realize long-term capital gains and,
therefore, does not contemplate payment of any "capital gain dividends" as
described in the Code.
Dividends declared in October, November, or December of any year payable to
shareholders of record on a specified date in such months will be deemed to have
been received by the shareholders and paid by the Fund on December 31 of such
year in the event such dividends are actually paid during January of the
following year.
The foregoing discussion is only a brief summary of some of the important
federal tax considerations generally affecting the Fund and its shareholder. As
noted above, IRAs receive special tax treatment. No attempt is made to present a
detailed explanation of the federal, state, or local income tax treatment of the
Fund or its shareholders, and this discussion is not intended as a substitute
for
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<PAGE> 14
careful tax planning. Accordingly, potential investors in the Fund should
consult their tax advisers with specific reference to their own tax situation.
YIELDS
From time to time, in advertisements or in reports to shareholders, the
"yields" and "effective yields" for TempCash Shares and TempCash Dollar Shares
may be quoted. Yield quotations are computed separately for TempCash Shares and
Dollar Shares. The "yield" for a particular class or sub-class of Fund shares
refers to the income generated by an investment in such shares over a specified
period (such as a seven-day period). This income is then "annualized"; that is,
the amount of income generated by the investment during that period is assumed
to be generated for each such period over a 52-week or one-year period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in a
particular class or sub-class is assumed to be reinvested. The "effective yield"
will be slightly higher than the "yield" because of the compounding effect of
this assumed reinvestment.
The Fund's yields may be compared to those of other mutual funds with
similar objectives, to stock or other relevant indices, or to rankings prepared
by independent services or other financial or industry publications that monitor
the performance of mutual funds. For example, such data are reported in national
financial publications such as IBC/Donoghue's Money Fund Report(R), The Wall
Street Journal, and The New York Times, reports prepared by Lipper Analytical
Services, Inc., and publications of a local or regional nature.
The Fund's yield figures for TempCash Shares and Dollar Shares represent
the Fund's past performance, will fluctuate, and should not be considered as
representative of future results. The yield of any investment is generally a
function of portfolio quality and maturity, type of investment, and operating
expenses. Any fees charged by Service Organizations or other institutional
investors directly to their customers in connection with investments in Fund
shares are not reflected in the Fund's yields; such fees, if charged, would
reduce the actual return received by customers on their investments. The methods
used to compute the Fund's yields are described in more detail in the Statement
of Additional Information. Investors may call (800) 821-6006 (TempCash Shares
code: 21; TempCash Dollar Shares code: 23) to obtain current yield information.
DESCRIPTION OF SHARES AND MISCELLANEOUS
The Company has authorized capital of 60 billion shares of Common Stock,
$.001 par value per share, of which 40 billion shares are classified as Class B
Common Stock, 5 billion shares are classified as Class B--Special Series 1
Common Stock, 5 billion shares are classified as Class C Common Stock and 10
billion shares are classified as Class C--Special Series 1 Common Stock. Shares
of Class C Common Stock and Class C--Special Series 1 Common Stock (also known
as "Dollar Shares") represent interests in the Company's TempCash portfolio.
Shares of Class B Common Stock and Class B--Special Series 1 Common Stock
represent interests in the TempFund portfolio. Under the Company's charter, the
Board of Directors has the power to classify or reclassify any unissued shares
of Common Stock into one or more classes or sub-classes.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE FUND AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE
AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS
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<PAGE> 15
RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING
THE COMPANY'S TEMPFUND PORTFOLIO MAY OBTAIN A SEPARATE PROSPECTUS BY CALLING
800-998-7633.
The Company does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Company will call a meeting of shareholders for the purpose of voting upon the
question of removal of a member of the Board of Directors upon written request
of shareholders owning at least 10% of the outstanding shares of the Company
entitled to vote.
Each Fund share represents an equal, proportionate interest in the assets
belonging to the Fund. Fund shares do not have preemptive or conversion rights.
When issued for payment as described in this Prospectus, Fund shares will be
fully paid and non-assessable.
Holders of the Fund's TempCash Shares and Dollar Shares will vote in the
aggregate and not by class or sub-class on all matters, except where otherwise
required by law and except that only Dollar Shares will be entitled to vote on
matters submitted to a vote of shareholders pertaining to the Fund's
arrangements with Service Organizations. Further, shareholders of the Fund and
of the Company's TempFund portfolio will vote in the aggregate and not by
portfolio except as otherwise required by law or when the Board of Directors
determines that the matter to be voted upon affects only the interests of the
shareholders of a particular portfolio. (See the Statement of Additional
Information under "Additional Description Concerning Fund Shares" for examples
where the 1940 Act requires voting by portfolio.) Shareholders of the Company
are entitled to one vote for each full share held (irrespective of class,
sub-class, or portfolio) and fractional votes for fractional shares held. Voting
rights are not cumulative and, accordingly, the holders of more than 50% of the
aggregate shares of Common Stock of the Company may elect all of the directors.
For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS; AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
-------------------
TABLE OF CONTENTS
PAGE
BACKGROUND AND EXPENSE
INFORMATION...........................................................
FINANCIAL HIGHLIGHTS.......................................................
INVESTMENT OBJECTIVE AND
POLICIES..............................................................
PURCHASE AND REDEMPTION OF
SHARES................................................................
MANAGEMENT OF THE FUND.....................................................
DIVIDENDS..................................................................
TAXES......................................................................
YIELDS.....................................................................
DESCRIPTION OF SHARES AND
MISCELLANEOUS.........................................................
TEMPCASH
OFFERED
THROUGH
USAA AMA
ASSET
MANAGEMENT
ACCOUNT
PROSPECTUS
INSIDE
JANUARY 31, 1997
USAA
USAA INVESTMENT
MANAGEMENT
COMPANY
