<PAGE> 1
As filed with the Securities and Exchange Commission on January 31, 1997
1933 Act Registration No. 2-47015
1940 Act Registration No. 811-2354
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
POST-EFFECTIVE AMENDMENT NO. 56
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
---------------
TEMPORARY INVESTMENT FUND, INC.
(Exact Name of Registrant As Specified In Charter)
<TABLE>
<S> <C>
Bellevue Park Corporate Center EDWARD J. ROACH
400 Bellevue Parkway, Suite 100 Bellevue Park Corporate Center
Wilmington, Delaware 19809 400 Bellevue Parkway, Suite 100
(Address of Principal Executive Offices) Wilmington, Delaware 19809
Registrant's Telephone Number: (302) 792-2555 (Name and Address of Agent for Service)
</TABLE>
Copies to:
W. BRUCE McCONNEL, III
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
It is proposed that this filing will become effective (check appropriate box)
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2. The Form 24f-2 Notice and Opinion
for the Registrant's fiscal year ended September 30, 1996 was filed on November
25, 1996.
<PAGE> 2
================================================================================
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933 (1)
<TABLE>
<CAPTION>
===================================================================================================================================
PROPOSED
MAXIMUM PROPOSED
AMOUNT BEING OFFERING MAXIMUM AMOUNT OF
TITLE OF SECURITIES REGISTERED PRICE PER OFFERING PRICE REGISTRATION
BEING REGISTERED (2) UNIT (2) (3) FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Class B
and Class B -
Special Series 1
Common Stock.................... 2,862,429,192 $1.00 $2,862,429,192 $0
- -----------------------------------------------------------------------------------------------------------------------------------
Shares of Class C
and Class C -
Special Series 1
Common Stock.................... 365,342,718 $1.00 $365,342,718 $0
- -----------------------------------------------------------------------------------------------------------------------------------
Total Shares of
Common Stock 3,227,771,910 $1.00 $3,227,771,910 $0
===================================================================================================================================
</TABLE>
(1) Registrant has registered an indefinite number of its shares, including
Class B, Class B - Special Series 1, Class C, and Class C - Special
Series 1 Common Stock, under the Securities Act of 1933 pursuant to
Rule 24(f)-2 under the Investment Company Act of 1940. Registrant's
Form 24(f)-2 Notice for its fiscal year ended September 30, 1996 was
filed on November 25, 1996 for its TempFund and TempCash portfolios.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 24(e)-2 under the Investment Company Act of 1940 and
Rule 457(d) under the Securities Act of 1933, based on an offering
price on January 30, 1997 of $1.00 per share of Class B, Class B -
Special Series 1, Class C, and Class C - Special Series 1 Common Stock.
(3) The maximum offering price(s) for Registrant's shares of Class B, Class
B - Special Series 1, Class C, and Class C - Special Series 1 Common
Stock is calculated pursuant to Rule 24(e)-2 under the Investment
Company Act of 1940. During the year ended September 30, 1996,
Registrant redeemed a total of 103,649,208,875 Class B and Class B-
Special Series 1 Shares and 47,473,446,398 Class C and Class C-Special
Series 1 Shares, of which Registrant used 100,786,779,683 Class B and
Class B-Special Series 1 Shares and 47,108,103,680 Class C and Class
C-Special Series 1 Shares for reductions pursuant to paragraph (c) of
Rule 24(f)-2 in Registrant's Form 24(f)-2 Notice dated November 25,
1996 for the year ended September 30, 1996 (none of the redeemed shares
were used for reductions pursuant to Rule 24(e)-2 in previous post-
effective amendments filed during the current fiscal year), and of
which Registrant is using 2,862,429,192 Class B and Class B-Special
Series 1 Shares and 365,342,718 Class C and Class C-Special Series 1
Shares to reduce, pursuant to paragraph (a) of Rule 24(e)-2, the number
of Shares for which the registration fee is payable with respect to
this Post-Effective Amendment.
<PAGE> 3
TEMPORARY INVESTMENT FUND, INC.
(TEMPFUND PORTFOLIO)
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM PROSPECTUS CAPTION
-------------- ------------------
<S> <C> <C>
1. Cover Page......................................... Cover Page
2. Synopsis........................................... Background and Expense
Information
3. Condensed Financial Information.................... Financial Highlights;
Yields
4. General Description of Registrant.................. Cover Page; Financial
Highlights; Investment
Objective and Policies
5. Management of the Fund............................. Management of the Fund;
Dividends
6. Capital Stock and Other Securities................. Cover Page; Financial
Highlights; Dividends;
Taxes; Description of
Shares and Miscellaneous
7. Purchase of Securities Being Offered............... Management of the Fund;
Purchase and Redemption
of Shares
8. Redemption or Repurchase........................... Purchase and Redemption
of Shares
9. Pending Legal Proceedings.......................... Inapplicable
</TABLE>
<PAGE> 4
TempFund
An Investment Portfolio Offered by
Temporary Investment Fund, Inc.
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption orders only call:
400 Bellevue Parkway, Suite 100 800-441-7450 (in Delaware: 302-791-5350).
Wilmington, DE 19809 For yield information call: 800-821-6006
(TempFund Shares code: 24; TempFund Dollar
Shares code: 20).
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 TempFund 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, bank, and commercial obligations 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 TempFund Shares, investors may purchase TempFund "Dollar" Shares
which accrue daily dividends in the same manner as TempFund 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> 5
BACKGROUND AND EXPENSE INFORMATION
The Company was incorporated in Maryland on February 8, 1973 and commenced
operations of the Fund on October 10, 1973. The Fund presently offers two
separate classes of shares--TempFund Shares and TempFund 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>
TEMPFUND
TEMPFUND 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:
TempFund Shares: $2 $ 6 $10 $23
TempFund 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
LESSER 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 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 TempFund
Shares and Dollar Shares for the fiscal year ended September 30, 1996, absent
fee waivers, would have been .26% and .51%, 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> 6
FINANCIAL HIGHLIGHTS
The following financial highlights for TempFund Shares and TempFund 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.
TEMPFUND SHARES
The table below sets forth selected financial data for a TempFund Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
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.............. .0541 .0567 .0360 .0310 .0424 .0667
Net Realized Gains on Investments.. -- -- -- -- .0015 --
---------- ---------- ---------- ---------- ---------- ----------
Total From Investment Operations... .0541 .0567 .0360 .0310 .0439 .0667
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (From Net Investment
Income).......................... (.0541) (.0567) (.0360) (.0310) (.0424) (.0667)
Distributions (From Capital
Gains)........................... -- -- -- -- (.0015) --
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions................ (.0541) (.0567) (.0360) (.0310) (.0439) (.0667)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year........ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=========== =========== =========== =========== =========== ===========
Total Return....................... 5.55% 5.82% 3.66% 3.14% 4.48% 6.87%
Ratios/Supplemental Data
Net Assets, End of Year (000's).... $5,715,004 $5,351,346 $4,480,851 $5,522,056 $9,227,572 $8,888,832
Ratio of Expenses to Average Daily
Net Assets....................... .18%(1) .24%(1) .25%(1) .21% .21% .27%
Ratio of Net Investment Income to
Average Daily Net Assets......... 5.41% 5.67% 3.60% 3.10% 4.13% 6.53%
<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.............. .0815 .0896 .0707 .0609
Net Realized Gains on Investments.. -- -- -- --
---------- ---------- ---------- ----------
Total From Investment Operations... .0815 .0896 .0707 .0609
---------- ---------- ---------- ----------
Less Distributions
Dividends (From Net Investment
Income).......................... (.0815) (.0896) (.0707) (.0609)
Distributions (From Capital
Gains)........................... -- -- -- --
---------- ---------- ---------- ----------
Total Distributions................ (.0815) (.0896) (.0707) (.0609)
---------- ---------- ---------- ----------
Net Asset Value, End of Year........ $1.00 $1.00 $1.00 $1.00
=========== =========== =========== ===========
Total Return....................... 8.47% 9.34% 7.31% 6.29%
Ratios/Supplemental Data
Net Assets, End of Year (000's).... $4,857,260 $5,265,850 $4,583,277 $5,267,851
Ratio of Expenses to Average Daily
Net Assets....................... .30% .30% .28% .28%
Ratio of Net Investment Income to
Average Daily Net Assets......... 8.16% 8.96% 7.02% 6.06%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempFund Shares would have been
.26% for the year ended September 30, 1996 and .27% for the years ended
September 30, 1995 and 1994, respectively.
3
<PAGE> 7
TEMPFUND DOLLAR SHARES
The table below sets forth selected financial data for a TempFund Dollar Share
outstanding throughout each period presented.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990
-------- ------- -------- -------- -------- ------- -------
<S> <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
-------- ------- -------- -------- -------- ------- -------
Income From Investment Operations
Net Investment Income........................ .0516 .0542 .0335 .0285 .0399 .0642 .0790
Net Realized Gains on Investments............ -- -- -- -- .0015 -- --
-------- ------- -------- -------- -------- ------- -------
Total From Investment Operations............. .0516 .0542 .0335 .0285 .0414 .0642 .0790
-------- ------- -------- -------- -------- ------- -------
Less Distributions
Dividends (From Net Investment Income)....... (.0516) (.0542) (.0335) (.0285) (.0399) (.0642) (.0790)
Distributions (From Capital Gains)........... -- -- -- -- (.0015) -- --
-------- ------- -------- -------- -------- ------- -------
Total Distributions.......................... (.0516) (.0542) (.0335) (.0285) (.0414) (.0642) (.0790)
-------- ------- -------- -------- -------- ------- -------
Net Asset Value, End of Year.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======= ======== ======== ======== ======= =======
Total Return................................. 5.30% 5.57% 3.41% 2.89% 4.23% 6.62% 8.22%
Ratios/Supplemental Data
Net Assets, End of Year (000's).............. $162,119 $81,828 $102,105 $112,695 $217,230 $44,667 $73,968
Ratio of Expenses to Average Daily Net
Assets..................................... .43%(1) .49%(1) .50%(1) .46% .46% .52% .55%
Ratio of Net Investment Income to Average
Daily Net Assets........................... 5.16% 5.42% 3.35% 2.85% 3.88% 6.28% 7.91%
<CAPTION>
1989 1988 1987
-------- ------- -------
<S> <<C> <C> <C>
Net Asset Value, Beginning of Year............ $1.00 $1.00 $1.00
-------- ------- -------
Income From Investment Operations
Net Investment Income........................ .0871 .0682 .0584
Net Realized Gains on Investments............ -- -- --
-------- ------- -------
Total From Investment Operations............. .0871 .0682 .0584
-------- ------- -------
Less Distributions
Dividends (From Net Investment Income)....... (.0871) (.0682) (.0584)
Distributions (From Capital Gains)........... -- -- --
-------- ------- -------
Total Distributions.......................... (.0871) (.0682) (.0584)
-------- ------- -------
Net Asset Value, End of Year.................. $1.00 $1.00 $1.00
======== ======= =======
Total Return................................. 9.09% 7.06% 6.04%
Ratios/Supplemental Data
Net Assets, End of Year (000's).............. $101,989 $65,077 $37,746
Ratio of Expenses to Average Daily Net
Assets..................................... .55% .53% .53%
Ratio of Net Investment Income to Average
Daily Net Assets........................... 8.71% 6.77% 5.81%
</TABLE>
- ---------------
(1) Without the waiver of advisory and administration fees, the ratio of
expenses to average daily net assets for TempFund Dollar Shares would have
been .51% for the year ended September 30, 1996 and .52% for the years ended
September 30, 1995 and 1994, respectively.
4
<PAGE> 8
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, 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 under 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.
With respect to the types of instruments in which the Fund may invest, 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.
Additionally, securities purchased by the Fund (or the issuers thereof) will be
rated at the time of purchase in the highest rating category by either Standard
& Poor's Ratings Group ("Standard & Poor's") or Moody's Investors Service, Inc.
("Moody's"), and no such security will be rated less than the highest rating
category (e.g. less than "A-1" by Standard & Poor's or "Prime-1" by Moody's) by
any NRSRO. A description of applicable NRSRO ratings is in the Appendix to the
Statement of Additional Information. 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.
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"
5
<PAGE> 9
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 bank obligations such as certificates of deposit and
bankers' acceptances 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 commercial
and savings banks in amounts not in excess of 5% of the Fund's assets.
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.
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 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.
The estimated life of certain asset-backed securities varies with the prepayment
experience with respect to the underlying 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.
6
<PAGE> 10
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 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 the 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.
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.
3. Purchase any securities which would cause 25% or more of the value
of its total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the
same industry, provided that there is no limitation with respect to
investments in federal government obligations or certain bank obligations.
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
7
<PAGE> 11
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 5:30 P.M., Eastern time (or orders accepted earlier
in the same day for which payment has not been received by 12:00 noon), will be
executed at 5:30 P.M., Eastern time, if payment has been received by PNC Bank by
that time. Orders received at other times, and orders for which payment has not
been received by 5:30 P.M., Eastern time, will not be accepted, and notice
thereof will be given to the institution placing the order. (Payment for orders
which are not received or accepted will be returned after prompt inquiry to the
sending institution.) Between 3:00 P.M. and 5:30 P.M., Eastern time, purchase
orders may only be transmitted by telephone, and the Fund reserves the right to
limit the amount of such orders. The Fund may in its discretion reject any order
for shares.
Payment for Fund shares may be made only in federal funds or other funds
immediately available to PNC Bank. The minimum initial investment by an
institution is $3 million for TempFund Shares and $5,000 for 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 TempFund
Shares for specific institutions whose aggregate relationship with the Provident
Institutional Funds is substantially equivalent to this $3 million minimum and
warrants this reduction.
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.")
REDEMPTION PROCEDURES
Redemption orders must be transmitted to PFPC in Wilmington, Delaware in
the manner described under "Purchase Procedures," except that redemption orders
placed between 3:00 P.M. and 5:30 P.M., Eastern time, may only be transmitted by
telephone. Shares are redeemed at the net asset value per share next determined
after PFPC's receipt of the redemption order. Telephone instructions for
redemptions received between 3:00 P.M. and 5:30 P.M., Eastern time, on a
Business Day are received for execution on that same day, however, the Fund
reserves the right to make payment for such redemptions the next Business Day.
While the Fund intends to use its best efforts to maintain its net asset value
per share at $1.00, the proceeds paid to a shareholder upon redemption may be
more or less than the amount invested depending upon a share's net asset value
at the time of redemption.
Payment for redeemed shares for which a redemption order is received by
PFPC by 5:30 P.M., Eastern time, on a Business Day is normally made in federal
funds wired to the redeeming shareholder on the same day. Payment for redemption
orders which are received on a day when PNC Bank is closed is normally wired in
federal funds on the next day following redemption that PNC Bank is open for
business.
8
<PAGE> 12
The Fund shall have the right to redeem shares in any TempFund Shares
account if the value of the account is less than $100,000, and in any TempFund
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 TempFund Shares account to $100,000 or more or its TempFund Dollar Shares
account to $1,000 or more, no such redemption shall take place. In addition, the
Fund may also redeem shares involuntarily under certain special circumstances
described in the Statement of Additional Information under "Additional Purchase
and Redemption Information."
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 5:30 P.M., Eastern
time, on each Business Day (excluding those 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 TempCash
portfolio. Under the 1940 Act, the Fund may postpone the date of payment of any
redeemable security for up to seven days.
Fund shares are sold and redeemed without charge by the Fund. Institutional
investors purchasing or holding Fund shares for their customer accounts may
charge customer fees for cash management and other services provided in
connection with their accounts. A customer should, therefore, consider the terms
of its account with an institution before purchasing Fund shares. An institution
purchasing or redeeming Fund shares on behalf of its customers is responsible
for transmitting orders to the Fund in accordance with its customer agreements.
