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The Gabelli U.S. Treasury Money Market Fund
One Corporate Center
Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)
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PROSPECTUS
February 1, 1996
The Gabelli U.S. Treasury Money Market Fund (the "Fund")
is the first
series of The Gabelli Money Market Funds, a Delaware
business trust (the
"Trust"). The Fund is a no-load, open-end, diversified,
management investment
company, whose investment objective is high current income
consistent with the
preservation of principal and liquidity. The Fund seeks to
achieve its
investment objective by investing in U.S. Treasury
obligations which have
remaining maturities of 397 days or less. Under normal
market conditions, the
Fund will invest at least 65% of its assets in U.S. Treasury
obligations.
Currently, the Fund will invest exclusively in U.S.
Treasury obligations.
Interest on U.S. Treasury obligations is specifically
exempted from state
and local income taxes under Federal law. Currently all
states allow the
character of the Fund's income to pass through to the
dividends distributed to
its shareholders. Interest on U.S. Treasury obligations is
not exempt from
Federal income tax. See "Investment Objective and Policies"
and "Dividends,
Distributions and Taxes." The Fund seeks to maintain a
stable net asset value of
$1.00 per share.
The minimum initial investment is $10,000 ($3,000 for
registered
shareholders of other open-end mutual funds managed by
Gabelli Funds, Inc. or
Teton Advisers LLC). See "Purchase of Shares." However,
the minimum initial
investment for Investment Retirement Accounts ("IRAs") and
other retirement
related accounts is $1,000. See "Retirement Plans."
Different minimums may apply
to investments through organizations that have special
arrangements with the
Fund ("Participating Organizations"). See "Investment
Through Participating
Organizations." For further information, contact Gabelli &
Company, Inc. at the
address and telephone number shown above.
This Prospectus sets forth concisely the information a
prospective investor
should know before investing in the Fund. A Statement of
Additional Information
dated February 1, 1996 containing additional
information about the Fund has
been filed with the Securities and Exchange Commission (the
"SEC") and is
incorporated by reference into this Prospectus. For a free
copy, write or call
the Fund at the telephone number or address set forth above.
------
An investment in the Fund is neither insured nor guaranteed
by the U.S.
Government. There can be no assurance that the Fund will be
able to maintain a
stable net asset value of $1.00 per share.
------
This Prospectus should be retained by investors for future
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the
more detailed
information appearing elsewhere in this Prospectus.
The Fund: The Gabelli U.S. Treasury Money Market Fund is the
initial series of
The Gabelli Money Market Funds, and is a no-load, open-
end, diversified,
management investment company.
Investment Objective: The Fund's investment objective is
high current income
consistent with the preservation of principal and
liquidity. The Fund
seeks to achieve its objective by investing exclusively in
U.S. Treasury
obligations which have remaining maturities of 397 days or
less. The Fund
is designed as a low-cost investment vehicle for the long-
term investor or
saver, with lower fund expenses than the average U.S.
Treasury money
market fund. However, because of certain charges for
redemptions, it may
not be appropriate for short term investors. Investors
seeking income free
from state and local taxes may find this Fund appropriate.
See "Investment
Objective and Policies."
Management and Fees: Gabelli Funds, Inc. (the "Manager")
serves as the Trust's
manager and is entitled to receive as compensation for its
services a fee,
computed daily and payable monthly, equal, on an annual
basis, to .30% of
the Fund's average daily net assets (the "Management
Fee"). The Manager
has engaged Gabelli-O'Connor Fixed Income Mutual Funds
Management Company
(the "Sub-Adviser") to act as sub-adviser to the Trust.
The Sub-Adviser
provides investment advisory services in connection with
the management of
the Trust. The Manager will pay the fee of the Sub-Adviser
and the fee of
First Data Investor Services Group, Inc., the sub-
administrator of the
Trust (the "Sub-Administrator"), from its Management Fee.
Gabelli &
Company, Inc. (the "Distributor") will act as distributor
of the Fund's
shares at no cost to the Fund. The Manager has agreed to
waive voluntarily
all or a portion of its Management Fee and/or to assume
voluntarily
certain expenses of the Trust until further notice to the
extent necessary
to maintain the total expense ratio of the Fund at not
more than .30% of
the Fund's average daily net assets. See "Management of
the Trust - The
Manager."
