As filed with the Securities and Exchange Commission on February 29, 2000
Registrant Nos. 33-17604 and 811-05347
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT No.
POST-EFFECTIVE AMENDMENT No. 21 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT No. 22 X
THE TREASURER'S FUND, INC.
(Exact Name of Registrant as Specified in Charter)
c/o Gabelli Fixed Income LLC
One Corporate Center, Rye, New York 10580-1434
(Address of Principal Executive Office)
Registrant's Telephone Number (800) 877-3863
Ronald S. Eaker
Gabelli Fixed Income LLC
One Corporate Center, Rye, New York 10580-1434
(Name and Address of Agent for Service)
Copy to:
Michael R. Rosella, Esq.
Battle Fowler LLP
75 East 55th Street
New York, NY 10022
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to Rule 485(b); or
X on March 1, 2000 pursuant to paragraph (b); or
60 days after filing pursuant to Rule 485(a)(1); or on [____]
pursuant to paragraph (a)(1); or 75 days after filing pursuant
to Rule 485(a)(2); or on [____] pursuant to paragraph (a)(2)
If appropriate, check the following box: this post-effective amendment
designates a new effective date for a previously filed post-effective amendment.
<PAGE>
The Treasurer's Fund, Inc.
U.S. Treasury Money Market Portfolio
o U.S. Treasury
Money Market Class
Domestic Prime Money Market Portfolio
o Domestic Prime
Money Market Class
Tax Exempt Money Market Portfolio
o Tax Exempt
Money Market Class
PROSPECTUS
March 1, 2000
===============================================================================
The Securities and Exchange Commission has not approved or disapproved the
shares described in this prospectus or determined whether this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
===============================================================================
The Treasurer's Fund, Inc.
U.S. Treasury Money Market Portfolio
Domestic Prime Money Market Portfolio
Tax Exempt Money Market Portfolio
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI [1-800-422-3554]
fax: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(Current [yield] information may be obtained by
calling 1-800-GABELLI after 6:00 P.M.)
Questions?
Call 1-800-GABELLI
<PAGE>
The Treasurer's Fund, Inc.
Table of Contents
Introduction
3
Investment and Performance Summary
3 - 7
Additional Investment and Risk Information
7 - 8
Management of the Portfolios
8
------------------------------------
8 Purchase of Shares
10 Redemption of Shares
11 Exchange of Shares
11 Pricing of Portfolio Shares
12 Dividends and Distributions
12 Tax Information
Financial Highlights
13 - 15
<PAGE>
INTRODUCTION
The Treasurer's Fund, Inc. (the "Fund") is a mutual fund designed to meet the
distinctive cash management objectives of treasurers and financial officers of
corporations and other institutions and individuals. The Fund currently offers
five separate investment portfolios, three of which are described by this
Prospectus. This Prospectus relates only to the following portfolios of the Fund
(each a "Portfolio", collectively the "Portfolios") and the respective class of
each Portfolio (formerly known as the Gabelli Cash Management Shares of each
Portfolio).
U. S. Treasury Money Market Portfolio ("U.S. Treasury Portfolio")
U.S. Treasury Money Market Class
Domestic Prime Money Market Portfolio ("Domestic Prime Portfolio")
Domestic Prime Money Market Class
Tax Exempt Money Market Portfolio ("Tax Exempt Portfolio")
Tax Exempt Money Market Class
The Portfolios are "money market funds" which invest primarily in short-term
investments. The Portfolios are advised by Gabelli Fixed Income LLC, (the
"Advisor"). Each Portfolio's investment objective is fundamental and may be
changed only with the approval of a majority of the outstanding shares of the
Portfolios.
INVESTMENT AND PERFORMANCE SUMMARY
U.S. TREASURY MONEY MARKET PORTFOLIO
Investment Objective:
The Portfolio's investment objectives are to maximize current income, and to
maintain liquidity and a stable net asset value of $1.00 per share.
Principal Investment Strategies:
The Portfolio invests primarily in short-term U.S. Treasury obligations, which
have effective maturities of 397 days or less and in repurchase agreements that
are collateralized by U.S. Treasury obligations.
Principal Risks:
The Portfolio is subject to the risk of loss of state tax exemption if minimum
levels of U.S. Treasury obligations are not maintained. Other factors may affect
the market price and yield of the Portfolio's securities including investor
demand and domestic and worldwide economic conditions. An investment in the
Portfolio is not insured or guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") or any other government agency. Although the Portfolio
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Portfolio. There is no guarantee that
the Portfolio can achieve its investment objectives.
You May Want to Invest in the Portfolio if:
you are seeking preservation of capital you have a low risk tolerance you are
willing to accept lower potential returns in exchange for a higher degree of
safety you are investing short-term reserves
You May Not Want to Invest in the Portfolio if:
you are aggressive in your investment approach or you desire a relatively high
rate of return
DOMESTIC PRIME MONEY MARKET PORTFOLIO
Investment Objective:
The Portfolio's investment objectives are to maximize current income and to
maintain liquidity and a stable net asset value of $1.00 per share.
Principal Investment Strategies:
The Portfolio invests exclusively in short-term, prime quality, domestic debt
obligations, which have effective maturities of 397 days or less.
Principal Risks:
The Portfolio is subject to the risk that the value of any fixed rate
investments will generally decline when interest rates increase. Other factors
may affect the market price and yield of the Portfolio's securities, including
investor demand and domestic and worldwide economic conditions. An investment in
the Portfolio is not insured or guaranteed by the FDIC or any other government
agency. Although the Portfolio seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Portfolio.
There is no guarantee that the Portfolio can achieve its investment objectives.
You May Want to Invest in the Portfolio if:
you are seeking preservation of capital you have a low risk tolerance you are
willing to accept lower potential returns in exchange for a higher degree of
safety you are investing short-term reserves
You May Not Want to Invest in the Portfolio if:
you are aggressive in your investment approach or you desire a relatively high
rate of return
TAX EXEMPT MONEY MARKET PORTFOLIO
Investment Objective:
The 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 $1.00 per share.
Principal Investment Strategies:
The Portfolio invests primarily in short-term municipal debt obligations which
are exempt from federal income tax and have effective maturities of 397 days or
less.
Principal Risks:
The Portfolio is subject to the risk that interest on certain securities may be
subject to state and local taxes. The Portfolio will not be exempt from federal
income tax with respect to taxable obligations and municipal obligations that
the Internal Revenue Service ("IRS") has successfully asserted are not
tax-exempt obligations. Other factors may affect the market price and yield of
the Portfolio's securities, including investor demand and domestic and worldwide
economic conditions. An investment in the Portfolio is not insured or guaranteed
by the FDIC or any other government agency. Although the Portfolio seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Portfolio. There is no guarantee that the Portfolio
can achieve its investment objectives.
<PAGE>
You May Want to Invest in the Portfolio if:
you are seeking preservation of capital you have a low risk tolerance you are
willing to accept lower potential returns in exchange for a higher degree of
safety you are investing short-term reserves
You May Not Want to Invest in the Portfolio if:
you are aggressive in your investment approach or you desire a relatively high
rate of return
Performance:
The bar charts and tables shown below provide an indication of the risks of
investing in the Portfolios by showing changes in each Portfolio's performance
from year to year and average annual returns for one, five and ten years (life
of the funds for the U.S. Treasury Portfolio). Performance figures reflect the
historical performance of each Portfolio's Money Market Class from December 31,
1990 for the Domestic Prime and Tax Exempt Portfolios and from December 31, 1991
for the U.S. Treasury Portfolio. For current yield information on the
Portfolios, call 1-800-422-3554. The Portfolios' yields appear in the Wall
Street Journal each Thursday.
As with all mutual funds, past performance does not indicate how the Portfolios
will perform in the future.
BAR CHART (GRAPHIC OMMITTED)
EDGAR PRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC
U.S. TREASURY PORTFOLIO
As of 12/31 Total Return
----------- ------------
1991 5.64%
1992 3.31%
1993 2.60%
1994 3.66%
1995 5.35%
1996 4.78%
1997 4.96%
1998 4.93%
1999 4.41%
During the period shown in the bar chart, the highest return for a quarter was
1.57% (quarter ended 3/31/91) and the lowest return for a quarter was 0.62%
(quarter ended 6/30/93).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ---------------------------------------------- ------------------ ------------------- -----------------------------
Average Annual Total Returns
(for the periods ended December 31, 1999) Past One Year Past Five Years Since December 31, 1991
- ---------------------------------------------- ------------------ ------------------- -----------------------------
- ---------------------------------------------- ------------------ ------------------- -----------------------------
U.S. Treasury Money Market Portfolio 4.41% 4.88% 4.52%
- ---------------------------------------------- ------------------ ------------------- -----------------------------
</TABLE>
BAR CHART (GRAPHIC OMMITTED)
EDGAR PRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC
DOMESTIC PRIME PORTFOLIO
As of 12/31 Total Return
----------- ------------
1990 8.16%
1991 5.90%
1992 3.50%
1993 2.89%
1994 3.88%
1995 5.59%
1996 5.00%
1997 5.17%
1998 5.07%
1999 4.72%
During the period shown in the bar chart, the highest return for a quarter was
2.00% (quarter ended 6/30/90) and the lowest return for a quarter was 0.70%
(quarter ended 6/30/93).
<TABLE>
<CAPTION>
<S><C> <C> <C> <C>
- ---------------------------------------------- -------------------- ----------------------- -----------------------
Average Annual Total Returns
(for the periods ended December 31, 1999) Past One Year Past Five Years Past Ten Years
- ---------------------------------------------- -------------------- ----------------------- -----------------------
- ---------------------------------------------- -------------------- ----------------------- -----------------------
Domestic Prime Money Market Portfolio 4.72% 5.11% 4.98%
- ---------------------------------------------- -------------------- ----------------------- -----------------------
</TABLE>
BAR CHART (GRAPHIC OMMITTED)
EDGAR PRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC
TAX EXEMPT PORTFOLIO
As of 12/31 Total Return
----------- ------------
1990 5.94%
1991 4.53%
1992 2.89%
1993 2.09%
1994 2.41%
1995 3.44%
1996 2.98%
1997 3.18%
1998 3.00%
1999 2.81%
During the period shown in the bar chart, the highest return for a quarter was
1.48% (quarter ended 12/31/90) and the lowest return for a quarter was 0.46%
(quarter ended 3/31/94).
<TABLE>
<CAPTION>
<S><C> <C> <C> <C>
- ---------------------------------------------- -------------------- ---------------------- ------------------------
Average Annual Total Returns
(for the periods ended December 31, 1999) Past One Year Past Five Years Past Ten Years
- ---------------------------------------------- -------------------- ---------------------- ------------------------
- ---------------------------------------------- -------------------- ---------------------- ------------------------
Tax Exempt Money Market Portfolio 2.81% 3.08% 3.32%
- ---------------------------------------------- -------------------- ---------------------- ------------------------
</TABLE>
Fees and Expenses of the Portfolios:
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolios. Annual Portfolio operating expenses are paid out of
the Portfolios' assets, and are reflected in the Portfolios' yields.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.S. Domestic Tax
Treasury Prime Exempt
Portfolio Portfolio Portfolio
Shareholder Fees: None None None
(fees paid directly from your investment *)
Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):
Management Fees .30% .30% .30%
Distribution (12b-1) Expenses None None None
Other Expenses** 0.36% 0.30% 0.29%
Total Annual Portfolio Operating Expenses 0.66% 0.60% 0.59%
- ------------------------
* There are no sales charges for purchasing or redeeming Portfolio shares nor
fees to exchange to another Portfolio or fund.
** Expense includes an additional 0.10% to reflect compensation to
participating organizations for services provided.
</TABLE>
Expense Example
This example is intended to help you compare the cost of investing in shares of
the Portfolios with the cost of investing in other mutual funds. The example
assumes that (1) you invest $10,000 in the Portfolios for the time periods
shown, (2) you redeem your shares at the end of those periods, (3) your
investment has a 5% return each year and (4) the Portfolios' operating expenses
remain the same. Although your actual costs may be higher or lower, based on the
assumptions your costs would be:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
U.S. Treasury $67 $211 $368 $822
Portfolio
Domestic Prime $61 $192 $335 $750
Portfolio
Tax Exempt $60 $189 $329 $738
Portfolio
</TABLE>
ADDITIONAL INVESTMENT AND RISK INFORMATION
U.S. TREASURY PORTFOLIO
Under normal market conditions, the Portfolio invests at least 65% of its total
assets in U.S. Treasury obligations including U.S. Treasury bills, notes and
bonds, which principally differ only in their interest rates, maturities and
times of issuance, and repurchase agreements which are collateralized by U.S.
Treasury obligations. The Portfolio may also engage in reverse repurchase
agreements.
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
Portfolio do not directly receive interest on U.S. Treasury obligations, the
dividends from the Portfolio are derived primarily from such interest. Interest
income derived from repurchase agreements is not considered to be income derived
from U.S. Treasury obligations and is not exempt from state and local income
taxes.
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
shareholders, the Portfolio must maintain specified minimum levels of U.S.
Treasury obligation investments. If a state's requirement is not met, then none
of the Portfolio's interest income would be tax exempt 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. These
state requirements may change and investors should consult their own tax
advisors regarding these state tax issues.
DOMESTIC PRIME PORTFOLIO
The Portfolio will invest primarily in United States Government obligations,
bank obligations including certificates of deposit and bankers' acceptances, and
commercial paper and other short-term domestic corporate obligations. Short-term
domestic corporate obligations include corporate bonds, variable amount master
demand notes and participations in corporate loans, with maturities of 397 days
or less. For a further description of the obligations in which the Portfolio may
invest, including the liquidity of participations in corporate loans, see
"Investments and Investment Techniques Common to Two or More Portfolios" in the
Statement of Additional 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 risk 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. Because interest rates on fixed rate investments fluctuate in
response to economic factors, the value of the Portfolio's investments generally
increases as short-term interest rates fall and decreases as short-term interest
rates rise.
TAX EXEMPT PORTFOLIO
The Portfolio intends to invest all of its assets in tax exempt obligations and
in no event shall invest less than 80% of its total assets in tax exempt
obligations; however, it reserves the right to invest up to 20% of its total
assets in taxable obligations (including securities the interest income on which
may be subject to alternative minimum tax). Such tax exempt obligations will
consist of high quality municipal securities (including municipal bonds,
municipal notes and municipal leases) 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. Interest on these securities may
be subject to state and local taxes.
The Portfolio will only purchase high quality tax exempt money market
instruments that have been determined by the Fund's Board of Directors to
present minimal credit risk and that are "Eligible Securities" at the time of
acquisition so that the Portfolio is able to employ the amortized cost method of
valuation. Interest income of the Portfolio will not be exempt from federal
income tax with respect to the following:
taxable obligations municipal obligations that the IRS has successfully asserted
are not tax exempt obligations
Payment of interest and preservation of capital are dependent on the continuing
ability of issuers and/or obligors of municipal and public authority debt
obligations to meet their payment obligations. Special factors may negatively
affect the value of municipal securities, and, as a result, the Portfolio's
share price. These factors include political or legislative changes,
uncertainties relating to the tax status of the securities or the rights of
investors in the securities. For a detailed description of municipal bonds,
municipal notes, municipal leases and other municipal obligations and the
quality requirements applicable to such obligations, see "Investments and
Investment Techniques Common to Two or More Portfolios" in the Statement of
Additional Information.
MANAGEMENT OF THE PORTFOLIOS
The Advisor. The Advisor, located at One Corporate Center, Rye, NY 10580, is a
Delaware limited liability company organized in 1997 and is the successor
company to Gabelli-O'Connor Fixed Income Mutual Funds Management Co. formed in
1987. Through its portfolio management team, the Advisor makes investment
decisions for the Portfolios and continuously reviews and administers the
Portfolios' investment programs under the supervision of the Fund's Board of
Directors.
As compensation for its services and the related expenses borne by the Advisor,
for the fiscal year ended October 31, 1999, the Portfolios paid the Advisor a
fee equal to .30% of the value of the Portfolios' average daily net assets. 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
Portfolio shares.
The Distributor. As of March 1, 2000, Gabelli & Company, Inc. (the
"Distributor") will serve as the Fund's distributor. Its address is One
Corporate Center, Rye, N.Y. 10580. Prior to March 1, 2000, Gabelli Fixed Income
Distributors, Inc. served as the Fund's distributor. Both entities are
affiliated with the parent company of the Advisor.
Distribution Arrangements. The Portfolios have each adopted a distribution and
service plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended. Rule 12b-1 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 Rule 12b-1. There are no fees or expenses
chargeable to the Portfolios under the Plans, and the Fund's Board of Directors
has adopted the Plans in case certain expenses of the Portfolios might be
considered to constitute indirect payment by the Portfolios of distribution
expenses. If a payment of advisory fees by the Fund to the Advisor should be
deemed to be indirect financing by the Fund of the distribution of its shares,
such payments are authorized by the Plans.
The Plans provide that the Advisor may make payments from time to time from its
own resources, which may include the advisory fee and past profits, to pay
promotional and administrative expenses in connection with the offer and sale of
shares of the Portfolios, including payments to participating organizations for
performing shareholder servicing and related administrative functions and for
providing assistance in distributing the Fund's shares. The Advisor, in its sole
discretion, will determine the amount of such payments made pursuant to the
Plans, provided that such payments will not increase the amount which a
Portfolio is required to pay to the Advisor for any fiscal year under its
investment advisory agreement in effect for the year.
PURCHASE OF SHARES
You can purchase the Portfolios' shares on any day the New York Stock Exchange
("NYSE") is open for trading (a "Business Day"). You may purchase shares through
the Distributor or through organizations that have special arrangements with the
Fund ("Participating Organizations") through which they are compensated by the
Fund for providing enhanced transfer agency services. Participating
Organizations may charge additional fees and may require higher or lower minimum
investments or impose other limitations on buying and selling shares.
By Mail or In Person. You may open an account by mailing a completed
subscription order form with a check or money order payable to "The
Treasurer's Fund, Inc.":
By Mail By Personal Delivery
The Treasurer's Fund, Inc. The Treasurer's Fund, Inc.
P.O. Box 8308 c/o BFDS
Boston, MA 02266-8308 66 Brooks Drive
Braintree, MA 02184
You can obtain a subscription order form by calling 1-800-GABELLI
(1-800-422-3554). Checks made payable to a third party and endorsed by
the depositor are not acceptable. For additional investments, send a
check to the above address with a note stating your exact name and
account number, and the name of the Portfolio.
By Bank Wire. To open an account using the bank wire system, first telephone the
Fund at 1-800-GABELLI (1-800-422-3554) to obtain a new account number. Then
instruct a Federal Reserve System member bank to wire funds to:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
ABA #011-0000-28
Re: The Treasurer's Fund, Inc.
REF DDA #99046187
Re: Name of Portfolio
Account #__________
Account of Registered Owners
If you are making an initial purchase, you should also complete and
mail a subscription order form to the address shown under "By Mail."
Note that banks may charge fees for wiring funds, although State Street
Bank and Trust Company ("State Street") will not charge you for
receiving wire transfers. If your wire is received by the Fund before
noon, Eastern Time, you will begin earning dividends on the day of
receipt.
Through A Participating Organization. You may purchase shares from a
Participating Organization. The Participating Organization will transmit a
purchase order and payment to State Street on your behalf. Participating
Organizations may send you confirmations of your transactions and periodic
account statements showing your investments in the Fund.
Share Price. The Portfolios sell their shares at the net asset value next
determined after the Fund receives your completed subscription order form and
your payment in Federal funds. See "Pricing of Fund Shares" for a description of
the calculation of net asset value.
Minimum Investments. Your minimum initial investment must be at least $3,000.
See "Retirement Plans" and "Automatic Investment Plan" regarding minimum
investment amounts applicable to such plans. There is no minimum for subsequent
investments. Participating Organizations may have different minimum investment
requirements.
- -------------------------------------------------------------------------------
Retirement Plans. The Fund has available a form of IRA and a "Roth" IRA for
investment in the Portfolios' shares that may be obtained from the Distributor
by calling 1-800-GABELLI (1-800-422-3554). Self-employed investors may purchase
shares of the Portfolios through tax deductible contributions to existing
retirement plans for self-employed persons, known as "Keogh" or "H.R.-10" plans.
The Fund does not currently act as a sponsor to such plans. Portfolio shares may
also be a suitable investment for other types of qualified pension or
profit-sharing plans which are employer sponsored, including deferred
compensation or salary reduction plans known as "401(k) Plans." The minimum
initial investment in all such retirement plans is $500. There is no minimum
initial subsequent investment requirement for retirement plans. The Tax Exempt
Money Market Portfolio does not accept investments for retirement plans.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Automatic Investment Plan. The Portfolios offer an automatic monthly investment
plan. There is no minimum monthly investment for accounts establishing an
automatic investment plan. Call 1-800-GABELLI (1-800-422-3554) for more details
about the plan.
- -------------------------------------------------------------------------------
Telephone Investment Plan. You may purchase additional shares of the Portfolios
by telephone if your bank is a member of the Automated Clearing House ("ACH")
system. You must also have a completed, approved Investment Plan application on
file with the Fund's transfer agent. There is a minimum of $100 for each
telephone investment. To initiate an ACH Purchase, please call 1-800-GABELLI
(1-800-422-3554) or 1-800-872-5365.
General. The Fund will not issue share certificates. The Fund reserves the right
to (i) reject any purchase order if, in the opinion of the Fund's management, it
is in the Fund's best interest to do so and (ii) suspend the offering of shares
for any period of time.
REDEMPTION OF SHARES
You can redeem shares of the Portfolios on any Business Day without a redemption
fee. The Portfolios may temporarily stop redeeming their shares when the NYSE is
closed or trading on the NYSE is restricted, when an emergency exists and the
Portfolios cannot sell their shares or accurately determine the value of their
assets, or if the Securities and Exchange Commission ("SEC") orders the
Portfolios to suspend redemptions.
