<PAGE> 1
As filed with the Securities and Exchange Commission on January 30, 1998
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. 58
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 GARY M. GARDNER
400 Bellevue Parkway Bellevue Park Corporate Center
Wilmington, Delaware 19809 400 Bellevue Parkway
(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 LLP
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.
Title of Securities Being Registered: Shares of Common Stock.
<PAGE> 2
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> 3
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 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 or
visit our Web Site at WWW.PIF.com.
</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, 1998, 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
Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). 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, 1998
<PAGE> 4
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, 1997, absent
fee waivers, would have been .24% and .49%, 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> 5
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, 1997, and for each of the nine preceding fiscal
years. The financial highlights for the fiscal years ended September 30, 1997,
1996, 1995, 1994 and 1993 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,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ----------
<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.............. .0539 .0541 .0567 .0360 .0310 .0424
Net Realized Gains on Investments.. -- -- -- -- -- .0015
---------- ---------- ---------- ---------- ---------- ----------
Total From Investment Operations... .0539 .0541 .0567 .0360 .0310 .0439
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (From Net Investment
Income).......................... (.0539) (.0541) (.0567) (.0360) (.0310) (.0424)
Distributions (From Capital
Gains)........................... -- -- -- -- -- (.0015)
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions................ (.0539) (.0541) (.0567) (.0360) (.0310) (.0439)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year........ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
=========== =========== =========== =========== =========== ===========
Total Return....................... 5.53% 5.55% 5.82% 3.66% 3.14% 4.48%
Ratios/Supplemental Data
Net Assets, End of Year (000's).... $8,060,501 $5,715,004 $5,351,346 $4,480,851 $5,522,056 $9,227,572
Ratio of Expenses to Average Daily
Net Assets....................... 18%(1) .18%(1) .24%(1) .25%(1) .21% .21%
Ratio of Net Investment Income to
Average Daily Net Assets......... 5.39% 5.41% 5.67% 3.60% 3.10% 4.13%
<CAPTION>
1991 1990 1989 1988
---------- ---------- ---------- ----------
<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.............. .0667 .0815 .0896 .0707
Net Realized Gains on Investments.. -- -- -- --
---------- ---------- ---------- ----------
Total From Investment Operations... .0667 .0815 .0896 .0707
---------- ---------- ---------- ----------
Less Distributions
Dividends (From Net Investment
Income).......................... (.0667) (.0815) (.0896) (.0707)
Distributions (From Capital
Gains)........................... -- -- -- --
---------- ---------- ---------- ----------
Total Distributions................ (.0667) (.0815) (.0896) (.0707)
---------- ---------- ---------- ----------
Net Asset Value, End of Year........ $1.00 $1.00 $1.00 $1.00
=========== =========== =========== ===========
Total Return....................... 6.87% 8.47% 9.34% 7.31%
Ratios/Supplemental Data
Net Assets, End of Year (000's).... $8,888,832 $4,857,260 $5,265,850 $4,583,277
Ratio of Expenses to Average Daily
Net Assets....................... .27% .30% .30% .28%
Ratio of Net Investment Income to
Average Daily Net Assets......... 6.53% 8.16% 8.96% 7.02%
</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
.24% for the year ended September 30, 1997, .26% for the year ended
September 30, 1996 and .27% for the years ended September 30, 1995 and 1994,
respectively.
3
<PAGE> 6
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,
----------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
-------- ------- -------- -------- -------- ------- -------
<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........................ .0514 .0516 .0542 .0335 .0285 .0399 .0642
Net Realized Gains on Investments............ -- -- -- -- -- .0015 --
-------- ------- -------- -------- -------- ------- -------
Total From Investment Operations............. .0514 .0516 .0542 .0335 .0285 .0414 .0642
-------- ------- -------- -------- -------- ------- -------
Less Distributions
Dividends (From Net Investment Income)....... (.0514) (.0516) (.0542) (.0335) (.0285) (.0399) (.0642)
Distributions (From Capital Gains)........... -- -- -- -- -- (.0015) --
-------- ------- -------- -------- -------- ------- -------
Total Distributions.......................... (.0514) (.0516) (.0542) (.0335) (.0285) (.0414) (.0642)
-------- ------- -------- -------- -------- ------- -------
Net Asset Value, End of Year.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======= ======== ======== ======== ======= =======
Total Return................................. 5.27% 5.30% 5.57% 3.41% 2.89% 4.23% 6.62%
Ratios/Supplemental Data
Net Assets, End of Year (000's).............. $355,284 $162,119 $81,828 $102,105 $112,695 $217,230 $44,667
Ratio of Expenses to Average Daily Net
Assets..................................... .43%(1) .43%(1) .49%(1) .50%(1) .46% .46% .52%
Ratio of Net Investment Income to Average
Daily Net Assets........................... 5.14% 5.16% 5.42% 3.35% 2.85% 3.88% 6.28%
<CAPTION>
1990 1989 1988
-------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year............ $1.00 $1.00 $1.00
-------- ------- -------
Income From Investment Operations
Net Investment Income........................ .0790 .0871 .0682
Net Realized Gains on Investments............ -- -- --
-------- ------- -------
Total From Investment Operations............. .0790 .0871 .0682
-------- ------- -------
Less Distributions
Dividends (From Net Investment Income)....... (.0790) (.0871) (.0682)
Distributions (From Capital Gains)........... -- -- --
-------- ------- -------
Total Distributions.......................... (.0790) (.0871) (.0682)
-------- ------- -------
Net Asset Value, End of Year.................. $1.00 $1.00 $1.00
======== ======= =======
Total Return................................. 8.22% 9.09% 7.06%
Ratios/Supplemental Data
Net Assets, End of Year (000's).............. $73,968 $101,989 $65,077
Ratio of Expenses to Average Daily Net
Assets..................................... .55% .55% .53%
Ratio of Net Investment Income to Average
Daily Net Assets........................... 7.91% 8.71% 6.77%
</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 .49% for the year ended September 30, 1997, .51% for the year ended
September 30, 1996 and .52% for the years ended September 30, 1995 and 1994,
respectively.
4
<PAGE> 7
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; provided that the Fund may not invest in the
securities of more than one issuer in accordance with the foregoing at any one
time.
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,
5
<PAGE> 8
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 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 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.
6
<PAGE> 9
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.
7
<PAGE> 10
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 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.
8
<PAGE> 11
Payment for redeemed shares for which a redemption order is received by
PFPC by 5:30 P.M., Eastern time, on a Business Day is normally made in federal
funds wired to the redeeming shareholder on the same day. Payment for redemption
orders which are received on a day when PNC Bank is closed is normally wired in
federal funds on the next day following redemption that PNC Bank is open for
business.
The Fund shall have the right to redeem shares in any 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, the holidays which the New York Stock Exchange and the Federal
Reserve Bank of Philadelphia observe are New Year's Day, Dr. Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day and the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday, respectively.
Additionally, the Federal Reserve Bank of Philadelphia is closed on Veterans'
Day and Columbus 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.
9
<PAGE> 12
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 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, 1997, 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 Funds."
10
<PAGE> 13
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. All of the outstanding stock of PDI is
owned by PDI's chief executive officer. 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, 1997, 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
11
<PAGE> 14
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.
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, 1997, 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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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
12
<PAGE> 15
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 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
13
<PAGE> 16
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
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
14
<PAGE> 17
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.
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> 18
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
</TABLE>
PIF--P-001
TEMPFUND
AN INVESTMENT PORTFOLIO
OFFERED BY
TEMPORARY INVESTMENT FUND, INC.
LOGO
Prospectus
January 31, 1998
<PAGE> 19
TEMPORARY INVESTMENT FUND, INC.
(TEMPCASH 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> 20
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 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 or visit our Web Site at
WWW.PIF.com.
</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, 1998, 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
Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). 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, 1998
<PAGE> 21
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, 1997,
absent fee waivers, would have been .30% and .55%, 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> 22
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, 1997, and for each of the nine preceding fiscal
years. The financial highlights for the fiscal years ended September 30, 1997,
1996, 1995, 1994 and 1993 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,
--------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ----------
<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 .0542 .0575 .0370 .0310 .0424
Net Realized Gains on Investments....... -- -- -- -- -- .0008
---------- ---------- ---------- ---------- ---------- ----------
Total From Investment Operations........ .0541 .0542 .0575 .0370 .0310 .0432
---------- ---------- ---------- ---------- ---------- ----------
Less Distributions
Dividends (From Net Investment
Income)............................... (.0541) (.0542) (.0575) (.0370) (.0310) (.0424)
Distributions (From Capital Gains)...... -- -- -- -- -- (.0008)
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions..................... (.0541) (.0542) (.0575) (.0370) (.0310) (.0432)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
========== ========== ========== ========== ========== ==========
Total Return............................ 5.55% 5.56% 5.90% 3.76% 3.14% 4.41%
Ratios/Supplemental Data
Net Assets, End of Year (000's)......... $1,991,037 $1,835,326 $1,316,166 $2,330,456 $1,479,035 $1,492,959
Ratio of Expenses to Average Daily Net
Assets................................ 18%(1) .18%(1) .16%(1) .16%(1) .19%(1) .20%(1)
Ratio of Net Investment Income to
Average Daily Net Assets.............. 5.41% 5.42% 5.75% 3.70% 3.10% 4.14%
<CAPTION>
1991 1990 1989 1988
---------- ---------- -------- --------
<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................... .0676 .0830 .0911 .0723
Net Realized Gains on Investments....... -- -- -- --
---------- ---------- --------- --------
Total From Investment Operations........ .0676 .0830 .0911 .0723
---------- ---------- --------- --------
Less Distributions
Dividends (From Net Investment
Income)............................... (.0676) (.0830) (.0911) (.0723)
Distributions (From Capital Gains)...... -- -- -- --
---------- ---------- --------- --------
Total Distributions..................... (.0676) (.0830) (.0911) (.0723)
---------- ---------- --------- --------
Net Asset Value, End of Year............. $1.00 $1.00 $1.00 $1.00
========== ========== ========= ========
Total Return............................ 6.97% 8.62% 9.50% 7.45%
Ratios/Supplemental Data
Net Assets, End of Year (000's)......... $1,528,637 $1,179,276 $560,740 $319,267
Ratio of Expenses to Average Daily Net
Assets................................ .20%(1) .20%(1) .20%(1) .19%(1)
Ratio of Net Investment Income to
Average Daily Net Assets.............. 6.57% 8.17% 9.17% 7.33%
</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
.30%, .33%, .30%, .33%, .37%, .33%, .34%, .39%, 41% and .43% for the years
ended September 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and
1988, respectively.