How to Purchase Shares: Shares of the Fund may be purchased
through the
Distributor, directly from the Trust through State Street
Bank and Trust
Company, custodian, transfer agent and dividend disbursing
agent of the
Trust (the "Custodian," "Transfer Agent" and "Dividend
Disbursing Agent")
or through Participating Organizations, at the public
offering price which
is the net asset value next determined after receipt of an
order in proper
form. There is no sales load associated with the purchase
of shares of the
Fund. The minimum initial investment is $10,000 ($3,000
for registered
shareholders of other open-end mutual funds managed by the
Manager or
Teton Advisers LLC). There is no minimum for
subsequent investments.
Investments through IRAs or other retirement plans or
through
Participating Organizations, however, may have different
requirements. See
"Purchase of Shares," "Retirement Plans" and "Investment
Through
Participating Organizations."
How to Sell Shares: Shares of the Fund may be redeemed
through the
Distributor, directly from the Trust through the Transfer
Agent or through
Participating Organizations by a shareholder at any time
at the net asset
value next determined after the redemption request in
proper form is
received. See "Redemption of Shares" and "Investment
Through Participating
Organizations."
Dividends and Reinvestment: The Fund declares daily and
pays monthly dividends
of net investment income and short-term capital gains and
makes
distributions annually of any long-term capital gains.
A shareholder
begins to earn dividends on the day the purchase of shares
has become
effective if such purchase is made before 12:00 Noon (New
York time) and
continues to earn dividends through the day before the day
the redemption
of such shares occurs if the redemption request is
received prior to 12:00
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2
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Noon. Each dividend and capital gains distribution, if
any, declared by
the Fund on its outstanding shares will, at the election
of each
shareholder, be paid on the payment date in cash or in
additional shares
of the Fund having an aggregate net asset value as of the
payment date of
such dividend or distribution equal to the cash amount of
such
distribution. An election to receive dividends and
distributions equal to
the cash amount of such distribution in cash or shares is
made at the time
shares are subscribed for and may be changed by notifying
the Fund in
writing at any time prior to the record date for a
particular dividend or
distribution. See "Dividends, Distributions and Taxes."
Risk Factors: An investment in the Fund entails certain
risks, including the
risk that there can be no assurance that the Fund will be
able to maintain
a stable net asset value of $1.00 per share. See "Net
Asset Value" herein
and "Certain Risk Considerations" in the Statement of
Additional
Information.
TABLE OF FEES AND EXPENSES FOR THE FUND
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Shareholder Transaction Expenses:
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Maximum Sales Load Imposed on Purchases ..... None
Maximum Sales Load Imposed on Reinvested Dividends ... None
Deferred Sales Load .... None
Redemption Fees (1) .... None
Exchange Fee ..... None
Account Closeout Fee (1) ..... $5.00
Annual Fund Operating Expenses
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(as a percentage of average net assets)
Management Fees (after waiver)(2) ..... .17%
12b-1 Fees .... None
Other Expenses ...... .13%
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Total Operating Expenses (after waiver)(3) .. .30%
=====
Example:
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<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-- -- -- ---
<S> <C> <C> <C> <C>
a) You would pay the following expenses on a $1,000
investment,assuming (1) 5% annual return and
(2) full redemption at the end of each time period: $ 8
$15 $22 $43
b) You would pay the following expenses on the same
investment, assuming no redemptions: $ 3 $10 $17
$38
</TABLE>
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The amounts listed in this example should not be considered
a representation of
future expenses and actual expenses may be greater or lesser
than those
indicated. Example (a) includes the effect of the Fund's
$5.00 account closeout
fee which is charged when you voluntarily redeem all of the
shares in your
account. Moreover, while the example assumes a 5% annual
return, the Fund's
actual performance will vary and may result in an actual
return greater or
lesser than 5%.