The Portfolios redeem their shares at the net asset value next determined after
the Portfolios receive your redemption request. See "Pricing of Fund Shares" for
a description of the calculation of net asset value.
You may redeem shares through the Distributor, or through Participating
Organizations.
By Letter. You may mail a letter requesting redemption of shares to:
The Treasurer's Fund, Inc., P.O. Box 8308, Boston, MA 02266-8308. Your
letter should state the name of the Portfolios, the dollar amount or
number of shares you are redeeming and your account number. You must
sign the letter in exactly the same way the account is registered, and
if there is more than one owner of shares, all must sign. A signature
guarantee is required for each signature on your redemption letter. You
can obtain a signature guarantee from financial institutions such as
commercial banks, brokers, dealers and savings associations. A notary
public cannot provide a signature guarantee.
By Telephone. You may redeem your shares in a direct registered
account by calling either 1-800-422-3554 or 1-800-872-5365
(617-328-5000 from outside the United States), subject to a $25,000
limitation. You may not redeem shares held through an IRA by telephone.
If State Street properly acts on telephone instructions and follows
reasonable procedures to protect against unauthorized transactions,
neither State Street nor the Fund will be responsible for any losses
due to telephone transactions. You may be responsible for any
fraudulent telephone order in your account as long as State Street or
the Fund takes reasonable measures to verify the order. You may request
that redemption proceeds be mailed to you by check (if your address has
not changed in the prior 30 days), forwarded to you by bank wire or
invested in another mutual fund advised by the Advisor (see "Exchanges
of Shares" below).
1. Telephone Redemption By Check. The Fund will make checks
payable to the name in which the account is registered and
normally will mail the check to the address of record within
seven days.
2. Telephone Redemption By Wire. The Fund accepts telephone
requests for wire redemption in amounts of at least $1,000.
The Portfolios will send a wire to either a bank designated on
your subscription order form or on a subsequent letter with a
guaranteed signature. The proceeds are normally wired on the
next Business Day. If you wish your bank to receive a wire on
the day you place the telephone request, you must call the
Fund by noon (New York time).
Through a Participating Organization. You may redeem shares through a
Participating Organization which will transmit a redemption order to
State Street on your behalf. A redemption request received from a
Participating Organization will be effected at the net asset value next
determined after State Street receives the request.
Through the Automatic Cash Withdrawal Plan. You may automatically redeem shares
on a monthly, quarterly or annual basis. Please call the Distributor at
1-800-GABELLI (1-800-422-3554) for more information.
By Check Draft. You may write checks on your account in the amount of
$500 or more. Simply request the check writing service on your
subscription order form and the Fund will send you checks. The Fund
will not honor a check if (1) you purchased shares by check and the
check has not cleared, (2) the check would close out your account, (3)
the amount of the check is higher than funds available in your account,
(4) the check is written for less than $500, or (5) the check contains
an irregularity in the signature or otherwise. The Fund may change or
terminate the check-writing service at any time.
Involuntary Redemption. The Fund may redeem all shares in your account (other
than an IRA account) if their value falls below $3,000 as a result of
redemptions (but not as a result of a decline in net asset value). You will be
notified in writing and allowed 30 days to increase the value of your shares to
at least $3,000.
Redemption Proceeds. If you request redemption proceeds by check, the Fund will
normally mail the check to you within seven days after it receives your
redemption request. If you purchased your Portfolio shares by check, you may not
receive proceeds from your redemptions until the check clears, which may take up
to 15 days following purchase. While the Fund will delay the processing of the
redemption until the check clears, your shares will be valued at the next
determined net asset value after receipt of your redemption request.
EXCHANGE OF SHARES
You may exchange your shares in one Portfolio for shares in another Portfolio of
the Fund or for shares of any other open-end fund managed by the Advisor or its
affiliates, and offered for sale in your state, based on their relative asset
values. The Fund also offers an automatic monthly exchange privilege. To obtain
a list of the funds whose shares you may acquire through exchange or details on
the automatic monthly exchange privilege call 1-800-GABELLI (1-800-422-3554).
In effecting an exchange:
o you must meet the minimum purchase requirements for the fund whose shares you
purchase through exchange.
o if you are exchanging into shares of a fund with a sales charge, you must
pay the sales charge at the time of exchange.
o you may realize a taxable gain or loss.
o you should read the prospectus of the fund whose shares you are purchasing.
Call 1-800-GABELLI (1-800-422-3554) to obtain the prospectus.
You may exchange shares by telephone, by mail or through a Participating
Organization.
Exchanges by Telephone. You may give exchange instructions by telephone by
calling 1-800-GABELLI (1-800-422-3554). You may not exchange shares by telephone
if you hold share certificates.
Exchanges by Mail. You may send a written request for exchanges to: The
Treasurer's Fund, Inc., P.O. Box 8308, Boston, MA 02266-8308. State your name,
your account number, the dollar value or number of shares you wish to exchange,
the name of the fund whose shares you wish to exchange, and the name of the fund
whose shares you wish to acquire.
Exchanges through the Internet. You may also give exchange instructions via the
Internet at www.gabelli.com.
We may modify or terminate the exchange privilege at any time. You will be given
notice 60 days prior to any material change in the exchange privilege.
PRICING OF PORTFOLIO SHARES
The Portfolios' net asset value per share is calculated on each Business Day.
The NYSE is currently scheduled to be closed on New Year's Day, Dr. Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day and on the preceding Friday
or subsequent Monday when a holiday falls on a Saturday or Sunday, respectively.
Each Portfolio's net asset value is determined at noon (Eastern time) and as of
the close of regular trading on the NYSE, normally 4:00 p.m., Eastern time, and
is computed by dividing the value of the Portfolio's net assets (i.e. the value
of its securities and other assets less its liabilities, including expenses
payable or accrued but excluding capital stock and surplus) by the total number
of its shares outstanding at the time the determination is made. The Portfolios
each use the amortized cost method of valuing their portfolio securities to
maintain a constant net asset value of $1.00 per share. Under this method of
valuation, the Portfolios value their portfolio securities at their cost at the
time of purchase and not at market value, thus minimizing fluctuations in value
due to interest rate changes or market conditions.
DIVIDENDS AND DISTRIBUTIONS
Dividends of net investment income for each Portfolio will be declared daily on
each Business Day and paid monthly, and distributions of capital gains for the
Portfolios, if any, will be paid annually. All dividends and distributions will
be automatically reinvested for your account at net asset value in additional
shares of the Portfolio(s) unless you request otherwise. To elect cash
distributions, notify the Fund at The Gabelli Funds, P.O. Box 8308, Boston, MA
02266-8308 or by telephone at 1-800-422-3554.
TAX INFORMATION
The Portfolios expect that their distributions will consist primarily of net
investment income or, if any, short-term capital gains as opposed to long-term
capital gains. With respect to the U.S. Treasury and Domestic Prime Portfolios,
dividends (including distributions from net investment income and short-term
capital gains) are taxable as ordinary income (which may be taxable at different
rates depending on the length of time the Portfolio holds its assets). With
respect to the Tax Exempt Portfolio, distributions of tax exempt income are not
subject to regular federal income tax, but may be subject to the alternative
minimum tax, and distributions of interest on taxable obligations, as well as
any net short-term capital gains, are taxable as ordinary income. Depending on
your residence for tax purposes, distributions also may be subject to state and
local taxes, including withholding taxes. With respect to the U.S. Treasury
Portfolio, distributions of interest on U.S. government obligations may be
exempt from state and local taxes. Dividends and distributions are treated in
the same manner for federal income tax purposes whether you receive them in cash
or in additional shares. Foreign shareholders generally will be subject to
federal withholding tax.
This summary of tax consequences is intended for general information only. You
should consult a tax advisor concerning the tax consequences of your investment
in the Portfolios.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each
Portfolio's financial performance for the past five years. The total returns in
the tables represent the rate that an investor would have earned or lost on an
investment in the Portfolio (assuming reinvestment of all dividends and
distributions). This information has been audited by Ernst & Young LLP,
independent auditors, whose report, along with the Portfolios' financial
statements and related notes, are included in the Fund's annual report, which is
available upon request.
U.S. TREASURY PORTFOLIO
Per share amounts for a Portfolio share outstanding throughout each
year ended October 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Operating performance:
Net asset value, beginning of period.. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net investment income ................ 0.042 0.048 0.047 0.047 0.051
Net realized and unrealized gain
on investments.................... -- 0.001 0.001 -- --
-- ----- ----- -- --
Total from investment operations...... 0.042 0.049 0.048 0.047 0.051
----- ----- ----- ----- -----
Distributions to shareholders from:
Net investment income................. (0.042) (0.048) (0.047) (0.047) (0.051)
Net realized gain on investments.. -- (0.001) (0.001) -- --
-- ------- ------- -- --
Total distributions................... (0.042) (0.049) (0.048) (0.047) (0.051)
----- ------- ------- ------- -------
Net asset value, end of period........ $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return (+)...................... 4.34% 5.03% 4.91% 4.83% 5.27%
===== ===== ===== ===== =====
Ratios to average net assets and
supplemental data:
Net assets, end of period (in 000s)... $108,893 $110,879 $85,204 $90,761 $94,834
Ratio of net investment income
to average net assets.............. 4.19% 4.83% 4.74% 4.70% 5.10%
Ratio of operating expenses
to average net assets ............. 0.56% 0.51% 0.61%(a) 0.63%(a) 0.56%(a)
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends.
(a) Operating expense ratios after custodian fee credits on securities lending
income for the year ended October 31, 1997 was 0.60%. Operating expense
ratios after custodian fee credits on cash balances maintained with the
custodian for the years ended October 31, 1996 and 1995 were 0.60% and
0.54%, respectively.
</TABLE>
<PAGE>
TAX EXEMPT PORTFOLIO
Per share amounts for a Portfolio share outstanding throughout each
year ended Ocotober 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Operating performance:
Net asset value, beginning of period.. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net investment income................. 0.027 0.030 0.031 0.030 0.034(a)
Distributions to shareholders from:
Net investment income................. (0.027) (0.030) (0.031) (0.030) (0.034)
Net asset value, end of period........ $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return (+)...................... 2.71% 3.08% 3.12% 3.04% 3.42%
===== ===== ===== ===== =====
Ratios to average net assets and
supplemental data:
Net assets, end of period (in 000s)... $195,580 $213,590 $192,834 $158,507 $140,826
Ratio of net investment income
to average net assets.............. 2.67% 3.04% 3.07% 3.00% 3.35%
Ratio of operating expenses
to average net assets (b).......... 0.49% 0.50% 0.53% 0.54% 0.53%
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends.
(a) Net investment income before fees waived by the administrator for the year
ended October 31, 1995 was $0.033.
(b) Operating expense ratios after custodian fee credits on cash balances
maintained with the custodian for the years ended October 31, 1999, 1998,
1997 and 1996 were 0.48%, 0.48%, 0.52% and 0.52%, respectively. The
operating expense ratio after custodian fee credits on cash balances
maintained with the custodian and fees waived by the administrator for the
year ended October 31, 1995 was 0.50%.
</TABLE>
<PAGE>
DOMESTIC PRIME PORTFOLIO
Per share amounts for a Portfolio share outstanding throughout each
year ended October 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Operating performance:
Net asset value, beginning of period.. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net investment income................. 0.045 0.050 0.050 0.049(a) 0.054(a)
Net realized and unrealized (loss) on -- -- -- -- (0.002)
-- -- -- -- -------
investments...........................
Total from investment operations...... 0.045 0.050 0.050 0.049 0.052
----- ----- ----- ----- -----
Distributions to shareholders from:
Net investment income................. (0.045) (0.050) (0.049) (0.049) (0.054)
Net realized gain on investments.. -- -- (0.001) -- --
-- -- ------- -- --
Total distributions................... (0.045) (0.050) (0.050) (0.049) (0.054)
----- ------- ------- ------- -------
Contributions from affiliate -- -- -- -- 0.002(b)
-- -- -- -- ---- --------
Net asset value, end of period........ $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return (+)...................... 4.65% 5.15% 5.19% 5.12% 5.50%
===== ===== ===== ===== =====
Ratios to average net assets and
supplemental data:
Net assets, end of period (in 000s)... $415,941 $357,850 $280,339 $236,812 $169,297
Ratio of net investment income
To average net assets.............. 4.55% 5.03% 4.99% 4.93% 5.33%
Ratio of operating expenses
To average net assets ............. 0.50% 0.54% 0.52% 0.54% 0.53%(c)
Ratio of interest expense to average
net assets.............................. -- -- -- 0.01% 0.02%
-- -- --
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends.
(a) Net investment income before fees waived by the administrator for the years
ended October 31, 1996 and 1995 was $0.048 and $0.053, respectively.
(b) During the year ended October 31, 1995, the Portfolio realized losses on
the sale of certain securities. Pursuant to an undertaking, losses in the
amount of $262,913 were reimbursed to the Portfolio by the former Advisor.
(c) Operating expense ratios after the custodian fee credits on cash balances
maintained with the custodian and fees waived by the administrator for the
years ended October 31, 1996 and 1995 were 0.52% and 0.50%, respectively.
</TABLE>
<PAGE>
[BACK COVER PAGE]
The Treasurer's Fund, Inc.
U.S. Treasury Money Market Portfolio
Domestic Prime Money Market Portfolio
Tax Exempt Money Market Portfolio
For More Information:
For more information about the Portfolios, the following documents are available
free upon request:
Annual/Semi-annual Reports:
The Portfolios' semi-annual and annual reports to shareholders contain
additional information on the Portfolios' investments.
Statement of Additional Information (SAI):
The SAI provides more detailed information about the Portfolios, including their
operations and investment policies. It is incorporated by reference and is
legally considered a part of this prospectus.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
You can get free copies of these documents and prospectuses of other funds in
the Gabelli family, or request other information and discuss your questions
about the Portfolios by contacting:
- -------------------------------------------------------------------------------
The Treasurer's Fund, Inc.
- -------------------------------------------------------------------------------
One Corporate Center
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
You can review the Portfolios' reports and SAI at the Public Reference Room of
the Securities and Exchange Commission. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. You can get text-only copies: o For a fee, by writing the
Commission's Public Reference Section, Washington, D.C. 20549-0102 or by calling
1-202-942-8090, or by electronic request at the following email address:
[email protected].
o Free from the Commission's Website at http://www.sec.gov
(Investment Company Act file no. 811-5347)
<PAGE>
The Treasurer's Fund, Inc.
Limited Term Portfolio
Tax Exempt Limited Term Portfolio
PROSPECTUS
March 1, 2000
===============================================================================
The Securities and Exchange Commission has not approved or disapproved the
shares described in this prospectus or determined whether this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
===============================================================================
THE TREASURER'S FUND, INC.
Limited Term Portfolio
Tax Exempt Limited Term Portfolio
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI [1-800-422-3554]
fax: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(Current Net Asset Value and yield information may
be obtained by calling 1-800-GABELLI after
6:00 P.M.)
Questions?
Call 1-800-GABELLI
<PAGE>
The Treasurer's Fund, Inc.
Table of Contents
Introduction
Investment and Performance Summary
3-5
Additional Investment and Risk Information
6-10
Management of the Portfolios
7
-------------------------------------------------
8 Purchase of Shares
9 Redemption of Shares
10 Exchange of Shares
11 Pricing of Portfolio Shares
11 Dividends and Distributions
11 Tax Information
Financial Highlights
12
<PAGE>
INTRODUCTION
The Treasurer's Fund, Inc. (the "Fund") is a mutual fund designed to meet the
distinctive cash management objective of treasurers and financial officers of
corporations and other institutions and individuals. The Fund currently offers
five separate investment portfolios, two of which are described by this
Prospectus. This Prospectus relates only to the Limited Term Portfolio and Tax
Exempt Limited Term Portfolio (each a "Portfolio" and collectively, the
"Portfolios") of the Fund. The Portfolios are advised by Gabelli Fixed Income
LLC (the"Advisor"). Each Portfolio's investment objective is fundamental and may
be changed only with the approval of a majority of the outstanding shares of the
Portfolio.
INVESTMENT AND PERFORMANCE SUMMARY
LIMITED TERM PORTFOLIO
Investment Objective:
The Portfolio's investment objective is to maximize current income with moderate
risk of capital.
Principal Investment Strategies:
The Portfolio invests primarily in domestic and foreign corporate and government
debt obligations, including U.S. Government obligations, bank obligations,
commercial paper and other short term corporate obligations that are rated no
less than Aa by Moody's Investor Services, Inc. ("Moody's") or AA by Standard &
Poor's Corporation ("S&P"), or the equivalent. The Portfolio invests primarily
in securities having a maximum 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.
Principal Risks:
As the value of the Portfolio's investments will fluctuate with market
conditions, so will the value of your investment in the Portfolio. The value of
the Portfolio's fixed rate securities varies inversely with interest rates, the
amount of outstanding debt of an issuer and other factors. This means that the
value of the Portfolio's investment generally increases as interest rates fall
and decreases as interest rates rise. It is also possible that the issuer of a
security will not be able to make interest and principal payments when due. You
could lose money on your investment in the Portfolio, or the Portfolio could
underperform other investments. Some of the Portfolio's holdings may
underperform its other holdings. There is no guarantee that the Portfolio can
achieve its investment objective.
You May Want to Invest in the Portfolio if:
you are looking to add a monthly income component to your portfolio
you are willing to accept the risk of price and dividend fluctuations
You May Not Want to Invest in the Portfolio if:
you are using emergency reserves for investment
you are seeking safety of principal
TAX EXEMPT LIMITED TERM PORTFOLIO
Investment objective:
The Portfolio's objective is to maximize current income exempt from federal
income tax consistent with moderate risk of capital.
<PAGE>
Principal Investment Strategies:
The Portfolio invests primarily in undervalued municipal debt obligations which
are exempt from federal income tax and have a maximum dollar weighted average
maturity of three years and a maximum of five years (five years and sixty days
for new issues) at the time of investment. The Portfolio invests in debt
securities rated no less than A by Moody's or S&P, or the equivalent, and in
short term municipal obligations rated no less than VMIG-2 by Moody's, SP-2 by
S&P or the equivalent.
Principal Risks:
As the value of the Portfolio's investments will fluctuate with market
conditions, so will the value of your investment in the Portfolio. Interest
rates on fixed rate investments fluctuate in response to economic factors. Rates
on the Portfolio's investments may vary, rising or falling with interest rates
generally. The value of the Portfolio's securities varies inversely with
interest rates, the amount of outstanding debt and other factors. This means
that the value of the Portfolio's investments generally increases as interest
rates fall and decreases as interest rates rise. Interest income of the
Portfolio will not be exempt from federal income tax with respect to taxable
obligations and municipal obligations that the Internal Revenue Service ("IRS")
has successfully asserted are not tax exempt obligations. Special factors may
negatively affect the value of municipal securities and, as a result, the
Portfolio's share price. These factors include political or legislative changes
and uncertainties relating to the tax status of the securities or the rights of
investors in the securities. The value of municipal securities in the Portfolio
can also be affected by market reaction to legislative consideration of various
tax reform proposals. There is also the risk that issuers will prepay fixed rate
obligations when interest rates fall, forcing the Portfolio to reinvest in
obligations with lower interest rates than the original obligations.
You could lose money on your investment in the Portfolio or the Portfolio could
underperform other investments. Some of the Portfolio's holdings may
underperform its other holdings. There is no guarantee that the Portfolio can
achieve its investment objective.
You May Want to Invest in the Portfolio if:
you are looking to add a monthly income component to your portfolio you are
willing to accept the risks of price and dividend fluctuations you are willing
to accept lower potential returns in exchange for income that is exempt from
federal income tax
You May Not Want to Invest in the Portfolio if:
you are using emergency reserves for investment
you will not benefit from income that is exempt from federal income tax
Performance:
Since the Portfolios were not operational before this offering, no performance
bar chart or table has been presented.
Fees and Expenses of the Portfolios:
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolios.
<PAGE>
Tax Exempt
Limited Term Limited Term
Portfolio Portfolio
Shareholder Fees: None None
(fees paid directly from your investment) *
Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio
assets):
Management Fees .45% .45%
Distribution (12b-1) Expenses none none
Other Expenses** .30% .30%
---- ----
Total Annual Portfolio Operating Expenses .75% .75%
==== ====
- ------------------------
* There are no sales charges for purchasing or redeeming Portfolio shares nor
fees to exchange to another Portfolio.
**Other Expenses are based on estimated amounts for the current fiscal year.
Expense Example
This example is intended to help you compare the cost of investing in shares of
the Portfolios with the cost of investing in other mutual Funds. The example
assumes that (1) you invest $10,000 in the Portfolios for the time periods
shown, (2) you redeem your shares at the end of those periods, (3) your
investment has a 5% return each year and (4) the Portfolios' operating expenses
remain the same. Although your actual costs may be higher or lower, based on the
assumptions your costs would be:
1 Year 3 Years
------ -------
Limited Term $102 $318
Portfolio
Tax Exempt Limited Term $102 $318
Portfolio
ADDITIONAL INVESTMENT AND RISK INFORMATION
Purchases and sales are made for the Portfolios whenever necessary, in the
Advisor's opinion, to meet the Portfolios' objectives. This is expected to
result in a maximum average annual Portfolio turnover rate of not greater than
200%. A higher Portfolio turnover rate involves greater transaction expenses
which must be borne directly by the Portfolios (and thus, indirectly by their
shareholders) and affect the Portfolios' performance. In addition, a high rate
of portfolios turnover may result in the realization of larger amounts of
short-term capital gains which, when distributed to the Portfolios'
shareholders, are taxable to them.
