TREASURERS FUND INC /MD/, 485BPOS, 1997-02-28

TREASURERS FUND INC /MD/
485BPOS, 1997-02-28

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As filed with the Securities and Exchange Commission on February 28, 1997
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. 17 /x/

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/

Amendment No. 18 /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, 1996 on December 19, 1996.

170013.4

<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-
170013.4

<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 History The Portfolios and Their Objectives;
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 *

- -----------------------
* Not applicable

-ii-
170013.4

<PAGE>

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

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

23. Financial Statements

- ----------------------
* Not applicable

-iii-
170013.4
<PAGE>

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

PROSPECTUS March 1, 1997
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 collat-eralized 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.
- -------------------------------------------------------------------------------

<PAGE>

TABLE OF CONTENTS

Page
-----
Summary.............................................. 1
Table of Fees and Expenses........................... 4
Financial Highlights................................. 4
U.S. Treasury Money Market Portfolio................. 6
Domestic Prime Money Market Portfolio................ 7
Global Money Market Portfolio........................ 9
Tax Exempt Money Market Portfolio.................... 11
Limited Term Portfolio............................... 13
Tax Exempt Limited Term Portfolio.................... 15
Additional Investment Information and
Risk Factors....................................... 16
Investment Restrictions.............................. 24

Page
-----

Management of the Fund............................... 25
Purchase of Shares................................... 28
Redemption of Shares................................. 29
Exchange of Shares................................... 30
Dividends and Distributions.......................... 31
Net Asset Value...................................... 31
Yield and Total Return Information................... 32
Description of Common Stock.......................... 33
Distribution Plan.................................... 33
Taxes................................................ 34
Custodian, Transfer Agent and
Dividend Agent..................................... 37

<PAGE>
The Treasurer's Fund Portfolios

SUMMARY

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 asset Maximum maturity of
value per share. individual securities:397 days

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

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

Tax Exempt Money Market Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Composed of high quality Maximum weighted Municipal notes MIG-1 or SP-1 or
municipal securities exempt from average maturity: 90 days MIG-2 SP-2
federal income tax. Seeks to Maximum maturity of Short term municipal bonds Aa or Aaa Aa or Aaa
maintain a stable $1 net asset individual securities:397 days Tax exempt commercial paper P-1 or P-2 A-1 or A-2
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 U.S. Maximum weighted U.S. Government obligations -- --
dollar denominated securities. average maturity: 2 years Commercial paper P-1 A-1
Seeks to obtain a current yield Maximum maturity of Corporate notes, bonds and Aa or Aaa Aa or Aaa
greater than that obtainable individual securities: 3 years other obligations
from the Money Market Portfolios Asset-backed debt Aa or Aaa Aa or Aaa
by actively managing securities Negotiable CDs -- --
in the short and intermediate Eurodollar and Yankee CDs -- --
maturity ranges. Net asset value Hedging instruments -- --
per share will fluctuate. Private placements -- --

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

<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 $100,000 per Portfolio
Investment

Subsequent No minimum amount
Investments

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, fund accounting 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.

<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 Eastern 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 Eastern 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 Eastern 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 Eastern time will be made at that day's NAV and
wired the next business day.

<PAGE>

Table of Fees And Expenses

Annual Fund Operating Expenses
(as a percentage of average net assets)

Domestic Prime Tax Exempt U.S. Treasury
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
-------------- ------------- -------------
Management Fees .30% .30% .30%
Other Operating Expenses .23% .24% .33%
Interest Expense .01% .00% .00%
---- ---- ----
Total Fund Operating Expenses .54% .54% .63%

Example:

You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption at the end of each time period:

Domestic Prime Tax Exempt U.S. Treasury
Money Market Money Market Money Market
Portfolio Portfolio Portfolio
-------------- ------------- -------------
1 Year $ 6.00 $ 6.00 $ 6.00
3 Years 17.00 17.00 20.00
5 Years 30.00 30.00 35.00
10 Years 68.00 68.00 79.00

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 1996, 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.

Domestic Prime
Money Market Portfolio
----------------------------------------------------------------------------------------------------------------------------------

Yead Ended
--------------------------------------------------------------------------------------------
October October October October October October October
31, 31, 31, 31, 31, 31, 31,
1996 1995 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value:
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Net Investment Income 0.049 0.054 0.035 0.028 0.038 0.061 0.080
Net Realized Gain (Loss)
on Investments 0.000 (0.002) 0.000 0.000 0.000 0.001 0.000
------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations 0.049 0.052 0.035 0.028 0.038 0.062 0.080
------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from
Net Investment Income (0.049) (0.054) (0.035) (0.028) (0.038) (0.061) (0.080)
Dividends from Net Realized
Gain on Investments (0.000) (0.000) (0.000) (0.000) (0.000) (0.001) (0.000)
------- ------- ------- ------- ------- ------- -------
Total Distributions (0.049) (0.054) (0.035) (0.028) (0.038) (0.062) (0.080)
------- ------- ------- ------- ------- ------- -------
Contributions from Affiliate 0.0000 0.002 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
======= ======= ======= ======= ======= ======= =======
Total Return 5.12% 5.50% 3.56% 2.90% 3.82% 6.42% 8.26%
Ratios/Supplemental Data:
Net Assets, End of Period
(in thousands) $236,812 $169,297 $143,744 $145,021 $169,357 $205,282 $155,732
Ratio of Operating Expenses
to Average Net Assets** 0.53%*** 0.52%*** 0.54% 0.55% 0.54% 0.49% 0.45%
Ratio of Interest Expenses
to Average Net Assets 0.01 0.02% 0.13% 0.07% -- 0.39% 0.59%
Ratio of Net Investment Income
to Average Net Assets 4.93% 5.33% 3.49% 2.82% 3.82% 6.12% 7.99%
Decrease reflected in above
expense ratios due to under-
takings by the Advisor
/Administrator 0.01% 0.01% 0.01% 0.00% 0.01% 0.06% 0.09%

January 8, 1988
(commencement
operations)
October through
31, October 31,
1989 1988
--------- -----------
Net Asset Value:
Beginning of Period $ 1.000 $ 1.000
------ ----------
Income from Investment
Operations:
Net Investment Income 0.090 0.057
Net Realized Gain (Loss)
on Investments 0.000 0.000
------ ----------
Total from Investment
Operations 0.090 0.057
------ ----------
Less Distributions:
Dividends from
Net Investment Income (0.090) (0.057)
Dividends from Net Realized
Gain on Investments (0.000) (0.000)
------ ----------
Total Distributions (0.090) (0.057)
------ ----------
Contributions from Affiliate 0.000 0.000
------ ----------
Net Asset Value:
End of Period $ 1.000 $ 1.000
====== ==========
Total Return 9.29% 7.33%*
Ratios/Supplemental Data:
Net Assets, End of Period
(in thousands) $185,068 $95,073
Ratio of Operating Expenses
to Average Net Assets** 0.45% 0.45%*
Ratio of Interest Expenses
to Average Net Assets 0.08% --
Ratio of Net Investment Income
to Average Net Assets 8.98% 7.33%*
Decrease reflected in above
expense ratios due to under-
takings by the Advisor
/Administrator 0.16% 0.40%*
</TABLE>

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

* Annualized.

** Expenses exclusive of interest, net of reimbursement/waivers.

*** 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 have been 0.52% and 0.50%
for the fiscal years ended October 31, 1996 and 1995, respectively.

<PAGE>

Tax Exempt
Money Market Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 18, 1987
- --------------------------------------------------------------------------------------------------- commencement
of operations)
October October October October October October October October through
31, 31, 31, 31, 31, 31, 31, 31, October 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- ------------- ----------- ------- ------ ---------- -----------

Net Asset Value:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Beginning of Period $ 1.000 $ 1.000$ 1.000 $1.000 $ 1.000 $ 1.000 1.000 $1.000$ 1.000
------- ------- ------- ------- ------- ------- --- ------ -------
Income from Investment Operations:
Net Investment Income 0.030 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 0.000 --
------- ------- ------- ------- ------- ------- ------- ------ -------
Total from Investment
Operations 0.030 0.034 0.022 0.021 0.031 0.047 0.058 0.061 0.045
------- ------- ------- ------- ------- ------- ------- ------ -------
Less Distributions:
Dividends from Net
Investment Income (0.030) (0.034) (0.022) (0.021) (0.031) (0.047) (0.058) (0.061) (0.45)
Dividends from Net Realized
Gain on Investments (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) --
------- ------- ------- ------- ------- ------- ------- ------ -------

Total Distributions (0.030) (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 $ 1.000
========= ====== ===== ====== ======= ===== ====== ===== =====
Total Return 3.04% 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) $158,507 $140,826 $133,951 $117,751 $95,751 $86,486 $89,620 $68,193 $57,561
Ratio of Operating Expenses
to Average Net Assets 0.54%** 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 3.00% 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 0.00% 0.01% 0.01% 0.00% 0.02% 0.09% 0.16% 0.27% 0.57%*

</TABLE>

- ----------------------------
* Annualized.
** 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 0.52% and
0.50% for the fiscal years ended October 31, 1996 and 1995, respectively.

U. S. Treasury
Money Market Portfolio
------------------------------------------------------------------------------------------------------
Year Ended July 25, 1990
--------------------------------------------------------------------------------------- (commencement
of operations)
October October October October October October through
31, 31, 31, 31, 31, 31, October 31,
1996 1995 1994 1993 1992 1991 1990
---------- ----------- ---------------------- ---------------------------------
Net Asset Value:
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- ----- --------
Income from Investment Operations:
Net investment income 0.047 0.051 0.033 0.026 0.034 0.055 0.019
Net Realized Gain on Investments 0.000 0.000 0.000 0.000 0.000 0.002 0.000
-------- -------- -------- -------- -------- ----- -------
Total from Investment Operations 0.047 0.051 0.033 0.026 0.036 0.057 0.019
-------- -------- -------- -------- -------- ----- -------
Less Distributions:
Dividends from Net Investment Income (0.047) (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) (0.000) (0.002) (0.002) (0.000)
-------- -------- -------- -------- ----- --------
- --------
Total Distributions (0.047) (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 $ 1.000
======== ======== ======== ======== ======== ===== ========
Total Return 4.83% 5.27% 3.31% 2.60% 3.68% 6.06% 1.82%**
Ratios/Supplemental Data:
Net Assets, End of Period
(in thousands) $ 90,761 $ 94,834 $138,205 $224,071 $254,899 $281,259 $130,337
Ratio of Operating Expenses to Average
Net Assets 0.63%*** 0.56%*** 0.49% 0.47% 0.45% 0.49% 0.45%*
Ratio of Net Investment Income to Average
Net Assets 4.70% 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% 0.00% 0.01% 0.03% 0.19%*

</TABLE>

- ----------------------------------
* Annualized.
** Not annualized.
*** 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 0.60% and
0.54% for the fiscal years ended October 31, 1996 and 1995, respectively.

<PAGE>

U.S. TREASURY MONEY MARKET PORTFOLIO

Investment Objectives and Policies

The U.S. Treasury Money Market Port-folio'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, 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.
<PAGE>

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

The Domestic Prime Money Market Port-folio'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 obligations of
domestic issuers which 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 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.

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.

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. For further description of these
obligations, including the liquidity of participations in corporate loans, see
"Additional Investment Information and Risk Factors" herein and "Investments and
Investment Techniques Common to Two or More Portfolios" in the Statement of
Addi-tional Information.

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")

<PAGE>

(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. While there are several organizations that currently qualify as
NRSROs, two examples of NRSROs are Standard & Poor's Rating Group, a division of
McGraw-Hill, Inc. ("S&P") and Moody's Investors Service, Inc. ("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."

<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 ("NRSROs") 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

<PAGE>

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 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
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 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."

<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 exceptions, 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 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 con- stitutions and

<PAGE>

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 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.
<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.
<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.

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 that 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

<PAGE>

investments for the Tax Exempt Money Market Portfolio, with varying and longer
maturities, such as Municipal Bonds and Municipal Notes, whose interest is
exempt from 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.

<PAGE>

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

<PAGE>

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.

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.

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

<PAGE>

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,
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.

<PAGE>

increasing the level 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

<PAGE>

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

<PAGE>

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/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. 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

<PAGE>

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 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

<PAGE>

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.

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

<PAGE>

(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 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
Judith Fabrizi -- Secretary, Treasurer and Investment Officer
Georgette L. Horton -- Vice President
Lisa Ling -- Vice President
Michael Sakala -- Assistant Treasurer
Alaina V. Metz -- Assistant Secretary
Bruce Treff -- 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

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 Properties, Inc., the KM Group, 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, 1996, the
Advisor served as investment advisor for assets aggregating in excess of $735
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, 1996, served as an investment
advisor for assets aggregating in excess of $1.0 billion. The Advisor is an
affiliate of Quantum/Gabelli-O'Connor L.P. which, as of December 31, 1996,
served as investment advisor for assets aggregating in excess of $125 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 $9.3 billion as of December 31, 1996.

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, .30%; the

<PAGE>

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 BISYS Fund Services Limited
Partnership d/b/a BISYS Fund Services (the "Administrator"), which is a
subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS, headquartered in Little
Falls, New Jersey, is a publicly owned company engaged in information
processing, loan servicing and 401(K) administration and Recordkeeping services
to and through banking and other financial organizations. BISYS and its
affiliates BISYS Fund Services and BISYS Fund Services, Inc. have their
principal place of business at 3435 Stelzer Road, Columbus, Ohio 43219. BISYS
Fund Services is the successor to Furman Selz LLP, the former administrator of
the Fund.

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 Administration Agreement for 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 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.

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

The Administration Agreement is terminable by the Board of Directors of the
Fund or the Administrator, respectively, on sixty days' written notice. The
Administration Agreement shall remain in effect for one year from the date of
the conversion of services to BISYS data processing system, and subject to
annual approval of the Fund's Board of Directors for one-year periods
thereafter. The Administration Agreement provides that in the absence of willful
misfeasance, bad faith or 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

<PAGE>

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 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. No third party or foreign checks will be accepted. Purchases
made by mail should be sent to The Treasurer's Fund, Inc., P.O. Box 182491,
Columbus, Ohio 43218-2491.

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 Eastern 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
<PAGE>

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.

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. Eastern 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. Eastern 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.

Other Purchase Information. Requests in "good order" must include the
following documentation: (a) A letter of instruction, if required, signed by all
registered owners of the shares in the exact names in which they are registered;
(b) Any required signature guarantees (see "Signature Guarantees" below); and
(c) Other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit sharing
plans and other organizations.