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The purpose of the foregoing table is to assist you in
understanding the various
costs and expenses that an investor in the Fund would bear
directly and
indirectly. The expenses set forth under "Other Expenses,"
as well as the
amounts set forth in the example, are based on amounts for
the Fund's most
recent fiscal year restated to reflect current fees and
waivers.
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(1) The Fund will charge your account $5.00 for each
telephone request for bank
wire redemption under $5,000 or telephone request for
redemption by check
you make. The Fund will charge a $5.00 account closeout
fee when you redeem
all shares in your account, except for fund exchanges and
wire transfers.
In addition, the Fund will charge your account $2.00 for
each redemption
check you write and $2.00 to establish a check-writing
privilege. However,
all charges associated with the check-writing privilege
will be waived
through January 31, 1997. See "Redemption of Shares." The
charges will be
paid to the Transfer Agent and will reduce the transfer
agency fees
otherwise payable by the Fund.
(2) Reflects agreement of the Manager to waive indefinitely
Management Fees to
the extent necessary to ensure that Total Fund Operating
Expenses do not
exceed the amount shown in the table above. If no waiver
applies, the
Management Fees would be .30% of average daily net assets.
(3) Reflects agreement of the Manager to bear certain
expenses of the Trust and
limit total Fund expenses. See "Management of the Trust --
The Manager." If
no fee waivers apply, Total Fund Operating Expenses would
be .43% of
average daily net assets.
Additional financial and performance information is
contained in the Fund's
annual report, which can be obtained without charge by
calling 1-800-GABELLI
(1-800-422-3554).
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3
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FINANCIAL HIGHLIGHTS
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The following information has been derived from the
financial statements of the
Fund which have been audited by Ernst & Young LLP,
independent auditors, whose
report dated October 25, 1995, accompanies the financial
statements included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
Per share amounts for a Fund share outstanding
throughout each year ended September 30, 1995 1994 1993*
----- ----- -----
<S> <C> <C> <C>
Operating performance:
Net asset value, beginning of year.... $1.00 $1.00
$1.00
----- ----- -----
Net investment income (a).... 0.0528 0.0323 0.0271
Net gain on investments... 0.0002 0.0002 0.0002
-- -- --
Total from investment operations... 0.0530 0.0325
0.0273
-- -- --
Distributions to shareholders from:
Net investment income... (0.0528) (0.0323) (0.0271)
Net realized gains... (0.0002) (0.0002) (0.0002)
Total distributions..... (0.0530) (0.0325) (0.0273)
---- --- ---
Net asset value, end of year.... $1.00 $1.00 $1.00
----- ----- -----
Total return**...... 5.4% 3.3% 2.8%
Ratios to average net assets/supplemental data
Net assets, end of year (in 000s).. $218,036 $186,020
$187,709
Ratios of investment income to average
net assets..... 5.30% 3.23% 2.73%
Ratios of operating expenses to
average net assets (b).. 0.27% 0.30% 0.30%
</TABLE>
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* The Fund commenced operations on October 1, 1992.
** 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 (exclusive of
any closeout
fees).
(a) Net investment income before expenses reimbursed by the
Manager for the
years ended September 30, 1995 and 1994 and the period
ended September 30,
1993 was $0.0516, $0.0312 and $0.0255, respectively.
(b) Operating expense ratios before expenses reimbursed by
the Manager for the
years ended September 30, 1995 and 1994 and the period
ended September 30,
1993 were 0.39%, 0.43% and 0.46%, respectively.
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INVESTMENT OBJECTIVE AND POLICIES
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The investment objective of the Fund is high current
income consistent with
preservation of principal and liquidity. The Fund seeks to
achieve this
objective by investing in U.S. Treasury obligations which
have remaining
maturities of 397 days or less. The securities in which the
Fund may invest may
not earn as high a level of current income as long term or
lower quality
securities which generally have less liquidity, greater
market risk and more
fluctuation in value.
The investment objective stated above is fundamental and
may be changed
only with the approval of the holders of a majority of the
outstanding voting
securities of the Fund, as defined in the Investment Company
Act of 1940, as
amended (the "1940 Act"). There can be no assurance that the
Fund can achieve
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4
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its investment objective. Currently, the Fund will invest
exclusively in U.S.
