TREASURERS FUND INC /MD/, 485BPOS, 1996-03-01

TREASURERS FUND INC /MD/
485BPOS, 1996-03-01

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As filed with the Securities and Exchange Commission on March 1, 1996
Registration No. 33-17604
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
--

Pre-Effective Amendment No. / /
--
Post-Effective Amendment No. 15 /x/
--
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
--
Amendment No. 16 /x/
--
(Check appropriate box or boxes)

THE TREASURER'S FUND, INC.
-----------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

c/o Gabelli-O'Connor Fixed Income Mutual Funds Management Co.
19 Old Kings Highway South
Darien, Connecticut 06820-4526
--------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (203) 655-1999

THOMAS E. O'CONNOR
Gabelli-O'Connor Fixed Income Mutual Funds Management Co.
19 Old Kings Highway South
Darien, Connecticut 06820-4526
------------------------------------------------------
(Name and Address of Agent for Service)

Copy to: MICHAEL R. ROSELLA, ESQ.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022

Approximate Date of Proposed Public Offering: As soon as practicable after
this Registration Statement becomes effective.

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)
--

/ / on (date) pursuant to paragraph (a) of Rule 485
--

The Registrant declares that an indefinite amount of its common
stock, par value $.001 per share, is being registered by this Registration
Statement pursuant to Section 24(f) under the Investment Company Act of 1940,
as amended, and Rule 24f-2 thereunder, and the Registrant filed a Rule 24f-2
Notice for its fiscal year ended on October 31, 1995 on December 19, 1995.

170013.3

<PAGE>

THE TREASURER'S FUND, INC.
Registration Statement on Form N-1A

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

CROSS REFERENCE SHEET -
Pursuant to Rule 404(c)
-----------------------

Part A
Item No. Prospectus Heading
- - -------- ------------------

1. Cover Page Cover Page

2. Synopsis Summary; Table of Fees and Expenses

3. Condensed Financial Information Selected Per Share Data and Ratios;
Selected Per Share Income and Capital
Changes; Yield and Total Return
Information

4. General Description of Registrant Investment Objectives and Policies;
Description of Common Stock

5. Management of the Fund Management of the Fund; Custodian,
Transfer Agent and Dividend Agent;
Distribution Plan

5A. Management's Discussion of Fund *
Performance

6. Capital Stock and Other Description of Common Stock;
Securities Purchase of Shares; Exchange of
Shares; Redemption of Shares;
Dividends and Distributions; Taxes

7. Purchase of Securities Being Purchase of Shares; Net Asset Value;
Offered Distribution Plan

8. Redemption or Repurchase Redemption of Shares; Net Asset
Value

9. Legal Proceedings None

_______________________
* Not applicable

-i-
170013.3

<PAGE>

Part B Caption in Statement
Item No. of Additional Information
- - -------- -------------------------

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and Portfolios and Their Objectives,
History Description of Common Stock

13. Investment Objectives and The Portfolios and their Objectives
Policies

14. Management of the Fund Management of the Fund

15. Control Persons and Principal Management of the Fund
Holders of Securities

16. Investment Advisory and Other Management of the Fund; Distribution
Services Plan

17. Brokerage Allocation and Other Brokerage and Portfolio Turnover
Practices

18. Capital Stock and Other Description of Common Stock
Securities

19. Purchase, Redemption and Pricing Purchase, Redemption and Exchange
of Securities Being Offered

20. Tax Status Taxes

21. Underwriters *

22. Calculations of Yield Quotations Computation of Yield
of Money Market Funds

_______________________
* Not applicable

170013.3 -ii-

<PAGE>

Part B Caption in Statement
Item No. of Additional Information
- - -------- -------------------------

23. Financial Statements Financial Statements

170013.3 -iii-

<PAGE>

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

PROSPECTUS March 1, 1996

The Treasurer's Fund

19 Old Kings Highway South, Darien, Connecticut 06820-4526

For information call

1-800-TSR-FUND/1-800-877-3863

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

The Treasurer's Fund is composed of six portfolios designed to meet the
short and intermediate term investment needs of corporate and institutional cash
managers. There are no sales loads or exchange or redemption fees associated
with the Fund.

U.S. Treasury Money Market Portfolio--seeks to maximize current income
and maintain liquidity and a stable net asset value of $1 per share by investing
in short term U.S. Treasury obligations. This Portfolio may also invest in
repurchase agreements and reverse repurchase agreements which are collateralized
by U.S. Treasury obligations.

Domestic Prime Money Market Portfolio--seeks to maximize current income
and maintain liquidity and a stable net asset value of $1 per share by investing
in prime quality, domestic money market instruments.

Global Money Market Portfolio--seeks to maximize current income and
maintain liquidity and a stable net asset value of $1 per share by investing in
prime quality money market instruments of both domestic and foreign issuers.

Tax Exempt Money Market Portfolio--seeks to maximize current tax exempt
income and maintain liquidity and a stable net asset value of $1 per share by
investing in high quality money market instruments which are exempt from federal
income tax.

Limited Term Portfolio--seeks to maximize current income consistent
with moderate risk of capital by investing in a liquid portfolio with a maximum
weighted average maturity of two years. Designed for investors who seek yields
greater than available from a portfolio of exclusively money market obligations.
The net asset value per share will fluctuate.

Tax Exempt Limited Term Portfolio--seeks to maximize current income
exempt from federal income tax consistent with moderate risk of capital by
investing in a liquid portfolio with a maximum weighted average maturity of
three years. Designed for investors who seek tax exempt yields greater than
available from a portfolio of exclusively tax exempt money market obligations.
The net asset value per share will fluctuate.

This Prospectus sets forth concisely the information about each
Portfolio that a prospective investor ought to know before investing and it
should be retained for future reference. Additional information about each
Portfolio, including additional information concerning risk factors relating to
an investment in each Portfolio, has been filed with the Securities and Exchange
Commission in a Statement of Additional Information for the Fund, dated or
supplemented the date of this Prospectus and as supplemented from time to time.
This information is incorporated by reference and is available without charge
upon request from GOC Fund Distributors, Inc., 19 Old Kings Highway South,
Darien, Connecticut 06820-4526, Attention: The Treasurer's Fund
1-800-TSR-FUND/1-800-877-3863.

An investment in the Money Market Portfolios is neither insured nor
guaranteed by the U.S. Government. There can be no assurance that the
Portfolios' objectives will be achieved or that the Money Market Portfolios'
stable net asset value of $1 per share can be maintained.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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

329543.1

<PAGE>

TABLE OF CONTENTS

SUMMARY.................................................. 1

Table of Fees and Expenses............................... 5

Financial Highlights..................................... 5

U.S. TREASURY MONEY MARKET PORTFOLIO..................... 7

DOMESTIC PRIME MONEY MARKET PORTFOLIO.................... 9

GLOBAL MONEY MARKET PORTFOLIO............................ 12

TAX EXEMPT MONEY MARKET PORTFOLIO........................ 15

LIMITED TERM PORTFOLIO................................... 19

TAX EXEMPT LIMITED TERM PORTFOLIO........................ 21

ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS....... 24

INVESTMENT RESTRICTIONS.................................. 34

MANAGEMENT OF THE FUND................................... 36

PURCHASE OF SHARES....................................... 40

REDEMPTION OF SHARES..................................... 42

EXCHANGE OF SHARES....................................... 44

DIVIDENDS AND DISTRIBUTIONS.............................. 45

NET ASSET VALUE.......................................... 46

YIELD AND TOTAL RETURN INFORMATION....................... 47

DESCRIPTION OF COMMON STOCK.............................. 48

DISTRIBUTION PLAN........................................ 49

TAXES.................................................... 50

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT............. 55

329543.1

<PAGE>

<TABLE>

The Treasurer's Fund Portfolios

SUMMARY
<CAPTION>

Maturity Representative* Quality Ratings**
Objectives Restrictions Investments Moody's S&P
--------------------------------------------------------------------------------------------------------------------------

U.S. Treasury Money Market Portfolio
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Composed of U.S. Treasury Maximum weighted U.S. Treasury obligations -- --
obligations only. Seeks to average maturity: 90 days
maintain a stable $1 net Maximum maturity of
asset value per share. individual securities: 397 days

Domestic Prime Money Market Portfolio
--------------------------------------------------------------------------------------------------------------------------
Composed of prime quality Maximum weighted U.S. Government obligations -- --
U.S. dollar denominated average maturity: 90 days Commercial paper P-1 A-1
money market obligations of Maximum maturity of Negotiable CDs -- --
domestic issuers only. individual securities: 397 days Bankers acceptances -- --
Seeks to maintain a stable Short term corporate obligationsAa or Aaa Aa or Aaa
$1 net asset value per share.

Global Money Market Portfolio
--------------------------------------------------------------------------------------------------------------------------
Composed of prime quality Maximum weighted U.S. Government obligations -- --
U.S. dollar denominated average maturity: 90 days Commercial paper P-1 A-1
money market obligations of Maximum maturity of Negotiable CDs -- --
domestic and foreign individual securities: 397 days Bankers acceptances -- --
issuers. Seeks to maintain a Eurodollar and Yankee CDs -- --
stable $1 net asset value per Short term corporate and Aa or Aaa Aa or Aaa
share. government obligations

Tax Exempt Money Market Portfolio
--------------------------------------------------------------------------------------------------------------------------
Composed of high quality Maximum weighted Municipal notes MIG-1 or SP-1 or
municipal securities exempt average maturity: 90 days MIG-2 SP-2
from federal income tax. Maximum maturity of Short term municipal bonds Aa or Aaa Aa or Aaa
Seeks to maintain a stable individual securities: 397 days Tax exempt commercial paper P-1 or P-2 A-1 or A-2
$1 net asset value per share. Variable and floating rate VMIG-1 or SP-1 or
demand notes VMIG-2 SP-2

Limited Term Portfolio
--------------------------------------------------------------------------------------------------------------------------
Composed of prime quality Maximum weighted U.S. Government obligations -- --
U.S. dollar denominated average maturity: 2 years Commercial paper P-1 A-1
securities. Seeks to obtain aMaximum maturity of Corporate notes, bonds and Aa or Aaa Aa or Aaa
current yield greater than individual securities: 3 years other obligations
that obtainable from the Asset-backed debt Aa or Aaa Aa or Aaa
Money Market Portfolios by Negotiable CDs -- --
actively managing securities Eurodollar and Yankee CDs -- --
in the short and intermediate Hedging instruments -- --
maturity ranges. Net asset Private placements -- --
value per share will
fluctuate.

Tax Exempt Limited Term Portfolio
--------------------------------------------------------------------------------------------------------------------------
Composed of municipal Maximum weighted Municipal notes MIG-1 or SP-1 or
securities exempt from average maturity: 3 years MIG-2 SP-2
federal income tax. Seeks to Maximum maturity of Intermediate term municipal A, Aa or A, Aa or
obtain a current yield individual securities: 5 years bonds Aaa Aaa
greater than that obtainable Tax exempt commercial paper P-1 or P-2 A-1 or A-2
from the Tax Exempt Variable and floating rate VMIG-1 or SP-1 or
Money Market Portfolio by demand notes VMIG-2 SP-2
actively managing securities Hedging instruments -- --
in the short and intermediate Private placements -- --
maturity ranges. Net asset
value per share will
fluctuate.
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

* In addition, each Portfolio may invest in repurchase
agreements and reverse repurchase agreements with member
banks of the Federal Reserve System and primary dealers in
U.S. Government Securities.

** Unrated securities may be purchased if they are determined
by the Fund's Board of Directors to be of comparable quality
to the permitted investments of the Portfolio. There is no
assurance that the Portfolios will achieve their objectives
or that the stable net asset value of $1 per share for the
Money Market Portfolios can be maintained.

329543.1
-1-

<PAGE>

The Treasurer's Fund

The Treasurer's Fund, Inc. (the "Fund") is a no-load, diversified,
open-end, management investment company, organized under Maryland law, that is
composed of six portfolios designed to meet the distinctive cash management
objectives of treasurers and financial officers of corporations and other
institutions.

The Fund offers a choice of four Money Market Portfolios -- three
taxable and the other tax exempt -- which seek to maintain stable net asset
values of $1 per share. There can be no assurance that the Money Market
Portfolios will be able to maintain stable net asset values of $1 per share. The
Fund also offers two Limited Term Portfolios -- one taxable and the other tax
exempt. The net asset value per share of the Limited Term Portfolios will
fluctuate.

An investment in the Portfolios of the Fund entails certain risks,
including, for certain Portfolios, risks associated with the purchase of
when-issued securities, repurchase agreements, reverse repurchase agreements,
puts and foreign securities, and with the lending of Portfolio securities, which
are further described under "Additional Investment Information and Risk Factors"
herein and "Risk Factors" in the Statement of Additional Information.

Investment Requirements

Minimum Initial Investment $100,000 per Portfolio

Subsequent Investments No minimum amount

Minimum Balance $50,000 per Portfolio

Investors may allocate their investment among the Portfolios at their
discretion and may change their allocation at any time, subject only to the
minimum initial investment required for each Portfolio. There are no fees for
exchanges among Portfolios.

Advisory Fee Expenses

The Fund will pay Gabelli-O'Connor Fixed Income Mutual Funds Management
Co., the Fund's investment advisor (the "Advisor"), a monthly advisory fee at
the annual rate of .30% of the average daily net assets of the Money Market
Portfolios and .45% of the average daily net assets of the Limited Term
Portfolios. Each Portfolio will also be responsible for payment of its expenses,
including administrator fees, custodian fees, transfer and dividend paying agent
fees, legal fees, auditing fees, directors' fees, the expense of issuing reports
to shareholders and other expenses of administering the Portfolio.

The Fund expects to achieve a significantly lower total expense ratio
than funds designed for individual investors because it:

o is designed specifically for corporate and institutional investors who
normally maintain high average account balances;

o requires a $100,000 minimum investment per Portfolio;

o imposes a $10,000 minimum on check writing privileges (available for
the Money Market Portfolios only).

Furthermore, there are no sales loads, exchange fees or redemption
fees. All distribution and promotional expenses payable pursuant to the
Portfolios' Rule 12b-1 Plans will be paid by the Advisor from its own resources
which include the advisory fee. Each Portfolio has adopted a "defensive" Rule
12b-1 Plan in case any Fund payments or expenses are deemed to be indirect
financing of distribution expenses. From time to time, Gabelli-O'Connor Fixed
Income Mutual Funds Management Co. may voluntarily assume certain expenses of
any Portfolio of the Fund. This would have the effect of lowering the overall
expense ratio of that Portfolio and of increasing yield to investors in that
Portfolio.

329543.1 -2-

<PAGE>

Operational Benefits

The Fund's six Portfolios are specifically designed to meet the
distinctive cash management needs and objectives of treasurers and financial
officers of corporations and other institutions:

o diversification, without the cost and inconvenience of direct
investment in individual securities

o a comprehensive package of convenient services:

-- dedicated line (1-800-TSR-FUND/1-800-877-3863) direct to the
Advisor's shareholder service representatives for
shareholder inquiries and for placing purchase, redemption
or exchange instructions

-- free exchange among the Portfolios

-- checkwriting option, without cost (Money Market Portfolios
only)

-- custodial services, security safekeeping, record keeping

-- dividends, accrued daily and paid monthly, may be
automatically reinvested or wired to a designated bank
account

-- confirmation statement for each transaction

-- consolidated monthly statement for all six Portfolios

o liquidity:

-- telephone purchase orders for the four Money Market
Portfolios received before 12:00 noon New York time will
become effective and begin earning income that day provided
Federal Funds are received by the Fund's Custodian prior to
the close of business; redemptions made before 12:00 noon
New York time will be wired that day (but no dividend will
be earned that day);

-- telephone purchase orders for the two Limited Term
Portfolios received by 4:00 pm New York time will be
invested at that day's NAV and will begin earning income on
the next business day; redemptions made before 4:00 pm New
York time will be made at that day's NAV and wired the next
business day.

329543.1
-3-

<PAGE>

<TABLE>

Table of Fees and Expenses

Annual Fund Operating Expenses
(as a percentage of average net assets)
<CAPTION>
Domestic Prime Tax Exempt U.S. Treasury
Money Market Money Market Money Market
Portfolio Portfolio Portfolio

Management Fees............................................ .30% .30% .30%
Other Operating Expenses................................... .22% .22% .26%
Interest Expense........................................... .02% .00% .00%
---- ---- ----
Total Fund Operating Expenses.............................. .54% .52% .56%
</TABLE>

Example:
You would pay the following expenses on a $1000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
Domestic Prime Tax Exempt U.S. Treasury
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
<C> <C> <C> <C>

1 Year..................................................... $ 6.00 $ 5.00 $ 6.00
3 Years.................................................... 17.00 17.00 18.00
5 Years.................................................... 30.00 29.00 31.00
10 Years................................................... 68.00 65.00 70.00
</TABLE>

The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in each Portfolio will bear
directly and indirectly. (For more complete descriptions of the various costs
and expenses, see "Management of the Fund."). The Example shown in the table
above should not be considered a representation of past or future expenses and
actual expenses may be greater or less than those shown. At this time, only the
Domestic Prime Money Market, Tax Exempt Money Market and U.S. Treasury Money
Market Portfolios of the Fund have been activated by the Advisor.

Financial Highlights

The following financial highlights of The Treasurer's Fund and the related
financial statements for 1995 1994, 1993, 1992, 1991 and 1990 have been audited
by Ernst & Young LLP, Independent Auditors. Prior to 1990, the Financial
Highlights were audited by other auditors. This information should be read in
conjunction with the financial statements which appear in the Statement of
Additional Information.
<TABLE>
<CAPTION>

Domestic Prime
Money Market Portfolio
------------------------------------------------------------------------------------------------
January 8, 1988
(commencement
of
operations)
through
October 31,
Year Ended 1988
----------------------------------------------------------------------------

October October October October October October October
31, 31, 31, 31, 31, 31, 31,
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value:
Beginning of Period.......... $1,000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net Investment Income.... 0.054 0.035 0.028 0.038 0.061 0.080 0.090 0.057
Net Realized Gain (Loss)
on Investments........ (0.002) 0.000 0.000 0.000 0.001 0.000 0.000 0.000
------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations............ 0.052 0.035 0.028 0.038 0.062 0.080 0.090 0.057
------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net
Investment Income........ (0.054) (0.035) (0.028) (0.038) (0.061) (0.080) (0.090) (0.057)
Dividends from Net Realized
Gain on Investments...... (0.000) (0.000) (0.000) (0.000) (0.001) (0.000) (0.000) (0.000)
------ ------ ------ ------ ------ ------ ------ ------
Total Distributions.......... (0.054) (0.035) (0.028) (0.038) (0.062) (0.080) (0.090) (0.057)
------ ------ ------ ------ ------ ------ ------ ------
Contributions from Affiliate. 0.002 0.000 0.000 0.000 0.000 0.000 0.000 0.000
------ ------ ------ ------ ------ ------ ------ ------

Net Asset Value:
End of Period................ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
======
Total Return..................... 5.50% 3.56% 2.90% 3.82% 6.42% 8.26% 9.29% 7.33%*
Ratios/Supplemental Data:
Net Assets, End of Period
(in thousands)........... $169,297 $143,744 $145,021 $169,357 $205,282 $155,732 $185,068 $95,073
Ratio of Operating Expenses
to Average Net Assets**.. 0.52%*** 0.54% 0.55% 0.54% 0.49% 0.45% 0.45% 0.45%
Ratio of Interest Expenses
to Average Net Assets.... 0.02% 0.13% 0.07% - 0.39% 0.59% 0.08% --
Ratio of Net Investment Income
to Average Net Assets.... 5.33% 3.49% 2.82% 3.82% 6.12% 7.99% 8.98% 7.33%*
Decrease reflected in above
expense ratios due to
undertakings by the
Advisor/Administrator.... 0.01% 0.01% 0.00% 0.01% 0.06% 0.09% 0.16% 0.40%*
</TABLE>

- - ---------------
* Annualized.
** Expenses exclusive of interest, net of reimbursement/waivers.
*** Effective 1995, the ratio does not include a reduction of expenses for
custodian fee credits on cash balances maintained with the custodian.
Including such custodian fee credits, the expense ratio would be 0.50%.

329543.1
-4-

<PAGE>

Tax Exempt
Money Market Portfolio
-------------------------------------------------------------------------------------------
December 18, 1987
(commencement
of
operations)
through
October 31,
Year Ended 1988
---------------------------------------------------------------------------

October October October October October October October
31, 31, 31, 31, 31, 31, 31,
1995 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value:
Beginning of Period................ $1,000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------
Income from Investment
Operations:
Net Investment Income.......... 0.034 0.022 0.021 0.031 0.047 0.058 0.061 0.045
Net Realized Gain on
Investments................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 --
------ ------ ------ ------ ------ ------ ------ ---
Total from Investment
Operations.................. 0.034 0.022 0.021 0.031 0.047 0.058 0.061 0.045
------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net
Investment Income.............. (0.034) (0.022) (0.021) (0.031) (0.047) (0.058) (0.061) (0.045)
Dividends from Net Realized
Gain on Investments............ (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) --
------ ------ ------ ------ ------ ------ ------ ------
Total Distributions................ (0.034) (0.022) (0.021) (0.031) (0.047) (0.058) (0.061) (0.045)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value:
End of Period...................... $1,000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
======
Total Return........................... 3.42% 2.21% 2.16% 3.19% 4.83% 5.94% 6.31% 5.19%*
Ratios/Supplemental Data:
Net Assets, End of Period
(in thousands)................. $140,826 $133,951 $117,751 $95,751 $86,486 $89,620 $68,193 $57,561

Ratio of Operating Expenses
to Average Net Assets.......... 0.52%** 0.53% 0.57% 0.58% 0.49% 0.45% 0.45% 0.45%*
Ratio of Net Investment Income
to Average Net Assets.......... 3.35% 2.18% 2.15% 3.10% 4.71% 5.77% 6.12% 5.20%*
Decrease reflected in above expense
ratios due to undertakings by the
Advisor/Administrator.......... 0.01% 0.01% 0.00% 0.02% 0.09% 0.16% 0.27% 0.57%*
</TABLE>

- - ---------------
* Annualized.
** Effective 1995, the ratio does not include a reduction of expenses for
custodian fee credits on cash balances maintained with the custodian.
Including such cusodian fee credits, the expense ratio would be 0.50%.

U.S. Treasury
Money Market Portfolio
---------------------------------------------------------------------------
July 25, 1990
(commencement
of
operations)
through
October 31,
Year Ended 1990
---------------------------------------------------------

October October October October October
31, 31, 31, 31, 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value:
Beginning of Period................................ $1,000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------
Income from InvestmentOperations:
Net Investment Income.............................. 0.051 0.033 0.026 0.034 0.055 0.019
Net Realized Gain on Investments................... 0.000 0.000 0.000 0.002 0.002 0.000
------ ------ ------ ------ ------ ------
Total from Investment Operations....................... 0.051 0.033 0.026 0.036 0.057 0.019
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from Net Investment Income............... (0.051) (0.033) (0.026) (0.034) (0.055) (0.019)
Dividends from Net Realized Gain on Investments.... (0.000) (0.000) (0.000) (0.002) (0.002) (0.000)
------ ------ ------ ------ ------ ------
Total Distributions................................ (0.051) (0.033) (0.026) (0.036) (0.057) (0.019)
------ ------ ------ ------ ------ ------
Net Asset Value:
End of Period...................................... $1,000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ======= ======= ======
Total Return........................................... 5.27% 3.31% 2.60% 3.68% 6.06% 1.82%**
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands)........... $94,834 $138,205 $224,071 $254,899 $281,259 $130,337
Ratio of Operating Expenses to Average Net Assets.. 0.56%*** 0.49% 0.47% 0.45% 0.49% 0.45%*
Ratio of Net Investment Income to Average Net Assets 5.10% 3.07% 2.55% 3.38% 5.50% 7.17%*
Decrease reflected in above expense ratios due to
undertakings by the Advisor/Administrator...... 0.00% 0.00% 0.00% 0.01% 0.03% 0.19%*
</TABLE>

- - ---------------
* Annualized.
** Not annualized.
*** Effective 1995, the ratio does not include a reduction of expenses for
custodian fee credits on cash balances maintained with the custodian.
Including such custodian fee credits, the expense ratio would be 0.054%.

329543.1
-5-

<PAGE>

U.S. TREASURY MONEY MARKET PORTFOLIO

Investment Objectives and Policies

The U.S. Treasury Money Market Portfolio's investment objectives are to
maximize current income and to maintain liquidity and a stable net asset value
of $1 per share. The Portfolio attempts to accomplish these objectives by
investing in U.S. Treasury obligations which have effective maturities of 397
days or less and repurchase agreements that are collateralized by U.S. Treasury
obligations to enable it to employ the amortized cost method of valuation. The
Portfolio may also engage in reverse repurchase agreements that enable it to
employ the amortized cost method of valuation. The investment objectives stated
above are fundamental and may be changed only with the approval of a majority of
the outstanding shares of the Portfolio. There can be no assurance that the U.S.
Treasury Money Market Portfolio can achieve these objectives or that it will be
able to maintain a stable net asset value of $1 per share.

PERMITTED INVESTMENTS:

United States Treasury Obligations -- obligations issued by the United
States Treasury. These obligations are backed by the full faith and credit of
the United States.

U.S. Treasury obligations include bills, notes and bonds, which principally
differ only in their interest rates, maturities and times of issuance. Interest
on U.S. Treasury obligations is specifically exempted from state and local
income taxes under federal law. While shareholders in the U.S. Treasury Money
Market Portfolio do not directly receive interest on U.S. Treasury obligations,
the dividends from the Portfolio are derived primarily from such interest.

States generally allow the character of the Portfolio's income to
pass-through to its shareholders, so that distributions from the Portfolio
derived from interest that would be exempt from state and local income taxes if
received directly by an individual taxpayer also will be exempt from such taxes
when earned by an individual shareholder through a distribution from the
Portfolio. The Portfolio may also invest in repurchase agreements which are
collateralized by U.S. Treasury obligations. At least 65% of the Portfolio's
total assets will consist of U.S. Treasury obligations and repurchase agreements
which are collateralized by U.S Treasury obligations. Interest income derived
from such repurchase agreements is not considered to be income derived from U.S
Treasury obligations and is not exempt from state and local income taxes. In
addition, some states require that, in order for the tax exempt character of the
Portfolio's interest from U.S. Treasury obligations to pass-through to its
shareholders, the Portfolio must maintain specified minimum levels of the
Portfolio's total assets in U.S. Treasury obligations. If the level of non-U.S.
Treasury obligations (including repurchase agreements) exceeds a state's limit
for this pass-through, then none of the Portfolio's interest income would be
exempt from state or local income tax in that state.

While the Portfolio does not specifically limit the amount of repurchase
agreements which the Portfolio can enter into (other than the requirement that
65% of the Portfolio's total assets be invested in U.S. Treasury obligations and
repurchase agreements collateralized by U.S. Treasury obligations), the
Portfolio will endeavor to maintain the levels necessary to preserve the
pass-through of the Portfolio's tax exempt interest income from U.S. Treasury
obligations.

Investors should recognize that the state and local income tax rules that
apply to the U.S. Treasury Money Market Portfolio and its shareholders may be
subject to change in the future and that such changes could have an adverse
impact on the Portfolio and its shareholders. Shareholders are urged to contact
their tax advisors regarding the state and local tax treatment of distributions
received from the U.S. Treasury Money Market Portfolio.

Interest income on U.S. Treasury obligations is not, however, exempt from
federal income tax. In addition, capital gains, if any,

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<PAGE>

realized by the Portfolio upon the sale of U.S. Treasury obligations is not
exempt from federal taxes or, generally, from state and local taxes.

The U.S. Treasury Money Market Portfolio may purchase securities on a
when-issued or delayed delivery basis and may enter into repurchase and reverse
repurchase agreements with member banks of the Federal Reserve System and with
broker-dealers who are recognized as primary dealers in U.S. government
securities by the Federal Reserve Bank of New York. In addition, the Portfolio
is permitted to lend its securities. For a discussion of these transactions, see
"Additional Investment Information and Risk Factors."

DOMESTIC PRIME MONEY MARKET PORTFOLIO

Investment Objectives and Policies

Permitted Investments:

United States Government Obligations -- obligations issued or guaranteed by
the United States Government or by its agencies or instrumentalities. These
obligations are backed by the full faith and credit of the United States, by the
credit of the issuing or guaranteeing agency or by the agency's right to borrow
from the U.S. Treasury. For further description of the government obligations in
which the Portfolio will invest, see "Additional Investment Information and Risk
Factors."

Bank Obligations -- certificates of deposit, bankers' acceptances and other
obligations issued or guaranteed by the 50 largest banks in the United States.
For this purpose, banks are ranked by total deposits as shown by their most
recent annual financial statements. The "other obligations" in which the
Portfolio may invest include instruments (such as bankers' acceptances,
commercial paper and certificates of deposit) issued by U.S. subsidiaries of the
50 largest banks in the U.S. which are guaranteed as to principal and interest
by such banks.

Quality Information. The Portfolio will only purchase high quality domestic
money market instruments that have been determined by the Fund's Board of
Directors to present minimal credit risks and that are First Tier Eligible
Securities at the time of acquisition, so that the Portfolio is able to employ
the amortized cost method of valuation. The term First Tier Eligible Securities
means (i) securities that have remaining maturities of 397 days or less and are
rated in the highest short-term rating category by any two nationally recognized
statistical rating organizations ("NRSROs") or in such category by the only
NRSRO that has rated the securities (collectively, the "Requisite NRSROs")
(acquisition in the latter situation must also be ratified by

329543.1
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<PAGE>

the Board of Directors); (ii) securities that have remaining maturities of 397
days or less but that at the time of issuance were long-term securities and
whose issuer has received from the Requisite NRSROs a rating with respect to
comparable short-term debt in the highest short-term category and (iii) unrated
securities determined by the Fund's Board of Directors to be of comparable
quality. Where the issuer of a long-term security with a remaining maturity
which would otherwise qualify it as a First Tier Eligible Security does not have
rated short-term debt outstanding, the long-term security is treated as unrated
but may not be purchased if it has a long-term rating from any NRSRO that is
below the two highest long-term categories. A determination of comparability by
the Board of Directors is made on the basis of its credit evaluation of the
issuer, which may include an evaluation of a letter of credit, guarantee,
insurance or other credit facility issued in support of the securities or
participation certificates. While there are several organizations that currently
qualify as NRSROs, two examples of NRSROs are S&P and Moody's. The two highest
ratings by Moody's for long-term debt securities are Aaa and Aa and by S&P are
AAA and AA. The highest rating for commercial paper is Prime-1 by Moody's and
A-1 by S&P. For a more detailed discussion of the quality requirements
applicable to certificates of deposit, bankers' acceptances and other bank
obligations, see "Investments and Investment Techniques Common to Two or More
Portfolios" in the Statement of Additional Information. These standards must be
satisfied at the time an investment is made. Subsequent to its purchase by the
Portfolio, the quality of an investment may cease to be rated or its rating may
be reduced so that it ceases to qualify as a First Tier Eligible Security. If
this occurs, the Board of Directors of the Fund shall reassess promptly whether
the security presents minimal credit risks and shall cause the Portfolio to take
such action as the Board of Directors determines is in the best interest of the
Portfolio and its shareholders. However, reassessment is not required if the
security is disposed of or matures within five business days of the Advisor
becoming aware of the new rating and provided further that the Board of
Directors is subsequently notified of the Advisor's actions.

In addition, in the event that a security (1) is in default, (2) ceases to
be an eligible investment under Rule 2a-7 or (3) is determined to no longer
present minimal credit risks, the Portfolio will dispose of the security absent
a determination by the Fund's Board of Directors that disposal of the security
would not be in the best interests of the Portfolio. In the event that the
security is disposed of, it shall be disposed of as soon as practicable
consistent with achieving an orderly disposition by sale, exercise of any demand
feature, or otherwise. In the event of a default with respect to a security
which immediately before default accounted for 1/2 of 1% or more of the
Portfolio's total assets, the Portfolio shall promptly notify the Securities and
Exchange Commission of such fact and of the actions that the Portfolio intends
to take in response to the situation.

The Domestic Prime Money Market Portfolio may purchase securities on a
when-issued or delayed delivery basis and may enter into repurchase and reverse
repurchase agreements with member banks of the Federal Reserve System and with
broker-dealers who are recognized as primary dealers in U.S. government
securities by the Federal Reserve Bank of New York. In addition, the Portfolio
is permitted to lend its securities. For a discussion of these transactions, see
"Additional Investment Information and Risk Factors."

329543.1
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<PAGE>

GLOBAL MONEY MARKET PORTFOLIO

Investment Objectives and Policies

The Global Money Market Portfolio's investment objectives are to maximize
current income and to maintain liquidity and a stable net asset value of $1 per
share. The Portfolio seeks to produce a higher yield than the Domestic Prime
Money Market Portfolio by investing in the securities of issuers located in at
least three countries (including the United States). The securities invested in
by the Global Money Market Portfolio, described below, have effective maturities
of 397 days or less. The investment objectives stated above are fundamental and
may be changed only with the approval of a majority of the outstanding shares of
the Portfolio. There can be no assurance that the Global Money Market Portfolio
can achieve these objectives or that it will be able to maintain a stable net
asset value of $1 per share.

PERMITTED INVESTMENTS:

United States Government Obligations -- obligations issued or guaranteed by
the United States Government or by its agencies or instrumentalities. These
obligations are backed by the full faith and credit of the United States, by the
credit of the issuing or guaranteeing agency or by the agency's right to borrow
from the U.S. Treasury. For further description of the government obligations in
which the Portfolio may invest, see "Additional Investment Information and Risk
Factors."

Bank Obligations -- certificates of deposit, bankers' acceptances and other
obligations (or instruments secured by such obligations) of (i) domestic banks
subject to regulation by the U.S. Government or its agencies (such as the
Federal Reserve Board, the Comptroller of the Currency, or the FDIC) and having
total assets of over $1 billion unless their obligations are guaranteed by their
parent bank, which has assets of over $5 billion; (ii) foreign branches of these
banks ("Euros"); (iii) United States branches of foreign banks of equivalent
size ("Yankees"); and (iv) foreign banks. The Portfolio limits investments in
foreign bank obligations to U.S. dollar denominated obligations of foreign banks
which have more than $10 billion of assets, are among the 75 largest in the
world, and have branches or agencies in the U.S. See "Additional Investment
Information and Risk Factors" for further information on foreign investments.

Commercial Paper and Other Short Term Corporate Obligations -- commercial
paper and other short term domestic corporate obligations, including corporate
bonds, variable amount master demand notes and participations in corporate
loans, with maturities of 397 days or less; commercial paper and other short
term obligations issued by foreign corporations if the issuer is a direct parent
or subsidiary of a United States corporation, the obligation is United States
dollar denominated and is not subject to foreign withholding tax ("Euro
Commercial Paper"); and commercial paper and other short term obligations issued
by foreign governments. For further description of all the obligations in the
Portfolio, including foreign investments and the liquidity of participations in
corporate loans, see "Additional Investment Information and Risk Factors" herein
and "Investment Objectives and Policies" in the Statement of Additional
Information.

Quality Information. The Portfolio will only purchase high quality money
market instruments that have been determined by the Fund's Board of Directors to
present minimal credit risks and that are First Tier Eligible Securities at the
time of acquisition so that the Portfolio is able to employ the amortized cost
method of valuation. The term First Tier Eligible Securities means (i)
securities that have remaining maturities of 397 days or less and are rated in
the highest short-term rating categories by any two nationally recognized
statistical rating organizations ("NRSRO") or in such categories by the only
NRSRO that has rated the securities (collectively, the "Requisite NRSROs")
(acquisition in the latter situation must also be ratified by the Board of
Directors); (ii) securities that have remaining maturities of 397 days or less
but that at the time of issuance were long-term securities and

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329543.1

<PAGE>

whose issuer has received from the Requisite NRSROs a rating with respect to
comparable short-term debt in the highest short-term rating categories and (iii)
unrated securities determined by the Fund's Board of Directors to be of
comparable quality. Where the issuer of a long-term security with a remaining
maturity which would otherwise qualify it as a First Tier Eligible Security does
not have rated short-term debt outstanding, the long-term security is treated as
unrated but may not be purchased if it has a long-term rating from any NRSRO
that is below the two highest long-term categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issues, which may include an evaluation of a letter of credit,
guarantee, insurance or other credit facility issued in support of the
securities or participation certificates. While there are several organizations
that currently qualify as NRSROs, two examples of NRSROs are S&P and Moody's.
The two highest ratings by Moody's for long-term debt securities are Aaa and Aa
and by S&P are AAA and AA; the highest ratings for domestic and foreign
commercial paper are Prime-1 by Moody's and A-1 by S&P. For a more detailed
discussion of quality requirements applicable to certificates of deposit,
bankers' acceptances and other bank obligations, see "Investments and Investment
Techniques Common to Two or More Portfolios" in the Statement of Additional
Information. Subsequent to its purchase by the Portfolio, the quality of an
investment may cease to be rated or its rating may be reduced so that it ceases
to qualify as a First Tier Security. If this occurs, the Board of Directors of
the Fund shall reassess promptly whether the security presents minimal credit
risks and shall cause the Portfolio to take such action as the Board of
Directors determines is in the best interest of the Portfolio and its
shareholders. However, reassessment is not required if the security is disposed
of or matures within five business days of the Advisor becoming aware of the new
rating and provided further that the Board of Directors is subsequently notified
of the Advisor's action.

The Global Money Market Portfolio may also purchase securities on a
when-issued or delayed delivery basis and may enter into repurchase and reverse
repurchase agreements with member banks of the Federal Reserve System and with
broker-dealers who are recognized as primary dealers in U.S. government
securities by the Federal Reserve Bank of New York. In addition, the Portfolio
is permitted to lend its securities. For a discussion of these transactions, see
"Additional Investment Information and Risk Factors."

329543.1
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<PAGE>

TAX EXEMPT MONEY MARKET PORTFOLIO

Investment Objectives and Policies

Although the Supreme Court has determined that Congress has the authority to
subject the interest on municipal securities, such as the securities in which
the Portfolio will invest, to regular federal income taxation, existing law
excludes such interest from regular federal income tax.