3
<PAGE> 23
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,
-----------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<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........... .0516 .0517 .0550 .0345 .0285 .0399 .0651 .0805 .0886 .0698
Net Realized Gains
on Investments... -- -- -- -- -- .0008 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations....... .0516 .0517 .0550 .0345 .0285 .0407 .0651 .0805 .0886 .0698
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions
Dividends (From Net
Investment
Income).......... (.0516) (.0517) (.0550) (.0345) (.0285) (.0399) (.0651) (.0805) (.0886) (.0698)
Distributions (From
Capital Gains)... -- -- -- -- -- (.0008) -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
Distributions.... (.0516) (.0517) (.0550) (.0345) (.0285) (.0407) (.0651) (.0805) (.0886) (.0698)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
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....... 5.29% 5.31% 5.65% 3.51% 2.89% 4.16% 6.72% 8.37% 9.25% 7.20%
Ratios/Supplemental
Data
Net Assets, End of
Year (000's)..... $401,529 $527,830 $454,156 $397,948 $307,239 $408,900 $438,721 $317,267 $209,507 $125,166
Ratio of Expenses
to Average Daily
Net Assets....... .43%(1) .43%(1) .41%(1) .41%(1) .44%(1) .45%(1) .45%(1) .45%(1) .45%(1) .44%(1)
Ratio of Net
Investment Income
to Average Daily
Net Assets....... 5.16% 5.17% 5.50% 3.45% 2.85% 3.89% 6.32% 7.92% 8.92% 7.08%
</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 .55%, .58%, .55%, .58%, .62%, .58%, .59%, .64%, .66% and .68% for
the years ended September 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991,
1990, 1989 and 1988, respectively.
4
<PAGE> 24
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; provided that the Fund may not invest in the
securities of more than one issuer in accordance with the foregoing at any one
time.
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
5
<PAGE> 25
company obligations and certificates of deposit, bankers' acceptances and time
deposits, including U.S. dollar-denominated instruments issued or supported by
the credit of U.S. or foreign banks or savings institutions having total assets
at the time of purchase in excess of $1 billion. The Fund may invest
substantially in obligations of foreign banks or foreign branches of U.S. banks
where the 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.
6
<PAGE> 26
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") 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. Under these contracts, the Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund on a monthly basis
guaranteed interest which is based on an index (in most cases this index is
expected to be the Salomon Brothers CD Index). The GICs provide that this
guaranteed interest will not be less than a certain minimum rate. GIC
investments that do not provide for payment within seven days after notice are
subject to the Fund's policy regarding investments in illiquid securities.
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.
7
<PAGE> 27
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, 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
8
<PAGE> 28
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." 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, the holidays which the New York Stock Exchange and the Federal
Reserve Bank of Philadelphia observe are New Year's Day, Dr. Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day and the preceding Friday or subsequent
Monday when one of these holidays fall on a Saturday or Sunday, respectively.
Additionally, the Federal Reserve Bank of Philadelphia is closed on Veterans'
Day and Columbus 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
9
<PAGE> 29
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 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, 1997, 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).
10
<PAGE> 30
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 Funds."
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. All of the outstanding stock of PDI is
owned by PDI's chief executive officer. 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, 1997, 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
11
<PAGE> 31
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. 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, 1997, 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.
12
<PAGE> 32
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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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> 33
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 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
14
<PAGE> 34
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 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> 35
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....................... 13
Taxes........................... 13
Yields.......................... 14
Description of Shares and
Miscellaneous................. 14
</TABLE>
PIF-P-002
TEMPCASH
AN INVESTMENT PORTFOLIO
OFFERED BY
TEMPORARY INVESTMENT FUND, INC.
LOGO
Prospectus
January 31, 1998
<PAGE> 36
TEMPORARY INVESTMENT FUND, INC.
(TEMPCASH 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> 37
TEMPCASH
An Investment Portfolio Offered by
Temporary Investment Fund, Inc.
Bellevue Park Corporate Center For purchase and redemption orders
400 Bellevue Parkway 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
or visit our Web Site at WWW.PIF.com.
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.
<PAGE> 38
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, 1998, 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
Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Web Site
(http://www.sec.gov). 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, 1998
-2-
<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
<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, 1997,
absent fee waivers, would have been .30% and .55%, respectively,
-3-
<PAGE> 40
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.
-4-
<PAGE> 41
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, 1997, and for each of the nine preceding
fiscal years. The financial highlights for the fiscal years ended September 30,
1997, 1996, 1995, 1994 and 1993 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,
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year................ $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Income From Investment Operations
Net Investment Income.......................... .0541 .0542 .0575 .0370 .0310
Net Realized Gains on Investments.............. ----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total From Investment Operations............... .0541 .0542 .0575 .0370 .0310
----- ----- ----- ----- -----
Less Distributions
Dividends (From Net Investment Income)......... (.0541) (.0542) (.0575) (.0370) (.0310)
Distributions (From Capital Gains)............. ----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total Distributions............................ (.0541) (.0542) (.0575) (.0370) (.0310)
----- ----- ----- ----- -----
Net Asset Value, End of Year...................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return................................... 5.55% 5.56% 5.90% 3.76% 3.14%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................ $1,991,037 $1,835,326 $1,316,166 $2,330,456 $1,479,035
Ratio of Expenses to Average
Daily Net Assets............................. .18%(1) .18%(1) .161 .16%(1) .19%(1)
Ratio of Net Investment Income to
Average Daily Net Assets..................... 5.41% 5.42% 5.75% 3.70% 3.10%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
1992 1991 1990 1989 1988
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year................ $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Income From Investment Operations
Net Investment Income.......................... .0424 .0676 .0830 .0911 .0723
Net Realized Gains on Investments.............. .0008 ----- ----- ----- -----
----- ----- ----- ----- -----
Total From Investment Operations............... .0432 .0676 .0830 .0911 .0723
----- ----- ----- ----- -----
Less Distributions
Dividends (From Net Investment Income)......... (.0424) (.0676) (.0830) (.0911) (.0723)
Distributions (From Capital Gains)............. (.0008) ----- ----- ----- -----
----- ----- ----- ----- -----
Total Distributions............................ (.0432) (.0676) (.0830) (.0911) (.0723)
----- ----- ----- ----- -----
Net Asset Value, End of Year...................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return................................... 4.41% 6.97% 8.62% 9.50% 7.45%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................ $1,492,959 $1,528,637 $1,179,276 $560,740 $319,267
Ratio of Expenses to Average
Daily Net Assets............................. .20%(1) .20%(1) .20%(1) .20%(1) .19%(1)
Ratio of Net Investment Income to
Average Daily Net Assets..................... 4.14% 6.57% 8.17% 9.17% 7.33%
</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 .30%, .33%, .30%, .33%, .37%, .33%, .34%, .39%, 41% and .43% for
the years ended September 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991,
1990, 1989 and 1988, respectively.
-5-
<PAGE> 42
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,
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year................ $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income........................... .0516 .0517 .0550 .0345 .0285
Net Realized Gains on Investments............... -- -- -- -- --
-------- -------- -------- -------- --------
Total From Investment Operations................ .0516 .0517 .0550 .0345 .0285
-------- -------- -------- -------- --------
Less Distributions
Dividends (From Net Investment
Income)....................................... (.0516) (.0517) (.0550) (.0345) (.0285)
Distributions (From Capital Gains).............. -- -- -- -- --
-------- -------- -------- -------- --------
Total Distributions............................. (.0516) (.0517) (.0550) (.0345) (.0285)
-------- -------- -------- -------- --------
Net Asset Value, End of Year...................... $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ========
Total Return ................................... 5.29% 5.31% 5.65% 3.51% 2.89%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................. $401,529 $527,830 $454,156 $397,948 $307,239
-------- -------- -------- -------- --------
Ratio of Expenses to Average Daily
Net Assets.................................... .43%(1) .43%(1) .41%(1) .41%(1) .44%(1)
Ratio of Net Investment Income to
Average Daily Net Assets...................... 5.16% 5.17% 5.50% 3.45% 2.85%
</TABLE>
<TABLE>
<CAPTION>
Year Ended September 30,
1992 1991 1990 1989 1988
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year................ $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income........................... .0399 .0651 .0805 .0886 .0698
Net Realized Gains on Investments............... .0008 -- -- -- --
-------- -------- -------- -------- --------
Total From Investment Operations................ .0407 .0651 .0805 .0886 .0698
-------- -------- -------- -------- --------
Less Distributions
Dividends (From Net Investment
Income)....................................... (.0399) (.0651) (.0805) (.0886) (.0698)
Distributions (From Capital Gains).............. (.0008) -- -- -- --
-------- -------- -------- -------- --------
Total Distributions............................. (.0407) (.0651) (.0805) (.0886) (.0698)
-------- -------- -------- -------- --------
Net Asset Value, End of Year...................... $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ========
Total Return ................................... 4.16% 6.72% 8.37% 9.25% 7.20%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................. $408,900 $438,721 $317,267 $209,507 $125,166
-------- -------- -------- -------- --------
Ratio of Expenses to Average Daily
Net Assets.................................... .45%(1) .45%(1) .45%(1) .45%(1) .44%(1)
Ratio of Net Investment Income to
Average Daily Net Assets...................... 3.89% 6.32% 7.92% 8.92% 7.08%
</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 .55%, .58%, .55%, .58%, .62%, .58%, .59%, .64%, .66% and .68%
for the years ended September 30, 1997, 1996, 1995, 1994, 1993, 1992,
1991, 1990, 1989 and 1988, respectively.