Treasury obligations.
The Fund is designed as a low-cost investment vehicle
for the long-term
investor or saver, with lower fund expenses than the average
U.S. Treasury money
market fund. In order to offer such low expenses, the Fund
will impose certain
transaction charges. However, because of certain charges for
redemptions, the
Fund may not be appropriate for short-term investors.
Investors seeking income
free from state and local taxes may find this Fund
appropriate.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in the following types of U.S. Treasury obligations:
U.S. Treasury Securities. The Fund will invest in U.S.
Treasury securities,
including bills, notes and bonds. These instruments are
direct obligations of
the U.S. Government and, as such, are backed by the "full
faith and credit" of
the United States. They differ primarily in their interest
rates and the lengths
of their maturities.
Components of U.S. Treasury Securities. The Fund may also
invest in
component parts of U.S. Treasury notes or bonds, namely,
either the corpus
(principal) of such Treasury obligations or one or more of
the interest payments
scheduled to be paid on such obligations. Component parts of
U.S. Treasury notes
or bonds are created through the U.S. Treasury Department's
STRIPS program and
certain other programs stripping government securities.
These obligations may
take the form of (i) Treasury obligations from which the
interest coupons have
been stripped, (ii) the interest coupons that are stripped,
or (iii)
book-entries at a Federal Reserve member bank representing
ownership of Treasury
obligation components, and may be acquired by the Fund in
the form of custodial
receipts that evidence ownership of future interest
payments, principal payments
or both on certain U.S. Treasury notes or bonds. The
underlying U.S. Treasury
notes and bonds are held in custody by a bank on behalf of
the owners. These
custodial receipts are commonly referred to as Treasury
strips.
Interest on U.S. Treasury obligations is specifically
exempted from state
and local taxes under Federal law. While shareholders of the
Fund do not
directly receive interest on U.S. Treasury obligations,
substantially all of the
dividends from the Fund will be derived primarily from such
interest. All states
allow the character of the Fund's income to pass through to
its shareholders so
that distributions from the Fund derived from interest on
U.S. Treasury
obligations will also be exempt from state and local income
taxes when earned by
an individual shareholder through a distribution from the
Fund.
Interest income on U.S. Treasury obligations is not exempt
from Federal
income tax. In addition, capital gains, if any, realized by
the Fund upon the
sale of U.S. Treasury obligations are not exempt from
Federal taxes or,
generally, from state and local taxes. See "Dividends,
Distributions and Taxes."
The Fund seeks to maintain a $1.00 share price at all
times. To achieve
this, the Fund purchases only securities with remaining
maturities of 397 days
or less and limits the dollar-weighted average maturity of
its portfolio to 90
days or less. The Fund cannot guarantee a $1.00 share price
but its maturity
standards and its investment in U.S. Treasury obligations
help to minimize any
price decreases or increases that might result from rising
or declining interest
rates. See "Net Asset Value."
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5
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OTHER INVESTMENTS AND POLICIES
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The Fund may borrow an amount equal to no more than 30% of
the value of its
total assets (computed at the time the loan is made) for
temporary,
extraordinary or emergency purposes, including the meeting
of redemption
requests which might otherwise require the untimely
disposition of securities,
or for clearance of transactions. See "Investment
Restrictions." Such borrowings
shall be made only from banks. The Fund may pledge up to 30%
of its assets to
secure these borrowings. The Fund will not purchase
portfolio securities if its
borrowings exceed 5% of its assets.
INVESTMENT RESTRICTIONS
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The Trust is subject to certain investment restrictions on
behalf of the Fund
which constitute fundamental policies. The Trust's
fundamental policies with
respect to the Fund cannot be changed without the approval
of the holders of a
majority of the outstanding voting securities of the Fund,
as defined in the
1940 Act.
As a matter of fundamental policy, the Trust may not, on
behalf of the
Fund:
(1) Purchase any security other than obligations of the
U.S. Government,
including repurchase agreements with respect to such
securities.