Permitted Investments:

Municipal Bonds - bonds issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies, authorities and instrumentalities. These
obligations may be general obligation bonds secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest, or they may be revenue bonds payable from specific revenue sources,
but not generally backed by the issuer's taxing power. These include industrial
revenue bonds or "private activity bonds" where payment is the responsibility of
the private industrial user of the facility financed by the bonds; such bonds
are issued by or on behalf of public authorities to provide funding for various
privately operated industrial facilities. Interest on such bonds is generally
exempt, with certain exemptions, from regular federal income tax provided the
issuer and corporate obligor thereof continue to meet certain conditions. See
"Taxes." The Portfolio may invest more than 25% of its assets in industrial
revenue bonds, but may not invest more than 25% of its assets in industrial
revenue bonds of projects of similar type or in the same state.

Municipal Notes - municipal notes of various types, including notes issued
in anticipation of receipt of taxes, the proceeds of the sale of bonds, other
revenues or grant proceeds, as well as municipal commercial paper and variable
rate demand notes. The interest rate on variable rate demand notes is adjustable
at periodic intervals of 397 days or less as specified in the notes. There is no
specific percentage limitation on these investments. For more information about
municipal notes, see "Investments and Investment Techniques Common to Two or
More Portfolios" in the Statement of Additional Information.

Municipal Leases - municipal leases, which may take the form of a lease or
an installment purchase or conditional sale contract, are issued by state and
local governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds. Leases and
installment purchases or conditional sales contracts (which normally provide for
title to the leased asset to pass eventually to the government issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations of many state constitutions and statutes
are deemed to be

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329543.1

<PAGE>

inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. These types of municipal leases may be considered illiquid
and subject to the 10% limitation of investment in illiquid securities set forth
under "Investment Restrictions" contained herein. The Board of Directors may
adopt guidelines and delegate to the Advisor the daily function of determining
and monitoring the liquidity of municipal leases. In making such determination,
the Board and the Advisor may consider such factors as the frequency of trades
for the obligations, the number of dealers willing to purchase or sell the
obligations and the number of other potential buyers and the nature of the
marketplace for the obligations, including the time needed to dispose of the
obligations and the method of soliciting offers. If the Board determines that
any municipal leases are illiquid, such leases will be subject to the 10%
limitation on investments in illiquid securities. The Board of Directors is also
responsible for determining the credit quality of municipal leases, on an
ongoing basis, including an assessment of the likelihood that the leases will
not be cancelled.

Quality Information. The Portfolio will only purchase high quality tax
exempt money market instruments ("Municipal Obligations") that have been
determined by the Fund's Board of Directors to present minimal credit risks and
that are Eligible Securities at the time of acquisition so that the Portfolio is
able to employ the amortized cost method of valuation. The term Eligible
Securities means (i) Municipal Obligations that have remaining maturities of 397
days or less and are rated in the two highest short-term rating categories by
any two nationally recognized statistical rating organizations ("NRSROs") or in
such categories by the only NRSRO that has rated the Municipal Obligations
(collectively, the "Requisite NRSROs") (acquisition in the latter situation must
also be ratified by the Board of Directors); (ii) Municipal Obligations that
have remaining maturities of 397 days or less but that at the time of issuance
were long-term securities and whose issuer has received from the Requisite
NRSROs a rating with respect to comparable short-term debt in the two highest
short-term rating categories and (iii) unrated Municipal Obligations determined
by the Fund's Board of Directors to be of comparable quality. Where the issuer
of a long-term Municipal Obligation with a remaining maturity which would
otherwise qualify it as an Eligible Security does not have rated short-term debt
outstanding, the long-term Municipal Obligation is treated as unrated but may
not be purchased if it has a long-term rating from any NRSRO that is below the
two highest long-term categories. A determination of comparability by the Board
of Directors is made on the basis of its credit evaluation of the issuer, which
may include an evaluation of a letter of credit, guarantee, insurance or other
credit facility issued in support of the Municipal Obligations or participation
certificates. While there are several organizations that currently qualify as
NRSROs, two examples of NRSROs are S&P and Moody's. The two highest long-term
ratings by S&P and Moody's are Aaa and Aa by Moody's and AAA and AA by S&P, for
debt securities; MIG-1, VMIG-1, Prime-1 and MIG-2, VMIG-2, Prime-2 by Moody's
and A-1, SP-1 and A-2, SP-2 by S&P, for short-term municipal securities. These
standards must be satisfied at the time an investment is made. Subsequent to its
purchase by the Portfolio, the quality of an investment may cease to be rated or
its rating may be reduced below the minimum required for purchase by the
Portfolio. If this occurs, the Board of Directors of the Fund shall reassess
promptly whether the Municipal Obligation presents minimal credit risks and
shall cause the Portfolio to take such action as the Board of Directors
determines is in the best interest of the Portfolio and its shareholders.
However, reassessment is not required if the Municipal Obligation is disposed of
or matures within five business days of the Advisor becoming aware of the new
rating and provided further that the Board of Directors is subsequently notified
of the Advisor's actions.

329543.1
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<PAGE>

In addition, in the event that a municipal obligation (1) is in default, (2)
ceases to be an Eligible Security or (3) is determined to no longer present
minimal credit risks, the Portfolio will dispose of the Municipal Obligation
absent a determination by the Fund's Board of Directors that disposal of the
Municipal Obligation would not be in the best interests of the Portfolio. In the
event that the Municipal Obligation is disposed of, it shall be disposed of as
soon as practicable consistent with achieving an orderly disposition by sale,
exercise of any demand feature, or otherwise. In the event of a default with
respect to a Municipal Obligation which immediately before default accounted for
1/2 of 1% or more of the Portfolio's total assets, the Fund shall promptly
notify the Securities and Exchange Commission of such fact and of the actions
that the Fund intends to take in response to the situation.

The Tax Exempt Money Market Portfolio may purchase municipal obligations on
a when-issued or delayed delivery basis and may also purchase municipal
obligations with puts and stand-by commitments. The Advisor currently does not
anticipate entering into any transactions which would result in income subject
to federal income tax. However, the Portfolio may invest up to 20% of the value
of its net assets in taxable securities in certain circumstances, including
repurchase and reverse repurchase agreements with member banks of the Federal
Reserve System and with broker-dealers who are recognized as primary dealers in
U.S. government securities by the Federal Reserve Bank of New York. The
Portfolio may also lend its portfolio securities. Income from taxable
securities, repurchase and reverse repurchase agreements and portfolio lending
will be subject to income taxation. For a discussion of these transactions, see
"Additional Investment Information and Risk Factors."

LIMITED TERM PORTFOLIO

Investment Objectives and Policies

The Limited Term Portfolio's investment objective is to maximize current
income consistent with moderate risk of capital by investing in a liquid
portfolio with a maximum weighted average maturity of two years. The investment
objective stated above is fundamental and may be changed only with the approval
of a majority of the outstanding shares of the Portfolio. There can be no
assurance that the Limited Term Portfolio will be able to achieve this
objective.

The Limited Term Portfolio seeks to maintain a current yield that is greater
than that obtainable from a portfolio of high quality money market obligations.
The Portfolio seeks to increase returns by actively managing securities in the
short term and intermediate term ranges. The Portfolio will consist only of
securities with a maximum dollar weighted average maturity of two years and a
maximum maturity of three years (three years and sixty days for new issues) at
the time of investment. However, it seeks to minimize market risk by employing a
"laddered" portfolio approach as opposed to a market timing approach. The
laddered approach to portfolio management involves the maintenance of securities
positions of varying amounts staggered at appropriate points along the fixed
income yield curve in an effort to maximize income and to minimize interest rate
risk. Assuming a positively sloping yield curve, a portfolio designed with a
series of periodic maturities can produce higher yields at the horizon of its
maturity restriction, balanced by the interest rate protection provided by
shorter, more quickly maturing securities.

In addition, the Portfolio seeks investment in securities which the Advisor
believes to be undervalued and, therefore, have capital appreciation potential.
Any realized capital gains, as well as interest income, will be subject to
federal income taxes. See "Management Strategies" in the Statement of Additional
Information.

329543.1
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<PAGE>

Purchases and sales are made for the Portfolio whenever necessary, in the
Advisor's opinion, to meet the Portfolio's objective. This is expected to result
in a maximum average annual portfolio turnover rate of not greater than 200%. In
order to qualify as a regulated investment company, less than 30% of the
Portfolio's gross income must be derived from the sale or other disposition of
stock, securities or certain other investments held for less than three months.
Although increased portfolio turnover may increase the likelihood of additional
capital gains for the Portfolio, the Portfolio expects to satisfy the 30% income
test.

The Portfolio may purchase or sell certain financial instruments in order to
attempt to reduce the volatility of its portfolio, moderate market risk and
minimize fluctuations in its net asset value per share. For a discussion of
these transactions, see "Additional Investment Information."

Permitted Investments:

The Portfolio will invest in the same types of securities that are permitted
investments for the Global Money Market Portfolio, with varying and longer
maturities. However, when purchasing securities with effective maturities in
excess of one year the Portfolio will purchase only domestic issues.

From time to time, the assets of the Portfolio may be substantially invested
in short term obligations in order to attempt to reduce the volatility of the
Portfolio, moderate market risk, and minimize fluctuation in its net asset
value. Short term obligations may also be purchased pending investment of
proceeds of sales of Portfolio shares or Portfolio securities, or to maintain
liquidity to meet anticipated redemptions.

Quality Information. The Limited Term Portfolio's rated debt securities must
be rated Aa or higher by Moody's or AA or higher by S&P, or the equivalent.
Rated domestic and foreign commercial paper must be rated Prime-1 by Moody's or
A-1 by S&P, or the equivalent. The Portfolio may also invest in unrated
securities if, in the opinion of the Fund's Board of Directors, such securities
are of comparable quality to the rated securities in which the Portfolio may
invest. These standards must be satisfied at the time an investment is made. If
the quality of the investment later declines, the Portfolio may continue to hold
the investment. However, if the Portfolio holds any variable rate demand
instruments with stated maturities in excess of one year, such instruments must
maintain their high quality rating or must be sold from the Portfolio.

The Limited Term Portfolio may also invest in hedging instruments in certain
circumstances. In addition, the Portfolio may purchase obligations on a
when-issued or delayed delivery basis, enter into repurchase and reverse
repurchase agreements with member banks of the Federal Reserve System and with
broker-dealers who are recognized as primary dealers in U.S. government
securities by the Federal Reserve Bank of New York. The Portfolio is also
permitted to lend its securities and purchase certain privately placed
securities. For a discussion of these transactions, see "Additional Investment
Information and Risk Factors."

The Portfolio may also purchase zero coupon bonds. Zero coupon bonds do not
provide for the payment of any current interest and provide for payment at
maturity at par value unless sooner sold or redeemed. The market value of zero
coupon bonds is subject to greater fluctuations than coupon bonds in response to
changes in interest rates. For a discussion of the tax consequences of an
investment in zero coupon bonds, see "Taxes" herein.

329543.1
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<PAGE>

TAX EXEMPT LIMITED TERM PORTFOLIO

Investment Objectives and Policies

The Tax Exempt Limited Term Portfolio's investment objective is to maximize
current income exempt from federal income tax consistent with moderate risk of
capital by investing in a liquid portfolio with a maximum weighted average
maturity of three years. The Portfolio attempts to accomplish this objective by
investing primarily in municipal securities which, in the opinion of bond
counsel at the date of issuance, earn interest exempt from federal income tax.
Any realized capital gains will be subject to federal income taxes. Interest on
these securities may be subject to state and local income taxes. See "Taxes."
The Portfolio intends to invest all of its assets in tax exempt obligations;
however, it reserves the right to invest up to 20% of its assets in taxable
obligations. The investment objectives stated above are fundamental and may be
changed only with the approval of a majority of the outstanding shares of the
Portfolio. There can be no assurance that the Tax Exempt Limited Term Portfolio
will be able to achieve these objectives.

The Tax Exempt Limited Term Portfolio seeks to maintain a current yield that
is greater than the obtainable from a portfolio of short term, high quality tax
exempt money market obligations. The Portfolio seeks to increase returns by
actively managing securities in the short term and intermediate term ranges. The
Portfolio will consist only of securities with a maximum dollar weighted average
maturity of three years and a maximum maturity of five years (five years and
sixty days for new issues) at the time of investment. However, it seeks to
minimize market risk by employing a "laddered" portfolio approach as opposed to
a market timing approach. The laddered approach to portfolio management involves
the maintenance of securities positions of varying amounts staggered at
appropriate points along the fixed income yield curve in an effort to maximize
income and to minimize interest rate risk. Assuming a positively sloping yield
curve, a portfolio designed with a series of periodic maturities can produce
higher yields at the horizon of its maturity restriction, balanced by the
interest rate protection provided by shorter, more quickly maturing securities.

In addition, the Portfolio seeks investments in securities which the Advisor
believes to be undervalued and, therefore, have capital appreciation potential.
The value of municipal securities in the Portfolio can also be affected by
market reaction to legislative consideration of various tax reform proposals.
See "Management Strategies" in the Statement of Additional Information.

Purchases and sales are made for the Portfolio whenever necessary, in the
Advisor's opinion, to meet the Portfolio's objective. This is expected to result
in a maximum average annual portfolio turnover rate of not greater than 200%.
In order to qualify as a regulated investment company, less than 30% of the
Portfolio's gross income (including tax exempt income) must be derived from the
sale or other disposition of stock, securities or certain other investments held
for less than three months. Although increased portfolio turnover may increase
the likelihood of additional capital gains for the Portfolio, the Portfolio
expects to satisfy the 30% income test.

Permitted Investments:

The Portfolio will invest in the same types of securities that are permitted
investments for the Tax Exempt Money Market Portfolio,

329543.1
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<PAGE>

with varying and longer maturities, such as Municipal Bonds and Municipal Notes,
whose interest is exempt form federal income tax.

From time to time, the assets of the Portfolio may be substantially invested
in short term municipal obligations in order to attempt to reduce the volatility
of the Portfolio, moderate market risk, and minimize fluctuation in its net
asset value. Short term obligations may also be purchased pending investment of
proceeds of sales of Portfolio shares or Portfolio securities, or to maintain
liquidity to meet anticipated redemptions.

Quality Information. The Tax Exempt Limited Term Portfolio's rated debt
securities must be rated A or higher by Moody's or A or higher by S&P, or the
equivalent. Rated short term municipal securities must be rated MIG-2, VMIG-2,
P-2 or higher by Moody's or SP-2, A-2 or higher by S&P, or the equivalent. The
Portfolio may also invest in unrated securities if, in the opinion of the Fund's
Board of Directors, such securities are of comparable quality to the rated
securities in which the Portfolio may invest. These standards must be satisfied
at the time an investment is made. If the quality of the investment later
declines, the Fund may continue to hold the investment. However, if the
Portfolio holds any variable rate demand instruments with stated maturities in
excess of one year, such instruments must maintain their high quality rating or
must be sold from the Portfolio.

The Tax Exempt Limited Term Portfolio may purchase municipal obligations on
a when-issued or delayed delivery basis and may purchase municipal obligations
with puts and stand-by commitments. The Advisor currently does not anticipate
entering into any transaction which would result in income subject to federal
income tax. However, the Portfolio may invest up to 20% of the value of its
total assets in taxable securities in certain circumstances, including hedging
instruments and repurchase and reverse repurchase agreements with member banks
of the Federal Reserve System and with broker-dealers who are recognized as
primary dealers in U.S. government securities by the Federal Reserve Bank of New
York. The Portfolio may also lend its securities. Income from taxable
securities, repurchase and reverse repurchase agreements and portfolio lending
will be subject to income taxation. The Portfolio may purchase certain privately
placed securities. For a discussion of these transactions, see "Additional
Investment Information and Risk Factors."

ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS

When-Issued and Delayed Delivery Securities. Each of the Portfolios may
purchase securities on a when-issued or delayed delivery basis. Delivery of and
payment for these securities may occur a month or more after the date of the
purchase commitment. The securities are subject to market fluctuation during
this period and no interest accrues to the Portfolio until settlement. Each
Portfolio maintains with the Custodian a separate account with a segregated
portfolio of liquid high grade debt securities in an amount at least equal to
these commitments.

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dealers in United States government securities by the Federal Reserve Bank of
New York whose creditworthiness has been reviewed and found to meet the
investment criteria of the Portfolio. Although the securities subject to the
repurchase agreement might bear maturities exceeding 397 days, settlement for
the repurchase would never be more than one year after the Portfolio's
acquisition of the securities and normally would be within a shorter period of
time. The resale price will be in excess of the purchase price, reflecting an
agreed upon market rate effective for the period of time the Portfolio's money
will be invested in the security, and will not be related to the coupon rate of
the purchased security. At the time a Portfolio enters into a repurchase
agreement the value of the underlying security, including accrued interest, will
be equal to or exceed the value of the repurchase agreement and, in the case of
a repurchase agreement exceeding one day, the seller will agree that the value
of the underlying security, including accrued interest, will at all times be
equal to or exceed the value of the repurchase agreement. Each Portfolio may
engage in a repurchase agreement with respect to any security in which that
Portfolio is authorized to invest, even though the underlying security may
mature in more than one year. The collateral securing the seller's obligation
must be of a credit quality at least equal to the Portfolio's investment
criteria for Portfolio securities and will be held by the Portfolio's Custodian
or in the Federal Reserve Book Entry System. If the seller defaults and the
collateral value declines, the Portfolio might incur a loss. If bankruptcy
proceedings are commenced with respect to the seller, the Fund's realization
upon the collateral may be delayed or limited. See "Investment Restrictions."
Each Portfolio may invest no more than 10% of its assets in illiquid securities
including repurchase agreements maturing in more than seven days. See
"Investment Restrictions."

Reverse Repurchase Agreements. Reverse repurchase agreements involve the
sale of securities held by a Portfolio pursuant to an agreement to repurchase
the securities at an agreed upon price and date. Each Portfolio is permitted to
enter into reverse repurchase agreements for liquidity purposes or when it is
able to purchase other securities which will produce more income than the cost
of the agreement. Each Portfolio permitted to enter into reverse repurchase
agreements may do so only with those member banks of the Federal Reserve System
and broker-dealers who are recognized as primary dealers in U.S. government
securities by the Federal Reserve Bank of New York whose creditworthiness has
been reviewed and found to meet the investment criteria of the Portfolio. When
engaging in reverse repurchase transactions, the Fund will maintain, in a
segregated account with its Custodian, securities equal in value to those
subject to the agreement. These agreements are considered to be borrowings and
therefore are included in the asset restriction contained under "Investment
Restrictions" relating to borrowings which allows a Portfolio to borrow money
from banks for extraordinary or emergency purposes and to engage in reverse
repurchase agreements provided that such in the aggregate do not exceed
one-third of the value of the total assets of that Portfolio less its
liabilities. Any Portfolio that utilizes reverse repurchase agreements to this
extent may be considered to be leveraging its portfolio; however, since the
Portfolios are required to maintain segregated accounts to cover their positions
on these reverse repurchase agreements, the risks inherent in this leveraging
technique are minimized.

The Portfolio could experience delays in recovering securities in the event
of the bankruptcy of the other party to a reverse repurchase agreement and could
experience a loss to the extent that the value of the securities may have
decreased in the meantime.

Portfolio Lending. Each Portfolio may from time to time lend securities on a
short-term basis to banks, brokers and dealers and receive as collateral cash,
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, or irrevocable bank letters of credit (or any combination
thereof), which collateral will be marked to market daily and will be required
to be maintained at all times in an amount equal to at

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<PAGE>

least 100% of the current value of the loaned securities plus accrued interest.
Such loans are not made with respect to any Portfolio if as a result the
aggregate of all outstanding loans exceeds one-third of the value of the
Portfolio's total assets. Securities lending will afford a Portfolio the
opportunity to earn additional income because the Portfolio will continue to be
entitled to the interest payable on the loaned securities and also will either
receive as income all or a portion of the interest on the investment of any cash
loan collateral or, in the case of collateral other than cash, a fee negotiated
with the borrower. Such loans will be terminable at any time. Loans of
securities involve risks of delay in receiving additional collateral or in
recovering the securities lent or even loss of rights in the collateral in the
event of the insolvency of the borrower of the securities. A Portfolio will have
the right to retain record ownership of loaned securities in order to exercise
beneficial rights. A Portfolio may pay reasonable fees in connection with
arranging such loans.

Foreign Investment Information for the Global Money Market Portfolio and the
Limited Term Portfolio. The Global Money Market Portfolio and the Limited Term
Portfolio may invest in certain U.S. dollar denominated foreign securities.
Investment in obligations of foreign issuers and in foreign branches of domestic
banks involves somewhat different investment risks from those affecting
obligations of United States domestic issuers. There may be limited publicly
available information with respect to foreign issuers and foreign issuers are
not generally subject to uniform accounting, auditing and financial standards
and requirements comparable to those applicable to domestic companies. There
may also be less government supervision and regulation of foreign securities
exchanges, brokers and listed companies than in the United States. Foreign
securities markets have substantially less volume than national securities
exchanges and securities of some foreign companies are less liquid and more
volatile than securities of comparable domestic companies. Brokerage commissions
and other transaction costs on foreign securities exchanges are generally higher
than in the United States. Dividends and interest paid by foreign issuers may be
subject to withholding and other foreign taxes, which may decrease the net
return on foreign investments as compared to dividends and interest paid to the
Portfolio by domestic issuers. Additional risks include future political and
economic developments; the possibility that a foreign jurisdiction might impose
or change withholding taxes on income payable with respect to foreign
securities; the possible seizure, nationalization or expropriation of the
foreign issuer or foreign deposits; and the possible adoption of foreign
governmental restrictions such as exchange controls.

Taxable Investments for the Tax Exempt Portfolios. The Advisor currently
does not anticipate entering into any transactions which would result in income
subject to federal income tax. However, the Tax Exempt Money Market Portfolio
and the Tax Exempt Limited Term Portfolio are permitted to invest up to 20% of
the value of their respective total assets in securities the interest income on
which is subject to federal income tax. These Portfolios may make taxable
investments pending investment of proceeds from sales of their shares or
portfolio securities, pending settlement of purchases of portfolio securities,
to maintain liquidity to meet anticipated redemptions or when it is advisable in
the Advisor's opinion because of adverse market conditions. The taxable
investments permitted for these Portfolios include Obligations of the United
States government and its agencies and instrumentalities, bank obligations,
commercial paper and repurchase agreements and, in the case of the Tax Exempt
Limited Term Portfolio, other debt securities which meet the Portfolio's quality
requirements. See "Taxes." Any securities, the interest income on which may be
subject to the federal alternative minimum tax for individuals (including
participation certificates in such securities) are included with taxable
investments in determining the 20% limitation.

329543.1
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<PAGE>

within a specified period prior to maturity to facilitate portfolio liquidity.
This right to resell is known as a put. The aggregate price paid for securities
with puts may be higher than the price which otherwise would be paid. Consistent
with the investment objectives of these Portfolios and subject to the
supervision of the Directors, the purpose of this practice is to permit the
Portfolios to be fully invested in tax exempt securities while maintaining the
necessary liquidity to purchase securities on a when-issued basis, to meet
unusually large redemptions, to purchase at a later date securities other than
those subject to the put and, in the case of the Tax Exempt Limited Term
Portfolio, to facilitate the Advisor's ability to manage the Portfolio actively.
The principal risk of puts is that the put writer may default on its obligation
to repurchase. The Advisor will monitor each writer's ability to meet its
obligations under puts. See "Investment Restrictions" and "Taxes" in the
Statement of Additional Information.

The amortized cost method is used by the Domestic Prime Money Market
Portfolio, the Global Money Market Portfolio and the Tax Exempt Money Market
Portfolio to value any municipal securities; no value is assigned to any puts on
such municipal securities. This method is also used by the Tax Exempt Limited
Term Portfolio to value certain high quality municipal securities which meet the
requirements specified for use of the amortized cost method; when these
securities are subject to puts separate from the underlying securities, no value
is assigned to the puts. The cost of any such put is carried as an unrealized
loss from the time of purchase until it is exercised or expires. See the
Statement of Additional Information for the valuation procedure if the Tax
Exempt Limited Term Portfolio were to invest in municipal securities that could
not be valued by the amortized cost method and that are subject to separate
puts.

Privately Placed Securities. All the Portfolios, except the U.S Treasury
Money Market Portfolio, may invest in securities issued as part of privately
negotiated transactions between an issuer and one or more purchasers. Except
with respect to securities subject to Rule 144A of the Securities Act of 1933
which are discussed below, these securities are typically not readily marketable
and are therefore considered illiquid securities. The price these Portfolios pay
for illiquid securities, and any price received upon resale, may be lower than
the price paid or received for similar securities with a more liquid market.
Accordingly, the valuation of privately placed securities purchased by a
Portfolio will reflect any limitations on their liquidity. As a matter of
policy, a Portfolio will not invest more than 10% of the market value of the net
assets of the Portfolio in repurchase agreements maturing in over seven days and
other illiquid investments.

These Portfolios may purchase securities that are not registered
("restricted securities") under the Securities Act of 1933 (the "Securities
Act"), but can be offered and sold to "qualified institutional buyers" under
Rule 144A of the Securities Act. These portfolios may also purchase certain
commercial paper issued in reliance on the exemption from regulations in Section
4(2) of the Securities Act ("4(2) Paper"). However, a Portfolio will not invest
more than 10% of its net assets in illiquid investments, which include
securities for which there is no readily available market, securities subject to
contractual restriction on resale, certain investments in asset-backed and
receivable-backed securities and restricted securities (unless, with respect to
these securities and 4(2) Paper, the Fund's Directors continuously determine,
based on the trading markets for the specific restricted security, that it is
liquid). The Directors may adopt guidelines and delegate to the Advisor the
daily function of determining and monitoring liquidity of restricted securities
and 4(2) Paper. The Directors, however, will retain sufficient oversight and be
ultimately responsible for these determinations.

Since it is not possible to predict with assurance exactly how this market
for restricted securities sold and offered under Rule 144A will develop, the
Directors will carefully monitor the Portfolios' investments in these
securities, focusing on such factors, among others, as valuation, liquidity and
availability of information. This investment practice could have the effect of
increasing the level

329543.1
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<PAGE>

of illiquidity in a Portfolio to the extent that qualified institutional buyers
become for a time uninterested in purchasing these restricted securities.

Hedging for the Limited Term Portfolio and the Tax Exempt Limited Term
Portfolio. Hedging is a means of transferring risk which an investor does not
desire to assume during an uncertain market environment. The Limited Term
Portfolio and the Tax Exempt Limited Term Portfolio are permitted to enter into
the transactions more fully described in the Statement of Additional Information
solely (a) to hedge against changes in the market value of portfolio securities
or (b) to close out or offset existing positions. The transactions must be
appropriate to reduction of risk; they cannot be for speculation. The Limited
Term Portfolio and the Tax Exempt Limited Term Portfolio may (a) sell futures
contracts on non-municipal and municipal debt securities and indexes of
non-municipal and municipal debt securities, respectively, and (b) purchase or
write (sell) options on these futures, on non-municipal and municipal debt
securities and on indexes of non-municipal and municipal debt securities traded
on registered securities exchanges and contract markets, respectively.

To the extent the Portfolios use hedging instruments which do not involve
specific portfolio securities, offsetting price changes between the hedging
instruments and the securities being hedged will not always be possible, and
market value fluctuations of the Portfolio may not be completely eliminated.
When using hedging instruments that do not specifically correlate with
securities in the Portfolio, the Advisor will attempt to create a very closely
correlated hedge. Hedging activities based on non-municipal debt securities or
indexes may not correlate as closely to the Portfolios as hedging activities
based on municipal debt securities or indexes. Less closely correlated hedges
are likely to occur if a Portfolio hedges municipal securities with a futures
contract in United States government obligations, other non-municipal securities
or an index that does not include municipal securities. This type of hedging
activity may be useful to a Portfolio, especially where closely correlated
hedging activities based on municipal securities or indexes are not available.
For more detailed information about these transactions, see the Statement of
Additional Information.

United States Government Obligations for the Domestic Prime Money Market
Portfolio, the Global Money Market Portfolio and the Limited Term Portfolio.
These Portfolios may purchase any obligations issued or guaranteed by the United
States Government or by its agencies or instrumentalities.

Securities issued or guaranteed as to principal and interest by the United
States Government or by agencies or instrumentalities thereof include
obligations of several different kinds. Such securities in general include a
variety of United States Treasury obligations, consisting of bills, notes and
bonds, which principally differ only in their interest rates, maturities and
times of issuance, and obligations issued or guaranteed by United States
Government agencies and instrumentalities which are supported by (a) the full
faith and credit of the United States Treasury (such as Government National
Mortgage Association participation certificates), (b) the limited authority of
the issuer to borrow from the United States Treasury (such as securities of the
Student Loan Marketing Association), (c) the authority of the United States
Government to purchase certain obligations of the issuer (such as securities of
the Federal National Mortgage Association), or (d) only the credit of the
issuer. No assurance can be given that the United States Government will provide
financial support to United States Government agencies or instrumentalities as
described in clauses (b), (c) or (d) above in the future, other than as set
forth above, since it is not obligated to do so by law. Certain instruments
issued or guaranteed by the United States Government or agencies thereof which
have a variable rate of interest readjusted no less frequently than annually are
deemed to have a maturity equal to the period remaining until the next
readjustment of the interest rate.

Custodial Receipts for the Domestic Prime Money Market Portfolio, the Global
Money Market Portfolio and the Limited

329543.1
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<PAGE>

Term Portfolio. Securities issued or guaranteed as to principal and interest by
the United States Government may be acquired by the Portfolios in the form of
custodial receipts that evidence ownership of future interest payments,
principal payments or both on certain United States Treasury notes or bonds.
Such notes and bonds are held in custody by a bank on behalf of the owners.
These custodial receipts are known by various names, including "Treasury
Receipts," "Treasury Investment Growth Receipts" ("TIGR"s) and "Certificates of
Accrual on Treasury Securities" ("CATS"). The Portfolios may also invest in
separately traded principal and interest components of securities issued or
guaranteed by the United States Treasury. The principal and interest components
of selected securities 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. The
Portfolios may also invest in stripped mortgage-backed securities that represent
beneficial ownership interests in either principal or interest distributions on
certain mortgage pass-through certificates which are guaranteed by the Federal
National Mortgage Association. Such certificates are held by a trust which sells
such securities through the Federal Reserve.

Securities guaranteed as to principal and interest by the United States
Government, its agencies or instrumentalities are deemed to include securities
for which the payment of principal and interest is backed by an irrevocable
letter of credit issued by the United States Government, its agencies or
instrumentalities.

Mortgage-Backed Securities. All of the Portfolios, except the U.S. Treasury
Money Market Portfolio, may purchase securities issued or guaranteed by federal
agencies or U.S. Government sponsored corporations. Such securities include
those issued and guaranteed by the Government National Mortgage Association
(GNMA, or "Ginnie Mae"), the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation.

GNMA Mortgage-Backed Securities ("GNMAs") are mortgage-backed securities
representing part ownership of a pool of mortgage loans. These loans issued by
lenders such as mortgage bankers, commercial banks, and savings and loan
associations are either insured by the Federal Housing Administration (FHA) or
guaranteed by the Veterans Administration (VA). A "pool" or group of such
mortgages is assembled and, after being approved by GNMA, is offered to
investors through securities dealers. Once approved by GNMA (a U.S. Government
corporation within the U.S. Department of Housing and Urban Development) the
timely payment of interest and principal is guaranteed by the full faith and
credit of the U.S. Government.

As mortgage-backed securities, GNMAs differ from bonds in that principal is
paid back by the borrower over the length of the loan rather than returned in a
lump sum at maturity. GNMAs are called "pass-through" securities because both
interest and principal payments, including prepayments, are passed through to
the holder of the security (in this case, the Portfolio).

The payment of principal of the underlying mortgages may exceed the minimum
required by the schedule of payments for the mortgages. Such prepayments are
made at the option of the mortgagors for a wide variety of reasons reflecting
their individual circumstances and may involve capital losses if the mortgages
were purchased at a premium. For example, mortgagors may speed up the rate at
which they prepay their mortgages when interest rates decline sufficiently to
encourage refinancing. A Portfolio, when such prepayments are passed through to
it, may be able to reinvest them only at a lower rate of interest. The Advisor,
in determining the attractiveness of GNMAs relative to alternative fixed income
securities, and in choosing specific GNMA issues, will have made assumptions as
to the likely speed of prepayment. Actual experience may vary from these
assumptions, resulting in a higher or lower investment return than anticipated.

329543.1
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<PAGE>

The Federal National Mortgage Association ("FNMA" or "Fannie Mae") is a U.S.
Government sponsored corporation owned entirely by private stockholders. It is
subject to general regulation by the Secretary of Housing and Urban Development.
FNMA purchases residential mortgages from a list of approved seller/servicers,
which include state and federally-chartered savings and loan associations,
mutual savings banks, commercial banks, credit unions, and mortgage banks.
Pass-through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith and credit
of the U.S. Government.

The Federal Home Loan Mortgage Corporation ("FHLMC" or "Freddie Mac") is a
corporate instrumentality of the U.S. Government, created by Congress in 1970
for the purpose of increasing the availability of mortgage credit for
residential housing. Its common stock is owned by the twelve Federal Home Loan
Banks. FHLMC also has preferred stock outstanding that is traded on the New York
Stock Exchange and is owned entirely by savings and loan institutions. FHLMC
issues Federal Home Loan Mortgage Corporation Participation Certificates ("PCs")
which represent interests in mortgages from FHLMC's mortgage portfolio. FHLMC
guarantees the timely payment of interest and ultimate collection of principal,
but PCs are not backed by the full faith and credit of the U.S. Government.

FHLMC PCs differ from FNMA pass-throughs in that the mortgages underlying
PCs are mostly conventional mortgages rather than FHA insured or VA guaranteed
mortgages, although FHLMC has occasionally purchased FHA or VA loans. However,
in several other respects (such as the monthly pass-through of interest and
principal and the unpredictability of future prepayment experience) PCs are
similar to FNMAs.

These types of securities generally are less effective than other debt
securities in providing a means of "locking" in attractive long term interest
rates because the underlying mortgages can be prepaid. However, this risk is far
less significant for the Portfolios because of their shorter weighted average
maturities than for a long term portfolio. During periods of declining interest
rates, mortgage-backed securities may have less potential for capital
appreciation because of the possibility of increased prepayments. During periods
of increasing interest rates, mortgage-backed securities may have a greater risk
of capital depreciation because of the possibility of decreased prepayments.

All of the Portfolios, except the U.S. Treasury Money Market Portfolio, may
also invest in Collateralized Mortgage Obligations ("CMOs"), a type of
mortgage-backed security. CMOs are debt securities collateralized by
mortgage-backed certificates issued by federal agencies or U.S. Government
sponsored corporations such as GNMA, FNMA and FHLMC. The payment of CMOs depends
upon the cash flow from the pool of mortgages represented by the mortgage-backed
certificates.

CMOs are divided into multiple classes. Generally, the interest on the
classes is distributed currently to the holders of each class. However,
principal is not paid in this manner. Instead, holders of the first class
receive all payments of principal until their bond is fully paid. Thereafter,
principal is paid on each succeeding class with the earliest maturing securities
being retired first.

One or more classes, usually the last, may be zero-coupon bonds ("Z bonds").
The cash flow that would otherwise be used to pay interest on this class is used
instead to pay principal on the earlier maturing classes. After all prior
classes are retired, the Z bond pays interest and principal until final
maturity. Interest accrued but not paid on the Z bond is added to the principal
of the Z bond and thereafter accrues interest.

Any guarantee or insurance on a mortgage-backed certificate does not extend
to a Portfolio's investment in CMOs. There is a possibility of limited liquidity
as there is no assurance that a secondary market will develop for CMOs or, if
such market does develop, that it will provide a Portfolio with liquidity or
remain for the term of the invest-

329543.1
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<PAGE>

ment. If an event of default occurs with respect to the CMOs purchased by a
Portfolio, there can be no assurance that the collateral pledged as security
therefor will be sufficient to pay the principal and interest due on such bonds.
The payment of principal of the underlying mortgages may exceed the minimum
required by the schedule of payments for the mortgages. Such prepayments are
made at the option of the mortgagors for a wide variety of reasons reflecting
their individual circumstances and may involve capital losses if the mortgages
were purchased at a premium. For example, mortgagors may speed up the rate at
which they prepay their mortgages when interest rates decline sufficiently to
encourage refinancing. The Advisor, in determining the attractiveness of CMOs
relative to alternative fixed income securities, and in choosing specific CMO
issues, will have made assumptions as to the likely speed of prepayment. Actual
experience may vary from these assumptions, resulting in a higher or lower
investment return than anticipated.

Variable Rate Demand Instruments. All of the Portfolios, except the U.S.
Treasury Money Market Portfolio, may purchase variable rate demand instruments.
These instruments may be tax exempt or taxable (variable amount master demand
notes) and provide for a periodic adjustment in the interest rate paid on the
instrument and permit the holder to demand payment of the unpaid principal
balance plus accrued interest upon not more than 30 days' notice either from the
issuer or by drawing on a bank letter of credit, a guarantee, insurance or other
credit facility issued with respect to such interest. These instruments are
payable either on demand or at specified intervals not exceeding one year. The
Money Market Portfolios may only purchase variable rate demand instruments if
(i) the instrument is subject to an unconditional demand feature, exercisable by
the Portfolio in the event of default in the payment of principal or interest on
the underlying securities, which itself qualifies as an Eligible Security, or
(ii) the instrument is not subject to an unconditional demand feature but does
qualify as an Eligible Security and has a long-term rating by the Requisite
NRSROs in one of the two highest rating categories, or, if unrated, is
determined to be of comparable quality by the Fund's Board of Directors. The
remaining Portfolios can only purchase such instruments if the Board of
Directors determines that they meet the particular Portfolio's quality
requirements. While transfer of these instruments is usually restricted by their
issuers and there are no trading markets for them, the liquidity of such
investments is assured through their demand features. Notwithstanding such,
variable rate demand instruments with demand features in excess of 7 days are
considered illiquid. See "Investments and Investment Techniques Common to Two or
More Portfolios" in the Statement of Additional Information for further
description of these instruments.