-6-
<PAGE> 43
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; provided that the Fund may not invest in the
securities of more than one issuer in accordance with the foregoing at any one
time.
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
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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. 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
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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") 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.
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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. Under these
contracts, the Fund makes cash contributions to a deposit fund of the insurance
company's general account. The insurance company then credits to the Fund on a
monthly basis guaranteed interest which is based on an index (in most cases this
index is expected to be the Salomon Brothers CD Index). The GICs provide that
this guaranteed interest will not be less than a certain minimum rate. GIC
investments that do not provide for payment within seven days after notice are
subject to the Fund's policy regarding investments in illiquid securities.
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
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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, 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
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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.")
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
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on which either the Federal Reserve Bank of Philadelphia or the New York Stock
Exchange are closed). Currently, the holidays which the New York Stock Exchange
and the Federal Reserve Bank of Philadelphia observe are New Year's Day, Dr.
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day and the
preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively. Additionally, the Federal Reserve Bank of
Philadelphia is closed on Veterans' Day and Columbus 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.
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
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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, 1997, 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 Funds."
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. All
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of the outstanding stock of PDI is owned by PDI's chief executive officer. 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, 1997, 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
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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. 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, 1997, 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
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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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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.
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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 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
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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.
-19-
<PAGE> 56
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 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."
-20-
<PAGE> 57
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS; AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
-------------------
TABLE OF CONTENTS
PAGE
----
BACKGROUND AND EXPENSE
INFORMATION........................................................
FINANCIAL HIGHLIGHTS........................................................
INVESTMENT OBJECTIVE AND
POLICIES...........................................................
PURCHASE AND REDEMPTION OF
SHARES.............................................................
MANAGEMENT OF THE FUND......................................................
DIVIDENDS...................................................................
TAXES ...................................................................
YIELDS ...................................................................
DESCRIPTION OF SHARES AND
MISCELLANEOUS......................................................
TEMPCASH
OFFERED
THROUGH
USAA AMA
ASSET
MANAGEMENT
ACCOUNT
PROSPECTUS
INSIDE
JANUARY 31, 1998
USAA
USAA INVESTMENT
MANAGEMENT
COMPANY
-21-
<PAGE> 58
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> 59
TempCash
Dollar Shares
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 800-441-7450 (in Delaware: 302-791-5350).
Wilmington, DE 19809 For yield information call: 800-821-6006
(Dollar Shares code: 23).
For other information call: 800-821-7432 or
visit our Web Site at WWW.PIF.com.
</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, 1998, 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
Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). 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, 1998
<PAGE> 60
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, 1997, absent fee waivers, would
have been .55% 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> 61
FINANCIAL HIGHLIGHTS
The following financial highlights for TempCash Dollar Shares have been
derived from the financial statements of the Fund for the fiscal year ended
September 30, 1997 and for each of the nine preceding fiscal years. The
financial highlights for the fiscal years ended September 30, 1997, 1996, 1995,
1994 and 1993 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,
--------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- ---------
<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.......................... .0516 .0517 .0550 .0345 .0285 .0399
Net Realized Gains on Investments.............. -- -- -- -- -- .0008
-------- -------- -------- -------- -------- --------
Total From Investment Operations............... .0516 .0517 .0550 .0345 .0285 .0407
-------- -------- -------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income)......... (.0516) (.0517) (.0550) (.0345) (.0285) (.0399)
Distributions (From Capital Gains)............. -- -- -- -- -- (.0008)
-------- -------- -------- -------- -------- --------
Total Distributions............................ (.0516) (.0517) (.0550) (.0345) (.0285) (.0407)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Year.................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ======== ========
Total Return................................... 5.29% 5.31% 5.65% 3.51% 2.89% 4.16%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................ $ 401,529 $ 527,830 $ 454,156 $ 397,948 $ 307,239 $ 408,900
Ratio of Expenses to Average Daily Net
Assets....................................... .43%(1) .43%(1) .41%(1) .41%(1) .44%(1) .45%(1)
Ratio of Net Investment Income to Average Daily
Net Assets................................... 5.16% 5.17% 5.50% 3.45% 2.85% 3.89%
<CAPTION>
1991 1990 1989 1988
--------- --------- --------- ---------
<S> <C<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.......................... .0651 .0805 .0886 .0698
Net Realized Gains on Investments.............. -- -- -- --
-------- -------- -------- --------
Total From Investment Operations............... .0651 .0805 .0886 .0698
-------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income)......... (.0651) (.0805) (.0886) (.0698)
Distributions (From Capital Gains)............. -- -- -- --
-------- -------- -------- --------
Total Distributions............................ (.0651) (.0805) (.0886) (.0698)
-------- -------- -------- --------
Net Asset Value, End of Year.................... $1.00 $1.00 $1.00 $1.00
======== ======== ======== ========
Total Return................................... 6.72% 8.37% 9.25% 7.20%
Ratios/Supplemental Data
Net Assets, End of Year (000's)................ $ 438,721 $ 317,267 $ 209,507 $ 125,166
Ratio of Expenses to Average Daily Net
Assets....................................... .45%(1) .45%(1) .45%(1) .44%(1)
Ratio of Net Investment Income to Average Daily
Net Assets................................... 6.32% 7.92% 8.92% 7.08%
</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 .55%, .58%, .55%, .58%, .62%, .58%, .59%, .64%, .66% and .68% for the
years ended September 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990,
1989 and 1988, respectively.
3
<PAGE> 62
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; provided that the Fund may not invest in the
securities of more than one issuer in accordance with the foregoing at any one
time.
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.
4
<PAGE> 63
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. 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.
5
<PAGE> 64
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") 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. Under these contracts, the Fund
makes cash contributions to a deposit fund of the insurance company's general
account. The insurance company then credits to the Fund on a monthly basis
guaranteed interest which is based on an index (in most cases this index is
expected to be the Salomon Brothers CD Index). The GICs provide that this
guaranteed interest will not be less than a certain minimum rate. GIC
investments that do not provide for payment within seven days after notice are
subject to the Fund's policy regarding investments in illiquid securities.
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 objectives 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.
6
<PAGE> 65
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, 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.
7
<PAGE> 66
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.
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, the holidays which the New York Stock Exchange and the Federal
Reserve Bank observe are New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day and the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday, respectively.
Additionally, the Federal Reserve Bank of Philadelphia is closed on Veterans'
Day and Columbus 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
8
<PAGE> 67
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. 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
9
<PAGE> 68
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 administrators with respect to a particular fiscal
year are not recoverable. For the fiscal year ended September 30, 1997, 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 Funds."
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. All of the outstanding stock of PDI is
owned by PDI's chief executive officer. 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, 1997, 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
10
<PAGE> 69
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
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, 1997, 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
11
<PAGE> 70
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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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.
12
<PAGE> 71
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 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 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")
13
<PAGE> 72
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 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."
14
<PAGE> 73
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..................... 4
Purchase and Redemption of
Shares........................ 7
Management of the Fund.......... 9
Dividends....................... 12
Taxes........................... 12
Yields.......................... 13
Description of Shares and
Miscellaneous................. 13
</TABLE>
TEMPCASH
DOLLAR SHARES
AN INVESTMENT PORTFOLIO
OFFERED BY
TEMPORARY INVESTMENT FUND, INC.
[PROVIDENT INSTITUTIONAL FUNDS LOGO]
Prospectus
January 31, 1998
<PAGE> 74
TEMPORARY INVESTMENT FUND, INC.
(TEMPCASH DOLLAR SHARES)
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> 75
TEMPCASH DOLLAR SHARES
AN INVESTMENT PORTFOLIO OFFERED BY
TEMPORARY INVESTMENT FUND, INC.
Bellevue Park Corporate Center For information call: (888)UBS-FUND
400 Bellevue Parkway (888)827-3863.
Wilmington, DE 19809
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.") The
New York Branch of Union Bank of Switzerland acts as a Service Organization on
behalf of its customers and customers of its affiliates with respect to all
shares offered by the Prospectus.
------------------------------
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.
<PAGE> 76
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, 1998, 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
Prospectus and Statement of Additional Information are also available for
reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). 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, 1998
-2-
<PAGE> 77
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>
- -----------------
EXAMPLE
<TABLE>
<CAPTION>
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, 1997, absent fee waivers, would
have been .55% 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.
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<PAGE> 78
The foregoing table reflects anticipated waivers and has not been audited by the
Fund's independent accountants.