LIMITED TERM PORTFOLIO
The Limited Term Portfolio will invest primarily in:
o U.S. Government obligations
o bank obligations, including:
o certificates of deposit
o bankers' acceptances
o 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 in their most recent audited financial statements).
o commercial paper
o other short term corporate obligations including:
o corporate bonds
o variable amount master demand notes
o participations in corporate loans
For a further description of the obligations in which the Portfolio may invest,
including the liquidity of participation in corporate loans, see "Investments
and Investment Techniques Common to Two or More Portfolios" in the Statement of
Additional Information. 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, securities with effective maturities in excess of one year
will only be purchased from domestic issuers.
The Portfolio seeks to maintain a current yield that is greater than that
obtainable from a portfolio of high quality money market obligations. However,
the Portfolio also has a greater level of risk than a money market fund because
it is more volatile. The Portfolio seeks to increase returns by actively
managing securities in the short term and intermediate term ranges. 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. As fixed rate securities
with longer maturities generally have higher interest rates, a portfolio
designed with a series of periodic maturities can generally 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.
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.
The 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
Portfolio'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 investments with stated maturities
in excess of one year, such investments must maintain their high quality rating
or must be sold from the Portfolio.
The Portfolio will only purchase high quality debt instruments, with varying and
longer maturities than a money market portfolio. Because interest rates on fixed
rate investments fluctuate in response to economic factors, rates on the
Portfolio's investments may vary, rising or falling with interest rates
generally. The value of the Portfolio's securities varies inversely with
interest rates, the amount of outstanding debt and other factors. This means
that the value of the Portfolio's investments generally increases as interest
rates fall and decreases as interest rates rise.
To the extent that the Portfolio is invested in foreign securities, such as
Eurodollar certificates, it may be subject to some foreign investment risk.
Eurodollar certificates of deposit may not be subject to the same regulatory
requirements as certificates issued by U.S. banks, and associated income may be
subject to the imposition of foreign taxes. 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.
TAX EXEMPT LIMITED TERM PORTFOLIO
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 Portfolio will invest in tax exempt securities whose interest,
in the opinion of bond counsel at the date of issuance, is exempt from federal
income tax. Such tax exempt obligations consist of: o municipal bonds o
municipal notes o municipal leases
Any related capital gains will be subject to federal income taxes. Interest on
these securities may be subject to state and local income taxes.
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.
The 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. 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. As fixed rate securities with longer
maturities generally have higher interest rates, a portfolio designed with a
series of periodic maturities can generally 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.
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.
The 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 Portfolio may continue to hold the
investment. However, if the Portfolio holds any variable rate demand investments
with stated maturities in excess of one year, such investments must maintain
their high quality rating or must be sold from the Portfolio.
The 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.
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" in the Statement of Additional
Information.
The Portfolio will invest in high quality tax exempt municipal debt obligations,
with varying and longer maturities than a money market portfolio. Because
interest rates on fixed rate investments fluctuate in response to economic
factors, rates on the Portfolio's investments may vary, rising or falling with
interest rates generally. The value of the Portfolio's securities varies
inversely with interest rates, the amount of outstanding debt and other factors.
This means that the value of the Portfolio's investments generally increases as
interest rates fall and decreases as interest rates rise.
Interest income of the Portfolio will not be exempt from Federal income tax with
respect to the following:
taxable obligations
municipal obligations that the IRS has successfully asserted are not tax exempt
obligations
Payment of interest and preservation of capital are dependent upon the
continuing ability of issuers and/or obligors of municipal and public authority
debt obligations to meet their payment obligations. Special factors may
negatively affect the value of municipal securities, and, as a result, the
Portfolio's share price. These factors include political or legislative changes
and uncertainties relating to the tax status of the securities or the rights of
investors in the securities. 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. There is also the risk that issuers will prepay fixed rate
obligations when interest rates fall, forcing the Portfolio to re-invest in
obligations with lower interest rates than the original obligations. For a
detailed discussion of the quality requirements applicable to municipal bonds,
municipal leases and other municipal obligations, see "Investment and Investment
Techniques Common to Two or More Portfolios" in the Statement of Additional
Information.
MANAGEMENT OF THE PORTFOLIOS
The Advisor. The Adviser, located at One Corporate Center, Rye, NY 10580, is a
Delaware limited liability company organized in 1997 and is the successor
company to Gabelli-O'Connor Fixed Income Mutual Fund Management Co. formed in
1987. The Advisor makes investment decisions for the Portfolios and continuously
reviews and administers the Portfolios' investment program under the supervision
of the Fund's Board of Directors.
As compensation for its services and the related expenses it bears, the Advisor
will receive a fee equal to .30% of the value of the Portfolios' average daily
net assets. 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 Portfolio shares.
Portfolio Managers. Through its portfolio management team, the Adviser makes the
day-to-day investment decisions and continuously reviews, supervises and
administers the Portfolios' investment programs.
Distribution Arrangements. The Portfolios have each adopted a distribution and
service plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act, as amended.
Rule 12b-1 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 Rule 12b-1. There are no fees or expenses chargeable to the
Portfolios under the Plans and the Fund's Board of Directors has adopted the
Plans in case certain expenses of the Portfolios might be considered to
constitute indirect payment by the Portfolios of distribution expenses. If a
payment of advisory fees by the Fund to the Advisor should be deemed to be
indirect financing by the Fund of the distribution of its shares, such payments
are authorized by the Plans.
The Plans provide that the Advisor may make payments from time to time from its
own resources, which may include the advisory fee and past profits, to pay
promotional and administrative expenses in connection with the offer and sale of
shares of the Portfolios, including payments to participating organizations for
performing shareholder servicing and related administrative functions and for
providing assistance in distributing the Fund's shares. The Advisor, in its sole
discretion, will determine the amount of such payments made pursuant to the
Plans, provided that such payments will not increase the amount which the Fund
is required to pay to the Advisor for any fiscal year under the Advisory
Agreement in effect for the year.
PURCHASE OF SHARES
You can purchase the Portfolios' shares on any day the New York Stock Exchange
("NYSE") is open for trading (a "Business Day"). You may purchase shares through
Gabelli & Company, Inc. (the "Distributor"), directly from the Portfolios
through the Portfolios' transfer agent or through organizations that have
special arrangements with the Portfolio ("Participating Organizations").
Participating Organizations may charge additional fees and may require higher or
lower minimum investments or impose other limitations on buying and selling
shares.
By Mail or In Person. You may open an account by mailing a completed
subscription order form with a check or money order payable to "The
Treasurer's Fund, Inc." to:
By Mail By Personal Delivery
The Treasurer's Fund, Inc. The Treasurer's Fund, Inc.
P.O. Box 8308 c/o BFDS
Boston, MA 02266-8308 66 Brooks Drive
Braintree, MA 02184
You can obtain a subscription order form by calling 1-800-GABELLI
(1-800-422-3554). Checks made payable to a third party and endorsed by
the depositor are not acceptable. For additional investments, send a
check to the above address with a note stating your exact name and
account number, and the name of the Portfolio.
By Bank Wire. To open an account using the bank wire system, first telephone the
Fund at 1-800-GABELLI (1-800-422-3554) to obtain a new account number. Then
instruct a Federal Reserve System member bank to wire Portfolios to:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
ABA #011-0000-28
Re: The Treasurer's Fund, Inc.
REF DDA #99046187
Re: Name of Portfolio
Account #__________
Account of Registered Owners
If you are making an initial purchase, you should also complete and
mail a subscription order form to the address shown under "By Mail."
Note that banks may charge fees for wiring funds, although State Street
Bank and Trust Company ("State Street") will not charge you for
receiving wire transfers.
Through a Participating Organization. You may purchase shares through from a
Participating Organization. The Participating Organization will transmit a
purchase order and payment to State Street on your behalf. Participating
Organizations may send you confirmations of your transactions and periodic
account statements showing your investments in the Fund.
Share Price. The Portfolios sell their shares at the net asset value next
determined after the Portfolios receive your completed subscription order form
and your payment in Federal funds. See "Pricing of Portfolio Shares" for a
description of the calculation of net asset value.
Minimum Investments. Your minimum initial investment must be at least $100,000.
See "Retirement Plans" and "Automatic Investment Plan" regarding minimum
investment amounts applicable to such plans. There is no minimum for subsequent
investments. Participating Organizations may have different minimum investment
requirements.
Retirement Plans. The minimum initial investments for all retirement plans is
$1,000. There is no minimum for subsequent investments. Investors with IRA plans
and self-employed investors may purchase shares of the Portfolios through
tax-deductible contributions to their existing IRA account or their retirement
plans for self-employed persons, known as "Keogh" or "H.R. 10" plans. Portfolio
shares may also be a suitable investment for other types of qualified pension or
profit-sharing plans which are employer sponsored, including deferred
compensation or salary reduction plans known as "401(k) Plans" which give
participants the right to defer portions of their compensation for investment on
a tax-deferred basis until distributions are made from the plans.
Automatic Investment Plan. The Portfolios offer an automatic monthly investment
plan. There is no minimum monthly investment for accounts establishing an
automatic investment plan. Call 1-800-GABELLI (1-800-422-3554) for more details
about the plan.
Telephone Investment Plan. You may purchase additional shares of the Portfolios
by telephone if your bank is a member of the Automated Clearing House ("ACH")
system. You must also have a completed, approved Investment Plan application on
file with the Fund's transfer agent. There is a minimum of $100 for each
telephone investment. To initiate an ACH Purchase, please call 1-800-GABELLI
(1-800-422-3554) or 1-800-872-5365.
General. The Fund will not issue share certificates. The Fund reserves the right
to (i) reject any purchase order if, in the opinion of the Fund's management, it
is in the Fund's best interest to do so and (ii) suspend the offering of shares
for any period of time.
REDEMPTION OF SHARES
You can redeem shares of the Portfolios on any Business Day without a redemption
fee. The Portfolios may temporarily stop redeeming their shares when the NYSE is
closed or trading on the NYSE is restricted, when an emergency exists and the
Portfolios cannot sell their shares or accurately determine the value of their
assets, or if the Securities and Exchange Commission ("SEC") orders the
Portfolios to suspend redemptions.
The Portfolios redeem their shares at the net asset value next determined after
the Funds receive your redemption request. See "Pricing of Fund Shares" for a
description of the calculation of net asset value.
You may redeem shares through the Distributor, directly from the Fund through
its transfer agent, or through Participating Organizations.
By Letter. You may mail a letter requesting redemption of shares to:
The Gabelli Funds, P.O. Box 8308, Boston, MA 02266-8308. Your letter
should state the name of the Portfolio(s), the dollar amount or number
of shares you are redeeming and your account number. You must sign the
letter in exactly the same way the account is registered, and if there
is more than one owner of shares, all must sign. A signature guarantee
is required for each signature on your redemption letter. You can
obtain a signature guarantee from financial institutions such as
commercial banks, brokers, dealers and savings associations. A notary
public cannot provide a signature guarantee.
By Telephone. You may redeem your shares in a direct registered
account by calling either 1-800-422-3554 or 1-800-872-5365
(617-328-5000 from outside the United States), subject to a $25,000
limitation. You may not redeem shares held through an IRA by telephone.
If State Street properly acts on telephone instructions and follows
reasonable procedures to protect against unauthorized transactions,
neither State Street nor the Portfolio will be responsible for any
losses due to telephone transactions. You may be responsible for any
fraudulent telephone order in your account as long as State Street or
the Fund takes reasonable measures to verify the order. You may request
that redemption proceeds be mailed to you by check (if your address has
not changed in the prior 30 days), forwarded to you by bank wire or
invested in another mutual fund advised by the Advisor (see "Exchanges
of Shares" below).
3. Telephone Redemption By Check. The Fund will make checks
payable to the name in which the account is registered and
normally will mail the check to the address of record within
seven days.
4. Telephone Redemption By Wire. The Fund accepts telephone
requests for wire redemption in amounts of at least $1,000.
The Fund will send a wire to either a bank designated on your
subscription order form or on a subsequent letter with a
guaranteed signature. The proceeds are normally wired on the
next Business Day.
Through a Participating Organization. You may redeem shares through a
Participating Organization which will transmit a redemption order to
State Street on your behalf. A redemption request received from a
Participating Organization will be effected at the net asset value next
determined after State Street receives the request.
Through the Automatic Cash Withdrawal Plan. You may automatically redeem shares
on a monthly, quarterly or annual basis. Please call the Distributor at
1-800-GABELLI (1-800-422-3554) for more information.
Involuntary Redemption. The Fund may redeem all shares in your account (other
than an IRA account) if their value falls below $50,000 as a result of
redemptions (but not as a result of a decline in net asset value). You will be
notified in writing and allowed 30 days to increase the value of your shares to
at least $1,000.
Redemption Proceeds. If you request redemption proceeds by check, the Funds will
normally mail the check to you within seven days after it receives your
redemption request. If you purchased your Portfolio shares by check, you may not
redeem shares until the check clears, which may take up to 15 days following
purchase. While the Fund will delay processing the redemption until the check
clears, your shares will be valued at the next determined net asset value after
receipt of your redemption request.
EXCHANGE OF SHARES
You may exchange your shares in one Portfolio for shares of another Portfolio of
the Fund or for shares of any other open-end fund managed by the Advisor or its
affiliates, offered for sale in your state, based on their relative asset
values. The Fund also offers an automatic monthly exchange privilege. To obtain
a list of the Portfolios whose shares you may acquire through exchange or
details on the automatic monthly exchange privilege call 1-800-GABELLI
(1-800-422-3554).
In effecting an exchange:
you must meet the minimum purchase requirements for the Portfolio whose shares
you purchase through exchange.
if you are exchanging into shares of a Portfolio with a sales charge, you must
pay the sales charge at the time of exchange.
you may realize a taxable gain or loss.
you should read the prospectus of the Portfolio whose shares you are purchasing
(call 1-800-GABELLI (1-800-422-3554) to obtain the prospectus).
You may exchange shares by telephone, by mail or through a
Participating Organization.
Exchanges by Telephone. You may give exchange instructions by telephone by
calling 1-800-GABELLI (1-800-422-3554). You may not exchange shares by telephone
if you hold share certificates.
Exchanges by Mail. You may send a written request for exchanges to: The Gabelli
Funds, P.O. Box 8308, Boston, MA 02266-8308. State your name, your account
number, the dollar value or number of shares you wish to exchange, the name and
class of the Portfolio whose shares you wish to exchange, and the name of the
Portfolio whose shares you wish to acquire.
Exchanges through the Internet. You may also give exchange instructions via the
Internet at www.gabelli.com.
We may modify or terminate the exchange privilege at any time. You will be
given notice 60 days prior to any material change in the exchange privilege.
PRICING OF PORTFOLIO SHARES
The Portfolios' net asset value per share is calculated on each Business Day.
The NYSE is currently scheduled to be closed on New Year's Day, Dr. Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day and on the preceding Friday
or subsequent Monday when a holiday falls on a Saturday or Sunday, respectively.
Each Portfolio's net asset value is determined as of the close of regular
trading on the NYSE, normally 4:00 p.m., New York time, and is computed by
dividing the value of the Portfolio's net assets (i.e. the value of its
securities and other assets less its liabilities, including expenses payable or
accrued but excluding capital stock and surplus) by the total number of its
shares outstanding at the time the determination is made. The Portfolios
generally use market quotations in valuing their portfolio securities. If market
quotations are not available, prices will be based on fair value as determined
by the Directors.
DIVIDENDS AND DISTRIBUTIONS
Dividends of net investment income for each Portfolio will be declared daily on
each Business Day and paid monthly, and distributions of capital gains for the
Portfolios, if any, will be paid annually. All dividends and distributions will
be automatically reinvested for your account at net asset value in additional
shares of the Portfolio(s) unless you request otherwise. If you elect cash
distributions, notify the Portfolio(s) at The Gabelli Funds, P.O. Box 8308,
Boston, MA 02266-8308 or by telephone at 1-800-422-3554.
TAX INFORMATION
(TO BE REVIEWED BY FUND TAX COUNSEL)
The Portfolios expect that their distributions will consist primarily of net
investment income or, if any, short-term and long-term capital gains. With
respect to the Limited Term Portfolio, dividends (including distributions from
net investment income and short-term capital gains) are taxable as ordinary
income and distribution of long-term capital gains (which may be taxable at
different rates depending on the length of time the Portfolio holds its assets).
With respect to the Tax Exempt Portfolio, distributions of tax exempt income are
not subject to regular federal income tax, but may be subject to the alternative
minimum tax, and distributions of interest on taxable obligations, as well as
any net short-term capital gains, are taxable as ordinary income. Distribution
of long-term capital gains, if any, will be taxable at different rates depending
on the length of time the Portfolio holds its assets. Depending on your
residence for tax purposes, distributions also may be subject to state and local
taxes, including withholding taxes. Dividends and distributions are treated in
the same manner for federal income tax purposes whether you receive them in cash
or in additional shares. Foreign shareholders generally will be subject to
federal withholding tax.
This summary of tax consequences is intended for general information only. You
should consult a tax advisor concerning the tax consequences of your investment
in the Portfolios.
FINANCIAL HIGHLIGHTS
Shares of the Limited Term and Tax Exempt Limited Term Portfolios have not
previously been offered and therefore do not have previous financial history.
<PAGE>
[BACK COVER PAGE]
The Treasurer's Fund, Inc.
Limited Term Portfolio
Tax Exempt Limited Term Portfolio
For More Information:
For more information about the Portfolios, the following documents are available
free upon request:
Statement of Additional Information (SAI):
The SAI provides more detailed information about the Portfolios, including their
operations and investments policies. It is incorporated by reference, and is
legally considered a part of this prospectus.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
You can get free copies of these documents and prospectuses of other funds in
the Gabelli family, or request other information and discuss your questions
about the Portfolios by contacting:
- -------------------------------------------------------------------------------
One Corporate Center
The Treasurer's Fund, Inc.
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
You can review the Portfolios' reports and SAI at the Public Reference Room of
the Securities and Exchange Commission. Information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. You can get text-only copies:
o For a fee, by writing the Commission's Public Reference Section, Washington,
D.C. 20549-0102 [or by calling 1-202-942-8090], or by electronic request at the
following email address: [email protected]
o Free from the Commission's Website at http://www.sec.gov
(Investment Company Act file no. 811-5347)
THE TREASURER'S FUND, INC.
U.S. Treasury Money Market Portfolio
Domestic Prime Money Market Portfolio
Tax Exempt Money Market portfolio
Limited Term Portfolio
Tax Exempt Limited Term Portfolio
STATEMENT OF ADDITIONAL INFORMATION
March 1, 2000
This Statement of Additional Information ("SAI"), which is not a
prospectus, describes The Treasurer's Fund, Inc. (the "Fund") and should be
read in conjunction with the Fund's Prospectuses dated March 1, 2000. For a
free copy of the Prospectuses, please contact the Fund at the address,
telephone number or Internet Web Site printed below.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
TABLE OF CONTENTS
Page
THE PORTFOLIOS AND THEIR OBJECTIVES........................................ 1
Investments and Investment Techniques Common to Two or More Portfolios..... 2
Change in Ratings............................................ 2
Eligible Securities.......................................... 2
Management Strategies........................................ 3
Municipal Obligations........................................ 3
Amortized Cost Valuation of Portfolio Securities............. 5
Variable Rate Demand Instruments............................. 5
When-Issued Securities....................................... 7
Stand-by Commitments......................................... 7
Repurchase Agreements........................................ 8
Reverse Repurchase Agreements................................ 9
Participation Interests...................................... 9
Bank Obligations, Certificates of Deposit and Bankers' Acceptances...10
United States Government Obligations.........................10
Mortgage-Backed Securities...................................11
Foreign Securities...........................................12
Privately Placed Securities..................................13
Hedging Instruments..........................................13
Loan of Fund Securities......................................14
Puts for the Tax Exempt Portfolios...........................15
INVESTMENT RESTRICTIONS ...................................................15
MANAGEMENT OF THE PORTFOLIOS...............................................17
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT...............................22
TAXES......................................................................22
PURCHASE, REDEMPTION AND EXCHANGE..........................................26
DIVIDENDS AND DISTRIBUTIONS................................................26
NET ASSET VALUE............................................................27
COMPUTATION OF YIELD...................................................... 28
DESCRIPTION OF COMMON STOCK .............................................. 30
DISTRIBUTION PLANS........................................................ 31
BROKERAGE AND PORTFOLIO TURNOVER ......................................... 32
SERVICE PROVIDERS ........................................................ 33
FINANCIAL STATEMENTS.......................................................33
RATINGS OF MUNICIPAL AND CORPORATE OBLIGATIONS............................ A-1
THE TREASURER'S FUND, INC.
THE PORTFOLIOS AND THEIR OBJECTIVES
The Fund was incorporated in Maryland on August 17, 1987 and is a
diversified, no-load, fixed income mutual fund currently offering five
portfolios referred to as the U.S. Treasury Money Market Portfolio ("U.S.
Treasury Portfolio"), Domestic Prime Money Market Portfolio ("Domestic
Prime Portfolio"), Tax Exempt Money Market Portfolio ("Tax Exempt
Portfolio"), Limited Term Portfolio and Tax Exempt Limited Term Portfolio
(each a "Portfolio" and collectively the "Portfolios") designed to meet the
short and intermediate term investment needs of individuals, corporations
and institutional cash managers. There are no sales loads or exchange or
redemption fees associated with the Fund. The investment objectives stated
in the Prospectuses for each Portfolio are fundamental and may be changed
only with the approval of a majority of outstanding shares of that
Portfolio.