(2) Borrow money, except from banks for temporary,
extraordinary or
emergency purposes, including the meeting of redemption
requests which
might otherwise require the untimely disposition of
securities, or for
clearance of transactions; borrowing in the aggregate may
not exceed
30% of the value of the Fund's total assets (including
the amount
borrowed), less liabilities (not including the amount
borrowed) at the
time the borrowing is made; investment securities will
not be purchased
while borrowings exceed 5% of the Fund's total assets.
(3) Issue senior securities as defined in the 1940 Act
except insofar as
the Fund may be deemed to have issued a senior security
by reason of:
(a) entering into any repurchase agreement; (b) permitted
borrowings of
money from banks; or (c) purchasing securities on a when-
issued or
delayed delivery basis.
The Trust's investment program and policies with respect
to the Fund are
subject to further restrictions and risks which are
described in the Statement
of Additional Information.
MANAGEMENT OF THE TRUST
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The Trustees of the Trust (who, with its officers, are
described in the
Statement of Additional Information) have overall
responsibility for the
management of the Trust. The Trustees decide upon matters of
general policy and
review the actions of the Manager, the Sub-Adviser and the
Distributor.
The Manager
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Subject to the Trustees' oversight, the Manager,
pursuant to an advisory
agreement with the Trust (the "Management Agreement"),
conducts and supervises
the daily operations of the Trust, manages the investment
operations of the
Trust and administers the Trust's business affairs. In
addition, the Manager
supervises the performance of administrative and
professional services provided
by others including the Sub-Adviser and the Sub-
Administrator. The Manager is
located at One Corporate Center, Rye, New York 10580-
1435.
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6
<PAGE>
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As compensation for its services and the related
expenses borne by the
Manager, the Manager is entitled to receive a Management
Fee, computed daily and
payable monthly, equal, on an annual basis, to .30% of the
Fund's average daily
net assets, payable out of the Fund's net assets.
The Manager has agreed to waive voluntarily all or a
portion of its
Management Fee and/or to assume voluntarily certain expenses
of the Trust until
further notice to the extent necessary to maintain the total
expense ratio of
the Fund at not more than .30% of average daily net assets
(excluding interest,
taxes and extraordinary expenses). This has the effect of
lowering the overall
expense ratio of the Fund and of increasing yield to
investors in the Fund.
There is no assurance that these fees will be waived or that
expenses will be
reimbursed in the future. See "The Manager - Expenses" in
the Statement of
Additional Information. For the fiscal year ended September
30, 1995, the
Manager received fees after waivers at the effective rate of
.15% of the Fund's
average daily net assets.
The Manager is a registered investment adviser under
the Investment
Advisers Act of 1940, as amended (the "Advisers Act"). The
Manager was formed in
1980 and as of December 29, 1995 acts as investment adviser
to the following
funds with aggregate assets of approximately $4.0
billion:
Net Assets
12/29/95
Open-end funds: (in millions)
-----
The Gabelli Asset Fund $1,090
The Gabelli Growth Fund 526
The Gabelli Value Fund Inc. 486
The Gabelli Small Cap Growth Fund 229
The Gabelli Equity Income Fund 56
The Gabelli ABC Fund 21
The Gabelli Global Telecommuni-
cations Fund 123
The Gabelli U.S. Treasury Money
Market Fund 236
The Gabelli Global Interactive
Couch Potato(R) Fund 31
The Gabelli Global Convertible
Securities Fund 16
The Gabelli Gold Fund, Inc. 15
The Gabelli Capital Asset Fund 26
The Gabelli International
Growth Fund, Inc. 2
Closed-end funds:
The Gabelli Equity Trust Inc. 1,034
The Gabelli Global Multimedia Trust Inc. 90
The Gabelli Convertible
Securities Fund, Inc. 89
The Distributor is an indirect majority-owned
subsidiary of the Manager.
GAMCO Investors, Inc. ("GAMCO"), a majority owned subsidiary
of the Manager,
acts as investment adviser for individuals, pension trusts,
profit sharing
trusts and endowments. As of December 29, 1995, GAMCO had
aggregate assets in
excess of $5 billion under its management. Teton Advisers
LLC, an affiliate of
the Manager, acts as Investment Adviser to the Westwood
Funds with aggregate
assets in excess of $38 million. Mr. Mario J. Gabelli may be
deemed a
"controlling person" of the Manager and the Distributor on
the basis of his
ownership of stock of the Manager.