While the value of the underlying variable rate demand instruments may
change with changes in interest rates generally, the variable rate nature of the
underlying variable rate demand instruments should minimize changes in value of
the instruments. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation and the risk of potential capital
depreciation is less than would be the case with a portfolio of fixed income
securities. The Portfolios may contain variable rate demand instruments on which
stated minimum or maximum rates, or maximum rates set by state law, limit the
degree to which interest on such variable rate demand instruments may fluctuate;
to the extent it does, increases or decreases in value may be somewhat greater
than would be the case without such limits. Additionally, these Portfolios may
contain variable rate demand participation certificates in fixed rate municipal
obligations and taxable debt obligations. The fixed rate of interest on these
obligations will be a ceiling on the variable rate of the participation
certificate. In the event that interest rates increased so that the variable
rate exceeded the fixed rate on the obligations, the obligations could no longer
be valued at par and this may cause the Portfolios to take corrective action,
including the elimination of the instruments. Because the adjustment of interest
rates on the variable rate demand instruments is made in relation to movements
of

329543.1
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<PAGE>

the applicable banks' "prime rate," or other interest rate adjustment index, the
variable rate demand instruments are not comparable to long-term fixed rate
securities. Accordingly, interest rates on the variable rate demand instruments
may be higher or lower than current market rates for fixed rate obligations or
obligations of comparable quality with similar maturities.

Participation Interests. All of the Portfolios, except the U.S. Treasury
Money Market Portfolio, may purchase from banks participation interests in all
or part of specific holdings of municipal or other debt obligations (including
corporate loans). Where the institution issuing the participation does not meet
a Portfolio's quality standard the participation interest will be backed by an
irrevocable letter of credit or guarantee that the Board of Directors has
determined meets the prescribed quality standards of each Portfolio. Thus, even
if the credit of the selling bank does not meet the quality standards of a
Portfolio, the credit of the entity issuing the credit enhancement will. Each
Portfolio will have the right to sell the participation interest back to the
bank for the full principal amount of the Portfolio's interest in the municipal
or debt obligation plus accrued interest, but only (1) as required to provide
liquidity to that Portfolio, (2) to maintain the quality standards of each
Portfolio's investment portfolio or (3) upon a default under the terms of the
debt obligation. The selling bank may receive a fee from a Portfolio in
connection with the arrangement. The terms of certain of the participations in
corporate loans in which a Portfolio may invest may not enable the Portfolios to
sell such instruments to the bank, and the secondary markets, if any, for such
instruments are extremely limited. Therefore, investments in these types of
participation interests having remaining maturities in excess of 7 days are
considered illiquid and are subject to the 10% limitation for all illiquid
investments.

INVESTMENT RESTRICTIONS

As a diversified investment company, 75% of the assets of each of the
Portfolios is subject to the following limitations: (a) each Portfolio may not
invest more than 5% of its total assets in the securities of any one issuer,
except obligations of the United States government and its agencies and
instrumentalities, and (b) each Portfolio may not own more than 10% of the
outstanding voting securities of any one issuer. The classification of the Fund
as a diversified investment company is a fundamental policy of the Fund and may
be changed only with the approval of the holders of a majority of the Fund's
outstanding shares. As used in this Prospectus, the term "majority of the
outstanding shares" of a Portfolio means, respectively, the vote of the lesser
of (i) 67% or more of the shares of the Portfolio present at the meeting, if
more than 50% of the outstanding shares of the Portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Portfolio.

The Fund also operates under certain investment restrictions which are
deemed fundamental policies of the Fund and also may be changed only with the
approval of the holders of a majority of a Portfolio's outstanding shares. In
addition to other restrictions listed in the Statement of Additional
Information, none of the Portfolios may (except where specified):

(i) with regard to the Domestic Prime Money Market Portfolio and
the Global Money Market Portfolio, invest more than 5% of their total assets in
securities of any one issuer; however, the Portfolios may invest more than 5% of
their total assets in the First Tier Securities of a single issuer for a period
of up to three business days;

(ii) invest more than 10% of the market value of the Fund's net
assets in illiquid investments including foreign securities, privately placed
securities (including short term debt obligations issued pursuant to Section
4(2) of the Securities

329543.1
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<PAGE>

Act of 1933) and bank participation interests for which a readily available
market does not exist and repurchase agreements maturing in more than seven
days;

(iii) purchase securities on margin or borrow money, except (a)
from banks for extraordinary or emergency purposes (not for leveraging or
investment) or (b) by engaging in reverse repurchase agreements, provided that
(a) and (b) in the aggregate do not exceed an amount equal to one-third of the
value of the total assets of that Portfolio less its liabilities (not including
the amount borrowed) at the time of the borrowing, and further provided that
300% asset coverage is maintained at all times;

(iv) purchase securities while borrowings (excluding reverse
repurchase agreements entered into for other than extraordinary or emergency
purposes) exceed 5% of its total assets;

(v) mortgage, pledge or hypothecate any assets except that a
Portfolio may pledge not more than one-third of its total assets to secure
borrowings made in accordance with paragraph (iii) above. However, although not
a fundamental policy of the Fund, as a matter of operating policy in order to
comply with certain state statutes, no Portfolio will pledge its assets in
excess of an amount equal to 10% of net assets; or

(vi) lend portfolio securities of value exceeding in the aggregate
one-third of the market value of the Portfolio's total assets less liabilities
other than obligations created by these transactions.

For a more detailed discussion of these investment restrictions, see
"Investment Restrictions" in the Statement of Additional Information.

MANAGEMENT OF THE FUND

Board of Directors and Officers. The Board of Directors of the Fund
decides upon matters of general policy and reviews the actions of the Fund's
Distributor and its Advisor. The following serve as the Fund's Board of
Directors and Officers:

Thomas E. O'Connor -- Chairman of the Board

Ronald S. Eaker -- President and Chief Investment Officer

Henley L. Smith -- Vice President and Investment Officer

Carroll L. Coward -- Vice President and Investment Officer

Judith Fabrizi -- Secretary, Treasurer and Investment Officer

John J. Pileggi -- Assistant Treasurer

Joan V. Fiore -- Assistant Secretary

Sheryl Hirschfeld -- Assistant Secretary

Felix J. Christiana -- Director; Retired Senior Vice President, Dollar
Dry Dock Savings Bank

Mary E. Hauck -- Director; Retired Senior Portfolio Manager,
Gabelli-O'Connor Fixed Income Mutual Funds Management Co.

Robert C. Kolodny, M.D. -- Director; Physician, author and lecturer;
General Partner of KBS Partnership, KBS II Investment Partnership, KBS III
Investment Partnership, KBS IV Limited Partnership KBS New Dimensions, L.P., KBS
Global Opportunities, L.P. and KBS VII Limited Partnership, private investment
partnerships; Medical Director and Chairman of the Board of the Behavioral
Medicine Institute.

Anthony R. Pustorino -- Director; Retired President of and consultant
to Pustorino, Puglisi & Co., P.C., certified public accountants; Professor, Pace
University

329543.1
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<PAGE>

Gary L. Roubos -- Director; Chairman of the Board of Dover Corp., a
diversified industrial manufacturing company

William A. Merritt Jr. -- Director; Financial Consultant/Mergers and
Acquisitions; Managing Member of Seaboard Realty LLC and Navigator
Communications Systems, LLC; President and Chief Operating Officer of WilTel
Communications Systems, Inc. (1990-1992).

Mr. O'Connor may be deemed an "interested person" of the Fund, as
defined in the Investment Company Act of 1940, on the basis of his affiliation
with the Advisor.

Advisor. Gabelli-O'Connor Fixed Income Mutual Funds Management Co. has
been employed by the Board of Directors as the Investment Advisor for each
Portfolio of the Fund pursuant to the Advisory Agreements entered into by the
Fund on behalf of each Portfolio. The Advisor supervises all aspects of the
Fund's operations and provides investment advice and portfolio management
services to the Fund. Subject to the supervision of the Fund's Board of
Directors, the Advisor makes the Fund's day-to-day investment decisions,
arranges for the execution of portfolio transactions and generally manages the
Fund's investments.

The Advisor also provides supervisory personnel who are responsible for
supervising the performance of administrative services, accounting and related
services, net asset value and yield calculations, reports to and filings with
regulatory authorities and services relating to such functions. However, the
Administrator provides personnel to perform the operational components of such
services.

Gabelli-O'Connor Fixed Income Mutual Funds Management Co., with offices
at 19 Old Kings Highway South, Darien, Connecticut 06820-4526, is a Delaware
partnership organized in 1987. As of the date of this Prospectus, the Advisor is
an investment manager, administrator or advisor for the assets of the Fund.
Gabelli-O'Connor Fixed Income Mutual Funds Management Co. is a registered
investment advisor under the Investment Advisers Act of 1940. Mr. O'Connor is
President and sole shareholder of Thomas E. O'Connor & Co. Inc., the general
partner of Thomas E. O'Connor & Co. L.P., which is a general partner of the
Advisor. Mr. Mario J. Gabelli is the Chairman of the Board of Gabelli Funds,
Inc., which is the other general partner of the Advisor. As a result of these
relationships, Messrs. Thomas E. O'Connor and Mario J. Gabelli may each be
deemed to be a "controlling person" of the Advisor. As of December 31, 1995, the
Advisor served as investment advisor for assets aggregating in excess of $641
million. The Advisor is an affiliate of Gabelli-O'Connor Fixed Income Management
Co., a registered investment advisor that is an investment manager or advisor to
corporations, institutions, pension trusts, profit sharing trusts and high net
worth individuals and which, as of December 31, 1995, served as an investment
adviser for assets aggregating in excess of $1.06 billion. The Advisor is an
affiliate of Quantum/Gabelli-O'Connor L.P. which, as of December 31, 1995,
served as investment advisor for assets aggregating in excess of $22 million.
The Advisor is also an affiliate of Gabelli Funds, Inc., which, through its
affiliates, acts as an investment manager, administrator or advisor for assets
aggregating in excess of $9.1 billion as of December 31, 1995.

The Advisor provides persons satisfactory to the Fund's Board of
Directors to serve as officers of the Fund. Such officers, as well as certain
other employees and directors of the Fund, may be directors, officers or
employees of the Advisor or its affiliates. Due to the services performed by the
Advisor and the Administrator, the Fund currently has no employees and its
officers are not required to devote their full time to the affairs of the Fund.

The Statement of Additional Information contains general background information
regarding each Director and principal officer of the Fund.

Fees. Set forth below as a percentage of average daily net assets are
the advisory fees paid to the Advisor for each Portfolio pursuant to the
respective Advisory Agreements: the U.S. Treasury Money Market Portfolio,

329543.1
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<PAGE>

.30%; the Domestic Prime Money Market Portfolio, 30%; the Global Money Market
Portfolio, .30%; the Tax Exempt Money Market Portfolio, .30%; the Limited Term
Portfolio, .45%; and the Tax Exempt Limited Term Portfolio, .45%. Any portion of
the total fees received by the Advisor may be used by the Advisor to provide
shareholder and administrative services and for distribution of Fund shares. See
"Financial Statements" in the Statement of Additional Information. The Advisor
may voluntarily assume certain expenses of any Portfolio of the Fund. This would
have the effect of lowering the overall expense ratio of the Portfolio and of
increasing yield to investors in that Portfolio. See "Expense Limitation" in the
Statement of Additional Information.

Administrator. The Administrator for the Fund is Furman Selz (the
"Administrator"), which has its principal office at 230 Park Avenue, New York,
New York 10169, and is primarily an institutional brokerage firm with membership
on the New York, American, Boston, Midwest, Pacific and Philadelphia Stock
Exchanges.

The Administrator and its affiliate, Furman Selz Capital Management,
LLC, act as investment advisor to numerous individual and institutional
accounts. The Administrator serves as administrator and distributor of other
mutual funds. The Fund will not invest in these funds or in any other fund which
may in the future be affiliated with the Administrator or any of its affiliates.

Pursuant to the Administrative Services Agreements with each of the
Portfolios, the Administrator provides all management and administrative
services necessary for the Fund, other than those provided by the Advisor,
subject to the supervision of the Fund's Board of Directors. Because of the
services rendered the Fund by the Administrator and the Fund's Advisor, the Fund
itself may not require any employees other than its officers, none of whom
receive compensation from the Fund.

For the services rendered to the Fund by the Administrator, the Fund
pays the Administrator a fee, computed daily and payable monthly, in the
according with the following schedule: (i) .10% of the first $500 million of
aggregate average daily net assets of the Fund, (ii) .065% of the next $250
million of aggregate average daily net assets of the Fund, (iii) .055% of the
next $250 million of aggregate average daily net assets of the Fund, and (iv)
.050% of all aggregate average daily net assets of the Fund over $1 billion.

The Administrator also provides the Fund with all accounting related
services. For the accounting services provided, the Administrator shall be paid
a fee of $2,500 per Portfolio per month.

The Administrative Services Agreements are terminable by the Portfolio
or the Administrator on sixty days' written notice; terminate automatically in
the event of an "assignment" as defined by the 1940 Act; and shall remain in
effect for the same periods as the Advisory Agreements subject to annual
approval of the Fund's Board of Directors. The Administrative Services
Agreements provide that in the presence of willful misfeasance, bad faith or
gross negligence on the part of the Administrator, or reckless disregard of its
obligations thereunder, the Administrator shall not be liable for any action or
failure to act in accordance with its duties thereunder.

Expenses. Each Portfolio is responsible for payment of its expenses,
including the following expenses, without limitation: fees payable to the
Advisor, Administrator, Custodian, Transfer Agent and Dividend Agent; brokerage
and commission expenses; Federal, state or local taxes, including issuance and
transfer taxes incurred by or levied on them; commitment fees, certain insurance
premiums and membership fees and dues in investment company organizations;
interest charges on borrowings; telecommunications expenses; recurring and
nonrecurring legal and auditing expenses; costs of organizing and maintaining
the Fund's existence as a corporation; compensation, including directors' fees,
of any directors, officers or employees who are not the officers of the Advisor
or its affiliates; costs of other personnel providing administrative and
clerical services; costs of stockholders' services and costs of stockholders'

329543.1
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<PAGE>

reports, proxy solicitations, and corporate meetings; fees and expenses of
registering their shares under the appropriate federal securities laws and of
qualifying their shares under applicable state securities laws, including
expenses attendant upon the initial registration and qualification of these
shares and attendant upon renewals of, or amendments to, those registrations and
qualifications; and expenses of preparing, printing and delivering the
Prospectus to existing shareholders and of printing shareholder application
forms for shareholder accounts. The Advisor pays the promotional and advertising
expenses related to the distribution of the Fund's shares and for the printing
of all Fund prospectuses used in connection with the distribution and sale of
Fund shares. See "Management of Fund" in the Statement of Additional
Information. The Advisor has agreed to a reduction in the amounts payable to it
and to reimburse each Portfolio, as necessary, if in any fiscal year the sum of
the Portfolio's expenses exceeds the limits set by applicable regulations of
state securities commissions.

PURCHASE OF SHARES

GOC Fund Distributors, Inc. (the "Distributor") serves as the exclusive
Distributor of the shares of each Portfolio pursuant to its Distribution
Agreement with the Fund. Investors may open accounts in the Portfolios in the
Fund only through the exclusive Distributor for the Fund. Under the Distribution
Agreement, the Distributor, for nominal consideration and as agent for the Fund,
will solicit orders for the purchase of Fund shares, provided that any
subscriptions and orders will not be binding on the Fund until accepted by the
Fund as principal.

Each Portfolio requires a minimum initial investment of $100,000. No
minimum amount is required for subsequent investments. Additionally, without
cost, investors have the flexibility to allocate their investment among the six
Portfolios at their discretion and may change such allocation at any time,
subject to the minimum initial investment requirements of each Portfolio.
Shareholders should maintain a share balance equal to at least $50,000 in any
Portfolio in which they wish to continue to invest. The Fund reserves the right
to redeem, after 60 days' written notice, shares in subminimum accounts and
return the proceeds to shareholders. The shareholder may restore and maintain a
minimum balance during the notice period or reallocate his investment among the
Portfolios to avoid involuntary redemption. See "Redemption of Shares - Optional
Redemption by the Fund." Shareholders are also provided flexibility since shares
can be redeemed or exchanged among the six Portfolios at no extra cost. For
purposes of minimum investment requirements, investments in the Portfolios by
related shareholders may be aggregated.

Shares of each Portfolio are sold on a continuous basis without a sales
charge at the net asset value per share next determined after receipt of an
order. The Fund reserves the right to reject any subscription for the shares of
its Portfolios.

The U.S. Treasury Money Market Portfolio, the Domestic Prime Money
Market Portfolio, the Global Money Market Portfolio and the Tax Exempt Money
Market Portfolio. To purchase shares in the U.S. Treasury Money Market
Portfolio, the Domestic Prime Money Market Portfolio, the Global Money Market
Portfolio, or the Tax Exempt Money Market Portfolio, an investor should place a
telephone purchase order before 12:00 noon New York time and wire immediately
available funds to the appropriate Portfolio on the same day. These Portfolios
must receive immediately available funds by the close of business for the
purchase to be effective and dividends to be earned on the same day. If funds
are received after the close of business, the purchase will become effective and
dividends will be earned on the next business day. Purchases made by check will
be invested and begin earning income on the next business day after the check is
received.

329543.1
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<PAGE>

The Limited Term Portfolio and the Tax Exempt Limited Term Portfolio.
To purchase shares in the Limited Term Portfolio or the Tax Exempt Limited Term
Portfolio, an investor should place a telephone purchase order and transfer
immediately available funds to the appropriate Portfolio. If the Portfolio
receives a telephone purchase order prior to 4:00 p.m. New York time on any
business day, the purchase of Portfolio shares is effective and is made at the
net asset value determined that day, and the purchaser will begin earning
dividends on the next business day. If the Portfolio receives a telephone
purchase order after 4:00 p.m. New York time, the purchase is effective and is
made at the net asset value determined on the next business day, and the
purchaser will begin earning dividends on the next following business day.
Purchases made by check will be invested on the next business day after the
check is received and begin earning income on the day following investment.

REDEMPTION OF SHARES

To redeem shares in any of the Portfolios of the Fund, an investor may
submit a redemption request to the Fund or may telephone the Fund directly at
1-800-TSR-FUND/1- 800-877-3863 and give the service representative the
shareholder's account number and the amount of the redemption. Each Portfolio
executes redemption requests at the next determined net asset value per share.
See "Net Asset Value." The Fund reserves the right to satisfy redemption
requests in cash or in securities of the Portfolio whose shares are being
redeemed. During a period of dramatic economic or market change, increased
volume may make the telephone redemption option difficult to implement.
Shareholders unable to reach the Fund by telephone may telecopy their redemption
requests to the Fund at 203-655-7719. The Fund will employ procedures to confirm
that telephone or telecopy redemption instructions are genuine, and will require
that shareholders electing such option provide a form of personal
identification. The failure of the Fund to employ such procedures may cause the
Fund to be liable for losses incurred by investors due to telephone or telecopy
redemptions based upon unauthorized or fraudulent instructions.

The U.S. Treasury Money Market Portfolio, the Domestic Prime Money
Market Portfolio, the Global Money Market Portfolio, and the Tax Exempt Money
Market Portfolio. A redemption request received by the U.S. Treasury Money
Market Portfolio, the Domestic Prime Money Market Portfolio, the Global Money
Market Portfolio or the Tax Exempt Money Market Portfolio prior to 12:00 noon,
New York time is effective on that day. A redemption request received after that
time becomes effective on the next day. Proceeds of an effective redemption are
generally wired the same day in immediately available funds to the shareholder's
designated bank account. If a redemption request becomes effective on a day when
the New York Stock Exchange is open but which is not a Fund business day, the
proceeds are transferred the next business day. See "Further Redemption
Information."

The Limited Term Portfolio and the Tax Exempt Limited Term Portfolio. A
redemption request received by the Limited Term Portfolio or the Tax Exempt
Limited Term Portfolio prior to 4:00 p.m. New York time is effective on that
day. A redemption request received after that time becomes effective on the next
day. Proceeds of an effective redemption are generally wired the next business
day in immediately available funds to the shareholder's designated bank account
and, subject to "Further Redemption Information" below, in any event are
transferred within seven days.

Redemption of Shares by Check Writing. Shareholders of any of the four
Money Market Portfolios who have elected check writing on their application will
receive checks

329543.1
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<PAGE>

which may be used to make payments to any person or business. Each check must be
for at least $10,000. Dividends will continue to be paid until a check is
presented to the Portfolio for payment.

Optional Redemption by the Fund. Shareholders should maintain a share
balance equal to at least $50,000 per Portfolio. The Fund reserves the right to
redeem, after 60 days' written notice, shares in subminimum accounts and return
the proceeds to shareholders. The shareholder may restore and maintain a minimum
balance during the notice period or reallocate his investment among the
Portfolios to avoid involuntary redemption.

Further Redemption Information. Investors should be aware that
redemptions from the Fund may not be processed if a completed account
application with a certified Taxpayer Identification Number has not been
received. See "Taxes." In addition, if a customer sends a check for the purchase
of Fund shares, and those shares are redeemed before the check has cleared, the
transmittal of redemption proceeds may be delayed until 15 days after the check
used to purchase the shares has been deposited by the Fund.

Each of the Portfolios of the Fund reserves the right to suspend the
right of redemption and to postpone the date of payment upon redemption for up
to seven days and for such other periods as the Investment Company Act of 1940
may permit.

EXCHANGE OF SHARES

An investor may, without cost, exchange shares from any of the
Portfolios of the Fund into any other Portfolio of the Fund, subject to the
$100,000 minimum initial investment requirement per Portfolio and the
maintenance of the suggested minimum balance of $50,000. See "Purchase of
Shares." Shares are exchanged on the basis of relative net asset value per
share. Exchanges are in effect redemptions from one Portfolio and purchases of
another Portfolio; and the Portfolio's purchase and redemption procedures and
requirements are applicable to exchanges. An exchange pursuant to this exchange
privilege is treated for federal income tax purposes as a sale on which a
shareholder may realize a taxable gain or loss. See "Purchase of Shares" and
"Redemption of Shares."

DIVIDENDS AND DISTRIBUTIONS

Net investment income is declared as dividends daily and paid monthly;
however, if an investor's shares are redeemed during a month, accrued but unpaid
dividends are paid with the redemption proceeds. Substantially all the realized
net capital gains for the Portfolios, if any, are declared and paid on an annual
basis. Dividends are payable to shareholders of record at the time of
declaration.

Dividends of each Portfolio are automatically reinvested in additional
Portfolio shares unless the shareholder has elected to have them paid in cash.

The net investment income of the Fund for each business day is
determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. Shares of the Money Market Portfolios earn
dividends on the business day their purchase is effective but not on the
business day their redemption is effective. Shares of the Limited Term Portfolio
and the Tax Exempt Limited Term Portfolio earn dividends on the business day
their redemption is effective but not on the business day their purchase is
effective. See "Purchase of Shares" and "Redemption of Shares."

329543.1
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<PAGE>

NET ASSET VALUE

Net asset value per share for each of the Portfolios is determined by
subtracting from the value of the Portfolio's total assets the amount of its
liabilities and dividing the remainder by the number of its outstanding shares.
The U.S. Treasury Money Market Portfolio, the Domestic Prime Money Market
Portfolio, the Global Money Market Portfolio and the Tax Exempt Money Market
Portfolio value all portfolio securities by the amortized cost method in
accordance with Rule 2a-7 under the Investment Company Act of 1940. This method
attempts to maintain a constant net asset value per share of $1.00. No
assurances can be given that this goal can be attained. See "Net Asset Value" in
the Statement of Additional Information.

In the case of the Limited Term Portfolio and the Tax Exempt Limited
Term Portfolio, the value of each security for which readily available market
quotations exist is based on a decision as to the broadest and most
representative market for the security; the value is based either on the last
sale price on a national securities exchange, or, in the absence of recorded
sales, at the readily available closing bid price on such exchanges, or at the
quoted bid price in the over-the-counter market. Assets for which market
quotations are not readily available are valued in accordance with procedures
established by the Fund's Board of Directors, including use of an independent
pricing service or services which use prices based on yields or prices of
comparable securities, indications as to values from dealers and general market
conditions. High quality securities with effective maturities of one year or
less generally will be valued by the amortized cost method.

Each of the Portfolios computes its net asset value once daily on
Monday through Friday, except that the net asset value may not be computed for a
Portfolio on a day in which no orders to purchase, sell or redeem Portfolio
shares have been received or on the holidays listed under "Net Asset Value" in
the Statement of Additional Information. The Portfolios compute net asset value
as follows: the U.S. Treasury Money Market Portfolio, the Domestic Prime Money
Market Portfolio, the Global Money Market Portfolio and the Tax Exempt Money
Market Portfolio, 12:00 noon New York time; the Limited Term Portfolio and the
Tax Exempt Limited Term Portfolio, 4:00 p.m. New York time.

YIELD AND TOTAL RETURN INFORMATION

The Portfolios may from time to time include yield, effective yield and
total return information in advertisements or reports to shareholders or
prospective investors. The "yield" of the U.S. Treasury Money Market Portfolio,
the Domestic Prime Money Market Portfolio, the Global Money Market Portfolio and
the Tax Exempt Money Market Portfolio refers to the income generated by an
investment in the Portfolio over a seven-day period (which period will be stated
in the advertisement). The Limited Term Portfolio and Tax Exempt Limited Term
Portfolio yield refers to income generated by an investment in these Portfolios
over a thirty-day period. This income is then "annualized." That is, the amount
of income generated by the investment during that month is assumed to be
generated each month over a 12-month 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 the Portfolio 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 "total return" of the
Limited Term Portfolio and the Tax Exempt Limited Term Portfolio is required to
be included in any advertisement containing the yield of any of these non-money
market funds. Total return is the average annual total return for the period
which

329543.1
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<PAGE>

began at the inception of the Portfolio and ended on the date of the most
recent balance sheet, and is computed by finding the average annual compound
rates of return over the period that would equate the initial amount invested to
the ending redeemable value. For a description of the methods used to calculate
total return, see the Fund's Statement of Additional Information. Yield,
effective yield and total return may fluctuate daily and do not provide a basis
for determining future yields, effective yields or total returns.

All or substantially all of the dividends paid by the U.S. Treasury
Money Market Portfolio represent a pass-through of income received on the
Portfolio's direct investment in U.S. Treasury obligations, and, as a result,
will not be subject to state and local income taxation in many states. The U.S.
Treasury Money Market Portfolio may, from time to time, advertise a tax
equivalent yield. The tax equivalent yield is a comparison of the taxable yield
necessary to produce an after-tax yield equivalent to that of a fund which
invests in obligations that are exempt from state and local income taxes, based
upon the applicable state's or municipality's highest marginal rate. The Tax
Exempt Money Market Portfolio and the Tax Exempt Limited Term Portfolio may also
advertise tax equivalent yield. Tax equivalent yield for the Tax Exempt Money
Market and Tax Exempt Limited Term Portfolios is a comparison of the taxable
yield necessary to produce an after-tax yield equivalent to that of a fund which
invests in obligations that are exempt from federal income taxes. Tax equivalent
yield for the Tax Exempt Money Market and Tax Exempt Limited Term Portfolios is
calculated by applying the stated federal income tax rate to only the net
investment income exempt from federal income taxation. For a description of the
methods used to calculate the Portfolios' tax equivalent yield, see the Fund's
Statement of Additional Information.

DESCRIPTION OF COMMON STOCK

The Fund was incorporated in Maryland on August 17, 1987. The
authorized capital stock of the Fund consists of twenty billion shares of stock
having a par value of one tenth of one cent ($.001) per share. The Fund's Board
of Directors is authorized to divide the unissued shares into separate series of
stock, each series representing a separate, additional investment portfolio. The
Board currently has authorized the division of the unissued shares into six
series, one for each of the Portfolios. Shares of all series will have identical
voting rights, except where, by law, certain matters must be approved by a
majority of the shares of the affected series. Each share of any series of
shares when issued has equal dividend, distribution, liquidation and voting
rights within the series for which it was issued, and each fractional share has
those rights in proportion to the percentage that the fractional share
represents of a whole share. Shares will be voted in the aggregate. There are no
conversion or preemptive rights in connection with any shares of the Fund. All
shares, when issued in accordance with the terms of the offering, will be fully
paid and nonassessable. Shares are redeemable at net asset value, at the option
of the shareholder.

The shares of the Fund have non-cumulative voting rights, which means
that the holders of more than 50% of the shares outstanding voting for the
election of directors can elect 100% of the directors if the holders choose to
do so, and, in that event, the holders of the remaining shares will not be able
to elect any person or persons to the Board of Directors. Unless specifically
requested by an investor who is a shareholder of record, the Fund does not issue
certificates evidencing Fund shares.

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<PAGE>

DISTRIBUTION PLAN

The Fund has adopted a distribution and service plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Rule") for
each Portfolio of the Fund. The Rule provides that an investment company which
bears any direct or indirect expense of distributing its shares must do so only
in accordance with a plan permitted by the Rule. There are no fees or expenses
chargeable to the Fund under the Plans and the Fund's Board of Directors has
adopted the Plans in case certain expenses of the Fund might be considered to
constitute indirect payment by the Fund of distribution expenses. If a payment
of advisory fees by the Fund to the Advisor should be deemed to be indirect
financing by the Fund of the distribution of its shares, such payments are
authorized by the Plans.

The Plans provide that the Advisor may make payments from time to time
from its own resources, which may include the advisory fee and past profits, to
pay promotional and administrative expenses in connection with the offer and
sale of shares of the Portfolios, including payments to participating
organizations for performing shareholder servicing and related administrative
functions and for providing assistance in distributing the Fund's shares. The
Advisor, in its sole discretion, will determine the amount of such payments made
pursuant to the Plans, provided that such payments will not increase the amount
which the Fund is required to pay to the Advisor for any fiscal year under the
Advisory Agreement in effect for the year.

The Glass-Steagall Act limits the ability of a depository institution
to become an underwriter or distributor of securities. However, it is the Fund
management's position that banks are not prohibited from acting in other
capacities for investment companies, such as providing administrative and
shareholder account maintenance services and receiving compensation from the
Advisor for providing such services. However, this is an unsettled area of the
law and if a determination contrary to the Fund management's position is made by
a bank regulatory agency or court concerning shareholder servicing and
administration payments to banks from the Advisor, any such payments will be
terminated and any shares registered in the banks' names, for their underlying
customers, will be re-registered in the name of the customers at no cost to the
Fund or its shareholders. 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.

Although there are no fees or expenses chargeable to the Fund under the
Plans, for the fiscal year ended October 31, 1995, the Advisor made payments
under each Plan to or on behalf of Participating Organizations in amounts of
$100,412, $134,644 and $149,719 with regard to the U.S. Treasury Money Market
Portfolio, the Tax Exempt Money Market Portfolio and the Domestic Prime Money
Market Portfolio, respectively (representing .10% of the average daily net
assets of each of those Portfolios). Although these payments were not made by
the Fund, each may be deemed an indirect payment by the Fund.

TAXES

The Fund has elected to qualify under the Internal Revenue Code of
1986, as amended (the "Code"), as a regulated investment company. As a
regulated investment company, each Portfolio will not be subject to federal
income taxes on the investment company taxable income and long-term capital
gains that it distributes to its shareholders, provided that at least 90% of
its investment company taxable income and at least 90% of its tax exempt net
interest income for the taxable year is distributed. The Fund's policy is to
distribute as divi-

329543.1
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<PAGE>

dends each year 100% (and in no event less than 90%) of its investment
company taxable income and tax exempt net interest income. Each Portfolio will
be treated as a separate corporation and generally will have to comply with the
qualification and other requirements applicable to regulated investment
companies without regard to other Portfolios. If for any taxable year a
Portfolio does not qualify as a regulated investment company, all of its taxable
income will be taxed to it at corporate rates and no distribution will qualify
as tax exempt.

The Fund has adopted a policy of declaring dividends daily in an amount
based on its net investment income. The amount of each daily dividend may differ
from actual net investment income calculated in accordance with federal income
tax principles. Dividend distributions generally will be made on the twentieth
day of each month. Dividends paid from taxable income and distributions of any
realized short term capital gains (whether from tax exempt or taxable
obligations) are taxable to shareholders as ordinary income for federal income
tax purposes, whether received in cash or reinvested in additional shares of the
Fund. Dividends paid from taxable income by a Portfolio on December 31 will be
treated as received by shareholders on such date (and subject to tax in the
shareholder's tax year in which such date occurs) for federal income tax
purposes, notwithstanding actual receipt of the dividend after December 31.
Distributions of net realized capital gains after utilization of capital loss
carryforwards, if any, are made in October and, if necessary to meet applicable
distribution requirements, shortly after October 31, the Portfolios' fiscal year
end. Investors in each Portfolio can receive distributions in cash or have them
reinvested in additional shares of the Portfolio. Distributions paid by the
Portfolios (including distributions of tax exempt interest) may result in a
liability (or increased liability) under the alternative minimum tax.

Distributions of tax exempt income are not subject to regular federal
income taxes, but may be subject to the alternative minimum tax. While shares
of the Fund are sold primarily to corporations and other institutional
investors, the Advisor has reserved the right to accept subscriptions for Fund
shares from individuals. Distributions derived from interest on certain
private activity bonds that are exempt from regular federal income tax are
specifically treated as tax preference items and may subject individual or
corporate shareholders to liability (or increased liability) under the
alternative minimum tax. However, at least 80% of the net assets of the Tax
Exempt Money Market Portfolio and Tax Exempt Limited Term Portfolio will be
invested in municipal obligations, the interest income on which is not treated
as a tax preference item under the alternative minimum tax. Because 75% of the
difference between adjusted current earnings (including, generally, tax exempt
income), and alternative minimum taxable income (determined without regard to
this item) is an addition to the corporate alternative minimum tax base, all
distributions derived from interest that is exempt from regular federal income
tax are included in adjusted current earnings and may subject corporate
shareholders to, or increase their liability under, the alternative minimum
tax. In certain cases, Subchapter S corporations with accumulated earnings and
profits from Subchapter C years will be subject to a tax on "passive
investment income," including tax exempt interest. For social security
recipients, interest on tax exempt bonds, including tax exempt interest
dividends paid by the Fund, is to be added to adjusted gross income for
purposes of computing the amount of social security benefits includible in
gross income.

329543.1
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<PAGE>

With respect to variable rate demand instruments and participation
certificates, the Fund is relying on the opinion of Battle Fowler LLP, counsel
to the Fund, that it will be treated for federal income tax purposes as the
owner thereof and the interest on the underlying tax exempt obligations will be
tax exempt to the Fund. Counsel has pointed out that the IRS has announced that
it will not ordinarily issue advance rulings on the question of ownership of
securities or participation interests therein subject to a put and could reach a
conclusion different from that reached by counsel.

If the Fund acquires debt instruments that were originally issued at a
discount, e.g., zero coupon bonds, it will be required to include annually in
gross income or, in the case of tax exempt instruments issued at a discount, in
tax exempt income, a portion of the "original issue discount" that accrues over
the term of the obligation regardless of whether the income is received by the
Fund, and to make distributions accordingly. To insure that the Fund has
sufficient cash to meet this distribution requirement, the Fund may borrow funds
on a short-term basis or sell certain investments. Since a substantial
percentage of the Fund's dividends is expected to be reinvested and dividends
that are declared and automatically reinvested satisfy the distribution
requirement, the Fund expects to satisfy the distribution requirement even if it
owns obligations with original issue discount. Shareholders will realize taxable
income on the automatic reinvestment of dividends that are attributable to
original issue discount on taxable obligations.

The Fund is required, subject to certain exemptions, to withhold at a
rate of 31% from dividends paid or credited to shareholders in addition to the
proceeds from the redemption of Portfolio shares, if a correct taxpayer
identification number, certified when required, is not on file with the Fund.
Corporate investors are not subject to this requirement.

The Fund may be subject to state or local tax in jurisdictions in which
the Fund is organized or may be deemed to be doing business. However,
Connecticut and Maryland tax regulated investment companies in a manner that is
generally similar to the federal income tax rules described herein.

Distributions may be subject to state and local income taxes. In
addition, the treatment of the Fund and its shareholders in those states that
have income tax laws might differ from their treatment under the federal income
tax laws. Shareholders should consult with their own tax advisors with respect
to any state or local taxes. In addition, shareholders should review with their
tax advisors the state and local income tax consequences of the Fund's investing
in certain investments issued by agencies and instrumentalities of the U.S.
Government and in repurchase and reverse repurchase agreements and of the Fund's
engaging in securities loans.

With respect to the U.S. Treasury Money Market Portfolio, states
generally provide for a pass-through of the state and local income tax exemption
afforded under federal law to direct owners of U.S. Government obligations,
subject to such Portfolio's compliance with certain state notice and investment
threshold requirements. It is expected that dividends from the U.S. Treasury
Money Market Portfolio that are derived from interest earned on U.S. Government
obligations generally will be treated for state and local income tax purposes as
if the investor directly owned a proportionate share of the U.S. Government
obligations held by that Portfolio. Therefore, since the income on U.S.
Government obligations in which the U.S. Treasury Money Market Portfolio invests
is exempt from state and local income taxes under federal law, dividends paid by
that Portfolio that are derived from such interest will also be free from state
income taxes. To the extent required by applicable state laws and within any
applicable time period following the end of the Fund's taxable year, the Fund
intends to send each shareholder a tax information notice describing the federal
and state income tax status of dividends paid to investors for the prior tax
year.

The exemption from state and local income taxation, if available, does
not preclude states from assessing other taxes, such as personal

329543.1
-35-

<PAGE>

property taxes and estate and inheritance taxes, on the value of an investor's
shares in the U.S. Treasury Money Market Portfolio. In addition, states may
impose taxes on capital gains distributed by such Portfolio and may include the
value of Portfolio shares and the income attributable thereto in the measure of
state or municipal franchise taxes imposed on a corporate investor's privilege
of doing business in the state or municipality. Shareholders are urged to
contact their tax advisors regarding the state and local tax treatment of
ownership of shares in the U.S. Treasury Money Market Portfolio and of dividends
received from the Portfolio.

The Code imposes a nondeductible 4% excise tax on a Portfolio unless it
meets certain requirements with respect to distributions of net ordinary income
and capital gain net income. It is anticipated that this provision will not have
any material impact on a Portfolio.