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
9
<PAGE> 13
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 TempCash 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 fee 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."
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
10
<PAGE> 14
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. TempFund Dollar Shares are
identical in all respects to TempFund Shares except that they bear the service
fees described below and enjoy certain exclusive voting rights on matters
relating to these fees. The Fund will enter into an agreement with each Service
Organization which purchases Dollar Shares requiring it to provide support
services to its customers who are the beneficial owners of such shares in
consideration of the Fund's payment of .25% (on an annualized basis) of the
average daily net asset value of the Dollar Shares held by the Service
Organization for the benefit of customers. Such services, which are described
more fully in the Statement of Additional Information under "Management of the
Fund--Service Organizations," include aggregating and processing purchase and
redemption requests from customers and placing net purchase and redemption
orders with PFPC; processing dividend payments from the Fund on behalf of
customers; providing information periodically to customers showing their
positions in Dollar Shares; and providing sub-accounting or the information
necessary for sub-accounting with respect to Dollar Shares beneficially owned by
customers. Under the terms of the agreements, Service Organizations are required
to provide to their customers a schedule of any fees that they may charge
customers in connection with their investments in Dollar Shares. TempFund Shares
are sold to institutions that have not entered into servicing agreements with
the Fund in connection with their investments.
11
<PAGE> 15
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 TempFund Shares were .18% of the average net assets of
the TempFund Shares and 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 or 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, 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 TempFund 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
12
<PAGE> 16
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 shareholders. 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 careful tax planning. Accordingly, potential investors in the Fund should
consult their tax advisors 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 TempFund Shares and Dollar Shares may be
quoted. Yield quotations are computed separately for TempFund Shares and
TempFund 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
13
<PAGE> 17
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 is 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 TempFund 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 (TempFund Shares
code: 24; TempFund Dollar Shares code: 20) 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 1 Common Stock. Shares of
Class C Common Stock and Class C--Special Series 1 Common Stock represent
interests in the Company's TempCash portfolio. Shares of Class B Common Stock
and Class B--Special Series 1 Common Stock (also known as "Dollar Shares")
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 RELATING TO THE FUND.
INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING THE COMPANY'S TEMPCASH
PORTFOLIO MAY OBTAIN SEPARATE PROSPECTUSES 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.
14
<PAGE> 18
Each Fund share represents an equal, proportionate interest in the assets
belonging to the TempFund portfolio. 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 TempFund 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 TempCash 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."
15
<PAGE> 19
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
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information................... 2
Financial Highlights............ 3
Investment Objective and
Policies...................... 5
Purchase and Redemption of
Shares........................ 7
Management of the Fund.......... 9
Dividends....................... 12
Taxes........................... 13
Yields.......................... 13
Description of Shares and
Miscellaneous................. 14
</TABLE>
PIF-P-001
TEMPFUND
AN INVESTMENT PORTFOLIO
OFFERED BY
TEMPORARY INVESTMENT FUND, INC.
LOGO
Prospectus
January 31, 1997
<PAGE> 20
TEMPORARY INVESTMENT FUND, INC.
(TempCash Portfolio)
Cross Reference Sheet
FORM N-1A ITEM PROSPECTUS CAPTION
1. Cover Page . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . Background and Expense Information
3. Condensed Financial Information . . Financial Highlights; Yields
4. General Description of
Registrant . . . . . . . . . . . . Cover Page; Financial Highlights;
Investment Objective and Policies
5. Management of the Fund . . . . . . . Management of the Fund; Dividends
6. Capital Stock and Other
Securities . . . . . . . . . . . . Cover Page; Financial Highlights;
Dividends; Taxes; Description of
Shares and Miscellaneous
7. Purchase of Securities Being
Offered . . . . . . . . . . . . . Management of the Fund; Purchase
and Redemption of Shares
8. Redemption or Repurchase . . . . . Purchase and Redemption of Shares
9. Pending Legal Proceedings . . . . . Inapplicable
<PAGE> 21
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> 22
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> 23
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> 24
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> 25
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> 26
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> 27
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> 28
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> 29
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.
9
<PAGE> 30
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."
10
<PAGE> 31
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-
11
<PAGE> 32
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,
12
<PAGE> 33
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
13
<PAGE> 34
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
14
<PAGE> 35
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."
15
<PAGE> 36
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
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information................... 2
Financial Highlights............ 3
Investment Objective and
Policies...................... 5
Purchase and Redemption of
Shares........................ 8
Management of the Fund.......... 10
Dividends....................... 12
Taxes........................... 13
Yields.......................... 14
Description of Shares and
Miscellaneous................. 14
PIF-P-002
</TABLE>
TEMPCASH
AN INVESTMENT PORTFOLIO
OFFERED BY
TEMPORARY INVESTMENT FUND, INC.
LOGO
Prospectus
January 31, 1997
<PAGE> 37
TEMPORARY INVESTMENT FUND, INC.
(TempCash Dollar Shares)
Cross Reference Sheet
FORM N-1A ITEM PROSPECTUS CAPTION
1. Cover Page . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . Background and Expense Information
3. Condensed Financial Information . . Financial Highlights; Yields
4. General Description of
Registrant . . . . . . . . . . . . Cover Page; Financial Highlights;
Investment Objective and Policies
5. Management of the Fund . . . . . . . Management of the Fund; Dividends
6. Capital Stock and Other
Securities . . . . . . . . . . . . Cover Page; Financial Highlights;
Dividends; Taxes; Description of
Shares and Miscellaneous
7. Purchase of Securities Being
Offered . . . . . . . . . . . . . Management of the Fund; Purchase
and Redemption of Shares
8. Redemption or Repurchase . . . . . Purchase and Redemption of Shares
9. Pending Legal Proceedings . . . . . Inapplicable
<PAGE> 38
TempCash
Dollar Shares
An Investment Portfolio Offered by
Temporary Investment Fund, Inc.
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption only call:
400 Bellevue Parkway, 800-441-7450 (in Delaware: 302-791-5350).
Suite 100 For yield information call: 800-821-6006
Wilmington, DE 19809 (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. This Prospectus describes one class of shares ("Dollar
Shares") 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.
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. Dollar
Shares may not be purchased by individuals directly, but institutional investors
may purchase shares for accounts maintained by individuals. Service
Organizations will perform shareholder servicing and provide assistance in
connection with the distribution of Dollar Shares and receive fees from the Fund
for their services. (See "Management of the Fund--Service Organizations.")
------------------------
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> 39
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--DOLLAR SHARES
<TABLE>
<CAPTION>
DOLLAR
SHARES
-----------
<S> <C> <C>
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (net of waivers)............................................... .08%
Other Expenses................................................................. .35%
Administration Fees (net of waivers)........................................ .08%
Shareholder Servicing Fees.................................................. .25%
Miscellaneous............................................................... .02%
Total Fund Operating Expenses (net of waivers)................................. .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 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
LESSER 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 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 Dollar
Shares for the fiscal year ended September 30, 1996, absent fee waivers, would
have been .58% 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> 40
FINANCIAL HIGHLIGHTS
The following financial highlights for TempCash Shares and TempCash Dollars
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 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
--------- --------- --------- --------- --------- ---------
<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.......................... .0517 .0550 .0345 .0285 .0399 .0651
Net Realized Gains on Investments.............. -- -- -- -- .0008 --
-------- -------- -------- -------- -------- --------
Total From Investment Operations............... .0517 .0550 .0345 .0285 .0407 .0651
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income)......... (.0517) (.0550) (.0345) (.0285) (.0399) (.0651)
Distributions (From Capital Gains)............. -- -- -- -- (.0008) --
-------- -------- -------- -------- -------- --------
Total Distributions............................ (.0517) (.0550) (.0345) (.0285) (.0407) (.0651)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Year.................... $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%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................ $ 527,830 $ 454,156 $ 397,948 $ 307,239 $ 408,900 $ 438,721
Ratio of Expenses to Average Daily Net
Assets....................................... .43%(1) .41%(1) .41%(1) .44%(1) .45%(1) .45%(1)
Ratio of Net Investment Income to Average Daily
Net Assets................................... 5.17% 5.50% 3.45% 2.85% 3.89% 6.32%
<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.......................... .0805 .0886 .0698 .0597
Net Realized Gains on Investments.............. -- -- -- --
-------- -------- -------- --------
Total From Investment Operations............... .0805 .0886 .0698 .0597
-------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income)......... (.0805) (.0886) (.0698) (.0597)
Distributions (From Capital Gains)............. -- -- -- --
-------- -------- -------- --------
Total Distributions............................ (.0805) (.0886) (.0698) (.0597)
-------- -------- -------- --------
Net Asset Value, End of Year.................... $1.00 $1.00 $1.00 $1.00
======== ======== ======== ========
Total Return................................... 8.37% 9.25% 7.20% 6.15%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................ $ 317,267 $ 209,507 $ 125,166 $ 135,866
Ratio of Expenses to Average Daily Net
Assets....................................... .45%(1) .45%(1) .44%(1) .55%(1)
Ratio of Net Investment Income to Average Daily
Net Assets................................... 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.
3
<PAGE> 41
TEMPCASH SHARES
The table below sets forth selected financial data for a TempCash Share
outstanding throughout each year presented.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------------------
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 .0424 .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.
4
<PAGE> 42
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> 43
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 the 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> 44
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> 45
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
Dollar Shares are sold exclusively to institutional investors, such as
banks and savings and loan associations ("Service Organizations"), acting on
behalf of themselves or their customers and customers of their affiliates
("customers"). The customers, which may include individuals, trusts,
partnerships and corporations, must maintain accounts (such as demand deposit,
custody, trust or escrow accounts) with the Service Organization. Service
Organizations (or their nominees) will normally be the holders of record of
Dollar Shares, and will reflect their customers' beneficial ownership of shares
in the account statements provided by them to their customers. The exercise of
voting rights and the delivery to customers of shareholder communications from
the Fund will be governed by the customers' account agreements with the Service
Organizations. Investors wishing to purchase Dollar Shares should contact their
account representatives.
Purchase orders must be transmitted by a Service Organization directly to
PFPC, the Fund's transfer agent. All such transactions are effected pursuant to
procedures established by the Service Organization in connection with a
customer's account. Dollar Shares are sold at the net asset value per share next
determined after acceptance of a purchase order by PFPC.
Purchase orders for shares are accepted by the Fund 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 Service Organization 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 Dollar Shares may be made only in federal funds immediately
available to PNC Bank. The minimum initial investment by a Service Organization
is $5,000 and there is no minimum subsequent investment; however, Service
Organizations may set a higher minimum initial investment and minimum subsequent
investments for their customers.
8
<PAGE> 46
Conflict of interest restrictions may apply to a Service Organization'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, should consult their legal advisors before investing fiduciary
funds in Dollar Shares. (See also "Management of the Fund-- Banking Laws.")
REDEMPTION PROCEDURES
Redemption orders must be transmitted by the Service Organization 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 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 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 those 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.
9
<PAGE> 47
Fund shares are sold and redeemed without charge by the Fund. Fund shares
are sold and redeemed without charge by the Fund. Service Organizations
purchasing or holding Dollar Shares for their customer accounts may charge
customers a fee for cash management and other services provided in connection
with their accounts. In addition, if a customer has agreed with a particular
Service Organization to maintain a minimum balance in its account with the
Service Organization and the balance in such account falls below that minimum,
the customer may be obliged by the Service Organization to redeem all or part of
its shares in the Fund to the extent necessary to maintain the required minimum
balance in such account. A customer should, therefore, consider the terms of its
account with a Service Organization before purchasing Dollar Shares. A Service
Organization purchasing or redeeming shares on behalf of its customers is
responsible for transmitting orders to the Fund in accordance with its customer
agreements, and to provide customers with account statements with respect to
share transactions for their accounts.
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 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
10
<PAGE> 48
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."
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.
11
<PAGE> 49
SERVICE ORGANIZATIONS
As stated above, Service Organizations (which may include affiliates of PNC
Bank Corp.) may purchase Dollar Shares offered by the Fund. Dollar Shares are
identical in all respects to TempCash Shares except that they bear the service
fees described below and enjoy certain exclusive voting rights on matters
relating to these fees. The Fund will enter into an agreement with each Service
Organization which purchases Dollar Shares requiring it to provide support
services to its customers who are the beneficial owners of such shares in
consideration of the Fund's payment of .25% (on an annualized basis) of the
average daily net asset value of the Dollar Shares held by the Service
Organization for the benefit of customers. Such services, which are described
more fully in the Statement of Additional Information under "Management of the
Fund--Service Organizations," include aggregating and processing purchase and
redemption requests from customers and placing net purchase and redemption
orders with PFPC; processing dividend payments from the Fund on behalf of
customers; providing information periodically to customers showing their
positions in Dollar Shares; and, providing sub-accounting or the information
necessary for sub-accounting with respect to Dollar Shares beneficially owned by
customers. Under the terms of the agreements, Service Organizations are required
to provide to their customers a schedule of any fees that they may charge
customers in connection with their investments in Dollar Shares.
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 Dollar Shares were .43% of the average net assets of
the Dollar Shares.
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.
12
<PAGE> 50
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, 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
13
<PAGE> 51
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 shareholders. 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 careful tax planning. Accordingly, potential investors in the Fund should
consult their tax advisors 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 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 (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
14
<PAGE> 52
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 DOLLAR SHARES OF THE FUND AND DESCRIBE ONLY THE
INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS
RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING
THE FUND'S OTHER CLASS OF SHARES OR THE COMPANY'S TEMPFUND PORTFOLIO MAY OBTAIN
SEPARATE PROSPECTUSES 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."
15
<PAGE> 53
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
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Background and Expense
Information................... 2
Financial Highlights............ 3
Investment Objective and
Policies...................... 5
Purchase and Redemption of
Shares........................ 8
Management of the Fund.......... 10
Dividends....................... 13
Taxes........................... 13
Yields.......................... 14
Description of Shares and
Miscellaneous................. 14
</TABLE>
TEMPCASH
DOLLAR SHARES
AN INVESTMENT PORTFOLIO
OFFERED BY
TEMPORARY INVESTMENT FUND, INC.
LOGO
Prospectus
January 31, 1997
<PAGE> 54
TEMPFUND AND TEMPCASH
Investment Portfolios Offered By
Temporary Investment Fund, Inc.
Statement of Additional Information
January 31, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
The Company..................................................................... 2
Investment Objectives and Policies.............................................. 2
Additional Purchase and Redemption Information.................................. 11
Management of the Funds......................................................... 14
Additional Information Concerning Taxes......................................... 24
Dividends....................................................................... 26
Additional Yield Information.................................................... 26
Additional Description Concerning Shares........................................ 29
Counsel......................................................................... 31
Auditors........................................................................ 31
Miscellaneous................................................................... 31
Appendix A ..................................................................... A-1
</TABLE>
This Statement of Additional Information is meant to be read
in conjunction with the Prospectuses for the TempFund and TempCash portfolios,
each dated January 31, 1997, and is incorporated by reference in its entirety
into each Prospectus. Because this Statement of Additional Information is not
itself a prospectus, no investment in shares of the TempFund or TempCash
portfolios should be made solely upon the information contained herein. Copies
of a Prospectus for TempFund, TempCash or TempCash Dollar Shares may be obtained
by calling 800-821-7432. Capitalized terms used but not defined herein have the
same meanings as in the Prospectuses.
<PAGE> 55
THE COMPANY
Temporary Investment Fund, Inc. (the "Company") is a no- load,
diversified, open-end investment company presently offering shares in two
separate money market portfolios - TempFund and TempCash (individually, a
"Fund"; collectively, the "Funds").