The Statement of Additional Information contains further
information about
the Management Agreement including a more complete
description of the advisory
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7
<PAGE>
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and expense arrangements, exculpatory and brokerage
provisions, as well as
information on the brokerage practices of the Trust.
Sub-Adviser
- -------
Gabelli-O'Connor Fixed Income Mutual Funds Management
Company has been
engaged by the Manager as the Sub-Adviser for the Trust.
Pursuant to a
sub-advisory agreement with the Manager (the "Sub-Advisory
Agreement"), the
Sub-Adviser provides investment advisory services in
connection with the
management of the Trust. The Manager continues to have
responsibility for all
investment advisory services pursuant to the Management
Agreement and supervises
the Sub-Adviser's performance of such services.
The Sub-Adviser, with offices at 19 Old Kings Highway
South, Darien,
Connecticut, 06820, is a Delaware partnership organized in
1987. As of the date
of this Prospectus, the Sub-Adviser is an investment manager
or adviser for the
assets of the Trust, and The Treasurer's Fund, Inc. The Sub-
Adviser is a
registered investment adviser under the Advisers Act. Thomas
E. O'Connor is
President and sole shareholder of Thomas E. O'Connor & Co.,
Inc., the general
partner of Thomas E. O'Connor & Co. L.P., which is a general
partner of the
Sub-Adviser. Thomas E. O'Connor & Co. L.P. and the Manager,
the other
general partner of the Sub-Adviser, have authority and
control over the
management of the Sub-Adviser's business and affairs. Mr.
Mario J. Gabelli is
the Chairman of the Board of the Manager. As a result of
these relationships,
Messrs. Thomas E. O'Connor and
Mario J. Gabelli may each be deemed to be a "controlling
person" of the
Sub-Adviser. As of December 29, 1995, the Sub-Adviser served
as investment
adviser for assets aggregating in excess of $641 million.
The Sub-Adviser is an
affiliate of Gabelli-O'Connor Fixed Income Management Co., a
registered
investment adviser that is an investment manager or adviser
to corporations,
institutions, pension trusts, profit sharing trusts and high
net worth
individuals and which, as of December 29, 1995, served as an
investment adviser
for assets aggregating in excess of $1.1 billion.
The Sub-Adviser is also an affiliate of the Manager.
The Manager pays the Sub-Adviser a fee, computed daily and
payable monthly,
equal, on an annual basis, to .08% of the Fund's average
daily net assets.
The Sub-Administrator
- ---------
The Manager has entered into a Sub-Administration Agreement
with the
Sub-Administrator covering the Fund and certain other Funds
advised by the
Manager. Under the Sub-Administration Agreement, the Sub-
Administrator provides
certain administrative services necessary for the Trust's
operations, including
the preparation and distribution of materials for meetings
of the Board of
Trustees relating to the Trust, compliance testing of Trust
activities and
assistance in the preparation of proxy statements and other
documentation. For
such services and the related expenses borne by the Sub-
Administrator, the
Manager pays an annual fee of .10% of the average daily net
assets of the Trust
and certain other affiliated funds not exceeding $1 billion,
.08% of net assets
exceeding $1 billion but not exceeding $1.5 billion, .03% of
net assets
exceeding $1.5 billion but not exceeding $3 billion, and
.02% of net assets
exceeding $3 billion. No additional amount will be paid by
the Trust for
services by the Sub-Administrator. The Sub-Administrator,
which is a subsidiary
of First Data Corp., has its principal office at One
Exchange Place, Boston,
Massachusetts 02109.
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8
<PAGE>
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The Distributor
- -------
Gabelli & Company, Inc., located at One Corporate Center,
Rye, New York
10580-1434, serves as Distributor of the Fund's shares at no
cost to the Fund.