Signature Guarantees. To protect shareholder accounts, the Funds and its
transfer agent from fraud, signature guarantees are required to enable the Funds
to verify the identity of the person who has authorized a redemption from an
account. Signature guarantees are required for (1) redemptions where the
proceeds are to be sent to someone other than the registered shareowner(s) and
the registered address and (2) share transfer requests. Shareholders may contact
the Funds at 1-800-TSR-FUND/1-800-877-3863 for further details.

By Wire. To purchase shares by a Federal funds wire, please contact
1-800-TSR-FUND/1-800-877-3863 for wiring instructions. A completed account
application must be over-nighted to the Fund in advance of the wire at The
Treasurer's Fund, Inc. c/o BISYS Fund Services, 3435 Stezler Road, Columbus,
Ohio 43219-8021.

By Mail. Purchases to open new accounts which are mailed should be sent to
The Treasurer's Fund, Inc., P.O. Box 182491, Columbus, Ohio 43218-2491, together
with the completed and account application.

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

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.
<PAGE>

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, Eastern
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. Eastern 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 share-holder'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 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. It is not possible to
use a check to close out your account.

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.

Requests in "good order" must include the following documentation: (a) A
letter of instruction, if required, signed by all registered owners of the
shares in the exact names in which they are registered; (b) Any required
signature guarantees (see "Signature Guarantees" above); and (c) Other
supporting legal documents, if required, in the case of estates, trusts,
guadianships, custodianships, corporations, pension and profit sharing plans and
other organizations.

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

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
<PAGE>

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." Telephone Redemption and Telephone Exchange
will be suspended for a period of 10 days following a telephonic address change.

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

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."

If you elect to receive distributions in cash and checks (1) are returned and
marked as "undeliverable" or (2) remain uncashed for six months, your cash
election will be changed automatically and your future dividend and capital
gains distributions will be reinvested in the Fund at the per share net asset
value determined as of the date of payment of the distribution. In addition, any
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in the Fund at the per share net asset value
determined as of the date of cancellation.

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

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.

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 Eastern time; the Limited Term Portfolio and the
Tax Exempt Limited Term Portfolio, 4:00 p.m. Eastern 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, Global Money Market Portfolio and 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 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 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
the Portfolios' yield, effective yield and 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

<PAGE>

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 out- standing 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. The Fund does not issue
certificates evidencing Fund shares.

- ------------------------------------------------------------------------------
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,
<PAGE>

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, 1996, the Advisor made payments
under each Plan to or on behalf of Participating Organizations in amounts of
$80,147, $151,873 and $213,907 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 active Portfolios of the Fund have qualified and intend to continue 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 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 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.

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.
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 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 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
<PAGE>

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 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.
<PAGE>

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.

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 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.
BISYS Fund Services, Inc., 3435 Stelzer Road, Columbus, Ohio 43219, serves as
the Fund's transfer agent and dividend agent pursuant to a Transfer Agency
Agreement with the Fund and receives a fee for such services.

<PAGE>

PART B
------

THE TREASURER'S FUND, INC.

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

STATEMENT OF ADDITIONAL INFORMATION

March 1, 1997

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

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, 1997, 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.

170559.5

<PAGE>

TABLE OF CONTENTS

<S> <C>
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.................................................................. 24
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..................................................................................... 38
Fees......................................................................................... 39
Expense Limitation..................................................................................... 40
Administrator.......................................................................................... 41

CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT.................................................................... 43

TAXES........................................................................................................... 43

PURCHASE, REDEMPTION AND EXCHANGE............................................................................... 51

DIVIDENDS AND DISTRIBUTIONS..................................................................................... 51

NET ASSET VALUE................................................................................................. 51

COMPUTATION OF YIELD............................................................................................ 53
Tax Equivalent Yield................................................................................ 54
Computation of Total Return......................................................................... 55

DESCRIPTION OF COMMON STOCK..................................................................................... 56

DISTRIBUTION PLANS.............................................................................................. 58

-i-
170559.5

<PAGE>

Page
BROKERAGE AND PORTFOLIO TURNOVER................................................................................ 60
Brokerage........................................................................................... 60
Portfolio Turnover.................................................................................. 61

COUNSEL AND INDEPENDENT AUDITORS................................................................................ 61

RATINGS OF MUNICIPAL AND CORPORATE OBLIGATIONS.................................................................. 61
Unrated Bonds....................................................................................... 64
Commercial Paper Ratings............................................................................ 64
Description of Standard & Poor's Corporation's
two highest commercial paper ratings....................................................... 64
Description of Moody's Investors Service, Inc.'s two
highest commercial paper ratings........................................................... 64
Money Market Fund Ratings........................................................................... 65
Description of Standard & Poor's Corporation's two
highest money market fund ratings......................................................... 65
Description of Moody's Investors Service, Inc.'s two
highest money market fund ratings......................................................... 65

Financial Statements.....................................................................................Appendix A
</TABLE>

-ii-
170559.5

<PAGE>

The Treasurer's Fund, Inc.

THE PORTFOLIOS AND THEIR OBJECTIVES

(See the Fund's Prospectus dated March 1, 1997)

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

170559.5

<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-
170559.5

<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-
170559.5

<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-
170559.5

<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-
170559.5

<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-
170559.5

<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.

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<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

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<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

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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
12 (see page 31), 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.

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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

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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.

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 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. These agreements are considered to be borrowings and
therefore are included in the asset restriction contained under "Investment
Restrictions" relating to borrowings.

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

-21-
170559.5

<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-
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<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. 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.

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 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

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<PAGE>

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 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

-24-
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<PAGE>

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 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

-25-
170559.5

<PAGE>

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 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

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<PAGE>

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".

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<PAGE>

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, 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

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<PAGE>

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.

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; 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;

- --------
* 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.

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170559.5

<PAGE>

(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;

(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

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<PAGE>

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

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<PAGE>

(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, 53...................... 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-
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<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, 72.....................Retired Senior Vice
Director President, Dollar Dry Dock
35 Club Point Drive Savings Bank. Director of
White Plains, New York 10604 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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<PAGE>

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

+Anthony R. Pustorino, 71....................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, 60..........................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., 60..................Financial Consultant/Mergers
Director and Acquisitions (1992-
One Dock Street, Suite 602 present). Managing Member of
Stamford, Connecticut 06902 Seaboard Properties, Inc.,
the KM Group and Navigator
Communications Systems, LLC
(1995-present). President
and Chief Operating Officer
of WilTel Communications
Systems, Inc. (1990-1992).

Mary E. Hauck, 54............................Retired Senior Portfolio
Director manager of the Advisor.
21 Bishop Park Road Prior to joining the Advisor
P.O. Box 295 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.

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<PAGE>

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

Ronald S. Eaker, 36..........................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, 40..........................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.

Judith Fabrizi, 29...........................Employee of the Advisor since
Secretary, Treasurer and 1989.
Investment Officer
19 Old Kings Highway South
Darien, Connecticut 06820-4526

Georgette L. Horton, 31......................Director of the Administrator
Vice President since October 1996. Prior to
125 West 55th Street joining the Administrator,
New York, New York 10019 she was Assistant Vice
President of Regional Sales
at PaineWebber from June 1993
to September 1996. From June
1992 to May 1993, she was a
Marketing Representative for
Eaton Vance Distributors.

Lisa Ling, 36................................Registration and Compliance
Vice President Officer, Fund Administration
3435 Stelzer Road of the Administrator since
Columbus, Ohio 43219 November 1995. Prior to
joining the Administrator,
she was a Manager of
Financial Services Department
at Federated Investors from
June 1989 to October 1995.

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<PAGE>

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

Michael Sakala, 31..........................Vice President and Treasurer
Assistant Treasurer of the Administrator since
125 West 55th Street December 1996 and Associate
New York, New York 10019 Director of Fund Accounting
of the Administrator from
April 1996 to December 1996.
Prior to joining the
Administrator, he was head of
Worldwide Fund Administration
at Banque Paribas Luxemburg
from April 1994 to April
1996. From June 1989 to April
1994, he was Accounting
Manager at Fidelity
Investments in Boston, MA.

Alaina V. Metz, 29..........................Chief Administrative Officer
Assistant Secretary of the Administrator since
3435 Stelzer Road June 1995. Prior to joining
Columbus, Ohio 43219 the Administrator, she was
Supervisor of Blue Sky
Department at Alliance
Capital Management, L.P. from
May 1989 to June 1995.

Bruce Treff, 30 ............................Counsel of the Administrator
Assistant Secretary since September 1995. Prior
3435 Stelzer Road to joining the Administrator,
Columbus, Ohio 43219 he was Manager at Alliance
Capital Management, L.P.

Sheryl Hirschfeld, 36.......................Manager-Legal Services of the
Assistant Secretary Administrator since January
125 West 55th Street 1997. Prior to joining the
New York, New York 10019 Administrator, she was
Director, Corporate Secretary
Services at Furman Selz LLC
from November 1994 to
December 1996. From 1982 to
1994, she was an employee of
The Dreyfus Corporation.

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<PAGE>

Compensation Table

Aggregate Compensation
Name of Person, Position from Fund
------------------------ ----------------------

Felix J. Christiana, Director $7,000

Mary E. Hauck, Director $6,000

Robert C. Kolodny, M.D., $7,000
Director

William A. Merritt Jr., $7,000
Director

Anthony R. Pustorino, Director $7,000

Gary L. Roubos, Director $6,500

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, 1996.

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<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, 1996 the
Advisor served as investment advisor for assets aggregating in excess of $735
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, 1996, served as an
investment advisor for assets aggregating in excess of $1.0 billion. The Advisor
is an affiliate of Quantum/Gabelli- O'Connor L.P. which, as of December 31,
1996, served as investment advisor for assets aggregating in excess of $125
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 $9.3 billion as of December 31, 1996.

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

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<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
October 16, 1996 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, 1997,
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, 1994, October 31, 1995 and October 31, 1996,
were: $440,162, $403,955

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<PAGE>

and $455,634, respectively, for the Tax Exempt Money Market Portfolio; $457,770,
$458,599 and $657,103, respectively, for the Domestic Prime Money Market
Portfolio; and $542,100, $307,543 and $263,957, respectively, for the U.S.
Treasury Money Market Portfolio. None of these amounts, for the fiscal years
ended October 31, 1994, October 31, 1995 and October 31, 1996, were voluntarily
and irrevocably waived by the Advisor for any of these Portfolios. 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
these shares and attendant upon renewals of, or amendments to,

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<PAGE>

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 BISYS Fund Services Limited
Partnership d/b/a BISYS Fund Services (the "Administrator"), which is a
subsidiary of The BISYS Group, Inc. ("BISYS"). BISYS, headquartered in Little
Falls, New Jersey, is a publicly owned company engaged in information
processing, loan servicing and 401(K) administration and Recordkeeping services
to and through banking and other financial organizations. BISYS and its
affiliates, BISYS Fund Services and BISYS Fund Services, Inc., have their
principal place of business at 3435 Stelzer Road, Columbus, Ohio 43219.

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 Administration Agreement for 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 Administration Agreement for each Portfolio, the
Administrator provides all administrative services, including, without
limitation: (i) provides services of persons

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<PAGE>

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.

BISYS Fund Services, Inc. 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, BISYS Fund Services, Inc.
shall be paid a fee of $2,500 per Portfolio per month.

The actual fees paid to Furman Selz LLP, the former administrator of
the Fund, for all administrative and accounting services rendered for the year
ended October 31, 1996 were $248,287 for the Domestic Prime Money Market
Portfolio, $181,702 for the Tax Exempt Money Market Portfolio and $117,806 for
the U.S. Treasury Money Market Portfolio. Furman Selz LLP waived its fees for
acting as transfer and dividend agent for the Portfolios.

The Administration Agreement is terminable, without the payment of any
penalty, by a vote of the majority of relevant Portfolio shareholders, by the
Board of Directors of the Fund or

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<PAGE>

the Administrator, respectively, on sixty days' written notice. The
Administration Agreement shall remain in effect for one year from the date of
the conversion of services to BISYS data processing system, and subject to
annual approval of the Fund's Board of Directors for one-year periods
thereafter. The Administration Agreement provides that in the absence of willful
misfeasance, bad faith or 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.
BISYS Fund Services, Inc. serves as transfer agent and dividend agent for the
Fund pursuant to a Transfer Agency Agreement. Pursuant to such Agreement, the
Transfer Agent, among other things, performs the following services in
connection with the Fund's Shareholders of record: maintenance of shareholder
records for each of the Fund's Shareholders of record; processing shareholder
purchase and redemption orders; processing transfers and exchanges of shares of
the Fund on the shareholder files and records; processing dividend payments and
reinvestments; and assistance in the mailing of shareholder reports and proxy
solicitation materials.

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

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<PAGE>

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.

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 will be made on the last business
day of each month. Dividends paid from taxable income, if any, and distributions
of any realized short term capital 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

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<PAGE>

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 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.

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<PAGE>

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.

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

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<PAGE>

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 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

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<PAGE>

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 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.

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<PAGE>

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 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

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<PAGE>

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 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.

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<PAGE>

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 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

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<PAGE>

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.

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 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 Eastern Time; the Limited Term Portfolio and the
Tax Exempt Limited Term Portfolio, 4:00 p.m. Eastern 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

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<PAGE>

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 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, 1996 were 4.83%, 2.98% and 4.62%,
respectively.

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<PAGE>

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

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,

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<PAGE>

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 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.

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<PAGE>

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, 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, 1997 were valued at $162,806,388.10 for the Tax Exempt
Money Market Portfolio, $253,865,814.73 for the Domestic Prime Money Market
Portfolio and $119,613,116.43 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.

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<PAGE>

As of January 31, 1997, 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, 1997, the following persons or entities owned as
much as 5% of the indicated Portfolio's outstanding shares:

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

Bear Stearns Profit Sharing Plan 13,479,596,440 U.S. Treasury 11.25%
c/o Custodial Trust Company
Attn: Accounting Department
101 Carnegie Center
Princeton, NJ 08540-6231

Bear Stearns Security Corp. 7,493,819,260 U.S. Treasury 6.26%
1 Metrotech Center North
Brooklyn, NY 11201-3857

</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. 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

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<PAGE>

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 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

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<PAGE>

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 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 October 16, 1996, the Board
of Directors approved the continuance of all of the Plans until October 31,
1997. 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, 1996, the Advisor made payments under each
Plan to or on behalf of participating organizations in amounts of $80,147,
$151,873 and $213,907 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

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<PAGE>

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 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.

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<PAGE>

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 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

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<PAGE>

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.

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
-62-
170559.5

<PAGE>
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 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.

-63-
170559.5

<PAGE>

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 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.

-64-
170559.5

<PAGE>

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.

-65-
170559.5

<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, 1996, 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, 1996 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, 1996, 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.