Although TempFund and TempCash have the same investment
adviser and have comparable investment objectives, their yields will normally
vary due to their differing cash flows and their differing types of portfolio
securities (for example, TempCash invests in obligations of foreign governments,
foreign banks and foreign branches of U.S. banks and TempFund does not).
INVESTMENT OBJECTIVES AND POLICIES
As stated in the Funds' Prospectuses, the investment objective
of each Fund is to seek current income and stability of principal, and the Funds
do so by investing in a portfolio of money market instruments. The following
policies supplement the description of each Fund's investment objective and
policies as contained in the applicable Prospectuses.
PORTFOLIO TRANSACTIONS
Subject to the general control of the Company's Board of
Directors, PNC Institutional Management Corporation ("PIMC") , each Fund's
investment adviser, is responsible for, makes decisions with respect to, and
places orders for all purchases and sales of portfolio securities for a Fund.
PIMC purchases portfolio securities for the Funds either directly from the
issuer or from dealers who specialize in money market instruments. Such
purchases are usually without brokerage commissions. In making portfolio
investments, PIMC seeks to obtain the best net price and the most favorable
execution of orders. To the extent that the execution and price offered by more
than one dealer are comparable, PIMC may, in its discretion, effect transactions
in portfolio securities with dealers who provide the Company with research
advice or other services. For the fiscal years ended September 30, 1994,
1995 and 1996, TempFund and TempCash paid no brokerage commissions.
PIMC may seek to obtain an undertaking from issuers of
commercial paper or dealers selling commercial paper to consider the repurchase
of such securities from a Fund prior to their maturity at their original cost
plus interest (interest may sometimes be adjusted to reflect the actual maturity
of the securities) if PIMC believes that a Fund's anticipated need for liquidity
makes such action desirable. Certain dealers (but not issuers) have charged and
may in the future charge a higher price for commercial paper where they
undertake to repurchase prior to
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<PAGE> 56
maturity. The payment of a higher price in order to obtain such an undertaking
reduces the yield which might otherwise be received by a Fund on the commercial
paper. The Company's Board of Directors has authorized PIMC to pay a higher
price for commercial paper where it secures such an undertaking if PIMC believes
that the prepayment privilege is desirable to assure a Fund's liquidity and such
an undertaking cannot otherwise be obtained.
Investment decisions for each Fund are made independently from
those for another of the Company's portfolios or other investment company
portfolios or accounts advised or managed by PIMC. Such other portfolios may
also invest in the same securities as the Funds. When purchases or sales of the
same security are made at substantially the same time on behalf of such other
portfolios, transactions are averaged as to price, and available investments
allocated as to amount, in a manner which PIMC believes to be equitable to each
portfolio, including either Fund. In some instances, this investment procedure
may adversely affect the price paid or received by a Fund or the size of the
position obtained for a Fund. To the extent permitted by law, PIMC may aggregate
the securities to be sold or purchased for a Fund with those to be sold or
purchased for such other portfolios in order to obtain best execution.
The Funds will not execute portfolio transactions through or
acquire portfolio securities issued by PIMC, PNC Bank, National Association
("PNC Bank"), PFPC Inc. ("PFPC"), and Provident Distributors, Inc. ("PDI"), or
any affiliated person (as such term is defined in the Investment Company Act of
1940 (the "1940 Act")) of any of them, except to the extent permitted by the
Securities and Exchange Commission (the "SEC"). In addition, with respect to
such transactions, securities, deposits and agreements, the Funds will not give
preference to Service Organizations with whom a Fund enters into agreements
concerning the provision of support services to customers who beneficially own
TempFund Dollar shares or TempCash Dollar Shares (collectively, "Dollar
Shares"). (See the applicable Prospectus, "Management of the Fund -- Service
Organizations.")
The TempFund Portfolio does not intend to seek profits through
short-term trading. Each Fund's annual portfolio turnover will be relatively
high, but is not expected to have a material effect on its net income. Each
Fund's portfolio turnover rate is expected to be zero for regulatory reporting
purposes.
ADDITIONAL INFORMATION ON PORTFOLIO INSTRUMENTS
VARIABLE AND FLOATING RATE INSTRUMENTS. With respect to the
variable and floating rate instruments described in the applicable Prospectuses,
the investment adviser will consider the earning power, cash flows, and other
liquidity ratios of the
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<PAGE> 57
issuers and guarantors of such instruments and will continuously monitor their
financial ability to meet payment.
REPURCHASE AGREEMENTS. Collateral for a repurchase agreement
may include obligations issued by the U.S. Government or its agencies or
instrumentalities or obligations rated in the highest category by a nationally
recognized statistical rating organization (an "NRSRO"). The repurchase price
under the repurchase agreements described in the Funds' Prospectuses generally
equals the price paid by that Fund plus interest negotiated on the basis of
current short-term rates (which may be more or less than the rate on the
securities underlying the repurchase agreement). Securities subject to
repurchase agreements will be held by the Company's custodian or sub-custodian,
or in the Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered to be loans by the Funds under the 1940 Act.
WHEN-ISSUED PURCHASES. As stated in the Funds' Prospectuses,
each Fund may purchase securities on a when-issued basis. When a Fund agrees to
purchase when-issued securities, the custodian will set aside cash or liquid
portfolio securities equal to the amount of the commitment in a separate
account. Normally, the custodian will set aside portfolio securities to satisfy
a purchase commitment, and in such a case that Fund may be required subsequently
to place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of such Fund's commitment. It
may be expected that the market value of the Fund's net assets will fluctuate to
a greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash. A Fund's liquidity and ability to
manage its portfolio might be affected when it sets aside cash or portfolio
securities to cover such purchase commitments. When a Fund engages in
when-issued transactions, it relies on the seller to consummate the trade.
Failure of the seller to do so may result in a Fund's incurring a loss or
missing an opportunity to obtain a price considered to be advantageous. Neither
Fund intends to purchase when-issued securities for speculative purposes but
only in furtherance of its investment objective. Each Fund reserves the right to
sell these securities before the settlement date if it is deemed advisable.
U.S. GOVERNMENT OBLIGATIONS. Examples of the types of U.S.
Government obligations that may be held by a Fund include U.S. Treasury Bills,
Treasury Notes, and Treasury Bonds and the obligations of the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
Federal National Mortgage Association, Federal Financing Bank, General Services
Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Federal Intermediate Credit Banks, Federal Land Banks, Federal Farm Credit
Banks,
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<PAGE> 58
Maritime Administration, Tennessee Valley Authority, Washington D.C. Armory
Board, and International Bank for Reconstruction and Development. The Funds may
also invest in mortgage-related securities issued or guaranteed by U.S.
Government agencies and instrumentalities, including such instruments as
obligations of the Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC").
MORTGAGE-RELATED AND OTHER ASSET-BACKED SECURITIES.
Mortgage-related securities include fixed and adjustable Mortgage Pass-Through
Certificates, which provide the holder with a pro-rata share of interest and
principal payments on a pool of mortgages, ordinarily on residential properties.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Pass-Through Certificates guaranteed
by GNMA (also known as "Ginnie Maes") are guaranteed as to the timely payment of
principal and interest by GNMA, whose guarantee is backed by the full faith and
credit of the United States. Mortgage-related securities issued by FNMA include
FNMA guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are guaranteed as to timely payment of principal and interest by FNMA.
They are not backed by or entitled to the full faith and credit of the United
States, but are supported by the right of the FNMA to borrow from the Treasury.
Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs"). Freddie Macs are not guaranteed by
the United States or by any Federal Home Loan Banks and do not constitute a debt
or obligation of the United States or of any Federal Home Loan Bank. Freddie
Macs entitle the holder to timely payment of interest, which is guaranteed by
the FHLMC. FHLMC guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. When FHLMC does not
guarantee timely payment of principal, FHLMC is required to remit the amount due
on account of its guarantee of ultimate payment of principal no later than one
year after it becomes payable.
TempCash may also invest in classes of collateralized mortgage
obligations ("CMOs") which have a remaining maturity of 397 days or less in
accordance with the requirements of Rule 2a-7 under the 1940 Act. Each class of
a CMO, which frequently elect to be taxed as a real estate mortgage investment
conduit ("REMIC"), represents an ownership interest in, and the right to receive
a specified portion of, the cash flow consisting of interest and principal on a
pool of residential mortgage loans or mortgage pass- through securities
("Mortgage Assets"). CMOs are issued in multiple classes, each with a specified
fixed or floating interest rate and a final distribution date. The relative
payment rights of the various CMO classes may be structured in many ways. In
most cases, however, payments of principal are applied to the CMO
-5-
<PAGE> 59
classes in the order of their respective stated maturities, so that no principal
payments will be made on a CMO class until all other classes having an earlier
stated maturity date are paid in full. These multiple class securities may be
issued or guaranteed by U.S. Government agencies or instrumentalities, including
GNMA, FNMA and FHLMC, or issued by trusts formed by private originators of, or
investors in, mortgage loans. Classes in CMOs which the Fund may hold are known
as "regular" interests. CMOs also issue "residual" interests, which in general
are junior to and more volatile than regular interests. TempCash does not intend
to purchase residual interests.
The Funds may also invest in non-mortgage asset-backed
securities (backed, e.g., by installment sales contracts, credit card
receivables or other assets). Asset-backed securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in an underlying pool of assets, or as debt instruments, which are
also known as collateralized obligations, and are generally issued as the debt
of a special purpose entity organized solely for the purpose of owning such
assets and issuing such debt.
The yield characteristics of certain mortgage-related and
asset-backed securities may differ from traditional debt securities. One such
major difference may be that the principal amount of the obligations may be
prepaid at any time because the underlying assets (i.e., loans) may be prepaid
at any time. As a result, a decrease in interest rates in the market may result
in increases in the level of prepayments as borrowers, particularly mortgagors,
refinance and repay their loans. An increased prepayment rate with respect to a
mortgage-related or asset-backed security subject to such a prepayment feature
will have the effect of shortening the maturity of the security. If a Fund has
purchased such a mortgage-related or asset-backed security at a premium, a
faster than anticipated prepayment rate could result in a loss of principal to
the extent of the premium paid. Conversely, an increase in interest rates may
result in lengthening the anticipated maturity of such a security because
expected prepayments are reduced. A prepayment rate that is faster than expected
will reduce the yield to maturity of such a security, while a prepayment rate
that is slower than expected may have the opposite effect of increasing yield to
maturity.
In general, the assets supporting non-mortgage asset- backed
securities are of shorter maturity than the assets supporting mortgage-related
securities. Like other fixed-income securities, when interest rates rise the
value of an asset-backed security generally will decline; however, when interest
rates decline, the value of an asset-backed security with prepayment features
may not increase as much as that of other fixed-income securities, and, as noted
above, changes in market rates of
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<PAGE> 60
interest may accelerate or retard prepayments and thus affect maturities.
These characteristics may result in a higher level of price
volatility for asset-backed securities with prepayment features under certain
market conditions. In addition, while the trading market for short-term
mortgages and asset backed securities is ordinarily quite liquid, in times of
financial stress the trading market for these securities sometimes becomes
restricted.
BANKING INDUSTRY OBLIGATIONS. For purposes of TempCash's
investment policies with respect to obligations of issuers in the banking
industry, the assets of a bank or savings institution will be deemed to include
the assets of its domestic and foreign branches. Obligations of foreign banks in
which TempCash may invest include Eurodollar Certificates of Deposit ("ECDs")
which are U.S. dollar-denominated certificates of deposit issued by offices of
foreign and domestic banks located outside the United States; Eurodollar Time
Deposits ("ETDs") which are U.S. dollar-denominated deposits in a foreign branch
of a U.S. bank or a foreign bank; Canadian Time Deposits ("CTDs") which are
essentially the same as ETDs except they are issued by Canadian offices of major
Canadian banks; and Yankee Certificates of Deposit ("Yankee CDs") which are U.S.
dollar-denominated certificates of deposit issued by a U.S. branch of a foreign
bank and held in the United States.
SPECIAL CONSIDERATIONS REGARDING FOREIGN INVESTMENTS.
TempCash's investments in the obligations of foreign issuers, including foreign
governments, foreign banks and foreign branches of U.S. banks, may subject
TempCash to investment risks that are different in some respects from those of
investments in obligations of U.S. domestic issuers. These risks may include
future unfavorable political and economic developments, possible withholding
taxes on interest income, seizure or nationalization of foreign deposits,
interest limitations, the possible establishment of exchange controls, or other
governmental restrictions which might affect the payment of principal or
interest on the securities held by the Fund. Additionally, foreign branches of
U.S. banks and foreign banks may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and recordkeeping
requirements than those applicable to domestic branches of U.S. banks. TempCash
will acquire securities issued by foreign issuers, including foreign
governments, foreign banks and foreign branches of U.S. banks, only when the
Fund's investment adviser believes that the risks associated with such
instruments are minimal.
GUARANTEED INVESTMENT CONTRACTS. Pursuant to its investments
in guaranteed investment contracts and similar funding agreements ("GICs"),
TempCash makes cash contributions to a deposit fund of the insurance company's
general account. The insurance company then credits to the Fund on a monthly
basis guaranteed
-7-
<PAGE> 61
interest which is based on an index (in most cases this index is expected to be
the Salomon Brothers CD Index). The GICs provide that this guaranteed interest
will not be less than a certain minimum rate. The purchase price paid for a GIC
becomes part of the general assets of the insurance company, and the contract is
paid from the general assets of the insurance company. Each Fund will only
purchase GICs from insurance companies which, at the time of purchase, are rated
"A+" by A.M. Best Company, have assets of $1 billion or more and meet quality
and credit standards established by the adviser under guidelines approved by the
Board of Directors. Generally, GICs are not assignable or transferable without
the permission of the issuing insurance companies, and an active secondary
market in GICs does not currently exist. The Fund's investments in GICs are not
expected to exceed 5% of its total assets (at the time of investment) absent
unusual market conditions.
MUNICIPAL OBLIGATIONS. As stated in the Funds' Prospectuses,
each Fund may invest in obligations issued by state and local governmental
entities. Municipal securities are issued by various public entities to obtain
funds for various public purposes, including the construction of a wide range of
public facilities, the refunding of outstanding obligations, the payment of
general operating expenses and the extension of loans to public institutions and
facilities. Private activity bonds that are issued by or on behalf of public
authorities to finance various privately operated facilities are considered to
be municipal securities and may be purchased by a Fund. Dividends paid by a Fund
that are derived from interest on municipal securities would be taxable to that
Fund's shareholders for federal income tax purposes.
RESTRICTED AND OTHER ILLIQUID SECURITIES. The SEC has adopted
Rule 144A under the Securities Act of 1933 (the "1933 Act") that allows for a
broader institutional trading market for securities otherwise subject to
restriction on resale to the general public. Rule 144A establishes a "safe
harbor" from the registration requirements of the 1933 Act for resales of
certain securities to qualified institutional buyers. The investment adviser
anticipates that the market for certain restricted securities such as
institutional commercial paper will expand further as a result of this
regulation and the development of automated systems for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers.
Each Fund's investment adviser will monitor the liquidity of
restricted and other illiquid securities under the supervision of the Board of
Directors. In reaching liquidity decisions, the investment adviser will
consider, inter alia, the following factors: (1) the unregistered nature of a
Rule 144A security; (2)
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<PAGE> 62
the frequency of trades and quotes for the Rule 144A security; (3) the number of
dealers wishing to purchase or sell the Rule 144A security and the number of
other potential purchasers; (4) dealer undertakings to make a market in the Rule
144A security; (5) the trading markets for the Rule 144A security; and (6) the
nature of the Rule 144A security and the nature of the marketplace trades (e.g.,
the time needed to dispose of the Rule 144A security, the method of soliciting
offers and the mechanics of the transfer).