-4-
<PAGE> 79
FINANCIAL HIGHLIGHTS
The following financial highlights for TempCash Dollar Shares have been
derived from the financial statements of the Fund for the fiscal year ended
September 30, 1997 and for each of the nine preceding fiscal years. The
financial highlights for the fiscal years ended September 30, 1997, 1996, 1995,
1994 and 1993 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,
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year............... $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income......................... .0516 .0517 .0550 .0345 .0285
Net Realized Gains on Investments............. - - - - -
-------- -------- -------- -------- --------
Total From Investment Operations.............. .0516 .0517 .0550 .0345 .0285
-------- -------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income)........ (.0516) (.0517) (.0550) (.0345) (.0285)
Distributions (From Capital Gains)............ - - - - -
-------- -------- -------- -------- --------
Total Distributions........................... (.0516) (.0517) (.0550) (.0345) (.0285)
-------- -------- -------- -------- --------
Net Asset Value, End of Year..................... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======== ======= ======= =======
Total Return.................................. 5.29% 5.31% 5.65% 3.51% 2.89%
Ratios/Supplemental Data
Net Assets, End of Year (000's)............... $401,529 $527,630 $454,156 $397,948 $307,239
-------- -------- -------- -------- --------
Ratio of Expenses to Average Daily
Net Assets................................. .43%(1) .43%(1) .41%(1) .41%(1) .44%(1)
Ratio of Net Investment Income to
Average Daily Net Assets................... 5.16% 5.17% 5.50% 3.45% 2.85%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1992 1991 1990 1989 1988
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year............... $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
Income From Investment Operations
Net Investment Income......................... .0399 .0651 .0805 .0886 .0698
Net Realized Gains on Investments............. .0008 - - - -
-------- -------- -------- -------- --------
Total From Investment Operations.............. .0407 .0651 .0805 .0886 .0698
-------- -------- -------- -------- --------
Less Distributions
Dividends (From Net Investment Income)........ (.0399) (.0651) (.0805) (.0886) (.0698)
Distributions (From Capital Gains)............ (.0008) - - - -
-------- -------- -------- -------- --------
Total Distributions........................... (.0407) (.0651) (.0805) (.0886) (.0698)
-------- -------- -------- -------- --------
Net Asset Value, End of Year..................... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total Return.................................. 4.16% 6.72% 8.37% 9.25% 7.20%
Ratios/Supplemental Data
Net Assets, End of Year (000's)............... $408,900 $438,721 $317,267 $209,507 $125,166
-------- -------- -------- -------- --------
Ratio of Expenses to Average Daily
Net Assets................................. .45%(1) .45%(1) .45%(1) .45%(1) .44%(1)
Ratio of Net Investment Income to
Average Daily Net Assets................... 3.89% 6.32% 7.92% 8.92% 7.08%
</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 .55%, .58%, .55%, .58%, .62%, .58%, .59%, .64%, .66% and .68% for the
years ended September 30, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990,
1989 and 1988, respectively.
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<PAGE> 80
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; provided that the Fund may not invest in the
securities of more than one issuer in accordance with the foregoing at any one
time.
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
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<PAGE> 81
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. 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
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<PAGE> 82
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") 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
-8-
<PAGE> 83
"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. Under
these contracts, the Fund makes cash contributions to a deposit fund of the
insurance company's general account. The insurance company then credits to the
Fund on a monthly basis guaranteed interest which is based on an index (in most
cases this index is expected to be the Salomon Brothers CD Index). The GICs
provide that this guaranteed interest will not be less than a certain minimum
rate. GIC investments that do not provide for payment within seven days after
notice are subject to the Fund's policy regarding investments in illiquid
securities.
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.
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.
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<PAGE> 84
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 New York Branch of Union Bank of Switzerland ("UBS") acts as
Service Organization for its customers and customers of its affiliates with
respect to all shares offered by this Prospectus. 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 UBS directly to PFPC, the Fund's
transfer agent. All such transactions are effected pursuant to procedures
established by UBS 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 by
UBS to PFPC in Wilmington, Delaware, by telephone 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.
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<PAGE> 85
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, such as UBS, may set a higher minimum initial investment and
minimum subsequent investments for their customers.
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 UBS 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. Service Organizations, such
as UBS, may require that customers maintain share accounts with minimum balances
in excess of $1,000. 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."
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<PAGE> 86
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, the holidays which the New York Stock Exchange and the Federal
Reserve Bank observe are New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day and the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday or Sunday, respectively.
Additionally, the Federal Reserve Bank of Philadelphia is closed on Veterans'
Day and Columbus 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. 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.
-12-
<PAGE> 87
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 administrators with
respect to a particular fiscal year are not recoverable. For the fiscal year
ended September 30, 1997, 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
-13-
<PAGE> 88
further in the Statement of Additional Information under "Management of the
Funds."
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. All of the outstanding stock
of PDI is owned by PDI's chief executive officer. 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, 1997, 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.
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<PAGE> 89
SERVICE ORGANIZATIONS
As stated above, Service Organizations (which may include affiliates of
PNC Bank Corp.) may purchase Dollar Shares offered by the Fund. The New York
Branch of Union Bank of Switzerland, 1345 Avenue of the Americas, New York, New
York 10105, will act as the Service Organization for the Dollar Shares offered
by this Prospectus to its customers and customers of its affiliates. 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, 1997, 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
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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 distributes substantially all of its net
investment income and capital gains, if any, to shareholders each year. 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.
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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 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
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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 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 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.
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The Company does not presently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Company will call a meeting of shareholders for the purpose of voting upon the
question of removal of a member of the Board of Directors upon written request
of shareholders owning at least 10% of the outstanding shares of the Company
entitled to vote.
Each Fund share represents an equal, proportionate interest in the
assets belonging to the Fund. Fund shares do not have preemptive or conversion
rights. When issued for payment as described in this Prospectus, Fund shares
will be fully paid and non-assessable.
Holders of the Fund's TempCash Shares and Dollar Shares will vote in
the aggregate and not by class or sub-class on all matters, except where
otherwise required by law and except that only Dollar Shares will be entitled to
vote on matters submitted to a vote of shareholders pertaining to the Fund's
arrangements with Service Organizations. Further, shareholders of the Fund and
of the Company's TempFund portfolio will vote in the aggregate and not by
portfolio except as otherwise required by law or when the Board of Directors
determines that the matter to be voted upon affects only the interests of the
shareholders of a particular portfolio. (See the Statement of Additional
Information under "Additional Description Concerning Fund Shares" for examples
where the 1940 Act requires voting by portfolio.) Shareholders of the Company
are entitled to one vote for each full share held (irrespective of class,
sub-class, or portfolio) and fractional votes for fractional shares held. Voting
rights are not cumulative and, accordingly, the holders of more than 50% of the
aggregate shares of Common Stock of the Company may elect all of the directors.
For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS; AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
-------------------
TABLE OF CONTENTS
PAGE
----
BACKGROUND AND EXPENSE INFORMATION...........................................
FINANCIAL HIGHLIGHTS.........................................................
INVESTMENT OBJECTIVE AND POLICIES............................................
PURCHASE AND REDEMPTION OF SHARES............................................
MANAGEMENT OF THE FUND.......................................................
DIVIDENDS....................................................................
TAXES........................................................................
YIELDS.......................................................................
DESCRIPTION OF SHARES AND MISCELLANEOUS......................................
UBS
MONEY MARKET
INVESTMENT PROGRAM
IN THE TEMPCASH PORTFOLIO
(DOLLAR SHARES)
PROSPECTUS
JANUARY 31, 1998
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TEMPFUND AND TEMPCASH
Investment Portfolios Offered By
Temporary Investment Fund, Inc.
Statement of Additional Information
January 31, 1998
TABLE OF CONTENTS
Page
The Company.......................................................... 2
Investment Objectives and Policies................................... 2
Additional Purchase and Redemption Information....................... 12
Management of the Funds.............................................. 14
Additional Information Concerning Taxes.............................. 25
Dividends............................................................ 26
Additional Yield Information......................................... 26
Additional Description Concerning Shares............................. 29
Counsel.............................................................. 31
Auditors............................................................. 31
Miscellaneous........................................................ 31
Appendix A........................................................... A-1
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, 1998, 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, TempFund Dollar Shares, 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> 96
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, 1995, 1996 and 1997, 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
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issuers) have charged and may in the future charge a higher price for commercial
paper where they undertake to repurchase prior to maturity. The payment of a
higher price in order to obtain such an undertaking reduces the yield which
might otherwise be received by a Fund on the commercial paper. The Company's
Board of 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.
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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 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
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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, 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.
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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 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 a 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
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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 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
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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 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. TempCash will only purchase GICs from insurance companies which, at the
time of purchase, are rated "A+" by A.M. Best Company, have assets of $1 billion
or more and meet quality and credit standards established by the adviser under
guidelines approved by the Board of Directors. Generally, GICs are not
assignable or transferable without the permission of the issuing insurance
companies, and an active secondary market in some GICs does not currently exist.
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
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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) 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.
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<PAGE> 104
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 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
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<PAGE> 105
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.
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
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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 and proper under the law governing the
administration of the account.
Prior to effecting a redemption of shares represented by certificates,
PFPC, the Company's transfer agent, must have received such certificates at its
principal office. All such certificates must be endorsed by the redeeming
shareholder or accompanied by a signed stock power, in each instance the
signature must be guaranteed. A signature guarantee may be obtained from a
domestic bank or trust company, broker, dealer, clearing agency or savings
association who are participants in a medallion program recognized by the
Securities Transfer Association. The three recognized medallion programs are
Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion
Signature Program (MSP) and the New York Stock Exchange, Inc. Medallion
Securities Program. Signature guarantees that are not part of these programs
will not be accepted. A Fund may require any additional information reasonably
necessary to evidence that a redemption has been duly authorized.
Under the 1940 Act, a Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the New
York Stock Exchange is closed,
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<PAGE> 107
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
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
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<PAGE> 108
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 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,
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<PAGE> 109
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: 53 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: 75 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.
ROBERT R. FORTUNE(2,3,4) Director Financial Consultant;
2920 Ritter Lane Chairman, President, and Chief
Allentown, PA 18104 Executive Officer, Associated
Age: 81 Electric & Gas Insurance
Services Limited, from July
1984 to July 1993; Member of
the Financial Executives Institute
and American Institute of
Certified Public Accountants.
JERROLD B. HARRIS Director President and Chief
706 Haldane Drive Executive Officer, VWR
Kennett Square, PA 19348 Corporation 1990 to
Age: 55 present.