The investment objectives and policies of the Portfolios are sought through
the following additional strategies employed in the management of the
Portfolios which are described under "Investments and Investment Techniques
Common to Two or More Portfolios":
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Tax
Exempt
U.S. Domestic Tax Limited Limited
Treasury Prime Exempt Term Term
Portfolio Portfolio Portfolio Portfolio Portfolio
Change in Ratings X X X X X
Eligible Securities X X
Management Strategies X X
Municipal Obligations X X
Amortized Cost Valuation of X X X
Portfolio Securities
Variable Rate Demand X X X X
Instruments
When-Issued Securities X X X X X
Stand-By Commitments X X
Repurchase Agreements X X X X X
Reverse Repurchase Agreements X X X X X
Participation Interests X X X X
Bank Obligations, Certificates of X X X X
Deposit and Bankers' Acceptances
United States Government X X
Obligations
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Tax
Exempt
U.S. Domestic Tax Limited Limited
Treasury Prime Exempt Term Term
Portfolio Portfolio Portfolio Portfolio Portfolio
Mortgage-Backed Securities X X X X
Privately Placed Securities X X X X
Hedging Instruments X X
Loan of Portfolio Securities X X X X X
Puts for the Tax Exempt X X
Portfolios
</TABLE>
In addition to the strategies listed above, the Limited Term Portfolio
may
invest in foreign 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 Gabelli Fixed Income LLC (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 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"
below. With regard to the U.S. Treasury Portfolio, the Domestic Prime
Portfolio and the Tax Exempt Portfolio, the Board of Directors of the Fund
shall reassess promptly whether the security presents minimal credit risk
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 risk or an event of insolvency occurs with respect
to the issuer of a Portfolio security or the provider of any demand feature
or guarantee, 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 interest 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 (the "SEC") of such
fact and of the actions that such Portfolio intends to take in response to
the situation.
Eligible Securities. The Domestic Prime Portfolio and the Tax Exempt
Portfolio may only purchase dollar-denominated securities that have been
determined by the Fund's Board of Directors to present minimal credit risk.
Securities purchased for the Domestic Prime Portfolio must also have been
First Tier Eligible Securities at the time of acquisition. Securities
purchased for the Tax Exempt Portfolio must also have been Eligible
Securities at the time of acquisition. The term Eligible Securities means:
(i) securities which have or are deemed to have remaining maturities of 397
days or less and 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"); or (ii) unrated
securities determined by the Fund's Board of Directors to be of comparable
quality. First Tier Eligible Securities are Eligible Securities which are
rated in the highest category by NRSROs or are determined to be of
comparable quality to the highest rated securities.
In addition, securities which have or are deemed to have remaining
maturities of 397 days or less but that at the time of issuance were
long-term securities (i.e. with maturities greater than 366 days) are
deemed unrated and may be purchased if such had received a long-term rating
from the Requisite NRSROs in one of the three highest rating 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. While there are several
organizations that currently qualify as NRSROs, two examples of NRSROs are
S&P, a division of The McGraw-Hill Companies and Moody's. The two highest
ratings by S&P and Moody's are "AAA" and "AA" by S&P in the case of
long-term bonds and notes or "Aaa" and "Aa" by Moody's in the case of
bonds; "SP-1" and "SP-2" by S&P or "MIG-1" and "MIG-2" by Moody's in the
case of notes; "A-1" and "A-2" by S&P or "Prime-1" and "Prime-2" by Moody's
in the case of tax-exempt commercial paper. The highest rating in the case
of variable and floating demand notes is "VMIG-1" by Moody's or "SP-1/AA"
by S&P. Such instruments may produce a lower yield than would be available
from less highly rated instruments.
Subsequent to its purchase by the Portfolio, a rated security 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 promptly reassess 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 (i) is in default, (ii) ceases to be an Eligible Security
under Rule 2a-7 of the Investment Company Act of 1940, as amended (the
"1940 Act") or (iii) is determined to no longer present minimal credit
risks, or an event of insolvency occurs with respect to the issues of a
portfolio security or the provider of any Demand Feature or Guarantee, 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. Disposal of the security shall occur 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 SEC of such fact and of the actions that the 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 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.
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 (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 of 1986, as amended (the "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 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 Prospectuses and provide a demand feature which may be exercised by the
Portfolios to provide liquidity. In accordance with investment restriction
12 (see "Investment Restrictions" section), the Portfolios are permitted to
invest up to 10% of the net assets 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
"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. 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 canceled.
The Fund expects that, on behalf of the Tax Exempt 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 1940 Act, each of the U.S. Treasury Portfolio, Domestic Prime
Portfolio and the Tax Exempt 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 1940 Act, 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.
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 Fund'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 Fund 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 Portfolio, Tax Exempt
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.
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. 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, and such unconditional demand
feature qualifies as an Eligible Security. 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. However,
immediately after the acquisition of any securities subject to a demand
feature of guarantee (as such terms are defined in the 1940 Act), with
respect to 75% of the total assets of each of the Money Market Portfolios,
not more than 10% of such assets may be invested in securities that are
subject to a guarantee or demand feature from the same institution. Each of
the Money Market Portfolios, however, may only invest more than 10% of its
assets in securities subject to a guarantee or demand feature issued by a
non-controlled person (as such term is defined in the 1940 Act). The
Portfolios have 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 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").
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, 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.1 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 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.
____________________________ 1. 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.
he 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 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 (the
"IRS") 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.
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. Repurchase agreements that do not mature
within seven days of purchase will be deemed illiquid and will be subject
to the 10% limitation. 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 1940 Act, 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 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 their 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 Portfolio, Tax Exempt
Portfolio, Limited Term Portfolio and 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 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 Portfolio to sell such instrument
to the bank, and the secondary markets, if any, for such instruments are
extremely limited. 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 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 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.
United States Government Obligations. The Domestic Prime Portfolio and the
Limited Term Portfolio may purchase any obligations issued or guaranteed by
the United States Government or by its agencies or instrumentalities.
Securities issued or guaranteed as to principal and interest by the United
States Government or by agencies or instrumentalities thereof include
obligations of several different kinds. Such securities in general include
a variety of United States Treasury obligations, consisting of bills, notes
and bonds, which principally differ only in their interest rates,
maturities and times of issuance, and obligations issued or guaranteed by
United States Government agencies and instrumentalities which are supported
by (a) the full faith and credit of the United States Treasury (such as
Government National Mortgage Association participation certificates), (b)
the limited authority of the issuer to borrow from the United States
Treasury (such as securities of the Student Loan Marketing Association),
(c) the authority of the United States Government to purchase certain
obligations of the issuer (such as securities of the Federal National
Mortgage Association), or (d) only the credit of the issuer. No assurance
can be given that the United States Government will provide financial
support to United States Government agencies or instrumentalities as
described in clauses (b), (c) or (d) above in the future, other than as set
forth above, since it is not obligated to do so by law. Certain instruments
issued or guaranteed by the United States Government or agencies thereof
which have a variable rate of interest readjusted no less frequently than
annually are deemed to have a maturity equal to the period remaining until
the next readjustment of the interest rate.
Securities issued or guaranteed as to principal and interest by the United
States Government may be acquired by the Domestic Prime Portfolio and the
Limited Term Portfolio 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" ("TIGRs") and "Certificates of Accrual on
Treasury Securities" ("CATS"). These 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. These 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. Certain of the Portfolios 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 ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC").
GNMA Mortgage-Backed Securities 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.
FNMA 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 principal
and interest by FNMA but are not backed by the full faith and credit of the
U.S. Government.
FHLMC 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-through 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 Portfolio, may also invest in
Collateralized Mortgage Obligations ("CMOs"), a type of mortgage-backed
security. CMOs are debt securities collateralized by mortgage-backed
certificates issued by federal agencies or U.S. Government sponsored
corporations such as GNMA, FNMA and FHLMC. The payment of CMOs depends upon
the cash flow from the pool of mortgages represented by the mortgage-backed
certificates.
CMOs are divided into multiple classes. Generally, the interest on the
classes is distributed currently to the holders of each class. However,
principal is not paid in this manner. Instead, holders of the first class
receive all payments of principal until their bond is fully paid.
Thereafter, principal is paid on each succeeding class with the earliest
maturing securities retired first.
One or more classes, usually the last, may be zero-coupon bonds ("Z
bonds"). The cash flow that would otherwise be used to pay interest on this
class is used instead to pay principal on the earlier maturing classes.
After all prior classes are retired, the Z bond pays interest and principal
until final maturity. Interest accrued but not paid on the Z bond is added
to the principal of the Z bond and thereafter accrues interest.
Any guarantee or insurance on a mortgage-backed certificate does not extend
to a Portfolio's investments in CMOs. There is a possibility of limited
liquidity as there is no assurance that a secondary market will develop for
CMOs or, if such market does develop, that it will provide a Portfolio with
liquidity or remain for the term of the investment. If an event of default
occurs with respect to the CMOs purchased by a Portfolio, there can be no
assurance that the collateral pledged as security therefor will be
sufficient to pay the principal and interest due on such bonds. The payment
of principal of the underlying mortgages may exceed the minimum required by
the schedule of payments for the mortgages. Such prepayments are made at
the option of the mortgagors for a wide variety of reasons reflecting their
individual circumstances and may involve capital losses if the mortgages
were purchased at a premium. For example, mortgagors may speed up the rate
at which they prepay their mortgages when interest rates decline
sufficiently to encourage refinancing. The Advisor, in determining the
attractiveness of CMO's relative to alternative fixed income securities,
and in choosing specific CMO issues, will have made assumptions as to the
likely speed of prepayment. Actual experience may vary from these
assumptions, resulting in a higher or lower investment return than
anticipated.
Foreign Securities. The 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
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
(the "Securities Act") 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 net 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 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 Board of Directors
continuously determine, based on the trading markets for the specific
restricted security, that it is liquid). The Board of 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 Board of 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 Board of 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 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 purchases a put option or call option, the maximum risk
of loss to the Portfolio is the price of the option purchased. The use of
options as a hedge rather than financial futures contracts may result in
partial hedges because of the limits inherent in the exercise prices. The
Portfolio will not invest more than 5% of its net assets in premiums on put
options.
The Tax Exempt Limited Term Portfolio may also utilize futures contracts on
municipal bond indexes or related put and call options on these index
contracts. The Portfolio's strategies in employing these contracts would be
similar to the strategies applicable to futures and options contracts
generally. The Portfolio may also buy put options and sell call options on
municipal bond index futures or on municipal bond indexes.
The hedging activities of the Portfolios are subject to several additional
restrictions. A Portfolio may not enter into futures contracts or related
options if immediately thereafter the sum of the amount of initial and
variation margin deposits on outstanding futures contracts and premiums
paid for related options would exceed 20% of the market value of its total
assets. In addition, it may not enter into futures contracts or purchase or
sell related options (other than offsetting existing positions) if
immediately thereafter the sum of the amount of initial margin deposits on
outstanding futures contracts and premiums paid for related options would
exceed 5% of the market value of its total assets. A Portfolio's ability to
engage in hedging activities is also restricted by the requirements to
"cover" any sale of a futures contract with securities held in the
Portfolio and to establish and maintain segregated accounts (which may be
invested only in liquid assets such as cash, U.S. government securities and
other high grade debt obligations) equal to the amount of any futures
contract purchased by the Portfolio. A segregated account freezes those
assets of the Portfolio and renders them unavailable for sale or other
disposition. These requirements may thus reduce the Portfolio 's
flexibility in making investment decisions with respect to such assets. The
Portfolios' ability to engage in hedging activities may be further limited
by certain income tax considerations. See "Taxes".
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 on United States
government obligations, other non-municipal securities or an index that
does not include municipal securities. This type of hedging activity may be
useful to a Portfolio, especially where closely correlated hedging
activities based on municipal securities or indexes are not available.
Brokerage commissions on financial futures and options transactions and
premium costs for purchasing options may tend to reduce a Portfolio's
yield.
Loan of Portfolio Securities. Each Portfolio may from time to time lend
securities on a short term basis to banks, brokers and dealers and receive
as collateral cash, securities issued or guaranteed by the U.S. Government
or its agencies and 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 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 Board of 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" herein.
The amortized cost method is used by the Domestic Prime Portfolio and the
Tax Exempt Portfolio to value any municipal securities; no value is
assigned to any puts on such municipal securities. This method is also used
by the Tax Exempt Limited Term Portfolio to value certain high quality
municipal securities which meet the requirements specified for use of the
amortized cost method; when these securities are subject to puts separate
from the underlying securities, no value is assigned to the puts. The cost
of any such put is carried as an unrealized loss from the time of purchase
until it is exercised or expires.
INVESTMENT RESTRICTIONS
Unless specified to the contrary, the following investment 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 1940 Act
and the rules thereunder and as used in this SAI, 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.2
The Fund may not, on behalf of a Portfolio:
(1) with regard to the Domestic Prime Portfolio, invest more than 5% of its
total assets in securities of any one issuer, except obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities;
however, the Portfolio may invest more than 5% of their total assets in the
First Tier Securities of a single issuer for a period of up to three
business days;
(2) purchase securities (including warrants) other than those described in
the Prospectuses as fundamental;
_____________________
2. 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.
3) except for the Domestic Prime Portfolio which is subject to Investment
Restriction (1) above, 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 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) 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 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 and not subject to
alternative minimum tax;
(18) with respect to the U.S. Treasury Portfolio, the Domestic Prime
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 Portfolio only, certificates of deposit and bankers'
acceptances of domestic banks); and
(19) with respect to the Tax Exempt 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 PORTFOLIOS
Directors and Officers
Under Maryland law, the Fund's Board of Directors is responsible for
establishing the Portfolios' policies and for overseeing the
management of the Portfolios. The Board also elects the Fund's
officers who conduct the daily business of the Portfolios. The
Directors and principal officers of the Fund, their ages and their
principal business occupations during the last five years, are listed
below. Unless otherwise specified, the address of each such person is
One Corporate Center, Rye, New York 10580-1434. Directors deemed to be
"interested persons" of the Fund for purposes of the 1940 Act are
indicated by an asterisk.
<TABLE>
<CAPTION>
<S> <C>
NAME, ADDRESS, AGE AND PRINCIPAL OCCUPATIONS DURING
POSITION(S) WITH FUND PAST FIVE YEARS
Felix J. Christiana, 74 Former Senior Vice President of Dry Dock
Director Savings Bank. Director or Trustee of 10 other
Gabelli funds.
Anthony J. Colavita, 64 President and Attorney at Law in the law Director
firm of Anthony J. Colavita, P.C. since
1961; Director/ Trustee of 16 other mutual funds
advised by Gabelli Funds, LLC and its affiliates.
Richard N. Daniel, 62 Former Chairman and Chief Executive
Director Officer, Handy and Harman.
Mary E. Hauck, 56 Retired Senior Portfolio manager of the
Director Gabelli O'Connor Fixed Income Mutual Funds
Management Company.
NAME, ADDRESS, AGE AND PRINCIPAL OCCUPATIONS DURING
POSITION(S) WITH FUND PAST FIVE YEARS
Robert C. Kolodny, M.D., 54
Director Physician, author and lecturer (self employed)
(1983-present). 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 (1981-present). Medical Director and
Chairman of the Board of the Behavioral Medicine
Institute (1983-present).
+ Thomas E. O'Connor, 55 Consultant to the Advisor since April 1997.
Director President of Thomas E. O'Connor & Co., Inc., the
general partner of Thomas E. O'Connor & Co. L.P.,
which was the general partner of the former Advisor
and Gabelli O'Connor Fixed Income Management Co.
(1985-1997)
A Karl Otto Pohl, 69 Member of the shareholder committee of Sal
Director Oppenheim Jr. & Cie. (private investment bank);
Former President of the Deutsche Bundesbank
(Germany's Central Bank) and Chairman of its
Central Bank Council (1980-1991); Currently board
member of Gabelli Asset Management Inc.; Zurich
Versicherungs-Gesellschaft (insurance);
International Council for JP Morgan & Co., &
Trizeeltahn Corp. Director/Trustee of 14 other
Gabelli funds.
Anthony R. Pustorino, 73 Professor of Accounting at Pace University
Director (1965-Present). Formerly President, consultant, and
shareholder, Pustorino, Puglisi & Co., certified
public accountants (1961-1989). Director or Trustee
of 10 other mutual funds advised by Gabelli Funds,
LLC and its affiliates.
Werner J. Roeder, M.D., 58 Medical Director, Lawrence Hospital
Director and practicing private physician. Director or
Trustee of 6 other Gabelli funds.
Anthonie C. van Ekris, 63 Managing Director of Balmac International,
Director Ltd.; Director of Spinnaker Industries, Inc. and
Stahel Mardmeyer A.Z.; and Director or Trustee of
10 other mutual funds advised by Gabelli Funds, LLC
and its affiliates.
NAME, AGE, POSITION(S) PRINCIPAL OCCUPATIONS DURING
WITH FUND AND ADDRESS PAST FIVE YEARS
Bruce N. Alpert, 47 Executive and Chief Operating Officer
Vice President Vice President of Gabelli Funds, LLC since 1988;
Director and President of Gabelli Advisers, Inc.
and an Officer of all funds advised by Gabelli
Funds, LLC and its affiliates.
Ronald S. Eaker, 38 Senior Portfolio Manager of the Advisor and
President and Chief Investment Officer its predecessors since 1987.
Henley L, Smith, 42 Senior Portfolio Manager of the Advisor and Vice
President and Investment Officer its predecessors since 1987.
Judith A. Raneri, 31 Portfolio Manager, Gabelli Funds, LLC
Secretary, Treasurer and Investment Officer since April 1997. Senior Portfolio Manager,
Secretary and Treasurer of the Fund. A
member of the Investment and Credit
and Review Committees.
</TABLE>
The Fund pays each Director who is not an employee of the Advisor or
an affiliate company an annual fee of $4,000 and $500 for each regular
meeting of the Board of Directors attended by the Director, and
reimburses Directors for certain travel and other out-of-pocket
expenses incurred by them in connection with attending such meetings.
The Fund pays each Director serving as a member of the Audit, Proxy
and Nominating Committee a fee of $250 per meeting when assets under
management by the Fund are below $100 million and $500 per meeting
when assets under management by the Fund are above $100 million. For
the fiscal year ended October 31, 1999 such fees paid totaled $30,753,
$17,302 and $9,286 for the Domestic Prime Portfolio, Tax Exempt
Portfolio and U.S. Treasury Portfolio, respectively. The Limited Term
Portfolio and Tax Exempt Limited Term Portfolio were not operational
during the fiscal year ended October 31, 1999.
Compensation Table
The following table sets forth certain information regarding the
compensation of the Fund's Directors and officers. Except as disclosed
below, no executive officer or person affiliated with the Fund
received compensation in excess of $60,000 from the Fund for the
calendar year ended December 31, 1999.
<TABLE>
<CAPTION>
<S> <C> <C>
NAME OF PERSON, AGGREGATE COMPENSATION AGGREGATE COMPENSATION
POSITION FROM FUND+ FROM FUND COMPLEX
Felix J. Christiana, Director $6,500 $98,750(11)
Mary E. Hauck, Director $6,000 $6,000
Robert C. Kolodny, M.D., Director $6,000 $6,000
Anthony R. Pustorino, Director $6,500 $107,000(11)
Anthony J. Colavita, Director $6,000 $95,375(17)
Richard N. Daniel, Director $6,000 $6,000
Werner J. Roeder, Director $6,000 $32,734(11)
Anthony van Ekris, Director $6,000 $59,750(11)
Karl Otto Pohl A, Director $1,500 $25,250(19)
Thomas O'Connor, Director $0 $0
</TABLE>
There are no pension, retirement or other benefits payable by the Fund
to any director or officer of the Fund.
____________________
+ Represents the total compensation paid to such
persons during the calendar year ended December 31, 1999. The
parenthetical number represents the number of investment companies
(including the Fund) from which such person received compensation that
are considered part of the same fund complex as the Fund because they
have common or affiliated investment advisers. ++ Mr. Pohl is a
director of Gabelli Asset Management, Inc., the indirect parent
company of the Advisor.
As of the date of this SAI, the Directors of the Fund as a group owned
less than 1% of the outstanding shares of each Portfolio.
Investment Advisor
The Advisor is a Delaware limited liability company organized in 1997,
with offices at One Corporate Center, Rye, New York 10580-1434. The
Advisor is an investment manager, administrator or advisor for the
assets of the Fund and separate managed accounts for corporations,
institutions, pension trusts, profit sharing trusts and high net worth
individuals. The Advisor is a registered investment advisor under the
1940 Act. Mr. Mario J. Gabelli is the Chairman of the Board of
Directors of Gabelli Asset Management Inc., which is the indirect
majority owner of the Advisor. As a result, Mr. Gabelli may be deemed
to be a "controlling person" of the Advisor. As of ______________,
2000 the Advisor and its affiliate, Darien Associates, served as
investment advisor for assets aggregating in excess of $___ billion.
The Advisor is an affiliate of Gabelli Asset Management Inc. which,
through its affiliates, including the Advisor, acts as an investment
manager, administrator or advisor for assets aggregating in excess of
$___ billion as of ______________, 2000. [Prior to April 14, 1997,
Gabelli O'Connor Fixed Income Mutual Funds Management Company served
as the Fund's Advisor ("Former Advisor")].
Pursuant to the Advisory Agreements for each of the Portfolios, the
Advisor manages the Portfolio's portfolio of securities and makes
decisions with respect to the purchase and sale of investments,
subject to the general supervision 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 services. The personnel rendering such
supervisory services may be employees of the Advisor, of its
affiliates or of other organizations.