NRSRO RATINGS. The ratings by NRSROs represent their
respective opinions as to the quality of the obligations they undertake to rate.
Ratings, however, are general and are not absolute standards of quality.
Consequently, obligations with the same rating, maturity, and interest rate may
have different market prices. The Appendix to this Statement of Additional
Information contains a description of the relevant rating symbols used by NRSROs
for commercial paper that may be purchased by each Fund.
INVESTMENT LIMITATIONS
The Funds' Prospectuses summarize certain investment
limitations that may not be changed without the affirmative vote of the holders
of a majority of such Fund's outstanding shares (as defined below under
"Miscellaneous"). Below is a complete list of each Fund's investment limitations
that may not be changed without such a vote of shareholders.
A FUND MAY NOT:
1. Purchase any securities other than so-called money market
instruments, including U.S. Treasury Bills; other obligations issued or
guaranteed by the federal government, its agencies or instrumentalities;
certificates of deposit; bankers' acceptances; and commercial paper (including
variable rate demand notes); some of which may be subject to repurchase
agreements, but each Fund may make interest-bearing savings deposits in
commercial and savings banks in amounts not in excess of 5% of the value of the
Fund's assets, and TempCash 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 a Fund's assets at the time
of such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's assets at the time
of such borrowing. (A loan limitation in excess of 5% is generally associated
with a leveraged fund, but since a Fund anticipates paying interest on borrowed
money at rates comparable to its yield, the potential for improving income by
such borrowing is remote. This borrowing provision is included solely to
facilitate the orderly sale of portfolio securities to accommodate
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<PAGE> 63
abnormally heavy redemption requests if they should occur and is not for
leverage purposes.)
3. With respect to TempFund, purchase any securities which
would cause 25% or more of the value of its total assets at the time of such
purchase to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that (a)
there is no limitation with respect to investments in U.S. Treasury Bills, other
obligations issued or guaranteed by the federal government, its agencies and
instrumentalities, certificates of deposit, and bankers' acceptances and (b)
neither all finance companies, as a group, nor all utility companies, as a
group, are considered a single industry for purposes of this policy. The Fund
interprets the exception for "certificates of deposit, and bankers' acceptances"
in this fundamental policy to include other similar obligations of domestic
banks.
4. With respect to TempCash, 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, provided that (a) there is no
limitation with respect to investments in U.S. Treasury Bills and other
obligations issued or guaranteed by the federal government, its agencies and
instrumentalities and (b) neither all finance companies, as a group, nor all
utility companies, as a group, are considered a single industry for purposes of
this policy.
5. 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 a Fund's total assets may be invested without regard to such 5%
limitation.
6. Make loans, except that a Fund may purchase or hold debt
instruments in accordance with its investment objective and policies, and may
enter into repurchase agreements with respect to commercial paper, certificates
of deposit and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
7. Purchase or sell commodities or commodity contracts, or
invest in oil, gas or mineral exploration or development programs.
8. Acquire voting securities of any issuer or acquire
securities of other investment companies.
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<PAGE> 64
9. Purchase or sell real estate. However, each Fund may
purchase commercial paper issued by companies which invest in real estate or
interests therein.
10. Purchase securities on margin, make short sales of
securities or maintain a short position.
11. Act as an underwriter of securities.
* * *
The percentage restrictions on borrowing and collateralization
contained in the second investment limitation above are based on a Fund's total
assets, and any interest paid by that Fund on its borrowings pursuant to this
investment limitation would reduce the Fund's income. It is currently each
Fund's policy not to purchase portfolio securities while borrowings in excess of
5% of that Fund's net assets are outstanding. Further, with respect to the
above-stated third limitation with respect to TempFund and the fourth limitation
with respect to TempCash, each Fund will consider wholly-owned finance companies
to be in the industries of their parents, if their activities are primarily
related to financing the activities of their parents, and will divide utility
companies according to their services, for example, gas, gas transmission,
electric and gas, electric, and telephone will each be considered a separate
industry. Neither Fund will invest in inverse floaters, range notes or mortgage
derived interest only notes. The policy and practices stated in this paragraph
may be changed without the affirmative vote of the holders of a majority of a
Fund's outstanding shares, but any such change would be disclosed in such
Fund's Prospectuses prior to implementation.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
IN GENERAL
Information on how to purchase and redeem each Fund's shares
is included in the applicable Prospectuses. The issuance of shares is recorded
on a Fund's books, and share certificates are not issued unless expressly
requested in writing. Certificates are not issued for fractional shares.
The regulations of the Comptroller of the Currency provide
that funds held in a fiduciary capacity by a national bank approved by the
Comptroller to exercise fiduciary powers must be invested in accordance with the
instrument establishing the fiduciary relationship and local law. The Company
believes that the purchase of TempFund and TempCash shares by such national
banks acting on behalf of their fiduciary accounts is not contrary to applicable
regulations if consistent with the particular account
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<PAGE> 65
and proper under the law governing the administration of the account.
Prior to effecting a redemption of shares represented by
certificates, PFPC, the Company's transfer agent, must have received such
certificates at its principal office. All such certificates must be endorsed by
the redeeming shareholder or accompanied by a signed stock power, in each
instance with the signature guaranteed by a commercial bank or a member of a
major stock exchange, or other eligible guarantor organization, unless other
arrangements satisfactory to a Fund have previously been made. A Fund may
require any additional information reasonably necessary to evidence that a
redemption has been duly authorized.
Under the 1940 Act, a Fund may suspend the right of redemption
or postpone the date of payment upon redemption for any period during which the
New York Stock Exchange is closed, other than customary weekend and holiday
closings, or during which trading on said Exchange is restricted, or during
which (as determined by the SEC by rule or regulation) an emergency exists as a
result of which disposal or valuation of portfolio securities is not reasonably
practicable, or for such other periods as the SEC may permit. (A Fund may also
suspend or postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions.)
In addition, a Fund may redeem shares involuntarily in certain
other instances if the Board of Directors determines that failure to redeem may
have material adverse consequences to that Fund's shareholders in general. Each
Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of such
Fund's net asset value, whichever is less, for any one shareholder within a
90-day period. Any redemption beyond this amount will also be in cash unless the
Board of Directors determines that conditions exist which make payment of
redemption proceeds wholly in cash unwise or undesirable. In such a case, a Fund
may make payment wholly or partly in securities or other property, valued in the
same way as that Fund determines net asset value. (See "Net Asset Value" below
for an example of when such redemption or form of payment might be appropriate.)
Redemption in kind is not as liquid as a cash redemption. Shareholders who
receive a redemption in kind may incur transaction costs, if they sell such
securities or property, and may receive less than the redemption value of such
securities or property upon sale, particularly where such securities are sold
prior to maturity.
Any institution purchasing shares on behalf of separate
accounts will be required to hold the shares in a single nominee name (a "Master
Account"). Institutions investing in more than one of the Company's portfolios,
or classes or sub-classes of shares, must maintain a separate Master Account for
each Fund's class or sub-class of shares. Institutions may also arrange with
PFPC for
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<PAGE> 66
certain sub-accounting services (such as purchase, redemption, and dividend
recordkeeping). Sub-accounts may be established by name or number either when
the Master Account is opened or later.
NET ASSET VALUE
Net asset value per share of each class of shares in a
particular Fund is calculated by adding the value of all portfolio securities
and other assets belonging to a Fund that are attributable to a class,
subtracting the Fund's liabilities attributable to the class, and dividing the
result by the number of outstanding shares in the class. "Assets belonging to" a
Fund consist of the consideration received upon the issuance of Fund shares
together with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Company not belonging to a particular
portfolio. Assets belonging to a Fund are charged with the direct liabilities of
that Fund and with a share of the general liabilities of the Company allocated
on a daily basis in proportion to the relative net assets of each of the
Company's portfolios. Determinations made in good faith and in accordance with
generally accepted accounting principles by the Company's Board of Directors as
to the allocation of any assets or liabilities with respect to a Fund are
conclusive. The expenses that are charged to a Fund are borne equally by each
share of the Fund except for payments to Service Organizations which are borne
solely by Dollar Shares.
As stated in the Funds' Prospectuses, in computing the net
asset value of its shares for purposes of sales and redemptions, each Fund uses
the amortized cost method of valuation. Under this method, a Fund values each of
its portfolio securities at cost on the date of purchase and thereafter assumes
a constant proportionate amortization of any discount or premium until maturity
of the security. As a result, the value of a portfolio security for purposes of
determining net asset value normally does not change in response to fluctuating
interest rates. While the amortized cost method seems to provide certainty in
portfolio valuation, it may result in valuations of a Fund's securities which
are higher or lower than the market value of such securities.
In connection with its use of amortized cost valuation, each
Fund limits the dollar-weighted average maturity of its portfolio to not more
than 90 days and does not purchase any instrument with a remaining maturity of
more than thirteen months (397 days) (with certain exceptions). The Company's
Board of Directors has also established procedures, pursuant to rules
promulgated by the SEC, that are intended to stabilize each Fund's net asset
value per share for purposes of sales and redemptions at -$1.00. Such procedures
include the determination, at such intervals as the Board deems appropriate, of
the extent, if any, to
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<PAGE> 67
which a Fund's net asset value per share calculated by using available market
quotations deviates from $1.00 per share. In the event such deviation exceeds
1/2 of 1%, the Board will promptly consider what action, if any, should be
initiated. If the Board believes that the amount of any deviation from a Fund's
$1.00 amortized cost price per share may result in material dilution or other
unfair results to investors or existing shareholders, it will take such steps as
it considers appropriate to eliminate or reduce to the extent reasonably
practicable any such dilution or unfair results. These steps may include selling
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten a Fund's average portfolio maturity, redeeming shares in kind, reducing
or withholding dividends, or utilizing a net asset value per share determined by
using available market quotations.
MANAGEMENT OF THE FUNDS
DIRECTORS AND OFFICERS
The Company's directors and executive officers, their
addresses, ages, principal occupations during the past five years and other
affiliations are as follows:
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
---------------- ------------- -----------------------
<S> <C> <C>
G. NICHOLAS BECKWITH, III Director President and Chief
Beckwith Machinery Company Executive Officer,
Post Office Box 8718 Beckwith Machinery
Pittsburgh, PA 15221 Company; Chairman of the
Age: 52 Board of Trustees, Shadyside
Hospital; Vice Chairman of the
Board of Trustees, Shadyside
Academy; Trustee, Claude
Washington Benedum Foundation;
Trustee, Chatham College.
PHILIP E. COLDWELL(2),(3),(4) Director Economic Consultant;
Coldwell Financial Member of the Board of
Consultants Governors of the Federal
3330 Southwestern Blvd. Reserve System, 1974 to 1980;
Dallas, TX 75225 President, Federal Reserve Bank
Age: 74 of Dallas, 1968 to 1974;
Director, Maxus Energy
Corporation (energy and chemical
products) 1987 to 1993;
Director, Diamond Shamrock
Corporation (energy and chemical
products) until 1987.
</TABLE>
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<PAGE> 68
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
---------------- ------------- -----------------------
<S> <C> <C>
ROBERT R. FORTUNE(2),(3),(4) Director Financial Consultant;
2920 Ritter Lane Chairman, President, and Chief
Allentown, PA 18104 Executive Officer, Associated
Age: 80 Electric & Gas Insurance
Services Limited, from July 1984
to July 1993; Member of the
Financial Executives Institute
and American Institute of
Certified Public Accountants;
Director, Prudential Utility
Fund, Inc. and Prudential
Structured Maturity Fund, Inc.
JERROLD B. HARRIS Director President and Chief
706 Haldane Drive Executive Officer, VWR
Kennett Square, PA 19348 Corporation 1990 to
Age: 54 present.
RODNEY D. JOHNSON(3),(4) Director President, Fairmount Capital
Fairmount Capital Advisors, Inc. (financial
Advisors, Inc. advising), since 1987.
1435 Walnut Street Treasurer, North Philadelphia
Drexel Building Health System (formerly Girard
Philadelphia, PA 19102 Medical Center), 1988 to 1992;
Age: 55 Member, Board of Education,
School District of Philadelphia,
1983 to 1988; Treasurer, Cascade
Aphasia Center, 1984 to 1988.
G. WILLING PEPPER(1),(2) Chairman of the Retired; Chairman of the
128 Springton Lake Road Board, Board, The Institute for
Media, PA 19063 President, Cancer Research until 1979;
Age: 88 and Director Director, Philadelphia National
Bank until 1978; President,
Scott Paper Company, 1971 to
1973; Chairman of the Board,
Specialty Composites Corporation
until May 1984.
</TABLE>
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<PAGE> 69
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name and Address the Company Other Affiliations
---------------- ------------- -----------------------
<S> <C> <C>
EDWARD J. ROACH Vice President Certified Public Accountant;
Bellevue Park Corporate and Treasurer Partner of the accounting firm
Center of Main Hurdman until 1981;
400 Bellevue Parkway Vice Chairman of the Board, Fox
Suite 100 Chase Cancer Center;
Wilmington, DE 19809 Trustee Emeritus,
Age: 72 Pennsylvania School for the
Deaf; Trustee Emeritus ,
Immaculata College; President
or Vice President and Treasurer
of various investment companies
advised by PNC Institutional
Management Corporation;
Director, The Bradford Funds,
Inc.
W. BRUCE McCONNEL, III Secretary Partner of the law firm of
Philadelphia National Bank Drinker Biddle & Reath,
Bldg. Philadelphia, Pennsylvania.
1345 Chestnut Street
Philadelphia, PA 19107-3496
Age: 53
</TABLE>
- ----------
(1) This director is considered by the Company to be an "interested person"
of the Company as defined in the 1940 Act.
(2) Executive Committee Member.
(3) Audit Committee Member.
(4) Nominating Committee Member.
During intervals between meetings of the Board, the Executive
Committee may exercise the authority of the Board of Directors in the management
of the Company's business to the extent permitted by law.
Each director of the Company serves as a trustee of Trust for
Federal Securities ("Fed") and Municipal Fund for Temporary Investment ("Muni").
In addition, Messrs. Fortune and Pepper are directors of Independence Square
Income Securities, Inc. ("ISIS") and Managing General Partners of Chestnut
Street Exchange Fund ("Chestnut"); Messrs. Johnson and Pepper are directors of
Municipal Fund for California Investors, Inc. ("Cal Muni"); and Mr. Johnson is a
director of Municipal Fund for New York Investors, Inc. ("New York Muni") and a
director of International Dollar Reserve Fund ("IDR").
Each of the Company's officers, with the exception of Mr.
McConnel, holds like offices with Fed and Muni. In addition, Mr. McConnel is
Secretary of Fed; Mr. Roach is Treasurer of
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<PAGE> 70
Chestnut, President and Treasurer of The RBB Fund, Inc. and New York Muni, and
Vice President and Treasurer of ISIS and Cal Muni; and Mr. Pepper is President
and Chairman of the Board of Cal Muni. Each of the investment companies named
above receives various advisory and other services from PIMC and/or PNC Bank. Of
the above-mentioned funds, PDI or an affiliate provides distribution services to
Fed, Muni, Compass Capital Funds(R) ("Compass"), Cal Muni, New York Muni and
IDR. Of the above-mentioned funds, PFPC and/or PDI (or an affiliate) provide
administrative services to Fed, Muni, Cal Muni, New York Muni, Compass and IDR.
The following chart provides certain information for the
fiscal year ended September 30, 1996 about the fees received by the directors of
the Company as directors and/or officers of the Company and as directors and/or
trustees of the Fund Complex.