</TABLE>
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<PAGE> 110
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
POSITION WITH DURING PAST 5 YEARS AND
NAME AND ADDRESS THE COMPANY OTHER AFFILIATIONS
<S> <C> <C>
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: 56 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 Cancer Research until 1979;
Age: 89 Director, Philadelphia National
Bank until 1978; President,
Scott Paper Company, 1971 to
1973; Chairman of the Board,
Specialty Composites Corporation
until May 1984.
THOMAS H. NEVIN President President and Chief Investment
Bellevue Park Corp. Center Officer, PIMC.
400 Bellevue Parkway
Wilmington, DE 19809
Age: 50
LISA M. BUONO Treasurer Vice President, Provident
Bellevue Park Corporate Advisors, Inc. since 1997;
Center prior thereto, Director of
400 Bellevue Parkway Finance and Compliance, PDI
Wilmington, DE 19809 (1993-1996); Field Supervisor,
Age: 33 National Association of
Securities Dealers, Inc. (1987-
1993).
W. BRUCE McCONNEL, III Secretary Partner of the law firm of
Philadelphia National Bank Drinker Biddle & Reath LLP,
Bldg. Philadelphia, Pennsylvania.
1345 Chestnut Street
Philadelphia, PA 19107-3496
Age: 54
</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.
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<PAGE> 111
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 holds like offices with Fed and Muni. In
addition, Mr. Pepper is 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, 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 and IDR.
The following chart provides certain information for the fiscal year
ended September 30, 1997 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.
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<PAGE> 112
<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, $ 17,000 n/a n/a $44,000(3)(2)
III, Director
Philip E. Coldwell, $ 17,000 n/a n/a $44,000(3)(2)
Director
Robert R. Fortune, $ 17,000 n/a n/a $63,100(5)(2)
Director
Jerrold B. Harris, $ 16,100 n/a n/a $41,300(3)(2)
Director
Rodney D. Johnson, $ 17,000 n/a n/a $55,350(5)(2)
Director
G. Willing Pepper,3 $ 26,000 n/a n/a $93,100(6)(2)
Chairman of the Board
</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. Total number of such other investment companies a director served on
within the Fund Complex during the fiscal year ended September 30,
1997.
3. Mr. Pepper was President of the Company, Fed, Muni and Cal Muni during
the fiscal year or period ended September 30, 1997.
For the Company's fiscal year ended September 30, 1997, the Company
paid a total of $198,625 to its officers and directors in all capacities, of
which $150,035 was allocated to TempFund and $48,590 was allocated to TempCash.
In addition, the Company contributed $3,032 for the last fiscal year to its
retirement plan for employees, of which $2,122 was allocated to TempFund and
$910 was allocated to TempCash. Drinker Biddle & Reath LLP, 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.
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<PAGE> 113
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>
<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
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<PAGE> 114
investment advisory and administrator fees otherwise payable by the Fund. During
the fiscal year ended September 30, 1997 the expense limitations then in effect
were not exceeded.
For the fiscal years ended September 30, 1997, 1996 and 1995, TempFund
paid to PIMC advisory fees (net of waivers) of $6,560,502, $5,254,506 and
$5,898,096, respectively. For the same periods, PIMC waived advisory fees with
respect to TempFund of $2,576,520, $2,765,281 and $942,342, respectively.
For the fiscal years ended September 30, 1997, 1996 and 1995, TempCash
paid to PIMC advisory fees (net of waivers) of $2,176,446, $2,170,845 and
$2,682,100, respectively. For the same periods, PIMC waived advisory fees with
respect to TempCash of $2,576,520, $2,106,346 and $2,595,378, 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 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
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<PAGE> 115
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 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, 1997, 1996 and 1995, TempFund
paid PFPC and PDI administration fees (net of waivers) of $6,560,502, $5,254,506
and $5,898,096, respectively. For the same periods, PFPC and PDI waived
administration fees with respect to TempFund of $2,576,520, $2,765,281 and
$942,342, respectively.
For the fiscal years ended September 30, 1997, 1996 and 1995, TempCash
paid PFPC and PDI administration fees (net of waivers) of $2,176,446, $2,170,845
and $2,682,100, respectively. For the same periods, PFPC and PDI waived
administration fees with respect to TempCash of $2,576,520, $2,106,346 and
$2,595,378, respectively.
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<PAGE> 116
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 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
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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 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
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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, 1997, TempFund Dollar Shares
were charged $863,401 in Service Organization fees, of which $617,378 was paid
to affiliates of PIMC.
For the fiscal year ended September 30, 1997, TempCash Dollar Shares
were charged $1,214,833 in Service Organization fees, of which $380,851 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 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
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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 discussion here and in the applicable Prospectuses is not intended as a
substitute for careful tax planning.
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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 and comply with
certain diversification requirements.
A 4% nondeductible excise tax is imposed on regulated investment
companies that fail currently to distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and any
capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
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 who has failed to provide a correct tax identification number in the
manner required, is subject to withholding by the Internal Revenue Service for
failure properly to include on his return payments of taxable interest or
dividends, or has failed to certify to the Fund that he is not subject to backup
withholding when required to do so or that it is an "exempt recipient."
Although each Fund expects to qualify as a regulated investment company
and to be relieved of all or substantially all 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 that 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.
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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. 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
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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, 1997, the yield and the
compounded effective yield on TempFund Shares were 5.53% and 5.69%,
respectively. For the same period, the yield and the compounded effective yield
on TempFund Dollar Shares were 5.28% and 5.42%, respectively. For the 30-day
period ended September 30, 1997, the yield and the compounded effective yield on
TempFund Shares were 5.51% and 5.65%, respectively. Similarly, for the same
30-day period, the yield and the compounded effective yield on TempFund Dollar
Shares were 5.26% and 5.39%, respectively.
For the seven-day period ended September 30, 1997, the yield and the
compounded effective yield on TempCash Shares were 5.54% and 5.70%,
respectively. For the same period, the yield and the compounded effective yield
on TempCash Dollar Shares were 5.29% and 5.43%, respectively. For the 30-day
period ended September 30, 1997, the yield and the compounded effective yield on
TempCash Shares were 5.52% and 5.66%, respectively. Similarly, for the same
30-day period, the yield and the compounded effective yield on TempCash Dollar
Shares were 5.27% and 5.40%, 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.
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
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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 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
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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 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
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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 not subject
to the separate voting requirements and may be effectively acted upon by
shareholders of the investment company voting without regard to portfolio.
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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 LLP, 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, 1998.
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, 1997, the value of TempFund's aggregate holdings of
the securities of each of its regular brokers or dealers or their parents was:
Morgan Stanley & Co., $847,000,000; Goldman Sachs & Co., $535,000,000; Lehman
Brothers Holding, Inc., $80,200,000; Swiss Bank Corp., $514,000,000;
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C.S. First Boston, Inc., $218,000,000; and Bear Stearns Co., Inc., $450,000.000.
As of September 30, 1997, the value of TempCash's aggregate holdings of
the securities of each of its regular brokers or dealers or their parents was:
Goldman Sachs & Co., $100,000.000; Lehman Brothers Holding, Inc., $125,000,000;
Paine Webber, Inc., $28,800.000; Swiss Bank Corp., $46,000,000; and Merrill
Lynch & Co., $104,000,000.
CERTAIN RECORD HOLDERS
On January 7, 1998, 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, 6.45%.
On January 7, 1998, 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: Saxon & Co., 200 Stevens
Drive, Lester, PA 19113, 8.95%; Wellnik & Co., 45 Freemont Street, 16th Floor,
San Francisco, CA 94105, 12.18%; and Shell Oil Company, P.O. Box 2463, Houston,
TX 77252, 13.21%.
FINANCIAL STATEMENTS
The audited financial statements and notes thereto for each Fund
contained in the Company's Annual Report to Shareholders dated September 30,
1997, are each incorporated by reference into this Statement of Additional
Information. The financial statements and notes thereto for each Fund contained
in the Company's Annual Report to Shareholders have been audited by Coopers &
Lybrand L.L.P., whose report thereon also appears in such Annual Report and is
also incorporated by reference herein. No other parts of the Annual Report are
incorporated by reference herein. Such audited 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 IBCA, Inc. ("Fitch IBCA") and Thomson
BankWatch.
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 indicates 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 IBCA'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.
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<PAGE> 129
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 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.
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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
- TempFund 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, 1997 are
incorporated herein by reference to the
Annual Report to Shareholders as filed with
the Securities and Exchange Commission (the
"SEC") on November 24, 1997 pursuant to Rule
30b2-1 of the Investment Company Act of 1940
(the "Act") (Nos. 2- 47015/811-2354).
(b) Exhibits:
(1) Articles of Restatement dated March 30, 1994 are
incorporated herein by reference to Exhibit 1 of
Post-Effective Amendment No. 57 to the Registrant's
Registration Statement on Form N-1A (Nos.
2-47015/811-2354) as filed with the SEC on August 15,
1997 ("PEA No. 57").
(2) Registrant's By-Laws as amended and restated on
January 21, 1993 are incorporated herein by reference
to Exhibit 2 of PEA No. 57.
(3) None.
<PAGE> 131
(4) See Article I, Sections Fifth, Seventh, Eight and
Fourteenth of the Articles of Retatement dated March
30, 1994, which are incorporated herein by reference
to Exhibit 1 of PEA No. 57 and Article IV of the
Registrant's By-Laws as amended and restated on
January 21, 1993, which are incorporated herein by
reference to Exhibit 2 of PEA No. 57.
(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 PEA No. 57.
(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 PEA No. 57.
(6) Distribution Agreement between Registrant and
Provident Distributors, Inc. ("PDI") dated January
18, 1994 is incorporated herein by reference to
Exhibit 6 of PEA No. 57.
(7) None.
(8) Custodian Agreement between Registrant and PNC Bank
dated June 1, 1989 is incorporated herein by
reference to Exhibit 8 of PEA No. 57.