Dividends and interest paid by foreign issuers may be subject to
withholding and other foreign taxes, which may decrease the net return on
foreign investments as compared to dividends and interest paid by domestic
issuers. The Fund does not expect that any Portfolio will qualify to elect to
pass through to its shareholders the right to take a foreign tax credit for
foreign taxes withheld from dividends and interest payments.

For federal income tax purposes, distributions of net capital gains
(the excess of net long-term capital gains over net short-term capital loss) if
any, are taxable as net capital gains regardless of the length of time
shareholders have owned their shares. The Tax Reform Act of 1986 eliminated the
preferential treatment previously available for net capital gains. However, the
Revenue Reconciliation Act of 1990 restored, in limited circumstances, a
preferential tax rate for net capital gains. Distributions attributable to
short-term capital gains (whether from tax exempt or taxable obligations) are
taxable as ordinary income. Generally, on the sale or exchange of obligations
held for more than one year, gain realized by a Portfolio that is not
attributable to original issue discount or certain market discount will be
long-term capital gain. Such capital gain, if any, will be distributed as
capital gain dividends. Gain on the disposition of a tax-exempt bond purchased
at a market discount generally will be treated as ordinary income, rather than
capital gain, to the extent of accrued market discount. Capital gain dividends,
designated as such in a written notice to investors mailed not later than 60
days after a Portfolio taxable year closes, will be taxed as long-term capital
gain. However, if an investor receives a capital gain dividend and sells shares
after holding them for six months or less (not including periods during which
the shareholder holds an offsetting position) then any loss realized on the sale
will be treated as long-term capital loss to the extent of such capital gain
dividend.

All taxable dividends from investment company taxable income are
taxable as ordinary income. It is not expected that any income distributions
from the Portfolios will qualify for the dividends received deduction for
corporations.

The Tax Reform Act of 1986 contained a provision limiting miscellaneous
itemized deductions for individuals and certain other shareholders, such as
estates or trusts, to the extent such miscellaneous itemized deductions do not
exceed 2% of adjusted gross income for a taxable year. However, the Revenue
Reconciliation Act of 1989 provided an exemption from the limitation for
publicly offered regulated investment companies. The U.S. Treasury Money Market
Portfolio, the Domestic Prime Money Market Portfolio and the Tax Exempt Money
Market Portfolio currently qualify and expect to continue to qualify as
publicly-offered regulated investment companies; it is expected that the
remaining Portfolios will qualify as publicly-offered regulated investment
companies when activated.

329543.1
-36-

<PAGE>

municipal bonds. The Supreme Court decision affirms the authority of the federal
government to regulate and control municipal bonds and to tax such bonds in the
future. The decision does not, however, affect the current exemption from
taxation of interest earned on municipal bonds in accordance with Section 103 of
the Code.

The federal, state and local income tax rules that apply to the Fund
and its shareholders have changed extensively in recent years, and investors
should recognize that additional changes may be made in the future, some of
which could have an adverse effect on the Fund and its investors for federal
and/or state and local income tax purposes. Investors in the Fund should consult
their tax advisors about the federal, state and local tax consequences of an
investment in the Fund in light of their own individual circumstances.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT

Custodial Trust Company, 101 Carnegie Center, Princeton, New Jersey
08540 is custodian for the Fund's cash and securities. The Custodian does not
assist in, and is not responsible for, investment decisions involving assets of
the Fund. Furman Selz LLC, the Fund's Administrator, also acts as the
Fund's transfer and dividend agent.

329543.1
-37-
<PAGE>

PART B

THE TREASURER'S FUND, INC.

_______________________________________________________________________________

STATEMENT OF ADDITIONAL INFORMATION

March 1, 1996

_______________________________________________________________________________

This Statement of Additional Information is not a prospectus
and should be read in conjunction with the Prospectus of The Treasurer's Fund,
Inc. dated March 1, 1996, as it may be amended from time to time, a copy of
which may be obtained without charge by writing to GOC Fund Distributors,
Inc., 19 Old Kings Highway South, Darien, Connecticut 06820-4526. This
Statement of Additional Information is incorporated by reference into the
Prospectus in its entirety.

170559.4

<PAGE>

TABLE OF CONTENTS

Page

THE PORTFOLIOS AND THEIR OBJECTIVES..................................... 1
General Investment Objectives and Policies of the
U.S. Treasury Money Market Portfolio........................... 1
Domestic Prime Money Market Portfolio..................... 2
Global Money Market Portfolio............................. 3
Tax Exempt Money Market Portfolio......................... 5
Limited Term Portfolio.................................... 6
Tax Exempt Limited Term Portfolio......................... 7
Investments and Investment Techniques
Common to Two or More Portfolios....................... 8
Change in Ratings......................................... 8
Management Strategies..................................... 9
Municipal Obligations..................................... 10
Amortized Cost Valuation of Portfolio Securities.......... 12
Variable Rate Demand Instruments.......................... 13
When-Issued Securities.................................... 16
Stand-by Commitments...................................... 17
Repurchase Agreements..................................... 19
Reverse Repurchase Agreements............................. 20
Participation Interests................................... 20
Bank Obligations, Certificates of Deposit
and Bankers' Acceptances............................... 21
Mortgage-Backed Securities................................ 21
Foreign Securities........................................ 24
Privately Placed Securities............................... 25
Hedging Instruments....................................... 25
Loan of Portfolio Securities.............................. 28
Puts for the Tax Exempt Portfolios........................ 28

INVESTMENT RESTRICTIONS................................................. 29

MANAGEMENT OF THE FUND.................................................. 32
Directors and Officers........................................... 32
Investment Advisor............................................... 37
Fees..................................................... 38
Expense Limitation............................................... 39
Administrator.................................................... 40

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT............................ 42

TAXES................................................................... 42

PURCHASE, REDEMPTION AND EXCHANGE....................................... 49

DIVIDENDS AND DISTRIBUTIONS............................................. 50

NET ASSET VALUE......................................................... 50

COMPUTATION OF YIELD.................................................... 52
Tax Equivalent Yield............................................. 53
Computation of Total Return...................................... 54

DESCRIPTION OF COMMON STOCK............................................. 55

DISTRIBUTION PLANS...................................................... 57

BROKERAGE AND PORTFOLIO TURNOVER........................................ 58

-i-
170559.4

<PAGE>

Page

Brokerage........................................................ 58
Portfolio Turnover............................................... 59

COUNSEL AND INDEPENDENT AUDITORS........................................ 60

RATINGS OF MUNICIPAL AND CORPORATE OBLIGATIONS.......................... 60
Unrated Bonds.................................................... 62
Commercial Paper Ratings......................................... 63
Description of Standard & Poor's Corporation's
two highest commercial paper ratings.................. 63
Description of Moody's Investors Service, Inc.'s
two highest commercial paper ratings.................. 63
Money Market Fund Ratings........................................ 63
Description of Standard & Poor's Corporation's
two highest money market fund ratings................. 63
Description of Moody's Investors Service, Inc.'s
two highest money market fund ratings................. 63

Financial Statements................................................Appendix A

-ii-
170559.4

<PAGE>

The Treasurer's Fund, Inc.

THE PORTFOLIOS AND THEIR OBJECTIVES

(See the Fund's Prospectus dated March 1, 1996)

The Treasurer's Fund, Inc. (the "Fund") is a diversified,
no-load, fixed income mutual fund consisting of six portfolios (the
"Portfolios") which are designed to meet the short and intermediate term
investment needs of corporations and institutional cash managers. There are no
sales loads or exchange or redemption fees associated with the Fund.

A detailed description of the types and quality of the
securities in which the Portfolios may invest is further described in the
Fund's Prospectus and is incorporated herein by reference. The investment
objectives stated below for each Portfolio are fundamental and may be changed
only with the approval of a majority of outstanding shares of that Portfolio.

General Investment Objectives and Policies
of the U.S. Treasury Money Market Portfolio

The U.S. Treasury Money Market Portfolio's investment
objectives are to maximize current income and to maintain liquidity and a
stable net asset value of $1 per share. The Portfolio attempts to accomplish
these objectives by investing in U.S. Treasury obligations which have
effective maturities of 397 days or less that enable it to employ the
amortized cost method of valuation. The Portfolio may also invest its assets
in repurchase agreements which are collateralized by U.S. Treasury
obligations. At least 65% of the Portfolio's total assets will consist of U.S.
Treasury Obligations and repurchase agreements which are collateralized by
U.S. Treasury obligations. There can be no assurance that the U.S. Treasury
Money Market Portfolio can achieve these objectives or that it will be able to
maintain a stable net asset value of $1 per share.

Risk Factors

The investment objectives and policies of the U.S. Treasury
Money Market Portfolio are sought through the following additional strategies
employed in the management of the Portfolio which are described under
"Investments and Investment Techniques Common to Two or More Portfolios":

1. Change in Ratings

2. Amortized Cost Valuation of Portfolio Securities

3. When-Issued Securities

170559.4

<PAGE>

4. Repurchase Agreements

5. Reverse Repurchase Agreements

6. Loan of Portfolio Securities

General Investment Objectives and Policies
of the Domestic Prime Money Market Portfolio

The Domestic Prime Money Market Portfolio's investment
objectives are to maximize current income and to maintain liquidity and a
stable net asset value of $1 per share. The Portfolio attempts to accomplish
these objectives by investing exclusively in prime quality, U.S. dollar
denominated money market obligations of domestic issuers which have effective
maturities of 397 days or less. The Portfolio will only purchase high quality
domestic money market instruments that have been determined by the Fund's
Board of Directors to present minimal credit risks and that are First Tier
Eligible Securities at the time of acquisition, so that the Portfolio is able
to employ the amortized cost method of valuation. The term First Tier Eligible
Securities means (i) securities that have remaining maturities of 397 days or
less and are rated in the highest short-term rating category by any two
nationally recognized statistical rating organizations ("NRSROs") or in such
category by the only NRSRO that has rated the securities (collectively, the
"Requisite NRSROs") (acquisition in the latter situation must also be ratified
by the Board of Directors); (ii) securities that have remaining maturities of
397 days or less but that at the time of issuance were long-term securities
and whose issuer has received from the Requisite NRSROs a rating with respect
to comparable short-term debt in the highest short-term category; and (iii)
unrated securities determined by the Fund's Board of Directors to be of
comparable quality. Where the issuer of a long-term security with a remaining
maturity which would otherwise qualify it as a First Tier Eligible Security
does not have rated short-term debt outstanding, the long-term security is
treated as unrated but may not be purchased if it has a long-term rating from
any NRSRO that is below the two highest long-term categories. A determination
of comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of
credit, guarantee, insurance or other credit facility issued in support of the
securities or participation certificates. There can be no assurance that the
Domestic Prime Money Market Portfolio can achieve these objectives or that it
will be able to maintain a stable net asset value of $1 per share.

-2-
170559.4

<PAGE>

Risk Factors

The investment objectives and policies of the Domestic Prime
Money Market Portfolio are sought through the following additional strategies
employed in the management of the Portfolio which are described under
"Investments and Investment Techniques Common to Two or More Portfolios":

1. Change in Ratings

2. Amortized Cost Valuation of Portfolio Securities

3. Variable Rate Demand Instruments

4. When-Issued Securities

5. Repurchase Agreements

6. Reverse Repurchase Agreements

7. Private Placements

8. Participation Interests

9. Mortgage-Backed Securities

10. Bank Obligations, Certificates of Deposit and
Bankers' Acceptances

11. Loan of Portfolio Securities

General Investment Objectives and Policies
of the Global Money Market Portfolio

The Global Money Market Portfolio's investment objectives are
to maximize current income and to maintain liquidity and a stable net asset
value of $1 per share. The Portfolio seeks to produce a higher yield than the
Domestic Prime Money Market Portfolio by investing in high quality money
market instruments of issuers located in three countries (including the United
States) with effective maturities of 397 days or less. The Portfolio will only
purchase high quality domestic money market instruments that have been
determined by the Fund's Board of Directors to present minimal credit risks
and that are First Tier Eligible Securities at the time of acquisition, so
that the Portfolio is able to employ the amortized cost method of valuation.
The term First Tier Eligible Securities means (i) securities that have
remaining maturities of 397 days or less and are rated in the highest
short-term rating category by any two nationally recognized statistical rating
organizations ("NRSROs") or in such category by the only NRSRO that has rated

-3-
170559.4

<PAGE>

the securities (collectively, the "Requisite NRSROs") (acquisition in the
latter situation must also be ratified by the Board of Directors); (ii)
securities that have remaining maturities of 397 days or less but that at the
time of issuance were long-term securities and whose issuer has received from
the Requisite NRSROs a rating with respect to comparable short-term debt in
the highest short-term category; and (iii) unrated securities determined by
the Fund's Board of Directors to be of comparable quality. Where the issuer of
a long-term security with a remaining maturity which would otherwise qualify
it as a First Tier Eligible Security does not have rated short-term debt
outstanding, the long-term security is treated as unrated but may not be
purchased if it has a long-term rating from any NRSRO that is below the two
highest long-term categories. A determination of comparability by the Board of
Directors is made on the basis of its credit evaluation of the issuer, which
may include an evaluation of a letter of credit, guarantee, insurance or other
credit facility issued in support of the securities or participation
certificates. There can be no assurance that the Global Money Market Portfolio
can achieve these objectives or that it will be able to maintain a stable net
asset value of $1 per share.

Risk Factors

The investment objectives and policies of the Global Money
Market Portfolio are sought through the following additional strategies
employed in the management of the Portfolio which are described under
"Investments and Investment Techniques Common to Two or More Portfolios":

1. Change in Ratings

2. Amortized Cost Valuation of Portfolio Securities

3. Variable Rate Demand Instruments

4. When-Issued Securities

5. Repurchase Agreements

6. Reverse Repurchase Agreements

7. Private Placements

8. Participation Interests

9. Mortgage-Backed Securities

10. Bank Obligations, Certificates of Deposit and
Bankers' Acceptances

-4-
170559.4

<PAGE>

11. Loan of Portfolio Securities

12. Foreign Securities

General Investment Objectives and Policies
of the Tax Exempt Money Market Portfolio

The Tax Exempt Money Market Portfolio's investment objectives
are to maximize current income that is exempt from federal income tax and to
maintain liquidity and a stable net asset value of $1 per share. The Portfolio
attempts to accomplish these objectives by investing in high quality municipal
securities which, in the opinion of bond counsel at the date of issuance, earn
interest exempt from federal income tax and which have effective maturities of
397 days or less. The Portfolio will only purchase high quality tax exempt
money market instruments ("Municipal Obligations") that have been determined
by the Fund's Board of Directors to present minimal credit risks and that are
Eligible Securities at the time of acquisition so that the Portfolio is able
to employ the amortized cost method of valuation. The term Eligible Securities
means (i) Municipal Obligations with remaining maturities of 397 days or less
and rated in the two highest short-term rating categories by any two NRSROs or
in such categories by the Requisite NRSRO (acquisition in the latter situation
must also be ratified by the Board of Directors); (ii) Municipal Obligations
with remaining maturities of 397 days or less but that at the time of issuance
were long-term securities and whose issuer has received from the Requisite
NRSROs a rating with respect to comparable short-term debt in the two highest
short-term rating categories; and (iii) unrated Municipal Obligations
determined by the Fund's Board of Directors to be of comparable quality. Where
the issuer of a long-term Municipal Obligation with a remaining maturity which
would otherwise qualify it as an Eligible Security, does not have rated
short-term debt outstanding, the long-term Municipal Obligation is treated as
unrated but may not be purchased if it has a long-term rating from any NRSRO
that is below the two highest long-term categories. A determination of
comparability by the Board of Directors is made on the basis of its credit
evaluation of the issuer, which may include an evaluation of a letter of
credit, guarantee, insurance or other credit facility issued in support of the
Municipal Obligations or participation certificates. Although the Supreme
Court has determined that Congress has the authority to subject the interest
on municipal securities, such as the securities in which the Portfolio will
invest, to regular Federal income taxation, existing law excludes such
interest from regular federal income tax. Interest on these securities may be
subject to state and local taxes. See "Taxes". There can be no assurance that
the Tax Exempt Money Market Portfolio can achieve these objectives or that it
will be able to maintain a stable net asset value of $1 per share.

-5-
170559.4

<PAGE>

Risk Factors

The investment objectives and policies of the Tax Exempt Money Market
Portfolio are sought through the following additional strategies employed in
the management of the Portfolio which are described under "Investments and
Investment Techniques Common to Two or More Portfolios":

1. Change in Ratings

2. Municipal Obligations

3. Amortized Cost Valuation of Portfolio Securities

4. Variable Rate Demand Instruments

5. When-Issued Securities

6. Stand-By Commitments

7. Repurchase Agreements

8. Reverse Repurchase Agreements

9. Private Placements

10. Participation Interests

11. Mortgage-Backed Securities

12. Bank Obligations, Certificates of Deposit and
Bankers' Acceptances

13. Loan of Portfolio Securities

General Investment Objectives and Policies
of the Limited Term Portfolio

Risk Factors

The investment objectives and policies of the Limited Term
Portfolio are sought through the following additional strategies employed in
the management of the Portfolio which are described under "Investments and
Investment Techniques Common to Two or More Portfolios":

-6-
170559.4

<PAGE>

1. Change in Ratings

2. Management Strategies

3. Amortized Cost Valuation of Portfolio Securities

4. Variable Rate Demand Instruments

5. When-Issued Securities

6. Repurchase Agreements

7. Reverse Repurchase Agreements

8. Participation Interests

9. Hedging Instruments

10. Private Placements

11. Mortgage-Backed Securities

12. Bank Obligations, Certificates of Deposit and
Bankers' Acceptances

13. Loan of Portfolio Securities

14. Foreign Securities

General Investment Objectives and Policies
of the Tax Exempt Limited Term Portfolio

The Tax Exempt Limited Term Portfolio's investment objective is
to maximize current income exempt from federal income tax consistent with
moderate risk of capital by investing in a liquid portfolio with a maximum
weighted average maturity of three years. The Portfolio attempts to accomplish
this objective by investing primarily in municipal securities which, in the
opinion of bond counsel at the date of issuance, earn interest exempt from
federal income tax. Although the Supreme Court has determined that Congress
has the authority to subject the interest on municipal securities, such as the
securities in which the Portfolio will invest, to regular Federal income
taxation, existing law excludes such interest from regular federal income tax.
Interest on these securities may be subject to state and local income taxes.
See "Taxes". There can be no assurance that the Tax Exempt Limited Term
Portfolio can achieve these objectives.

-7-
170559.4

<PAGE>

Risk Factors

The investment objectives and policies of the Tax Exempt
Limited Term Portfolio are sought through the following additional strategies
employed in the management of the Portfolio which are described under
"Investments and Investment Techniques Common to Two or More Portfolios":

1. Change in Ratings

2. Management Strategies

3. Municipal Obligations

4. Amortized Cost Valuation of Portfolio Securities

5. Variable Rate Demand Instruments

6. When-Issued Securities

7. Stand-By Commitments

8. Repurchase Agreements

9. Reverse Repurchase Agreements

10. Participations

11. Hedging Instruments

12. Private Placements

13. Mortgage-Backed Securities

14. Bank Obligations Certificates of Deposit and
Bankers' Acceptances

15. Loan of Portfolio Securities

Investments and Investment Techniques
Common to Two or More Portfolios

Change in Ratings. Subsequent to its purchase by a Portfolio,
an issue of securities may cease to be rated or its rating may be reduced
below the minimum required for purchases by that Portfolio. With regard to the
Limited Term Portfolio and the Tax Exempt Limited Term Portfolio, neither
event requires the elimination of such securities from these Portfolios, but
the Advisor will consider such an event to be relevant in its determination of
whether these Portfolios should continue to hold such securities. To the
extent that the ratings accorded by

-8-
170559.4

<PAGE>

Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation
("S&P") for securities may change as a result of changes in these ratings
systems, the Advisor will attempt to use comparable ratings as standards for
its investment in debt securities in accordance with the investment policies
contained therein. However, if these Portfolios hold any variable rate demand
instruments with stated maturities in excess of one year, such instruments
must maintain their high quality rating or must be sold from these Portfolios.
See "Variable Rate Demand Instruments" herein. With regard to the U.S.
Treasury Money Market Portfolio, the Domestic Prime Money Market Portfolio,
the Global Money Market Portfolio and the Tax Exempt Money Market Portfolio,
the Board of Directors of the Fund shall reassess promptly whether the
security presents minimal credit risks and shall cause these Portfolios to
take such action as the Board of Directors determines is in the best interest
of these Portfolios and their shareholders. However, reassessment is not
required if the security is disposed of or matures within five business days
of the Advisor becoming aware of the new rating and provided further that the
Board of Directors is subsequently notified of the Advisor's actions.

In addition, in the event that a security (1) is in default,
(2) ceases to be an Eligible Security under Rule 2a-7 or (3) is determined to
no longer present minimal credit risks, these Portfolios will dispose of the
security absent a determination by the Fund's Board of Directors that disposal
of the security would not be in the best interests of these Portfolios. In the
event that the security is disposed of, it shall be disposed of as soon as
practicable consistent with achieving an orderly disposition by sale, exercise
of any demand feature, or otherwise. In the event of a default with respect to
a security which immediately before default accounted for 1/2 of 1% or more of
a Portfolio's total assets, that Portfolio shall promptly notify the
Securities and Exchange Commission of such fact and of the actions that such
Portfolio intends to take in response to the situation.

Management Strategies. In pursuit of their investment
objectives the Limited Term Portfolio and the Tax Exempt Limited Term
Portfolio seek to increase returns by actively managing securities in the
short term and intermediate term ranges. However, the Portfolios seek to
minimize market risk by employing a "laddered" portfolio approach as opposed
to a market timing approach. In addition, the Portfolios seek investments in
securities which the Advisor believes to be undervalued and, therefore, have
capital appreciation potential. The laddered approach to portfolio management
involves the maintenance of securities positions of varying amounts staggered
at appropriate points along the fixed income yield curve in an effort to
maximize income and to minimize interest rate risk. Assuming a positively
sloping yield curve, a portfolio designed with a

-9-
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<PAGE>

series of periodic maturities can produce higher yields at the horizon of its
maturity restriction, balanced by the interest rate protection provided by
shorter, more quickly maturing securities.

In addition to the above, these Portfolios may engage in short
term trading (selling securities held for brief periods of time, usually less
than three months) if the Advisor believes that such transactions, net of
costs including taxes, if any, would improve the overall return of the
particular Portfolio. Each of the Limited Term Portfolio and the Tax Exempt
Limited Term Portfolio will limit its voluntary short-term trading to the
extent such limitation is necessary for it to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986. Currently, a
regulated investment company must realize less than 30% of its annual gross
income from the sale of stock, securities and certain options, futures,
forward contracts and foreign currencies held for less than three months.

Municipal Obligations. (1) Municipal Bonds are debt obligations
of states, cities, counties, municipalities and municipal agencies (all of
which are generally referred to as "municipalities") which generally have a
maturity at the time of issue of one year or more and which are issued to
raise funds for various public purposes such as construction of a wide range
of public facilities, to refund outstanding obligations and to obtain funds
for institutions and facilities.

The two principal classifications of Municipal Bonds are
"general obligation" and "revenue" bonds. General obligation bonds are secured
by the issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. Issuers of general obligation bonds include
states, counties, cities, towns and other governmental units. The principal
of, and interest on, revenue bonds are payable from the income of specific
projects or authorizations and generally are not supported by the issuer's
general power to levy taxes. In some cases, revenues derived from specific
taxes are pledged to support payments on a revenue bond.

In addition, certain kinds of "private activity bonds" are
issued by or on behalf of public authorities to provide funding for various
privately operated industrial facilities (hereinafter referred to as
"industrial revenue bonds" or "IRBs"). Interest on the IRBs is generally
exempt, with certain exceptions, from federal income tax pursuant to Section
103(a) of the Internal Revenue Code, provided the issuer and corporate obligor
thereof continue to meet certain conditions. (See "Taxes".) IRBs are, in most
cases, revenue bonds and do not generally constitute the pledge of the credit
of the issuer of such bonds. The payment of the principal and interest on IRBs
usually depends solely on the ability of the user of the

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<PAGE>

facilities financed by the bonds or other guarantor to meet its financial
obligations and, in certain instances, the pledge of real and personal
property as security for payment. If there is not an established secondary
market for the IRBs, the IRBs will be supported by letters of credit,
guarantees, insurance or other credit facilities that meet the high quality
criteria of the Portfolios stated in the Prospectus and provide a demand
feature which may be exercised by the Portfolios to provide liquidity. In
accordance with investment restriction 11 (see page 28), the Portfolios are
permitted to invest up to 10% of the portfolio in high quality, short-term
Municipal Obligations (including IRBs) that may not be readily marketable or
have a liquidity feature.

(2) The principal kinds of Municipal Notes include tax
anticipation notes, bond anticipation notes, revenue anticipation notes and
grant anticipation notes. Notes sold in anticipation of collection of taxes, a
bond sale or receipt of other revenues are usually general obligations of the
issuing municipality or agency.

(3) Issues of Municipal Commercial Paper typically represent
very short term, unsecured, negotiable promissory notes. These obligations are
often issued to meet seasonal working capital needs of municipalities or to
provide interim construction financing and are paid from general revenues of
municipalities or are refinanced with long term debt. In most cases Municipal
Commercial Paper is backed by letters of credit, lending agreements, note
repurchase agreements or other credit facility agreements offered by banks or
other institutions which may be called upon in the event of default by the
issuer of the commercial paper.

(4) Municipal Leases, which may take the form of a lease or an
installment purchase or conditional sale contract, are issued by state and
local governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Municipal Leases frequently have special risks not
normally associated with general obligation or revenue bonds. Leases and
installment purchases or conditional sale contracts (which normally provide
for title to the leased asset to pass eventually to the government issuer)
have evolved as a means for governmental issuers to acquire property and
equipment without meeting the constitutional and statutory requirements for
the issuance of debt. The debt-issuance limitations of many state
constitutions and statutes are deemed to be inapplicable because of the
inclusion in many leases or contracts of "non- appropriation" clauses that
provide that the governmental issuer has no obligation to make future payments
under the lease or contract unless money is appropriated for such purpose by
the appropriate legislative body on a yearly or other periodic basis. These
types of municipal leases may be considered illiquid and

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<PAGE>

subject to the 10% limitation of investment in illiquid securities set forth
under "Investment Restrictions" contained herein. The Board of Directors may
adopt guidelines and delegate to the Advisor the daily function of determining
and monitoring the liquidity of municipal leases. In making such
determination, the Board and the Advisor may consider such factors as the
frequency of trades for the obligation, the number of dealers willing to
purchase or sell the obligations and the number of other potential buyers and
the nature of the marketplace for the obligations, including the time needed
to dispose of the obligations and the method of soliciting offers. If the
Board determines that any municipal leases are illiquid, such leases will be
subject to the 10% limitation on investments in illiquid securities. The Board
of Directors is also responsible for determining the credit quality of
municipal leases, on an ongoing basis, including an assessment of the
likelihood that the lease will not be cancelled.

The Fund expects that, on behalf of the Tax Exempt Money Market
Portfolio and the Tax Exempt Limited Term Portfolio, it will not invest more
than 25% of each Portfolio's total assets in municipal obligations whose
issuers are located in the same state or more than 25% of each Portfolio's
total assets in municipal obligations the security of which is derived from
any one category. There could be economic, business or political developments
which might affect all municipal obligations of a similar type. However, the
Fund believes that the most important consideration affecting risk is the
quality of particular issues of municipal obligations rather than factors
affecting all, or broad classes of, municipal obligations.

Amortized Cost Valuation of Portfolio Securities. Pursuant to
Rule 2a-7 under the Investment Company Act of 1940 (the "Rule") each of the
U.S. Treasury Money Market Portfolio, the Domestic Prime Money Market
Portfolio, the Global Money Market Portfolio and the Tax Exempt Money Market
Portfolio (the "Money Market Portfolios") uses the amortized cost method of
valuing its investments, which facilitates the maintenance of the Money Market
Portfolios' per share net asset value at $1.00. The amortized cost method
involves initially valuing a security at its cost and thereafter amortizing to
maturity any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument.

Consistent with the provisions of the Rule, the Money Market
Portfolios maintain a dollar-weighted average portfolio maturity of 90 days or
less, purchase only instruments having effective maturities of 397 days or
less, and invest only in securities determined by or under the direction of
the Board of Directors to be of high quality with minimal credit risks.

-12-
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<PAGE>

The Board of Directors has also established procedures designed
to stabilize, to the extent reasonably possible, the Money Market Portfolios'
price per share as computed for the purpose of sales and redemptions at $1.00.
Such procedures include review of the Money Market Portfolios' investments by
the Board of Directors at such intervals as they deem appropriate to determine
whether each Portfolio's net asset value calculated by using available market
quotations or market equivalents (i.e., determination of value by reference to
interest rate levels, quotations of comparable securities and other factors)
deviates from $1.00 per share based on amortized cost. Market quotations and
market equivalents used in such review may be obtained from an independent
pricing service approved by the Board of Directors.

The extent of deviation between any Money Market Portfolio's
net asset value based upon available market quotations or market equivalents
and $1.00 per share based on amortized cost, will be periodically examined by
the Board of Directors. If such deviation exceeds 1/2 of 1%, the Board of
Directors will promptly consider what action, if any, will be initiated. In
the event the Board of Directors determines that a deviation exists which may
result in material dilution or other unfair results to investors or existing
shareholders, they will take such corrective action as they regard to be
necessary and appropriate, including the sale of portfolio instruments prior
to maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding part or all of dividends or payment of distributions
from capital or capital gains; redemptions of shares in kind; or establishing
a net asset value per share by using available market quotations or
equivalents. Each Money Market Portfolio may hold cash for the purpose of
stabilizing its net asset value per share. Holdings of cash, on which no
return is earned, would tend to lower the yield on the Money Market
Portfolios' shares.

Variable Rate Demand Instruments. The Domestic Prime
Money Market Portfolio, Global Money Market Portfolio, Tax Exempt Money Market
Portfolio, Limited Term Portfolio and Tax Exempt Limited Term Portfolio may
purchase variable rate demand instruments.

Variable rate demand instruments that the Portfolios will
purchase are tax exempt Municipal Obligations or taxable (variable amount
master demand notes) debt obligations that provide for a periodic adjustment
in the interest rate paid on the instrument and permit the holder to demand
payment of the unpaid principal balance plus accrued interest at specified
intervals upon a specified number of days' notice either from the issuer or by
drawing on a bank letter of credit, a guarantee, insurance or other credit
facility issued with respect to such instrument.

-13-
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<PAGE>

The variable rate demand instruments in which the Portfolios
may invest are payable on not more than thirty calendar days' notice either on
demand or at specified intervals not exceeding one year depending upon the
terms of the instrument. Variable rate demand instruments with demand features
in excess of 7 days are considered illiquid. The terms of the instruments
provide that interest rates are adjustable at intervals ranging from daily to
up to one year and their adjustments are based upon the prime rate of a bank
or other appropriate interest rate adjustment index as provided in the
respective instruments. The Fund will decide which variable rate demand
instruments it will purchase in accordance with procedures prescribed by its
Board of Directors to minimize credit risks. A Portfolio utilizing the
amortized cost method of valuation may only purchase variable rate demand
instruments if (i) the instrument is subject to an unconditional demand
feature, exercisable by the Portfolio in the event of default in the payment
of principal or interest on the underlying securities, which itself qualifies
as an Eligible Security, or (ii) the instrument is not subject to an
unconditional demand feature but does qualify as an Eligible Security and has
a long-term rating by the Requisite NRSROs in one of the two highest rating
categories, or, if unrated, is determined to be of comparable quality by the
Fund's Board of Directors. If an instrument is ever deemed to be of less than
high quality, the Portfolio either will sell it in the market or exercise the
demand feature.

The variable rate demand instruments that the Portfolios may
invest in include participation certificates purchased by the Portfolios from
banks, insurance companies or other financial institutions in fixed or
variable rate, tax-exempt Municipal Obligations (expected to be concentrated
in IRBs) or taxable debt obligations (variable amount master demand notes)
owned by such institutions or affiliated organizations. A participation
certificate gives the Portfolios an undivided interest in the obligation in
the proportion that the Portfolio's participation interest bears to the total
principal amount of the obligation and provides the demand repurchase feature
described below. Where the institution issuing the participation does not meet
the Portfolio's high quality standards, the participation is backed by an
irrevocable letter of credit or guaranty of a bank (which may be a bank
issuing a confirming letter of credit, or a bank serving as agent of the
issuing bank with respect to the possible repurchase of the certificate of
participation or a bank serving as agent of the issuer with respect to the
possible repurchase of the issue) or insurance policy of an insurance company
that the Board of Directors of the Fund has determined meets the prescribed
quality standards for the Portfolio. The Portfolio has the right to sell the
participation certificate back to the institution and, where applicable, draw
on the letter of credit, guarantee or insurance after no more than 30 days'
notice either on demand or at specified intervals not exceeding

-14-
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<PAGE>

397 days (depending on the terms of the participation), for all or any part of
the full principal amount of the Portfolio's participation interest in the
security, plus accrued interest. The Portfolios intend to exercise the demand
only (1) upon a default under the terms of the bond documents, (2) as needed
to provide liquidity to the Portfolio in order to make redemptions of the
Portfolio shares, or (3) to maintain a high quality investment portfolio. The
institutions issuing the participation certificates will retain a service and
letter of credit fee (where applicable) and a fee for providing the demand
repurchase feature, in an amount equal to the excess of the interest paid on
the instruments over the negotiated yield at which the participations were
purchased by the Portfolio. The total fees generally range from 5% to 15% of
the applicable prime rate* or other interest rate index. With respect to
insurance, the Portfolios will attempt to have the issuer of the participation
certificate bear the cost of the insurance, although the Portfolios retain the
option to purchase insurance if necessary, in which case the cost of insurance
will be an expense of the Portfolio subject to the expense limitation on
investment company expenses prescribed by any state in which the Portfolio's
shares are qualified for sale. The Advisor has been instructed by the Fund's
Board of Directors to continually monitor the pricing, quality and liquidity
of the variable rate demand instruments held by the Portfolio, including the
participation certificates, on the basis of published financial information
and reports of the rating agencies and other bank analytical services to which
the Portfolio may subscribe. Although these instruments may be sold by the
Portfolio, the Portfolio intends to hold them until maturity, except under the
circumstances stated above (see "Taxes").

- - --------
* The "prime rate" is generally the rate charged by a bank to its most
creditworthy customers for short term loans. The prime rate of a
particular bank may differ from other banks and will be the rate
announced by each bank on a particular day. Changes in the prime rate
may occur with great frequency and generally become effective on the
date announced.

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<PAGE>

to which interest on such variable rate demand instruments may fluctuate; to
the extent it does, increases or decreases in value may be somewhat greater
than would be the case without such limits. Additionally, the Portfolios may
contain variable rate demand participation certificates in fixed rate
Municipal Obligations and taxable debt obligations. The fixed rate of interest
on these obligations will be a ceiling on the variable rate of the
participation certificate. In the event that interest rates increased so that
the variable rate exceeded the fixed rate on the obligations, the obligations
could no longer be valued at par and this may cause the Portfolios to take
corrective action, including the elimination of the instruments. Because the
adjustment of interest rates on the variable rate demand instruments is made
in relation to movements of the applicable banks' "prime rate", or other
interest rate adjustment index, the variable rate demand instruments are not
comparable to long-term fixed rate securities. Accordingly, interest rates on
the variable rate demand instruments may be higher or lower than current
market rates for fixed rate obligations or obligations of comparable quality
with similar maturities.

For purposes of determining whether a variable rate demand
instrument held by a Portfolio matures within 397 days from the date of its
acquisition, the maturity of the instrument will be deemed to be the longer of
(1) the period required before the Portfolio is entitled to receive payment of
the principal amount of the instrument or (2) the period remaining until the
instrument's next interest rate adjustment. The maturity of a variable rate
demand instrument will be determined in the same manner for purposes of
computing the Portfolios' dollar-weighted average portfolio maturity. If a
variable rate demand instrument ceases to meet the investment criteria of the
Portfolio, it will be sold in the market or through exercise of the repurchase
demand.

When-Issued Securities. All Portfolios may purchase debt
obligations offered on a "when-issued" or "delayed delivery" basis. When so
offered, the price, which is generally expressed in yield terms, is fixed at
the time the commitment to purchase is made, but delivery and payment for the
when-issued securities take place at a later date. Normally, the settlement
date occurs within one month of the purchase of debt obligations; during the
period between purchase and settlement, no payment is made by the purchaser to
the issuer and no interest accrues to the purchaser. To the extent that assets
of a Portfolio are not invested prior to the settlement of a purchase of
securities, that Portfolio will earn no income; however, it is intended that
each Portfolio will be fully invested to the extent practicable and subject to
the policies stated above. While when-issued securities may be sold prior to
the settlement date, it is intended that each Portfolio will purchase such
securities with the purpose of actually acquiring them unless a sale appears
desirable for

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<PAGE>

investment reasons. At the time the Portfolio makes the commitment to purchase
a debt obligation on a when-issued basis, it will record the transaction and
reflect the value of the security in determining its net asset value. The Fund
does not believe that the net asset value or income of the Portfolios'
securities portfolios will be adversely affected by their purchase of debt
obligations on a when-issued basis. Each Portfolio will establish a segregated
account in which it will maintain cash and liquid high grade debt securities
equal in value to commitments for when-issued securities. Such segregated
securities either will mature or, if necessary, be sold on or before the
settlement date.

Stand-by Commitments. When the Portfolios purchase Municipal
Obligations they may also acquire stand-by commitments from banks and other
financial institutions with respect to such Municipal Obligations. Under a
stand-by commitment, a bank or broker-dealer agrees to purchase at the
Portfolio's option a specified Municipal Obligation at a specified price with
same day settlement. A stand-by commitment is the equivalent of a "put" option
acquired by the Portfolio with respect to a particular Municipal Obligation
held in its portfolio.