<TABLE>
<CAPTION>
==================================================================================================================================
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
AGGREGATE BENEFITS ESTIMATED REGISTRANT AND
COMPENSATION ACCRUED AS ANNUAL FUND COMPLEX(1)
NAME OF PERSON, FROM PART OF FUND BENEFITS UPON PAID TO
POSITION REGISTRANT EXPENSES RETIREMENT DIRECTORS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
G. Nicholas Beckwith, $8,050 n/a n/a $20,650(3)(3)
III, Director(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Philip E. Coldwell, $15,750 n/a n/a $44,125(3)(3)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
Robert R. Fortune, $15,750 n/a n/a $65,025(6)(3)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
Jerrold B. Harris, $8,950 n/a n/a $23,350(3)(3)
Director(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Rodney D. Johnson, $15,750 n/a n/a $57,025(6)(3)
Director
- ----------------------------------------------------------------------------------------------------------------------------------
G. Willing Pepper, $24,750 n/a n/a $96,275(7)(3)
Chairman of the Board
and President
- ----------------------------------------------------------------------------------------------------------------------------------
Anthony Santomero, $2,375 n/a n/a $56,400(6)(3)
Director(4)
- ----------------------------------------------------------------------------------------------------------------------------------
David R. Wilmerding, $2,792 n/a n/a $62,650(6)(3)
Vice Chairman of the
Board(4)
==================================================================================================================================
</TABLE>
1. A Fund complex means two or more investment companies that hold
themselves out to investors as related companies for purposes of investment and
investor services, or have a common investment adviser or have an investment
adviser that is an affiliated person of the investment adviser of any of the
other investment companies.
2. These directors were elected to the Board of Directors of the Company
on March 22, 1996.
3. Total number of such other investment companies a director served on
within the Fund Complex during the fiscal year ended September 30, 1996.
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<PAGE> 71
4. These directors resigned from the Board of Directors of the Company on
January 4, 1996.
For the Company's fiscal year ended September 30, 1996, the
Company paid a total of $139,960 to its officers and directors in all
capacities, of which $112,068 was allocated to TempFund and $27,892 was
allocated to TempCash. In addition, the Company contributed $2,690 for the last
fiscal year to its retirement plan for employees (who included Mr. Roach), of
which $1,883 was allocated to TempFund and $807 was allocated to TempCash.
Drinker Biddle & Reath, of which Mr. McConnel is a partner, receives legal fees
as counsel to the Company. No employee of PDI, PIMC, PFPC or PNC Bank receives
any compensation from the Company for acting as an officer or director of the
Company. The directors and officers of the Company as a group own less than 1%
of the shares of each of the Company's portfolios.
By virtue of the responsibilities assumed by PDI, PIMC and PNC
Bank under their respective agreements with the Company, the Company itself
requires only one part-time employee in addition to its officers.
INVESTMENT ADVISER AND SUB-ADVISER
The advisory and sub-advisory services provided by PIMC and
PNC Bank are described in the Funds' Prospectuses. For the advisory services
provided and expenses assumed by it, PIMC is entitled to receive fees, computed
daily and payable monthly, at the following annual rates:
<TABLE>
<CAPTION>
TEMPFUND:
---------
ANNUAL FEE AVERAGE NET ASSETS
- ---------- ------------------
<S> <C>
.175% ............................of the first $1 billion
.150% ............................ of the next $1 billion
.125% ............................ of the next $1 billion
.100% ............................ of the next $1 billion
.095% ............................ of the next $1 billion
.090% ............................ of the next $1 billion
.080% ............................ of the next $1 billion
.075% ............................ of the next $1 billion
.070% .................of amounts in excess of $8 billion.
</TABLE>
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<PAGE> 72
<TABLE>
<CAPTION>
TEMPCASH:
---------
ANNUAL FEE AVERAGE NET ASSETS
- ---------- ------------------
<S> <C>
.175% ............................of the first $1 billion
.150% ............................ of the next $1 billion
.125% ............................ of the next $1 billion
.100% ............................ of the next $1 billion
.095% ............................ of the next $1 billion
.090% ............................ of the next $1 billion
.085% ............................ of the next $1 billion
.080% .................of amounts in excess of $7 billion.
</TABLE>
PIMC and the administrators may from time to time reduce their
fees to ensure that TempFund's and TempCash's respective ordinary operating
expenses (excluding interest, taxes, brokerage fees, fees paid to Service
Organizations pursuant to Servicing Agreements, and extraordinary expenses) do
not exceed a specified percentage of each Portfolio's average net assets. PIMC
and the administrators have agreed that if, in any fiscal year, the expenses
borne by a Fund exceed the applicable expense limitations imposed by the
securities regulations of any state in which shares of that Fund are registered
or qualified for sale to the public, they will each reimburse that Fund for a
portion of any such excess expense in an amount equal to the portion that the
administration fees otherwise payable by the Fund to the administrators bear to
the total amount of the investment advisory and administrator fees otherwise
payable by the Fund. During the fiscal year ended September 30, 1996 the
expense limitations then in effect were not exceeded.
For the fiscal years ended September 30, 1996, 1995 and 1994,
TempFund paid to PIMC advisory fees (net of waivers) of $5,254,506, $5,898,096
and $6,682,252, respectively. For the same periods, PIMC waived advisory fees
with respect to TempFund of $2,765,281, $942,342 and $612,404, respectively.
For the fiscal years ended September 30, 1996, 1995 and 1994,
TempCash paid to PIMC advisory fees (net of waivers) of $2,170,845, $2,682,100
and $1,652,235, respectively. For the same periods, PIMC waived advisory fees
with respect to TempCash of $2,106,346, $2,595,378 and $2,119,803, respectively.
BANKING LAWS
Certain banking laws and regulations with respect to
investment companies are discussed in each Fund's Prospectuses. PIMC, PNC Bank
and PFPC believe that they may perform the services for the Funds contemplated
- -by their respective agreements, Prospectuses and this Statement of Additional
Information without violation of applicable banking laws or regulations. It
should be
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<PAGE> 73
noted, however, that future changes in legal requirements relating to the
permissible activities of banks and their affiliates, as well as further
interpretations of present requirements, could prevent PIMC and PFPC from
continuing to perform such services for the Funds and PNC Bank from continuing
to perform such services for PIMC and the Funds. If PIMC, PFPC or PNC Bank were
prohibited from continuing to perform such services, it is expected that the
Company's Board of Directors would recommend that the Funds enter into new
agreements with other qualified firms. Any new advisory agreement would be
subject to shareholder approval.
In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
ADMINISTRATORS
As the Funds' administrators, PFPC and PDI have agreed to
provide the following services: (i) assist generally in supervising the Funds'
operations, including providing a Wilmington, Delaware order-taking facility
with toll-free IN-WATS telephone lines, providing for the preparing, supervising
and mailing of purchase and redemption order confirmations to shareholders of
record, providing and supervising the operation of an automated data processing
system to process purchase and redemption orders, maintaining a back-up
procedure to reconstruct lost purchase and redemption data, providing
information concerning the Funds to their shareholders of record, handling
shareholder problems, providing (through PDI) the services of employees to
preserve and strengthen shareholder relations and monitoring the arrangements
pertaining to the Funds' agreements with Service Organizations; (ii) assure that
persons are available to receive and transmit purchase and redemption orders;
(iii) participate in the periodic updating of the Funds' prospectuses; (iv)
assist in the Funds' Wilmington, Delaware office; (v) accumulate information for
and coordinate the preparation of reports to the Funds' shareholders and the
SEC; (vi) maintain the registration of the Funds' shares for sale under state
securities laws; (vii) review and provide advice with respect to all sales
literature of the Funds; and (viii) assist in the monitoring of regulatory and
legislative developments which may affect the Company, participate in counseling
and assisting the Company in relation to routine regulatory examinations and
investigations, and work with the Company's counsel in connection with
regulatory matters and litigation.
For their administrative services, the administrators are
entitled jointly to receive fees, computed daily and payable monthly, as
described above determined in the same manner as PIMC's advisory fee set forth
above. As stated in the Prospectuses, each
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<PAGE> 74
administrator is also reimbursed for its reasonable out-of-pocket expenses
incurred by it in connection with the Fund's computer access program. For
information regarding the administrators' obligation to reimburse the Funds in
the event their expenses exceed certain prescribed limits, see "Investment
Adviser and Sub-Adviser" above. Any fees waived by the administrators with
respect to a particular fiscal year are not recoverable.
For the fiscal years ended September 30, 1996, 1995 and 1994,
TempFund paid PFPC and PDI administration fees (net of waivers) of $5,254,506,
$5,898,096 and $6,682,252, respectively. For the same periods, PFPC and PDI
waived administration fees with respect to TempFund of $2,765,281, $942,342 and
$612,404, respectively.
For the fiscal years ended September 30, 1996, 1995 and 1994,
TempCash paid PFPC and PDI administration fees (net of waivers) of $2,170,845,
$2,682,100 and $1,652,235, respectively. For the same periods, PFPC and PDI
waived administration fees with respect to TempCash of $2,106,346, $2,595,378
and $2,119,803, respectively.
PFPC, a wholly-owned, indirect subsidiary of PNC Bank, and PDI
provide administrative and in some cases sub-administrative services to
investment companies which are distributed by PDI or its affiliates.
DISTRIBUTOR
PDI acts as the distributor of the Fund's shares. Each Fund's
shares are sold on a continuous basis by the distributor as agent, although it
is not obliged to sell any particular amount of shares. The distributor pays the
cost of printing and distributing prospectuses to persons who are not
shareholders of the Funds (excluding preparation and printing expenses necessary
for the continued registration of the Fund shares). The distributor shall
prepare or review, provide advice with respect to, and file with the federal and
state agencies or other organizations as required by federal, state or other
applicable laws and regulations, all sales literature (advertisements, brochures
and shareholder communications) for each of the Funds and any class or subclass
thereof. No compensation is payable by the Fund to the distributor for its
distribution services. PDI is a Delaware corporation with its principal place of
business located at Four Falls Corporate Center, 6th Floor, West Conshohocken,
Pennsylvania 19428.
CUSTODIAN AND TRANSFER AGENT
Pursuant to a Custodian Agreement, PNC Bank serves as the
Fund's custodian, holding a Fund's portfolio securities, cash and other
property. Under the Custodian Agreement, PNC Bank has agreed to provide the
following services: (i) maintain a separate account
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<PAGE> 75
or accounts in the name of a Fund; (ii) hold and disburse portfolio securities
on account of a Fund; (iii) collect and make disbursements of money on behalf of
a Fund; (iv) collect and receive all income and other payments and distributions
on account of a Fund's portfolio securities; and (v) make periodic reports to
the Board of Directors concerning a Fund's operations.
PNC Bank is also authorized to select one or more banks or
trust companies to serve as sub-custodian on behalf of a Fund, provided that PNC
Bank shall remain responsible for the performance of all of its duties under the
Custodian Agreement and shall hold each Fund harmless from the acts and
omissions of any bank or trust company serving as sub-custodian chosen by PNC
Bank.
PFPC also serves as transfer agent, registrar and dividend
disbursing agent to each Fund pursuant to a Transfer Agency Agreement. Under the
Agreement, PFPC has agreed to provide the following services: (i) maintain a
separate account or accounts in the name of a Fund; (ii) issue, transfer and
redeem Fund shares; (iii) transmit all communications by a Fund to its
shareholders of record, including reports to shareholders, dividend and
distribution notices and proxy material for its meetings of shareholders; (iv)
respond to correspondence by shareholders, security brokers and others relating
to its duties; (v) maintain shareholder accounts and sub-accounts; (vi) provide
installation and other services in connection with the Funds' computer access
program maintained to facilitate shareholder access to a Fund; (vii) send each
shareholder of record a monthly statement showing the total number of a Fund's
shares owned as of the last business day of the month (as well as the dividends
paid during the current month and year); and (viii) provide each shareholder of
record with a daily transaction report for each day on which a transaction
occurs in the shareholder's Master Account with a Fund. Further, an institution
establishing sub-accounts with PFPC is provided with a daily transaction report
for each day on which a transaction occurs in a sub-account and, as of the last
calendar day of each month, a report which sets forth the share balances for the
sub- accounts at the beginning and end of the month and income paid or
reinvested during the month. Finally, PFPC provides each shareholder of record
with copies of all information relating to dividends and distributions which is
required to be filed with the Internal Revenue Service and other appropriate
taxing authorities.
Pursuant to the Custodian Agreement, each Fund pays PNC Bank
an annual fee, calculated daily on the average daily gross assets and paid
monthly, at the rate of $.25 for each $1000 of the first $250 million, $.20 for
each $1000 on the next $250 million, $.15 for each $1000 on the next $500
million, $.09 for each $1000 on the next $2 billion, and $.08 for each $1000 on
amounts over $3 billion, plus $15.00 for each purchase, sale, or delivery of
fixed income securities (other than "Money Market" obligations) and $40 for each
interest collection or claim item. For transfer agency
-22-
<PAGE> 76
and dividend disbursing services, each Fund pays PFPC fees at the annual rate of
$12.00 per account and sub-account maintained by PFPC plus $1.00 for each
purchase or redemption transaction by an account (other than a purchase
transaction made in connection with the automatic reinvestment of dividends).
Payments to PFPC for sub-accounting services provided by others are limited to
the amount which PFPC pays to others for such services. In addition, each Fund
reimburses PNC Bank and PFPC for out-of-pocket expenses related to such
services. PNC Bank maintains a principal business address at 1600 Market Street,
Philadelphia, Pennsylvania 19103.
SERVICE ORGANIZATIONS
As stated in the Funds' Prospectuses, a Fund will enter into
an agreement with banks, savings and loan associations, and other financial
institutions, including affiliates of PNC Bank Corp. ("Service Organizations"),
requiring them to provide administrative support services to their customers
("Customers") who beneficially own a Fund's Dollar Shares in consideration of
such Fund's payment of .25% (on an annualized basis) of the average daily net
asset value of that Fund's Dollar Shares held by the Service Organization for
the benefit of its Customers. Such services include: (i) aggregating and
processing purchase and redemption requests from Customers and placing net
purchase and redemption orders with PFPC; (ii) providing Customers with a
service that invests the assets of their accounts in a Fund's Dollar Shares;
(iii) processing dividend payments from a Fund on behalf of Customers; (iv)
providing information periodically to Customers showing their positions in a
Fund's Dollar Shares; (v) arranging for bank wires; (vi) responding to Customer
inquiries relating to the services performed by the Service Organization; (vii)
providing sub-accounting with respect to a Fund's Dollar Shares beneficially
owned by Customers or the information necessary for sub-accounting; (viii)
forwarding shareholder communications from a Fund (such as proxies, shareholder
reports, annual and semi- annual financial statements, and dividend distribution
and tax notices) to Customers, if required by law; and (ix) other similar
services if requested by a Fund.
For the fiscal year ended September 30, 1996, TempFund Dollar
Shares were charged $307,468 in Service Organization fees, of which $215,093 was
paid to affiliates of PIMC.
For the fiscal year ended September 30, 1996, TempCash Dollar
Shares were charged $1,226,772 in Service Organization fees, of which $328,534
was paid to affiliates of PIMC.
Each Fund's agreements with Service Organizations are governed
by a Shareholder Services Plan (the "Plan") that has been adopted by the
Company's Board of Directors pursuant to an exemptive order granted by the SEC
in connection with the offering
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of a Fund's Dollar Shares. Pursuant to the Plan, the Board of Directors reviews,
at least quarterly, a written report of the amounts expended under each Fund's
agreements with Service Organizations and the purposes for which the
expenditures were made. In addition, a Fund's arrangements with Service
Organizations must be approved annually by a majority of the Company's
directors, including a majority of the directors who are not "interested
persons" of the Company as defined in the 1940 Act and have no direct or
indirect financial interest in such arrangements.