(9) (a) Administration Agreement between Registrant, 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 PEA No. 57.
(b) Transfer Agency Agreement between Registrant and PFPC
dated June 1, 1989 is incorporated herein by
reference to Exhibit 9(b) of PEA No. 57.
(10) Opinion and Consent of Counsel.
(11) Consent of Coopers & Lybrand L.L.P.
C-2
<PAGE> 132
(12) None.
(13) None.
(14) None.
(15) None.
(16) Schedules of Performance Computations.
(17) Financial Data Schedules.
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 7, 1998:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
<S> <C>
Class B Common Stock (TempFund Shares)................. 1,381
Class B Common Stock - Special
Series 1 (TempFund Dollar Shares).................... 217
Class C Common Stock (TempCash
Dollar Shares)....................................... 227
Class C Common Stock - Special
Series 1 (TempCash Shares)........................... 395
</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, Section 22 of the Custodian
Agreement and Section 17 of the Transfer Agency Agreement, which are
incorporated herein by reference to Exhibits 6, 8 and 9(b),
respectively of PEA No. 57.
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, which are incorporated
herein by reference to Exhibit 2 of PEA No. 57, provides for the
indemnification of Registrant's directors and officers.
C-3
<PAGE> 133
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 SEC
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
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).
C-4
<PAGE> 134
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
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
</TABLE>
C-5
<PAGE> 135
<TABLE>
<CAPTION>
POSITION WITH TYPE
PNC BANK NAME OTHER BUSINESS CONNECTIONS OF BUSINESS
<S> <C> <C> <C>
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
100 North 20th Street
Philadelphia, PA 19103
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
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 and C.E.O. Airline
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
</TABLE>
C-6
<PAGE> 136
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
<S> <C>
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, Northeast, Pa
Andra D. Cochran Senior Vice President
Sharon Coghlan Coordinating Market Chief Counsel,
Philadelphia
James P. Conley Senior Vice President/Credit Policy
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
</TABLE>
C-7
<PAGE> 137
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
<S> <C>
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 Senior Counsel and Corporate Secretary
Brian K. Garlock Senior Vice President
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 Executive 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
</TABLE>
C-8
<PAGE> 138
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
<S> <C>
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
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
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
</TABLE>
C-9
<PAGE> 139
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
<S> <C>
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
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
Robert L. Tassome Senior Vice President
Jane B. Tompkins Senior Vice President
</TABLE>
C-10
<PAGE> 140
<TABLE>
<CAPTION>
NAME POSITION WITH PNC BANK
<S> <C>
Robert B. Trempe Senior Vice President
Kevin M. Tucker Senior Vice President
Alan P. Vail Senior Vice President
Frank T. VanGrofski Executive Vice President
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) PDI currently acts as distributor for, in addition to the
Registrant, 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 PDI is incorporated by reference to
Schedule A of Form BD filed by PDI 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-11
<PAGE> 141
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, 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 co-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 co-administrator, transfer agent, registrar and
dividend disbursing agent).
(6) Drinker Biddle & Reath LLP, 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-12
<PAGE> 142
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. 58 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 58 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, 1998.
TEMPORARY INVESTMENT FUND, INC.
/s/ Thomas H. Nevin
-------------------------------
Thomas H. Nevin
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 58 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>
Director January __, 1998
- --------------------------
G. Nicholas Beckwith, III
* Philip E. Coldwell Director January 30, 1998
- --------------------------
Philip E. Coldwell
* Robert R. Fortune Director January 30, 1998
- --------------------------
Robert R. Fortune
* Jerrold B. Harris Director January 30, 1998
- --------------------------
Jerrold B. Harris
* Rodney D. Johnson Director January 30, 1998
- --------------------------
Rodney D. Johnson
*G. Willing Pepper Chairman of January 30, 1998
- -------------------------- the Board
G. Willing Pepper
/s/ Thomas H. Nevin President January 30, 1998
- --------------------------
Thomas H. Nevin
/s/ Lisa Buono Treasurer January 30, 1998
- -------------------------- (Principal Financial
Lisa Buono and Accounting
Officer)
*By: /s/ Lisa Buono
----------------------
Lisa Buono
Attorney-in-Fact
</TABLE>
<PAGE> 143
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint Thomas H. Nevin or Lisa Buono 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, 1998.
/s/ Robert R. Fortune
---------------------
Robert R. Fortune
-16-
<PAGE> 144
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint Thomas H. Nevin or Lisa Buono 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 23, 1998.
/s/ Jerrold B. Harris
---------------------
Jerrold B. Harris
-17-
<PAGE> 145
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint Thomas H. Nevin or Lisa Buono 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 26, 1998.
/s/ Rodney D. Johnson
---------------------
Rodney D. Johnson
-18-
<PAGE> 146
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint Thomas H. Nevin or Lisa Buono 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, 1998.
/s/ G. Willing Pepper
---------------------
G. Willing Pepper
-19-
<PAGE> 147
TEMPORARY INVESTMENT FUND, INC.
POWER OF ATTORNEY
I hereby appoint Thomas H. Nevin or Lisa Buono 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, 1998.
/s/ Philip E. Coldwell
-------------------------
Philip E. Coldwell*
* With the understanding that all amendments will be sent to me in advance.
-20-
<PAGE> 148
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(10) Opinion and Consent of Counsel.
(11) Consent of Coopers & Lybrand L.L.P.
(16) Schedules of Performance Calculations.
(17) Financial Data Schedules.
<PAGE> 1
Exhibit 10
Law Offices
DRINKER BIDDLE & REATH LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
TELEX: 834684
FAX: (215) 988-2757
January 30, 1998
Temporary Investment Fund, Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
RE: TEMPORARY INVESTMENT FUND, INC.
POST-EFFECTIVE AMENDMENT NO. 58 TO THE REGISTRATION
STATEMENT ON FORM N-1A (FILE NOS. 2-47015 AND 811-2354)
-------------------------------------------------------
Gentlemen:
We have acted as counsel for Temporary Investment Fund, Inc., a
Maryland corporation (the "Company") in connection with the preparation and
filing with the Securities and Exchange Commission of Post-Effective Amendment
No. 58 to the Company's Registration Statement under the Securities Act of
1933, as amended.
The Company is an open-end investment company authorized to issue a
total of sixty billion shares ("Shares") of common stock, par value $.001 per
share. The Board of Directors of the Company has the power to designate one or
more classes ("Portfolios") of Shares and to designate separate series of
Shares within the same Portfolio. The Board of Directors have previously
authorized the issuance of Shares to the public.
<PAGE> 2
Temporary Investment Fund, Inc.
January 30, 1998
Page 2
Currently, the Company is offering Shares of two Portfolios as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME OF CLASS/SERIES COMMON STOCK ALLOCATED
-------------------- ----------------------
<S> <C>
TempFund Portfolio
TempFund Shares 40 billion
TempFund Dollar Shares 5 billion
TempCash Portfolio
TempCash Shares 5 billion
TempCash Dollar Shares 10 billion
</TABLE>
We have reviewed the Company'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. We assume that the Shares have been or
will be issued against payment therefor as described in the Company's
applicable Prospectuses relating thereto and that the number of outstanding
Shares has not and will not exceed the number of Shares authorized for the
particular class or series.
This opinion is based exclusively on the Maryland General Corporation Law
and the federal law of the United States of America.
Based upon the foregoing, it is our opinion that all of the Shares
issued by the Company since October 1, 1996 that were not included in our
opinions dated November 22, 1996 and January 30, 1997, were validly issued,
fully paid and non-assessable by the Company, and further, that the Shares
issued after the date hereof pursuant to and for the consideration provided
for in the Registration Statement will be, when so issued, validly issued,
fully paid and non-assessable by the Company.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to Post-Effective Amendment No. 58 to the
Company's Registration Statement.