The amount payable to the Portfolio upon its exercise of a
stand-by commitment normally would be (1) the acquisition cost of the
Municipal Obligation (excluding any accrued interest that the Portfolio paid
on the acquisition), less any amortized market premium or plus any amortized
market or original issue discount during the period the Portfolio owned the
security plus (2) all interest accrued on the security since the last interest
payment date during the period the security was owned by the Portfolio. Absent
unusual circumstances relating to a change in market value, the Portfolio
would value the underlying Municipal Obligation at amortized cost.
Accordingly, the amount payable by a bank or dealer during the time a stand-by
commitment is exercisable would be substantially the same as the market value
of the underlying Municipal Obligation.

The Portfolio's right to exercise a stand-by commitment would
be unconditional and unqualified. A stand-by commitment would not be
transferable by the Portfolio, although it could sell the underlying Municipal
Obligation to a third party at any time.

The Advisor expects that stand-by commitments generally will be
available without the payment of any direct or indirect consideration.
However, if necessary and advisable, the Portfolio may pay for stand-by
commitments either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities).
The total amount paid in either manner for outstanding stand-by

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<PAGE>

commitments held in the Portfolio would not exceed 1/2 of 1% of the value of
the Portfolio's total assets calculated immediately after each stand-by
commitment was acquired.

The Portfolio would enter into stand-by commitments only with
banks and other financial institutions that, in the Advisor's opinion, present
minimal credit risks and where the issuer of the Municipal Obligation meets
the investment criteria of the Portfolio. The Portfolio's reliance upon the
credit of these banks and broker-dealers would be supported by the value of
the underlying Municipal Obligations held by the Portfolio that were subject
to the commitment.

The Portfolio intends to acquire stand-by commitments solely to
facilitate Portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The purpose of this practice is to permit the
Portfolio to be fully invested in securities the interest on which is exempt
from federal income taxes while preserving the necessary liquidity to purchase
securities on a when-issued basis, to meet unusually large redemptions and to
purchase at a later date securities other than those subject to the stand-by
commitment.

The acquisition of a stand-by commitment would not affect the
valuation or assumed maturity of the underlying Municipal Obligations which
will continue to be valued in accordance with the amortized cost method.
Stand-by commitments acquired by the Portfolios would be valued at zero in
determining net asset value. In those cases in which the Portfolio paid
directly or indirectly for a stand-by commitment, its cost would be reflected
as unrealized depreciation for the period during which the commitment is held
by the Portfolio. Stand-by commitments would not affect the dollar weighted
average maturity of the Portfolio. The maturity of a security subject to a
stand-by commitment is longer than the stand-by repurchase date.

The stand-by commitments that the Portfolios may enter into are
subject to certain risks, which include the ability of the issuer of the
commitment to pay for the securities at the time the commitment is exercised,
the fact that the commitment is not marketable by the Portfolios, and that the
maturity of the underlying security will generally be different from that of
the commitment.

In addition, the Portfolio may apply to the Internal Revenue
Service for a ruling, or seek from its counsel an opinion, that interest on
Municipal Obligations subject to stand-by commitments will be exempt from
federal income taxation (see "Taxes"). In the absence of a favorable tax
ruling or opinion of counsel, the Portfolios will not engage in the purchase
of securities subject to stand-by commitments.

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<PAGE>

Repurchase Agreements. When a Portfolio purchases securities,
it may enter into a repurchase agreement with the seller wherein the seller
agrees, at the time of sale, to repurchase the security at a mutually agreed
upon time and price. A Portfolio may enter into repurchase agreements with
member banks of the Federal Reserve System and with broker-dealers who are
recognized as primary dealers in United States government securities by the
Federal Reserve Bank of New York. Although the securities subject to the
repurchase agreement might bear maturities exceeding one year, settlement for
the repurchase would never be more than 397 days after the Portfolio's
acquisition of the securities and normally would be within a shorter period of
time. The resale price will be in excess of the purchase price, reflecting an
agreed upon market rate effective for the period of time the Portfolio's money
will be invested in the security, and will not be related to the coupon rate
of the purchased security. At the time a Portfolio enters into a repurchase
agreement the value of the underlying security, including accrued interest,
will be equal to or exceed the value of the repurchase agreement, and, in the
case of a repurchase agreement exceeding one day, the seller will agree that
the value of the underlying security, including accrued interest, will at all
times be equal to or exceed the value of the repurchase agreement. Each
Portfolio may engage in a repurchase agreement with respect to any security in
which that Portfolio is authorized to invest, even though the underlying
security may mature in more than one year. The collateral securing the
seller's obligation must be of a credit quality at least equal to the
Portfolio's investment criteria for Portfolio securities and will be held by
the Portfolio's Custodian or in the Federal Reserve Book Entry System.

For purposes of the Investment Company Act of 1940, a
repurchase agreement is deemed to be a loan from a Portfolio to the seller
subject to the repurchase agreement and is therefore subject to that
Portfolio's investment restriction applicable to loans. It is not clear
whether a court would consider the securities purchased by a Portfolio subject
to a repurchase agreement as being owned by that Portfolio or as being
collateral for a loan by that Portfolio to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the
seller of the securities before repurchase of the security under a repurchase
agreement, a Portfolio may encounter delay and incur costs before being able
to sell the security. Delays may involve loss of interest or decline in price
of the security. If the court characterized the transaction as a loan and a
Portfolio has not perfected a security interest in the security, that
Portfolio may be required to return the security to the seller's estate and be
treated as an unsecured creditor of the seller. As an unsecured creditor, a
Portfolio would be at the risk of losing some or all of the principal and
income involved in the transaction. As with any unsecured debt obligation
purchased for

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<PAGE>

a Portfolio, the Advisor seeks to minimize the risk of loss through repurchase
agreements by analyzing the creditworthiness of the obligor, in this case the
seller. Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security, in which
case a Portfolio may incur a loss if the proceeds to that Portfolio of the
sale to a third party are less than the repurchase price. However, if the
market value of the securities subject to the repurchase agreement becomes
less than the repurchase price (including interest), the Portfolio involved
will direct the seller of the security to deliver additional securities so
that the market value of all securities subject to the repurchase agreement
will equal or exceed the repurchase price. It is possible that a Portfolio
will be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.

The Portfolio could experience delays in recovering securities
in the event of the bankruptcy of the other party to a reverse repurchase
agreement and could experience a loss to the extent that the value of the
securities may have decreased in the meantime.

Participation Interests. The Domestic Prime Money Market
Portfolio, Global Money Market Portfolio, Tax Exempt Money Market Portfolio,
Limited Term Portfolio and the Tax Exempt Limited Term Portfolio may purchase
from banks participation interests in all or part of specific holdings of
Municipal or other debt obligations (including corporate loans). Where the
institution issuing the participation does not meet the Portfolio's quality
standards, the participation may be backed by an irrevocable letter of credit
or guarantee that the Board of Directors has determined meets the prescribed
quality standards

-20-
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<PAGE>

of each Portfolio. Thus, even if the credit of the selling bank does not meet
the quality standards of a Portfolio, the credit of the entity issuing the
credit enhancement will. Each Portfolio will have the right to sell the
participation interest back to the bank for the full principal amount of the
Portfolio's interest in the Municipal or debt obligation plus accrued
interest, but only (1) as required to provide liquidity to that Portfolio, (2)
to maintain the quality standards of each Portfolio's investment portfolio or
(3) upon a default under the terms of the debt obligation. The selling bank
may receive a fee from a Portfolio in connection with the arrangement. When
purchasing bank participation interests, the Portfolio will treat both the
bank and the underlying borrower as the issuer of the instrument for the
purpose of complying with the diversification requirement of investment
restriction number 3 discussed below.

Bank Obligations, Certificates of Deposit and Bankers'
Acceptances. All the Portfolios, except the U.S. Treasury Money Market
Portfolio, may purchase certificates of deposit, bankers' acceptances and
other obligations issued or guaranteed by the 50 largest banks in the United
States. For this purpose banks are ranked by total deposits as shown by their
most recent annual financial statements. The "other obligations" in which the
Portfolio may invest include instruments (such as bankers' acceptances,
commercial paper and certificates of deposit) issued by U.S. subsidiaries of
the 50 largest banks in the U.S. where the instruments are guaranteed as to
principal and interest by such banks. In addition, the Global Money Market
Portfolio and the Limited Term Portfolio may also purchase certificates of
deposit, bankers' acceptances and other obligations (or instruments secured by
such obligations) of (i) domestic banks subject to regulation by the U.S.
Government or its agencies (such as the Federal Reserve Board, the Comptroller
of the Currency, or the FDIC) and having total assets of over $1 billion
unless their obligations are guaranteed by their parent bank, which has assets
of over $5 billion; (ii) foreign branches of these banks ("Euros"); (iii)
United States branches of foreign banks of equivalent size ("Yankees"); and
(iv) foreign banks. The Portfolio limits investments in foreign bank
obligations to U.S. dollar denominated obligations of foreign banks which have
more than $10 billion of assets, are among the 75 largest in the world, and
have branches or agencies in the U.S. See "Foreign Securities" herein for
further discussion of the risks inherent in such investments. At the time the
Portfolio invests in any certificate of deposit, bankers' acceptance or other
bank obligation, the issuer or its parent must have its debt rated within the
quality standards of the Portfolio or if unrated be of comparable quality as
determined by the Fund's Board of Directors.

Mortgage-Backed Securities. Certain of the Portfolios may
purchase securities issued or guaranteed by federal agencies

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<PAGE>

or U.S. Government sponsored corporations. Such securities include those
issued and guaranteed by the Government National Mortgage Association (GNMA,
or "Ginnie Mae"), the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation.

GNMA Mortgage-Backed Securities ("GNMAs") are mortgage-backed
securities representing part ownership of a pool of mortgage loans. These
loans issued by lenders such as mortgage bankers, commercial banks, and
savings and loan associations are either insured by the Federal Housing
Administration (FHA) or guaranteed by the Veterans Administration (VA). A
"pool" or group of such mortgages is assembled and, after being approved by
GNMA, is offered to investors through securities dealers. Once approved by
GNMA (a U.S. Government corporation within the U.S. Department of Housing and
Urban Development) the timely payment of interest and principal is guaranteed
by the full faith and credit of the U.S. Government.

As mortgage-backed securities, GNMAs differ from bonds in that
principal is paid back by the borrower over the length of the loan rather than
returned in a lump sum at maturity. GNMAs are called "pass-through" securities
because both interest and principal payments, including prepayments, are
passed through to the holder of the security (in this case, the Portfolio).

The payment of principal of the underlying mortgages may exceed
the minimum required by the schedule of payments for the mortgages. Such
prepayments are made at the option of the mortgagors for a wide variety of
reasons reflecting their individual circumstances and may involve capital
losses if the mortgages were purchased at a premium. For example, mortgagors
may speed up the rate at which they prepay their mortgages when interest rates
decline sufficiently to encourage refinancing. A Portfolio, when such
prepayments are passed through to it, may be able to reinvest them only at a
lower rate of interest. The Advisor, in determining the attractiveness of
GNMAs relative to alternative fixed income securities, and in choosing
specific GNMA issues, will have made assumptions as to the likely speed of
prepayment. Actual experience may vary from these assumptions, resulting in a
higher or lower investment return than anticipated.

The Federal National Mortgage Association ("FNMA" or "Fannie
Mae") is a U.S. Government sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases residential mortgages from a list of
approved seller/services, which include state and federally-chartered savings
and loan associations, mutual savings banks, commercial banks, credit unions,
and mortgage banks. Pass-through securities issued by FNMA are guaranteed as
to timely payment of

-22-
170559.4

<PAGE>

principal and interest by FNMA but are not backed by the full faith and credit
of the U.S. Government.

The Federal Home Loan Mortgage Corporation ("FHLMC" or "Freddie
Mac") is a corporate instrumentality of the U.S. Government, created by
Congress in 1970 for the purpose of increasing the availability of mortgage
credit for residential housing. Its common stock is owned by the twelve
Federal Home Loan Banks. FHLMC also has preferred stock outstanding that is
traded on the New York Stock Exchange and is owned entirely by savings and
loan institutions. FHLMC issues Federal Home Loan Mortgage Corporation
Participation Certificates ("Pcs") which represent interests in mortgages from
FHLMC's mortgage portfolio. FHLMC guarantees the timely payment of interest
and ultimate collection of principal, but Pcs are not backed by the full faith
and credit of the U.S. Government.

FHLMC Pcs differ from FNMA pass-throughs in that the mortgages
underlying Pcs are mostly conventional mortgages rather than FHA insured or VA
guaranteed mortgages, although FHLMC has occasionally purchased FHA or VA
loans. However, in several other respects (such as the monthly pass-through of
interest and principal and the unpredictability of future prepayment
experience) Pcs are similar to FNMAs.

The Portfolios, except the U.S. Treasury Money Market
Portfolio, may also invest in Collateralized Mortgage Obligations ("CMOs"), a
type of mortgage-backed security. CMOs are debt securities collateralized by
mortgage-backed certificates issued by federal agencies or U.S. Government
sponsored corporations such as GNMA, FNMA and FHLMC. The payment of CMOs
depends upon the cash flow from the pool of mortgages represented by the
mortgage-backed certificates.

CMOs are divided into multiple classes. Generally, the interest
on the classes is distributed currently to the holders of each class. However,
principal is not paid in this manner. Instead, holders of the first class
receive all payments of principal until their bond is fully paid. Thereafter,
principal is paid on each succeeding class with the earliest maturing
securities retired first.

One or more classes, usually the last, may be zero- coupon
bonds ("Z bonds"). The cash flow that would otherwise be used to pay interest
on this class is used instead to pay principal on the earlier maturing
classes. After all prior classes are retired, the Z bond pays interest and
principal until final maturity. Interest accrued but not paid on the Z bond is
added to the principal of the Z bond and thereafter accrues interest.

-23-
170559.4

<PAGE>

Any guarantee or insurance on a mortgage-backed certificate
does not extend to a Portfolio's investments in CMOs. There is a possibility
of limited liquidity as there is no assurance that a secondary market will
develop for CMOs or, if such market does develop, that it will provide a
Portfolio with liquidity or remain for the term of the investment. If an event
of default occurs with respect to the CMOs purchased by a Portfolio, there can
be no assurance that the collateral pledged as security therefor will be
sufficient to pay the principal and interest due on such bonds. The payment of
principal of the underlying mortgages may exceed the minimum required by the
schedule of payments for the mortgages. Such prepayments are made at the
option of the mortgagors for a wide variety of reasons reflecting their
individual circumstances and may involve capital losses if the mortgages were
purchased at a premium. For example, mortgagors may speed up the rate at which
they prepay their mortgages when interest rates decline sufficiently to
encourage refinancing. The Advisor, in determining the attractiveness of CMO's
relative to alternative fixed income securities, and in choosing specific CMO
issues, will have made assumptions as to the likely speed of prepayment.
Actual experience may vary from these assumptions, resulting in a higher or
lower investment return than anticipated.

Foreign Securities. The Global Money Market Portfolio and the
Limited Term Portfolio may invest in certain foreign securities. Investment in
obligations of foreign issuers and in foreign branches of domestic banks
involves somewhat different investment risks from those affecting obligations
of United States domestic issuers. There may be limited publicly available
information with respect to foreign issuers and foreign issuers are not
generally subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to domestic companies. There may
also be less government supervision and regulation of foreign securities
exchanges, brokers and listed companies than in the United States. Foreign
securities markets have substantially less volume than national securities
exchanges and securities of some foreign companies are less liquid and more
volatile than securities of comparable domestic companies. Brokerage
commissions and other transaction costs on foreign securities exchanges are
generally higher than in the United States. Dividends and interest paid by
foreign issuers may be subject to withholding and other foreign taxes, which
may decrease the net return on foreign investments as compared to dividends
and interest paid to the Portfolio by domestic companies. Additional risks
include future political and economic developments, the possibility that a
foreign jurisdiction might impose or change withholding taxes on income
payable with respect to foreign securities, the possible seizure,
nationalization or expropriation of the foreign issuer or foreign deposits and
the

-24-
170559.4

<PAGE>

possible adoption of foreign governmental restrictions such as exchange
controls.

Privately Placed Securities. All the Portfolios, except the
U.S. Treasury Money Market Portfolio, may invest in securities issued as part
of privately negotiated transactions between an issuer and one or more
purchasers. Except with respect to securities subject to Rule 144A of the
Securities Act of 1933 which are discussed below, these securities are
typically not readily marketable, and therefore are considered illiquid
securities. The price these Portfolios pay for illiquid securities, and any
price received upon resale, may be lower than the price paid or received for
similar securities with a more liquid market. Accordingly, the valuation of
privately placed securities by these Portfolios will reflect any limitations
on their liquidity. As a matter of policy, none of the Portfolios will invest
more than 10% of the market value of the total assets of the Portfolio in
repurchase agreements maturing in over seven days and other illiquid
investments. The Portfolios may purchase securities that are not registered
("restricted securities") under the Securities Act of 1933 (the "Securities
Act"), but can be offered and sold to "qualified institutional buyers" under
Rule 144A under the Securities Act. These Portfolios may also purchase certain
commercial paper issued in reliance on the exemption from regulations in
Section 4(2) of the Securities Act ("4(2) Paper"). However, each Portfolio
will not invest more than 10% of its net assets in illiquid investments, which
include securities for which there is no ready market, securities subject to
contractual restriction on resale, certain investments in asset-backed and
receivable-backed securities and restricted securities (unless, with respect
to these securities and 4(2) Paper, the Fund's Directors continuously
determine, based on the trading markets for the specific restricted security,
that it is liquid). The Directors may adopt guidelines and delegate to the
Investment Advisor the daily function of determining and monitoring liquidity
of restricted securities and 4(2) Paper. The Directors, however, will retain
sufficient oversight and be ultimately responsible for the determinations.

Since it is not possible to predict with assurance exactly how
this market for restricted securities sold and offered under Rule 144A will
develop, the Directors will carefully monitor the Portfolios investments in
these securities, focusing on such factors, among others, as valuation,
liquidity and availability of information. This investment practice could have
the effect of increasing the level of illiquidity in the Portfolios to the
extent that qualified institutional buyers become for a time uninterested in
purchasing these restricted securities.

Hedging Instruments. Hedging is a means of transferring risk
which an investor does not desire to assume

-25-
170559.4

<PAGE>

during an uncertain market environment. The Limited Term Portfolio and the Tax
Exempt Limited Term Portfolio are permitted to enter into transactions solely
(a) to hedge against changes in the market value of portfolio securities or
(b) to close out or offset existing positions. The transactions must be
appropriate for the reduction of risk; they cannot be for speculation. The
Limited Term Portfolio and the Tax Exempt Limited Term Portfolio may (a) sell
futures contracts on non-municipal and municipal debt securities and indexes
of non-municipal and municipal debt securities, respectively, and (b) purchase
or write (sell) options on these futures, on non-municipal and municipal debt
securities and on indexes of non-municipal and municipal debt securities
traded on registered securities exchanges and contract markets, respectively.

Financial futures contracts obligate the seller to deliver a
specific type of security, at a specified time for a specified price. The
contracts may be satisfied by actual delivery of the securities or by an
offsetting transaction. There are risks associated with the use of futures
contracts for hedging purposes. In certain market conditions, as with rising
interest rates, futures contracts may not completely offset a decline in value
of portfolio securities. It may not always be possible to execute a buy or
sell order at the desired price or to close out an open position due to market
conditions, limits on open positions, and/or daily price fluctuation limits.
Changes in market interest rates may differ substantially from those
anticipated when hedge positions were established. If a Portfolio has hedged
against rising interest rates and they decline, the value of the Portfolio
will increase, but at least part of the benefit of the increase will be lost
because of losses in the Portfolio's futures positions. The Portfolio may have
to sell securities to meet daily maintenance margin requirements. The risk of
loss to the Portfolio is theoretically unlimited when the Portfolio sells a
futures contract because the Portfolio is obligated to make delivery unless
the contract is closed out, regardless of fluctuations in the price of the
underlying security.

The Portfolios may also purchase put options or write (sell)
call options on non-municipal debt securities. In the event that options on
municipal debt securities became available, the Tax Exempt Limited Term
Portfolio would consider purchasing or selling these options. The Portfolios
may purchase call options and write (sell) put options on debt securities to
close out open positions, purchase put options to protect its holding from a
decline in market value, and write call options. The Portfolios may also
purchase put options and write call options on futures contracts which are
traded on a United States exchange or board of trade and enter into closing
transactions with respect to these options. The Portfolios may use options on
futures contracts under the same conditions it uses put and call

-26-
170559.4

<PAGE>

options on debt securities. The effect of a futures contract may also be
created by simultaneous purchase of a put and sale of a call option on the
same security. When the Portfolio purchases a put option or call option, the
maximum risk of loss to the Portfolio is the price of the option purchased.
The use of options as a hedge rather than financial futures contracts may
result in partial hedges because of the limits inherent in the exercise
prices. The Portfolio will not invest more than 5% of its net assets in
premiums on put options.

The Tax Exempt Limited Term Portfolio may also utilize futures
contracts on municipal bond indexes or related put and call options on these
index contracts. The Portfolio's strategies in employing these contracts would
be similar to the strategies applicable to futures and options contracts
generally. The Portfolio may also buy put options and sell call options on
municipal bond index futures or on municipal bond indexes.

The hedging activities of the Portfolios are subject to several
additional restrictions. A Portfolio may not enter into futures contracts or
related options if immediately thereafter the sum of the amount of initial and
variation margin deposits on outstanding futures contracts and premiums paid
for related options would exceed 20% of the market value of its total assets.
In addition, it may not enter into futures contracts or purchase or sell
related options (other than offsetting existing positions) if immediately
thereafter the sum of the amount of initial margin deposits on outstanding
futures contracts and premiums paid for related options would exceed 5% of the
market value of its total assets. A Portfolio's ability to engage in hedging
activities is also restricted by the requirements to "cover" any sale of a
futures contract with securities held in the Portfolio and to establish and
maintain segregated accounts (which may be invested only in liquid assets such
as cash, U.S. government securities and other high grade debt obligations)
equal to the amount of any futures contract purchased by the Portfolio. A
segregated account freezes those assets of the Portfolio and renders them
unavailable for sale or other disposition. These requirements may thus reduce
the Portfolio's flexibility in making investment decisions with respect to
such assets. The Portfolios' ability to engage in hedging activities may be
further limited by certain income tax considerations. See "Taxes".

-27-
170559.4

<PAGE>

on non-municipal debt securities or indexes may not correlate as closely to
the Portfolios as hedging activities based on municipal debt securities or
indexes. Less closely correlated hedges are likely to occur if a Portfolio
hedges municipal securities with a futures contract on United States
government obligations, other non-municipal securities or an index that does
not include municipal securities. This type of hedging activity may be useful
to a Portfolio, especially where closely correlated hedging activities based
on municipal securities or indexes are not available.

Brokerage commissions on financial futures and options
transactions and premium costs for purchasing options may tend to reduce a
Portfolio's yield.

Loan of Portfolio Securities. Each Portfolio may from time to
time lend securities on a short term basis to banks, brokers and dealers and
receive as collateral cash, securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, or irrevocable bank letters
of credit (or any combination thereof), which collateral will be marked to
market daily and will be required to be maintained at all times in an amount
equal to at least 100% of the current value of the loaned securities plus
accrued interest. Such loans are not made with respect to any Portfolio if as
a result the aggregate of all outstanding loans exceeds one-third of the value
of the Portfolio's total assets. Securities lending will afford a Portfolio
the opportunity to earn additional income because the Portfolio will continue
to be entitled to the interest payable on the loaned securities and also will
either receive as income all or a portion of the interest on the investment of
any cash loan collateral or, in the case of collateral other than cash, a fee
negotiated with the borrower. Such loans will be terminable at any time. Loans
of securities involve risks of delay in receiving additional collateral or in
recovering the securities lent or even loss of rights in the collateral in the
event of the insolvency of the borrower of the securities. A Portfolio will
have the right to retain record ownership of loaned securities in order to
exercise beneficial rights. A Portfolio may pay reasonable fees in connection
with arranging such loans. The Portfolio will not lend its securities to any
officer, partner, Director, employee, or affiliate of the Fund, or the
Advisor.

Puts for the Tax Exempt Portfolios. The Tax Exempt Money Market
Portfolio and the Tax Exempt Limited Term Portfolio may purchase municipal
bonds or notes with the right to resell them at an agreed price or yield
within a specified period prior to maturity to facilitate portfolio liquidity.
This right to resell is known as a put. The aggregate price paid for
securities with puts may be higher than the price which otherwise would be
paid. Consistent with the investment objectives of these Portfolios and
subject to the supervision of the Directors,

-28-
170559.4

<PAGE>

the purpose of this practice is to permit the Portfolios to be fully invested
in tax exempt securities while maintaining the necessary liquidity to purchase
securities on a when-issued basis, to meet unusually large redemptions, to
purchase at a later date securities other than those subject to the put and in
the case of the Tax Exempt Limited Term Portfolio, to facilitate the Advisor's
ability to manage the portfolio actively. The principal risk of puts is that
the put writer may default on its obligation to repurchase. The Advisor will
monitor each writer's ability to meet its obligations under puts. See
"Investment Restrictions" and "Taxes" herein.

The amortized cost method is used by the Domestic Prime Money
Market Portfolio, the Global Money Market Portfolio and the Tax Exempt Money
Market Portfolio to value any municipal securities; no value is assigned to
any puts on such municipal securities. This method is also used by the Tax
Exempt Limited Term Portfolio to value certain high quality municipal
securities which meet the requirements specified for use of the amortized cost
method; when these securities are subject to puts separate from the underlying
securities, no value is assigned to the puts. The cost of any such put is
carried as an unrealized loss from the time of purchase until it is exercised
or expires.

INVESTMENT RESTRICTIONS

Unless specified to the contrary, the following restrictions
may not be changed as to a Portfolio without the approval of a majority of the
outstanding voting securities of that Portfolio which, under the Investment
Company Act of 1940 and the rules thereunder and as used in this Statement of
Additional Information, means the lesser of (1) 67% of the shares of a
Portfolio present at a meeting if the holders of more than 50% of the
outstanding shares of that Portfolio are present in person or by proxy, or (2)
more than 50% of the outstanding shares of a Portfolio.*

The Fund may not, on behalf of a Portfolio:

(1) with regard to the Domestic Prime Money Market Portfolio
and the Global Money Market Portfolio, invest more than 5% of their total
assets in securities of any one issuer;

- - --------
* Any investment restrictions herein which involve a maximum percentage
of securities or assets shall not be considered to be violated unless
an excess over the percentage occurs immediately after, and is caused
by, an acquisition or encumbrance of securities or assets of, or
borrowings by, the Portfolio.

-29-
170559.4

<PAGE>

however, the Portfolios may invest more than 5% of their total assets in the
First Tier Securities of a single issuer for a period of up to three business
days;

(2) purchase securities (including warrants) other
than those described in the Prospectus as fundamental;

(3) with respect to 75% of the Portfolio's total assets, invest
more than 5% of the value of the total assets in the securities of any one
issuer, except obligations issued or guaranteed by the U.S. Government or its
agencies and instrumentalities;

(4) purchase the securities of any issuer if such purchase
would cause more than 10% of the voting securities of such issuer to be held
by the Portfolio or if such securities were purchased for the purpose of
exercising control;

(5) borrow money, except (a) from banks for extraordinary or
emergency purposes (not for leveraging or investment) or (b) by engaging in
reverse repurchase agreements, provided that (a) and (b) in the aggregate do
not exceed an amount equal to one-third of the value of the total assets of
that Portfolio less its liabilities (not including the amount borrowed) at the
time of borrowing, and further provided that 300% asset coverage is maintained
at all times;

(6) purchase securities while borrowings (excluding reverse
repurchase agreements entered into for other than extraordinary or emergency
purposes) exceed 5% of the Portfolio's total assets;

(7) mortgage, pledge, or hypothecate any assets except that a
Portfolio may pledge not more than one-third of its total assets to secure
borrowings made in accordance with Investment Restriction (5) above. However,
although not a fundamental policy of the Fund, as a matter of operating policy
in order to comply with certain state statutes, no Portfolio will pledge its
assets in excess of an amount equal to 10% of net assets;

(8) act as underwriter of securities issued by others, except
to the extent that the purchase of securities in accordance with the
Portfolio's investment objectives and policies directly from the issuer
thereof and the later disposition thereof may be deemed to be underwriting;

(9) make loans to other persons, except loans of portfolio
securities and except to the extent that the purchase of debt obligations in
accordance with the Portfolio's investment objectives and policies and the
entry into repurchase agreements may be deemed to be loans;

-30-
170559.4

<PAGE>

(10) issue senior securities, except as appropriate to evidence
indebtedness which a Portfolio is permitted to incur pursuant to Investment
Restriction (5) and except for shares of the various series which may be
established by the Board of Directors;

(11) purchase and sell real estate or invest in real estate
limited partnerships or in limited partnership interests in real estate
investment trusts which are not readily marketable (although a Portfolio may
invest in securities of companies which deal in real estate and in other
permitted investments secured by real estate), commodities, commodities
contracts or oil and gas interests;

(12) invest more than 10% of the market value of the
Portfolio's net assets in illiquid investments including repurchase agreements
maturing in more than seven days and foreign securities, privately placed
securities (including short term debt obligations issued pursuant to Section
4(2) of the Securities Act of 1933) and bank participation interests for which
a readily available market does not exist;

(13) sell securities short or purchase securities on margin, or
engage in the purchase and sale of a put, call, straddle or spread option or
in writing such option except to the extent that securities subject to a
demand obligation and stand-by commitments may be purchased as set forth
herein and except that the Limited Term Portfolio and the Tax Exempt Limited
Term Portfolio may purchase hedging instruments as described herein;

(14) acquire securities of other investment companies;

(15) lend portfolio securities in an amount exceeding in the
aggregate one-third of the market value of the Portfolio's total assets, less
liabilities other than obligations created by these transactions;

(16) invest more than 5% of the value of a Portfolio's total
assets in the securities of issuers where the entity providing the revenues
from which the issue is to be paid has a record, including predecessors, of
fewer than three years of continuous operation, except obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.

The Fund may not, on behalf of the Portfolio or Portfolios
specified:

(17) with respect to the Tax Exempt Money Market Portfolio and
the Tax Exempt Limited Term Portfolio, under normal market conditions,
purchase securities if such purchase would cause less than 80% of the
Portfolio's net assets to be invested

-31-
170559.4

<PAGE>

in securities the income from which is exempt from regular federal income tax;

(18) with respect to the U.S. Treasury Money Market Portfolio,
the Domestic Prime Money Market Portfolio, Global Money Market Portfolio and
Limited Term Portfolio, invest more than 25% of the value of the Portfolio's
total assets in securities of companies in the same industry (excluding U.S.
Government securities and, as to Domestic Prime Money Market Portfolio and
Global Money Market Portfolio only, certificates of deposit and bankers'
acceptances of domestic banks); and

(19) with respect to the Tax Exempt Money Market Portfolio and
Tax Exempt Limited Term Portfolio, purchase (i) pollution control and
industrial revenue bonds or (ii) securities which are not Municipal
Obligations, if in either case the purchase would cause more than 25% of the
value of the Portfolio's total assets to be invested in companies in the same
industry (for the purposes of this restriction wholly-owned finance companies
are considered to be in the industry of their parents if their activities are
primarily related to financing the activities of the parents).

MANAGEMENT OF THE FUND

Directors and Officers

The Directors and Officers of the Fund and their principal
occupations during the last five years are set forth below.

Name, Age, Position(s) Principal Occupations During
with Fund and Address Past Five Years

*Thomas E. O'Connor, 52...................... President of Thomas E.
Chairman of the Board O'Connor & Co., Inc., the
19 Old Kings Highway South general partner of Thomas E.
Darien, Connecticut 06820-4526 O'Connor & Co. L.P. which is
a general partner of the
Advisor. Prior to forming
the Advisor and its
affiliated management
company, Gabelli-O'Connor
Fixed Income Management

- - --------
* "Interested person" of the Fund, as defined in the
Investment Company Act.

-32-
170559.4

<PAGE>

Name, Age, Position(s) Principal Occupations During
with Fund and Address Past Five Years

Co., he was a Managing
Director of Bear, Stearns &
Co. Inc. He began his
affiliation with Bear,
Stearns & Co. Inc. in 1972
and became a General Partner
of Bear, Stearns & Co. (the
predecessor partnership) in
1977, and became manager of
the Public Finance Department
in 1978.

+Felix J. Christiana, 71..................... Retired Senior Vice
Director President, Dollar Dry Dock
45 Pondfield Parkway Savings Bank. Director of
Mount Vernon, New York 10552 The Gabelli Asset Fund,
Gabelli Equity Series
Funds, Inc., Gabelli
Global Series Funds, Inc.,
Gabelli Global Multimedia
Trust Inc., The Gabelli
Value Fund, Inc., The
Gabelli Convertible
Securities Fund, Inc., The
Gabelli Equity Trust and
The Gabelli Growth Fund.

+Robert C. Kolodny, M.D., 52................. Physician, author and
Director lecturer (self-employed)
885 Oenoke Ridge Road (1983-present). General
New Canaan, Connecticut 06840 Partner of KBS Partnership,
KBS II Investment
Partnership, KBS III
Investment Partnership,
KBS IV Limited
Partnership, KBS New
Dimensions, L.P., KBS
Global Opportunities, L.P.
and KBS VII Limited
Partnership, private
investment partnerships
(1981-present). Medical
Director and Chairman of
the Board of the
Behavioral Medicine
Institute (1983- present).

- - --------
+ Director, trustee or officer of investment companies advised
by Gabelli Funds, Inc.

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170559.4

<PAGE>

Name, Age, Position(s) Principal Occupations During
with Fund and Address Past Five Years

+Anthony R. Pustorino, 70.................... Retired President of (1961-
Director 1989) and consultant to
515 Madison Avenue Pustorino, Puglisi & Co.,
New York, New York 10022 P.C., certified public
accountants; Professor, Pace
University (1965-present).
Director of The Gabelli Asset
Fund, The Gabelli Growth
Fund, The Gabelli Value Fund,
Inc. and The Gabelli
Convertible Securities Fund.
Trustee of The Gabelli Equity
Trust, Gabelli Capital Series
Fund, Gabelli Multimedia
Trust and Gabelli Equity
Series Fund.

Gary L. Roubos, 59.......................... Chairman of the Board of
Director Dover Corp., a diversified
280 Park Avenue industrial manufacturing
New York, New York 10017 company since 1981.

William A. Merritt Jr., 59.................. Financial Consultant/Mergers
Director and Acquisitions (1992-
83 Brookside Road present). Managing Member of
Darien, Connecticut 06820 Seaboard Realty LLC and
Navigator Communications
Systems, LLC (1995-present).
President and Chief Operating
Officer of WilTel
Communications Systems, Inc.
(1990-1992).

Mary E. Hauck, 51............................ Retired Senior Portfolio
Director manager of the Advisor.
Bishop Park Road Prior to joining the Advisor
RR4, Box 200 in 1987, she was a senior
Pound Ridge, New York 10576 vice president and portfolio
manager of municipal mutual
funds at the Dreyfus
Corporation, where she began
in 1977.

- - --------
+ Director, trustee or officer of investment companies advised
by Gabelli Funds, Inc.

-34-
170559.4

<PAGE>

Name, Age, Position(s) Principal Occupations During
with Fund and Address Past Five Years

Ronald S. Eaker, 35.......................... Senior Portfolio manager of
President and Chief Investment the Advisor. Prior to
Officer joining the Advisor in 1987,
19 Old Kings Highway South he was Supervisor of
Darien, Connecticut 06820-4526 Administrative Operations at
Frank Henjes & Co., where
he began in 1983.

Henley L. Smith, 39.......................... Senior Portfolio manager of
Vice President and the Advisor. Prior to
Investment Officer joining the Advisor in 1987,
19 Old Kings Highway South he was portfolio manager at
Darien, Connecticut 06820-4526 Manufacturers Hanover
Investment Corp. where he
began in 1984. From 1982-
1984 he was a portfolio
manager for Manufacturers
Hanover Trust Company.

Carroll L. Coward, 39........................ Portfolio manager of the
Vice President and Investment Advisor. Prior to joining
Officer the Advisor in 1992, she was
19 Old Kings Highway South Vice President of Lord Abbett
Darien, Connecticut 06820-4526 & Co., where she began in
1986.

Judith Fabrizi, 28........................... Employee of the Advisor.
Secretary, Treasurer and Prior to joining the Advisor
Investment Officer in 1989, she was a cosmetic
19 Old Kings Highway South consultant for Lord & Taylor,
Darien, Connecticut 06820-4526 where she began in 1987.

Joan V. Fiore, 39............................ Managing Director and Counsel
Assistant Secretary of the Administrator since
230 Park Avenue 1991. Staff Attorney at the
New York, New York 10169 Securities Exchange
Commission from 1986 to 1991.

Sheryl Hirschfeld, 35........................ Director of the Administrator
Assistant Secretary since 1994. Prior to joining
230 Park Avenue the Administrator, she was an
New York, New York 10169 employee of The Dreyfus
Corporation from 1982 to
1994.

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<PAGE>

Name, Age, Position(s) Principal Occupations During
with Fund and Address Past Five Years

John J. Pileggi, 36.......................... Senior Managing Director of
Assistant Treasurer the Administrator since 1984.
230 Park Avenue
New York, New York 10169

Compensation Table

Aggregate Compensation
Name of Person, Position from Fund

Felix J. Christiana, Director $4,750

Robert C. Kolodny, M.D., $5,250
Director

Anthony R. Pustorino, Director $5,250

Gary L. Roubos, Director $5,250

William A. Merritt Jr., $5,250
Director

Mary E. Hauck, Director $5,250

There are no pension, retirement or other benefits payable by
the Fund to any director or officer of the Fund.

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

* The total compensation paid to such persons by the Fund during the
fiscal year ending October 31, 1995.