The Board of Directors has approved each Fund's arrangements
with Service Organizations based on information provided by the Company's
service contractors and others that there is a reasonable likelihood that the
arrangements will benefit such Fund and its shareholders by affording the Fund
greater flexibility in connection with the servicing of the accounts of the
beneficial owners of its shares in an efficient manner. Any material amendment
to a Fund's arrangements with Service Organizations must be approved by a
majority of the Company's Board of Directors (including a majority of the
non-interested directors). So long as a Fund's arrangements with Service
Organizations are in effect, the selection and nomination of the members of the
Company's Board of Directors who are not "interested persons" (as defined in the
1940 Act) of the Company will be committed to the discretion of such
non-interested directors.
EXPENSES
A Fund's expenses include taxes, interest, fees and salaries
of the Company's directors and officers who are not directors, officers or
employees of the Company's service contractors, SEC fees, state securities
registration fees, costs of preparing and printing prospectuses for regulatory
purposes and for distribution to shareholders, advisory and administration fees,
charges of the custodian and of the transfer and dividend disbursing agent,
Service Organization fees, costs of the Funds' computer access program, certain
insurance premiums, outside auditing and legal expenses, costs of shareholder
reports and shareholder meetings and any extraordinary expenses. A Fund also
pays for brokerage fees and commissions (if any) in connection with the purchase
and sale of portfolio securities.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional tax considerations
generally affecting a Fund and its shareholders that are not described in the
Funds' Prospectuses. No attempt is made to present a detailed explanation of the
tax treatment of a Fund or its shareholders or possible legislative changes, and
the
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discussion here and in the applicable Prospectuses is not intended as a
substitute for careful tax planning.
As stated in each Prospectus, each Fund is treated as a
separate corporate entity under the Internal Revenue Code of 1986, as amended
(the "Code") and intends to qualify each year as a regulated investment company
under the Code. In order to so qualify for a taxable year, a Fund must satisfy
the distribution requirement described in the Prospectuses, derive at least 90%
of its gross income for the year from certain qualifying sources, comply with
certain diversification requirements, and derive less than 30% of its gross
income for the year from the sale or other disposition of securities and certain
other investments held for less than three months. Interest (including original
issue discount and accrued market discount) received by a Fund at maturity or
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security within
the meaning of the 30% requirement. However, any income in excess of such
interest will be treated as gross income from the sale or other disposition of
securities for this purpose.
A 4% non-deductible excise tax is imposed on regulated
investment companies that fail currently to distribute an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). Each Fund intends to make
sufficient distributions or deemed distributions of its ordinary taxable income
and any capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
If for any taxable year a Fund does not qualify for tax
treatment as a regulated investment company, all of that Fund's taxable income
will be subject to tax at regular corporate rates without any deduction for
distributions to Fund shareholders. In such event, dividend distributions to
shareholders would be taxable as ordinary income to the extent of that Fund's
earnings and profits and would be eligible for the dividends received deduction
in the case of corporate shareholders.
Each Fund will be required in certain cases to withhold and
remit to the U.S. Treasury 31% of taxable dividends or 31% of gross proceeds
paid to a shareholder that has failed to provide a correct tax identification
number in the manner required, that is subject to withholding by the Internal
Revenue Service for failure properly to include on its return payments of
taxable interest or dividends, or that has failed to certify to the Fund that it
is not subject to backup withholding when required to do so or that it is an
"exempt recipient."
Although each Fund expects to qualify as a regulated
investment company and to be relieved of all or substantially all
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federal income tax, depending upon the extent of its activities in states and
localities in which its offices are maintained, in which its agents or
independent contractors are located or in which it is otherwise deemed to be
conducting business, a Fund may be subject to the tax laws of such states or
localities. In addition, in those states and localities which have income tax
laws, the treatment of the Fund and its shareholders under such laws may differ
from the treatment under federal income tax laws. Shareholders are advised to
consult their tax advisors concerning the application of state and local taxes.
The foregoing discussion is based on federal tax laws and
regulations which are in effect on the date of this Statement of Additional
Information; such laws and regulations may be changed by legislative or
administrative action.
DIVIDENDS
GENERAL
Each Fund's net investment income for dividend purposes
consists of (i) interest accrued and original issue discount earned on that
Fund's assets, (ii) plus the amortization of market discount and minus the
amortization of market premium on such assets and (iii) less accrued expenses
directly attributable to that Fund and the general expenses (e.g. legal,
accounting and directors' fees) of the Company prorated to such Fund on the
basis of its relative net assets. Any realized short-term capital gains may also
be distributed as dividends to Fund shareholders. In addition, a Fund's Dollar
Shares bear exclusively the expense of fees paid to Service Organizations. (See
"Management of the Funds -- Service Organizations.")
As stated, the Company uses its best efforts to maintain the
net asset value per share of each Fund at $1.00. As a result of a significant
expense or realized or unrealized loss incurred by either Fund, it is possible
that the Fund's net asset value per share may fall below $1.00.
ADDITIONAL YIELD INFORMATION
The "yields" and "effective yields" are calculated separately
for TempFund and TempFund Dollar Shares and for TempCash and TempCash Dollar
Shares. The seven-day yield for each class or sub-class of shares in a Fund is
calculated by determining the net change in the value of a hypothetical
pre-existing account in a Fund having a balance of one share of the class
involved at the beginning of the period, dividing the net change by the value of
the account at the beginning of the period to obtain the base period return, and
multiplying the base period return by 365/7.
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<PAGE> 80
The net change in the value of an account in a Fund includes the value of
additional shares purchased with dividends from the original share and dividends
declared on the original share and any such additional shares, net of all fees
charged to all shareholder accounts in proportion to the length of the base
period and the Fund's average account size, but does not include gains and
losses or unrealized appreciation and depreciation. In addition, the effective
annualized yield may be computed on a compounded basis (calculated as described
above) by adding 1 to the base period return, raising the sum to a power equal
to 365/7, and subtracting 1 from the result. Similarly, based on the
calculations described above, 30-day (or one-month) yields and effective yields
may also be calculated.
For the seven-day period ended September 30, 1996, the yield
and the compounded effective yield on TempFund Shares were 5.37% and 5.51%,
respectively. For the same period, the yield and the compounded effective yield
on TempFund Dollar Shares were 5.12% and 5.25%, respectively. For the 30-day
period ended September 30, 1996, the yield and the compounded effective yield on
TempFund Shares were 5.29% and 5.42%, respectively. Similarly, for the same
30-day period, the yield and the compounded effective yield on TempFund Dollar
Shares were 5.04% and 5.16%, respectively.
For the seven-day period ended September 30, 1996, the yield
and the compounded effective yield on TempCash Shares were 5.38% and 5.53%,
respectively. For the same period, the yield and the compounded effective yield
on TempCash Dollar Shares were 5.13% and 5.27%, respectively. For the 30-day
period ended September 30, 1996, the yield and the compounded effective yield on
TempCash Shares were 5.32% and 5.45%, respectively. Similarly, for the same
30-day period, the yield and the compounded effective yield on TempCash Dollar
Shares were 5.07% and 5.19%, respectively.
From time to time, in reports to shareholders or otherwise, a
Fund's yield may be quoted and compared to that of other money market funds or
accounts with similar investment objectives, to stock or other relevant indices
and to other reports or analyses that relate to yields, interest rates, total
return, market performance, etc. For example, the yield of the Fund may be
compared to the IBC/Donoghue's Money Fund Average, which is an average compiled
by IBC/Donoghue's MONEY FUND REPORT(R) of Holliston, MA 01746, a widely
recognized independent publication that monitors the performance of money market
funds, or to the average yields reported by the Bank Rate Monitor from money
market deposit accounts offered by the 50 leading banks and thrift institutions
in the top five standard metropolitan statistical areas.
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<PAGE> 81
YIELD WILL FLUCTUATE, AND ANY QUOTATION OF YIELD SHOULD NOT BE
CONSIDERED AS REPRESENTATIVE OF THE FUTURE PERFORMANCE OF THE FUND. Since yields
fluctuate, yield data cannot necessarily be used to compare an investment in a
Fund's shares with bank deposits, savings accounts, and similar investment
alternatives which often provide an agreed or guaranteed fixed yield for a
stated period of time. Shareholders should remember that performance and yield
are generally functions of the kind and quality of the investments held in a
fund, portfolio maturity, operating expenses and market conditions. Any fees
charged by banks with respect to customer accounts in investing in shares of a
Fund will not be included in yield calculations; such fees, if charged, would
reduce the actual yield from that quoted.
The Funds may also from time to time include in
advertisements, sales literature, communications to shareholders and other
materials ("Materials"), discussions or illustrations of the effects of
compounding. "Compounding" refers to the fact that, if dividends or other
distributions on an investment are reinvested by being paid in additional
Portfolio shares, any future income or capital appreciation of a Fund would
increase the value, not only of the original investment, but also of the
additional shares received through reinvestment. As a result, the value of the
Fund investment would increase more quickly than if dividends or other
distributions had been paid in cash.
In addition, the Funds may also include in Materials
discussions and/or illustrations of the potential investment goals of a
prospective investor (including materials that describe general principles of
investing, questionnaires designed to help create a personal financial profile,
worksheets used to project savings needs based on certain assumptions and action
plans offering investment alternatives), investment management strategies,
techniques, policies or investment suitability of a Fund, economic and political
conditions, the relationship between sectors of the economy and the economy as a
whole, various securities markets, the effects of inflation and historical
performance of various asset classes, including but not limited to, stocks,
bonds and Treasury securities, and hypothetical investment returns based on
certain assumptions. From time to time, Materials may summarize the substance of
information contained in shareholder reports (including the investment
composition of a Fund), as well as the views of the advisers as to current
market, economic, trade and interest rate trends, legislative, regulatory and
monetary developments, investment strategies and related matters believed to be
of relevance to a Fund. In addition, selected indices may be used to illustrate
historical performance of select asset classes. The Funds may also include in
Materials charts, graphs or drawings which compare the investment objective,
return potential, relative stability and/or growth possibilities of the Funds
and/or other mutual funds, or illustrate the potential risks and rewards of
investment in various investment vehicles, including but not
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<PAGE> 82
limited to, stocks, bonds, Treasury securities and shares of a Fund and/or other
mutual funds. Materials may include a discussion of certain attributes or
benefits to be derived by an investment in a Fund and/or other mutual funds
(such as value investing, market timing, dollar cost averaging, asset
allocation, constant ratio transfer, automatic accounting rebalancing and the
advantages and disadvantages of investing in tax-deferred and taxable
investments), shareholder profiles and hypothetical investor scenarios, timely
information on financial management, tax and retirement planning and investment
alternatives to certificates of deposit and other financial instruments,
designations assigned a Fund by various rating or ranking organizations, and
Fund identifiers (such as CUSIP numbers or NASDAQ symbols). Such Materials may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein.
Materials may include lists of representative clients of the
Funds' investment adviser, may include discussions of other products or
services, may contain information regarding average weighted maturity or other
maturity characteristics, and may contain information regarding the background,
expertise, etc. of the investment adviser or of a Fund's portfolio manager.
From time to time in advertisements, sales literature and
communications to shareholders, the Funds may compare their total returns to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, such
data is found in IBC/Donoghue's Money Fund Report and reports prepared by Lipper
Analytical Services, Inc. Total return is the change in value of an investment
in a Fund over a particular period, assuming that all distributions have been
reinvested. SUCH RANKINGS REPRESENT THE FUNDS' PAST PERFORMANCE AND SHOULD NOT
BE CONSIDERED AS REPRESENTATIVE OF FUTURE RESULTS.
The following information has been provided by the Funds'
distributor: In managing each Fund's portfolio, the investment adviser utilizes
a "pure and simple" approach, which may include disciplined research, stringent
credit standards and careful management of maturities.
ADDITIONAL DESCRIPTION CONCERNING SHARES
The Company does not presently intend to hold annual meetings
of shareholders except as required by the 1940 Act or other applicable law. Upon
the written request of shareholders owning at least twenty percent of the
Company's shares, the Company will call for a meeting of shareholders to
consider the removal of one or more directors and other certain matters. To the
extent
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required by law, the Company will assist in shareholder communication in such
matters.
The Company's Charter authorizes the Board of Directors,
without shareholder approval (unless otherwise required by applicable law), to:
(i) sell and convey a Fund's assets to another management investment company for
consideration which may include securities issued by the purchaser and, in
connection therewith, to cause all outstanding shares of a Fund to be redeemed
at a price which is equal to their net asset value and which may be paid in cash
or by distribution of the securities or other consideration received from the
sale and conveyance; (ii) sell and convert a Fund's assets into money and, in
connection therewith, to cause all outstanding shares of a Fund to be redeemed
at their net asset value; or, (iii) combine a Fund's assets with the assets
belonging to another portfolio of the Company if the Board of Directors
reasonably determines that such combination will not have a material adverse
effect on the shareholders of such Fund and such other portfolio and, in
connection therewith, to cause all outstanding shares of a Fund to be redeemed
or converted into shares of another class of the Company's Common Stock at net
asset value. The exercise of such authority by the Board will be subject to the
provisions of the 1940 Act.
As stated in the Funds' Prospectuses, holders of shares in a
Fund in the Company will vote in the aggregate and not by class or sub-class on
all matters, except as described above, and except that only a Fund's Dollar
Shares will be entitled to vote on matters submitted to a vote of shareholders
pertaining to that Fund's arrangements with Service Organizations. (See
"Management of the Funds -- Service Organizations.") Further, shareholders of
each of the Company's portfolios will vote in the aggregate and not by portfolio
except as otherwise required by law or when the Board of Directors determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular portfolio. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted by the provisions of such Act or applicable
state law, or otherwise, to the holders of the outstanding securities of an
investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the holders of a majority of the
outstanding shares of each portfolio affected by the matter. Rule 18f-2 further
provides that a portfolio shall be deemed to be affected by a matter unless it
is clear that the interests of each portfolio in the matter are identical or
that the matter does not affect any interest of the portfolio. Under the Rule,
the approval of an investment advisory agreement or any change in a fundamental
investment policy would be effectively acted upon with respect to a portfolio
only if approved by the holders of a majority of the outstanding voting
securities of such portfolio. However, the Rule also provides that the
ratification of the selection of independent accountants, the approval of
principal underwriting contracts, and the election of directors are
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<PAGE> 84
not subject to the separate voting requirements and may be effectively acted
upon by shareholders of the investment company voting without regard to
portfolio.
Notwithstanding any provision of Maryland law requiring a
greater vote of shares of the Company's Common Stock (or of any class voting as
a class) in connection with any corporate action, unless otherwise provided by
law (for example by Rule 18f-2 discussed above) or by the Company's Charter, the
Company may take or authorize such action upon the favorable vote of the holders
of more than 50% of all of the outstanding shares of Common Stock voting without
regard to class (or portfolio).
COUNSEL
Drinker Biddle & Reath, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107- 3496, of which W. Bruce
McConnel, III, Secretary of the Company, is a partner, will pass upon the
legality of the shares offered hereby.
AUDITORS
Coopers & Lybrand L.L.P., with offices at 2400 Eleven Penn
Center, Philadelphia, Pennsylvania 19103 has been selected as the independent
accountants of each Fund for the fiscal year ended September 30, 1997.