Very truly yours,
/s/ Drinker Biddle & Reath LLP
DRINKER BIDDLE & REATH LLP
<PAGE> 1
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment No. 58
to the Registration Statement (File No. 2-47015) of Temporary Investment Fund,
Inc. (the "Company") on Form N-1A under the Securities Act of 1933 of our report
dated November 7, 1997 on our audit of the financial statements and financial
highlights of the Company, which report is included in the Annual Report to
Shareholders for the year ended September 30, 1997 which is incorporated by
reference in the Post-Effective Amendment to the Registration Statement. We also
consent to the reference to our Firm under the heading "Financial Highlights" to
the Prospectus and under the captions "Auditors" and "Financial Statements" in
the Statement of Additional Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 26, 1998
<PAGE> 1
EXHIBIT 16
TEMP FUND DOLLAR SHARES
DIVIDEND LISTING
SEPTEMBER 1997
<TABLE>
<CAPTION>
DATE SHARES FACTOR INCOME DIV. 1 DAY YIELD 7 DAY YIELD
==============================================================================================
<S> <C> <C> <C> <C> <C>
01-Sep-97 401,304,481.26 0.000144783 58,102.07 5.2845795 5.28540857
02-Sep-97 393,314,918.87 0.000145142 57,086.51 5.2976830 5.2894079
03-Sep-97 393,792,489.60 0.000143855 56,649.02 5.2507075 5.2814301
04-Sep-97 386,793,972.55 0.000143611 55,547.87 5.2418015 5.2755014
05-Sep-97 408,832,530.44 0.000143109 58,507.61 5.2234785 5.2667727
06-Sep-97 408,832,530.44 0.000143109 58,507.61 5.2234785 5.2580440
07-Sep-97 408,832,530.44 0.000143109 58,507.61 5.2234785 5.2493153
08-Sep-97 412,385,155.00 0.000143679 59,251.09 5.2442835 5.2435587
09-Sep-97 410,416,010.45 0.000143595 58,933.69 5.2412175 5.2354922
10-Sep-97 408,669,276.63 0.000144177 58,920.71 5.2624605 5.2371712
11-Sep-97 410,351,440.83 0.000143656 58,949.45 5.2434440 5.2374059
12-Sep-97 418,257,260.37 0.000143379 59,969.31 5.2333335 5.2388137
13-Sep-97 418,257,260.37 0.000143379 59,969.31 5.2333335 5.2402216
14-Sep-97 418,257,260.37 0.000143379 59,969.31 5.2333335 5.2416294
15-Sep-97 416,271,858.42 0.000144600 60,192.91 5.2779000 5.2464318
16-Sep-97 412,795,296.94 0.000144022 59,451.60 5.2568030 5.2486583
17-Sep-97 405,450,794.32 0.000143648 58,242.20 5.2431520 5.2458999
18-Sep-97 402,594,499.25 0.000143882 57,926.10 5.2516930 5.2470784
19-Sep-97 397,603,558.69 0.000143462 57,041.00 5.2363630 5.2475111
20-Sep-97 397,603,558.69 0.000143462 57,041.00 5.2363630 5.2479439
21-Sep-97 397,603,558.69 0.000143462 57,041.00 5.2363630 5.2483767
22-Sep-97 393,560,583.36 0.000143894 56,631.01 5.2521310 5.2446954
23-Sep-97 380,094,844.50 0.000144098 54,770.91 5.2595770 5.2450917
24-Sep-97 379,293,661.69 0.000144446 54,787.45 5.2722790 5.2492527
25-Sep-97 368,814,427.66 0.000144026 53,118.87 5.2569490 5.2500036
26-Sep-97 362,005,485.31 0.000143805 52,058.20 5.2488825 5.2517921
27-Sep-97 362,005,485.31 0.000143805 52,058.20 5.2488825 5.2535806
28-Sep-97 362,005,485.31 0.000143805 52,058.20 5.2488825 5.2553691
29-Sep-97 340,891,914.22 0.000145054 49,447.74 5.2944710 5.2614176
30-Sep-97 355,262,165.14 0.000148551 52,774.55 5.4221115 5.2846369
--------------------------------------------------------------------------------
TOTALS 11,832,154,295.12 0.004319984 1,703,512.10 5.25598053 - 30 Day Yield
================================================================================
AVG. SHARES 394,405,143.17
</TABLE>
7 DAY YIELD
5.272279
5.256949
5.2488825
5.2488825
5.2488825
5.294471
5.4221115
---------
TOTAL 36.992458
=========
5.2846368570429
<PAGE> 2
TEMP FUND
DIVIDEND LISTING
SEPTEMBER 1997
<TABLE>
<CAPTION>
AVERAGE
DATE SHARES FACTOR INCOME DIV. 1 DAY YIELD 7 DAY YIELD DAYS TO MAT. DAYS TO MAT.
==========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
01-Sep-97 8,858,334,384.62 0.000151633 $1,343,215.82 5.5346045 5.5354284 55.73 56.21
02-Sep-97 8,818,284,114.07 0.000151991 $1,340,299.62 5.5476716 5.5394277 56.69 56.65
03-Sep-97 9,336,959,406.34 0.000150705 $1,407,126.47 5.5007326 5.5314499 52.90 56.44
04-Sep-97 9,324,866,229.24 0.000150460 $1,403,019.37 5.4917900 5.5255160 52.18 55.81
05-Sep-97 9,321,251,492.61 0.000149958 $1,397,796.23 5.4734670 5.5167821 51.71 54.81
06-Sep-97 9,321,251,492.61 0.000149958 $1,397,796.23 5.4734670 5.5060481 50.71 53.81
07-Sep-97 9,321,251,492.61 0.000149958 $1,397,796.23 5.4734670 5.4993142 49.71 52.80
08-Sep-97 8,899,394,318.07 0.000150528 $1,339,608.03 5.4942720 5.4935524 52.22 52.30
09-Sep-97 9,098,261,085.65 0.000150445 $1,368,787.69 5.4912425 5.4654911 50.41 51.41
10-Sep-97 9,102,670,924.80 0.000151027 $1,374,749.06 5.5124855 5.4871701 49.58 50.93
11-Sep-97 9,025,396,555.57 0.000150506 $1,358,376.33 5.4934690 5,4874100 49.15 50.50
12-Sep-97 9,001,344,240.83 0.000150229 $1,352,262.94 5.4833585 5.4886231 49.94 60.25
13-Sep-97 9,001,344,240.83 0.000150229 $1,352,262.94 5.4833585 5.4902361 48.94 49.99
14-Sep-97 9,001,344,240.83 0.000150229 $1,352,262.94 5.4833585 5.4916492 47.94 49.74
15-Sep-97 8,774,174,498.97 0.000151450 $1,328,846.73 5.5279250 5.4964568 50.45 49.49
16-Sep-97 8,896,463,308.98 0.000150872 $1,342,227.21 5.5068280 5.4986833 52.45 49.78
17-Sep-97 9,152,126,126.12 0.000150498 $1,377,376.68 5.4931770 5.4959249 51.90 50.11
18-Sep-97 8,747,833,060.79 0.000150732 $1,318,578.38 5.5017180 5.4971034 54.30 50.85
19-Sep-97 8,895,446,880.25 0.000150312 $1,337,092.41 5.4863880 5.4975361 52.93 51.27
20-Sep-97 8,895,446,880.25 0.000150312 $1,337,092.41 5.4863880 5.4979689 51.93 51.70
21-Sep-97 8,895,446,880.25 0.000150312 $1,337,092.41 5.4863880 5.4984017 50.93 52.13
22-Sep-97 8,815,106,357.53 0.000150743 $1,328,815.58 5.6021195 5.4947152 50.51 52.14
23-Sep-97 8,779,365,980.22 0.000150948 $1,325,227.74 5.5096020 5.4951115 50.09 51.60
24-Sep-97 8,820,634,445.06 0.000151296 $1,334,526.71 5.5223040 5.4992725 49.08 51.40
25-Sep-97 8,953,594,131.57 0.000150876 $1,350,882.47 5.5069740 5.5000234 47.86 50.46
26-Sep-97 8,941,573,166.98 0.000150655 $1,347,092.71 5.4989075 5.5016119 47.69 49.73
27-Sep-97 8,941,573,166.98 0.000150655 $1,347,092.71 5.4989075 5.5036004 46.69 48.96
28-Sep-97 8,941,573,166.98 0.000150655 $1,347,092.71 5.4969075 5.5053889 45.69 48.23
29-Sep-97 8,700,220,687.50 0.000151903 $1,321,569.62 5.5444595 5.6114374 46.21 47.62
30-Sep-97 8,060,499,075.91 0.000155401 $1,252,609.62 5.6721365 5.5346566 48.83 47.44
------------------------------------------------------------------------------------------------------------
TOTALS 268,643,032,053.22 0.004525476 40,518,598.41 5.5059958-30 Day Yield
============================================================================================================
AVG. SHARES 8,954,767,735.11
</TABLE>
7 DAY YIELD
5.522308
5.506974
5.4989075
5.4989075
5.4989075
5.5444595
5.6721365
----------
TOTAL 38.7425965
==========
5.5346566428571
<PAGE> 3
TEMP CASH
DIVIDEND LISTING
SEPTEMBER 1997
<TABLE>
<CAPTION>
DATE SHARES FACTOR INCOME DIVIDEND 1 DAY YIELD 7 DAY YIELD DTM AVG. DTM
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
09/01/97 2,582,427,498.29 0.000152384 393,520.63 5.5620160 5.3918113 1 41.61 46.76
09/02/97 2,452,574,979.65 0.000152711 374,535.18 5.5739515 5.4285772 1 45.26 46.82
09/03/97 2,632,702,900.17 0.000152691 401,990.04 5.5732215 5.4662452 1 41.71 46.15
09/04/97 2,746,413,827.73 0.000151195 415,244.04 5.5186175 5.4961126 1 40.06 45.39
09/05/97 2,968,820,108.82 0.000150467 446,709.46 5.4920455 5.5221841 1 50.67 46.29
09/06/97 2,968,820,108.82 0.000150467 446,709.46 5.4920455 5.5488604 1 49.67 46.47
09/07/97 2,968,820,108.82 0.000150467 446,709.46 5.4920455 5.5291347 1 48.67 45.38
09/08/97 2,872,551,882.98 0.000150536 432,422.47 5.4945640 5.5194987 1 38.94 45.00
09/09/97 2,763,539,691.09 0.000150613 416,225.00 5.4973745 5.5085591 1 39.64 44.19
09/10/97 2,689,468,153.56 0.000151689 407,962.73 5.5366485 5.5033344 1 40.18 43.98
09/11/97 2,792,847,998.61 0.000150758 421,044.18 5.5026670 5.5010558 1 38.23 43.71
09/12/97 2,743,610,522.50 0.000150952 414,153.50 5.5097480 5.5035847 1 38.84 42.02
09/13/97 2,743,610,522.50 0.000150952 414,153.50 5.5097480 5.5061136 1 37.84 40.33
09/14/97 2,743,610,522.50 0.000150952 414,153.50 5.5097480 5.5086426 1 36.84 38.64
09/15/97 2,370,752,793.32 0.000152004 360,363.91 5.5481460 5.5162971 1 40.88 38.92
09/16/97 2,505,138,591.20 0.000152100 381,031.58 5.5516500 5.5240508 1 38.61 38.77
09/17/97 2,710,921,547.55 0.000151028 409,425.06 5.5125220 5.5206041 1 39.35 38.66
09/18/97 2,524,567,533.53 0.000151568 382,643.65 5.5322320 5.5248277 1 41.23 39.08
09/19/97 2,694,252,226.69 0.000150585 405,713.97 5.4963525 5.5229141 1 38.85 39.09
09/20/97 2,694,252,226.69 0.000150585 405,713.97 5.4963525 5.5210004 1 37.85 39.09
09/21/97 2,694,252,226.69 0.000150585 405,713.97 5.4963525 5.5190868 1 36.85 39.09
09/22/97 2,485,076,311.50 0.000150946 375,112.33 5.5095290 5.5135701 1 39.24 38.85
09/23/97 2,483,537,662.95 0.000151423 376,064.72 5.5269395 5.5100400 1 39.41 38.97