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 Portfolio, .30%; Domestic Prime
Portfolio, .30%; Tax Exempt Portfolio, .30%; Limited Term Portfolio,
.45%; and 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisory Fees Paid by the Fund
For the Years Ended October 31
1999 1998 1997
Domestic Prime Money Market Portfolio $1,180,277 $886,379 $827,784
Tax Exempt Money Market Portfolio $567,728 $575,919 $541,424
U.S. Treasury Money Market Portfolio $348,614 $296,590 $311,763
</TABLE>
None of these amounts, for the fiscal years ended October 31, 1999,
1998 and 1997, were voluntarily and irrevocably waived by the Advisor
for any of these Portfolios. Prior to March 1, 2000, the Limited Term
Portfolio and the Tax Exempt Limited Term Portfolio had not commenced
operations. The Advisor may 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.
ADMINISTRATOR AND SUB-ADMINISTRATOR
Administrator. The administrator for the Fund is Gabelli Funds, LLC
(the "Administrator"). 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 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.
Under the Administration Agreement for each Portfolio, the
Administrator provides all administrative services, including, without
limitation: (i) provides services of persons competent to perform such
administrative and clerical functions as are necessary to provide
effective administration of the Fund, including maintaining certain
books and records described in Rule 31a-1 under the 1940 Act, and
reconciling account information and balances among the Fund's
Custodian and Advisor; (ii) oversees the performance of administrative
and professional services to the Fund by others, including the Fund's
Custodian; (iii) prepares, but does not pay for, the periodic updating
of the Fund's Registration Statement, Prospectuses and Statement of
Additional Information in conjunction with Fund counsel, including the
printing of such documents for the purpose of filings with the SEC and
state securities administrators, prepares the Fund's tax returns, and
prepares reports to the Fund's shareholders and the SEC; (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 of Directors; (vi) monitors daily and periodic compliance
with respect to all requirements and restrictions of the 1940 Act, the
Code and the Prospectuses; and (vii) monitors and evaluates daily
income and expense accruals, and sales and redemptions of shares of
the Portfolios.
Sub-Administrator. The Administrator has entered into a
Sub-Administration Contract with PFPC Inc. (formerly known as First
Data Investor Services Group, Inc.) (the "Sub-Administrator"), a
majority owned subsidiary of PNC Bank Corp., 101 Federal Street,
Boston, MA 02110, pursuant to which the Sub-Administrator provides
certain administrative services necessary for the Fund operations but
which do not concern the investment advisory and portfolio management
services provided by the Advisor. For such services and the related
expenses borne by the Sub-Administrator , the Advisor pays the
Sub-Administrator on the first business day of each month a fee for
the previous month at the following rates: .0275% on aggregate net
assets of $0-$10 billion, .0125% on aggregate net assets of $10-$15
billion and .0100% on aggregate net assets over $15 billion, which
together with the services rendered, is subject to re-negotiation if
net assets exceed $20 billion. If the average revenue of the
Sub-Administrator per fund in the Gabelli complex under administration
falls below $80,000 per annum, and there are more than 17 funds in the
Gabelli complex whose annual revenue is less than $30,000 per annum, a
minimum annual fee of $30,000 will be implemented for every Gabelli
fund in excess of 17.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
The Fund's custodian is Custodial Trust Company (the "Custodian"),
located at 101 Carnegie Center, Princeton, New Jersey 08540. 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.
State Street Bank and Trust Company ("State Street"), serves as
transfer agent and dividend agent for the Fund and Boston Financial
Data Services, Inc., an affiliate of State Street, serves as the
Fund's shareholder accounting agent 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: maintains shareholder records for each of the
Fund's shareholders of record; processes shareholder purchase and
redemption orders; processes transfers and exchanges of shares of the
Fund on the shareholder files and records; processes dividend payments
and reinvestments; and assists in the mailing of shareholder reports
and proxy solicitation materials.
TAXES
Each of the Portfolios of the Fund has qualified under the Code, as a
regulated investment company. 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. The
Portfolios intend to continue to qualify as regulated investment
companies. Qualification relieves the Portfolios of federal income
taxes on taxable income and long-term capital gains distributed to
their shareholders, provided that at least 90% of their investment
company taxable income and 90% of their net tax exempt interest income
is distributed and numerous other requirements 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. If a Portfolio does not qualify as a
regulated investment company, all of its taxable income would be
taxable at corporate rates and no distributions would qualify as tax
exempt.
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. The Fund believes that this provision
will not have any material impact on any Portfolio.
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 twentieth day of each month. Dividends paid from
taxable income, and distributions of any realized short term capital
gains (whether from tax exempt or taxable obligations) are taxable to
shareholders as ordinary income, whether received in cash or
reinvested in additional shares of the Fund. It is not expected that
any income distributions from the Portfolios will qualify for the
dividends received deduction for corporations.
The Code permits tax exempt interest distributed by a regulated
investment company to flow through as exempt interest dividends 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 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 by their shareholders as exempt interest dividends for
federal income tax purposes. Distributions of exempt interest
dividends are not subject to regular federal income taxes, but may be
subject to the alternative minimum tax. 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 (offset by
any capital loss carry forwards) 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 Portfolio, the Domestic Prime Portfolio and the Tax Exempt
Portfolio include net short-term capital gain in their daily
declarations of income.
Distributions derived from interest on certain private activity bonds
that are exempt from regular federal income tax are tax preference
items that may subject individual or corporate shareholders to
liability (or increased liability) under the alternative minimum tax.
However, at least 80 percent of the net assets of the Tax Exempt
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. In addition,
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 exempt from regular federal income tax 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 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 the Fund will be treated
for federal income tax purposes as the owner of an interest in the
underlying debt obligations and that the interest received will be tax
exempt to the Fund to the same extent that the interest on the
underlying obligations will be tax exempt. 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, New York 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 distributions
received from the Fund from state personal income tax to the extent
such distributions are derived from interest on obligations issued by
such state or its municipalities or political subdivisions.
With respect to the U.S. Treasury 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 Fund's compliance with certain state
notice and investment threshold requirements. It is expected that
dividends from the U.S. Treasury 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 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.
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.
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 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.
If the Fund acquires debt instruments that were originally issued at a
discount, e.g., zero coupon bonds, for purposes of determining its
distribution requirements 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, portion of the "original issue
discount" that accrues over the term of the obligation regardless of
whether the income is received by the Fund. 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.
However, since the Fund expects that a substantial percentage of its
dividends will be reinvested, and since 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 attributable
to original issue discount on taxable obligations.
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.
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 accrued market discount will be long-term
capital gain. However, gain on the disposition of a bond purchased at
a market discount generally will be treated as ordinary income, rather
than capital gain, to the extent of accrued market discount. 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 long-term capital gains regardless of
the length of time shareholders have owned their shares. If a
shareholder receives a capital gain dividend and sells shares after
holding them for six months or less (not including as part of the
period held, 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.
Capital gain dividends will be designated as such in a written notice
to investors mailed not later than 60 days after a Portfolio's taxable
year closes. If any net capital gains are retained by a Portfolio for
reinvestment, requiring federal income taxes to be paid thereon by
such Portfolio, the Portfolio will elect to treat such capital gains
as having been distributed to shareholders. As a result, shareholders
will report such capital gains as net capital gains, will be able to
claim their share of federal income taxes paid by the Portfolio on
such gains as a credit against their own federal income tax liability,
and will be entitled to increase the adjusted tax basis of their
Portfolio shares by 65% of their share of the undistributed gain.
Distributions of net capital gains are not eligible for the dividends
received deduction.
A shareholder may also recognize a taxable gain or loss if the
shareholder sells or redeems shares. Any gain or loss arising from (or
treated as arising from ) the sale or redemption of shares will be a
capital gain or loss, except in the case of a dealer in securities.
Capital gains realized by corporations are generally taxed at the same
rate as ordinary income. However, long term capital gains of
non-corporate shareholders are taxable at a maximum rate of 20% for
shareholders who have a holding period of more than 12 months.
Corresponding maximum rate and holding period rules apply with respect
to capital gains dividends distributed by the Fund, without regard to
the length of time the shares have been held by the shareholder. The
Portfolios will advise shareholders as to what portion of their
distributions will be treated as long term capital gains. The
deduction of capital losses is subject to limitations.
Any short-term capital loss realized by shareholders upon the
redemption of shares of the Tax Exempt 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 exempt interest
dividends received during such six-month period.
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 (including
exempt interest dividends) 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.
Interest on indebtedness incurred by shareholders to purchase or carry
shares of the Tax Exempt 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 corporate taxpayers is deductible only to the extent of
net investment income. Under rules used by the IRS 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 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.
The U.S. Supreme Court has determined 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 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 interest on 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.
The Portfolios will be required to report to the IRS all distributions
of taxable income and capital gains as well as gross proceeds from the
redemption or exchange of Fund 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 the Portfolios 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 Portfolios 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.
Shareholders should provide the Portfolios with their taxpayer
identification numbers and corporate shareholders should certify their
exempt status in order to avoid possible unnecessary 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 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 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 Fund,
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 federal, state and local tax law described in
this statement of additional information in light of their particular
federal and state tax situations.
PURCHASE, REDEMPTION AND EXCHANGE
As of March 1, 2000, Gabelli & Company, Inc. (the "Distributor"), a
New York corporation which is an indirect majority owned subsidiary of
GAMI, having principal offices located at One Corporate Center, Rye,
New York 10580-1434, acts as the Fund's distributor pursuant to its
Distribution Agreement with the Fund. The Distributor acts as agent of
the Fund for the continuous offering of its shares on a best efforts
basis. The material relating to the purchase, redemption and exchange
of Fund shares in the Prospectuses is incorporated herein by reference
and investors should refer to the Prospectuses 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
at 12:00 noon. Shares of the Limited Term Portfolio and the Tax Exempt
Limited Term Portfolio earn dividends on the business day their
purchase is effective but not on the business day their redemption is
effective. See "Purchase of Shares" and "Redemption of Shares" in the
Prospectuses.
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 Portfolio, the Domestic Prime
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 1940 Act. 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 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 61 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, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
The Portfolios compute net asset value as follows: the U.S. Treasury
Portfolio, Domestic Prime Portfolio and the Tax Exempt Portfolio,
12:00 noon. (Eastern Time) and as the close of regular trading on the
New York Stock Exchange, normally 4:00 p.m.; the Limited Term
Portfolio and 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 Money Market Portfolios to deviate more
than l/2 of l% from the value determined on the basis of amortized
cost, the Board of Directors will consider whether any action should
be initiated, as described in the following paragraph. Although the
amortized cost method provides certainty in valuation, it may result
in periods during which the value of an instrument is higher or lower
than the price an investment company would receive if the instrument
were sold.
The Fund's Board of Directors has established procedures to stabilize,
to the extent reasonably possible, the Money Market 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 of Directors 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 Fund shares.
The yields of the Domestic Prime Portfolio, Tax Exempt Portfolio and
the U.S. Treasury Portfolio for the
seven-day period ended October 31, 1999 were 4.80%, 3.13% and 4.47%
respectively.
The Limited Term Portfolio and Tax Exempt Limited Term Portfolio are
not money market funds and must compute their yield in a different
fashion. These Funds 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 receive 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 Funds, changes in interest rates on
investments, and the Funds' expenses during the period.
TAX EQUIVALENT YIELD
The Tax Exempt Portfolio and Tax Exempt Limited Term Portfolio may
from time to time advertise their tax equivalent yield.
Tax equivalent yield is computed upon a 30-day (or one month) period
ended on the date of the most recent balance sheet included in the
Fund's Annual Report. It is computed by dividing by one that portion
of the yield of the Portfolio (as computed pursuant to the formulae
previously discussed) which is tax exempt 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 Portfolio may also advertise a tax equivalent yield
for one or more of the states and municipalities wherein all or
substantially all of that Portfolio's dividends represent a
pass-through of income received on direct obligations of the U.S.
Government and, as a result, are not subject to such state's income
tax. The U.S. Treasury 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 Portfolio would have produced. Tax
equivalent yield is calculated by dividing the portion of the U.S.
Treasury 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
Portfolio's yield that is subject to state or municipal income tax.
All dividends paid by the U.S. Treasury 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 Funds. 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 Fund's Annual Report. It is 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:
P(1+T)n = 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 $1000 payment made at
the beginning of the 1-, 5- or 10- year periods at the end of the 1-,
5- or 10-year periods (or fractional portion).
Because the Limited Term Portfolio and the Tax Exempt Limited Term
Portfolio have not had a registration in effect for 1, 5 or 10 years,
there is no yield or total return information available.
Yield information may be useful for reviewing the performance of the
Portfolio and for providing a basis for comparison with other
investment alternatives. However, unlike bank deposits or other
investments which pay a fixed yield for a stated period of time, the
Portfolios' yield does fluctuate, and this should be considered when
reviewing performance or making comparisons.
From time to time evaluations of performance of the Portfolios made by
independent sources may be used in advertisements concerning the
Funds. These sources may include Lipper, Inc., Wiesenberger Investment
Company Service, IBC's Money Fund Report, Barron's, Business Week,
Changing Times, Financial World, Forbes, Fortune, Money, Personal
Investor, Bank Rate Monitor, and The Wall Street Journal.
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in Maryland on August 17, 1987. The Fund was
formerly named the Gabelli-O'Connor Treasurer's Fund, Inc. At a
meeting of the shareholders held on March 6, 1989, the shareholders of
the Fund voted to amend the Amended Articles of Incorporation to
change the name of the Fund to The Treasurer's Fund, Inc. The
authorized capital stock of the Fund consists of twenty billion shares
of common stock having a par value of one tenth of one cent ($.001)
per share ("Common Stock"). The Fund's net assets at the close of
business on February 25, 2000 were valued at $190,962,394 for the Tax
Exempt Portfolio, $391,196,268 for the Domestic Prime Portfolio and
$89,584,521 for the U.S. Treasury Portfolio. The Limited Term
Portfolio and Tax Exempt Limited Term Portfolio had not commenced
operations as of March 1, 2000. 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 of Directors currently has authorized the
division of the unissued shares into five series of Common Stock, one
for each of the Portfolios. Shares of all series will have identical
voting rights, except where, by law, certain matters must be approved
by a majority of the shares of the affected series. Each share of any
series of shares when issued has equal dividend, distribution,
liquidation and voting rights within the series for which it was
issued, and each fractional share has those rights in proportion to
the percentage that the fractional share represents of a whole share.
Shares will be voted in the aggregate. There are no conversion or
preemptive rights in connection with any shares of the Fund. All
shares, when issued in accordance with the terms of the offering, will
be fully paid and nonassessable. Shares are redeemable at net asset
value, at the option of the shareholder.
As of February 14, 2000, the following persons or entities owned as
much as 5% of the indicated Fund's outstanding shares:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NAME AND ADDRESS FUND IN PERCENTAGE OF
OF RECORD OR NUMBER OF WHICH SHARES OWNERSHIP OF
BENEFICIAL OWNER SHARES OWNED ARE OWNED FUND
Bear Stearns Security Corp. 10,090,699 U.S. Treasury Portfolio 5.45%
1 Metrotech Center North
Brooklyn, NY 11201-3870
Bear Stearns Security Corp. 4,453,193 Tax Exempt Portfolio 5.12%
1 Metrotech Center North
Brooklyn, NY 11201-3870
</TABLE>
The shares held by Bear Stearns Security Corp. 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
1940 Act including the removal of Fund directors and communication
among shareholders, any registration of the Fund with the SEC or any
state, or as the Board of 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 1940 Act provides that any matter required to be
submitted by the provisions of the 1940 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, Rule 18f-2 exempts the selection of
independent public accountants, the approval of principal distribution
contracts and the election of directors from the separate voting
requirements of Rule 18f-2.
DISTRIBUTION PLANS
The Fund has adopted a distribution and service plan (the "Plan"),
pursuant to Rule 12b-1 under the 1940 Act for each Portfolio of the
Fund. Rule 12b-1 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 12b-1. 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 Portfolio's shares. The Advisor, in its sole discretion, will
determine the amount of such payments made pursuant to the Plans,
provided that such payments will not increase the amount which the
Fund is required to pay to the Advisor for any fiscal year under the
Advisory Agreement in effect for that year.
[TO BE REVIEWED BY FUND COUNSEL] 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.
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 February 16, 2000, the Board of Directors approved
the continuance of all of the Plans until February 2001. The Plans for
the Domestic Prime Portfolio and Tax Exempt 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 Portfolio was
approved by a majority of that Fund's shareholders on March 14, 1991.
The Plans for the Limited Term Portfolio and Tax Exempt Limited Term
Portfolio were approved by Consent of Sole Stockholder on _________,
2000. 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, 1999, the Advisor made payments under
the Plans to or on behalf of participating organizations in the amount
of $___________ with regard to the U.S. Treasury Portfolio, Tax Exempt
Portfolio and Domestic Prime Portfolio, (representing .10% of the
average daily net assets of certain accounts within each of those
Funds). Although these payments were not made by the Portfolio, each
may be deemed an indirect payment by the Portfolio.
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.
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.
SERVICE PROVIDERS
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.
FINANCIAL STATEMENTS
The audited financial statements for the Fund dated October 31, 1999
and the Report of Ernst & Young LLP thereon, are incorporated herein
by reference to the Fund's Annual Report. The Annual Report is
available upon request and without charge.
RATINGS OF MUNICIPAL AND CORPORATE OBLIGATIONS
MUNICIPAL AND CORPORATE BOND RATINGS
Description of Moody's Investors Service, Inc.'s municipal and
corporate bond ratings:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge". Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While
the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuations of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A posses favorable investment attributes
and are 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 are 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.
Issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in
recognition of the differences between short-term and long-term credit
risk. Loans bearing the designation MIG 1 are of the best quality,
enjoying strong protection by establishing cash flow of funds for
their servicing or by established and broad-based access to the market
for refinancing, or both. Loans bearing the designation MIG 2 are of
high quality, with margins of protection ample although not so large
as in the preceding group. A short-term issue having a demand feature
(i.e., payment relying on external liquidity and usually payable on
demand rather than fixed maturity dates) is differentiated by Moody's
with the use of the Symbol VMIG, instead of MIG.
Moody's also provides credit ratings for tax exempt commercial paper.
These are promissory obligations (1) not having an original maturity
in excess of nine months, and (2) backed by commercial banks. Notes
bearing the designation P-1 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 degrees.
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 conditions 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 lowest degree of speculation and CCC the
highest degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C -- Bonds rated C are income bonds on which no interest is being paid.
D -- Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
S&P's top ratings for municipal notes issued after July 29, 1984 are
SP-1 and SP-2. The designation SP-1 indicates a very strong capacity
to pay principal and interest. A "+" is added for those issues
determined to possess overwhelming safety characteristics. An "SP-2"
designation indicates a satisfactory capacity to pay principal and
interest.
UNRATED BONDS
Bonds which are unrated expose the investor to risks with respect to
the issuer's capacity to pay interest and principal which are similar
to the risks of rated- rated obligations. The safety of an investment
in an unrated obligation, therefore, is more reliant as a general
proposition on an investment advisor's judgment, analysis and
experience than an investment in a higher rated obligation.
COMMERCIAL PAPER RATINGS
Description of Standard & Poor's Corporation's two highest commercial
paper ratings:
A -- Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree
of safety.
A-1 -- This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics will be
denoted with a plus (+) sign designation.
A-2 -- Capacity for timely payment on issues with this designation is
strong. However, the relative degree
of safety is not as high as for issues designated A-1.
Description of Moody's Investors Service, Inc.'s two highest
commercial paper ratings:
Moody's employs the following designations, both judged to be
investment grade, to indicate the relative repayment capacity of rated
issues: Prime-1, highest quality; Prime-2, higher quality.
MONEY MARKET FUND RATINGS
Description of Standard & Poor's Corporation's two highest money
market fund ratings:
AAAm -- Safety is excellent for money market funds with this rating.
Capacity to maintain principal value and limit exposure to loss is
superior.
AAm -- Safety is very good for money market funds with this rating.
They have a 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.
<PAGE>
PART C: OTHER INFORMATION
Item 23.
Exhibits
(a)(1) Amended and Restated Articles of Incorporation of the
Registrant are incorporated by reference to Post-Effective
Amendment No. 18 to the Registration Statement as filed with
the SEC on February 27, 1998.
(a)(2) Articles Supplementary are filed herewith.
(b) Amended and Restated By-laws are incorporated by reference to
Post-Effective Amendment No. 18 to the Registration Statement
as filed with the SEC on February 27, 1998.
(c) Not applicable.
(d)(1) Advisory Agreement between the Registrant, on behalf of the
Domestic Prime Money Market Portfolio, and Gabelli Fixed
Income LLC is filed herewith.
(d)(2) Advisory Agreement between the Registrant, on behalf of the U.S.
Treasury Money Market Portfolio, and Gabelli Fixed Income LLC is filed
herewith.
(d)(3) Advisory Agreement between the Registrant, on behalf of the
Tax Exempt Money Market Money Market Portfolio, and Gabelli
Fixed Income LLC is filed herewith.
(d)(4) Advisory Agreement between the Registrant, on behalf of the
Limited Term Portfolio, and Gabelli Fixed Income LLC is filed
herewith.
(d)(5) Advisory Agreement between the Registrant, on behalf of the
Tax Exempt Limited Term Portfolio, and Gabelli Fixed Income
LLC is filed herewith.
(e)(1) Distribution Agreement between the Registrant and Gabelli Fixed
Income Distributors, Inc. is incorporated by reference to Post-Effective
Amendment No. 18 to the Registration Statement as filed with the SEC on
February 28, 1998.
(e)(2) Form of Distribution Agreement between the Registrant and Gabelli &
Company, Inc. is filed herewith.
(f) Not applicable.
(g) Custody Agreement between Registrant and Custodial Trust
Company is incorporated by reference to Post-Effective
Amendment No. 18 to the Registration Statement as filed with
the SEC on February 28, 1998.
(h)(1) Transfer Agency Agreement between the Registrant and State Street
Bank and Trust Company is incorporated by reference to Post-Effective
Amendment No. 18 to the Registration Statement as filed with the SEC on
February 28, 1998.