MISCELLANEOUS
SHAREHOLDER VOTE
As used in this Statement of Additional Information and the
Funds' Prospectuses, a "majority of the outstanding shares" of a Fund or of a
particular portfolio means, with respect to the approval of an investment
advisory agreement, a distribution plan or a change in a fundamental investment
policy, the lesser of (1) 67% of that Fund's shares (irrespective of class or
subclass) or of the portfolio represented at a meeting at which the holders of
more than 50% of the outstanding shares of that Fund or portfolio are present in
person or by proxy, or (2) more than 50% of the outstanding shares of a Fund
(irrespective of class or subclass) or of the portfolio.
SECURITIES HOLDINGS OF BROKERS
As of September 30, 1996, TempFund held the following
securities of its regular brokers or dealers or their parents: Goldman Sachs
Group, L.P. $260,000,000, Merrill Lynch & Co.
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<PAGE> 85
$325,000,000, C.S. First Boston Group, Inc. $75,000,000, Bear Stearns Co., Inc.
$225,000,000 and Morgan Stanley Group, Inc. $234,000,000.
As of September 30, 1996, TempCash held the following
securities of its regular brokers or dealers or their parents: Merrill Lynch &
Co. $50,000,000, Lehman Brothers Holding, Inc. $125,000,000, Nomura Holding
America, Inc. $50,000,000, Bear Stearns Co., Inc. $50,000,000 and C.S. First
Boston, Inc. $120,000,000.
CERTAIN RECORD HOLDERS
On January 22, 1997, the name, address and percentage of
ownership of each institutional investor that owned of record 5% or more of the
outstanding shares of the TempFund portfolio were as follows: Saxon & Co., 200
Stevens Drive, Lester, PA 19113, 6.5%; and Sanwa Bank California, P.O. Box
60078, Los Angeles, CA 90060, 6.41%.
On January 22, 1997, the name, address and percentage of
ownership of the institutional investors that owned of record 5% or more of the
outstanding shares of the TempCash portfolio were as follows: Wellnik & Co., 45
Freemont Street, San Francisco, CA 94105, 7.32%; and Harris Trust & Savings
Bank, 111 West Monroe Street, P.O. Box 755, Chicago, IL 60690, 5.96%.
FINANCIAL STATEMENTS
The audited financial statements and notes thereto for each
Fund contained in the Company's Annual Report to Shareholders dated September
30, 1996 are incorporated by reference into this Statement of Additional
Information and have been audited by Coopers & Lybrand L.L.P., whose report
thereon also appears in the Annual Report and is also incorporated by reference
herein. No other parts of the Annual Report are incorporated by reference
herein. Such financial statements and notes thereto have been incorporated
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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TEMPFUND AND TEMPCASH
APPENDIX A
NRSRO COMMERCIAL PAPER RATINGS
The following is a description of the securities ratings of
Standard & Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Duff & Phelps Credit Rating Co. ("D&P"), Fitch Investor Services,
Inc. ("Fitch"), Thomson BankWatch, and IBCA Limited and IBCA Inc. ("IBCA").
Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debt considered short-term in the relevant
market. Commercial paper rated A-1 by S&P indi- cates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted "A-1+".
Commercial paper ratings by Moody's are current assessments of
the ability of issuers to repay punctually promissory obligations not having an
original maturity in excess of nine months. The rating "Prime-1" is the highest
commercial paper rating assigned by Moody's. Issuers (or related supporting
institutions) rated "Prime-1" are considered to have a superior capacity for
repayment of short-term promissory obligations.
D&P uses short-term ratings for investment grade commercial
paper. The highest rating category of D&P for short- term debt is "D-1+". D&P
employs three designations, "D-1+", "D-1" and "D-1-", within the highest rating
category. "D-1+" indicates highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk- free U.S.
Treasury short-term obligations. "D-1" indicates very high certainty of timely
payment. Liquidity factors are excellent and supported by good fundamental
protection factors. Risk factors are minor. "D-1-" indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small.
Fitch's short-term ratings for commercial paper apply to debt
obligations that are payable on demand or have original maturities of up to
three years. The highest rating category is "F-1+". "F-1+" securities possess
exceptionally strong credit quality. Issues assigned this rating are regarded as
having the strongest degree of assurance for timely payment.
Thomson BankWatch short-term ratings assess the likelihood of
an untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one
A-1
<PAGE> 87
year or less which is issued by United States commercial banks, thrifts and
non-bank banks; non-United States banks; and broker- dealers. The highest
category is "TBW-1". This designation indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The "A1+" rating by IBCA is
used for the highest category obligations which have the highest capacity for
timely repayment. Capacity for timely repayment of principal and interest is
substantial but may be susceptible to adverse changes in business, economic or
financial conditions.
A-2
<PAGE> 88
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Included in Part A hereof:
Financial Highlights for:
- TempFund Shares
- TempFund Dollar Shares
- TempCash Shares
- TempCash Dollar Shares
(2) Incorporated by reference in Part B hereof:
- The audited financial statements and
related notes thereto as well as the
auditor's report thereon for each of
the TempFund portfolio and TempCash
portfolio for the fiscal year ended
September 30, 1996 are incorporated
herein by reference to the Annual
Report to Shareholders as filed with
the Securities and Exchange
Commission on November 25, 1996
pursuant to Rule 30b2-1 of the
Investment Company Act of 1940 (the
"1940 Act") (Nos. 2-47015/811-
2354).
(b) Exhibits:
(1) (a) Articles of Restatement dated March
30, 1994, filed April 8, 1994 are
incorporated herein by reference to
Exhibit (1) (a) of Post-Effective
Amendment No. 54 to Registrant's
Registration Statement (No. 2-47015)
filed on January 13, 1995.
(2) Registrant's By-Laws as amended and
restated on January 21, 1993, are
incorporated herein by reference to
Exhibit (2)(a) of Post-Effective
Amendment No. 53 to Registrant's
Registration Statement (No. 2-47015)
filed on January 28, 1994.
(3) None.
<PAGE> 89
(4) (a) Specimen copy of share certificate
for Class B Common Stock of the
Company is incorporated herein by
reference to Exhibit (4)(b) of
Post-Effective Amendment No. 2 to
Registrant's Registration Statement
(No. 2-87227) relating to its
TempFund Shares, filed on October 3,
1984.
(b) Specimen copy of share certificate
for Class C Common Stock of the
Company is incorporated herein by
reference to Exhibit (4)(c) of
Post-Effective Amendment No. 2 to
Registrant's Registration Statement
(No. 2-87227) relating to its
TempCash Dollar Shares , filed on
October 3, 1984.
(c) Specimen copy of share certificate
for Class B Common Stock - Special
Series 1 is incorporated herein by
reference to Exhibit (4)(d) of
Post-Effective Amendment No. 45 to
Registrant's Registration Statement
(No. 2-47015) relating to its
TempFund Dollar Shares , filed on
December 3, 1986.
(d) Specimen copy of share certificate
for Class C Common Stock - Special
Series 1 is incorporated herein by
reference to Exhibit (4)(e) of
Post-Effective Amendment No. 45 to
Registrant's Registration Statement
(No. 2-87227) relating to its
TempCash Shares, filed on December
3, 1986.
(5) (a) Investment Advisory Agreement
between Registrant and PNC
Institutional Management Corporation
("PIMC") dated March 11, 1987 is
incorporated herein by reference to
Exhibit (5)(a) of Post- Effective
Amendment No. 46 to Registrant's
Registration Statement (No. 2-47015)
filed on January 28, 1988.
(b) Sub-Advisory Agreement between PIMC
and PNC Bank, National Association
("PNC Bank") dated March 11, 1987 is
incorporated herein by reference to
Exhibit (5)(b) of Post-Effective
Amendment No. 46 to Registrant's
C-2
<PAGE> 90
Registration Statement (No. 2-47015)
filed on January 28, 1988.
(6) (a) Distribution Agreement between
Registrant and Provident
Distributors, Inc. ("PDI") dated
January 18, 1994 is incorporated
herein by reference to Exhibit (6)
of Post-Effective Amendment No. 53
to Registrant's Registration
Statement (No. 2-47015) filed on
January 28, 1994.
(7) Temporary Investment Fund, Inc. Fund
Office Retirement Profit-Sharing
Plan and Trust Agreement as approved
Fall of 1990 is incorporated herein
by reference to Exhibit (7) of
Post-Effective Amendment No. 49 to
Registrant's Registration Statement
(No. 2-47015) filed on December 12,
1990.
(8) (a) Custodian Agreement between
Registrant and PNC Bank dated June
1, 1989 is incorporated herein by
reference to Exhibit (8)(a) of
Post-Effective Amendment No. 48 to
Registrant's Registration Statement
(No. 2-47015) filed December 1,
1989.
(b) Custodian Fee Agreement between
Registrant and PNC Bank dated June
1, 1989 is incorporated herein by
reference to Exhibit (8)(b) of
Post-Effective Amendment No. 48 to
Registrant's Registration Statement
(No. 2-47015) filed December 1,
1989.
(9) (a) Administration Agreement between
Registrant and Provident
Distributors, Inc. ("PDI"), formerly
MFD Group, Inc., and PFPC Inc.
("PFPC") dated as of January 18,
1993 is incorporated herein by
reference to Exhibit (9) (a) of
Post- Effective Amendment No. 52 to
Registrant's Registration Statement
(No. 2-47015) filed on January 15,
1993.
(b) Transfer Agency Agreement between
Registrant and PFPC dated June 1,
1989 is incorporated herein by
reference to Exhibit (9)(b) of
Post-Effective Amendment No. 48 to
Registrant's
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<PAGE> 91
Registration Statement (No. 2-47015)
filed December 1, 1989.
(c) Transfer Agency Fee Agreement
between Registrant and PFPC dated
June 1, 1989 is incorporated herein
by reference to Exhibit (9)(c) of
Post-Effective amendment No. 48 to
Registrant's Registration Statement
(No. 2-47015) filed December 1,
1989.
(10) Opinion and Consent of Counsel.
(11) Consent of Coopers & Lybrand L.L.P.
(12) None.
(13) None.
(14) None.
(15) None.
(16) Schedules of Performance
Computations are incorporated herein
by reference to Exhibit (16) of
Post-Effective Amendment No. 49 to
Registrant's Registration Statement
(No. 2-47015) relating to its
TempFund Portfolio and Exhibit (16)
of Post-Effective Amendment No. 9 to
Registrant's Registration Statement
(No. 2-87227) relating to its
TempCash Portfolio, both filed on
December 12, 1990.
(17) Financial Data Schedules for the
fiscal year ended September 30,
1996.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
Registrant is controlled by its Board of Directors.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The following information is as of January 22, 1997:
C-4
<PAGE> 92
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
-------------- --------------
<S> <C>
Class B Common Stock (TempFund Shares)........................ 1,066
Class B Common Stock - Special
Series 1 (TempFund Dollar Shares)............................ 26
Class C Common Stock (TempCash
Dollar Shares)............................................... 40
Class C Common Stock - Special
Series 1 (TempCash Shares)................................... 403
</TABLE>
ITEM 27. INDEMNIFICATION
Indemnification of Registrant's Principal Underwriter,
Custodian and Transfer Agent against certain stated
liabilities is provided for in Section 6 of the Distribution
Agreement, incorporated herein by reference as Exhibit 6, and
in Section 22 of the Custodian Agreement and in Section 17 of
the Transfer Agency Agreement, incorporated herein by
reference as Exhibits 8(a) and 9(b), respectively.
Registrant has obtained from a major insurance carrier a
directors' and officers' liability policy covering certain
types of errors and omissions.
Section 2 of Article VI of Registrant's By-Laws, incorporated
herein by reference as Exhibit 2, provides for the
indemnification of Registrant's directors and officers.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors,
officers, and controlling persons of Registrant pursuant to
the foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person
of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against
C-5
<PAGE> 93
public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) PIMC performs investment advisory services for Registrant
and certain other investment companies and accounts. PNC Bank
and its predecessors have been in the business of managing the
investments of fiduciary and other accounts in the
Philadelphia area since 1847. In addition to its trust
business, PNC Bank provides commercial banking services.
To the Registrant's knowledge, none of the directors or
officers of PIMC or PNC Bank, except those set forth below,
is, or has been at any time during Registrant's past two
fiscal years, engaged in any other business, profession,
vocation or employment of a substantial nature, except that
certain directors and officers of PNC Bank and PIMC also hold
various positions with, and engage in business for, PNC Bank
Corp., which indirectly owns all the outstanding stock of PNC
Bank, or other subsidiaries of PNC Bank Corp.
(b) The information required by this Item 28 with respect to
each director, officer and partner of PIMC is incorporated by
reference to Schedules A and D of Form ADV filed by PIMC with
the Securities and Exchange Commission pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-13304).
Set forth below are the names and principal businesses of the
directors and certain executives of PNC Bank who are engaged
in any other business, profession, vocation or employment of a
substantial nature.
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- -------- ---- -------------------------- -----------
<S> <C> <C> <C>
Director B.R. Brown President and C.E.O. of Coal
Consol, Inc.
Consol Plaza
Pittsburgh, PA 15241
Director Constance E. Clayton Associate Dean, School of Medical
Health & Professor of Pediatrics
Medical College of PA
Hahnemann University
430 East Sedgwick St.
Philadelphia, PA 19119
</TABLE>
C-6
<PAGE> 94
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- -------- ---- -------------------------- -----------
<S> <C> <C> <C>
Director Eberhard Faber IV Chairman and C.E.O. Manufacturing
E.F.L., Inc.
450 Hedge Road
P.O. Box 49
Bearcreek, PA 18602
Director Dr. Stuart Heydt President and C.E.O. Medical
Geisinger Foundation
100 N. Academy Avenue
Danville, PA 17822
Director Edward P. Junker, III Vice Chairman Banking
PNC Bank, N.A.
Ninth and State Streets
Erie, PA 16553
Director Thomas A. McConomy President, C.E.O. and Manufacturing
Chairman, Calgon Carbon
Corporation
413 Woodland Road
Sewickley, PA 15143
Director Thomas H. O'Brien Chairman Banking
PNC Bank, National Association
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Dr. J. Dennis O'Connor Provost, The Smithsonian Education
Institution
1000 Jefferson Drive, S.W.
Room 230, MRC 009
Washington, DC 20560
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Continental Medical Systems, Inc.
P.O. Box 715
Mechanicsburg, PA 17055
Director Jane G. Pepper President Horticulture
Pennsylvania Horticulture Society
325 Walnut Street
Philadelphia, PA 19106
Director Robert C. Robb, Jr. President, Lewis, Eckert, Robb Financial and
& Company Management
425 One Plymouth Meeting Consultants
Plymouth Meeting, PA 19462
Director James E. Rohr President and C.E.O. Bank Holding
PNC Bank, National Association Company
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
</TABLE>
C-7
<PAGE> 95
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
- -------- ---- -------------------------- -----------
<S> <C> <C> <C>
Director Daniel M. Rooney President, Pittsburgh Steelers Football
Football Club of the National
Football League
300 Stadium Circle
Pittsburgh, PA 15212
Director Seth E. Schofield Chairman, President and C.E.O. Airline
USAir Group, Inc. and USAir, Inc.