-36-
170559.4

<PAGE>

Investment Advisor

The investment advisor for the Fund is Gabelli-O'Connor Fixed
Income Mutual Funds Management Co., with offices at 19 Old Kings Highway
South, Darien, Connecticut 06820-4526, a Delaware partnership organized in
1987. As of the date of this Statement of Additional Information, the Advisor
is an investment manager, administrator or advisor only for the assets of the
Fund. Gabelli-O'Connor Fixed Income Mutual Funds Management Co. is a
registered investment advisor under the Investment Advisers Act of 1940. Mr.
O'Connor is President and sole shareholder of Thomas E. O'Connor & Co., Inc.,
the general partner of Thomas E. O'Connor & Co. L.P., which is a general
partner of the Advisor. Mario J. Gabelli is the Chairman of the Board of
Directors of Gabelli Funds, Inc., which is the other general partner of the
Advisor. As a result of these relationships, Messrs. Thomas E. O'Connor and
Mario J. Gabelli may each be deemed to be a "controlling person" of the
Advisor. As of December 31, 1995 the Advisor served as investment advisor for
assets aggregating in excess of $641 million. The Advisor is an affiliate of
Gabelli- O'Connor Fixed Income Management Co., a registered investment advisor
that is an investment manager or advisor to corporations, institutions,
pension trusts, profit sharing trusts and high net worth individuals and
which, as of December 31, 1995, served as an investment advisor for assets
aggregating in excess of $1.06 billion. The Advisor is an affiliate of
Quantum/Gabelli-O'Connor L.P. which, as of December 31, 1995, served as
investment advisor for assets aggregating in excess of $22 million. The
Advisor is also an affiliate of Gabelli Funds, Inc. which, through its
affiliates, acts as an investment manager, administrator or advisor for assets
aggregating in excess of $9.1 billion as of December 31, 1995.

Pursuant to the Advisory Agreements for each of the Portfolios,
the Advisor manages the Fund's portfolio of securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Directors of the Fund.

The Advisor provides persons satisfactory to the Board of
Directors of the Fund to serve as officers of the Fund. Such officers, as well
as certain other employees and directors of the Fund, may be directors,
officers or employees of the Advisor or its affiliates.

The Advisor also provides the Fund with supervisory personnel
who will be responsible for supervising the performance of administrative
services, accounting and related services, net asset value and yield
calculation, reports to and filings with regulatory authorities, and services
relating to such functions. However, the Administrator will provide personnel
who will be responsible for performing the operational components of such

-37-
170559.4

<PAGE>

services. The personnel rendering such supervisory services may be employees
of the Advisor, of its affiliates or of other organizations. The Advisory
Agreements for each Portfolio were most recently approved, as amended, on July
19, 1995 by the Board of Directors, including a majority of the directors who
are not interested persons (as defined in the Investment Company Act of 1940)
of the Fund or the Advisor. The Advisory Agreements for the Domestic Prime
Money Market Portfolio and the Tax Exempt Money Market Portfolio were approved
by a majority of the shareholders of each such Portfolio at a meeting of the
shareholders on March 6, 1989. The Advisory Agreement for the U.S. Treasury
Money Market Portfolio was approved by the shareholders of that Portfolio on
March 14, 1991.

The Advisory Agreements have a term which extends to October
31, 1996, and may be continued in force thereafter for successive twelve-month
periods beginning each November 1, provided that such continuance is
specifically approved annually by majority vote of the respective Portfolio's
outstanding voting securities or by the Fund's Board of Directors, and in
either case by a majority of the directors who are not parties to the Advisory
Agreement or interested persons of any such party, by votes cast in person at
a meeting called for the purpose of voting on such matter.

The Advisory Agreements are terminable without penalty by the
Portfolio on sixty days' written notice when authorized either by majority
vote of the outstanding voting shares of the Portfolio or by a vote of a
majority of the Fund's Board of Directors, or by the Advisor on sixty days'
written notice, and will automatically terminate in the event of an
assignment. The Advisory Agreements provide that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Advisor, or of
reckless disregard of its obligations thereunder, the Advisor shall not be
liable for any action or failure to act in accordance with its duties
thereunder.

Fees. Set forth below as a percentage of average daily net
assets are the advisory fees paid to the Advisor for each Portfolio pursuant
to the Advisory Agreements: the U.S. Treasury Money Market Portfolio, .30%;
the Domestic Prime Money Market Portfolio, .30%; the Global Money Market
Portfolio, .30%; the Tax Exempt Money Market Portfolio, .30%; the Limited Term
Portfolio, .45%; and the Tax Exempt Limited Term Portfolio, .45%. Any portion
of the total fees received by the Advisor may be used by the Advisor to
provide shareholder and administrative services and for distribution of Fund
shares. See "Financial Statements" herein.

The fees payable under the applicable Advisory Agreements for
the fiscal years ended October 31, 1993, October 31, 1994 and October 31,
1995, were: $311,273, $440,162

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170559.4

<PAGE>

and $403,955, respectively, for the Tax Exempt Money Market Portfolio;
$454,859, $457,770 and $458,599, respectively, for the Domestic Prime Money
Market Portfolio; and $673,891, $542,100 and $307,543, respectively, for the
U.S. Treasury Money Market Portfolio. None of these amounts, for the fiscal
years ended October 31, 1993, October 31, 1994 and October 31, 1995, were
voluntarily and irrevocably waived by the Advisor for any of these Portfolios.
The U.S. Treasury Money Market Portfolio was activated on July 20, 1990. As of
the date hereof, the other three Portfolios have not been activated by the
Advisor. The Advisor may continue to irrevocably waive its rights to any
portion of the advisory fees and may use any portion of the advisory fees for
purposes of shareholder and administrative services and distribution of the
Fund's shares pursuant to the Fund's Distribution and Service Plans.

Expense Limitation

The Advisor has agreed to reimburse a Portfolio for its
expenses (exclusive of interest, taxes, brokerage, and extraordinary expenses)
which in any year exceed the limits on investment company expenses prescribed
by any state in which the Portfolio's shares are qualified for sale. For the
purpose of this obligation to reimburse expenses, the Portfolio's annual
expenses are estimated and accrued daily, and any appropriate estimated
payments are made to it on a monthly basis. From time to time, the Advisor may
voluntarily assume certain expenses of any Portfolio of the Fund. This would
have the effect of lowering the overall expense ratio of that Portfolio and of
increasing yield to investors in that Portfolio. Subject to the obligations of
the Advisor to reimburse a Portfolio for its excess expenses as described
above, the Portfolios have, under the respective Advisory Agreements,
confirmed their obligation for payment of all their other expenses, including
without limitation: fees payable to the Advisor, Administrator, Custodian,
Transfer Agent and Dividend Agent; brokerage and commission expenses; federal,
state or local taxes, including issuance and transfer taxes incurred by or
levied on them; commitment fees, certain insurance premiums and membership
fees and dues in investment company organizations; interest charges on
borrowings; telecommunications expenses; recurring and non-recurring legal and
accounting expenses; costs of organizing and maintaining the Fund's existence
as a corporation; compensation, including directors' fees, of any directors,
officers or employees who are not also officers of the Advisor or its
affiliates and costs of other personnel providing administrative and clerical
services; costs of stockholders' services and costs of stockholders' reports,
proxy solicitations, and corporate meetings; fees and expenses of registering
their shares under the appropriate Federal securities laws and of qualifying
their shares under applicable state securities laws, including expenses
attendant upon the initial registration and qualification of

-39-
170559.4

<PAGE>

these shares and attendant upon renewals of, or amendments to, those
registrations and qualifications; and expenses of preparing, printing and
delivering the Prospectus to existing shareholders and of printing shareholder
application forms for shareholder accounts.

The Fund may from time to time hire its own employees or
contract to have management services performed by third parties, and the
management of the Fund intends to do so whenever it appears advantageous to
the Fund. The Fund's expenses for employees and for such services are among
the expenses subject to the expense limitation described above.

Administrator

The Administrator for the Fund is Furman Selz LLC (the
"Administrator"), which has its principal office at 230 Park Avenue, New York,
New York 10169, and is primarily an institutional brokerage firm with
membership on the New York, American, Boston, Midwest, Pacific and
Philadelphia Stock
Exchanges.

The Administrator and its affiliate, Furman Selz Capital
Management LLC, act as investment advisor to numerous individual and
institutional accounts. The Administrator serves as administrator and
distributor of other mutual funds. The Fund will not invest in these funds or
in any other fund which may in the future be affiliated with the Administrator
or any of its affiliates.

Pursuant to the Administrative Services Agreements from each of
the Portfolios, the Administrator provides all management and administrative
services reasonably necessary for the Fund, other than those provided by the
Advisor, subject to the supervision of the Fund's Board of Directors. Because
of the services rendered the Fund by the Administrator and the Fund's Advisor,
the Fund itself may not require any employees other than its officers, none of
whom receive compensation from the Fund.

For the services rendered to the Fund by the Administrator,
each Portfolio pays the Administrator a fee, computed daily and payable
monthly, in accordance with the following schedule: (i) .10% of the first $500
million of aggregate average daily net assets of the Fund, (ii) .065% of the
next $250 million of aggregate average daily net assets of the Fund, (iii)
.055% of the next $250 million of aggregate average daily net assets of the
Fund, and (iv) .050% of all aggregate average daily net assets of the Fund
over $1 billion.

Under the Administrative Services Agreement with each
Portfolio, the Administrator provides all administrative
services, including, without limitation: (i) provides services

-40-
170559.4

<PAGE>

of persons competent to perform such administrative and clerical functions as
are necessary to provide effective administration of the Fund, including
maintaining certain books and records described in Rule 31a-1 under the 1940
Act, and reconciling account information and balances among the Fund's
Custodian and Advisor; (ii) oversees the performance of administrative and
professional services to the Fund by others, including the Fund's Custodian;
(iii) prepares, but does not pay for, the periodic updating of the Fund's
Registration Statement, Prospectus and Statement of Additional Information in
conjunction with Fund counsel, including the printing of such documents for
the purpose of filings with the Securities and Exchange Commission and state
securities administrators, prepares the Fund's tax returns, and prepares
reports to the Fund's shareholders and the Securities and Exchange Commission;
(iv) prepares in conjunction with Fund counsel, but does not pay for, all
filings under the securities or "Blue Sky" laws of such states or countries as
are designated by the Distributor, which may be required to register or
qualify, or continue the registration or qualification, of the Fund and/or its
shares under such laws; (v) prepares notices and agendas for meetings of the
Fund's Board of Directors and minutes of such meetings in all matters required
by the 1940 Act to be acted upon by the Board; (vi) monitors daily and
periodic compliance with respect to all requirements and restrictions of the
Investment Company Act, the Internal Revenue Code and the Prospectus; and
(vii) monitors and evaluates daily income and expense accruals, and sales and
redemptions of shares of the Portfolios.

The Administrator also provides the Fund with all accounting
services, including (i) daily computation of net asset value for each
Portfolio; (ii) maintenance of security ledgers and books and records as
required by the Investment Company Act; (iii) production of the Portfolio and
general ledger reports; (iv) reconciliation of accounting records; and (v)
calculation of yield and average maturity for each Portfolio.

For these accounting services provided, the Administrator shall
be paid a fee of $2,500 per Portfolio per month.

The actual fees paid to the Administrator for all services
rendered for the year ended October 31, 1995 were $152,866 for the Domestic
Prime Money Market Portfolio, $134,652 for the Tax Exempt Money Market
Portfolio and $102,517 for the U.S. Treasury Money Market Portfolio.

The Administrative Services Agreements are terminable
at any time, without the payment of any penalty, by a vote of the
majority of the relevant Portfolio's shareholders, by the Fund on
behalf of the Portfolio or the Administrator on sixty days'
written notice and automatically in the event of an "assignment"
as defined by the 1940 Act. The Administrative Services

-41-
170559.4

<PAGE>

Agreements shall remain in effect for the same periods as the Advisory
Agreements subject to annual approval by the Fund's Board of Directors. The
Administrative Services Agreements provide that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Administrator,
or reckless disregard of its obligations thereunder, the Administrator shall
not be liable for any action or failure to act in accordance with its duties
thereunder.

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT

Custodial Trust Company, 101 Carnegie Center, Princeton, New
Jersey 08540 is the Fund's Custodian. Pursuant to a Custodian Agreement with
the Fund, it is responsible for maintaining the books and records of the
Fund's portfolio securities and cash. Subject to the supervision of the
Advisor and Administrator, the Custodian maintains the Fund's portfolio
transaction records. The Administrator acts as the Fund's transfer agent and
dividend agent.

TAXES

The active Portfolios of the Fund have qualified and intend to
continue to qualify under the Internal Revenue Code of 1986, as amended
("Code"), as a regulated investment company. As a regulated investment
company, each Portfolio will not be subject to federal income taxes on its
investment company taxable income and its long-term capital gains that it
distributes to its shareholders, provided that at least 90% of its investment
company taxable income and at least 90% of its tax exempt net interest income
for the taxable year is distributed and numerous other requirements concerning
regulated investment companies are satisfied. The Fund's policy is to
distribute as dividends each year 100% (and in no event less than 90%) of its
investment company taxable income and tax exempt net interest income. Each
Portfolio will be treated as a separate corporation and generally will have to
comply with the qualifications and other requirements applicable to regulated
investment companies without regard to other Portfolios. If for any taxable
year a Portfolio does not qualify as a regulated investment company, all of
its taxable income would be taxable at corporate rates and no distributions
would qualify as tax exempt.

-42-
170559.4

<PAGE>

gains (whether from tax exempt or taxable obligations) are taxable to
shareholders as ordinary income, whether received in cash or reinvested in
additional shares of the Fund. Dividends paid by the Fund from taxable income
on December 31 will be treated as received by shareholders on such date (and
subject to tax in the shareholder's tax year in which such date occurs) for
federal income tax purposes, notwithstanding actual receipt of the dividend in
the following calendar year. Distributions of net realized capital gains after
utilization of capital loss carryforwards, if any, are made in October and, if
necessary, to meet applicable distribution requirements, shortly after October
31, the Portfolios' fiscal year-end, except that the U.S. Treasury Money
Market Portfolio, the Domestic Prime Money Market Portfolio, the Global Money
Market Portfolio and the Tax Exempt Money Market Portfolio include net
short-term capital gain in their daily declarations of income. Distributions
paid by the Portfolios (including distributions of tax exempt interest) may
result in a liability (or increased liability) under the alternative minimum
tax.

Distributions of tax exempt income are not subject to regular
federal income taxes, but may be subject to the alternative minimum tax.
Distributions derived from interest on certain private activity bonds that are
exempt from regular federal income tax are specifically treated as tax
preference items and may subject individual or corporate shareholders to
liability (or increased liability) under the alternative minimum tax. At least
80 percent of the net assets of the Tax Exempt Money Market Portfolio and Tax
Exempt Limited Term Portfolio will be invested in municipal obligations, the
interest income on which is not treated as a tax preference item under the
alternative minimum tax. However, because 75% of the difference between
adjusted current earnings (including, generally, tax exempt income) and
alternative minimum taxable income (determined without regard to this item) is
an addition to the corporate alternative minimum tax base, all distributions
derived from interest that is exempt from regular federal income tax are
included in adjusted current earnings and may subject corporate shareholders
to, or increase their liability under, the alternative minimum tax. In certain
cases, Subchapter S corporations with accumulated earnings and profits from
Subchapter C years will be subject to a tax on "passive investment income,"
including tax exempt interest. For social security recipients, interest on tax
exempt bonds, including tax exempt interest dividends paid by the Fund, is to
be added to adjusted gross income, for purposes of computing the amount of
social security benefits includible in gross income.

With respect to the variable rate demand instruments and
participation certificates, the Fund is relying on the opinion of Battle
Fowler LLP, counsel to the Fund, that it will be treated for Federal income
tax purposes as the owner thereof

-43-
170559.4

<PAGE>

and that the interest on the underlying tax exempt obligations will be tax
exempt to the Fund. Counsel has pointed out that the IRS has announced that it
will not ordinarily issue advance rulings on the question of ownership of
securities or participation interests therein subject to a put and, as a
result, the IRS could reach a conclusion different from that reached by
counsel.

The Fund may be subject to state or local tax in jurisdictions
in which the Fund is organized or may be deemed to be doing business. However,
Connecticut and Maryland tax regulated investment companies in a manner that
is generally similar to the federal income tax rules described herein.

Distributions may be subject to state and local income taxes.
In addition, the treatment of the Fund and its shareholders in those states
that have income tax laws might differ from their treatment under the federal
income tax laws. Some states exempt from state personal income tax
distributions received from the Fund only to the extent such distributions are
derived from interest on obligations issued by such state or its
municipalities or political subdivisions. Shareholders should consult with
their own tax advisors with respect to any state or local taxes. In addition,
shareholders should review with their tax advisors the state and local income
tax consequences of the Fund's investing in certain investments issued by
agencies and instrumentalities of the U.S. Government and in repurchase and
reverse repurchase agreements and of the Fund's engaging in securities loans.

With respect to the U.S. Treasury Money Market Portfolio,
states generally provide for a pass-through of the state and local income tax
exemption afforded under federal law to direct owners of U.S. Government
obligations, subject to such Portfolio's compliance with certain state notice
and investment threshold requirements. It is expected that dividends from the
U.S. Treasury Money Market Portfolio that are derived from interest earned on
U.S. Government obligations generally will be treated for state and local
income tax purposes as if the investor directly owned a proportionate share of
the U.S. Government obligations held by that Portfolio. Therefore, since the
income on U.S. Government obligations in which the U.S. Treasury Money Market
Portfolio invests is exempt from state and local income taxes under federal
law, dividends paid by that Portfolio that are derived from such interest will
also be free from state and local income taxes. To the extent required by
applicable state laws and within any applicable time period following the end
of the Fund's taxable year, the Fund intends to send each shareholder a tax
information notice describing the federal and state tax status of dividends
paid to investors for the prior tax year.

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170559.4

<PAGE>

The exemption from state and local income taxation, if
available, does not preclude states from assessing other taxes, such as
personal property taxes and estate and inheritance taxes, on the value of an
investor's shares in the U.S. Treasury Money Market Portfolio. In addition,
states may impose taxes on capital gains distributed by such Portfolio and may
include the value of Portfolio shares and the income attributable thereto in
the measure of state or municipal franchise taxes imposed on a corporate
investor's privilege of doing business in the state or municipality.
Shareholders are urged to contact their tax advisors regarding the state and
local tax treatment of ownership of shares in the U.S. Treasury Money Market
Portfolio and of dividends received from the Portfolio.

If the Fund acquires debt instruments that were originally
issued at a discount, e.g., zero coupon bonds, it will be required to include
annually in gross income or, in the case of tax-exempt instruments issued at a
discount, in tax-exempt income, a portion of the "original issue discount"
that accrues over the term of the obligation regardless of whether the income
is received by the Fund, and to make distributions accordingly. To insure that
the Fund has sufficient cash to meet this distribution requirement, the Fund
may borrow funds on a short-term basis or sell certain investments. Since a
substantial percentage of the Fund's dividends are expected to be reinvested
and dividends that are declared and automatically reinvested satisfy the
distribution requirement, the Fund expects to satisfy the distribution
requirement even if it owns obligations with original issue discount.
Shareholders will realize taxable income on the automatic reinvestment of
dividends that are attributable to original issue discount on taxable
obligations.

The Code imposes a nondeductible 4% excise tax on a Portfolio
unless it meets certain requirements with respect to distributions of ordinary
income and capital gain net income. The formula requires payment to
shareholders during a calendar year of distributions representing at least 98%
of each Portfolio's ordinary income for the calendar year, plus at least 98%
of the excess of its capital gains over its capital losses realized during the
one-year period ending October 31 during such year, which shall be reduced
(but not below net capital gain) by the amount of the Portfolio's net ordinary
loss for the year. It is anticipated that this provision will not have any
material impact on any Portfolio.

Dividends and interest paid by foreign issuers may be subject
to withholding and other foreign taxes, which may decrease the net return on
foreign investments as compared to dividends and interest paid by domestic
issuers. The Fund does not expect that any Portfolio will qualify to elect to
pass through to its shareholders the right to take a foreign tax

-45-
170559.4

<PAGE>

credit for foreign taxes withheld from dividends and interest payments.

For federal income tax purposes, distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
loss), if any, are taxable as net capital gains regardless of the length of
time shareholders have owned their shares. Although the Tax Reform Act of 1986
eliminated the preferential treatment previously available for net capital
gains, the preferential treatment for net capital gains was restored, to some
extent, by the Revenue Reconciliation Act of 1990, which, in limited
circumstances, places a 28% ceiling on the marginal rate applicable to net
capital gains realized by individuals. Distributions attributable to
short-term capital gains (whether from tax exempt or taxable obligations) are
taxable as ordinary income for federal income tax purposes. Generally, on the
sale or exchange of obligations held for more than one year, gain realized by
a Portfolio that is not attributable to original issue discount or certain
market discount will be long-term capital gain. Such capital gain, if any,
will be distributed as capital gain dividends. Gain on the disposition of a
tax-exempt bond purchased at a market discount generally will be treated as
ordinary income, rather than capital gain, to the extent of accrued market
discount. Capital gain dividends, designated as such in a written notice to
investors mailed not later than 60 days after a Portfolio taxable year closes,
will be taxed as long-term capital gain. However, if an investor receives a
capital gain dividend and sells shares after holding them for six months or
less (not including periods during which the shareholder holds an offsetting
position), then any loss realized on the sale will be treated as long-term
capital loss to the extent of such capital gain dividend. If any net capital
gains are retained by a Portfolio for reinvestment, requiring federal income
taxes to be paid thereon by such Portfolio, the Portfolio will elect to treat
such capital gains as having been distributed to shareholders. As a result,
shareholders will report such capital gains as net capital gains, will be able
to claim their share of federal income taxes paid by the Portfolio on such
gains as a credit against their own federal income tax liability, and will be
entitled to increase the adjusted tax basis of their Portfolio shares by 65%
of their share of the undistributed gain. Distributions of net capital gains
are not eligible for the dividends received deduction.

All taxable dividends from investment company taxable income
are taxable as ordinary income. It is not expected that any income
distributions from the Portfolios will qualify for the dividends received
deduction for corporations.

The Code permits the character of tax exempt interest
distributed by a regulated investment company to flow through as tax exempt
interest to its shareholders, provided that at least

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<PAGE>

50% of the value of its assets at the end of each quarter of its taxable year
is invested in state, municipal and other obligations the interest on which is
exempt under Section 103(a) of the Code. The Tax Exempt Money Market Portfolio
and Tax Exempt Limited Term Portfolio intend to satisfy this 50% requirement
in order to permit their distributions attributable to tax exempt interest to
be treated as such for federal income tax purposes in the hands of their
shareholders. Distributions to shareholders of tax exempt interest earned by
these Portfolios for the taxable year are therefore not subject to regular
federal income tax, although, as described above, they may be subject to the
individual and corporate alternative minimum taxes.

Any short-term capital loss realized upon the redemption of
shares of the Tax Exempt Money Market Portfolio or the Tax Exempt Limited Term
Portfolio within six months from the date of their purchase will be disallowed
to the extent of any tax exempt dividends received during such six-month
period, although the period may be reduced under Treasury Regulations to be
prescribed.

Distributions of investment company taxable income and net
realized capital gains will be taxable as described above, whether received in
shares or in cash. Shareholders electing to receive distributions in the form
of additional shares will have a cost basis for federal income tax purposes in
each share so received equal to the value of a share on the reinvestment date.

Shareholders are required to report tax exempt interest on
their federal income tax returns. Redemptions of shares, including exchanges
for shares of another Portfolio, may result in tax consequences (gain or loss)
to shareholders and are also subject to reporting requirements.

The Tax Reform Act of 1986 contained a provision limiting
miscellaneous itemized deductions for individuals and certain other
shareholders, such as estates and trusts, to the extent such miscellaneous
itemized deductions do not exceed 2% of adjusted gross income for a taxable
year. However, the Revenue Reconciliation Act of 1989 provided an exemption
from the limitation for publicly-offered regulated investment companies. The
U.S Treasury Money Market Portfolio, Domestic Prime Money Market Portfolio and
the Tax Exempt Money Market Portfolio currently qualify and expect to continue
to qualify as publicly-offered regulated investment companies; it is expected
that the remaining Portfolios will qualify as publicly-offered regulated
investment companies when activated.

Interest on indebtedness incurred by shareholders to purchase
or carry shares of the Tax Exempt Money Market Portfolio and the Tax Exempt
Limited Term Portfolio will not be deductible for federal income tax purposes.
In addition, interest incurred

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<PAGE>

or continued to purchase shares of the other Portfolios is generally treated
as investment interest, and in the case of non-corporate taxpayers is
deductible only to the extent of net investment income. Under rules used by
the Internal Revenue Service to determine when borrowed funds are used for the
purpose of purchasing or carrying particular assets, the purchase of shares
may be considered to have been made with borrowed funds even though the
borrowed funds are not directly traceable to the purchase of shares.

Section 147(a) of the Code prohibits exemption from taxation of
interest on certain governmental obligations to persons who are "substantial
users" (or persons related thereto) of facilities financed by such
obligations. The Tax Exempt Money Market Portfolio and the Tax Exempt Limited
Term Portfolio have not undertaken any investigation as to the users of the
facilities financed by tax exempt bonds in their portfolios.

In South Carolina v. Baker, the U.S. Supreme Court held that
the federal government may constitutionally require states to register bonds
they issue and may subject the interest on such bonds to federal tax if not
registered, and the Court further held that there is no constitutional
prohibition against the federal government's taxing the interest earned on
municipal bonds. The Supreme Court decision affirms the authority of the
federal government to regulate and control municipal bonds and to tax such
bonds in the future. The decision does not, however, affect the current
exemption from taxation of the interest earned on municipal bonds in
accordance with Section 103 of the Code.

Under the federal income tax law, the Portfolios will be
required to report to the Internal Revenue Service all distributions of
taxable income and capital gains as well as gross proceeds from the redemption
or exchange of Portfolio shares, except in the case of exempt shareholders,
which include most corporations. Under the backup withholding provisions of
Section 3406 of the Code, distributions of taxable income and capital gains
and proceeds from the redemption or exchange of the shares of a regulated
investment company may be subject to withholding of federal income tax at the
rate of 31% in the case of non-exempt shareholders who fail to furnish the
investment company with their taxpayer identification numbers and their
required certifications regarding their status under the federal income tax
law. A special exception is available for proceeds from the redemption or
exchange of Portfolio shares if a Portfolio maintains a constant net asset
value per share. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld. Corporate
shareholders should provide the Portfolios with their taxpayer identification
numbers and certify their exempt status

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170559.4

<PAGE>

in order to avoid possible erroneous application of backup withholding.

In January of each year (or earlier, if necessary to satisfy
state and local income tax notice requirements), the Portfolios will issue to
each shareholder a statement of the federal income tax status of all
distributions, including: in the case of the Tax Exempt Money Market Portfolio
and the Tax Exempt Limited Term Portfolio, a statement of the percentage of
the prior calendar year's distributions which the respective Portfolio has
designated as tax exempt, the percentage of such tax exempt distributions
treated as a tax preference item for purposes of the alternative minimum tax,
and the source on a state-by-state basis of all distributions; and, in the
case of the U.S. Treasury Money Market Portfolio, all applicable state and
local income tax information.

The foregoing discussion of U.S. federal income tax law relates
solely to the application of that law to U.S. persons, i.e., U.S. citizens and
residents and U.S. domestic corporations, partnerships, trusts and estates.
Each shareholder who is not a U.S. person should consider the U.S. and foreign
tax consequences of ownership of shares of a Portfolio, including the
possibility that such a shareholder may be subject to a U.S. withholding tax
at a rate of 30% (or at a lower rate under an applicable income tax treaty) on
amounts constituting ordinary income received by such person, where such
amounts are treated as income from U.S. sources under the Code.

The federal, state and local income tax rules that apply to the
Fund and its shareholders have changed extensively in recent years, and
investors should recognize that additional changes may be made in the future,
some of which could have an adverse affect on the Fund and its investors for
federal and/or state and local tax purposes. Shareholders should consult their
tax advisors about the application of the provisions of tax law described in
this statement of additional information in light of their particular federal
and state tax situations.

PURCHASE, REDEMPTION AND EXCHANGE

GOC Fund Distributors, Inc. (the "Distributor") serves as the
exclusive Distributor of the shares of each Portfolio pursuant to its
Distribution Agreement with the Fund. Investors may open accounts in the
Portfolios in the Fund only through the exclusive Distributor for the Fund.
Under the Distribution Agreement, the Distributor, for nominal consideration
and as agent for the Fund, will solicit orders for the purchase of Fund
shares, provided that any subscriptions and orders will not be binding on the
Fund until accepted by the Fund as principal. The material relating to the
purchase, redemption and exchange of

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<PAGE>

Portfolio shares in the Prospectus is incorporated herein by reference and
investors should refer to the Prospectus for information relating to these
areas.

DIVIDENDS AND DISTRIBUTIONS

Net investment income is declared as dividends daily and paid
monthly; if an investor's shares are redeemed during a month, accrued but
unpaid dividends are paid with the redemption proceeds. Substantially all the
realized net capital gains for the Portfolios, if any, are declared and paid
on an annual basis (except for net short-term capital gains for the Money
Market Portfolios). Dividends are payable to shareholders of record at the
time of declaration.

Dividends of each Portfolio are automatically reinvested in
additional Portfolio shares unless the shareholder has elected to have them
paid in cash.

The net investment income of the Fund for each business day is
determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. Shares of the Limited Term Portfolio and
the Tax Exempt Limited Term Portfolio earn dividends on the business day their
redemption is effective but not on the business day their purchase is
effective. See "Purchase of Shares" and "Redemption of Shares" in the
Prospectus.

NET ASSET VALUE

Net asset value per share for each of the Portfolios is
determined by subtracting from the value of the Portfolio's total assets the
amount of its liabilities and dividing the remainder by the number of its
outstanding shares. The U.S. Treasury Money Market Portfolio, the Domestic
Prime Money Market Portfolio, the Global Money Market Portfolio and the Tax
Exempt Money Market Portfolio value all portfolio securities by the amortized
cost method in accordance with Rule 2a-7 under the Investment Company Act of
1940. This method attempts to maintain a constant net asset value per share of
$1.00. No assurances can be given that this goal can be attained.

-50-
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<PAGE>

exchanges, or at the quoted bid price in the over-the-counter market. Assets
for which market quotations are not readily available are valued in accordance
with procedures established by the Fund's Board of Directors, including use of
an independent pricing service or services which use prices based on yields or
prices of comparable municipal securities, indications as to values from
dealers and general market conditions. High quality securities with effective
maturities of 397 calendar days or less generally will be valued by the
amortized cost method.

Each of the Portfolios computes its net asset value once daily
on Monday through Friday, except that the net asset value is not computed for
a Portfolio on a day in which no orders to purchase, sell or redeem Portfolio
shares have been received or on the holidays listed herein. The Fund does not
determine net asset value per share on the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.

The Portfolios compute net asset value as follows: the U.S.
Treasury Money Market Portfolio, the Domestic Prime Money Market Portfolio,
the Global Money Market Portfolio and the Tax Exempt Money Market Portfolio
(the "Money Market Portfolios"), 12:00 Noon New York Time; the Limited Term
Portfolio and the Tax Exempt Limited Term Portfolio, 4:00 p.m. New York Time.
The days on which a Fund's net asset value is determined are its business
days.

The Money Market Portfolios utilize the amortized cost method
of valuation. Amortized cost valuation involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any
discount or premium, except that if fluctuating interest rates cause the
market value of the Portfolios to deviate more than l/2 of l% from the value
determined on the basis of amortized cost, the Board of Directors will
consider whether any action should be initiated, as described in the following
paragraph. Although the amortized cost method provides certainty in valuation,
it may result in periods during which the value of an instrument is higher or
lower than the price an investment company would receive if the instrument
were sold.

The Fund's Board of Directors has established procedures to
stabilize, to the extent reasonably possible, these Portfolios' net asset
value at $l.00 per share. These procedures include a review of the extent of
any deviation of net asset amortized cost per share. Should that deviation
exceed 1/2 of 1%, the Board will consider whether any action should be
initiated to eliminate or reduce material dilution or other unfair results to
shareholders. Such action may include redemption of shares in kind, selling
portfolio securities prior to maturity, reducing or withholding dividends and
utilizing a

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<PAGE>

net asset value per share as determined by using available market quotations.
The Money Market Portfolios will maintain a dollar-weighted average portfolio
maturity of 90 days or less, will not purchase any instrument with an
effective maturity greater than 397 days, will limit portfolio investments,
including repurchase agreements, to those United States dollar-denominated
instruments that the Fund's Board of Directors determines present minimal
credit risks, and will comply with certain reporting and recordkeeping
procedures. The Fund has also established procedures to ensure compliance with
the requirement that portfolio securities meet the high quality criteria. See
"Investments and Investment Techniques Common to Two or More Portfolios",
herein.

COMPUTATION OF YIELD

The current and effective yields of the Money Market Portfolios
may be quoted in reports, sales literature, and advertisements published by
the Fund. Current yield is computed by determining the net change, exclusive
of capital changes, in the value of a hypothetical pre-existing account having
a balance of one share at the beginning of a seven-day calendar period,
dividing the net change in account value of the account at the beginning of
the period, and multiplying the return over the seven-day period by 365/7. For
purposes of the calculation, net change in account value reflects the value of
additional shares purchased with dividends from the original share and
dividends declared on both the original share and any such additional shares,
but does not reflect realized gains or losses or unrealized appreciation or
depreciation. Effective yield is computed by annualizing the seven-day return
with all dividends reinvested in additional Portfolio shares.

The yields of the Domestic Prime Money Market Portfolio, the
Tax Exempt Money Market Portfolio and the U.S. Treasury Money Market Portfolio
for the seven-day period ended October 31, 1995 were 5.36%, 3.32% and 5.01%,
respectively.

The Limited Term Portfolio and Tax Exempt Limited Term
Portfolio are not money market funds and must compute their yield in a
different fashion. These Portfolios compute yield based on a 30-day (or one
month) period ended on the date of the most recent balance sheet included in
the registration statement, computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:

YIELD = 2[( a-b + 1)6 - 1]
----
cd

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<PAGE>

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of
reimbursements).

c = the average daily number of shares outstanding during
the period that were entitled to dividends.

d = the maximum offering price per share on the last
day of the period.

Actual future yields will depend on the type, quality, and
maturities of the investments held by the Portfolios, changes in interest
rates on investments, and the Portfolios' expenses during the period.

Tax Equivalent Yield

The Tax Exempt Money Market Portfolio and Tax Exempt Limited
Term Portfolio may from time to time advertise their tax equivalent yield.

Tax equivalent yield is computed based upon a 30-day (or one
month) period ended on the date of the most recent balance sheet included in
the Statement of Additional Information, computed by dividing that portion of
the yield of the Portfolio (as computed pursuant to the formulae previously
discussed) which is tax exempt by one minus a stated income tax rate and
adding the product to that portion, if any, of the yield of the Portfolio that
is not tax exempt. The tax equivalent yields for these Portfolios also may
fluctuate daily and do not provide a basis for determining future yields.

The U.S. Treasury Money Market Portfolio may also advertise a
tax equivalent yield for one or more of the states and municipalities wherein
all or substantially all of that Portfolio's dividends represent a
pass-through of income received on direct obligations of the U.S. Government
and, as a result, are not subject to such state's income tax. The U.S.
Treasury Money Market Portfolio's advertisement of a tax equivalent yield
reflects the taxable yield that an investor subject to that state's or
municipality's highest marginal tax rate would have had to receive in order to
realize the same level of after-tax yield as an investment in the U.S.
Treasury Money Market Portfolio would have produced. Tax equivalent yield is
calculated by dividing the portion of the U.S. Treasury Money Market
Portfolio's yield that is not subject to state or municipal taxes (calculated
as described above) by the result of subtracting the state's or municipality's
highest marginal tax rate from 1, and adding the resulting figure to that
portion, if any, of the U.S. Treasury Money Market Portfolio's yield that is

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<PAGE>

subject to state or municipal income tax. All dividends paid by the U.S.
Treasury Money Market Portfolio are subject to federal income taxation at
applicable rates.

Computation of Total Return

The total return of the Limited Term and the Tax Exempt Limited
Term Portfolios must be displayed in any advertisement containing the yield of
any of these Portfolios. Total return is the average annual total return for
the 1-, 5- and 10-year period ended on the date of the most recent balance
sheet included in the Statement of Additional Information, computed by finding
the average annual compounded rates of return over 1-, 5- and 10-year periods
that would equate the initial amount invested to the ending redeemable value
according to the following formula:

n
P(1+T) = ERV

Where:

P = a hypothetical initial investment of $1000

T = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of the 1-, 5- or 10- year
periods at the end of the 1-, 5- or 10-year periods (or
fractions thereof).

Because the Limited Term and the Tax Exempt Limited Term Portfolios have not
had a registration in effect for 1, 5 or 10 years the period during which the
registration has been effective shall be substituted.

Yield information may be useful for reviewing the performance
of the Portfolio and for providing a basis for comparison with other
investment alternatives. However, unlike bank deposits or other investments
which pay a fixed yield for a stated period of time, the Portfolios' yield
does fluctuate, and this should be considered when reviewing performance or
making comparisons.

From time to time evaluations of performance of the Portfolios
made by independent sources may be used in advertisements concerning the
Portfolios. These sources may include Lipper Analytical Services, Wiesenberger
Investment Company Service, Donoghue's Money Fund Report, Barron's, Business
Week, Changing Times, Financial World, Forbes, Fortune, Money,

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<PAGE>

Personal Investor, Bank Rate Monitor, and The Wall Street Journal.

DESCRIPTION OF COMMON STOCK

The Fund was incorporated in Maryland on August 17, 1987. The
Fund was formerly named the Gabelli-O'Connor Treasurer's Fund, Inc. At a
meeting of the shareholders held on March 6, 1989, the shareholders of the
Fund voted to amend the Amended Articles of Incorporation to change the name
of the Fund to The Treasurer's Fund, Inc. The authorized capital stock of the
Fund consists of twenty billion shares of common stock having a par value of
one tenth of one cent ($.001) per share ("Common Stock"). The Fund's net
assets at the close of business on January 31, 1996 were valued at
$155,898,486.84 for the Tax Exempt Money Market Portfolio, $238,511,270.60 for
the Domestic Prime Money Market Portfolio and $78,577,328.20 for the U.S.
Treasury Money Market Portfolio. The Fund's Board of Directors is authorized
to divide the unissued shares into separate series of stock, each series
representing a separate, additional investment portfolio. The Board currently
has authorized the division of the unissued shares into six series of Common
Stock, one for each of the Portfolios. Shares of all series will have
identical voting rights, except where, by law, certain matters must be
approved by a majority of the shares of the affected series. Each share of any
series of shares when issued has equal dividend, distribution, liquidation and
voting rights within the series for which it was issued, and each fractional
share has those rights in proportion to the percentage that the fractional
share represents of a whole share. Shares will be voted in the aggregate.
There are no conversion or preemptive rights in connection with any shares of
the Fund. All shares, when issued in accordance with the terms of the
offering, will be fully paid and nonassessable. Shares are redeemable at net
asset value, at the option of the shareholder.