/s/Ernst & Young LLP

New York, New York
December 11, 1996

<PAGE>

THE TREASURER'S FUND
DOMESTIC PRIME MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<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 - 51.5%
First Credit Corp., 5.28%....................... A1/P1 5.392% 11/07/96 $10,500,000 $ 10,490,760
International Lease Finance Corp., 5.37% (a).... A1/P1/D1+ 5.505 11/07/96 10,000,000 9,991,050
Avnet, Inc., 5.41%.............................. A1/P1 5.551 11/18/96 10,000,000 9,974,453
MCI Communications Corp., 5.25%................. A1/P1 5.363 11/18/96 10,500,000 10,473,969
National Fleet Funding Corp., 5.25%............. A1/P1 5.363 11/19/96 10,500,000 10,472,437
B.I. Funding, Inc., 5.26% (a)................... A1/NR/D1+ 5.371 11/20/96 10,000,000 9,972,239
American Trading & Production Corp., 5.43%...... A1/P1 5.582 11/21/96 9,000,000 8,972,850
Alamo Funding L.P., 5.28%....................... A1/P1 5.393 11/25/96 10,000,000 9,964,800
Transamerica Financial Corp., 5.24% (a)......... A1/P1/D1 5.351 11/25/96 10,000,000 9,965,067
First Chicago Capital Markets, Inc., 5.27%...... A1/P1 5.392 12/04/96 10,500,000 10,449,276
First Brands Commercial, Inc., 5.27............. A1/P1 5.405 12/10/96 11,000,000 10,937,199
Island Finance Puerto Rico, Inc., 5.35% (a)(b).. A1+/P1/F1+/D1+ 5.514 01/09/97 10,300,000 10,194,382
-----------
TOTAL COMMERCIAL PAPER ....................................................................................... 121,858,482
-----------

ADJUSTABLE RATE SECURITIES - 2.7%
Health Insurance Plan of Greater New York ACES,
Series 1990B-1, (07/01/16)**.................. A1+/NR 5.541 05/01/96 6,300,000 6,300,000
-----------
TOTAL ADJUSTABLE RATE SECURITIES .............................................................................. 6,300,000
-----------

U.S TREASURY ISSUES - 12.0%
U.S. Treasury Bills................................................. 4.877 02/06/97 6,000,000 5,925,957
U.S. Treasury Bills................................................. 4.974 02/06/97 6,000,000 5,924,502
U.S. Treasury Bills................................................. 5.027 02/06/97 6,000,000 5,923,693
U.S. Treasury Bills................................................. 5.185 03/06/97 6,000,000 5,898,958
U.S. Treasury Bills................................................. 5.667 07/24/97 5,000,000 4,805,483
-----------
TOTAL U.S. TREASURY ISSUES .................................................................................... 28,478,593
-----------

LOAN PARTICIPATIONS - 4.4%
Pacific Financial Asset Management, 5.44% (2)... NR/NR 5.531 11/06/96 10,500,000 10,500,000
-----------
TOTAL LOAN PARTICIPATIONS ..................................................................................... 10,500,000
-----------

See accompanying notes to financial statements

2
</TABLE>

<PAGE>

THE TREASURER'S FUND
DOMESTIC PRIME MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1996

<TABLE>
<CAPTION>
YIELD TO
MATURITY
AT TIME OF MATURITY PRINCIPAL VALUE
PURCHASE DATE AMOUNT (NOTE 1A)
---------- ------ ------- --------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS - 29.5%
Bear Stearns & Co., Inc. dated 10/31/96.............................. 5.570% 11/01/96 $24,973,970 $24,973,970
(Proceeds at maturity, $24,977,834) collateralized by:
$6,240,000 U.S. Treasury STRIPS 02/15/10 vs. $2,589,600
$43,000,000 U.S. Treasury STRIPS 02/15/15 vs. $12,416,250
$1,075,000 FHLMC Pool #C80427, 7.500% 09/01/26 vs. $1,084,857
$4,025,000 FHLMC Pool #G00399, 8.500% 09/01/25 vs. $3,187,232
$5,000,000 FHLMC REMIC, 4.0625%, 03/15/03 vs. $320,684
$1,500,000 FNMA REMIC Trust, 7.600%, 06/25/08 vs. $1,327,165
$79,080,165 FHLMC, 3.412% 12/15/22 vs. $2,369,838
$35,907,051 FHLMC, 4.012% 04/15/22 vs. $1,620,678
$750,000 FNMA REMIC Trust, 11.681%, 02/25/22 vs. $556,693
$1,200 U.S. Treasury STRIPS 05/15/10 vs. $489

Nomura Securities International, Inc., dated 10/31/96................ 5.520 11/01/96 45,000,000 45,000,000
(Proceeds at maturity, $45,006,900) collateralized by:
$36,685,000 FHLB Bonds, 6.070%, 07/02/97 vs. $36,685,000
$9,235,000 FNMA Notes, 5.250%, 03/25/98 vs. $9,223,456
------------
TOTAL REPURCHASE AGREEMENTS ..................................................................................... 69,973,970
------------
TOTAL INVESTMENTS--100.1% (COST $237,111,045)+ .................................................................. $237,111,045
============
*,**,+,(a),(2) See Footnotes to Portfolios

See accompanying notes to financial statements

3
</TABLE>

<PAGE>

THE TREASURER'S FUND
TAX EXEMPT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
CREDIT CURRENT MATURITY PRINCIPAL VALUE
RATINGS* COUPON DATE AMOUNT (NOTE 1A)
-------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES - 98.7%
ALABAMA - 2.2%
Huntsville IDR TENR #66, Series 1982 (Avco Corporation
Project) (LOC Bankers Trust) (11/01/99)**.................. Aa2/NR 4.000% 11/07/96 $2,000,000 $ 2,000,000
Phenix County, IDB Environmental Improvement Revenue
(Mead Coated Board Project) (LOC Toronto Dominion Bank)
(06/01/28)**............................................... NR/A1+ 3.700 11/01/96 1,500,000 1,500,000
-----------
TOTAL ALABAMA 3,500,000
-----------

ARIZONA - 2.5%
Arizona HFAR, Series 1985 (Pooled Loan Program) (FGIC)
(10/01/15)**............................................... VMIG1/A1 3.550 11/07/96 500,000 500,000
Chandler IDA (SMP II Limited Partnership Project) (LOC
Credit Lyonnais & Republic National Bank, NY) (12/01/15)**. VMIG1/NR 3.600 11/07/96 1,500,000 1,500,000
Pima County IDA, Series 1982 A, (Tucson Electric Power Co.
Project) (LOC Bank of America) (07/01/22)**................ VMIG1/A1 3.550 11/07/96 2,000,000 2,000,000
-----------
TOTAL ARIZONA 4,000,000
-----------

CONNECTICUT - 1.9%
Connecticut Special Assessment Unemployment Compensation
Advance Fund Revenue Bond, Series C 1993 (SPA FGIC)
(FGIC) (11/15/01)***(b).................................... VMIG1/A1+/F1+ 3.900 07/01/97 3,000,000 3,000,000
-----------

FLORIDA - 4.0%
Dade County Water & Sewer System Revenue,
Series 1994 (FGIC) (SPA Commerzbank Aktiengesel)
(10/05/22)**............................................... VMIG1/A1 3.500 11/07/96 2,500,000 2,500,000
Indian Trace Community Development District (Basin I Water
Management Project) (LOC Tokai Bank, Ltd.) (05/01/10)**.... VMIG1/A2 3.500 11/07/96 3,900,000 3,900,000
-----------
TOTAL FLORIDA 6,400,000
-----------

GEORGIA - 12.0%
Burke County Development Authority, 5th Series (Georgia Power
Co. Vogtle Project) (07/01/24)**........................... VMIG1/A1+ 3.650 11/01/96 3,100,000 3,100,000
Burke County Development Authority, 5th Series (Georgia Power
Co. Vogtle Project) (07/01/24)****......................... VMIG1/A1+ 3.250 11/05/96 1,150,000 1,150,000
Burke County Development Authority, 5th Series (Georgia Power
Co. Vogtle Project) (07/01/24)****........................ P1/A1+ 3.600 01/09/97 5,000,000 5,000,000
Burke County Development Authority PCR (Oglethorpe
Power Corp. Project) (FGIC) (SPA Canadian Imperial
Bank) (01/01/16)**......................................... VMIG1/A1+ 3.500 11/07/96 1,700,000 1,700,000
Cobb County GO TANS, Series 1996.............................. MIG1/SP1+ 4.000 12/31/96 5,000,000 5,003,992
DeKalb County Private Hospital Authority (LOC Trust Company
Bank) (03/01/24)**......................................... VMIG1/A1+ 3.500 11/07/96 1,700,000 1,700,000
Hapeville Development Authority IDR (Hapeville Hotel
L.P. Project) (LOC Union Bank of Switzerland) (11/01/15)**. P1/NR 3.550 11/01/96 1,300,000 1,300,000
-----------
TOTAL GEORGIA 18,953,992
-----------
See accompanying notes to financial statements

4
</TABLE>
<PAGE>

KANSAS - 5.0%
Burlington PCR (Kansas City Power & Light Co. Project)
(LOC Toronto Dominion Bank) (10/01/17)****................. P1/A1+ 3.600 11/13/96 2,600,000 2,600,000
Burlington PCR (Kansas City Power & Light Co. Project)
(LOC Toronto Dominion Bank) (10/01/17)****................. P1/A1+ 3.500 12/04/96 2,000,000 2,000,000
Burlington PCR (Kansas City Power & Light Co. Project)
(LOC Toronto Dominion Bank) (10/01/17)****................. P1/A1+ 3.650 01/23/97 3,250,000 3,250,000
-----------
TOTAL KANSAS 7,850,000
-----------

KENTUCKY - 1.8%
Ohio County PCR, (Big Rivers Electric Corporation Project)
(LOC Chemical Bank) (10/01/15)**........................... NR/NR 4.150 11/07/96 2,900,000 2,900,000
-----------

LOUISIANA - 3.5%
East Baton Rouge Parish PCR Refunding Bonds, Series 1989
(LOC Union Bank of Switzerland) (11/01/19)**............... P1/A1+ 3.550 11/01/96 1,100,000 1,100,000
Louisiana State GO Bonds, Series A (LOC Credit
Local de France) (07/01/03)****............................ VMIG1/A1+ 3.400 12/02/96 4,500,000 4,500,000
-----------
TOTAL LOUISIANA 5,600,000
-----------

MASSACHUSETTS - 0.6%
State of Massachusetts Updates GO Revenue Bonds, Series E
(LOC ABN-AMRO Bank, NY) (12/01/97)**....................... VMIG1/A1+ 3.600 11/01/96 1,000,000 1,000,000
-----------

MICHIGAN - 2.2%
State of Michigan Building Authority (University of Michigan
Adult General Hospital) (12/01/04)***...................... Aaa/AAA 7.875 12/01/96 2,000,000 2,046,728
Wayne Charter County Airport Revenue (Detroit Metropolitan
County Project-B) (10/01/16)***............................ NR/A1+ 3.650 12/01/96 1,500,000 1,500,000
-----------
TOTAL MICHIGAN 3,546,728
-----------

MINNESOTA - 1.1%
Rochester Health Care, Series F (Mayo Foundation/
Mayo Medical Center Project) (SPA Credit Suisse)
(11/15/17)****............................................. NR/A1+ 3.650 01/16/97 1,800,000 1,800,000
-----------

NEBRASKA - 1.9%
Lancaster County Hospital Authority Revenue (Bryan Memorial
Hospital Project) (MBIA) (SPA Commerzbank Aktiengesel)
(06/01/12)**............................................... VMIG1/A1+ 3.500 11/07/96 3,000,000 3,000,000
-----------
See accompanying notes to financial statements

5
</TABLE>
<PAGE>

THE TREASURER'S FUND
TAX EXEMPT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (continued)
OCTOBER 31, 1996
<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 - 11.5%
Babylon IDA Resource Recovery (Ogden Corporation)
(OFS Equity Babylon Project) (LOC Union Bank of
Switzerland) (12/01/24)**.................................. NR/A1+ 3.650% 11/01/96 $6,400,000 $ 6,400,000
New York City GO Bonds Fiscal 1994, Series A - A8 (LOC Union
Bank of Switzerland) (08/01/17)**.......................... VMIG1/A1+ 3.550 11/01/96 1,300,000 1,300,000
New York City GO Bonds Fiscal 1994, Series B, Subseries B4
(MBIA) (LIQ National Westminster Bank PLC) (08/15/23)**.... VMIG1/A1+ 3.550 11/01/96 1,000,000 1,000,000
New York City Municipal Water Finance Authority & Sewer
System Revenue, 1992 Series C (FGIC) (06/15/22)**.......... VMIG1/A1+ 3.550 11/01/96 3,400,000 3,400,000
New York City Municipal Water Finance Authority & Sewer
System Revenue, 1994 Series C (FGIC) (06/15/23)**.......... VMIG1/A1+ 3.550 11/01/96 1,100,000 1,100,000
State of New York Dormitory Authority (Beverwyck, Inc. Project)
(LOC Banque Paribas) (07/01/25)**.......................... VMIG1/A2 3.600 11/07/96 1,000,000 1,000,000
State of New York Energy Resh. & Development Authority
PCR (New York State Electric & Gas Co. Project) (LOC
Morgan Guaranty Trust) (06/01/29)**........................ VMIG1/A1+ 3.500 11/01/96 2,700,000 2,700,000
State of New York Job Development Authority, Series B-1 - B-21
(GTD State of New York) (03/01/05)**....................... VMIG1/NR 3.800 11/01/96 1,280,000 1,280,000
-----------
TOTAL NEW YORK 18,180,000
-----------

NORTH CAROLINA - 3.6%
Charlotte Airport Refunding Revenue Bonds, Series 1993 A
(MBIA) (SPA Commerzbank Aktiengesel) (07/01/16)**.......... VMIG1/A1+ 3.500 11/07/96 3,850,000 3,850,000
Lenoir County PCR TENR #60, Series 1983 (Texasgulf, Inc.
Project) (LOC Bankers Trust Co.) (12/01/03)**.............. Aa2/NR 3.625 11/07/96 1,000,000 1,000,000
Wake County Industrial Facilities & PCR Financing Authority
(Carolina Power & Light Co. Project)
(LOC Sumitomo Bank, Ltd.) (02/01/17)**..................... P1/NR 3.700 11/01/96 900,000 900,000
-----------
TOTAL NORTH CAROLINA 5,750,000
-----------

OHIO - 0.6%
Ohio State Student Loan Funding Corp., Cincinnati, OH,
Series A-2 (LOC National Westminster Bank PLC) (01/01/07)** VMIG1/NR 3.650 11/07/96 900,000 900,000
-----------