2345 Crystal Drive
Arlington, VA 22227
</TABLE>
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
---- ----------------------
<S> <C>
John E. Alden Senior Vice President
James C. Altman Senior Vice President
Lila M. Bachelier Senior Vice President
R. Perrin Baker Chief Market Counsel, Northwest PA
James R. Bartholomew Senior Vice President
Peter R. Begg Senior Vice President
Donald G. Berdine Senior Vice President
Ben Berzin, Jr. Senior Vice President
James H. Best Senior Vice President
Eva T. Blum Senior Vice President
Susan B. Bohn Senior Vice President
George Brikis Executive Vice President
Michael Brundage Senior Vice President
Anthony J. Cacciatore Senior Vice President
Richard C. Caldwell Executive Vice President
Craig T. Campbell Senior Vice President
J. Richard Carnall Executive Vice President
Edward V. Caruso Executive Vice President
Peter K. Classen President & CEO, PNC Bank, Northwest, Pa
James P. Conley Senior Vice President/Credit Policy
</TABLE>
C-8
<PAGE> 96
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
---- ----------------------
<S> <C>
Andra D. Cochran Senior Vice President
Sharon Coghlan Coordinating Market Chief Counsel,
Philadelphia
John F. Calligan Senior Vice President
James P. Conley Senior Vice President
C. David Cook Senior Vice President
Alfred F. Cordasco Supervising Counsel, Pittsburgh, PA
Robert Crouse Senior Vice President
Peter M. Crowley Senior Vice President
Keith P. Crytzer Senior Vice President
John J. Daggett Senior Vice President
Peter J. Donchak Senior Vice President
Anuj Dhanda Senior Vice President
Victor M. DiBattista Chief Regional Counsel
Frank H. Dilenschneider Senior Vice President
Thomas C. Dilworth Senior Vice President
Alfred J. DiMatteis Senior Vice President
James Dionise Senior Vice President and C.F.O.
Patrick S. Doran Vice President, Head of Consumer Lending
Robert D. Edwards Senior Vice President
David J. Egan Senior Vice President
J. Lynn Evans Senior Vice President & Controller
William E. Fallon Senior Vice President
James M. Ferguson, III Senior Vice President
Charles J. Ferrero Senior Vice President
Frederick C. Frank, III Executive Vice President
William J. Friel Executive Vice President
John F. Fulgoney Coordinating Market Chief Counsel,
Northeast PA
Brian K. Garlock Senior Vice President
</TABLE>
C-9
<PAGE> 97
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
---- ----------------------
<S> <C>
George D. Gonczar Senior Vice President
Richard C. Grace Senior Vice President
James S. Graham Senior Vice President
Michael J. Hannon Senior Vice President
Stephen G. Hardy Senior Vice President
Michael J. Harrington Senior Vice President
Marva H. Harris Senior Vice President
Maurice H. Hartigan, II Executive Vice President
G. Thomas Hewes Senior Vice President
Sylvan M. Holzer Senior Vice President
Bruce C. Iacobucci Senior Vice President
John M. Infield Senior Vice President
Philip C. Jackson Senior Vice President
William J. Johns Controller
William R. Johnson Audit Director
Edward P. Junker, III Vice Chairman
Robert D. Kane Senior Vice President
Michael D. Kelsey Chief Compliance Counsel
Jack Kelly Senior Vice President
Geoffrey R. Kimmel Senior Vice President
Randall C. King Senior Vice President
Christopher M. Knoll Senior Vice President
Richard C. Krauss Senior Vice President
Frank R. Krepp Senior Vice President & Chief Credit Policy
Officer
Kenneth P. Leckey Senior Vice President & Cashier
Marilyn R. Levins Senior Vice President
</TABLE>
C-10
<PAGE> 98
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
---- ----------------------
<S> <C>
Carl J. Lisman Executive Vice President
George Lula Senior Vice President
Jane E. Madio Senior Vice President
Nicholas M. Marsini, Jr. Senior Vice President
John A. Martin Senior Vice President
David O. Matthews Senior Vice President
Walter B. McClellan Senior Vice President
James F. McGowan Senior Vice President
Charlotte B. McLaughlin Senior Vice President
James C. Mendelson Senior Vice President
James W. Meighen Senior Vice President
Scott C. Meves Senior Vice President
Ralph S. Michael, III Executive Vice President
J. William Mills Senior Vice President
Barbara A. Misner Senior Vice President
Marlene D. Mosco Senior Vice President
Scott Moss Senior Vice President
Peter F. Moylan Senior Vice President
Michael B. Nelson Executive Vice President
Thomas J. Nist Senior Vice President
Thomas H. O'Brien Chairman
James F. O'Day Senior Vice President
Cynthia G. Osofsky Senior Vice President
Thomas E. Paisley, III Senior Vice President
Barbara Z. Parker Executive Vice President
George R. Partridge Senior Vice President
Daniel J. Panlick Senior Vice President
David M. Payne Senior Vice President
Charles C. Pearson, Jr. President and CEO, PNC Bank, Central PA
</TABLE>
C-11
<PAGE> 99
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
---- ----------------------
<S> <C>
Helen P. Pudlin Senior Vice President
Edward V. Randall, Jr. President and CEO, PNC Bank, Pittsburgh
Arthur F. Rodman, III Senior Vice President
Richard C. Rhoades Senior Vice President
Bryan W. Ridley Senior Vice President
James E. Rohr President and Chief Executive Officer
Gary Royer Senior Vice President
Robert T. Saltarelli Senior Vice President
Robert V. Sammartino Senior Vice President
William Sayre, Jr. Senior Vice President
Alfred J. Schiavetti Senior Vice President
David W. Schoffstall Executive Vice President
Seymour Schwartzberg Senior Vice President
Timothy G. Shack Senior Vice President
Douglas E. Shaffer Senior Vice President
Alfred A. Silva Senior Vice President
George R. Simon Senior Vice President
Richard L. Smoot President and CEO of PNC Bank, Philadelphia
Timothy N. Smyth Senior Vice President
Kenneth S. Spatz Senior Vice President
Darcel H. Steber Senior Vice President
William F. Strome Senior Vice President and Secretary
Robert L. Tassome Senior Vice President
Jane B. Tompkins Senior Vice President
Robert B. Trempe Senior Vice President
Kevin M. Tucker Senior Vice President
Alan P. Vail Senior Vice President
Frank T. VanGrofski Executive Vice President
</TABLE>
C-12
<PAGE> 100
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
---- ----------------------
<S> <C>
Ronald H. Vicari Senior Vice President
William A. Wagner Senior Vice President
Patrick M. Wallace Senior Vice President
Annette M. Ward-Kredel Senior Vice President
Robert S. Wrath Senior Vice President
Arlene M. Yocum Senior Vice President
Carole Yon Senior Vice President
George L. Ziminski, Jr. Senior Vice President
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITER
(a) Provident Distributors, Inc. currently acts as distributor
for, in addition to the Company, Trust for Federal Securities,
Municipal Fund for Temporary Investment, Municipal Fund for
California Investors, Inc. and Municipal Fund for New York
Investors, Inc.
(b) The information required by this Item 29 with respect to
each director, officer or partner of Provident Distributors,
Inc. is incorporated by reference to Schedule A of Form BD
filed by Provident Distributors, Inc. with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934 (SEC File No. 8-46564).
(c) The following represents all commissions and other
compensation received by each principal underwriter who is not
an affiliated person of the registrant:
<TABLE>
<CAPTION>
NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION AND BROKERAGE OTHER
UNDERWRITER COMMISSIONS REPURCHASE COMMISSIONS COMPENSATION
- ----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Provident
Distributors, Inc. $0 $0 $0 $0
</TABLE>
C-13
<PAGE> 101
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
(1) PNC Bank, National Association, 1600 Market
Street, Philadelphia, Pennsylvania 19103
(records relating to its functions as sub-
investment adviser).
(2) PNC Bank, National Association, 200 Stevens
Drive, Suite 440, Lester, Pennsylvania 19113
(records relating to its functions as
custodian).
(3) Provident Distributors, Inc., Four Falls
Corporate Center, 6th Floor, West
Conshohocken, Pennsylvania 19428 (records
relating to its functions as administrator
and distributor).
(4) PNC Institutional Management Corporation,
Bellevue Park Corporate Center, 400 Bellevue
Parkway, Wilmington, Delaware 19809 (records
relating to its functions as investment
adviser).
(5) PFPC Inc., 400 Bellevue Parkway, Bellevue
Park Corporate Center, Wilmington, Delaware
19809 (records relating to its functions as
administrator, transfer agent, registrar and
dividend disbursing agent).
(6) Drinker Biddle & Reath, Philadelphia
National Bank Building, 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107
(Registrant's Charter, By-Laws, and Minutes
Books).
ITEM 31. MANAGEMENT SERVICES
None.
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes to furnish its Annual Report
to Shareholders upon request and without charge to any
person to whom a prospectus is delivered.
C-14
<PAGE> 102
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Post- Effective Amendment No. 56
to its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment No. 56 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Wilmington, and State of Delaware, on January
30, 1997.
TEMPORARY INVESTMENT FUND, INC.
/s/ G. Willing Pepper
-----------------------------------
G. Willing Pepper
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 56 to Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
*G. Nicholas Beckwith, III
- --------------------------- Director January 30, 1997
G. Nicholas Beckwith, III
* Philip E. Coldwell
- --------------------------- Director January 30, 1997
Philip E. Coldwell
- --------------------------- Director January __, 1997
Robert R. Fortune
*Jerrold B. Harris
- --------------------------- Director January 30, 1997
Jerrold B. Harris
* Rodney D. Johnson
- --------------------------- Director January 30, 1997
Rodney D. Johnson
/s/ G. Willing Pepper
- --------------------------- Chairman of January 30, 1997
G. Willing Pepper the Board and
President
/s/ Edward J. Roach
- --------------------------- Vice President January 30, 1997
Edward J. Roach and Treasurer
(Principal Financial
and Accounting
Officer)
*By:/s/ Edward J. Roach
- ---------------------------
Edward J. Roach
Attorney-in-Fact
</TABLE>
<PAGE> 103
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint G. Willing Pepper or Edward J. Roach attorney for me,
with full power of substitution, and in my name and on my behalf as a director
to sign any Registration Statement or Amendment thereto of TEMPORARY INVESTMENT
FUND, INC. (Registration No. 2-47015) to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, and generally to do and
perform all things necessary to be done in that connection.
I have signed this Power of Attorney on January 22, 1997.
/s/ G. Nicholas Beckwith, III
------------------------------
G. Nicholas Beckwith, III
<PAGE> 104
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint G. Willing Pepper or Edward J. Roach attorney for me,
with full power of substitution, and in my name and on my behalf as a director
to sign any Registration Statement or Amendment thereto of TEMPORARY INVESTMENT
FUND, INC. (Registration No. 2-47015) to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, and generally to do and
perform all things necessary to be done in that connection.
I have signed this Power of Attorney on January 21, 1997.*
/s/ Philip E. Coldwell
-------------------------
Philip E. Coldwell
* With the understanding that all amendments will be sent to
me in advance.
<PAGE> 105
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint G. Willing Pepper or Edward J. Roach attorney for me,
with full power of substitution, and in my name and on my behalf as a director
to sign any Registration Statement or Amendment thereto of TEMPORARY INVESTMENT
FUND, INC. (Registration No. 2-47015) to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, and generally to do and
perform all things necessary to be done in that connection.
I have signed this Power of Attorney on January 22, 1997.
/s/ Jerrold B. Harris
--------------------------
Jerrold B. Harris
<PAGE> 106
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint G. Willing Pepper or Edward J. Roach attorney for me,
with full power of substitution, and in my name and on my behalf as a director
to sign any Registration Statement or Amendment thereto of TEMPORARY INVESTMENT
FUND, INC. (Registration No. 2-47015) to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, and generally to do and
perform all things necessary to be done in that connection.
I have signed this Power of Attorney on January 20, 1997.
/s/ Rodney D. Johnson
------------------------
Rodney D. Johnson
<PAGE> 107
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
- ---------- ----------- --------
(10) Opinion and Consent of Counsel.
(11) Consent of Coopers & Lybrand L.L.P.
(17) Financial Data Schedules.
<PAGE> 1
EXHIBIT 10
Law Offices
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
Telex: 834684
Fax: (215) 988-2757
January 30, 1997
Temporary Investment Fund, Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
RE: TEMPORARY INVESTMENT FUND, INC.
POST-EFFECTIVE AMENDMENT NO. 56 TO REGISTRATION
STATEMENT ON FORM N-1A
(REGISTRATION NO. 2-47015)
Gentlemen:
We have acted as counsel for Temporary Investment Fund, Inc.,
a Maryland corporation (the "Fund"), and have been informed by the Fund of the
registration of 2,862,429,192 shares of Class B and Class B - Special Series 1
Common Stock and 365,342,718 shares of Class C and Class C - Special Series 1
Common Stock ("Shares"), pursuant to Post-Effective Amendment No. 56 to the
Fund's Registration Statement under the Securities Act of 1933. The registration
of such Shares has been made in reliance upon Rule 24e-2 under the Investment
Company Act of 1940. The Fund is an open-end investment company authorized to
issue a total of sixty billion shares of Common Stock, par value $.001 per
share, of which forty billion shares were classified as Class B Common Stock,
five billion shares were classified as Class B - Special Series 1 Common Stock,
five billion shares were classified as Class C Common Stock, and ten billion
shares were classified as Class C - Special Series 1 Common Stock at all times
during the fiscal year ended September 30, 1996 and remain so classified as of
the date of this opinion. We have reviewed the Fund's Charter, its By-Laws,
resolutions adopted by its Board of Directors and shareholders and such other
legal and factual matters as we have deemed appropriate.
On the basis of the foregoing, we are of the opinion that the
foregoing 2,862,429,192 shares of Class B and Class B - Special Series 1 Common
Stock and 365,342,718 shares of Class C and Class C - Special Series 1 Common
Stock when issued for payment as described in the Fund's Prospectuses, will be
validly issued, fully paid and non-assessable by the Fund.
<PAGE> 2
Temporary Investment Fund, Inc.
January 30, 1997
Page 2
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to Post- Effective Amendment
No. 56 to the Fund's Registration Statement.
Very truly yours,
/s/ Drinker Biddle & Reath
DRINKER BIDDLE & REATH
VSJ/KLT
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference to this Post- Effective Amendment
No. 56 to the Registration Statement under the Securities Act of 1933 on Form
N-1A (File No. 2-47015) of our report dated November 1, 1996 on our audit of the
financial statements and financial highlights of Temporary Investment Fund, Inc.
We also consent to the reference to our Firm under the caption "Financial
Highlights" in the Prospectus and under the captions "Auditors" and "Financial
Statements" in the Statement of Additional Information.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 29, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000097098
<NAME> TEMPORARY INVESTMENT FUND, INC.
<SERIES>
<NUMBER> 011
<NAME> TEMP FUND PORTFOLIO - CLASS B
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 5880820264
<INVESTMENTS-AT-VALUE> 5880820264
<RECEIVABLES> 26694881
<ASSETS-OTHER> 17822
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5907532967
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30410465
<TOTAL-LIABILITIES> 30410465
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5877073373
<SHARES-COMMON-STOCK> 5877073373
<SHARES-COMMON-PRIOR> 5433219534
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49129
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5877122502
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 382897873
<OTHER-INCOME> 0
<EXPENSES-NET> 12687038
<NET-INVESTMENT-INCOME> 370210835
<REALIZED-GAINS-CURRENT> 94556
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 370305391
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 370210835
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 104002736713
<NUMBER-OF-SHARES-REDEEMED> 103649208875
<SHARES-REINVESTED> 90326001
<NET-CHANGE-IN-ASSETS> 443948395
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (45427)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8019787
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18217601
<AVERAGE-NET-ASSETS> 6736117723
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .054
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .054
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000097098
<NAME> TEMPORARY INVESTMENT FUND, INC.
<SERIES>
<NUMBER> 012
<NAME> TEMP FUND PORTFOLIO - DOLLAR SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 5880820264
<INVESTMENTS-AT-VALUE> 5880820264
<RECEIVABLES> 26694881
<ASSETS-OTHER> 17822
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5907532967
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30410465
<TOTAL-LIABILITIES> 30410465
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5877073373
<SHARES-COMMON-STOCK> 5877073373
<SHARES-COMMON-PRIOR> 5433219534
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 49129
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5877122502
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 382897873
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