(h)(2) Administration Agreement between the Registrant and Gabelli
Funds, LLC is incorporated by reference to Post-Effective
Amendment No. 18 to the Registration Statement as filed with
the SEC on February 28, 1998.
(i) Not applicable.
(j)(1) Consent of Independent Accountants is filed herewith.
(j)(2) Powers of Attorney for Felix J. Christiana, Anthony J. Colavita,
Richard N. Daniel, Dr. Robert C. Kolodny, Thomas E. O'Connor, Karl Otto
Pohl, Anthony R. Pustorino, Dr. Werner J. Roeder, Anthonie C. van Ekris and
Mary E. Hauck are incorporated by reference to Post-Effective Amendment No.
18 to the Registration Statement as filed with the SEC on February 27,
1998.
(k) Not applicable.
(l) 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 is
incorporated herein by reference to Post-Effective Amendment
No. 4 to the Registration Statement as filed with the SEC on
May 11, 1990.
(m) Distribution and Service Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, for each portfolio
of the Registrant is incorporated by reference to
Post-Effective Amendment No. 18 to the Registration Statement
as filed with the SEC on February 27, 1998.
(n) Not applicable.
(o) Rule 18f-3 Multi-Class Plan is filed herewith.
Item 24. Persons Controlled by or Under Common Control with Registrant
None
Item 25. Indemnification
Reference is made to Article Eighth of Registrant's Articles of Amendment
and Restatement.
Subject to the requirements of the Investment Company Act of
1940 and rules promulgated thereunder, as from time to time
amended, to the maximum extent permitted by the General
Corporation Law of the State of Maryland as from time to time
amended, the Corporation shall indemnify its currently acting
and its former directors and officers and those persons who at
the request of the Corporation, serve and have served another
corporation, partnership, joint venture, trust or other
enterprise in one or more of such capacities.
The Registrant hereby undertakes that it will apply the
indemnification provisions of its Articles of Amendment and
Restatement, its By-laws, the Advisory Agreement, the
Administration Agreement and the Distribution Agreement in a
manner consistent with Release No. 11330 of the SEC under the
1940 Act.
Item 26. Business and Other Connections of Investment Adviser
Gabelli Fixed Income LLC (the "Adviser") is a registered
investment adviser providing investment management and
administrative services to the Registrant.
The description of the Adviser under the caption "Fund
Management" in the Prospectus and under the caption
"Management of the Fund" in the Statement of Additional
Information constituting parts A and B, respectively, of the
Registration Statement are incorporated herein by reference.
Item 27. Principal Underwriter
(a) As of March 1, 2000, Gabelli & Company, Inc. ("Gabelli & Company")
currently acts as distributor for The Gabelli ABC Fund, The Gabelli Asset
Fund, The Gabelli Blue Chip Value Fund, The Gabelli Capital Asset Fund, The
Gabelli Convertible Securities Fund, Inc., The Gabelli Equity Income Fund,
The Gabelli Equity Trust Inc., The Gabelli Global Convertible Securities
Fund, The Gabelli Global Growth Fund, The Gabelli Global Multimedia Trust
Inc., The Gabelli Global Telecommunications Fund, Gabelli Gold Fund, Inc,
The Gabelli Growth Fund, Gabelli International Growth Fund, Inc., The
Gabelli Global Opportunity Fund, The Gabelli Mathers Fund, The Gabelli
Small Cap Growth Fund, The Gabelli U.S. Treasury Money Market Fund, The
Treasurer's Fund, Inc., The Gabelli Utilities Fund, The Gabelli Utility
Trust, The Gabelli Value Fund, Inc. and the Gabelli Westwood Funds.
(b) The information required by this Item 27 with respect to each
director, officer or partner of Gabelli & Company is
incorporated by reference to Schedule A of Form BD filed by
Gabelli & Company pursuant to the Securities Exchange Act of
1934, as amended (SEC File No. 8-21373).
Item 28. Location of Accounts and Records
All such accounts, books and other documents required by
Section 31(a) of the 1940 Act and Rules 31a-1 through 31a-3
thereunder are maintained at the offices of the Adviser,
Gabelli Fixed Income LLC, One Corporate Center, Rye, New York
10580-1434, PFPC Inc., 101 Federal Street, Boston,
Massachusetts 02110, Custodial Trust Company, 101 Carnegie
Center, Princeton, NJ 08540 and Boston Financial Data
Services, Inc., Two Heritage Drive, North Quincy,
Massachusetts, 02171.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant, THE TREASURER'S
FUND, INC., certifies that it meets all the requirements for effectiveness of
this Post-Effective Amendment to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933, as amended, and has duly caused this
Post-Effective Amendment No. 21 to its Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of Rye and
State of New York, on the 28th day of February, 2000.
THE TREASURER'S FUND, INC.
By: /s/Ronald S. Eaker
Ronald S. Eaker
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 21 to its Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/Ronald S. Eaker President and February 28, 2000
- ---------------------------
Ronald S. Eaker Chief Investment Officer
/s/Judith Raneri Treasurer February 28, 2000
Judith Raneri
/s/ Thomas E. O' Connor* Director February 28, 2000
- ---------------------------
Thomas E. O'Connor
/s/ Mary E. Hauck* Director February 28, 2000
- -----------------------------
Mary E. Hauck
/s/ Robert C. Kolodny, M.D.* Director February 28, 2000
Robert C. Kolodny, M.D.*
/s/ Felix J. Christiana* Director February 28, 2000
- -----------------------------
Felix J Christiana
/s/ Anthony J. Colavita* Director February 28, 2000
- -----------------------------
Anthony J. Colavita
/s/ Richard N. Daniel* Director February 28, 2000
- -----------------------------
Richard N. Daniel
/s/ Karl Otto Pohl* Director February 28, 2000
- -----------------------------
Karl Otto Pohl
/s/ Anthony R. Pustorino* Director February 28, 2000
- -----------------------------
Anthony R. Pustorino
/s/ Anthonie C. van Ekris* Director February 28, 2000
- -----------------------------
Anthonie C. van Ekris
/s/ Werner J. Roeder, M.D.* Director February 28, 2000
Werner J. Roeder, M.D.
*By:/s/Ronald S. Eaker
Ronald S. Eaker
Attorney-in-fact
</TABLE>
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT
(a)(2) Articles Supplementary
(d)(1) Advisory Agreement on behalf of the Domestic Prime Money Market Portfolio
(d)(2) Advisory Agreement on behalf of the U.S. Treasury Money Market Portfolio
(d)(3) Advisory Agreement on behalf of the Tax Exempt Money Market Portfolio
(d)(4) Advisory Agreement on behalf of the Limited Term Portfolio
(d)(5) Advisory Agreement on behalf of the Tax Exempt Limited Term Portfolio
(e)(2) Form of Distribution Agreement
(j)(1) Consent of Independent Accountants
(o) Rule 18f-3 Multi-Class Plan
ARTICLES SUPPLEMENTARY
OF
THE TREASURERS FUND, INC.
The Treasurers Fund, Inc., a Maryland Corporation having its principal
office in the State of Maryland in the City of Baltimore (hereinafter called the
"Corporation" or the "Fund"), certifies to the Department of Assessments and
Taxation of Maryland that:
(1) The following is a description of the stock, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption, as set and changed by the board of directors:
The reclassification of the Domestic Prime Money Market
Portfolio to the Domestic Prime Money Market Portfolio -
Gabelli Cash Management Class and Domestic Prime Money Market
Portfolio Domestic Prime Money Market Class. One billion
(1,000,000,000) shares of authorized but unissued stock will
be allocated to the Domestic Prime Money Market Portfolio -
Gabelli Cash Management Class and two billion (2,000,000,000)
shares previously allocated to the Domestic Prime Money Market
Portfolio will be reallocated to the Domestic Prime Money
Market Portfolio Domestic Prime Money Market Class; the
reclassification of the U.S. Treasury Money Market Portfolio
to the U.S. Treasury Money Market Portfolio - Gabelli Cash
Management Class and U.S. Treasury Money Market Portfolio -
U.S. Treasury Class. One billion (1,000,000,000) shares of
authorized but unissued stock will be allocated to the U.S.
Treasury Money Market Portfolio - Gabelli Cash Management
Class and two billion (2,000,000,000) shares previously
allocated to the U.S. Treasury Money Market Portfolio will be
reallocated to the U.S. Treasury Money Market Portfolio - U.S.
Treasury Class; and the reclassification of the Tax Exempt
Money Market Portfolio to the Tax Exempt Money Market
Portfolio - Gabelli Cash Management Class and Tax Exempt Money
Market Portfolio - Tax Exempt Class. One billion
(1,000,000,000) shares of authorized but unissued stock will
be allocated to the Tax Exempt Money Market Portfolio -
Gabelli Cash Management Class and two billion (2,000,000,000)
shares previously allocated to the Tax Exempt Money Market
Portfolio will be reallocated to the Tax Exempt Money Market
Portfolio - Tax Exempt Class. The shares of such stock may be
issued in these classes, having such designations, such
powers, preferences and rights and such qualifications,
limitations and restrictions as the shares of the currently
existing classes of common stock.
(2) The Corporation's stock has been reclassified by the Corporation's
board of directors under the authority contained in Article Fifth of the
Corporation's Articles of Incorporation, as amended.
IN WITNESS WHEREOF, The Treasurer Fund, Inc., has caused these presents
to be signed in its name and on its behalf by its President or one of its Vice
Presidents and attested by its Secretary or one of its Assistant Secretaries, on
February 25, 2000.
THE TREASURERS FUND, INC.,
DOMESTIC PRIME MONEY MARKET PORTFOLIO
U.S. TREASURY MONEY MARKET PORTFOLIO
TAX EXEMPT MONEY MARKET PORTFOLIO
By:/s/Ronald S. Eaker
Ronald S. Eaker
President
ATTEST:
/s/Judith A. Raneri
Judith A. Ranieri
Secretary
THE UNDERSIGNED, President of THE TREASURERS FUND, INC., who executed
on behalf of said Corporation, the foregoing Articles Supplementary, of which
this certificate is made a part, hereby acknowledges, in the name and on behalf
of said Corporation, the foregoing Articles Supplementary to be the corporate
act of said Corporation and further certifies that, to the best of his
knowledge, information, and in all material respects, under the penalties of
perjury.
THE TREASURERS FUND, INC.,
DOMESTIC PRIME MONEY MARKET PORTFOLIO
U.S. TREASURY MONEY MARKET PORTFOLIO
TAX EXEMPT MONEY MARKET PORTFOLIO
By:/s/Ronald S. Eaker
Ronald S. Eaker
President
ADVISORY AGREEMENT
THE TREASURER'S FUND, INC.
DOMESTIC PRIME MONEY MARKET PORTFOLIO
Darien, Connecticut
April 14, 1997
Gabelli Fixed Income L.L.C.
19 Old Kings Highway South
Darien, Connecticut 06820
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting
our assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Regis-tra-tion Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment
of our assets as above specified, and, without limiting the generality of the
foregoing, to provide the manage-ment and other services specified below.
(b) Subject to the general control of our Board of Directors, you will
make decisions with respect to all purchases and sales of our portfolio
securities. To carry out such deci-sions, you are hereby authorized, as our
agent and attorney-in-fact, for our account and at our risk and in our name, to
place orders for the investment and reinvestment of our assets. In all
purchases, sales and other transactions in our portfolio secu-ri-ties you are
authorized to exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself might or could do with
respect to such pur-chases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof
all changes in our portfolio since your prior report, and will also keep us in
touch with important develop-ments affecting our portfolio and, on your own
initiative, will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual entities
whose securities are included in our port-folio, the activities in which such
entities engage, Federal income tax policies applicable to our investments, or
the con-ditions prevailing in the money market or the economy generally. You
will also furnish us with such statistical and analytical information with
respect to our portfolio securities as you may believe appropriate or as we may
reasonably request. In making such purchases and sales of our portfolio
securities, you will comply with the policies set from time to time by our Board
of Directors as well as the limitations imposed by our Articles of
Incorporation, the provisions of the Internal Revenue Code relating to regulated
investment companies and the 1940 Act, and the limitations contained in the
Registration Statement.
(d) It is understood that you will from time to time employ,
subcontract with or otherwise associate with yourself, entirely at your expense
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder. While this agreement is in effect, you or
persons affiliated with you, other than us ("your affiliates"), will provide
persons satisfactory to our Board of Directors to be elected or appointed
officers or employees of our corporation. These shall be a president, a
secretary, a treasurer, and such additional officers and employees as may
reasonably be necessary for the conduct of our business.
(e) You or your affiliates will also provide super-visory personnel
without charge, who may be our officers and who will be responsible for
supervising the performance of admin-is-tra-tive services, accounting and
related services, net asset value and yield calculations, reports to and filings
with regulatory authorities, and services relating to such functions. Such
personnel may be your employees or employees of your affili-ates or of other
organizations. It is understood that we may retain, at our expense, an
administrator to perform the opera-tional components of the functions and
services listed herein.
(f) You or your affiliates will also furnish us, with-out charge, such
additional administrative and management super-vision and such office facilities
as you may believe appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be subject. You or
your affiliates will also pay the expenses of promoting and advertising the sale
of our shares (other than the costs of preparing, printing and filing our
Registration Statement, print-ing copies of the Prospectus contained therein for
existing shareholders of the Fund and complying with other applicable regulatory
requirements), and of printing and distributing the Fund's Prospectus to
prospective investors. To the extent that you or your affiliates directly, or
through Gabelli & Company, Inc. (the "Distributor"), may make payments to
securities dealers and other third parties who engage in the sale of our shares
or who render shareholder support services, and that such payments may be deemed
indirect financing of an activity pri-marily intended to result in the sale of
shares of the Portfolios within the context of Rule 12b-1 under the 1940 Act
(the "Rule"), then such payments by you shall be deemed to be authorized under
the Portfolio's Distribution and Service Plan adopted pursuant to the Rule. You
will, in your sole discretion, determine the amount of such payments and may
from time to time in your sole discretion increase or decrease the amount of
such payments; pro-vided, however, that no such payment will increase the amount
the Portfolio is required to pay you or the Distributor under this Agreement or
any agreement. Any payments made by you for the purpose of distributing shares
of the Portfolio are subject to compliance with the terms of written agreements
in a form sat-is-fac-tory to the Fund's Board of Directors to be entered into by
you and the participating organization. It is understood that you, in your sole
discretion, may reimburse the Distributor for any of such expenses that it may
incur on your behalf.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses including: (a) brokerage and commission expenses; (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on us; (c)
com-mit-ment fees, certain insurance premiums and membership fees and dues in
investment company organizations; (d) interest charges on borrowings; (e)
charges and expenses of our custodian and ad-min-istra-tor; (f) charges and
expenses relating to the issuance, redemption, transfer and dividend disbursing
functions for us; (g) tele-com-muni-cations expenses; (h) recur-ring and
non-recurring legal and accounting expenses; (i) costs of organizing and
maintaining our existence as a corporation; (j) compensation, including
directors' fees, of any of our directors, officers or employees who are not your
officers or officers of your affili-ates, and costs of other personnel providing
administrative and clerical services to us; (k) costs of providing shareholders'
services and costs of shareholders' reports, proxy solicitations, and corporate
meetings; (l) fees and expenses of registering our shares under the appropriate
Federal securities laws and of qualifying our shares under applicable state
securities laws, including expenses attendant upon the initial registration and
qualification of our shares and attendant upon renewals of, or amendment to,
those registrations and qualifications; (m) ex-penses of preparing, printing and
delivering our initial registration statement and of preparing, printing and
delivering our Prospectus to our existing shareholders and of printing
shareholder application forms for shareholder accounts; and (n) pay-ment of the
fees provided for herein, in the Distribution Agreement and in the
Administrative Services Agreement. Our obligation for the foregoing expenses is
limited by your agreement to be responsible, while this Agreement is in effect,
for any amount by which our annual operating expenses (excluding taxes,
brokerage, interest and extraordinary expenses) exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale.
4. We will expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you a fee at the
annual rate of thirty one-hundredths of one percent (0.30%) of our average daily
net assets. Your fee will be accrued by us daily, and will be payable on the
last day of each calendar month for services performed hereunder during that
month or on such other schedule as you shall request of us in writing. You may
waive your right to any fee to which you are entitled hereunder, provided such
waiver is delivered to us in writing. Any reimbursement of our expenses, to
which we may become entitled pursuant to para-graph 3 hereof, will be paid to us
at the end of the month for which those expenses are accrued, at the same time
as we pay you your fee for that month.
6. This Agreement will become effective on April 14, 1997 and shall
continue in effect until March 31, 1999 and there-after for successive
twelve-month periods (computed from each April 1), provided that such
continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
secu-rities, as defined in the 1940 Act, and, in either case, by a majority of
those of our directors who are neither party to this Agreement nor, other than
by their service as directors of the corporation, interested persons, as defined
in the 1940 Act, of any such person who is party to this Agreement. Upon the
effec-tiveness of this Agreement, it shall supersede all previous Agreements
between us 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 our
outstanding voting securities, as defined in the 1940 Act, or by a vote of a
majority of our entire Board of Directors, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your under-stand-ing, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE TREASURER'S FUND, INC.
By: /s/Ronald S. Eaker
President
ACCEPTED: April 14, 1997
GABELLI FIXED INCOME L.L.C.
By: Gabelli Fixed Income, Inc.,
Managing Member
By: _______________________________
**On March 1, 2000, this agreement was amended to reflect that Gabelli &
Company, Inc. replaced Gabelli Fixed Income Distributors, Inc. as the
fund's Distributor.
ADVISORY AGREEMENT
THE TREASURER'S FUND, INC.
U.S. TREASURY MONEY MARKET PORTFOLIO
Darien, Connecticut
April 14, 1997
Gabelli Fixed Income L.L.C.
19 Old Kings Highway South
Darien, Connecticut 06820
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting
our assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Regis-tra-tion Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment
of our assets as above specified, and, without limiting the generality of the
foregoing, to provide the manage-ment and other services specified below.
(b) Subject to the general control of our Board of Directors, you will
make decisions with respect to all purchases and sales of our portfolio
securities. To carry out such deci-sions, you are hereby authorized, as our
agent and attorney-in-fact, for our account and at our risk and in our name, to
place orders for the investment and reinvestment of our assets. In all
purchases, sales and other transactions in our portfolio secu-ri-ties you are
authorized to exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself might or could do with
respect to such pur-chases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof
all changes in our portfolio since your prior report, and will also keep us in
touch with important develop-ments affecting our portfolio and, on your own
initiative, will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual entities
whose securities are included in our port-folio, the activities in which such
entities engage, Federal income tax policies applicable to our investments, or
the con-ditions prevailing in the money market or the economy generally. You
will also furnish us with such statistical and analytical information with
respect to our portfolio securities as you may believe appropriate or as we may
reasonably request. In making such purchases and sales of our portfolio
securities, you will comply with the policies set from time to time by our Board
of Directors as well as the limitations imposed by our Articles of
Incorporation, the provisions of the Internal Revenue Code relating to regulated
investment companies and the 1940 Act, and the limitations contained in the
Registration Statement.
(d) It is understood that you will from time to time employ,
subcontract with or otherwise associate with yourself, entirely at your expense
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder. While this agreement is in effect, you or
persons affiliated with you, other than us ("your affiliates"), will provide
persons satisfactory to our Board of Directors to be elected or appointed
officers or employees of our corporation. These shall be a president, a
secretary, a treasurer, and such additional officers and employees as may
reasonably be necessary for the conduct of our business.
(e) You or your affiliates will also provide super-visory personnel
without charge, who may be our officers and who will be responsible for
supervising the performance of admin-is-tra-tive services, accounting and
related services, net asset value and yield calculations, reports to and filings
with regulatory authorities, and services relating to such functions. Such
personnel may be your employees or employees of your affili-ates or of other
organizations. It is understood that we may retain, at our expense, an
administrator to perform the opera-tional components of the functions and
services listed herein.
(f) You or your affiliates will also furnish us, with-out charge, such
additional administrative and management super-vision and such office facilities
as you may believe appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be subject. You or
your affiliates will also pay the expenses of promoting and advertising the sale
of our shares (other than the costs of preparing, printing and filing our
Registration Statement, print-ing copies of the Prospectus contained therein for
existing shareholders of the Fund and complying with other applicable regulatory
requirements), and of printing and distributing the Fund's Prospectus to
prospective investors. To the extent that you or your affiliates directly, or
through Gabelli & Company, Inc. (the "Distributor"), may make payments to
securities dealers and other third parties who engage in the sale of our shares
or who render shareholder support services, and that such payments may be deemed
indirect financing of an activity pri-marily intended to result in the sale of
shares of the Portfolios within the context of Rule 12b-1 under the 1940 Act
(the "Rule"), then such payments by you shall be deemed to be authorized under
the Portfolio's Distribution and Service Plan adopted pursuant to the Rule. You
will, in your sole discretion, determine the amount of such payments and may
from time to time in your sole discretion increase or decrease the amount of
such payments; pro-vided, however, that no such payment will increase the amount
the Portfolio is required to pay you or the Distributor under this Agreement or
any agreement. Any payments made by you for the purpose of distributing shares
of the Portfolio are subject to compliance with the terms of written agreements
in a form sat-is-fac-tory to the Fund's Board of Directors to be entered into by
you and the participating organization. It is understood that you, in your sole
discretion, may reimburse the Distributor for any of such expenses that it may
incur on your behalf.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses including: (a) brokerage and commission expenses; (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on us; (c)
com-mit-ment fees, certain insurance premiums and membership fees and dues in
investment company organizations; (d) interest charges on borrowings; (e)
charges and expenses of our custodian and ad-min-istra-tor; (f) charges and
expenses relating to the issuance, redemption, transfer and dividend disbursing
functions for us; (g) tele-com-muni-cations expenses; (h) recur-ring and
non-recurring legal and accounting expenses; (i) costs of organizing and
maintaining our existence as a corporation; (j) compensation, including
directors' fees, of any of our directors, officers or employees who are not your
officers or officers of your affili-ates, and costs of other personnel providing
administrative and clerical services to us; (k) costs of providing shareholders'
services and costs of shareholders' reports, proxy solicitations, and corporate
meetings; (l) fees and expenses of registering our shares under the appropriate
Federal securities laws and of qualifying our shares under applicable state
securities laws, including expenses attendant upon the initial registration and
qualification of our shares and attendant upon renewals of, or amendment to,
those registrations and qualifications; (m) ex-penses of preparing, printing and
delivering our initial registration statement and of preparing, printing and
delivering our Prospectus to our existing shareholders and of printing
shareholder application forms for shareholder accounts; and (n) pay-ment of the
fees provided for herein, in the Distribution Agreement and in the
Administrative Services Agreement. Our obligation for the foregoing expenses is
limited by your agreement to be responsible, while this Agreement is in effect,
for any amount by which our annual operating expenses (excluding taxes,
brokerage, interest and extraordinary expenses) exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale.