PENNSYLVANIA - 10.2%
Berks County IDR (Sixth & Penn Street Project)
(LOC Meridian Bank) (11/23/03)**........................... VMIG1/NR 3.600 11/07/96 1,240,000 1,240,000
Delaware Valley Regional Financing (LOC Midland Bank PLC)
(08/01/16)**.............................................. VMIG1/A1 3.650 11/07/96 2,700,000 2,700,000
Montgomery County IDA PCR, Series 1994-A (PECO Energy
Project) (LOC Deutsche Bank) (06/01/29)****................ P1/A1+ 3.600 11/04/96 3,760,000 3,760,000
Montgomery County IDA PCR, Series 1994-A (PECO Energy
Project) (LOC Deutsche Bank) (06/01/29)****................ P1/A1+ 3.200 11/13/96 3,500,000 3,500,000
Montgomery County IDA PCR, Series 1994-A (PECO Energy
Project) (LOC Deutsche Bank) (06/01/29)****................ P1/A1+ 3.200 11/14/96 3,500,000 3,500,000
State of Pennsylvania Energy Development Authority Revenue
Bonds, Series 1986 (Ebensburg Project) (LOC Swiss Bank
Corp.) (12/01/11)**........................................ Aa1/NR 3.600 11/07/96 1,400,000 1,400,000
-----------
TOTAL PENNSYLVANIA 16,100,000
-----------
See accompanying notes to financial statements

6
</TABLE>
<PAGE>

TEXAS - 10.9%
Brazos River Harbor Navigation District, Series
1990 (Dow Chemical Co. Project) (01/01/16)****............. P1/A1 3.650 02/11/97 1,000,000 1,000,000
Harris County Health Facilities Development Corp.
(Memorial Hospital System) (LOC Societe Generale)
(06/01/24)****............................................. VMIG1/NR 3.650 01/14/97 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 3.600 11/07/96 2,750,000 2,750,000
Panhandle Plains Higher Education Authority, Inc.,
Student Loan Revenue, Series A (LOC SLMA)
(06/01/21)**............................................... VMIG1/NR 3.600 11/07/96 2,000,000 2,000,000
Panhandle Plains Higher Education Authority, Inc.,
Student Loan Revenue, Series A (LOC SLMA)
(06/01/25)**............................................... VMIG1/NR 3.600 11/07/96 4,300,000 4,300,000
San Antonio HFC, Multifamily Housing REV.,
Series 1990 (Eagles' Nest Apartments Project)
(LOC Landesbank Hessen) (05/01/20)**....................... NR/A1+ 3.600 11/07/96 4,800,000 4,800,000
-----------
TOTAL TEXAS 17,250,000
-----------

UTAH - 1.3%
Tooele County Hazardous Waste Treatment Revenue
(Westinghouse Electric Corp. Project A) (LOC Union Bank of
Switzerland) (06/01/20)****................................ NR/A1+ 3.550 12/05/96 2,000,000 2,000,000
-----------

VIRGINIA - 1.8%
Alexandria IDA Resource Recovery Revenue, Series 1986 A
(Ogden Corp. Project) (LOC Swiss Bank) (12/01/16)**........ VMIG1/A1+ 3.650 11/01/96 1,300,000 1,300,000
Peninsula Ports Authority Coal Terminal Revenue (Dominion
Terminal Project - C) (LOC National Westminster Bank)
(07/01/16)**............................................... P1/NR 3.600 11/01/96 1,500,000 1,500,000
-----------
TOTAL VIRGINIA 2,800,000
-----------
See accompanying notes to financial statements

7
</TABLE>
<PAGE>
THE TREASURER'S FUND
TAX EXEMPT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (continued)
OCTOBER 31, 1996
<TABLE>
<CAPTION>
CREDIT CURRENT MATURITY PRINCIPAL VALUE
RATINGS* COUPON DATE AMOUNT (NOTE 1A)
-------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES (CONTINUED)
WYOMING - 9.3%
Lincoln County PCR (Pacificorp Project) (LOC Union Bank of
Switzerland) (01/01/16)****................................ VMIG1/A1+ 3.300% 11/21/96 $3,800,000 $ 3,800,000
Lincoln County PCR (Pacificorp Project) (LOC Union Bank of
Switzerland) (01/01/16)****................................ VMIG1/A1+ 3.500 01/22/97 1,500,000 1,500,000
Lincoln County PCR, Series B (Exxon Corp. Project)
(07/01/17)**............................................... P1/A1+ 3.650 11/01/96 1,100,000 1,100,000
Lincoln County PCR, Series A (Exxon Corp. Project)
(07/01/17)**............................................... P1/A1+ 3.650 11/01/96 1,200,000 1,200,000
Platte County PCR Refunding Bonds (Tri-State Generator &
Transmission Project) (LOC Societe Generale) (07/01/14)**.. P1/NR 3.600 11/01/96 2,000,000 2,000,000
Platte County PCR Refunding Bonds, Series 1984A
(07/01/14)****............................................. P1/NR 3.250 11/04/96 2,500,000 2,500,000
Platte County PCR Refunding Bonds, Series 1984B
(07/01/14)****............................................. P1/NR 3.600 11/06/96 1,800,000 1,800,000
Platte County PCR Refunding Bonds, Series 1984B
(Tri-State Generator & Transmission Project)
(LOC Societe Generale) (07/01/14)**........................ P1/NR 3.600 11/01/96 800,000 800,000
------------
TOTAL WYOMING 14,700,000
------------
TOTAL INVESTMENTS--98.7% (COST $156,430,720)+ ................................................................. $156,430,720
============
*,**,***,****,+,(b) See Footnotes to Portfolios

See accompanying notes to financial statements

8
</TABLE>
<PAGE>

THE TREASURER'S FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996
<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 - 52.3%
U S. Treasury Bills................................................... 5.133% 01/02/97 $ 4,000,000 $ 3,965,693
U.S. Treasury Bills................................................... 5.128 01/09/97 10,000,000 9,904,550
U.S. Treasury Bills++................................................. 5.122 01/09/97 10,000,000 9,904,646
U.S. Treasury Bills++................................................. 5.128 01/16/97 15,000,000 14,842,300
U.S. Treasury Bills................................................... 5.164 01/30/97 5,000,000 4,937,312
U.S. Treasury Bills++................................................. 5.196 03/06/97 4,000,000 3,932,500
----------
TOTAL U.S. GOVERNMENT ISSUES .................................................................................. 47,487,001
----------

REPURCHASE AGREEMENTS - 48.0%
Bear Stearns & Co., Inc. dated 10/31/96............................... 5.570 11/01/96 17,525,353 17,525,353
(Proceeds at maturity $17,528,064) collateralized by:
$47,090,000 U.S. Treasury STRIPS, 11/15/14 vs. $13,832,688
$15,082,100 U.S. Treasury STRIPS, 11/15/15 vs. $4,124,049

Nomura Securities International Inc. dated 10/31/96................... 5.520 11/01/96 18,000,000 18,000,000
(Proceeds at maturity $18,002,760) collateralized by:
$17,980,000 U.S. Treasury Notes 6.120%, 12/31/96 vs. $18,362,075

UBS Securities, Inc. dated 10/31/96................................... 5.500 11/01/96 8,000,000 8,000,000
(Proceeds at maturity $8,001,222) collateralized by:
$5,041,000 U.S. Treasury Notes 13.250%, 05/15/14 vs. $8,160,119

-----------
TOTAL REPURCHASE AGREEMENTS .................................................................................... 43,525,353
-----------
TOTAL INVESTMENTS--100.3% (COST $91,012,354)+................................................................... $91,012,354
===========

+ See Footnotes to Portfolios
++ Securities partially on loan to Bear Stearns & Co., Inc.; collateralized by
U.S. Government securities at a market value of $21,680,783 as of October
31, 1996.

See accompanying notes to financial statements

9
</TABLE>

<PAGE>

THE TREASURER'S FUND
FOOTNOTES TO PORTFOLIOS

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

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 THESE STATEMENTS:

<S> <C>
ACES.........................Adjustable Convertible Extendable Securities
BANS ........................Bond Anticipation Notes
FGIC ........................Insured as to principal and interest by the Financial Guaranty Insurance Corp.
FHLB.........................Federal Home Loan Bank
FHLMC........................Federal Home Loan Mortgage Corp.
FNMA.........................Federal National Mortgage Association
GO...........................General Obligation
GTD .........................Guaranteed(1)
HFAR ........................Health Facilities Authority Revenue
HFC .........................Housing Finance Corporation
IDA .........................Industrial Development Authority
IDB..........................Industrial Development Board
IDR .........................Industrial Development Revenue
LIQ..........................Liquidity Facility Agreement
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
REMIC........................Real Estate Mortgage Investment Conduit
REV .........................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
TENR ........................Tax Exempt Note Rate

See accompanying notes to financial statements

10
</TABLE>

<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.
** 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, 1996. Date in
parenthesis is the final maturity date of the issue.
*** Adjustable Rate Security. "Maturity Date" shown is next coupon reset date
and and "Yield to Maturity at Time of Purchase" / "Current Coupon" is the
rate in effect on October 31, 1996. 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

<PAGE>

THE TREASURER'S FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<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--$237,111,045*,
$156,430,720, and $91,012,354*, respectively) .............................. $ 237,111,045 $ 156,430,720 $ 91,012,354
Cash .......................................................................... 136,132 1,543,600 58,156
Interest receivable ........................................................... 43,165 766,634 6,694
Receivable for fund shares sold ............................................... 8,450 -- --
Other assets .................................................................. 7,261 6,238 16,500
------------- ------------- -------------
Total assets ............................................................ 237,306,053 158,747,192 91,093,704
------------- ------------- -------------

LIABILITIES:
Dividend payable .............................................................. 344,813 132,203 89,678
Payable for fund shares redeemed .............................................. 109 1,614 171,633
Advisory fee payable (note 2) ................................................. 59,566 40,523 23,303
Administrative services fee payable (note 2) .................................. 19,855 13,508 7,768
Fund accounting and shareholder servicing fees payable (note 2) ............... 8,676 6,148 4,224
Accrued expenses payable and other liabilities ................................ 61,394 46,262 35,636
------------- ------------- -------------
Total liabilities ....................................................... 494,413 240,258 332,242
------------- ------------- -------------
NET ASSETS .................................................................... $ 236,811,640 $ 158,506,934 $ 90,761,462
============= ============= =============
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) ..................... $ 236,700 $ 158,558 $ 90,761
Additional paid-in capital .................................................... 236,463,101 158,399,648 90,670,701
Undistributed net investment income ........................................... -- 3,430 --
Distributions in excess of net investment income .............................. (11,680) -- --
Accumulated net realized gain (loss) on investments ........................... 123,519 (54,702) --
------------- ------------- -------------
NET ASSETS APPLICABLE TO OUTSTANDING SHARES ................................... $ 236,811,640 $ 158,506,934 $ 90,761,462
============= ============= =============
SHARES OF BENEFICIAL INTEREST OUTSTANDING ..................................... 236,699,801 158,558,206 90,761,462
============= ============= =============
NET ASSET VALUE PER SHARE OUTSTANDING ......................................... $ 1.00 $ 1.00 $ 1.00
============= ============= =============

* Includes Repurchase Agreements of $69,973,970 and $43,525,353 for the
Domestic Prime Money Market Portfolio and U.S. Treasury Money Market
Portfolio, respectively.

See accompanying notes to financial statements

12
</TABLE>

<PAGE>
THE TREASURER'S FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996

DOMESTIC PRIME TAX EXEMPT U.S. TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
INTEREST INCOME .................................................. $ 11,965,370 $ 5,340,685 $ 4,662,127
------------ ------------ ------------

EXPENSES:
Advisory (note 2) .............................................. 657,103 455,634 263,957
Administrative services (note 2) ............................... 218,993 151,851 87,971
Custody ........................................................ 64,225 15,795 18,102
Shareholder services (note 2) .................................. 37,005 19,598 12,641
Fund accounting (note 2) ....................................... 31,589 37,463 31,122
Auditing ....................................................... 25,000 25,020 25,000
Interest (note 7) .............................................. 22,865 -- --
Legal .......................................................... 19,714 14,049 8,620
Registration ................................................... 17,268 17,268 16,034
Directors' fees and expenses ................................... 15,004 15,003 14,587
Reports to shareholders ........................................ 14,626 8,964 3,630
Miscellaneous .................................................. 58,574 36,860 51,452
------------ ------------ ------------
1,181,966 797,505 533,116
Less--Fund expenses waived by Administrator (note 2) ............. (20,122) (7,713) (5,202)
------------ ------------ ------------
Total expenses ................................................... 1,161,844 789,792 527,914
------------ ------------ ------------
NET INVESTMENT INCOME ............................................ 10,803,526 4,550,893 4,134,213
NET REALIZED GAIN ON SECURITIES .................................. 390,740 11,161 30,689
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............. $ 11,194,266 $ 4,562,054 $ 4,164,902
============ ============ ============

See accompanying notes to financial statements

13
</TABLE>

THE TREASURER'S FUND
STATEMENT OF CHANGES IN NET ASSETS

DOMESTIC PRIME TAX EXEMPT U.S. TREASURY
MONEY MARKET PORTFOLIO MONEY MARKET PORTMONEY 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,
1996 1995 1996 1995 1996 1995
------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income ............... .$ 10,803,526 $ 8,150,142 $ 4,550,893 $ 4,516,976 $ 4,134,213 $ 5,231,872
Net realized gain (loss) on securities
(note 8) ........................... 390,740 (474,237) 11,161 (2,775) 30,689 30,797
------------ ------------ ------------ ------------ ----------- -----------
Net increase in net assets resulting
from operations ..................... 11,194,266 7,675,905 4,562,054 4,514,201 4,164,902 5,262,669
------------ ------------ ------------ ------------ ----------- -----------
Distributions to shareholders:
Net investment income (note 1C) ...... (10,803,526) (8,150,142) (4,550,893) (4,516,976) (4,134,213) (5,231,872)
In excess of net investment income ... -- (11,680) -- -- -- --
Net realized gain on securities ...... (55,898) -- -- -- (30,689) (30,797)
------------ ------------ ------------ ------------ ----------- -----------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS (10,859,424) (8,161,822) (4,550,893) (4,516,976) (4,164,902) (5,262,669)
------------ ------------ ------------ ------------ ----------- -----------
Net increase (decrease) in net assets
from capital share transactions
(note 3) ........................... 67,179,305 25,776,580 17,670,184 6,877,356 (4,072,838) (43,370,462)
------------ ------------ ------------ ------------ ----------- -----------
CONTRIBUTIONS BY AFFILIATE (NOTE 8) .... -- 262,913 -- -- -- --
------------ ------------ ------------ ------------ ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 67,514,147 25,553,576 17,681,345 6,874,581 (4,072,838) (43,370,462)

NET ASSETS
Beginning of period .................. 169,297,493 143,743,917 140,825,589 133,951,008 94,834,300 138,204,762
------------ ------------ ------------ ------------ ----------- -----------
End of period* ..................... ..$236,811,640 $169,297,493 $158,506,934 $140,825,589 $90,761,462 $94,834,300
============ ============ ============ ============ =========== ===========
</TABLE>
* Distributions in excess of net investment income for the Domestic Prime Money
Market Portfolio is (11,680) for October 31, 1996 and October 31, 1995 and
accumulated net investment income for the Tax Exempt Money Market Portfolio is
$3,430 for October 31, 1996 and October 31, 1995.