As of January 31, 1996, the officers and directors of the Fund,
collectively, beneficially owned, directly or indirectly (including the power
to vote or to dispose of any shares), less than 1% of the total outstanding
shares of each of the Fund's Portfolios.

As of January 31, 1996, the following persons or entities owned
as much as 5% of the indicated Portfolio's outstanding shares:

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<PAGE>

<TABLE>

<CAPTION>
Name and Address Portfolio in Percentage of
of record or Number of which shares Ownership of
beneficial owner shares owned are owned Portfolio

<S> <C> <C> <C>
Bear Stearns Securities Corp. 17,947,051.00 Domestic Prime 7.53%
Bear Stearns Security Corp.
1 Metrotech Center North
Brooklyn, NY 11201-3857

Exor-CRC Inc. 14,078,271.62 Domestic Prime 5.90%
c/o Exor America Inc.
Attn: Peter Ruys
375 Park Avenue, Suite 2107
New York, NY 10152-2199

</TABLE>

The shares held by Bear, Stearns & Co. Inc. are held on
behalf of individual client accounts.

The shares of the Fund have non-cumulative voting rights, which
means that the holders of more than 50% of the shares outstanding voting for
the election of directors can elect 100% of the directors if the holders
choose to do so, and, in that event, the holders of the remaining shares will
not be able to elect any person or persons to the Board of Directors. Unless
specifically requested by an investor who is a shareholder of record, the Fund
does not issue certificates evidencing Fund shares.

As a general matter, the Fund will not hold annual or other
meetings of the Funds' shareholders. This is because the By-laws of the Fund
provide for annual meetings only (a) for the election of directors, (b) for
approval of the Fund's revised investment advisory agreement with respect to a
particular class or series of stock, (c) for approval of revisions to the
Fund's distribution agreement with respect to a particular class or series of
stock, and (d) upon the written request of holders of shares entitled to cast
not less than twenty-five percent of all the votes entitled to be cast at such
meeting. Annual and other meetings may be required with respect to such
additional matters relating to the Fund as may be required by the Investment
Company Act of 1940 (the "Act") including the removal of Fund directors and
communication among shareholders, any registration of the Fund with the
Securities and Exchange Commission or any state, or as the Directors may
consider necessary or desirable. Each Director serves until the next meeting
of shareholders called for the purpose of considering the election or
reelection of such Director or of a successor to such Director, and until the
election and qualification of his or her successor, elected at such meeting,
or until such Director sooner dies, resigns, retires or is removed by the vote
of the shareholders.

Rule 18f-2 under the Act provides that any matter
required to be submitted by the provisions of the Act or

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<PAGE>

applicable state law, or otherwise, to the holders of the outstanding voting
securities of an investment company such as the Fund shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority
of the outstanding shares of each class or series affected by such matter,
i.e., by a majority of the outstanding shares of each Portfolio. Rule 18f-2
further provides that a class or series shall be deemed to be affected by a
matter unless it is clear that the interests of each class or series in the
matter are substantially identical or that the matter does not affect any
interest of such class or series. However, the Rule exempts the selection of
independent public accountants, the approval of principal distribution
contracts and the election of directors from the separate voting requirements
of the Rule.

DISTRIBUTION PLANS

The Fund has adopted a shareholder servicing and administration
plan (the "Plan"), pursuant to Rule 12b-1 under the Act (the "Rule") for each
Portfolio of the Fund. The Rule provides that an investment company which
bears any direct or indirect expense of distributing its shares must do so
only in accordance with a plan permitted by the Rule. Although there are no
fees or expenses chargeable to the Fund under the Plans, the Fund's Board of
Directors has adopted the Plans in case certain expenses of the Fund might be
considered to constitute indirect payments by the Fund of distribution
expenses. If a payment by the Fund to the Advisor of advisory fees should be
deemed to be indirect financing by the Fund of the distribution of its shares,
such payments would be authorized under the Plans.

The Plans provide that the Advisor may make payments from time
to time from its own resources, which may include the advisory fee and past
profits for the following purposes: to pay promotional and administrative
expenses in connection with the offer and sale of the shares of the
Portfolios, including payments to participating organizations for performing
shareholder servicing and related administrative functions and for providing
assistance in distributing the Fund's shares. The Advisor, in its sole
discretion, will determine the amount of such payments made pursuant to the
Plans, provided that such payments will not increase the amount which the Fund
is required to pay to the Advisor for any fiscal year under the Advisory
Agreement in effect for that year.

The Glass-Steagell Act limits the ability of a depository
institution to become an underwriter or distributor of securities. However, it
is the Fund management's position that banks are not prohibited from acting in
other capacities for investment companies, such as providing administrative
and shareholder account maintenance services and receiving

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<PAGE>

compensation from the Advisor for providing such services. However, this is an
unsettled area of the law and if a determination contrary to the Fund
management's position is made by a bank regulatory agency or court concerning
shareholder servicing and administration payments to banks from the Advisor,
any such payments will be terminated and any shares registered in the banks'
names, for their underlying customers, will be reregistered in the name of the
customers at no cost to the Fund or its shareholders. In addition, state
securities laws on this issue may differ from the interpretation of federal
law expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.

The Plans provide that they may continue in effect for
successive annual periods provided they are approved by the shareholders or by
the Board of Directors, including a majority of directors who are not
interested persons of the Fund and who have no direct or indirect interest in
the operation of the Plans, or in the agreements related to the Plans. On July
19, 1995, the Board of Directors approved the continuance of all of the Plans
until October 31, 1996. The Plans for the Domestic Prime Money Market
Portfolio and the Tax Exempt Money Market Portfolio were approved by a
majority of the affected Portfolio's shareholders at the annual meeting on
March 6, 1989. The Plan for the U.S. Treasury Money Market Portfolio was
approved by a majority of that Portfolio's shareholders on March 14, 1991. The
Plans further provide that they may not be amended to increase materially the
costs which may be spent by the Fund for distribution pursuant to the Plans
without shareholder approval, and the other material amendments must be
approved by the directors in the manner described in the preceding sentence.
The Plans may be terminated at any time by a vote of a majority of the
disinterested directors of the Fund or the Fund's shareholders. Although there
are no fees or expenses chargeable to the Fund under the Plans, for the fiscal
year ended October 31, 1995, the Advisor made payments under each Plan to or
on behalf of participating organizations in amounts of $100,412, $134,644 and
$149,719 with regard to the U.S. Treasury Money Market Portfolio, the Tax
Exempt Money Market Portfolio and the Domestic Prime Money Market Portfolio,
respectively (representing .10% of the average daily net assets of each of
those Portfolios). Although these payments were not made by the Fund, each may
be deemed an indirect payment by the Fund.

BROKERAGE AND PORTFOLIO TURNOVER

Brokerage

The Fund's purchases and sales of portfolio securities usually
are principal transactions. Portfolio securities are normally purchased
directly from the issuer, from banks and

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<PAGE>

financial institutions or from an underwriter or market maker for the
securities. There usually are not brokerage commissions paid for such
purchases. Any transactions for which the Fund pays a brokerage commission
will be effected at the best price and execution available. Purchases from
underwriters of portfolio securities include a commission or concession paid
by the issuer to the underwriter, and purchases from dealers serving as market
makers include the spread between the bid and asked price. The Fund may
purchase participation certificates in variable rate Municipal Obligations
with a demand feature from banks or other financial institutions at a
negotiated yield to the Fund based on the applicable interest rate adjustment
index for the security. The interest received by the Fund is net of a fee
charged by the issuing institution for servicing the underlying obligation and
issuing the participation certificate, letter of credit, guarantee or
insurance and providing the demand repurchase feature.

Allocation of transactions, including their frequency, to
various dealers is determined by the Advisor in its best judgment and in a
manner deemed in the best interest of shareholders of the Fund rather than by
a formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price. No preference in purchasing
portfolio securities will be given to banks or dealers that are Participating
Organizations.

Investment decisions for the Fund will be made independently
from those for any other investment companies or accounts that may be or
become managed by the Advisor or its affiliates. If, however, the Fund and
other investment companies or accounts managed by the Advisor are
simultaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by the Fund or the size of the position obtainable for the Fund. In
addition, when purchases or sales of the same security for the Fund and for
other investment companies managed by the Advisor occur contemporaneously, the
purchase or sale orders may be aggregated in order to obtain any price
advantage available to large denomination purchasers or sellers.

No portfolio transactions are executed with the Advisor or its
affiliates acting as principal. In addition, the Fund will not buy bankers'
acceptances, certificates of deposit or commercial paper from the Advisor or
its affiliates.

Portfolio Turnover

Each Portfolio's average annual portfolio turnover rate, i.e.,
the ratio of the lesser of sales or purchases to the monthly average value of
the portfolio (excluding from both the

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<PAGE>

numerator and the denominator all securities with maturities at the time of
acquisition of one year or less) is expected to be high. Purchases and sales
are made for each Portfolio whenever necessary in the Advisor's opinion, to
meet the Portfolio's objective. In order to qualify as a regulated investment
company, less than 30% of each Portfolio's gross income (including tax exempt
income) must be derived from the sale or other disposition of stock,
securities or certain investments held for less than three months. Although
increased Portfolio turnover may increase the likelihood of additional capital
gains for the Portfolios, the Portfolios expect to satisfy the 30% income
test.

COUNSEL AND INDEPENDENT AUDITORS

Legal Matters for the Fund are passed upon by Battle Fowler
LLP, 75 East 55th Street, New York, New York 10022.

Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019
have been selected as independent auditors for the Fund.

RATINGS OF MUNICIPAL AND CORPORATE OBLIGATIONS

Description of Moody's Investors Service, Inc.'s municipal and
corporate bond ratings:

Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality
by all standards. Together with Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuations
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
Aaa securities.

A - Bonds which are rated A posses favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

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<PAGE>

Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

B - Bonds which rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa - Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.

Ca - Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

C - Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.

Moody's ratings for municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term and long-term credit risk.
Loans bearing the designation MIG 1 are of the best quality, enjoying strong
protection by establishing cash flow of funds for their servicing or by
established and broad-based access to the market for refinancing, or both.
Loans bearing the designation MIG 2 are of high quality, with margins of
protection ample although not so large as in the preceding group. A short-term
issue having a demand feature (i.e., payment relying on external liquidity and
usually payable on demand rather than fixed maturity dates) is differentiated
by Moody's with the use of the Symbol VMIG, instead of MIG.

Moody's also provides credit ratings for tax exempt commercial
paper. These are promissory obligations (1) not having an original maturity in
excess of nine months, and (2) backed by commercial banks. Notes bearing the
designation P-1

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<PAGE>

have a superior capacity for repayment. Notes bearing the designation P-2 have
a strong capacity for repayment.

Description of Standard & Poor's Corporation's municipal and
corporate bond ratings:

AAA - Bonds rated AAA have the highest rating assigned by S&P
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.

AA - Bonds rated AA have a very strong capacity to pay interest
and repay principal and differ from the highest rated issues only in small
degree.

A - Bonds rated A have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in the
highest rated categories.

BBB - Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic condition or changing
circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal for bonds in this category than for bonds in higher rated
categories.

BB, B, CC, CCC - Bonds rated BB, B, CC, CCC are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lower degree of speculation and CCC the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

C - Bonds rated C are income bonds on which no interest is
being paid.

D - Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.

S&P's top ratings for municipal notes issued after July 29,
1984 are SP-1 and SP-2. The designation SP-1 indicates a very strong capacity
to pay principal and interest. A "+" is added for those issues determined to
possess overwhelming safety characteristics. An "SP-2" designation indicates a
satisfactory capacity to pay principal and interest.

Unrated Bonds. Bonds which are unrated expose the
investor to risks with respect to the issuer's capacity to pay

-62-
170559.4

<PAGE>

interest and principal which are similar to the risks of lower- rated
obligations. The safety of an investment in an unrated obligation, therefore,
is more reliant as a general proposition on an investment advisor's judgment,
analysis and experience than an investment in a higher rated obligation.

Commercial Paper Ratings

Description of Standard & Poor's Corporation's two highest commercial paper
ratings:

A - Issues assigned this highest rating are regarded as having
the greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree of
safety.

A-1 - This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics will be denoted with
a plus (+) sign designation.

A-2 - Capacity for timely payment on issues with this
designation is strong. However, the relative degree of safety is not as high
as for issues designated A-1.

Description of Moody's Investors Service, Inc.'s two highest commercial paper
ratings:

Moody's employs the following designations, both judged to be
investment grade, to indicate the relative repayment capacity of rated issues:
Prime-1, highest quality; Prime-2, higher quality.

Money Market Fund Ratings

Description of Standard & Poor's Corporation's two highest money market fund
ratings:

AAAm - Safety is excellent. Superior capacity to maintain
principal value and limit exposure to loss.

AAm - Safety is very good. Strong capacity to maintain
principal value and limit exposure to loss.

Description of Moody's Investors Service, Inc.'s two highest money market fund
ratings:

Aaa - Money Market Funds rated Aaa have superior quality assets
and management.

Aa - Money Market Funds rated Aa have strong quality assets and
management.

-63-
170559.4

<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Shareholders and Board of Directors
The Treasurer's Fund, Inc.

We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of The Treasurer's Fund, Inc.
(comprising the Domestic Prime Money Market, Tax Exempt Money Market, and U.S.
Treasury Money Market Portfolios) as of October 31, 1995, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and others. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting The Treasure's Fund, Inc. at
October 31, 1995, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for each of the indicated periods, in conformity
with generally accepted accounting principles.

ERNST & YOUNG LLP

New York, New York
December 8, 1995

<PAGE>

THE TREASURER'S FUND
DOMESTIC PRIME MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>

YIELD TO
MATURITY
CREDIT AT TIME OF MATURITY PRINCIPAL VALUE
RATINGS* PURCHASE DATE AMOUNT (NOTE 1A)
-------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER - 38.7%
Island Finance Puerto Rico, Inc., 5.70%(a)(b) .................. A1+/P1/F1+/D1+ 5.839% 11/03/95 $7,200,000 $ 7,197,720
Agway Financial Corp. (LOC Rabobank), 5.75%.................... A1+/P1 5.848 11/08/95 5,700,000 5,693,627
Omnicom Finance, Inc. (LOC Swiss Bank), 5.73%.................. A1+/P1 5.823 11/10/95 5,000,000 4,992,838
First Credit Corp., 5.78%...................................... A1/P1 5.891 11/17/95 8,000,000 7,979,449
Louis Dreyfus Corp. (LOC Credit Agricole), 5.73%............... A1+/P1 5.831 11/22/95 8,000,000 7,973,260
American Trading & Production Corp., 5.74%..................... A1/P1 5.851 11/28/95 8,000,000 7,965,560
International Lease Finance Corp., 5.67%(a) ................... A1/P1/D1+ 5.831 01/08/96 8,000,000 7,914,320
Transamerica Financial Corp., 5.75%(a) ........................ A1/P1/D1 5.898 01/11/96 8,000,000 7,909,278
General Electric Capital Corp., 5.64%.......................... A1+/P1 5.802 01/16/96 8,000,000 7,904,747
----------
TOTAL COMMERCIAL PAPER ............................................................................................... 65,530,799
----------

ADJUSTABLE RATE SECURITIES - 16.6%
Health Insurance Plan of Greater New York ACES,
Series 1990B-1, (07/01/16)**................................. A1+/NR 5.900 11/01/95 3,200,000 3,200,000
Small Business Administration 6.50%, due 09/25/13
Pool #502521(3)***........................................... NR/NR 6.590 11/01/95 1,791,232 1,791,232
Small Business Administration 6.75%, due 02/25/18
Pool #502161(4)*** .......................................... NR/NR 6.861 11/01/95 1,591,089 1,587,355
Small Business Administration 6.75%, due 04/25/18
Pool #502220(4)***........................................... NR/NR 6.857 11/01/95 1,718,688 1,715,790
Small Business Administration 6.75%, due 05/25/18
Pool #502159(5)***........................................... NR/NR 6.861 01/01/96 8,369,283 8,350,559
Small Business Administration 6.375%, due 01/25/19
Pool #502519(6)***........................................... NR/NR 6.472 01/01/96 2,415,610 2,373,831
Small Business Administration 6.75%, due 06/25/19
Pool #502635(4)***........................................... NR/NR 6.852 11/01/95 4,039,694 4,034,926
Student Loan Marketing Association
Note (12/14/95)(7)***........................................ NR/Aaa 5.891 11/06/95 5,000,000 5,000,000
----------
TOTAL ADJUSTABLE RATE SECURITIES ..................................................................................... 28,053,693
----------

U.S. TREASURY ISSUES - 2.8%
U.S. Treasury Bills ............................................................ 5.578 06/27/96 5,000,000 4,826,559
----------
TOTAL U.S. TREASURY ISSUES ........................................................................................... 4,826,559
----------

U.S. GOVERNMENT AGENCIES - 3.0%
Federal National Mortgage Association Discount Notes .......... NR/NR 5.758 11/02/95 5,000,000 4,999,222
----------
TOTAL U.S. GOVERNMENT AGENCIES ....................................................................................... 4,999,222
----------
See accompanying notes to financial statements
</TABLE>
2
<PAGE>

THE TREASURER'S FUND
DOMESTIC PRIME MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1995
<TABLE>
<CAPTION>
YIELD TO
MATURITY
CREDIT AT TIME OF MATURITY PRINCIPAL VALUE
RATINGS* PURCHASE DATE AMOUNT (NOTE 1A)
-------- ---------- ------ ------- --------
LOAN PARTICIPATIONS - 7.7%
<S> <C> <C> <C> <C> <C>
Bell Atlantic Financial Services, 5.97% (Chase Securities)(2).. NR/NR 5.800% 11/01/95 $ 5,000,000 $ 5,000,000
Morgan Stanley Group, 5.92% (Citibank)(2)...................... NR/NR 5.920 11/01/95 8,000,000 8,000,000
------------
TOTAL LOAN PARTICIPATIONS ............................................................................................ 13,000,000
------------

REPURCHASE AGREEMENTS - 31.0%
Bear Stearns & Co. dated 10/31/95................................................. 5.900 11/01/95 22,471,546 22,471,546
(Proceeds at maturity, $22,475,229) collateralized by:
$5,060,000 U.S. Treasury STRIPS 08/15/19 vs. $1,072,113
$41,337,000 U.S. Treasury STRIPS 02/15/09 vs. $17,917,109
$23,300,000 U.S. Treasury STRIPS 08/15/23 vs. $3,931,875

Nomura Securities International, Inc., dated 10/31/95............................. 5.900 11/01/95 30,000,000 30,000,000
(Proceeds at maturity, $30,004,917) collateralized by:
$15,000,000 FNMA Med. Term Note 6.63%, 08/16/00 vs. $15,412,500
$15,115,000 FHLMC Med. Term Note 6.78%, 03/28/01 vs. $15,190,575
------------
TOTAL REPURCHASE AGREEMENTS .......................................................................................... 52,471,546
------------
TOTAL INVESTMENTS - 99.8% (COST $168,881,819)+ ...................................................................... $168,881,819
============
*,**,***, +,(a),(b) See Footnotes to Portfolios
</TABLE>
3
<PAGE>

THE TREASURER'S FUND
TAX EXEMPT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
CREDIT CURRENT MATURITY PRINCIPAL VALUE
RATINGS* COUPON DATE AMOUNT (NOTE 1A)
-------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES - 99.3%
ALABAMA - 1.4%
Huntsville IDR TENR #66 (Avco Corporation Project)
Series 1982 (LOC Wachovia Bank) (11/01/99)**................ Aa2/NR 4.450% 11/07/95 $2,000,000 $ 2,000,000
----------

ARIZONA - 1.8%
Arizona HFAR, Series 1985 (Pooled Loan Program) (FGIC)
(10/01/15)**................................................ VMIG1/A1 4.000 11/07/95 500,000 500,000
Pima County IDA, Series 1982 A (Tucson Electric Power Co.)
(LOC Bank of America) (07/01/22)**.......................... VMIG1/A1 4.000 11/07/95 2,000,000 2,000,000
----------
TOTAL ARIZONA 2,500,000
----------

COLORADO - 3.1%
Platte River Power Authority Electric Revenue
Subordinated Lien Series S-1 (SPA Morgan Guaranty Trust)
(06/01/18)****(b) .......................................... VMIG1/A1/F1+ 3.200 11/09/95 2,000,000 2,000,000
Platte River Power Authority Electric Revenue
Subordinated Lien Series S-1 (SPA Morgan Guaranty Trust)
(06/01/18)****(b) .......................................... VMIG1/A1/F1+ 3.750 01/18/96 2,300,000 2,300,000
----------
TOTAL COLORADO 4,300,000
-----------

CONNECTICUT - 1.4%
Connecticut Special Assessment Unemployment Compensation
Revenue (FGIC) (11/15/01)***(b) ............................ VMIG1/A1+/F1+ 3.900 07/01/96 2,000,000 2,000,000
----------

FLORIDA - 5.0%
Dade County IDR, Solid Waste Disposal (Montenay Project)
(LOC Banque Paribas) (12/01/10)**........................... NR/A1 4.150 11/07/95 2,200,000 2,200,000
Florida HFA Multi-Family Series 1986 B (Heritage Place II)
(GTY Lincoln National Bank) (12/01/08)**.................... NR/A1+ 4.250 11/07/95 4,800,000 4,800,000
----------
TOTAL FLORIDA 7,000,000
----------

GEORGIA - 4.8%
Burke County Development Authority PCR (07/01/24)**............ VMIG1/A1 3.850 11/01/95 600,000 600,000
Burke County Development Authority PCR, Series 1992A,
(Oglethorpe Power Corp. Project) (LOC Credit Suisse)
(01/01/25)****(b) .......................................... P1/A1+/F1+ 3.800 02/21/96 2,500,000 2,500,000
DeKalb County Private Hospital Authority (LOC Trust
Company Bank) (03/01/24)**.................................. VMIG1/A1+ 3.850 11/07/95 1,700,000 1,700,000
Georgia Municipal Gas Authority (Transco Portfolio I
Project) (LOC Credit Suisse) (01/01/01)****................. VMIG1/NR 3.900 12/04/95 2,000,000 2,000,000
----------
TOTAL GEORGIA 6,800,000
----------

ILLINOIS - 9.0%
City of Fulton Solid Waste Disposal Facility Revenue Bonds,
Series A (CGE Fulton Project) (09/01/12)***................. NR/NR 4.000 11/02/95 5,000,000 5,000,000
Illinois Health Facilities Authority Revenue, Series E,
(Hospital Sisters Service) (MBIA) (SPA Morgan Guaranty
Trust) (12/01/15)**......................................... VMIG1/AAA 3.850 11/07/95 2,600,000 2,600,000

4
</TABLE>

<PAGE>
THE TREASURER'S FUND
TAX EXEMPT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (continued)
OCTOBER 31, 1995
<TABLE>
<CAPTION>
CREDIT CURRENT MATURITY PRINCIPAL VALUE
RATINGS* COUPON DATE AMOUNT (NOTE 1A)
-------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (CONTINUED)
ILLINOIS (CONTINUED)
Illinois State Revenue Anticipation Certificates............... MIG1/SP1+ 4.500% 04/12/96 $2,000,000 $ 2,006,944
Illinois State Toll Highway Authority, Series B (MBIA)
(LOC Societe Generale) (01/01/10)**(b) ..................... VMIG1/A1+/F1+ 3.850 11/07/95 3,100,000 3,100,000
----------
TOTAL ILLINOIS 12,706,944
----------

KANSAS - 1.4%
Burlington PCR (Kansas City Power & Light Project)
(LOC Toronto Dominion Bank) (10/01/17)****.................. NR/A1+ 3.800 02/08/96 1,000,000 1,000,000
Burlington PCR (Kansas City Power & Light Project)
(LOC Toronto Dominion Bank) (10/01/17)****.................. NR/A1+ 3.800 02/22/96 1,000,000 1,000,000
----------
TOTAL KANSAS 2,000,000
----------

KENTUCKY - 2.8%
Jefferson County PCR, Series A (Louisville Gas &
Electric Company Project) (09/01/17)****.................... VMIG1/A1+ 3.650 01/25/96 1,000,000 1,000,000
Jefferson County PCR, Series A (Louisville Gas &
Electric Company Project) (09/01/17)****.................... VMIG1/A1+ 3.900 01/25/96 100,000 100,000
Ohio County PCR, (Big Rivers Electric Corporation)
(LOC Chemical Bank) (10/01/15)**............................ NR/NR 4.450 11/07/95 2,900,000 2,900,000
----------
TOTAL KENTUCKY 4,000,000
----------

LOUISIANA - 5.4%
East Baton Rouge Parish PCR (Exxon Corp. Project)
(11/01/19)**................................................ P1/A1+ 4.000 11/01/95 2,000,000 2,000,000
Louisiana State GO Bonds, Series A (LOC Credit
Local de France) (07/01/03)****............................. VMIG1/A1+ 3.600 02/07/96 5,550,000 5,550,000
----------
TOTAL LOUISIANA 7,550,000
----------

MASSACHUSETTS - 3.6%
Commonwealth of Massachusetts GO Notes, Series A(b) ........... MIG1/SP1/F1 4.250 06/12/96 5,000,000 5,023,714
----------

MINNESOTA - 2.2%
Rochester Health Care Facilities Revenue, Series C (Mayo
Foundation/Mayo Medical Center Project) (11/15/21)****...... NR/A1+ 3.600 02/08/96 2,100,000 2,100,000
Rochester Health Care Facilities Revenue, Series B (Mayo
Foundation/Mayo Medical Center Project) (11/15/19)****...... NR/A1+ 3.600 02/12/96 1,000,000 1,000,000
----------
TOTAL MINNESOTA 3,100,000
----------

NEW YORK - 8.0%
New York City Municipal Water Finance Authority, Series C
(SPA FGIC) (06/15/22)**..................................... VMIG1/A1+ 4.000 11/01/95 1,500,000 1,500,000
New York City Variable Series GO Bonds, Subseries B-2 (MBIA)
(08/15/03)**................................................ VMIG1/A1+ 4.000 11/01/95 400,000 400,000
New York State Energy Research Development Authority PCR
(New York Electric & Gas Corp.) (LOC Morgan Guaranty
Trust) (06/01/29)**......................................... VMIG1/A1+ 3.600 11/01/95 800,000 800,000
New York State Job Development Authority, Series A-1--A-42
(State GTD) (03/01/05)**.................................... VMIG1/NR 4.050 11/01/95 800,000 800,000
</TABLE>
See accompanying notes to financial statements.

5
<PAGE>

THE TREASURER'S FUND
TAX EXEMPT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (continued)
OCTOBER 31, 1995
<TABLE>
<CAPTION>
CREDIT CURRENT MATURITY PRINCIPAL VALUE
RATINGS* COUPON DATE AMOUNT (NOTE 1A)
-------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (CONTINUED)
NEW YORK (CONTINUED)
New York State Job Development Authority, Series B-1--
B-21 (State GTD) (03/01/05)**............................... VMIG1/NR 4.050% 11/01/95 $1,700,000 $ 1,700,000
Suffolk County Water Authority Variable BANS
(SPA Bank of Nova Scotia) (12/06/99)**...................... VMIG1/NR 3.850 11/07/95 5,000,000 5,000,000
Westchester County TANS........................................ NR/NR 5.000 12/14/95 1,000,000 1,000,570
----------
TOTAL NEW YORK 11,200,570
----------

NORTH CAROLINA - 10.3%
Charlotte Airport Refunding Revenue Bonds, Series A (MBIA)
(SPA Industrial Bank of Japan, Ltd.) (07/01/16)**........... VMIG1/A1+ 3.850 11/07/95 4,200,000 4,200,000
Lenoir County PCR TENR #60, Series 1983 (Texasgulf, Inc.
Project) (LOC Bankers Trust Co.) (12/01/03)**............... Aa2/NR 4.200 11/07/95 1,000,000 1,000,000
North Carolina Eastern Municipal Power Agency, Series B
(LOC Morgan Guaranty Trust & Union Bank of Switzerland)
(01/01/26)****.............................................. NR/A1+ 3.500 12/06/95 2,700,000 2,700,000
North Carolina Eastern Municipal Power Agency, Series B
(LOC Morgan Guaranty Trust & Union Bank of Switzerland)
(01/01/26)****.............................................. NR/A1+ 3.650 02/13/96 2,200,000 2,200,000
North Carolina Eastern Municipal Power Agency, Series B
(LOC Morgan Guaranty Trust & Union Bank of Switzerland)
(01/01/26)****.............................................. NR/A1+ 3.800 02/14/96 3,000,000 3,000,000
North Carolina State Medical Care Community (Carol Woods
Project) (LOC Bank of Scotland) (04/01/21)**................ VMIG1/NR 4.050 11/01/95 600,000 600,000
Wake County Industrial Facilities & Pollution Control
Financing Authority (Carolina Power & Light Co. Project)
(LOC Sumitomo Bank, Ltd.) (03/01/17)**...................... NR/P1 3.950 11/01/95 800,000 800,000
----------
TOTAL NORTH CAROLINA 14,500,000
----------

NORTH DAKOTA - 2.8%
North Dakota State HFA Home Mortgage Bonds, Series C .......... VMIG1/NR 3.700 12/01/95 2,000,000 2,000,000
North Dakota State HFA Home Mortgage Bonds, Series D .......... VMIG1/NR 3.950 05/01/96 2,000,000 2,000,000
----------
TOTAL NORTH DAKOTA 4,000,000
----------
OHIO - 0.6%
Ohio State Student Loan Funding Corp., Series A-2
(LOC National Westminster Bank plc) (01/01/07)**............ VMIG1/NR 4.050 11/07/95 900,000 900,000
----------

PENNSYLVANIA - 6.9%
Berks County IDA (Sixth & Penn Street Project) (LOC
Meridian Bank) (11/23/03)**................................. VMIG1/NR 3.950 11/07/95 1,460,000 1,460,000
Delaware Valley Regional Financing (LOC Marine Midland
Bank, Hong Kong & Shanghai Bank) (08/01/16)**............... VMIG1/A1 4.050 11/07/95 2,700,000 2,700,000
Pennsylvania Energy Development Authority, Series 1986
Development Energy Revenue Bonds (Ebensburg Project)
(LOC Swiss Bank Corp.) (12/01/11)**......................... Aa1/NR 4.000 11/07/95 1,450,000 1,450,000
Montgomery County Industrial Development Authority
(06/01/29)****.............................................. P1/A1+ 3.500 11/08/95 4,120,000 4,120,000
----------
TOTAL PENNSYLVANIA 9,730,000
----------
See accompanying notes to financial statements.
</TABLE>

6
<PAGE>

SOUTH CAROLINA - 2.1%
Charleston County School District TANS......................... NR/NR 4.500% 04/15/96 $3,000,000 $ 3,009,858
------------

TENNESSEE - 0.6%
Clarksville Public Authority Pooled Financing, Series 1990
(MBIA) (SBPA Credit Suisse) (07/01/13)**.................... VMIG1/A1+ 3.850 11/07/95 800,000 800,000
------------
TEXAS - 22.2%
Brazos River Harbor Navigation District, Series B
(Dow Chemical Co. Project) (10/01/99)****................... P1/NR 4.150 11/08/95 2,900,000 2,900,000
Brazos River Harbor Navigation District, Series A
(Dow Chemical Co. Project) (09/01/00)****................... P1/NR 3.550 12/07/95 2,100,000 2,100,000
Harris County Health Facilities Development Corp.,
Series B (Memorial Hospital System) (LOC Societe
Generale) (06/01/24)****.................................... VMIG1/NR 3.900 01/17/96 2,400,000 2,400,000
Harris County HFC MFHR (Idlewood Park Project) (GTD New
England Mutual Life Insurance Co.) (06/01/05)**............. NR/A1 4.250 11/07/95 2,750,000 2,750,000
Harris County Industrial Development Corp. PCR
(Exxon Corp.) (03/01/24)**.................................. NR/A1+ 4.000 11/01/95 3,300,000 3,300,000
Harris County Industrial Development Corp. PCR
(Exxon Corp.) (03/01/24)**.................................. NR/A1+ 4.000 11/01/95 1,000,000 1,000,000
North Central Texas Health Facilities Development Corp.
(Presbyterian Medical Center Project) (MBIA)
(SPA Nationsbank of Texas) (12/01/15)**..................... VMIG1/A1 3.900 11/01/95 400,000 400,000
North Texas Higher Education Authority, Inc., Student Loan
Revenue (LOC Fuji Bank, Ltd.) (12/01/05)**.................. VMIG1/NR 4.150 11/07/95 1,400,000 1,400,000
Panhandle Plains Higher Education Authority, Inc., Student
Loan Revenue, Series A (LOC SLMA) (06/01/21)**.............. VMIG1/NR 4.000 11/07/95 5,000,000 5,000,000
San Antonio Electric & Gas Revenue (FGIC)
(02/01/12)****.............................................. P1/A1+ 3.800 02/08/96 4,000,000 4,000,000
State of Texas TRANS, Series A(b) ............................. MIG1/SP1+/F1+ 4.750 08/30/96 6,000,000 6,036,452
------------
TOTAL TEXAS 31,286,452
------------

WISCONSIN - 2.2%
Wisconsin State Operating Notes................................ MIG1/SP1+ 4.500 06/17/96 3,000,000 3,016,314
------------

WYOMING - 1.7%
Lincoln County PCR, Series A (Exxon Corporation Project-A)
(11/01/14)**................................................ P1/A1+ 4.000 11/01/95 400,000 400,000
Lincoln County PCR (Pacificorp Project) (LOC Union Bank
of Switzerland) (01/01/16)****.............................. VMIG1/A1+ 3.600 02/07/96 2,000,000 2,000,000
------------
TOTAL WYOMING 2,400,000
------------
TOTAL INVESTMENTS - 99.3% (COST 139,823,852)+ ........................................................................ $139,823,852
============
*,**,***,****,+,(b) See Footnotes to Portfolios

</TABLE>

See accompanying notes to financial statements.

7
<PAGE>

THE TREASURER'S FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
YIELD TO
MATURITY
AT TIME OF MATURITY PRINCIPAL VALUE
PURCHASE DATE AMOUNT (NOTE 1A)
---------- -------- --------- ---------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT ISSUES - 54.3%
U.S. Treasury Bills.......................................................... 5.426% 11/30/95 $ 7,800,000 $ 7,766,824
U.S. Treasury Bills++........................................................ 5.348 12/21/95 7,500,000 7,445,781
U.S. Treasury Bills.......................................................... 5.374 01/04/96 16,500,000 16,346,000
U.S. Treasury Bills++........................................................ 5.572 01/11/96 10,000,000 9,894,486
U.S. Treasury Notes, 7.875%.................................................. 5.520 02/15/96 10,000,000 10,065,067
----------
TOTAL U.S. GOVERNMENT ISSUES ....................................................................................... 51,518,158
----------

REPURCHASE AGREEMENTS - 45.6%
Bear Stearns & Co., Inc. dated 10/31/95...................................... 5.900 11/01/95 17,261,686 17,261,686
(Proceeds at maturity $17,264,515)
collateralized by:
$4,125,000 U.S. Treasury Notes 6.250%, 02/15/03 vs. $4,198,466
$2,000,000 U.S. Treasury Notes 5.500%, 04/15/00 vs. $1,980,300
$6,481,000 U.S. Treasury Bonds 7.625%, 02/15/25 vs. $7,523,987
$3,065,000 U.S. Treasury Bonds 6.875%, 08/15/25 vs. $3,289,113
$405,000 U.S. Treasury Notes 5.750%, 09/30/97 vs. $406,013

Nesbitt Burns Securities Inc. dated 10/31/95................................. 5.850 11/01/95 10,000,000 10,000,000
(Proceeds at maturity $10,001,625)
collateralized by:
$9,725,000 U.S. Treasury Notes 7.250%, 11/15/96 vs. $10,211,250

Nomura Securities International Inc. dated 10/31/95.......................... 5.875 11/01/95 16,000,000 16,000,000
(Proceeds at maturity $16,002,611)
collateralized by:
$16,025,000 U.S. Treasury Notes 6.625%, 03/31/97 vs. $16,325,469

-----------
TOTAL REPURCHASE AGREEMENTS ........................................................................................ 43,261,686
-----------
TOTAL INVESTMENTS 99.9% (COST 94,779,844)+ ......................................................................... $94,779,844
===========

+ See Footnotes to Portfolios
++ Securities on loan to Bear Stearns & Co.; collateralized by U.S. Government
securities at a market value of $17,919,682 as of October 31, 1995.
</TABLE>

See accompanying notes to financial statements.

8
<PAGE>

THE TREASURER'S FUND
FOOTNOTES TO PORTFOLIOS

*CREDIT RATINGS GIVEN BY STANDARD AND POOR'S CORPORATION & MOODY'S INVESTORS
SERVICE INC. (UNAUDITED)
<TABLE>
<CAPTION>

STANDARD & POOR'S MOODY'S
----------------- -----------
<S> <C> <C>
A1 P1 Instrument of the highest quality.
AAA Aaa Instrument judged to be of the best quality and carrying the smallest amount of
investment risk.
AA Aa Instrument judged to be of high quality by all standards.
SP1 MIG1/VMIG1 Instrument judged to be of the best quality with strong protection.
SP2 MIG2/VMIG2 Instrument judged to be of high quality with ample protection.
NR NR Not Rated. In the opinion of the Investment Advisor, instrument judged to be of comparable
investment quality to rated securities which may be purchased by the Portfolios.
</TABLE>

(A) Rated D1 by Duff & Phelps, Inc. (highest quality). (unaudited)
(B) Rated F1 by Fitch Investors Service, Inc. (highest quality). (unaudited)

Items which possess the strongest investment attributes of their category
are given that letter rating followed by a number. Duff & Phelps, Inc., Fitch
Investors Service, Inc. and Standard & Poor's ratings may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

U.S. Government Issues have an assumed rating of AAA/Aaa.