09/24/97 2,415,512,668.38 0.000151592 366,172.40 5.5331080 5.5129809 1 36.53 38.57
09/25/97 2,362,213,161.39 0.000151858 358,720.97 5.5428170 5.5144930 1 37.07 37.97
09/26/97 2,581,918,310.34 0.000151333 390,729.44 5.5236545 5.5183933 1 37.07 37.72
09/27/97 2,581,918,310.34 0.000151333 390,729.44 5.5236545 5.5222936 1 36.07 37.46
09/28/97 2,581,918,310.34 0.000151333 390,729.44 5.5236545 5.5261939 1 35.07 37.21
09/29/97 2,485,362,110.45 0.000152184 378,232.35 5.5547160 5.5326491 1 32.58 36.26
09/30/97 1,991,439,490.84 0.000153659 306,002.60 5.6085535 5.5443083 1 38.41 36.11
0 30.90
2,627,761,743.61 0.004540950 11,928,632.93 5.5248225 5.5092473
78,832,852,308.24 0.004540950 11,928,632.93 5.5248225 5.5092473 39.77
30 DAY YIELD
</TABLE>
7 DAY YIELD
5.533108
5.542817
5.5236545
5.5236545
5.5236545
5.554716
5.6085535
---------
TOTAL 38.810158
=========
5.5443082857143
<PAGE> 4
TEMP CASH DOLLAR SHARES
DIVIDEND LISTING
SEPTEMBER 1997
<TABLE>
<CAPTION>
DATE SHARES FACTOR INCOME DIVIDEND 1 DAY YIELD 7 DAY YIELD DTM AVG. DTM
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
09/01/97 417,495,880.37 0.000145537 60,761.10 5.3121005 5.1430377 1 41.60 46.76
09/02/97 418,890,341.27 0.000145863 61,100.60 5.3239995 5.1798036 1 45.26 46.82
09/03/97 420,422,813.26 0.000145843 61,315.72 5.3232695 5.2174716 1 41.7 46.15
09/04/97 438,097,519.70 0.000144348 63,238.50 5.2687020 5.2473443 1 40.06 45.39
09/05/97 435,741,654.24 0.000143619 62,580.78 5.2420935 5.2734157 1 50.67 46.28
09/06/97 435,741,654.24 0.000143619 62,580.78 5.2420935 5.3000920 1 49.50 46.45
09/07/97 435,741,654.24 0.000143619 62,580.78 5.2420935 5.2791931 1 48.50 45.33
09/08/97 436,515,453.25 0.000143688 62,722.03 5.2446120 5.2695519 1 38.94 44.95
09/09/97 439,887,287.69 0.000143765 63,240.40 5.2474225 5.2586124 1 39.64 44.14
09/10/97 443,048,745.91 0.000144841 64,171.62 5.2866965 5.2533876 1 40.18 43.93
09/11/97 439,681,755.65 0.000143910 63,274.60 5.2527150 5.2511038 1 38.23 43.67
09/12/97 440,378,727.46 0.000144104 63,460.34 5.2597960 5.2536327 1 38.84 41.98
09/13/97 440,378,727.46 0.000144104 63,460.34 5.2597960 5.2561616 1 37.84 40.31
09/14/97 440,378,727.46 0.000144104 63,460.34 5.2597960 5.2586906 1 36.84 38.64
09/15/97 427,589,894.89 0.000145157 62,067.67 5.2982305 5.2663504 1 40.88 38.92
09/16/97 470,723,409.25 0.000145252 68,373.52 5.3016980 5.2741040 1 38.61 38.77
09/17/97 451,038,448.61 0.000144180 65,030.72 5.2625700 5.2706574 1 39.35 38.66
09/18/97 432,352,673.07 0.000144720 62,570.08 5.2822800 5.2748809 1 41.23 39.08
09/19/97 434,416,324.21 0.000143738 62,442.13 5.2464370 5.2729725 1 38.85 39.09
09/20/97 434,416,324.21 0.000143738 62,442.13 5.2464370 5.2710641 1 37.85 39.09
09/21/97 434,416,324.21 0.000143738 62,442.13 5.2464370 5.2691556 1 36.85 39.09
09/22/97 431,003,588.95 0.000144098 62,106.76 5.2595770 5.2636337 1 39.24 38.85
09/23/97 422,822,589.76 0.000144575 61,129.58 5.2769875 5.2601036 1 39.41 38.97
09/24/97 410,635,786.67 0.000144744 59,437.07 5.2831560 5.2630445 1 36.53 38.57
09/25/97 402,113,823.77 0.000145011 58,310.93 5.2929015 5.2645619 1 37.07 37.97
09/26/97 400,902,947.40 0.000144485 57,924.46 5.2737025 5.2684569 1 37.07 37.72
09/27/97 400,902,947.40 0.000144485 57,924.46 5.2737025 5.2723520 1 36.07 37.46
09/28/97 400,902,947.40 0.000144485 57,924.46 5.2737025 5.2762471 1 35.07 37.21
09/29/97 401,705,674.82 0.000145336 58,382.30 5.3047640 5.2827024 1 32.58 36.26
09/30/97 401,630,251.08 0.000146811 58,963.74 5.3586015 5.2943615 1 38.42 36.12
10/01/97 0.00 0.0000000 4.5396249 0 30.90
427,999,163.26 0.004335517 1,855,420.06 5.2748790 5.4108591
12,839,974,897.90 0.004335517 1,855,420.06 5.2748790 5.4108591 39.76
30 DAY YIELD
</TABLE>
7 DAY YIELD
5.283156
5.2929015
5.2737025
5.2737025
5.2737025
5.304764
5.3586015
- ----------
37.0605305
==========
5.2943615
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000097098
<NAME> TEMPORARY INVESTMENT FUND, INC.
<SERIES>
<NUMBER> 011
<NAME> TEMP FUND PORTFOLIO - SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 8422161583
<INVESTMENTS-AT-VALUE> 8422161583
<RECEIVABLES> 36213152
<ASSETS-OTHER> 73739
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8458448474
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42663046
<TOTAL-LIABILITIES> 42663046
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8415761241
<SHARES-COMMON-STOCK> 8415726141
<SHARES-COMMON-PRIOR> 5877073373
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 73316
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8415785428
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 467142993
<OTHER-INCOME> 0
<EXPENSES-NET> 15924419
<NET-INVESTMENT-INCOME> 451218574
<REALIZED-GAINS-CURRENT> 24187
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 451242761
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (451267703)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 159612735266
<NUMBER-OF-SHARES-REDEEMED> 157210517694
<SHARES-REINVESTED> 136470296
<NET-CHANGE-IN-ASSETS> 2538687868
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 49129
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9137022
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21077460
<AVERAGE-NET-ASSETS> 8022428332
<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-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 8422161583
<INVESTMENTS-AT-VALUE> 8422161583
<RECEIVABLES> 36213152
<ASSETS-OTHER> 73739
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8458448474
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 42663046
<TOTAL-LIABILITIES> 42663046
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8415761241
<SHARES-COMMON-STOCK> 8415761241
<SHARES-COMMON-PRIOR> 5877073373
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 73316
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8415785478
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 467142993
<OTHER-INCOME> 0
<EXPENSES-NET> 15924419
<NET-INVESTMENT-INCOME> 451218574
<REALIZED-GAINS-CURRENT> 24187
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 451242761
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (451267703)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 159612735266
<NUMBER-OF-SHARES-REDEEMED> 157210517694
<SHARES-REINVESTED> 136470296
<NET-CHANGE-IN-ASSETS> 2538687868
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 49129
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9137022
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21077460
<AVERAGE-NET-ASSETS> 345320198
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .051
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .051
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000097098
<NAME> TEMPORARY INVESTMENT FUND, INC.
<SERIES>
<NUMBER> 021
<NAME> TEMP CASH - SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 2395856653
<INVESTMENTS-AT-VALUE> 2395856653
<RECEIVABLES> 17574782
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2413431435
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20865456
<TOTAL-LIABILITIES> 20865646
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2393069742
<SHARES-COMMON-STOCK> 2393069742
<SHARES-COMMON-PRIOR> 2363739180
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (503763)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2392565979
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 182420850
<OTHER-INCOME> 0
<EXPENSES-NET> 7099963
<NET-INVESTMENT-INCOME> 175320887
<REALIZED-GAINS-CURRENT> 79331
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 175400218
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (175320887)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 66663923098
<NUMBER-OF-SHARES-REDEEMED> 66703957164
<SHARES-REINVESTED> 69364628
<NET-CHANGE-IN-ASSETS> 29409893
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (583094)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4752966
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11183161
<AVERAGE-NET-ASSETS> 2783584993
<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> 022
<NAME> TEMP CASH - DOLLAR SHARES
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 2395856653
<INVESTMENTS-AT-VALUE> 2395856653
<RECEIVABLES> 17574782
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2413431435
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20865456
<TOTAL-LIABILITIES> 20865456
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2393069742
<SHARES-COMMON-STOCK> 2393069742
<SHARES-COMMON-PRIOR> 2363739180
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (503763)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2392565979
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 182420850
<OTHER-INCOME> 0
<EXPENSES-NET> 7099963
<NET-INVESTMENT-INCOME> 175320887
<REALIZED-GAINS-CURRENT> 79331
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 175400218
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (175320887)
<DISTRIBUTIONS-OF-GAINS> 0
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</TABLE>