See accompanying notes to financial statements

14
<PAGE>

THE TREASURER'S FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996

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.

(F) Use of Estimates. Estimates and assumptions are required to be
made regarding assets, liabilities, and changes in net assets
resulting from operations when financial statements are
prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates
could cause actual results to differ from these amounts.

2. The Fund retains Gabelli-O'Connor Fixed Income Mutual Funds Management Co.
("Gabelli-O'Connor") to act as Investment Advisor and Furman Selz LLC
("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.

<PAGE>

THE TREASURER'S FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996

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, (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, 1996, Gabelli-O'Connor was entitled to fees
of $657,103, $455,634 and $263,957 from the Domestic Prime Money Market
Portfolio, the Tax Exempt Money Market Portfolio and the U.S. Treasury Money
Market Portfolio, respectively. For fund accounting and administrative
servicing fees during this period, Furman Selz received $31,589 and
$218,993, respectively, from the Domestic Prime Money Market Portfolio,
$37,463 and $151,851, respectively, from the Tax Exempt Money Market
Portfolio and $31,122 and $87,971, respectively, from the U.S. 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, 1996, Furman Selz was entitled to and voluntarily waived fees of $20,122
for the Domestic Prime Money Market Portfolio, $7,713 for the Tax Exempt
Money Market Portfolio and $5,202 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, 1996, for any of the Portfolios.

3. At October 31, 1996, 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 as
follows:

<PAGE>

<TABLE>
<CAPTION>
THE TREASURER'S FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 1996

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,
1996 1995 1996 1995 1996 1995
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sold ................................. 834,654,747 615,364,259 457,529,068 459,789,646 480,104,084 603,115,075
Issued in reinvestment of dividends .. 10,497,986 7,815,023 4,428,441 4,303,751 3,922,581 4,838,090
----------- ----------- ----------- ----------- ----------- -----------
845,152,733 623,179,282 461,957,509 464,093,397 484,026,665 607,953,165
Redeemed ............................. (777,973,428) (597,402,702) (444,287,325) (457,216,041) (488,099,503) (651,323,627)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in shares ....... 67,179,305 25,776,580 17,670,184 6,877,356 (4,072,838) (43,370,462)
=========== =========== =========== =========== =========== ===========
</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. 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.

7. 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 and 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.

8. 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.

9. At October 31, 1996, the Tax Exempt Money Market Portfolio had net capital
loss carryforwards for Federal income tax purposes of $53,141 with $2,775,
$1,391, $2,039, $7,802 and $39,134 expiring in 2003, 2002, 2001, 1998 and
1997, respectrively.

10. SUBSEQUENT EVENTS. Furman Selz has consummated an agreement with BISYS
Group, Inc. ("BISYS") whereby services currently provided to the Fund by
Furman Selz will be provided to the Fund by BISYS and certain of its
affiliates under new Administrative Services, Transfer Agency and Fund
Accounting Agreements between the Fund and BISYS.

17
<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.

DOMESTIC PRIME
MONEY MARKET PORTFOLIO
----------------------------------------------------------------------------
YEAR ENDED
----------------------------------------------------------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<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 .................... 0.049 0.054 0.035 0.028 0.038
Net realized gain (loss)
on investments........................... -- (0.002) -- -- --
-------- -------- -------- -------- --------
Total from Investment Operations......... 0.049 0.052 0.035 0.028 0.038
-------- -------- -------- -------- --------
Dividends from investment
income--net ............................. (0.049) (0.054) (0.035) (0.028) (0.038)
Dividends from net realized
gain on investments...................... -- -- -- -- --
-------- -------- -------- -------- --------
Total Distributions ..................... (0.049) (0.054) (0.035) (0.028) (0.038)
-------- -------- -------- -------- --------
Contributions from affiliate (note 8)...... -- 0.002 -- -- --
-------- -------- -------- -------- --------
Net asset value, end of year............... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======== ======== ========
Total Investment Return...................... 5.12% 5.50% 3.56% 2.90% 3.82%
Ratios/Supplemental Data:
Ratio of expenses
to average net assets.................... 0.53%* 0.52%* 0.54% 0.62% 0.54%
Ratio of interest expense to
average net assets....................... 0.01% 0.02% 0.13% -- --
Ratio of net investment income to
average net assets ...................... 4.93% 5.33% 3.49% 2.82% 3.82%
Decrease reflected in above expense
ratios due to undertakings by the
Advisor/Administrator ................... 0.01% 0.01% 0.01% -- 0.01%
Net Assets, end of
year (in thousands)...................... $236,812 $169,297 $143,744 $145,021 $169,357
</TABLE>

- -----------------------
* 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 have been
0.52% and 0.50% for the fiscal years ended October 31, 1996 and October 31,
1995, respectively.
See accompanying notes to financial statements

18
<PAGE>

THE TREASURER'S FUND

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
TAX EXEMPT
MONEY MARKET PORTFOLIO
-----------------------------------------------------------------------------------
YEAR ENDED
-----------------------------------------------------------------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994 1993 1992
---------- ----------- ---------- ---------- ----------
<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................... 0.030 0.034 0.022 0.021 0.031
Net realized gain (loss)
on investments......................... -- -- -- -- --
------- ------- ------- ------- -------
Total from Investment Operations ...... 0.030 0.034 0.022 0.021 0.031
------- ------- ------- ------- -------
Distributions:
Dividends from investment
income--net............................ (0.030) (0.034) (0.022) (0.021) (0.031)
------- ------- ------- ------- -------
Total Distributions.................... (0.030) (0.034) (0.022) (0.021) (0.031)
------- ------- ------- ------- -------
Net asset value, end of year ............ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Total Investment Return ................... 3.04% 3.42% 2.21% 2.16% 3.19%
Ratios/Supplemental Data:
Ratio of expenses to
average net assets..................... 0.54%* 0.52%* 0.53% 0.57% 0.58%
Ratio of net investment income to
average net assets..................... 3.00% 3.35% 2.18% 2.15% 3.10%
Decrease reflected in above expense
ratios due to undertakings by the
Advisor/Administrator.................. -- 0.01% 0.01% -- 0.02%
Net Assets, end of year
(in thousands) ........................ $158,507 $140,826 $133,951 $117,751 $95,751

- ----------
*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 have been 0.52% and 0.50% for
the fiscal years ended October 31, 1996 and October 31, 1995, respectively.
</TABLE>

19
<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,
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<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 .................... 0.047 0.051 0.033 0.026 0.034
Net realized gain (loss)
on investments........................... -- -- -- -- 0.002
------ ------ ------ ------ ------
Total from Investment Operations......... 0.047 0.051 0.033 0.026 0.036
------ ------ ------ ------ ------
Distributions:
Dividends from
investment income--net................... (0.047) (0.051) (0.033) (0.026) (0.034)
Dividends from net realized
gain on investments...................... -- -- -- -- (0.002)
------ ------ ------ ------ ------
Total Distributions ..................... (0.047) (0.051) (0.033) (0.026) (0.036)
------ ------ ------ ------ ------
Net asset value, end of year .............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
====== ====== ====== ====== ======
Total Investment Return ..................... 4.83% 5.27% 3.31% 2.60% 3.68%
Ratios/Supplemental Data:
Ratio of expenses to average
net assets............................... 0.63%* 0.56%* 0.49% 0.47% 0.45%
Ratio of net investment income
to average net assets .................. 4.70% 5.10% 3.07% 2.55% 3.38%
Decrease reflected in above expense
ratios due to undertakings by the
Advisor/Administrator.................... -- -- -- -- 0.01%
Net Assets, end of
year (in thousands)...................... $90,761 $94,834 $138,205 $224,071 $254,899
- ----------
*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 have been 0.60% and 0.54% for
the fiscal years ended October 31, 1996 and October 31, 1995, respectively.

</TABLE>

See accompanying notes to financial statements

- --------------------------------------------------------------------------------
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, 1996, dividends paid to you in cash or
reinvested in the amount of $0.049 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. 11.2% of the
income was derived from obligations of the U.S. Treasury.

For the fiscal year October 31, 1996, dividends in the amont of $ 0.030 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, 1996, dividends paid to you in cash or
reinvested in the amount of $0.047 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. 52.4% of the
income was derived from obligations of the U.S. Treasury.

<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, 1996.

(3) Statement of Assets and Liabilities,
October 31, 1996.

(4) Statement of Operations for the year ended
October 31, 1996.

(5) Statement of Changes in Net Assets for each
of the two years in the period ended
October 31, 1996.

(6) Notes to the Financial Statements.

(7) Report of Ernst & Young LLP, independent
auditors, dated December 11, 1996.

(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
170015.5

<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.

(9.1) Administration Agreement between the
Registrant and BISYS Fund Services Limited
Partnership, d/b/a BISYS Fund Services Inc.

(9.2) Transfer Agent Agreement between the
Registrant and BISYS Fund Services, Inc.

(9.3) Fund Accounting Agreement between the
Registrant and BISYS Fund Services, Inc.

**(10.1) Opinion of Battle Fowler LLP, 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 "Taxes" in the Prospectus and
Statement of Additional Information.

- --------
* Filed with Pre-Effective Amendment No. 1 to the Registration
Statement No. 33-17604 on November 17, 1987, and incor-
porated 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
170015.5

<PAGE>

(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.

(17) Financial Data Schedules (for EDGAR filing
only).

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 incorpo-
rated herein by reference.
** Filed with Post-Effective Amendment No. 4 to the Registra-
tion Statement No. 33-17604 on May 11, 1990, and incorpo-
rated herein by reference.

II-3
170015.5

<PAGE>

Item 26. Number of Holders of Securities.

Number of Record Holders
Title of Class as of January 31, 1997
-------------- -----------------------

Common Stock
(par value $.001)

- U.S. Treasury Money Market Portfolio 2,249
- Domestic Prime Money Market Portfolio Series 11,001
- Global Money Market Portfolio Series 1
- Tax Exempt Money Market Portfolio Series 3,981
- 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
170015.5

<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 advisor; at Custodial Trust Company,
the Registrant's custodian; and at BISYS Fund Services Limited
Partnership, d/b/a BISYS Fund Services, the Registrant's
administrator, and BISYS Fund Services, Inc. the Registrant's fund
accounting, transfer agent and dividend agent.

Item 31. Management Services.

Not applicable.

Item 32. Undertakings.

(a) Not applicable.

(b) Not applicable.

II-5
170015.5

<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 28th day of February, 1997.

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 February 28, 1997
----------------------
Ronald S. Eaker Investment
Officer

(2) Principal Financial and
Accounting Officer

/s/ Judith Fabrizi Treasurer February 28, 1997
Judith Fabrizi

(3) Majority of Directors

Thomas E. O'Connor ) Directors February 28, 1997
Felix J. Christiana )
Mary E. Hauck )
Robert C. Kolodny, M.D. )
Anthony R. Pustorino ) By:/s/ Thomas E. O'Connor
----------------------
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.

Exhibit (9.1)

ADMINISTRATION AGREEMENT

THIS AGREEMENT is made as of this 1st day of October, 1996, by and between
THE TREASURER'S FUND, INC., a Maryland corporation (the "Company"), and BISYS
FUND SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES, INC. (the
"Administrator"), an Ohio limited partnership.

WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest ("Shares");
and

WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Company as the Company and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:

ARTICLE 1. Retention of the Administrator; Conversion to the Services. The
Company hereby engages the Administrator to act as the administrator of the
Portfolios and to furnish the Portfolios with the management and administrative
services as set forth in Article 2 below (collectively, the "Services"), and, in
connection therewith, the Company agrees to convert to the Administrator's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Company shall cooperate with the Administrator to
provide the Administrator with all necessary information and assistance required
to successfully convert to the BISYS System. The Administrator shall provide the
Company with a schedule relating to such conversion and the parties agree that
the conversion may progress in stages. The date upon which all Services shall
have been converted to the BISYS System shall be referred to herein as the
"Conversion Date.' The Administrator hereby accepts such engagement and agrees
to perform the Services commencing, with respect to each individual Service, on
the date that the conversion of such Service to the BISYS System has been
completed. The Administrator shall determine in accordance with its normal
acceptance procedures when the applicable Service has been successfully
converted.

The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company.

ARTICLE 2. Administrative Services. The Administrator shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolios, and, on behalf of the Company,
will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers

G:\LEGALSRV\AGREEMENT\TREASURE\ADMNCORP.AGR
<PAGE>

and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations. The
Administrator shall provide the directors of the Company with such reports
regarding investment performance as they may reasonably request but shall have
no responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.

The Administrator shall provide the Company with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholders") and
directors of the Company) for handling the affairs of the Portfolios and such
other services as the Administrator shall, from time to time, determine to be
necessary to perform its obligations under this Agreement. In addition, at the
request of the Board of Directors, the Administrator shall make reports to the
Company's directors concerning the performance of its obligations hereunder.