4. We will expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you a fee at the
annual rate of thirty one-hundredths of one percent (0.30%) of our average daily
net assets. Your fee will be accrued by us daily, and will be payable on the
last day of each calendar month for services performed hereunder during that
month or on such other schedule as you shall request of us in writing. You may
waive your right to any fee to which you are entitled hereunder, provided such
waiver is delivered to us in writing. Any reimbursement of our expenses, to
which we may become entitled pursuant to para-graph 3 hereof, will be paid to us
at the end of the month for which those expenses are accrued, at the same time
as we pay you your fee for that month.
6. This Agreement will become effective on April 14, 1997 and shall
continue in effect until March 31, 1999 and there-after for successive
twelve-month periods (computed from each April 1), provided that such
continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
secu-rities, as defined in the 1940 Act, and, in either case, by a majority of
those of our directors who are neither party to this Agreement nor, other than
by their service as directors of the corporation, interested persons, as defined
in the 1940 Act, of any such person who is party to this Agreement. Upon the
effec-tiveness of this Agreement, it shall supersede all previous Agreements
between us 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 our
outstanding voting securities, as defined in the 1940 Act, or by a vote of a
majority of our entire Board of Directors, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your under-stand-ing, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE TREASURER'S FUND, INC.
By: /s/Ronald S. Eaker
President
ACCEPTED: April 14, 1997
GABELLI FIXED INCOME L.L.C.
By: Gabelli Fixed Income, Inc.,
Managing Member
By: _______________________________
** On March 1, 2000, this agreement was amended to reflect that Gabelli &
Company, Inc. replaced Gabelli Fixed Income Distributors, Inc. as the
Fund's Distributor.
ADVISORY AGREEMENT
THE TREASURER'S FUND, INC.
TAX EXEMPT MONEY MARKET PORTFOLIO
Darien, Connecticut
April 14, 1997
Gabelli Fixed Income L.L.C.
19 Old Kings Highway South
Darien , Connecticut 06820
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting
our assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Regis-tra-tion Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment
of our assets as above specified, and, without limiting the generality of the
foregoing, to provide the manage-ment and other services specified below.
(b) Subject to the general control of our Board of Directors, you will
make decisions with respect to all purchases and sales of our portfolio
securities. To carry out such deci-sions, you are hereby authorized, as our
agent and attorney-in-fact, for our account and at our risk and in our name, to
place orders for the investment and reinvestment of our assets. In all
purchases, sales and other transactions in our portfolio secu-ri-ties you are
authorized to exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself might or could do with
respect to such pur-chases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof
all changes in our portfolio since your prior report, and will also keep us in
touch with important develop-ments affecting our portfolio and, on your own
initiative, will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual entities
whose securities are included in our port-folio, the activities in which such
entities engage, Federal income tax policies applicable to our investments, or
the con-ditions prevailing in the money market or the economy generally. You
will also furnish us with such statistical and analytical information with
respect to our portfolio securities as you may believe appropriate or as we may
reasonably request. In making such purchases and sales of our portfolio
securities, you will comply with the policies set from time to time by our Board
of Directors as well as the limitations imposed by our Articles of
Incorporation, the provisions of the Internal Revenue Code relating to regulated
investment companies and the 1940 Act, and the limitations contained in the
Registration Statement.
(d) It is understood that you will from time to time employ,
subcontract with or otherwise associate with yourself, entirely at your expense
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder. While this agreement is in effect, you or
persons affiliated with you, other than us ("your affiliates"), will provide
persons satisfactory to our Board of Directors to be elected or appointed
officers or employees of our corporation. These shall be a president, a
secretary, a treasurer, and such additional officers and employees as may
reasonably be necessary for the conduct of our business.
(e) You or your affiliates will also provide super-visory personnel
without charge, who may be our officers and who will be responsible for
supervising the performance of admin-is-tra-tive services, accounting and
related services, net asset value and yield calculations, reports to and filings
with regulatory authorities, and services relating to such functions. Such
personnel may be your employees or employees of your affili-ates or of other
organizations. It is understood that we may retain, at our expense, an
administrator to perform the opera-tional components of the functions and
services listed herein.
(f) You or your affiliates will also furnish us, with-out charge, such
additional administrative and management super-vision and such office facilities
as you may believe appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be subject. You or
your affiliates will also pay the expenses of promoting and advertising the sale
of our shares (other than the costs of preparing, printing and filing our
Registration Statement, print-ing copies of the Prospectus contained therein for
existing shareholders of the Fund and complying with other applicable regulatory
requirements), and of printing and distributing the Fund's Prospectus to
prospective investors. To the extent that you or your affiliates directly, or
through Gabelli & Company, Inc. (the "Distributor"), may make payments to
securities dealers and other third parties who engage in the sale of our shares
or who render shareholder support services, and that such payments may be deemed
indirect financing of an activity pri-marily intended to result in the sale of
shares of the Portfolios within the context of Rule 12b-1 under the 1940 Act
(the "Rule"), then such payments by you shall be deemed to be authorized under
the Portfolio's Distribution and Service Plan adopted pursuant to the Rule. You
will, in your sole discretion, determine the amount of such payments and may
from time to time in your sole discretion increase or decrease the amount of
such payments; pro-vided, however, that no such payment will increase the amount
the Portfolio is required to pay you or the Distributor under this Agreement or
any agreement. Any payments made by you for the purpose of distributing shares
of the Portfolio are subject to compliance with the terms of written agreements
in a form sat-is-fac-tory to the Fund's Board of Directors to be entered into by
you and the participating organization. It is understood that you, in your sole
discretion, may reimburse the Distributor for any of such expenses that it may
incur on your behalf.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses including: (a) brokerage and commission expenses; (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on us; (c)
com-mit-ment fees, certain insurance premiums and membership fees and dues in
investment company organizations; (d) interest charges on borrowings; (e)
charges and expenses of our custodian and ad-min-istra-tor; (f) charges and
expenses relating to the issuance, redemption, transfer and dividend disbursing
functions for us; (g) tele-com-muni-cations expenses; (h) recur-ring and
non-recurring legal and accounting expenses; (i) costs of organizing and
maintaining our existence as a corporation; (j) compensation, including
directors' fees, of any of our directors, officers or employees who are not your
officers or officers of your affili-ates, and costs of other personnel providing
administrative and clerical services to us; (k) costs of providing shareholders'
services and costs of shareholders' reports, proxy solicitations, and corporate
meetings; (l) fees and expenses of registering our shares under the appropriate
Federal securities laws and of qualifying our shares under applicable state
securities laws, including expenses attendant upon the initial registration and
qualification of our shares and attendant upon renewals of, or amendment to,
those registrations and qualifications; (m) ex-penses of preparing, printing and
delivering our initial registration statement and of preparing, printing and
delivering our Prospectus to our existing shareholders and of printing
shareholder application forms for shareholder accounts; and (n) pay-ment of the
fees provided for herein, in the Distribution Agreement and in the
Administrative Services Agreement. Our obligation for the foregoing expenses is
limited by your agreement to be responsible, while this Agreement is in effect,
for any amount by which our annual operating expenses (excluding taxes,
brokerage, interest and extraordinary expenses) exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale.
4. We will expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you a fee at the
annual rate of thirty one-hundredths of one percent (0.30%) of our average daily
net assets. Your fee will be accrued by us daily, and will be payable on the
last day of each calendar month for services performed hereunder during that
month or on such other schedule as you shall request of us in writing. You may
waive your right to any fee to which you are entitled hereunder, provided such
waiver is delivered to us in writing. Any reimbursement of our expenses, to
which we may become entitled pursuant to para-graph 3 hereof, will be paid to us
at the end of the month for which those expenses are accrued, at the same time
as we pay you your fee for that month.
6. This Agreement will become effective on April 14, 1997 and shall
continue in effect until March 31, 1999 and there-after for successive
twelve-month periods (computed from each April 1), provided that such
continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
secu-rities, as defined in the 1940 Act, and, in either case, by a majority of
those of our directors who are neither party to this Agreement nor, other than
by their service as directors of the corporation, interested persons, as defined
in the 1940 Act, of any such person who is party to this Agreement. Upon the
effec-tiveness of this Agreement, it shall supersede all previous Agreements
between us 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 our
outstanding voting securities, as defined in the 1940 Act, or by a vote of a
majority of our entire Board of Directors, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your under-stand-ing, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE TREASURER'S FUND, INC.
By: /s/Ronald S. Eaker
President
ACCEPTED: April 14, 1997
GABELLI FIXED INCOME L.L.C.
By: Gabelli Fixed Income, Inc.,
Managing Member
By: _______________________________
** On March 1, 2000, this agreement was amended to reflect that Gabelli &
Company, Inc. replaced Gabelli Fixed Income Distributors, Inc. as the
Fund's Distributor.
ADVISORY AGREEMENT
THE TREASURER'S FUND, INC.
LIMITED TERM PORTFOLIO
Darien, Connecticut
April 14, 1997
Gabelli Fixed Income L.L.C.
19 Old Kings Highway South
Darien, Connecticut 06820
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting
our assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Regis-tra-tion Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment
of our assets as above specified, and, without limiting the generality of the
foregoing, to provide the manage-ment and other services specified below.
(b) Subject to the general control of our Board of Directors, you will
make decisions with respect to all purchases and sales of our portfolio
securities. To carry out such deci-sions, you are hereby authorized, as our
agent and attorney-in-fact, for our account and at our risk and in our name, to
place orders for the investment and reinvestment of our assets. In all
purchases, sales and other transactions in our portfolio secu-ri-ties you are
authorized to exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself might or could do with
respect to such pur-chases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof
all changes in our portfolio since your prior report, and will also keep us in
touch with important develop-ments affecting our portfolio and, on your own
initiative, will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual entities
whose securities are included in our port-folio, the activities in which such
entities engage, Federal income tax policies applicable to our investments, or
the con-ditions prevailing in the money market or the economy generally. You
will also furnish us with such statistical and analytical information with
respect to our portfolio securities as you may believe appropriate or as we may
reasonably request. In making such purchases and sales of our portfolio
securities, you will comply with the policies set from time to time by our Board
of Directors as well as the limitations imposed by our Articles of
Incorporation, the provisions of the Internal Revenue Code relating to regulated
investment companies and the 1940 Act, and the limitations contained in the
Registration Statement.
(d) It is understood that you will from time to time employ,
subcontract with or otherwise associate with yourself, entirely at your expense
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder. While this agreement is in effect, you or
persons affiliated with you, other than us ("your affiliates"), will provide
persons satisfactory to our Board of Directors to be elected or appointed
officers or employees of our corporation. These shall be a president, a
secretary, a treasurer, and such additional officers and employees as may
reasonably be necessary for the conduct of our business.
(e) You or your affiliates will also provide super-visory personnel
without charge, who may be our officers and who will be responsible for
supervising the performance of admin-is-tra-tive services, accounting and
related services, net asset value and yield calculations, reports to and filings
with regulatory authorities, and services relating to such functions. Such
personnel may be your employees or employees of your affili-ates or of other
organizations. It is understood that we may retain, at our expense, an
administrator to perform the opera-tional components of the functions and
services listed herein.
(f) You or your affiliates will also furnish us, with-out charge, such
additional administrative and management super-vision and such office facilities
as you may believe appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be subject. You or
your affiliates will also pay the expenses of promoting and advertising the sale
of our shares (other than the costs of preparing, printing and filing our
Registration Statement, print-ing copies of the Prospectus contained therein for
existing shareholders of the Fund and complying with other applicable regulatory
requirements), and of printing and distributing the Fund's Prospectus to
prospective investors. To the extent that you or your affiliates directly, or
through Gabelli & Company, Inc. (the "Distributor"), may make payments to
securities dealers and other third parties who engage in the sale of our shares
or who render shareholder support services, and that such payments may be deemed
indirect financing of an activity pri-marily intended to result in the sale of
shares of the Portfolios within the context of Rule 12b-1 under the 1940 Act
(the "Rule"), then such payments by you shall be deemed to be authorized under
the Portfolio's Distribution and Service Plan adopted pursuant to the Rule. You
will, in your sole discretion, determine the amount of such payments and may
from time to time in your sole discretion increase or decrease the amount of
such payments; pro-vided, however, that no such payment will increase the amount
the Portfolio is required to pay you or the Distributor under this Agreement or
any agreement. Any payments made by you for the purpose of distributing shares
of the Portfolio are subject to compliance with the terms of written agreements
in a form sat-is-fac-tory to the Fund's Board of Directors to be entered into by
you and the participating organization. It is understood that you, in your sole
discretion, may reimburse the Distributor for any of such expenses that it may
incur on your behalf.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses including: (a) brokerage and commission expenses; (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on us; (c)
com-mit-ment fees, certain insurance premiums and membership fees and dues in
investment company organizations; (d) interest charges on borrowings; (e)
charges and expenses of our custodian and ad-min-istra-tor; (f) charges and
expenses relating to the issuance, redemption, transfer and dividend disbursing
functions for us; (g) tele-com-muni-cations expenses; (h) recur-ring and
non-recurring legal and accounting expenses; (i) costs of organizing and
maintaining our existence as a corporation; (j) compensation, including
directors' fees, of any of our directors, officers or employees who are not your
officers or officers of your affili-ates, and costs of other personnel providing
administrative and clerical services to us; (k) costs of providing shareholders'
services and costs of shareholders' reports, proxy solicitations, and corporate
meetings; (l) fees and expenses of registering our shares under the appropriate
Federal securities laws and of qualifying our shares under applicable state
securities laws, including expenses attendant upon the initial registration and
qualification of our shares and attendant upon renewals of, or amendment to,
those registrations and qualifications; (m) ex-penses of preparing, printing and
delivering our initial registration statement and of preparing, printing and
delivering our Prospectus to our existing shareholders and of printing
shareholder application forms for shareholder accounts; and (n) pay-ment of the
fees provided for herein, in the Distribution Agreement and in the
Administrative Services Agreement. Our obligation for the foregoing expenses is
limited by your agreement to be responsible, while this Agreement is in effect,
for any amount by which our annual operating expenses (excluding taxes,
brokerage, interest and extraordinary expenses) exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale.
4. We will expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you a fee at the
annual rate of forty-five one-hundredths of one percent (0.45%) of our average
daily net assets. Your fee will be accrued by us daily, and will be payable on
the last day of each calendar month for services performed hereunder during that
month or on such other schedule as you shall request of us in writing. You may
waive your right to any fee to which you are entitled hereunder, provided such
waiver is delivered to us in writing. Any reimbursement of our expenses, to
which we may become entitled pursuant to para-graph 3 hereof, will be paid to us
at the end of the month for which those expenses are accrued, at the same time
as we pay you your fee for that month.
6. This Agreement will become effective on April 14, 1997 and shall
continue in effect until March 31, 1999 and there-after for successive
twelve-month periods (computed from each April 1), provided that such
continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
secu-rities, as defined in the 1940 Act, and, in either case, by a majority of
those of our directors who are neither party to this Agreement nor, other than
by their service as directors of the corporation, interested persons, as defined
in the 1940 Act, of any such person who is party to this Agreement. Upon the
effec-tiveness of this Agreement, it shall supersede all previous Agreements
between us 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 our
outstanding voting securities, as defined in the 1940 Act, or by a vote of a
majority of our entire Board of Directors, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your under-stand-ing, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE TREASURER'S FUND, INC.
By: /s/Ronald S. Eaker
President
ACCEPTED: April 14, 1997
GABELLI FIXED INCOME L.L.C.
By: Gabelli Fixed Income, Inc.,
Managing Member
By: _______________________________
** On March 1, 2000, this agreement was amended to reflect that Gabelli &
Company, Inc. replaced Gabelli Fixed Income Distributors, Inc. as the
Fund's Distributor.
ADVISORY AGREEMENT
THE TREASURER'S FUND, INC.
TAX EXEMPT LIMITED TERM PORTFOLIO
Darien, Connecticut
April 14, 1997
Gabelli Fixed Income L.L.C.
19 Old Kings Highway South
Darien, Connecticut 06820
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and reinvesting
our assets in securities of the type, and in accordance with the limitations,
specified in our Articles of Incorporation, By-Laws and Registration Statement
filed with the Securities and Exchange Commission under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933, including the
Prospectus forming a part thereof (the "Regis-tra-tion Statement"), all as from
time to time in effect, and in such manner and to such extent as may from time
to time be authorized by our Board of Directors. We enclose copies of the
documents listed above and will furnish you such amendments thereto as may be
made from time to time.
2. (a) We hereby employ you to manage the investment and reinvestment
of our assets as above specified, and, without limiting the generality of the
foregoing, to provide the manage-ment and other services specified below.
(b) Subject to the general control of our Board of Directors, you will
make decisions with respect to all purchases and sales of our portfolio
securities. To carry out such deci-sions, you are hereby authorized, as our
agent and attorney-in-fact, for our account and at our risk and in our name, to
place orders for the investment and reinvestment of our assets. In all
purchases, sales and other transactions in our portfolio secu-ri-ties you are
authorized to exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself might or could do with
respect to such pur-chases, sales or other transactions, as well as with respect
to all other things necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors at each meeting thereof
all changes in our portfolio since your prior report, and will also keep us in
touch with important develop-ments affecting our portfolio and, on your own
initiative, will furnish us from time to time with such information as you may
believe appropriate for this purpose, whether concerning the individual entities
whose securities are included in our port-folio, the activities in which such
entities engage, Federal income tax policies applicable to our investments, or
the con-ditions prevailing in the money market or the economy generally. You
will also furnish us with such statistical and analytical information with
respect to our portfolio securities as you may believe appropriate or as we may
reasonably request. In making such purchases and sales of our portfolio
securities, you will comply with the policies set from time to time by our Board
of Directors as well as the limitations imposed by our Articles of
Incorporation, the provisions of the Internal Revenue Code relating to regulated
investment companies and the 1940 Act, and the limitations contained in the
Registration Statement.
(d) It is understood that you will from time to time employ,
subcontract with or otherwise associate with yourself, entirely at your expense
such persons as you believe to be particularly fitted to assist you in the
execution of your duties hereunder. While this agreement is in effect, you or
persons affiliated with you, other than us ("your affiliates"), will provide
persons satisfactory to our Board of Directors to be elected or appointed
officers or employees of our corporation. These shall be a president, a
secretary, a treasurer, and such additional officers and employees as may
reasonably be necessary for the conduct of our business.
(e) You or your affiliates will also provide super-visory personnel
without charge, who may be our officers and who will be responsible for
supervising the performance of admin-is-tra-tive services, accounting and
related services, net asset value and yield calculations, reports to and filings
with regulatory authorities, and services relating to such functions. Such
personnel may be your employees or employees of your affili-ates or of other
organizations. It is understood that we may retain, at our expense, an
administrator to perform the opera-tional components of the functions and
services listed herein.
(f) You or your affiliates will also furnish us, with-out charge, such
additional administrative and management super-vision and such office facilities
as you may believe appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be subject. You or
your affiliates will also pay the expenses of promoting and advertising the sale
of our shares (other than the costs of preparing, printing and filing our
Registration Statement, print-ing copies of the Prospectus contained therein for
existing shareholders of the Fund and complying with other applicable regulatory
requirements), and of printing and distributing the Fund's Prospectus to
prospective investors. To the extent that you or your affiliates directly, or
through Gabelli & Company, Inc. (the "Distributor"), may make payments to
securities dealers and other third parties who engage in the sale of our shares
or who render shareholder support services, and that such payments may be deemed
indirect financing of an activity pri-marily intended to result in the sale of
shares of the Portfolios within the context of Rule 12b-1 under the 1940 Act
(the "Rule"), then such payments by you shall be deemed to be authorized under
the Portfolio's Distribution and Service Plan adopted pursuant to the Rule. You
will, in your sole discretion, determine the amount of such payments and may
from time to time in your sole discretion increase or decrease the amount of
such payments; pro-vided, however, that no such payment will increase the amount
the Portfolio is required to pay you or the Distributor under this Agreement or
any agreement. Any payments made by you for the purpose of distributing shares
of the Portfolio are subject to compliance with the terms of written agreements
in a form sat-is-fac-tory to the Fund's Board of Directors to be entered into by
you and the participating organization. It is understood that you, in your sole
discretion, may reimburse the Distributor for any of such expenses that it may
incur on your behalf.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses including: (a) brokerage and commission expenses; (b) Federal, state or
local taxes, including issue and transfer taxes incurred by or levied on us; (c)
com-mit-ment fees, certain insurance premiums and membership fees and dues in
investment company organizations; (d) interest charges on borrowings; (e)
charges and expenses of our custodian and ad-min-istra-tor; (f) charges and
expenses relating to the issuance, redemption, transfer and dividend disbursing
functions for us; (g) tele-com-muni-cations expenses; (h) recur-ring and
non-recurring legal and accounting expenses; (i) costs of organizing and
maintaining our existence as a corporation; (j) compensation, including
directors' fees, of any of our directors, officers or employees who are not your
officers or officers of your affili-ates, and costs of other personnel providing
administrative and clerical services to us; (k) costs of providing shareholders'
services and costs of shareholders' reports, proxy solicitations, and corporate
meetings; (l) fees and expenses of registering our shares under the appropriate
Federal securities laws and of qualifying our shares under applicable state
securities laws, including expenses attendant upon the initial registration and
qualification of our shares and attendant upon renewals of, or amendment to,
those registrations and qualifications; (m) ex-penses of preparing, printing and
delivering our initial registration statement and of preparing, printing and
delivering our Prospectus to our existing shareholders and of printing
shareholder application forms for shareholder accounts; and (n) pay-ment of the
fees provided for herein, in the Distribution Agreement and in the
Administrative Services Agreement. Our obligation for the foregoing expenses is
limited by your agreement to be responsible, while this Agreement is in effect,
for any amount by which our annual operating expenses (excluding taxes,
brokerage, interest and extraordinary expenses) exceed the limits on investment
company expenses prescribed by any state in which the Fund's shares are
qualified for sale.