ABBREVIATIONS USED IN THIS STATEMENT:
<TABLE>
<CAPTION>

<S> <C>
ACES................................Adjustable Convertible Extendable Securities
BANS................................Bond Anticipation Notes
FGIC ...............................Insured as to principal and interest by the Financial Guaranty Insurance Corp.
FHLMC...............................Federal Home Loan Mortgage Corporation
FNMA................................Federal National Mortgage Association
GO..................................General Obligation
GTD ................................Guaranteed(1)
GTY ................................Guaranty(1)
HFA ................................Housing Finance Agency
HFAR ...............................Health Facilities Authority Revenue
HFC ................................Housing Finance Corporation
IDA ................................Industrial Development Authority
IDR ................................Industrial Development Revenue
LOC.................................Letter of Credit(1)
MBIA ...............................Insured as to principal and interest by the Municipal Bond Insurance Association
MFHR ...............................Multi-Family Housing Revenue
PCR ................................Pollution Control Revenue
SBPA ...............................Stand-by Purchase Agreement(1)
SLMA................................Student Loan Marketing Association
STRIPS .............................Prestripped zero coupon bond that is a direct obligation of the U.S. Treasury
SPA ................................Securities Purchase Agreement(1)
TANS................................Tax Anticipation Notes
TRANS...............................Tax and Revenue Anticipation Notes
TENR ...............................Tax Exempt Note Rate
</TABLE>
See accompanying notes to financial statements.

9
<PAGE>

THE TREASURER'S FUND
FOOTNOTES TO PORTFOLIOS (CONTINUED)

(1) Institutions shown in parenthesis have entered into credit support
agreements with the issuer.
(2) Institutions shown in parenthesis are the issuers of the participation
interests of those specific holdings.
(3) Coupon resets monthly. The interest rate is based upon the Prime rate
minus 2.25%.
(4) Coupon resets monthly. The interest rate is based upon the Prime rate
minus 2%.
(5) Coupon resets quarterly. The interest rate is based upon the Prime rate
minus 2%.
(6) Coupon resets quarterly. The interest rate is based upon the Prime rate
minus 2.375%.
(7) Coupon resets weekly at the bond equivalent yield of the 91 day Treasury
Bill plus 22 basis points.
** Variable/Floating Rate Demand Note. "Maturity Date" shown is next exercise
date of demand feature and "Yield to Maturity at Time of Purchase"/
"Current Coupon" is the rate in effect on October 31, 1995. Date in
parenthesis is the final maturity date of the issue.
*** Adjustable Rate Security. "Maturity Date" shown is next coupon reset date
and "Yield to Maturity at Time of Purchase" / "Current Coupon" is the rate
in effect on October 31, 1995. Date in parenthesis is the final maturity
date of the issue.
**** Tax-Free Commercial Paper. Date in parenthesis is the final maturity of an
issue which has been remarketed in short-term interest periods ending on
date shown in maturity date column.
+ Cost basis for book and tax purposes is substantially the same.
INVESTMENT PERCENTAGES SHOWN ARE CALCULATED AS A PERCENTAGE OF NET ASSETS.

See accompanying notes to financial statements.

10
<PAGE>

THE TREASURER'S FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
DOMESTIC PRIME TAX EXEMPT U.S. TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ -------------
<S> <C> <C> <C>
ASSETS:
Investments, in securities, at value (identified cost--$168,881,819*,
$139,823,852, and $94,779,844*, respectively)................................ $168,881,819 $139,823,852 $ 94,779,844
Cash........................................................................... 161,659 406,763 29,197
Interest receivable............................................................ 372,149 836,976 173,981
Receivable for fund shares sold................................................ 4,583 -- --
Paydowns receivable............................................................ 268,917 -- 260
Other assets................................................................... 4,761 3,738 66,868
------------ ------------ ------------
Total assets............................................................. 169,693,888 141,071,329 95,050,150
------------ ------------ ------------

LIABILITIES:
Dividend payable............................................................... 264,889 142,863 143,443
Payable for fund shares redeemed............................................... 38,061 20,768 --
Advisory fee payable (note 2).................................................. 42,033 36,825 23,912
Administrative services fee payable (note 2)................................... 14,011 12,275 7,971
Fund accounting and shareholder servicing fees payable (note 2)................ 4,670 4,735 7,009
Accrued expenses payable and other liabilities................................. 32,731 28,274 33,515
------------ ------------ ------------
Total liabilities........................................................ 396,395 245,740 215,850
------------ ------------ ------------
NET ASSETS .................................................................... $169,297,493 $140,825,589 $ 94,834,300
============ ============ ============

NET ASSETS CONSIST OF:
Shares of beneficial interest outstanding (par value of $0.001 per share);
2,000,000,000 shares authorized per Portfolio (note 3)....................... $ 169,520 $ 140,888 $ 94,834
Additional paid-in capital..................................................... 169,350,977 140,748,643 94,739,466
Undistributed net investment income............................................ -- 3,430 --
Distributions in excess of net investment income............................... (11,680) -- --
Accumulated net realized loss on securities.................................... (211,324) (67,372) --
------------ ------------ ------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES ................................... $169,297,493 $140,825,589 $ 94,834,300
============ ============ ============
SHARES OF BENEFICIAL INTEREST OUTSTANDING ..................................... 169,520,497 140,888,022 94,834,300
============ ============ ============
NET ASSET VALUE PER SHARE OUTSTANDING ......................................... $1.00 $1.00 $1.00
===== ===== =====

* Includes Repurchase Agreements of $52,471,546 and $43,261,686 for the Domestic
Prime Money Market Portfolio and U.S. Treasury Money Market Portfolio,
respectively.
</TABLE>
See accompanying notes to financial statements.

11
<PAGE>

THE TREASURER'S FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
DOMESTIC PRIME TAX EXEMPT U.S. TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ -------------
<S> <C> <C> <C>
INTEREST INCOME ............................................................... $8,945,417 $5,211,262 $5,810,174
---------- ---------- ----------
EXPENSES:
Advisory (note 2) ........................................................... 458,599 403,955 307,534
Administrative services (note 2)............................................. 152,866 134,652 102,517
Interest (note 8)............................................................ 26,354 -- --
Ratings...................................................................... -- -- 42,250
Custody...................................................................... 35,349 33,854 29,447
Shareholder services (note 2) ............................................... 27,819 23,108 14,291
Fund accounting (note 2)..................................................... 31,779 35,658 28,667
Auditing..................................................................... 25,000 25,000 25,000
Registration................................................................. 7,445 9,650 3,983
Reports to shareholders...................................................... 12,340 10,013 2,866
Legal........................................................................ 12,923 10,957 3,389
Directors' fees and expenses................................................. 14,500 14,523 14,500
Amortization of organization expense......................................... -- -- 6,425
Miscellaneous................................................................ 1,483 1,784 1,684
---------- ---------- ----------
806,457 703,154 582,553
Less--Fund expenses waived by Administrator (note 2)............................ (11,182) (8,868) (4,251)
---------- ---------- ----------
Total expenses ................................................................ 795,275 694,286 578,302
---------- ---------- ----------
NET INVESTMENT INCOME ......................................................... 8,150,142 4,516,976 5,231,872
NET REALIZED GAIN (LOSS) ON SECURITIES ........................................ (474,237) (2,775) 30,797
---------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .......................... $7,675,905 $4,514,201 $5,262,669
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.

12
<PAGE>

THE TREASURER'S FUND
STATEMENT OF CHANGES IN NET ASSETS

DOMESTIC PRIME TAX EXEMPT U.S. TREASURY
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
-------------------------- -------------------------- ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994 1995 1994
------------- ---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income..................... $ 8,150,142 $ 5,330,056 $ 4,516,976 $ 3,196,461 $ 5,231,872 $ 5,543,045
Net realized gain (loss) on securities
(note 9) (474,237) 9,118 (2,775) (1,391) 30,797 32,925
------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations.............................. 7,675,905 5,339,174 4,514,201 3,195,070 5,262,669 5,575,970
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders:
Net investment income (note 1C) .......... (8,150,142) (5,330,056) (4,516,976) (3,195,070) (5,231,872) (5,543,045)
In excess of net investment income........ (11,680) -- -- -- -- --
Net realized gain on securities .......... -- (9,118) -- -- (30,797) (32,925)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS .. (8,161,822) (5,339,174) (4,516,976) (3,195,070) (5,262,669) (5,575,970)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
capital share transactions (note 3)..... 25,776,580 (1,276,595) 6,877,356 16,199,684 (43,370,462) (85,866,292)
------------ ------------ ------------ ------------ ------------ ------------
CONTRIBUTIONS BY AFFILIATE (NOTE 9) ........ 262,913 -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .... 25,553,576 (1,276,595) 6,874,581 16,199,684 (43,370,462) (85,866,292)

NET ASSETS
Beginning of period....................... 143,743,917 145,020,512 133,951,008 117,751,324 138,204,762 224,071,054
------------ ------------ ------------ ------------ ------------ ------------
End of period* ........................... $169,297,493 $143,743,917 $140,825,589 $133,951,008 $ 94,834,300 $138,204,762
============ ============ ============ ============ ============ ============
</TABLE>

* Accumulated net investment income for the Tax Exempt Money Market Portfolio is
$3,430 and $3,430 for 1995 and 1994, respectively.

13
<PAGE>

THE TREASURER'S FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995

1. The Treasurer's Fund, Inc. (the "Fund") is an open-end, diversified
management investment company registered under the Investment Company Act of
1940, as amended, (the "Act"). The Fund currently consists of six separately
managed portfolios: U.S. Treasury Money Market Portfolio, Domestic Prime
Money Market Portfolio, Global Money Market Portfolio, Tax Exempt Money
Market Portfolio, Limited Term Portfolio and Tax Exempt Limited Term
Portfolio (collectively, the "Portfolios"). Of these, the U.S. Treasury Money
Market Portfolio, the Domestic Prime Money Market Portfolio and the Tax
Exempt Money Market Portfolio have commenced operations. The following is a
summary of significant accounting policies consistently followed by the Fund
in preparation of its financial statements:

(A) The Domestic Prime Money Market Portfolio, the Tax Exempt Money
Market Portfolio and the U.S. Treasury Money Market Portfolio value
all portfolio securities by the amortized cost method which
approximates market value in accordance with Rule 2a-7 under the
Investment Company Act of 1940, as amended.

(B) It is the Fund's policy to comply with the requirements of the
Internal Revenue Code (the "Code") applicable to regulated
investment companies and to distribute all of its "investment
company taxable income," as defined in the Code, and net capital
gains, if any, to its shareholders. Therefore, no Federal income tax
provision is required. The Fund intends to treat each Portfolio as a
separate entity taxable as a corporation for Federal income tax
purposes and to have each Portfolio qualify and elect to be taxed as
a "regulated investment company" under Subchapter M of the Internal
Revenue Code.

(C) Net investment income, including short-term capital gains, is
declared as dividends daily and paid monthly; however, if an
investor's shares are redeemed during a month, accrued but unpaid
dividends are paid with the redemption proceeds. Dividends are
payable to shareholders of record at the time of declaration.

(D) Investment transactions are recorded on trade date. Identified cost
of investments sold is used for both financial statement and Federal
income tax purposes. Interest income, including the amortization of
discount or premium, is recorded as earned. When-issued securities
are recorded on the date on which the priced transaction
confirmation is issued.

(E) Certain administrative expenses are common to, and allocated among,
the Portfolios. Such allocations are made on the basis of each
Portfolio's average net assets or other criteria directly affecting
the expenses.

2. The Fund retains Gabelli-O'Connor Fixed Income Mutual Funds Management Co.
("Gabelli-O'Connor") to act as Investment Advisor and Furman Selz
Incorporated ( "Furman Selz" ) to act as Administrator for the Fund.
Gabelli-O'Connor supervises all aspects of the Fund's operations and provides
investment advice and portfolio management services to the Fund. Subject to
the supervision of the Fund's Board of Directors, the Advisor makes the
Fund's day-to-day investment decisions, arranges for the execution of
portfolio transactions and generally manages the Fund's investments. The
Advisor also provides supervisory personnel who are responsible for
supervising the performance of administrative services, accounting and
related services, net asset value and yield calculations, reports to and
filings with regulatory authorities and services relating to such functions.
However, the Administrator provides personnel to perform the operational
components of such services.

Pursuant to the Administrative Services Agreement with each of the
Portfolios, Furman Selz provides all management and administrative services
necessary for the Fund, other than those provided by the Advisor, subject to
the supervision of the Fund's Board of Directors.

14
<PAGE>

THE TREASURER'S FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1995

As compensation for their respective services, Gabelli-O'Connor and Furman
Selz are entitled to monthly fees with respect to each Portfolio.
Gabelli-O'Connor earns fees at the following annualized rates:

---------------------------------------------------------
AVERAGE DAILY VALUE OF GABELLI-
NET ASSETS OF EACH PORTFOLIO O'CONNOR
---------------------------------------------------------
U.S. Treasury Money Market Portfolio 0.30%
Domestic Prime Money Market Portfolio 0.30%
Money Market Plus Portfolio 0.30%
Tax Exempt Money Market Portfolio 0.30%
Limited Term Portfolio 0.45%
Tax Exempt Limited Term Portfolio 0.45%
---------------------------------------------------------

For the services rendered to the Fund by the Administrator, the Fund pays the
Administrator a fee, computed daily and payable monthly, in accordance with
the following schedule: (i) 0.10% of the first $500 million of aggregate
average daily net assets of the Fund and, (ii) 0.065% of the next $250
million of aggregate average daily net assets of the Fund, (iii) 0.055% of
the next $250 million of aggregate average daily net assets of the Fund, and
(iv) 0.050% of all aggregate average daily net assets of the Fund over $1
billion.

The Administrator also provides the Fund with all accounting related
services. For the fund accounting services provided, the Administrator is
paid a fee of $2,500 plus out of pocket expenses per Portfolio per month.

For the year ended October 31, 1995, Gabelli-O'Connor was entitled to fees of
$458,599, $403,955 and $307,534, respectively, from the Domestic Prime Money
Market Portfolio, the Tax Exempt Money Market Portfolio and the U.S. Treasury
Money Market Portfolio. For fund accounting and administrative servicing fees
during this period, Furman Selz received $31,779 and $152,866, respectively,
from the Domestic Prime Money Market Portfolio, $35,658 and $134,652,
respectively, from the Tax Exempt Money Market Portfolio and $28,667 and
$102,517, respectively, from the US. Treasury Money Market Portfolio.

Furman Selz acts as the Fund's transfer and dividend disbursing agent. The
Fund compensates Furman Selz for providing personnel and facilities to
perform transfer agency related services for the Fund at a rate intended not
to exceed the cost of providing such services. During the year ended October
31, 1995, Furman Selz was entitled to and voluntarily waived fees of $11,182
for the Domestic Prime Money Market Portfolio, $8,868 for the Tax Exempt
Money Market Portfolio and $4,251 for the U.S. Treasury Money Market
Portfolio.

The Fund has adopted a distribution and service plan (the "Plan" ) pursuant
to Rule 12b-1 under the Investment Company Act of 1940 for each Portfolio of
the Fund. There are no fees or expenses chargeable to the Fund under the Plan
and the Fund's Board of Directors has adopted the Plan in case certain
expenses of the Fund might be considered to constitute indirect payment by
the Fund of distribution expenses. GOC Fund Distributors, Inc. (the
"Distributor") serves as the exclusive Distributor of the shares of each
Portfolio pursuant to its Distribution Agreement with the Fund.

The Advisor has agreed to reimburse each Portfolio for its expenses
(exclusive of interest, taxes, brokerage, and extraordinary expenses) which
in any year exceed the lesser of (i) 1.50% of the Portfolio's average annual
net assets or (ii) the limits on investment company expenses prescribed by
any state in which the Portfolio's shares are qualified for sale. From time
to time, the Advisor may voluntarily assume certain expenses of any Portfolio
of the Fund as noted above. No such reimbursement was required during the
year ended October 31, 1995, for any of the Portfolios.

3. At October 31, 1995, there were twenty billion shares of capital stock,
having a par value of one tenth of one cent ($0.001) per share, authorized.
Each Portfolio has been allocated two billion shares of the authorized
capital stock. The balance of eight billion shares of capital stock may be
issued in an existing or newly created class by resolution of the Board of
Directors. Transactions in capital stock shares at $1.00 per share were a
follows:
15
<PAGE>

THE TREASURER'S FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1995

<TABLE>
<CAPTION>
DOMESTIC PRIME TAX EXEMPT U.S. TREASURY
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
--------------------------- ------------------------- -------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sold ....................................... 615,364,259 650,211,087 459,789,646 447,120,392 603,115,075 1,400,716,056
Issued in reinvestment of dividends ........ 7,815,023 5,064,961 4,303,751 3,068,356 4,838,090 5,457,529
----------- ----------- ----------- ----------- ----------- -----------
623,179,282 655,276,048 464,093,397 450,188,748 607,953,165 1,406,173,585
Redeemed ................................... (597,402,702) (656,552,643) (457,216,041) (433,989,064) (651,323,627)(1,492,039,877)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in shares ............ 25,776,580 (1,276,595) 6,877,356 16,199,684 (43,370,462) (85,866,292)
=========== =========== =========== =========== =========== ===========
</TABLE>

4. Each Portfolio, may engage in repurchase agreements, with respect to any
security in which that Portfolio is authorized to invest, with member banks
of the Federal Reserve System and with broker-dealers who are recognized as
primary dealers in U.S. government securities by the Federal Reserve Bank of
New York whose creditworthiness has been reviewed and found satisfactory by
the Fund's Board of Directors. The Portfolios will always receive securities
as collateral whose market value, including accrued interest, will be at
least equal to 100% of the dollar amount invested by the Portfolio in each
agreement, and the Portfolio will make payment for such securities only upon
physical delivery or upon evidence of book entry transfer to the account of
the custodian. If the value of the underlying securities falls below the
value of the repurchase price plus accrued interest, the Fund will require
the seller to deposit additional collateral by the next business day. If the
request for additional collateral is not met, or the seller defaults on its
repurchase obligation, the Portfolios maintain the right to sell the
underlying securities at market value and may claim any resulting loss
against the seller.

5. In the pursuit of the Fund's minimum credit risk investment policy, each
Portfolio maintains a diversified portfolio of money market instruments, each
of which matures or resets to par in less than 397 days from date of purchase
and is determined to represent minimal credit risk in accordance with the
policies and procedures approved by the Fund's Directors. The ability of the
issuer of the instruments to meet their obligations may be affected by
economic developments in a specific industry, region or state.

6. At October 31, 1995, the Domestic Prime Money Market Portfolio had a net
capital loss carryforward for Federal Income tax purposes of $211,324
expiring in 2003. The Tax Exempt Money Market Portfolio had net capital loss
carryforwards for Federal income tax purposes of $67,372 with $2,775, $1,391,
$2,039, $7,802, $39,134 and $14,231, expiring in 2003, 2002, 2001, 1998, 1997
and 1996, respectively.

7. The Fund may lend its securities to broker-dealers and other institutional
investors. The Fund's policy is to receive collateral on each loan equal at
all times to the market value of the securities loan plus accrued interest.
The Fund may bear the risk of delay in receiving additional collateral or in
recovering the securities loaned or even a loss of rights in the collateral
should the borrower of the securities fail financially. The Fund receives
compensation for lending its securities in the form of fees or through the
reinvestment of collateral of any cash received as collateral. The Fund also
continues to receive interest on the securities loaned, and any gain or loss
in the market price of the securities loaned that may occur during the term
of the loan will be for the account of the Fund.

8. The Portfolios are permitted to enter into reverse repurchase agreements for
liquidity purposes or when it is able to purchase other securities which will
produce more income than the cost of the agreement. The Portfolios may enter
into reverse repurchase agreements only with those member banks of the
Federal Reserve System and broker-dealers who are recognized as primary
dealers in U.S. government securities by the Federal Reserve Bank of New York
whose creditworthiness has been reviewed and found satisfactory by the Fund's
Board of Directors. When engaging in reverse repurchase transactions, the
Portfolios will maintain, in a segregated account with its Custodian,
securities equal in value to those subject to the agreement.

9. During the year ended October 31, 1995, the Domestic Prime Money Market
Portfolio realized losses on the sale of certain securities. Pursuant to an
undertaking, losses in the amount of $262,913 were reimbursed to the Fund by
Gabelli-O'Connor. In addition, Gabelli-O'Connor currently has undertaken,
under circumstances, to reimburse the Domestic Prime Money Market Portfolio
with respect to realized losses on certain securities previously held in the
portfolio in an amount which would maintain its net asset value at $1 per
share.
16
<PAGE>

THE TREASURER'S FUND

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
DOMESTIC PRIME
MONEY MARKET PORTFOLIO
---------------------------------------------------------------------
YEAR ENDED
---------------------------------------------------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year ................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- --------
Investment Operations:
Investment income--net ............................... 0.054 0.035 0.028 0.038 0.061
Net realized gain (loss)
on investments...................................... (0.002) 0.000 0.000 0.000 0.001
-------- -------- -------- -------- --------
Total from Investment Operations.................... 0.052 0.035 0.028 0.038 0.062
-------- -------- -------- -------- --------
Distributions:
Dividends from investment
income--net ........................................ (0.054) (0.035) (0.028) (0.038) (0.061)
Dividends from net realized
gain on investments................................. -- -- -- -- (0.001)
-------- -------- -------- -------- --------
Total Distributions ................................ (0.054) (0.035) (0.028) (0.038) (0.062)
-------- -------- -------- -------- --------
Contributions from affiliate (note 9)................. 0.002 -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of period........................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Investment Return................................. 5.50% 3.56% 2.90% 3.82% 6.42%
Ratios/Supplemental Data:
Ratio of expenses
to average net assets............................... 0.52%* 0.54% 0.62% 0.54% 0.88%
Ratio of interest expense to
average net assets.................................. 0.02% 0.13% -- -- 0.39%
Ratio of net investment income to
average net assets ................................. 5.33% 3.49% 2.82% 3.82% 6.12%
Decrease reflected in above expense
ratios due to undertakings by the
Advisor/Administrator .............................. 0.01% 0.01% 0.00% 0.01% 0.06%
Net Assets, end of
period (in thousands)............................... $169,297 $143,744 $145,021 $169,357 $205,282
</TABLE>
- - -------------------
*See page 19
17
<PAGE>

THE TREASURER'S FUND

FINANCIAL HIGHLIGHTS

TAX-EXEMPT
MONEY MARKET PORTFOLIO
---------------------------------------------------------------------
YEAR ENDED
---------------------------------------------------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year.................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Investment Operations:
Investment income--net................................ 0.034 0.022 0.021 0.031 0.047
Net realized gain (loss)
on investments...................................... 0.000 0.000 0.000 0.000 0.000
------- ------- ------- ------- -------
Total from Investment Operations ................... 0.034 0.022 0.021 0.031 0.047
------- ------- ------- ------- -------
Distributions:
Dividends from investment
income--net......................................... (0.034) (0.022) (0.021) (0.031) (0.047)
------- ------- ------- ------- -------
Total Distributions................................. (0.034) (0.022) (0.021) (0.031) (0.047)
------- ------- ------- ------- -------
Net asset value, end of period ....................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Investment Return ................................ 3.42% 2.21% 2.16% 3.19% 4.83%
Ratios/Supplemental Data:
Ratio of expenses to
average net assets.................................. 0.52%* 0.53% 0.57% 0.58% 0.49%
Ratio of net investment income to
average net assets.................................. 3.35% 2.18% 2.15% 3.10% 4.71%
Decrease reflected in above expense
ratios due to undertakings by the
Advisor/Administrator............................... 0.01% 0.01% 0.00% 0.02% 0.09%
Net Assets, end of period (in thousands) ............. $140,826 $133,951 $117,751 $95,751 $86,486
</TABLE>
- - ------------------
*See page 19

18
<PAGE>

THE TREASURER'S FUND

FINANCIAL HIGHLIGHTS

Contained below is per share-operating performance data for a share of
beneficial interest outstanding, total investment return, ratios to average net
assets and other supplemental data for each year indicated. This information has
been derived from information provided in the Portfolio's financial statements.
<TABLE>
<CAPTION>
U.S. TREASURY
MONEY MARKET PORTFOLIO
---------------------------------------------------------------------
YEAR ENDED
---------------------------------------------------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of year................. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- -------
Investment Operations:
Investment income--net ............................ 0.051 0.033 0.026 0.034 0.055
Net realized gain (loss)
on investments................................... 0.000 0.000 0.000 0.002 0.002
------- ------- ------- ------- -------
Total from Investment Operations................. 0.051 0.033 0.026 0.036 0.057
------- ------- ------- ------- -------
Distributions:
Dividends from
investment income--net........................... (0.051) (0.033) (0.026) (0.034) (0.055)
Dividends from net realized
gain on investments.............................. -- -- -- (0.002) (0.002)
------- ------- ------- ------- -------
Total Distributions ............................. (0.051) (0.033) (0.026) (0.036) (0.057)
------- ------- ------- ------- -------
Net asset value, end of year ...................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Investment Return ............................. 5.27% 3.31% 2.60% 3.68% 6.06%
Ratios/Supplemental Data:
Ratio of expenses to average
net assets....................................... 0.56%* 0.49% 0.47% 0.45% 0.49%
Ratio of net investment income
to average net assets .......................... 5.10% 3.07% 2.55% 3.38% 5.50%
Decrease reflected in above expense
ratios due to undertakings by the
Advisor/Administrator............................ 0.00% 0.00% 0.00% 0.01% 0.03%
Net Assets, end of
year (in thousands).............................. $94,834 $138,205 $224,071 $254,899 $281,259
- - ----------
*Effective 1995, the ratios do not include a reduction of expenses for custodian
fee credits on cash balances maintained with the custodian. Including such
custodian fee credits, the expense ratios would be 0.50%, 0.50% and 0.54% for
Domestic Prime, Tax-Exempt and U.S. Treasury Money Market Funds, respectively.
</TABLE>

- - --------------------------------------------------------------------------------
FEDERAL TAX STATUS OF DIVIDENDS (UNAUDITED)

This information is provided to you to meet regulatory requirements and no
current action on your part is needed.

For the fiscal year ended October 31, 1995, dividends paid to you in cash or
reinvested in the amount of $0.054 per share for Domestic Prime Money Market
Portfolio are taxable as ordinary dividend income. None of this amount qualifies
for the dividend received deduction available to corporations. 5.5% of the
income was derived from obligations of the U.S. Treasury.

For the fiscal year October 31, 1995, dividends in the amount of $0.034 per
share for the Tax Exempt Money Market Portfolio are exempt from Federal
taxation. They may not be exempt from state or local taxation. You should
contact your tax adviser as to the state and local status of the dividend you
have received.

For the fiscal year ended October 31, 1995, dividends paid to you in cash or
reinvested in the amount of $0.051 per share for the U.S Treasury Money Market
Portfolio are taxable as ordinary dividend income. None of this amount qualifies
for the dividend received deduction available to corporations. 61.4% of the
income was derived from obligations of the U.S. Treasury.

See accompanying notes to financial statements.

19
<PAGE>

THE TREASURER'S FUND, INC.

PART C - OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements (for those portfolios
activated by the Advisor).

Included in Part A of the Registration Statement:

(1) Financial Highlights for each of the periods
indicated therein.

Included in Part B of the Registration Statement:

(2) Statement of Investments, October 31, 1995.

(3) Statement of Assets and Liabilities,
October 31, 1995.

(4) Statement of Operations for the year ended
October 31, 1995.

(5) Statement of Changes in Net Assets for each of the two
years in the period ended October 31, 1995.

(6) Notes to the Financial Statements.

(7) Report of Ernst & Young LLP, independent auditors,
dated December 8, 1995.

(b) Exhibits.

*(1) Amended and Restated Articles of
Incorporation of the Registrant.

*(2) Amended and Restated By-laws of the
Registrant.

(3) Not applicable.

__________________
* Filed with Post-Effective Amendment No. 2 to Registration Statement No.
33-17604 on March 10, 1989, and incorporated herein by reference.

II-1
170015.4

<PAGE>

*(4) Form of certificate for shares of Common Stock, par
value $.001 per share, of the Registrant.

*(5) Advisory Agreements between the Registrant
and Gabelli-O'Connor Fixed Income Mutual
Funds Management Co. for each portfolio
series of the Registrant except the U.S.
Treasury Money Market Portfolio.

**(5.1) Advisory Agreements between the Registrant
and Gabelli-O'Connor Fixed Income Mutual
Funds Management Co. for the U.S. Treasury
Money Market Portfolio.

***(6) See Distribution Agreement filed as
Exhibit 15.2 hereto.

(7) Not applicable.

**(8) Custody Agreement between the Registrant and
Custodial Trust Company.

**(9) Administrative Services Agreement between the
Registrant and Furman Selz Mager Dietz &
Birney Incorporated for each portfolio series
of the Registrant except the U.S. Treasury
Money Market Portfolio.

*(9.1) Administrative Services Agreement between the
Registrant and Furman Selz Mager Dietz &
Birney for the U.S. Treasury Money Market
Portfolio.

**(10.1) Opinion of Battle Fowler, as to the legality of the
securities being registered, including their consent
to the filing thereof and to the use of their name
under the heading
__________________
* Filed with Pre-Effective Amendment No. 1 to the Registration Statement
No. 33-17604 on November 17, 1987, and incorporated herein by reference.
** Filed with Post-Effective Amendment No. 4 to the Registration Statement
No. 33-17604 on May 11, 1990, and incorporated herein by reference.
*** Filed with Pre-Effective Amendment No. 1 to the Registration
Statement No. 33-17604 on November 17, 1987, and
incorporated herein by reference.

II-2
170015.4

<PAGE>

"Taxes" in the Prospectus and Statement of
Additional Information.

(11) Consent of Independent Auditors.

(12) Not applicable.

**(13) Written assurance of Thomas E. O'Connor that his
purchase of shares of the Registrant was for
investment purposes without any present intention of
redeeming or reselling.

(14) Not applicable.

*(15.1) Distribution and Service Plan pursuant to
Rule 12b-1 under the Investment Company Act
of 1940 for each portfolio series of the
Registrant except the U.S. Treasury Money
Market Portfolio.

**(15.1.1) Distribution and Service Plan pursuant to
Rule 12b-1 under the Investment Company Act
of 1940 for the U.S. Treasury Money Market
Portfolio.

*(15.2) Distribution Agreement between the Registrant
and GOC Fund Distributors, Inc.

Item 25. Persons Controlled by or Under Common
Control with Registrant.

None.

__________________
* Filed with Pre-Effective Amendment No. 1 to the Registration Statement
No. 33-17604 on November 17, 1987, and incorporated herein by reference.
** Filed with Post-Effective Amendment No. 4 to the Registration Statement
No. 33-17604 on May 11, 1990, and incorporated herein by reference.

II-3
170015.4

<PAGE>

Item 26. Number of Holders of Securities.

Number of Record Holders
Title of Class as of December 29, 1995
-------------- ------------------------

Common Stock
(par value $.001)

- U.S. Treasury Money Market Portfolio 1,194
- Domestic Prime Money Market Portfolio Series 3,635
- Global Money Market Portfolio Series 1
- Tax Exempt Money Market Portfolio Series 2,335
- Limited Term Portfolio Series 1
- Tax Exempt Limited Term Portfolio Series 1

Item 27. Indemnification.

Registrant incorporates herein by reference its response to
Item 27 of the Registration Statement filed with the Commission on
January 28, 1987.

Item 28. Business and Other Connections of Investment Adviser.

The description of Gabelli-O'Connor Fixed Income Mutual
Funds Management Co. under the caption "Management of the Fund" in
the Prospectus and in the Statement of Additional Information
constituting parts A and B, respectively, of the Registration
Statement are incorporated herein by reference.

Registrant's investment adviser, Gabelli-O'Connor
Fixed Income Mutual Funds Management Co., is a
registered investment adviser.

The general partners of the investment adviser are Thomas E.
O'Connor & Co., L.P. and Gabelli Funds, Inc. The general partners
are entities created for the purpose of acting as general partners
of the adviser and of Gabelli-O'Connor Fixed Income Management
Co., an investment manager or adviser to corporations,
institutions, pension trusts, profit sharing trusts and high net
worth individuals. Neither general partner is engaged in any other
business activity; however, Thomas E. O'Connor & Co., Inc., the
managing general partner of Thomas E. O'Connor & Co., L.P., and
Gabelli Funds, Inc. are the sole stockholders of the Registrant's
distributor, GOC Fund Distributors, Inc.

II-4
170015.4

<PAGE>

Item 29. Principal Underwriters.

(a) GOC Fund Distributors, Inc., the Registrant's
distributor, currently is not a distributor for any other
registered investment companies.

(b) The following are the directors and officers of GOC Fund
Distributors, Inc. The principal business address of each of these
persons is 19 Old Kings Highway South, Darien, Connecticut
06820-4526.

Positions and Offices Positions and Offices
Name With Distributor With Registrant
---- --------------------- ---------------------

Thomas E. O'Connor Director; President; Chairman of Board
Treasurer

Ronald S. Eaker Vice President President; Chief
Investment Officer

Henley L. Smith Vice President and Vice President;
Secretary Investment Officer

Judith Fabrizi -- Secretary; Treasurer;
Investment Officer

Item 30. Location of Accounts and Records.

Accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the rules promulgated thereunder are maintained in the
physical possession of the Registrant; at Gabelli-O'Connor Fixed
Income Mutual Funds Management Co., the Registrant's adviser; at
Custodial Trust Company, the Registrant's custodian; and at Furman
Selz LLC, the Registrant's administrator, transfer agent and
dividend agent.

Item 31. Management Services.

Not applicable.

Item 32. Undertakings.

(a) Not applicable.

(b) Not applicable.

II-5
170015.4

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Post-
Effective Amendment to its Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Darien, and
State of Connecticut, on the 1st day of March, 1995.

THE TREASURER'S FUND, INC.
(Registrant)

By: /s/ Ronald S. Eaker
----------------------------
Ronald S. Eaker, President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title Date

(1) Principal Executive
Officer

President
/s/ Ronald S. Eaker and Chief March 1, 1995
------------------------
Ronald S. Eaker Investment
Officer

(2) Principal Financial and
Accounting Officer

/s/ Judith Fabrizi Treasurer March 1, 1995
------------------------
Judith Fabrizi

(3) Majority of Directors

Thomas E. O'Connor ) Directors March 1, 1995
Felix J. Christiana )
Mary E. Hauck )
Robert C. Kolodny, M.D. ) By:/s/ Thomas E. O'Connor
Anthony R. Pustorino ) -----------------------
Gary L. Roubos ) Thomas E. O'Connor
William A. Merritt, Jr. ) Attorney-in-Fact*

* An executed copy of the power of attorney for all of the Directors
except Mr. Merritt was filed with Post-Effective Amendment No. 1 to this
Registration Statement, filed with the Commission on June 8, 1988. An
executed copy of the power of attorney for Mr. Merritt was filed with
the Commission on March 1, 1991 with Post-Effective Amendment No. 7 to
this Registration Statement.

II-6
170015.4
<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our
report dated December 8, 1995 in this Registration Statement (Form N-1A No.
33-17604) of The Treasurer's Fund, Inc.

ERNST & YOUNG LLP

New York, New York
February 26, 1996

<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements and supporting schedules as of the end of the most current period and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> TREASURER'S FUND DOMESTIC PRIME MONEY MARKET PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 168882
<INVESTMENTS-AT-VALUE> 168882
<RECEIVABLES> 646
<ASSETS-OTHER> 166
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 169694
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 396
<TOTAL-LIABILITIES> 396
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 169351
<SHARES-COMMON-STOCK> 169
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 12
<ACCUMULATED-NET-GAINS> 211
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 169297
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8945
<OTHER-INCOME> 0
<EXPENSES-NET> 795
<NET-INVESTMENT-INCOME> 8150
<REALIZED-GAINS-CURRENT> (474)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 76676
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8150
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 12
<NUMBER-OF-SHARES-SOLD> 615364
<NUMBER-OF-SHARES-REDEEMED> 597403
<SHARES-REINVESTED> 7815
<NET-CHANGE-IN-ASSETS> 25554
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 459
<INTEREST-EXPENSE> 26
<GROSS-EXPENSE> 806
<AVERAGE-NET-ASSETS> 152866
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.054
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.054
<RETURNS-OF-CAPITAL> 263
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements and supporting schedules as of the end of the most current period and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> TREASURER'S FUND TAX EXEMPT MONEY MARKET PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 139824
<INVESTMENTS-AT-VALUE> 139824
<RECEIVABLES> 837
<ASSETS-OTHER> 410
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 141071
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 246
<TOTAL-LIABILITIES> 246
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 140749
<SHARES-COMMON-STOCK> 141
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (67)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 140826
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5211
<OTHER-INCOME> 0
<EXPENSES-NET> 694
<NET-INVESTMENT-INCOME> 4517
<REALIZED-GAINS-CURRENT> (3)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 4514
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4517
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 459789
<NUMBER-OF-SHARES-REDEEMED> 457216
<SHARES-REINVESTED> 4304
<NET-CHANGE-IN-ASSETS> 6877
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 004
<GROSS-ADVISORY-FEES> 404
<INTEREST-EXPENSE> 003
<GROSS-EXPENSE> 703652
<AVERAGE-NET-ASSETS> 134652
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .034
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .034
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements and supporting schedules as of the end of the most current period and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> TREASURER'S FUND U.S. TREASURY MONEY MARKET PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 94780
<INVESTMENTS-AT-VALUE> 94780
<RECEIVABLES> 174
<ASSETS-OTHER> 96
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95050
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 216
<TOTAL-LIABILITIES> 216
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 94739
<SHARES-COMMON-STOCK> 95
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 94834
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5810
<OTHER-INCOME> 0
<EXPENSES-NET> 578
<NET-INVESTMENT-INCOME> 5232
<REALIZED-GAINS-CURRENT> 31
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5263
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5232
<DISTRIBUTIONS-OF-GAINS> 31
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6033115
<NUMBER-OF-SHARES-REDEEMED> 651323
<SHARES-REINVESTED> 4838
<NET-CHANGE-IN-ASSETS> 43370
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 308
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 583
<AVERAGE-NET-ASSETS> 102517
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .051
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .051
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>