Without limiting the generality of the foregoing, the Administrator shall:

(a) calculate contractual Company expenses and control all
disbursements for the Company, and as appropriate compute the
Company's yields, total return, expense ratios, portfolio turnover
rate and, if required, portfolio average dollar-weighted maturity;

(b) assist Company counsel with the preparation of prospectuses,
statements of additional information, registration statements and
proxy materials;

(c) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be required
in order to comply with Federal and state securities law) as may be
necessary or desirable to register the Company's Shares with state
securities authorities, monitor the sale of Company Shares for
compliance with state securities laws, and file with the appropriate
state securities authorities the registration statements and reports
for the Company and the Company's Shares and all amendments thereto,
as may be necessary or convenient to register and keep effective the
Company and the Company's Shares with state securities authorities to
enable the Company to make a continuous offering of its Shares;

(d) develop and prepare, with the assistance of the Company's
investment adviser, communications to Shareholders, including the
annual report to Shareholders, coordinate the mailing of prospectuses,
notices, proxy statements, proxies and other reports to Company
Shareholders, and supervise and facilitate the proxy solicitation
process for all shareholder meetings, including the tabulation of
shareholder votes;

(e) administer contracts on behalf of the Company with, among others,
the Company's investment adviser, distributor, custodian, transfer
agent and fund accountant;

G:\LEGALSRV\AGREEMENT\TREASURE\ADMNCORP.AGR

<PAGE>

(f) supervise the Company's transfer agent with respect to the payment
of dividends and other distributions to Shareholders;

(g) calculate performance data of the Company and its Portfolios for
dissemination to information services covering the investment company
industry;

(h) coordinate and supervise the preparation and filing of the
Company's tax returns;

(i) examine and review the operations and performance of the various
organizations providing services to the Company or any Portfolio of
the Company, including, without limitation, the Company's investment
adviser, distributor, custodian, fund accountant, transfer agent,
outside legal counsel and independent public accountants, and at the
request of the Board of Trustees, report to the Board on the
performance of organizations;

(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Company's semi-annual and annual reports to Shareholders;

(k) assist with the design, development, and operation of the Company
Portfolios, including new classes, investment objectives, policies and
structure;

(l) provide individuals reasonably acceptable to the Company's Board
of Directors to serve as officers of the Company, who will be
responsible for the management of certain of the Company's affairs as
determined by the Company's Board of Directors;

(m) advise the Company and its Board of Directors on matters
concerning the Company and its affairs;

(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Company's
Board of Directors;

(o) monitor and advise the Company and its Portfolios on their
registered investment company status under the Internal Revenue Code
of 1986, as amended;

(p) perform all administrative services and functions of the Company
and each Portfolio to the extent administrative services and functions
are not provided to the Company or such Portfolio pursuant to the
Company's or such Portfolio's

G:\LEGALSRV\AGREEMENT\TREASURE\ADMNCORP.AGR

<PAGE>

investment advisory agreement, distribution agreement, custodian agreement,
transfer agent agreement and fund accounting agreement;

(q) furnish advice and recommendations with respect to other aspects
of the business and affairs of the Portfolios as the Company and the
Administrator shall determine desirable; and

(r) prepare and file with the SEC the semi-annual report for the
Company on Form N-SAR and all required notices pursuant to Rule 24f-2.

The Administrator shall perform such other services for the Company that
are mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the
Company will pay the Administrator's out-of-pocket expenses.

ARTICLE 3. Allocation of Charges and Expenses.

(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all directors of the
Company who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Trustees of the
Company to perform services on behalf of the Company.

(B) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of directors who are not
affiliated persons of the Administrator or the Investment Adviser to the Company
or any affiliated corporation of the Administrator or the Investment Adviser,
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers to the
Company.

ARTICLE 4. Compensation of the Administrator.

(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Company shall pay to the Administrator compensation at an annual
rate specified in Schedule A attached hereto.

G:\LEGALSRV\AGREEMENT\TREASURE\ADMNCORP.AGR

<PAGE>

Such compensation shall be calculated and accrued daily, and paid to the
Administrator monthly. The Company shall also reimburse the Administrator for
its reasonable out-of-pocket expenses, including the travel and lodging expenses
incurred by officers and employees of the Administrator in connection with
attendance at Board meetings.

If the Conversion Date occurs subsequent to the first day of a month or
terminates before the last day of a month, the Administrator's compensation for
that part of the month in which this Agreement is in effect shall be prorated in
a manner consistent with the calculation of the fees as set forth above. Payment
of the Administrator's compensation for the preceding month shall be made
promptly.

(B) Survival of Compensation Rights. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.

ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable law which
cannot be waived or modified hereby. (As used in this Article 5, the term
"Administrator" shall include directors, officers, employees and other agents of
the Administrator as well as the Administrator itself.)

So long as the Administrator acts in good faith and with due diligence and
without negligence, the Company assumes full responsibility and shall indemnify
the Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any and
all losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of said administration, transfer agency, and
dividend disbursing relationships to the Company or any other service rendered
to the Company hereunder. The indemnity and defense provisions set forth herein
shall indefinitely survive the termination of this Agreement.

The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a

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<PAGE>

claim for indemnification against the Company, but failure to do so in good
faith shall not affect the rights hereunder.

The Company shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to the Administrator, whose approval shall not be
unreasonably withheld. In the event that the Company elects to assume the
defense of any suit and retain counsel, the Administrator shall bear the fees
and expenses of any additional counsel retained by it. If the Company does not
elect to assume the defense of a suit, it will reimburse the Administrator for
the reasonable fees and expenses of any counsel retained by the Administrator.

The Administrator may apply to the Company at any time for instructions and
may consult counsel for the Company or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.

Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Company until receipt of written notice thereof from the Company.

ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and Shareholders of the Company are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that partners, officers and employees of the Administrator and its counsel
are or may be or become similarly interested in the Company, and that the
Administrator may be or become interested in the Company as a Shareholder or
otherwise.

ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall be
as specified in Schedule A hereto.

ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and

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<PAGE>

shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. ARTICLE 9. Amendments. This Agreement may be
amended by the parties hereto only if such amendment is specifically approved
(i) by the vote of a majority of the directors of the Company, and (ii) by the
vote of a majority of the directors of the Company who are not parties to this
Agreement or interested persons of any such party, cast in person at a Board of
Directors meeting called for the purpose of voting on such approval.

For special cases, the parties hereto may amend such procedures set forth
herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Company does not conflict with or violate any requirements of
its Articles of Incorporation or then-current prospectuses, or any rule,
regulation or requirement of any regulatory body.

ARTICLE 10. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.

In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.

ARTICLE 11. Definitions of Certain Terms. The terms "interested person" and
"affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.

ARTICLE 12. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the following address: if to the Administrator, to it at 3435 Stelzer Road,
Columbus, Ohio 43219; if to the Company, to it at 19 Old Kings Highway South,
Darien, Connecticut 06820, or at such other address as such party may from time
to time specify in writing to the other party pursuant to this Section.

ARTICLE 13. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Ohio and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Ohio, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.

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<PAGE>

ARTICLE 14. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

THE TREASURER'S FUND, INC.

By: /s/ Thomas E. O'Connor, Chairman

Attest: /s/ Ronald S. Eaker, President

BISYS FUND SERVICES LIMITED PARTNERSHIP

By: BISYS Fund Services, Inc.,
General Partner

By: /s/ Stephen G. Mintos, Executive Vice President

Attest: /s/ Elise M. Elman

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<PAGE>

SCHEDULE A

TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1996
BETWEEN THE TREASURER'S FUND, INC.
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP

Portfolios: This Agreement shall apply to all Portfolios of The Treasurer's
Fund, Inc., either now or hereafter created (collectively, the
"Portfolios"). The current portfolios of the Company are set
forth below: 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.

Fees: Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Company will pay
the Administrator on the first business day of each month, or at
such time(s) as the Administrator shall request and the parties
hereto shall agree, a fee computed daily at the annual rate of:

.10% of the first $500 million of aggregate average daily
net assets of each Portfolio of the Company; .065% of the
next $250 million of aggregate average daily net assets of
each Portfolio of the Company; .055% of the next $250
million of aggregate average daily net assets of each
Portfolio of the Company; and .050% of all aggregate average
daily net assets of each Portfolio of the Company over $1
billion.

The fee for the period from the day of the month this Agreement
is entered into until the end of that month shall be prorated
according to the proportion which such period bears to the full
monthly period. Upon any termination of this Agreement before the
end of any month, the fee for such part of a month shall be
prorated according to the proportion which such period bears to
the full monthly period and shall be payable upon the date of
termination of this Agreement.

For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Company's Declaration of Company or in the Prospectus or
Statement of Additional Information respecting that Portfolio as
from time to time is in effect for the computation of the value
of such net assets in connection with the determination of the
liquidating value of the shares of such Portfolio.

The parties hereby confirm that the fees payable hereunder shall
be applied to each Portfolio as a whole, and not to separate
classes of shares within the Portfolios.

Term: The initial term of this Agreement (the "Initial Term") shall be
for a period commencing on the date this Agreement is executed by
both parties and ending on the date that is one year after the
Conversion Date. This Agreement shall be renewed automatically
for successive periods of one year after the Initial Term,
provided that such continuation is specifically approved at least
annually by the Company's Board of Directors or by a majority
vote of the holders of the Company's outstanding voting
securities, as defined in the 1940 Act, and, in either case, by a
majority of those Directors who are neither party to this
Agreement nor, other than by their service as Directors of the
Company, interested persons, as defined in the 1940 Act, of any
such person who is party to this Agreement. Upon the
effectiveness of this Agreement, it shall supersede all previous
agreements between the parties hereto covering the subject matter
hereof. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of a majority of the Company's
outstanding voting securities, as defined in the 1940 Act, or by
a vote of a majority of the Company's entire Board of Directors,
on sixty days' written notice to the Administrator, or by the
Administrator on sixty days' written notice to the Company. In
the event of a material breach of this Agreement by either party,
the non-breaching party shall notify the breaching party in
writing of such breach and upon receipt of such notice, the
breaching party shall have 45 days to remedy the breach. In the
event the breach is not remedied within such time period, the
nonbreaching party may immediately terminate this Agreement.

Notwithstanding the foregoing, after such termination for so long
as the Administrator, with the written consent of the Company, in
fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto,
the provisions of this Agreement, including without limitation
the provisions dealing with indemnification, shall continue in
full force and effect. Compensation due the Administrator and
unpaid by the Company upon such termination shall be immediately
due and payable upon and notwithstanding such termination. The
Administrator shall be entitled to collect from the Company, in
addition to the compensation described in this Schedule A, the
amount of all of the Administrator's cash disbursements for
services in connection with the Administrator's activities in
effecting such termination, including without limitation, the
delivery to the Company and/or its designees of the Company's
property, records, instruments and documents, or any copies
thereof. Subsequent to such termination, for a reasonable fee,
the Administrator will provide the Company with reasonable access
to any Company documents or records remaining in its possession.

Exhibit (9.2)

TRANSFER AGENCY AGREEMENT

AGREEMENT made this 1st day of October, 1996, between THE TREASURER'S FUND,
INC.(the "Company"), a Maryland corporation having its principal place of
business at 19 Old Kings Highway South, Darien, Connecticut 06820, and BISYS
FUND SERVICES, INC. ("BISYS"), a Delaware corporation having its principal place
of business at 3435 Stelzer Road, Columbus, Ohio 43219.

WHEREAS, the Company desires that BISYS perform certain services for each
series of the Company (individually referred to herein as a "Fund" and
collectively as the "Funds"); and

WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:

1. Retention of BISYS; Conversion to the Services.

The Company hereby engages BISYS to act as the transfer agent for the Funds
to perform (i) the transfer agent services set forth in Schedule A hereto (the
"Initial Services"), (ii) such special services (the "Special Services")
incidental to the performance of such services as may be agreed to by the
parties from time to time (for such fees as the parties may agree as aforesaid)
and (iii) such additional services (collectively with the Initial Services and
the Special Services, the "Services"), as may be agreed to by the parties from
time to time and set forth in an amendment to said Schedule A (for such fees as
the parties may agree as aforesaid), and, in connection therewith, the Company
agrees to convert to BISYS' data processing systems and software (the "BISYS
System") as necessary in order to receive the Services. The Company shall
cooperate with BISYS to provide BISYS with all necessary information and
assistance required to successfully convert to the BISYS System. BISYS shall
provide the Company with a schedule relating to such conversion and the parties
agree that the conversion may progress in stages. The date upon which all
Initial Services shall have been converted to the BISYS System shall be referred
to herein as the "Conversion Date." BISYS hereby accepts such engagement and
agrees to perform the Services commencing, with respect to each individual
Service, on the date that the conversion of such Service to the BISYS System has
been completed. BISYS shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted.

BISYS may, in its discretion, appoint in writing other parties qualified to
perform transfer agency services reasonably acceptable to the Company
(individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-transfer Agent shall be the agent of BISYS and not the agent of the
Company or such Fund, and that BISYS shall be fully responsible for the acts of
such Sub-transfer Agent and shall not be relieved of any of its responsibilities
hereunder by the appointment of such Sub-transfer Agent.

2. Fees.

The Company shall pay BISYS for the services to be provided by BISYS under
this Agreement in accordance with, and in the manner set forth in, Schedule B
hereto. Fees for any additional services to be provided by BISYS pursuant to an
amendment to Schedule A hereto shall be subject to mutual agreement at the time
such amendment to Schedule A is proposed.

3. Reimbursement of Expenses.

In addition to paying BISYS the fees described in Section 2 hereof, the
Company agrees to reimburse BISYS for BISYS' out-of-pocket expenses in providing
services hereunder, including without limitation, the following:

(a) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Company and in
delivering all materials to shareholders;

(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Company, the Company's investment adviser
or custodian, dealers, shareholders or others as required for
BISYS to perform the services to be provided hereunder;

(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms, proxies,
notices or other form of printed material which shall be required
by BISYS for the performance of the services to be provided
hereunder;

(d) The cost of microfilm or microfiche of records or other
materials; and

(e) Any expenses BISYS shall incur at the written direction of an
officer of the Company thereunto duly authorized.

4. Effective Date.

This Agreement shall become effective as of the date first written above
(the "Effective Date").

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<PAGE>

5. Term.

The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both parties and
ending on the date that is one year after the Conversion Date. Thereafter, it
shall be renewed automatically for successive one-year terms unless written
notice not to renew is given by the non-renewing party to the other party at
least 60 days prior to the expiration of the then-current term; provided that
such continuation is specifically approved at least annually by the Company's
Board of Directors or by a majority vote of the holders of the Company's
outstanding voting securities, as defined in the 1940 Act, and, in either case,
by a majority of those Directors who are neither party to this Agreement nor,
other than by their service as Directors of the Company, interested persons, as
defined in the 1940 Act, of any such person who is party to this Agreement. Upon
the effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof. This Agreement
may be terminated at any time, without the payment of any penalty, by vote of a
majority of the Company's outstanding voting securities, as defined in the 1940
Act, or by a vote of a majority of the Company's entire Board of Directors, on
sixty days' written notice to BISYS, or by BISYS on sixty days' written notice
to the Company. After such termination, for so long as BISYS, with the written
consent of the Company, in fact continues to perform any one or more of the
services contemplated by this Agreement or any Schedule or exhibit hereto, the
provisions of this Agreement, including without limitation the provisions
dealing with indemnification, shall continue in full force and effect. Fees and
out-of-pocket expenses incurred by BISYS but unpaid by the Company upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Company, in addition to
the fees and disbursements provided by Sections 2 and 3 hereof, the amount of
all of BISYS' cash disbursement and a reasonable fee (which fee shall not be
less than one hundred and two percent (102%) of the sum of the actual costs
incurred by BISYS in performing such service) for services in connection with
BISYS' activities in effecting such termination, including without limitation,
the delivery to the Company and/or its distributor or investment adviser and/or
other parties, of the Company's property, records, instruments and documents, or
any copies thereof. To the extent that BISYS may retain in its possession copies
of any Company documents or records subsequent to such termination which copies
had not been requested by or on behalf of the Company in connection with the
termination process described above, BISYS, for a reasonable fee, will provide
the Company with reasonable access to such copies.