4. We will expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you a fee at the
annual rate of forty-five one-hundredths of one percent (0.45%) of our average
daily net assets. Your fee will be accrued by us daily, and will be payable on
the last day of each calendar month for services performed hereunder during that
month or on such other schedule as you shall request of us in writing. You may
waive your right to any fee to which you are entitled hereunder, provided such
waiver is delivered to us in writing. Any reimbursement of our expenses, to
which we may become entitled pursuant to para-graph 3 hereof, will be paid to us
at the end of the month for which those expenses are accrued, at the same time
as we pay you your fee for that month.
6. This Agreement will become effective on April 14, 1997 and shall
continue in effect until March 31, 1999 and there-after for successive
twelve-month periods (computed from each April 1), provided that such
continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
secu-rities, as defined in the 1940 Act, and, in either case, by a majority of
those of our directors who are neither party to this Agreement nor, other than
by their service as directors of the corporation, interested persons, as defined
in the 1940 Act, of any such person who is party to this Agreement. Upon the
effec-tiveness of this Agreement, it shall supersede all previous Agreements
between us 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 our
outstanding voting securities, as defined in the 1940 Act, or by a vote of a
majority of our entire Board of Directors, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the Securities and Exchange Commission.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your under-stand-ing, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
THE TREASURER'S FUND, INC.
By: /s/Ronald S. Eaker
ACCEPTED: April 14, 1997
GABELLI FIXED INCOME L.L.C.
By: Gabelli Fixed Income, Inc.,
Managing Member
By: _______________________________
** On March 1, 2000, this agreement was amended to reflect that Gabelli &
Company, Inc. replaced Gabelli Fixed Income Distributors, Inc. as the
Fund's Distributor.
DISTRIBUTION AGREEMENT
THE TREASURER'S FUND, INC.
One Corporate Center
Rye, New York 10580
March 1, 2000
Gabelli & Company, Inc.
One Corporate Center
Rye, New York 10580
Gentlemen:
1. In consideration of the agreements on your part herein
contained and of the payment by us to you of a fee of $1 per year and on the
terms and conditions set forth herein, we have agreed that you shall be, for the
period of this agreement, a distributor, as our agent, for the unsold portion of
each series of such number of shares of our common stock, $.001 par value per
share, as may be effectively registered from time to time under the Securities
Act of 1933, as amended (the "1933 Act"). This agreement is being entered into
pursuant to the Distribution and Service Plan (the "Plan") adopted by us on
behalf of each of our portfolio series in accordance with Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act").
2. We hereby agree that you will act as our agent, and hereby
appoint you our agent, to offer, and to solicit offers to subscribe to, the
unsold balance of shares of each series of our common stock as shall then be
effectively registered under the 1933 Act. All subscriptions for shares of our
common stock obtained by you shall be directed to us for acceptance and shall
not be binding on us until accepted by us. You shall have no authority to make
binding subscriptions on our behalf. We reserve the right to sell shares of each
series of our common stock through other distributors or directly to investors
through subscriptions received by us at our principal office in Rye, New York.
The right given to you under this agreement shall not apply to any shares of our
common stock issued in connection with (a) the merger or consolidation of any
other investment company with us, (b) our acquisition by purchase or otherwise
of all or substantially all of the assets or stock of any other investment
company, or (c) the reinvestment in shares of our common stock by our
stockholders of dividends or other distributions or any other offering by us of
securities to our stockholders.
3. You will use your best efforts to obtain subscriptions to
shares of each series of our common stock upon the terms and conditions
contained herein and in our Prospectus, as in effect from time to time. You will
send to us promptly all subscriptions placed with you. We shall furnish you from
time to time, for use in connection with the offering of shares of our common
stock, such other information with respect to us and shares of our common stock
as you may reasonably request. We shall supply you with such copies of our
Registration Statement and Prospectus, as in effect from time to time, as you
may request. Except as we may authorize in writing, you are not authorized to
give any information or to make any representation that is not contained in the
Registration Statement or Prospectus, as then in effect. You may use employees,
agents and other persons, at your cost and expense, to assist you in carrying
out your obligations hereunder, but no such employee, agent or other person
shall be deemed to be our agent or have any rights under this Agreement. You may
sell our shares to or through qualified brokers, dealers and financial
institutions under selling and servicing agreements provided that no dealer,
financial institution or other person shall be appointed or authorized to act as
our agent without our written consent. We acknowledge that you and Gabelli Fixed
Income L.L.C. (the "Advisor") may arrange for organizations whose customers or
clients are shareholders of our corporation ("Participating Organizations") to
enter into agreements with the Advisor pursuant to which the Participating
Organizations will be compensated directly by the Advisor, or through you, for
providing assistance in the distribution of our shares and for the performance
of shareholder servicing and related administrative functions not performed by
the Advisor, the Administrator or the Transfer Agent. Such payments will be made
only pursuant to written agreements approved in form and substance by our Board
of Directors to be entered into by the Advisor and the Participating
Organizations. It is recognized that we shall have no obligation or liability to
you, them or any Participating Organization for any such payments under the
agreements with Participating Organizations. Our obligation is solely to make
payments to the Advisor under the Advisory Agreement. It is understood that the
Advisor may, in its sole discretion, reimburse you for any of these expenses, or
for any other expenses for which the Advisor is responsible under the Advisory
Agreement, that you may incur on its behalf. All sales of our shares effected
through you will be made in compliance with all applicable federal securities
laws and regulations and the Constitution, rules and regulations of the National
Association of Securities Dealers, Inc.
("NASD").
4. We reserve the right to suspend the offering of shares of
our common stock at any time, in the absolute discretion of our Board of
Directors, and upon notice of such suspension you shall cease to offer shares of
our common stock hereunder.
5. Both of us will cooperate with each other in taking such
action as may be necessary to qualify shares of our common stock for sale under
the securities laws of such states as we may designate, provided, that you shall
not be required to register as a broker-dealer or file a consent to service of
process in any such state where you are not now so registered. Pursuant to an
Advisory Agreement dated April 14, 1997 between us and the Advisor, we will pay
all fees and expenses of registering shares of all series of our common stock
under the 1933 Act and of qualification of shares of all series of our common
stock, and to the extent necessary, our qualification under applicable state
securities laws. You will pay all expenses relating to your broker-dealer
qualification.
6. We represent to you that our Registration Statement and
Prospectus have been carefully prepared to date in conformity with the
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Securities and Exchange Commission (the "SEC") thereunder. We represent and
warrant to you, as of the date hereof, that our Registration Statement and
Prospectus contain all statements required to be stated therein in accordance
with the 1933 Act and the 1940 Act and the SEC's rules and regulations
thereunder; that all statements of fact contained therein are or will be true
and correct at the time indicated or the effective date as the case may be; and
that neither our Registration Statement nor our Prospectus, when they shall
become effective or be authorized for use, will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of shares
of our common stock. We will from time to time file such amendment or amendments
to our Registration Statement and Prospectus as, in the light of future
development, shall, in the opinion of our counsel, be necessary in order to have
our Registration Statement and Prospectus at all times contain all material
facts required to be stated therein or necessary to make any statements therein
not misleading to a purchaser of shares of our common stock. If we shall not
file such amendment or amendments within fifteen days after the receipt of a
written request from you to do so, you may, at your option, terminate this
agreement immediately. We will not file any amendment to our Registration
Statement or Prospectus without giving you reasonable notice thereof in advance;
provided, however, that nothing in this agreement shall in any way limit our
right to file such amendments to our Registration Statement or Prospectus, of
whatever character, as we may deem advisable, such right being in all respects
absolute and unconditional. We represent and warrant to you that any amendment
to our Registration Statement or Prospectus hereafter filed by us will be
carefully prepared in conformity within the requirements of the 1933 Act and the
1940 Act and the SEC's rules and regulations thereunder and will, when it
becomes effective, contain all statements required to be stated therein in
accordance the 1933 Act and the 1940 Act and the SEC's rules and regulations
thereunder; that all statements of fact contained therein will, when the same
shall become effective, be true and correct; and that no such amendment, when it
becomes effective, will include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of our shares.
7. We agree to indemnify, defend and hold you, and any person
who controls you within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which you or
any such controlling person may incur, under the 1933 Act or the 1940 Act, or
under common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in our Registration Statement or
Prospectus in effect from time to time or arising out of or based upon any
alleged omission to state a material fact required to be stated in either of
them or necessary to make the statements in either of them not misleading;
provided, however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of your duties, or by reason of
your reckless disregard of your obligations and duties under this agreement. Our
agreement to indemnify you and any such controlling person is expressly
conditioned upon our being notified of any action brought against you or any
such controlling person, such notification to be given by letter or by telegram
addressed to us at our principal office in Rye, New York and sent to us by the
person against whom such action is brought within ten days after the summons or
other first legal process shall have been served. The failure so to notify us of
any such action shall not relieve us from any liability which we may have to the
person against whom such action is brought other than on account of our
indemnity agreement contained in this paragraph 7. We will be entitled to assume
the defense of any suit brought to enforce any such claim, and to retain counsel
of good standing chosen by us and approved by you. In the event we do elect to
assume the defense of any such suit and retain counsel of good standing approved
by you, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case we do
not elect to assume the defense of any such suit, or in case you, in good faith,
do not approve of counsel chosen by us, we will reimburse you or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by you or them. Our indemnification
agreement contained in this paragraph 7 and our representations and warranties
in this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of you or any controlling person and shall
survive the sale of any shares of our common stock made pursuant to
subscriptions obtained by you. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your successors and assigns, and
to the benefit of your controlling persons and their successors and assigns. We
agree promptly to notify you of the commencement of any litigation or proceeding
against us in connection with the issue and sale of any shares of our common
stock.
8. You agree to indemnify, defend and hold us, our several
officers and directors, and any person who controls us within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which we, our officers and directors, or any
such controlling person, may incur under the 1933 Act or under common law or
otherwise, but only to the extent that such liability or expense incurred by us,
our officers or directors or such controlling person shall arise out of or be
based upon any alleged untrue statement of a material fact contained in
information furnished in writing by you to us for use in our Registration
Statement or Prospectus as in effect from time to time, or shall arise out of or
be based upon any alleged omission to state a material fact in connection with
such information required to be stated in the Registration Statement or
Prospectus or necessary to make such information not misleading. Your agreement
to indemnify us, our officers and directors, and any such controlling person is
expressly conditioned upon your being notified of any action being brought
against us, our officers or directors or any such controlling person, such
notification to be given by letter or telegram addressed to you at your
principal office in Rye, New York, and sent to you by the person against whom
such action is brought, within ten days after the summons or other first legal
process shall have been served. You shall have a right to control the defense of
such action, with counsel of your own choosing, satisfactory to us, if such
action is based solely upon such alleged misstatement or omission on your part,
and in any other event you and we, our officers or directors or such controlling
person shall each have the right to participate in the defense or preparation of
any such action. The failure so to notify you of any such action shall not
relieve you from any liability which you may have to us, to our officers or
directors, or to such controlling person other than on account of your indemnity
agreement contained in this paragraph 8.
9. We agree to advise you immediately:
(a) of any request by the SEC for amendments to our Registration Statement
or Prospectus or for additional information.
(b) of the issuance by the SEC of any stop order suspending the
effectiveness of our Registration Statement or Prospectus or the initiation
of any proceedings for that purpose.
(c) of the happening of any material event which makes untrue any statement
made in our Registration Statement or Prospectus or which requires the
making of a change in either of them in order to make the statements
therein not misleading, and
(d) of all action of the SEC with respect to any amendments to our
Registration Statement or Prospectus.
10. This Agreement will become effective on the date hereof
and will remain in effect until February 28, 2001 and thereafter for successive
twelve-month periods (computed from each February 28th (or February 29th in a
leap year)), provided that such continuation is specifically approved at least
annually by vote of our Board of Directors and of a majority of those of our
directors who are not interested persons (as defined in the 1940 Act) and have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of our entire
Board of Directors, or by a vote of a majority of our Directors who are not
interested persons (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan, or by vote of a majority of our outstanding voting
securities, as defined in the Act, on sixty days' written notice to you, or by
you on sixty days' written notice to us.
11. This Agreement may not be transferred, assigned, sold or
in any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and in
applicable rules or regulations of the SEC thereunder.
12. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the 1940 Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to another
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
THE TREASURER'S FUND, INC.
By ______________________________
Accepted:
March 1, 2000
GABELLI & COMPANY, INC.
By ____________________________
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and "Service Providers" and "Financial Statements" and to the
incorporation by reference of our report dated December 8, 1999 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, 2000
RULE 18f-3
MULTI-CLASS PLAN
FOR
THE TREASURER'S FUND (the "Company")
U.S. Treasury Money Market Portfolio
Domestic Prime Money Market Portfolio
Tax Exempt Money Market Portfolio
This Multi-Class Plan (this "Multi-Class Plan") is adopted
pursuant to Rule 18f-3 under the Act to provide for the issuance and
distribution of multiple classes of shares by the Funds in accordance with the
terms, procedures and conditions set forth below. A majority of the Directors of
the Company, including a majority of the Directors who are not interested
persons of the Company within the meaning of the Act, have found this
Multi-Class Plan, including the expense allocations, to be in the best interest
of each Fund and each Class of Shares constituting each Fund.
DEFINITIONS. AS USED HEREIN, THE TERMS SET FORTH BELOW SHALL HAVE THE
MEANINGS ASCRIBED TO THEM BELOW.
The Act -- the Investment Company Act of 1940, as amended, and the rules and
regulations promulgated thereunder.
Class -- a class of Shares of a Fund.
Gabelli Cash Management Class Shares -- shall have the meaning
ascribed in Section B.1.
U.S. Treasury Money Market Class Shares, Domestic Prime
Money Market Class Shares and Tax Exempt Money Market
Class Shares -- shall have the meaning ascribed in
Section B.1.
Distributor -- Gabelli Fixed Income Distributors, Inc.
Fund or Funds - U.S. Treasury Money Market Portfolio, Domestic
Prime Money Market Portfolio and Tax Exempt Money Market Portfolio.
IRS -- Internal Revenue Service.
Prospectus -- a prospectus, including the statement of additional
information incorporated by reference therein, covering
the Shares of the referenced Class or Classes of a
Fund.
SEC -- Securities and Exchange Commission.
Share -- a share of common stock of a Fund.
Directors -- the directors of the Company.
CLASSES. THE FUNDS MAY OFFER TWO CLASSES OF SHARES AS FOLLOWS:
Gabelli Cash Management Class Shares. Gabelli Cash Management Class Shares
means Gabelli Cash Management Class Shares of each Fund designated by a vote
adopted by the Directors. Gabelli Cash Management Class Shares shall be offered
to investors acquiring Shares directly from the Distributor or from certain
financial intermediaries with whom the Distributor has entered into an
agreement expressly authorizing the sale by such intermediary of Gabelli
Cash Management Class Shares.
U.S. Treasury Money Market Class Shares, Domestic Prime Money Market Class
Shares and Tax Exempt Money Market Class Shares. U.S. Treasury Money Market
Class Shares, Domestic Prime Money Market Class Shares and Tax Exempt Money
Market Class Shares means U.S. Treasury Money Market Class Shares, Domestic
Prime Money Market Class Shares and Tax Exempt Money Market Class Shares
designated by a vote adopted by the Directors. U.S. Treasury Money Market
Class Shares, Domestic Prime Money Market Class Shares and Tax Exempt Money
Market Class Shares shall be offered to investors acquiring Shares from a
financial intermediary with whom the Distributor has entered into an
agreement expressly authorizing the sale by such intermediary of U.S.
Treasury Money Market Class Shares, Domestic Prime Money Market Class
Shares and Tax Exempt Money Market Class Shares and that provides various
transfer agency services to investors acquiring such shares.
RIGHTS AND PRIVILEGES OF CLASSES. EACH OF THE GABELLI CASH MANAGEMENT CLASS
SHARES, U.S. TREASURY MONEY MARKET CLASS SHARES, DOMESTIC PRIME MONEY
MARKET CLASS SHARES AND TAX EXEMPT MONEY MARKET CLASS SHARES WILL REPRESENT
AN INTEREST IN THE SAME PORTFOLIO OF ASSETS AND WILL HAVE IDENTICAL VOTING,
DIVIDEND, LIQUIDATION AND OTHER RIGHTS, PREFERENCES, POWERS, RESTRICTIONS,
LIMITATIONS, QUALIFICATIONS, DESIGNATIONS AND TERMS AND CONDITIONS EXCEPT
AS DESCRIBED OTHERWISE IN THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION WITH RESPECT TO EACH OF SUCH CLASSES.
ALLOCATION OF LIABILITIES, EXPENSES, INCOME AND GAINS AMONG CLASSES.
Liabilities and Expenses applicable to a particular Class. Expenses applicable
to any of the foregoing such as incremental transfer agency fees, but not
including advisory or custodial fees or other expenses related to the
management of the Fund's assets, upon approval of the Directors, may be
allocated among such Classes in different amounts in accordance with the
terms of each such Class if they are actually incurred in different amounts
by such Classes or if such Classes receive services of a different kind or
to a different degree than other Classes.
Income, losses, capital gains and losses, and liabilities and other expenses
applicable to all Classes. Income, losses, realized and unrealized capital
gains and losses, and any liabilities and expenses not applicable to any
particular Class shall be allocated to each Class on the basis of the net
asset value of that Class in relation to the net asset value of the Fund.
Determination of nature of items. The Directors shall determine in their sole
discretion whether any liability, expense, income, gains or loss other than
those listed herein is properly treated as attributed in whole or in
part to a particular Class or all Classes.
EXCHANGE PRIVILEGE. HOLDERS OF GABELLI CASH MANAGEMENT CLASS SHARES, U.S.
TREASURY MONEY MARKET CLASS SHARES, DOMESTIC PRIME MONEY MARKET CLASS
SHARES AND TAX EXEMPT MONEY MARKET CLASS SHARES SHALL HAVE SUCH EXCHANGE
PRIVILEGES AS SET FORTH IN THE PROSPECTUS FOR SUCH CLASS. EXCHANGE
PRIVILEGES MAY VARY AMONG CLASSES AND AMONG HOLDERS OF A CLASS.
VOTING RIGHTS OF CLASSES.
Shareholders shall have separate voting rights on any matter
submitted to shareholders in which the interests
of one Class differ from the interests of any
other Class.
DIVIDENDS AND DISTRIBUTIONS. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS PAID
BY A FUND WITH RESPECT TO EACH CLASS, TO THE EXTENT ANY SUCH DIVIDENDS AND
DISTRIBUTIONS ARE PAID, WILL BE CALCULATED IN THE SAME MANNER AND AT THE
SAME TIME ON THE SAME DAY AND WILL BE, AFTER TAKING INTO ACCOUNT ANY
DIFFERENTIATION IN EXPENSES ALLOCABLE TO A PARTICULAR CLASS, IN
SUBSTANTIALLY THE SAME PROPORTION ON A RELATIVE NET ASSET VALUE BASIS.
REPORTS TO DIRECTORS. THE DISTRIBUTOR SHALL PROVIDE THE
DIRECTORS SUCH INFORMATION AS THE DIRECTORS MAY FROM
TIME TO TIME DEEM TO BE REASONABLY NECESSARY TO EVALUATE
THIS PLAN.
AMENDMENT. ANY MATERIAL AMENDMENT TO THIS MULTI-CLASS PLAN SHALL BE
APPROVED BY THE AFFIRMATIVE VOTE OF A MAJORITY (AS DEFINED IN THE ACT) OF
THE DIRECTORS OF THE RELEVANT FUND, INCLUDING THE AFFIRMATIVE VOTE OF THE
DIRECTORS OF THE COMPANY WHO ARE NOT INTERESTED PERSONS OF THE COMPANY.
EXCEPT AS SO PROVIDED, NO AMENDMENT TO THIS MULTI-CLASS PLAN SHALL BE
REQUIRED TO BE APPROVED BY THE SHAREHOLDERS OF ANY CLASS OF THE SHARES
CONSTITUTING A FUND. THE DISTRIBUTOR SHALL PROVIDE THE DIRECTORS SUCH
INFORMATION AS MAY BE REASONABLY NECESSARY TO EVALUATE ANY AMENDMENT TO
THIS MULTI-CLASS PLAN.
Dated: February 16, 2000