In the event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of such breach
and, upon receipt of such notice, the breaching party shall have 45 days to
remedy the breach. In the event the breach is not remedied within such time
period, the nonbreaching party may immediately terminate this Agreement.

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<PAGE>

6. Uncontrollable Events.

BISYS assumes no responsibility hereunder, and shall not be liable for any
damage, loss of data, delay or any other loss whatsoever caused by events beyond
its reasonable control.

7. Legal Advice.

BISYS shall notify the Company at any time BISYS believes that it is in
need of the advice of counsel (other than counsel in the regular employ of BISYS
or any affiliated companies) with regard to BISYS' responsibilities and duties
pursuant to this Agreement; and after so notifying the Company, BISYS, at its
discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at the expense of the Company or
Funds unless relating to a matter involving BISYS' willful misfeasance, bad
faith, gross negligence or reckless disregard with respect to BISYS'
responsibilities and duties hereunder and BISYS shall in no event be liable to
the Company or any Fund or any shareholder or beneficial owner of the Company
for any action reasonably taken pursuant to such advice.

8. Instructions.

Whenever BISYS is requested or authorized to take action hereunder pursuant
to instructions from a shareholder, or a properly authorized agent of a
shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication, believed by BISYS to be genuine and to have been properly made,
signed or authorized by an officer or other authorized agent of the Company or
by the shareholder or shareholder's agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be
ascertained by it hereunder a certificate signed by an officer of the Company or
any other person authorized by the Company's Board of Directors or by the
shareholder or shareholder's agent, as the case may be.

As to the services to be provided hereunder, BISYS may rely conclusively
upon the terms of the Prospectuses and Statement of Additional Information of
the Company relating to the Funds to the extent that such services are described
therein unless BISYS receives written instructions to the contrary in a timely
manner from the Company.

9. Standard of Care; Reliance on Records and Instructions; Indemnification.

BISYS shall use its best efforts to ensure the accuracy of all services
performed under this Agreement, but shall not be liable to the Company for any
action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Company agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or nonactions with respect to the
performance of services under this Agreement or based, if applicable, upon
reasonable reliance on information, records, instructions or requests given or
made to BISYS by the Company, the investment adviser and on any records provided
by any fund accountant or custodian thereof; provided that this indemnification
shall not apply to actions or omissions of BISYS in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties; and further provided that prior to confessing any claim
against it which may be the subject of this indemnification, BISYS shall give
the Company written notice of and reasonable opportunity to defend against said
claim in its own name or in the name of BISYS.

10. Record Retention and Confidentiality.

BISYS shall keep and maintain on behalf of the Company all books and
records which the Company or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees that
all such books and records shall be the property of the Company and to make such
books and records available for inspection by the Company or by the Securities
and Exchange Commission (the "Commission") at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Company and its shareholders, except when requested to divulge such information
by duly-constituted authorities or court process, or requested by a shareholder
or shareholder's agent with respect to information concerning an account as to
which such shareholder has either a legal or beneficial interest or when
requested by the Company, the shareholder, or shareholder's agent, or the dealer
of record as to such account.

11. Reports.

BISYS will furnish to the Company and to its properly-authorized auditors,
investment advisers, examiners, distributors, dealers, underwriters, salesmen,
insurance companies and others designated by the Company in writing, such
reports at such times as are prescribed in Schedule C attached hereto, or as
subsequently agreed upon by the parties pursuant to an amendment to Schedule C.
The Company agrees to examine each such report or copy promptly and will report
or cause to be reported any errors or discrepancies therein not later than three
business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within three days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and be binding upon the Company and
any other recipient, and BISYS shall have no liability for errors or
discrepancies therein and shall have no further responsibility with respect to
such report except to perform reasonable corrections of such errors and
discrepancies within a reasonable time after requested to do so by the Company.

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<PAGE>

12. Rights of Ownership.

All computer programs and procedures developed to perform services required
to be provided by BISYS under this Agreement are the property of BISYS. All
records and other data except such computer programs and procedures are the
exclusive property of the Company and all such other records and data will be
furnished to the Company in appropriate form as soon as practicable after
termination of this Agreement for any reason.

13. Return of Records.

BISYS may at its option at any time, and shall promptly upon the Company's
demand, turn over to the Company and cease to retain BISYS' files, records and
documents created and maintained by BISYS pursuant to this Agreement which are
no longer needed by BISYS in the performance of its services or for its legal
protection. If not so turned over to the Company, such documents and records
will be retained by BISYS for six years from the year of creation. At the end of
such six-year period, such records and documents will be turned over to the
Company unless the Company authorizes in writing the destruction of such records
and documents.

14. Bank Accounts.

The Company and the Funds shall establish and maintain such bank accounts
with such bank or banks as are selected by the Company, as are necessary in
order that BISYS may perform the services required to be performed hereunder. To
the extent that the performance of such services shall require BISYS directly to
disburse amounts for payment of dividends, redemption proceeds or other
purposes, the Company and Funds shall provide such bank or banks with all
instructions and authorizations necessary for BISYS to effect such
disbursements.

15. Representations of the Company.

The Company certifies to BISYS that: (a) as of the close of business on the
Effective Date, each Fund which is in existence as of the Effective Date has
authorized unlimited shares, and (b) by virtue of its Articles of Incorporation,
shares of each Fund which are redeemed by the Company may be sold by the Company
from its treasury, and (c) this Agreement has been duly authorized by the
Company and, when executed and delivered by the Company, will constitute a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.

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<PAGE>

16. Representations of BISYS.

BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in, substantial compliance with all provisions of law, including
Section 17A(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), required in connection with the performance of its duties under this
Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Company and BISYS' records, data, equipment, facilities and other property used
in the performance of its obligations hereunder are adequate and that it will
make such changes therein from time to time as are required for the secure
performance of its obligations hereunder.

17. Insurance.

BISYS shall notify the Company should its insurance coverage with respect
to professional liability or errors and omissions coverage be canceled or
reduced. Such notification shall include the date of change and the reasons
therefor. BISYS shall notify the Company of any material claims against it with
respect to services performed under this Agreement, whether or not they may be
covered by insurance, and shall notify the Company from time to time as may be
appropriate of the total outstanding claims made by BISYS under its insurance
coverage.

18. Information to be Furnished by the Company and Funds.

The Company has furnished to BISYS the following:

(a) Copies of the Articles of Incorporation of the Company and of any
amendments thereto, certified by the proper official of the state in
which such Declaration has been filed.

(b) Copies of the following documents:

1. The Company's Bylaws and any amendments thereto.

2. Certified copies of resolutions of the Board of Directors
covering the following matters:

A. Approval of this Agreement and authorization of a specified
officer of the Company to execute and deliver this Agreement
and authorization for specified officers of the Company to
instruct BISYS hereunder; and

B. Authorization of BISYS to act as Transfer Agent for the
Company on behalf of the Funds. (c) A list of all officers
of the Company, together with specimen signatures of those
officers, who are authorized to instruct BISYS in all
matters.

(d) Two copies of the following (if such documents are employed
by the Company):

1. Prospectuses and Statement of Additional Information;

2. Distribution Agreement; and

3. All other forms commonly used by the Company or its
Distributor with regard to their relationships and
transactions with shareholders of the Funds.

(e) A certificate as to shares of beneficial interest of the
Company authorized, issued, and outstanding as of the
Effective Date of BISYS' appointment as Transfer Agent (or
as of the date on which BISYS' services are commenced,
whichever is the later date) and as to receipt of full
consideration by the Company for all shares outstanding,
such statement to be certified by the Treasurer of the
Company.

19. Information Furnished by BISYS.

BISYS has furnished to the Company the following:

(a) BISYS' Articles of Incorporation.

(b) BISYS' Bylaws and any amendments thereto.

1. Approval of this Agreement, and authorization of a specified
officer of BISYS to execute and deliver this Agreement;

2. Authorization of BISYS to act as Transfer Agent for the Company.

(d) A copy of the most recent independent accountants' report relating to
internal accounting control systems as filed with the Commission
pursuant to Rule 17Ad-13 under the Exchange Act.

20. Amendments to Documents.

The Company shall furnish BISYS written copies of any amendments to, or
changes in, any of the items referred to in Section 18 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Company agrees
that no amendments will be made to the Prospectuses or Statement of Additional
Information of the Company which might have the effect of changing the
procedures employed by BISYS in providing the services agreed to hereunder or
which amendment might affect the duties of BISYS hereunder unless the Company
first obtains BISYS' approval of such amendments or changes.

21. Reliance on Amendments.

BISYS may rely on any amendments to or changes in any of the documents and
other items to be provided by the Company pursuant to Sections 18 and 20 of this
Agreement and the Company hereby indemnifies and holds harmless BISYS from and
against any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every nature
and character which may result from actions or omissions on the part of BISYS in
reasonable reliance upon such amendments and/or changes. Although BISYS is
authorized to rely on the above-mentioned amendments to and changes in the
documents and other items to be provided pursuant to Sections 18 and 20 hereof,
BISYS shall be under no duty to comply with or take any action as a result of
any of such amendments or changes unless the Company first obtains BISYS'
written consent to and approval of such amendments or changes.

22. Compliance with Law.

Except for the obligations of BISYS set forth in Section 10 hereof, the
Company assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Company's shares. The Company
represents and warrants that no shares of the Company will be offered to the
public until the Company's registration statement under the 1933 Act and the
1940 Act has been declared or becomes effective.

23. Notices.

Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Company, to it at 19 Old Kings Highway
South, Darien, Connecticut 06820; if to BISYS, to it at 3435 Stelzer Road,
Columbus, Ohio 43219, or at such other address as such party may from time to
time specify in writing to the other party pursuant to this Section.

24. Headings.

Paragraph headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.

25. Assignment.

This Agreement and the rights and duties hereunder shall not be assignable
by either of the parties hereto except by the specific written consent of the
other party. This Section 25 shall not limit or in any way affect BISYS' right
to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective successors and permitted assigns.

26. Governing Law.

This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of Ohio.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

THE TREASURER'S FUND, INC.

By: /s/ Thomas E. O'Connor, Chairman

Attest: /s/ Ronald S. Eaker, President

BISYS FUND SERVICES, INC.

By: /s/ Stephen G. Mintos, Executive Vice President

Attest: /s/ Elise M. Elman

G:\LEGALSRV\AGREEMEN\TREASURE\TRNSAGR.AGR
<PAGE>

Dated: October 1, 1996

SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE TREASURER'S FUND, INC.
AND
BISYS FUND SERVICES, INC.

TRANSFER AGENCY SERVICES

1. Shareholder Transactions

a. Process shareholder purchase and redemption orders.

b. Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.

c. Issue confirmations in compliance with Rule 10 under the Securities
Exchange Act of 1934, as amended.

d. Issue periodic statements for shareholders.

e. Process transfers and exchanges.

f. Process dividend payments, including the purchase of new shares,
through dividend reimbursement.

2. Shareholder Information Services

a. Make information available to shareholder servicing unit and other
remote access units regarding trade date, share price, current
holdings, yields, and dividend information.

b. Produce detailed history of transactions through duplicate or special
order statements upon request.

c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.

G:\LEGALSRV\AGREEMEN\TREASURE\TRNSAGR.AGR
<PAGE>

3. Compliance Reporting

a. Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers and the States in which the
Fund is registered.

b. Prepare and distribute appropriate Internal Revenue Service forms for
corresponding Fund and shareholder income and capital gains.

c. Issue tax withholding reports to the Internal Revenue Service.

4. Dealer/Load Processing (if applicable)

a. Provide reports for tracking rights of accumulation and purchases made
under a Letter of Intent.

b. Account for separation of shareholder investments from transaction
sale charges for purchase of Fund shares.

c. Calculate fees due under 12b-1 plans for distribution and marketing
expenses.

d. Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load Fund.

5. Shareholder Account Maintenance

a. Maintain all shareholder records for each account in the Company.

b. Issue customer statements on scheduled cycle, providing duplicate
second and third party copies if required.

c. Record shareholder account information changes.

d. Maintain account documentation files for each shareholder.

G:\LEGALSRV\AGREEMEN\TREASURE\TRNSAGR.AGR
<PAGE>

SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE TREASURER'S FUND, INC.
AND
BISYS FUND SERVICES, INC.

TRANSFER AGENT FEES

The Transfer Agent will provide Gabelli-O'Connor Fixed Income Mutual Funds
Management Company with the DST System Inc. shareholder accounting system. For
the transfer agent services provided, the Transfer Agent shall be paid a fee of
$4.00 per account per year with a monthly minimum of $1,000 for the Fund.

G:\LEGALSRV\AGREEMEN\TREASURE\TRNSAGR.AGR
<PAGE>

SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
THE TREASURER'S FUND, INC.
AND
BISYS FUND SERVICES, INC.

REPORTS

1. Daily Shareholder Activity Journal

2. Daily Fund Activity Summary Report

a. Beginning Balance

b. Dealer Transactions

c. Shareholder Transactions

d. Reinvested Dividends

e. Exchanges

f. Adjustments

g. Ending Balance

3. Daily Wire and Check Registers

4. Monthly Dealer Processing Reports

5. Monthly Dividend Reports

6. Sales Data Reports for Blue Sky Registration

7. Annual report by independent public accountants concerning BISYS' shareholder
system and internal accounting control systems to be filed with the
Securities and Exchange Commission pursuant to Rule 17Ad-13 of the Securities
Exchange Act of 1934, as amended.

Exhibit (9.3)

FUND ACCOUNTING AGREEMENT

AGREEMENT made this 1st day of October, 1996, between THE TREASURER'S FUND,
INC. (the "Company"), a Maryland corporation having its principal place of
business at 19 Old Kings Highway South, Darien, Connecticut 06820, and BISYS
FUND SERVICES, INC. ("Fund Accountant"), a corporation organized under the laws
of the State of Delaware and having its principal place of business at 3435
Stelzer Road, Columbus, Ohio 43219.

WHEREAS, the Company desires that Fund Accountant perform certain fund
accounting services for each investment portfolio of the Company, all as now or
hereafter may be established from time to time (individually referred to herein
as the "Fund" and collectively as the "Funds"); and

WHEREAS, Fund Accountant is willing to perform such services on the terms
and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:

1. Services as Fund Accountant; Conversion to Services.

The Company hereby engages Fund Accountant to perform fund accounting
services as set forth in this Section 1 (collectively, the "Services"), and, in
connection therewith, the Company agrees to convert to Fund Accountant's data
processing systems and software (the "BISYS System") as necessary in order to
receive the Services. The Company shall cooperate with Fund Accountant to
provide Fund Accountant with all necessary information and assistance required
to successfully convert to the BISYS System. Fund Accountant shall provide the
Company with a schedule relating to such conversion and the parties agree that
the conversion may progress in stages. The date upon which all Services shall
have been converted to the BISYS System shall be referred to herein as the
"Conversion Date." Fund Accountant hereby accepts such engagement and agrees to
perform the Services commencing, with respect to each individual Service, on the
date that the conversion of such Service to the BISYS System has been completed.
Fund Accountant shall determine in accordance with its normal acceptance
procedures when the applicable Service has been successfully converted.

(a) Maintenance of Books and Records. Fund Accountant will keep and
maintain the following books and records of each Fund pursuant to
Rule 31a-1 under the Investment Company Act of 1940 (the "Rule"):

(i) Journals containing an itemized daily record in detail
of all purchases and sales of securities, all receipts and
disbursements of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;

<PAGE>

(ii) General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense accounts,
including interest accrued and interest received, as required by
subsection (b)(2)(i) of the Rule;

(iii) Separate ledger accounts required by subsection
(b)(2)(ii) and (iii) of the Rule; and

(iv) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the
Rule.

(b) Performance of Daily Accounting Services. In addition to the
maintenance of the books and records specified above, Fund
Accountant shall perform the following accounting services daily
for each Fund:

(i) Calculate the net asset value per share utilizing prices
obtained from the sources described in subsection 1(b)(ii)
below;

(ii) Obtain security prices from independent pricing services, or
if such quotes are unavailable, then obtain such prices from
each Fund's investment adviser or its designee, as approved
by the Company's Board of Directors;

(iii) Verify and reconcile with the Fund's custodian all daily
trade activity;

(iv) Compute, as appropriate, each Fund's net income and capital
gains, dividend payables, dividend factors, 7-day yields,
7-day effective yields, 30-day yields, and weighted average
portfolio maturity;

(v) Review daily the net asset value calculation and dividend
factor (if any) for each Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations, and
distribute net asset values and yields to NASDAQ;

(vi) Report to the Company the daily market pricing of securities
in any money market Funds, with the comparison to the
amortized cost basis;

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR
<PAGE>

(vii) Determine unrealized appreciation and depreciation on
securities held in variable net asset value Funds;

(viii) Amortize premiums and accrete discounts on securities
purchased at a price other than face value, if requested by
the Company; (ix) Update fund accounting system to reflect
rate changes, as received from a Fund's investment adviser,
on variable interest rate instruments;

(x) Post Fund transactions to appropriate categories;

(xi) Accrue expenses of each Fund according to instructions
received from the Company's Administrator;

(xii) Determine the outstanding receivables and payables for all
(1) security trades, (2) Fund share transactions and (3)
income and expense accounts;

(xiii) Provide accounting reports in connection with the
Company's regular annual audit and other audits and
examinations by regulatory agencies; and

(xiv) Provide such periodic reports as the parties shall agree
upon, as set forth in a separate schedule.

(i) Fund Accountant may provide additional special reports upon
the request of the Company or a Fund's investment adviser,
which may result in an additional charge, the amount of
which shall be agreed upon between the parties.

(ii) Fund Accountant may provide such other similar services with
respect to a Fund as may be reasonably requested by the
Company, which may result in an additional charge, the
amount of which shall be agreed upon between the parties.

(d) Additional Accounting Services. Fund Accountant shall also
perform the following additional accounting services for each
Fund:

(i) Provide monthly a download (and hard copy thereof) of the
financial statements described below, upon request of the
Company. The download will include the following items:

Statement of Assets and Liabilities,

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

Statement of Operations, Statement of Changes in Net Assets,
and Condensed Financial Information;

(ii) Provide accounting information for the following:

(A) federal and state income tax returns and federal excise
tax returns;

(B) the Company's semi-annual reports with the Securities
and Exchange Commission ("SEC") on Form N-SAR;

(D) registration statements on Form N-1A and other filings
relating to the registration of Shares;

(E) the Administrator's monitoring of the Company's status
as a regulated investment company under Subchapter M of the
Internal Revenue Code, as amended;

(F) annual audit by the Company's auditors; and

(G) examinations performed by the SEC.

2. Subcontracting.

Fund Accountant may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder; provided,
however, that Fund Accountant shall not be relieved of any of its obligations
under this Agreement by the appointment of such subcontractor and provided
further, that Fund Accountant shall be responsible, to the extent provided in
Section 6 hereof, for all acts of such subcontractor as if such acts were its
own.

3. Compensation.

The Company shall pay Fund Accountant for the services to be provided by
Fund Accountant under this Agreement in accordance with, and in the manner set
forth in, Schedule A hereto, as such Schedule may be amended from time to time.
<PAGE>

4. Reimbursement of Expenses.

In addition to paying Fund Accountant the fees described in Section 3
hereof, the Company agrees to reimburse Fund Accountant for its out-of-pocket
expenses in providing services hereunder, including without limitation the
following:

(a) All freight and other delivery and bonding charges incurred by
Fund Accountant in delivering materials to and from the Company;

(b) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by Fund Accountant in
communication with the Company, the Company's investment advisor or
custodian, dealers or others as required for Fund Accountant to
perform the services to be provided hereunder;

(d) The cost of microfilm or microfiche of records or other materials;

(e) Any expenses Fund Accountant shall incur at the written direction
of an officer of the Company thereunto duly authorized; and

(f) Any additional expenses reasonably incurred by Fund Accountant in
the performance of its duties and obligations under this Agreement.

5. Effective Date.

This Agreement shall become effective with respect to a Fund as of the date
first written above.

6. Term.

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

securities, as defined in the 1940 Act, and, in either case, by a majority of
those Directors who are neither party to this Agreement nor, other than by their
service as Directors of the Company, interested persons, as defined in the 1940
Act, of any such person who is party to this Agreement. Upon the effectiveness
of this Agreement, it shall supersede all previous agreements between the
parties hereto covering the subject matter hereof. This Agreement may be
terminated at any time, without the payment of any penalty, by vote of a
majority of the Company's outstanding voting securities, as defined in the 1940
Act, or by a vote of a majority of the Company's entire Board of Directors, on
sixty days' written notice to Fund Accountant, or by Fund Accountant on sixty
days' written notice to the Company. After such termination for so long as Fund
Accountant, with the written consent of the Company, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due Fund Accountant and unpaid by the Company
upon such termination shall be immediately due and payable upon and
notwithstanding such termination. Fund Accountant shall be entitled to collect
from the Company, in addition to the compensation described under Section 3
hereof, the amount of all of Fund Accountant's cash disbursements for services
in connection with Fund Accountant's activities in effecting such termination,
including without limitation, the delivery to the Company and/or its designees
of the Company's property, records, instruments and documents, or any copies
thereof. Subsequent to such termination, for a reasonable fee, Fund Accountant
will provide the Company with reasonable access to any Company documents or
records remaining in its possession.

7. Standard of Care; Reliance on Records and Instructions; Indemnification.

Fund Accountant shall use its best efforts to insure the accuracy of all
services performed under this Agreement, but shall not be liable to the Company
for any action taken or omitted by Fund Accountant in the absence of bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties. A Fund agrees to indemnify and hold harmless Fund
Accountant, its employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Fund Accountant's actions
taken or nonactions with respect to the performance of services under this
Agreement with respect to such Fund or based, if applicable, upon reasonable
reliance on information, records, instructions or requests with respect to such
Fund given or made to Fund Accountant by a duly authorized representative of the
Company; provided that this indemnification shall not apply to actions or
omissions of Fund Accountant in cases of its own bad faith, willful misfeasance,
negligence or from reckless disregard by it of its obligations and duties, and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, Fund Accountant shall give the Company written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of Fund Accountant.

8. Record Retention and Confidentiality.

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

Fund Accountant shall keep and maintain on behalf of the Company all books
and records which the Company and Fund Accountant is, or may be, required to
keep and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"), relating to the maintenance of books
and records in connection with the services to be provided hereunder. Fund
Accountant further agrees that all such books and records shall be the property
of the Company and to make such books and records available for inspection by
the Company or by the Securities and Exchange Commission at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Company and its shareholders; except when requested to divulge
such information by duly-constituted authorities or court process.

9. Uncontrollable Events.

Fund Accountant assumes no responsibility hereunder, and shall not be
liable, for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control.

10. Reports.

Fund Accountant will furnish to the Company and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports and at such times as are prescribed pursuant to the terms and the
conditions of this Agreement to be provided or completed by Fund Accountant, or
as subsequently agreed upon by the parties pursuant to an amendment hereto. The
Company agrees to examine each such report or copy promptly and will report or
cause to be reported any errors or discrepancies therein no later than three
business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within ten days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and binding upon the Company and any
other recipient, and, except as provided in Section 6 hereof, Fund Accountant
shall have no liability for errors or discrepancies therein and shall have no
further responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Company.

11. Rights of Ownership.

All computer programs and procedures developed to perform services required
to be provided by Fund Accountant under this Agreement are the property of Fund
Accountant. All records and other data except such computer programs and
procedures are the exclusive property of the Company and all such other records
and data will be furnished to the Company in appropriate form as soon as
practicable after termination of this Agreement for any reason.

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

12. Return of Records.

Fund Accountant may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company and cease to retain Fund Accountant's
files, records and documents created and maintained by Fund Accountant pursuant
to this Agreement which are no longer needed by Fund Accountant in the
performance of its services or for its legal protection. If not so turned over
to the Company, such documents and records will be retained by Fund Accountant
for six years from the year of creation. At the end of such six-year period,
such records and documents will be turned over to the Company unless the Company
authorizes in writing the destruction of such records and documents.

13. Representations of the Company.

The Company certifies to Fund Accountant that: (1) as of the close of
business on each Conversion Date, each Fund that is in existence as of the
Conversion Date has authorized unlimited shares, and (2) this Agreement has been
duly authorized by the Company and, when executed and delivered by the Company,
will constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.

14. Representations of Fund Accountant.

Fund Accountant represents and warrants that: (1) the various procedures
and systems which Fund Accountant has implemented with regard to safeguarding
from loss or damage attributable to fire, theft, or any other cause the records,
and other data of the Company and Fund Accountant's records, data, equipment
facilities and other property used in the performance of its obligations
hereunder are adequate and that it will make such changes therein from time to
time as are required for the secure performance of its obligations hereunder,
and (2) this Agreement has been duly authorized by Fund Accountant and, when
executed and delivered by Fund Accountant, will constitute a legal, valid and
binding obligation of Fund Accountant, enforceable against Fund Accountant in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.

15. Insurance.

Fund Accountant shall notify the Company should any of its insurance
coverage be canceled or reduced. Such notification shall include the date of
change and the reasons therefor. Fund Accountant shall notify the Company of any
material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Company from time to time as may be appropriate of the total outstanding claims
made by Fund Accountant under its insurance coverage.

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

16. Information to be Furnished by the Company and Funds.

The Company has furnished to Fund Accountant the following:

(a) Copies of the Articles of Incorporation of the Company and of
any amendments thereto, certified by the proper official of the state
in which such document has been filed.

(b) Copies of the following documents:

(i) The Company's Bylaws and any amendments thereto; and

(ii) Certified copies of resolutions of the Board of
Directors covering the approval of this Agreement,
authorization of a specified officer of the Company to
execute and deliver this Agreement and authorization for
specified officers of the Company to instruct Fund
Accountant thereunder.

(c) A list of all the officers of the Company, together with
specimen signatures of those officers who are authorized to instruct
Fund Accountant in all matters.

(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.

17. Information Furnished by Fund Accountant.

(a) Fund Accountant has furnished to the Company the following:

(i) Fund Accountant's Articles of Incorporation; and

(ii) Fund Accountant's Bylaws and any amendments thereto.

(b) Fund Accountant shall, upon request, furnish certified copies
of corporate actions covering the following matters:

(i) Approval of this Agreement, and authorization of a
specified officer of Fund Accountant to execute and deliver this
Agreement; and

(ii) Authorization of Fund Accountant to act as fund
accountant for the Company and to provide accounting services for
the Company.

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

18. Amendments to Documents.

The Company shall furnish Fund Accountant written copies of any amendments
to, or changes in, any of the items referred to in Section 16 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Company
agrees that no amendments will be made to the Prospectuses or Statements of
Additional Information of the Company which might have the effect of changing
the procedures employed by Fund Accountant in providing the services agreed to
hereunder or which amendment might affect the duties of Fund Accountant
hereunder unless the Company first obtains Fund Accountant's approval of such
amendments or changes.

19. Compliance with Law.

Except for the obligations of Fund Accountant set forth in Section 8
hereof, the Company assumes full responsibility for the preparation, contents
and distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Company's
Shares. The Company represents and warrants that no Shares of the Company will
be offered to the public until the Company's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.

20. Notices.

Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such
notice, at the following address: 3435 Stelzer Road, Columbus, Ohio 43219, or at
such other address as such party may from time to time specify in writing to the
other party pursuant to this Section.

21. Headings.

Paragraph headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.

22. Assignment.

This Agreement and the rights and duties hereunder shall not be assignable
with respect to a Fund by either of the parties hereto except by the specific
written consent of the other party. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

23. Governing Law.

This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of Ohio.

G:\LEGALSRV\AGREEMENT\TREASURE\FUNDACCT.AGR

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

THE TREASURER'S FUND, INC.

By: /s/ Thomas E. O'Connor, Chairman

Attest: /s/ Ronald S. Eaker, President

BISYS FUND SERVICES, INC.

By: /s/ Stephen G. Mintos, Executive Vice President

Attest: /s/ Elise M. Elman

Exhibit (11)

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 11, 1996 in this Registration Statement (Form N-1A No. 33-17604)
of The Treasurer's Fund, Inc.

ERNST & YOUNG LLP

New York, New York
February 24, 1997

II-7
170015.5

<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> TREASURERS FUND, DOMESTIC PRIME MONEY MARKET PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 237111
<INVESTMENTS-AT-VALUE> 237111
<RECEIVABLES> 52
<ASSETS-OTHER> 143
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 237306
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 494
<TOTAL-LIABILITIES> 494
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 236700
<SHARES-COMMON-STOCK> 236700
<SHARES-COMMON-PRIOR> 169520
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 12
<ACCUMULATED-NET-GAINS> 124
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<NET-INVESTMENT-INCOME> 10803
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</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> TREASURERS'S FUND, TAX EXEMPT MONEY MARKET PORTFOLIO
<MULTIPLIER> 1000

<S> <C>
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<PERIOD-END> OCT-30-1996
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</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> 12-MOS
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<PERIOD-END> OCT-31-1996
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</TABLE>