Expenses
- ----
In addition to the fees of the Manager, the Trust is
responsible for the
payment of all its other expenses incurred in the operation
of the Trust, which
include, among other things, charges of the Custodian,
Transfer Agent and
Dividend Disbursing Agent, expenses for legal and
independent auditor's
services, costs of printing proxies, stock certificates, if
any, and shareholder
reports, SEC fees, fees and expenses of unaffiliated
Trustees, accounting and
printing costs, the Trust's membership fees in trade
organizations, fidelity
bond coverage for the Trust's officers and employees,
interest, brokerage costs,
taxes, expenses of qualifying shares of the Trust for sale
in various states,
expenses of personnel performing shareholder servicing
functions, litigation and
other extraordinary or non-recurring expenses and other
expenses properly
payable by the Trust.
CALCULATION OF INVESTMENT PERFORMANCE
- -------------
The Fund calculates its "current yield" based on the net
change, exclusive
of realized and unrealized gains or losses, in the value of
a hypothetical
account over a seven calendar day base period. The Fund also
calculates its
"effective annual yield" assuming weekly compounding and its
tax-equivalent
yield. Tax-equivalent yield shows the taxable yield an
investor would have to
earn from a fully taxable investment in order to equal an
after-tax yield
equivalent to the Fund's tax-free yield and is calculated by
dividing the Fund's
current or effective yield by the result of one minus a
certain state tax rate.
The yield will fluctuate from time to time and is not
intended to indicate
future performance.
The Fund may include total return figures in its
advertisements. The "total
return" of the Fund refers to the investment results
achieved by the Fund over a
specified period of time. In calculating total return, the
net asset value per
share at the beginning of the period is subtracted from the
net asset value per
share at the end of the period (after adjusting for the
reinvestment of any
income dividends and capital gain distributions), and the
result is divided by
the net asset value per share at the beginning of the period
to ascertain the
total return percentage.
Yield and total return are computed in accordance with
standardized
formulas described in the Statement of Additional
Information under the heading
"Performance Information." In addition, comparative
performance information may
be used from time to time in advertising or marketing the
Fund's shares,
including data from Lipper Analytical Services, Inc.,
Donoghue's Money Fund
Report, other industry publications, business periodicals,
rating services and
market indices.
NET ASSET VALUE
- -------
The net asset value per share of the Fund is determined at
12:00 Noon and
4:00 P.M. (New York time) on each day that the New York
Stock Exchange is open
(a "business day") by dividing the value of the Fund'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
number of shares outstanding at the time the determination
is made.
The Fund uses the amortized cost method of valuing
portfolio securities to
maintain a constant net asset value per share of $1.00 per
share. See "Net Asset
Value" in the Statement of Additional Information. This
method of valuation
involves valuing portfolio securities at their cost at the
time of purchase and
thereafter assuming a constant amortization to maturity of
any discount or
premium, regardless of the impact of interest rate and
credit fluctuations on
- ----------------------------
9
<PAGE>
- ----------------------------
the market value of the securities. There can be no
assurance that the $1.00 net
asset value per share will be maintained.
PURCHASE OF SHARES
- ------
Shares of the Fund may be purchased through the
Distributor, directly from
the Trust through the Transfer Agent or through
Participating Organizations. The
following purchase procedures apply to investors who wish to
invest in the Fund
directly and not through Participation Organizations which
are described under
"Investment Through Participating Organizations" below.
Shares of the Fund are currently offered without the
imposition of a sales
charge. The minimum initial investment is $10,000 ($3,000
for registered
shareholders of other mutual funds managed by the Manager
or Teton Advisers
LLC). There is no minimum for subsequent investments.
Investments through an IRA
or other retirement plan or through a Participating
Organization, however, may
have different requirements (see "Retirement Plans" and
"Investment Through
Participating Organizations").
Purchases transmitted by check or money order and
accompanied by a purchase
order in proper form become effective and shares are priced
at the net asset
value next determined after payment for the investor's order
is converted into
Federal funds; payment will generally be considered to have
been converted to
Federal funds before 12:00 Noon (New York time) on the next
business day after
receipt by the Transfer Agent. If payment is transmitted by
Federal funds or by
bank-wire as described below, the purchase will become
effective upon receipt of
the wire by the Transfer Agent. Once effective, purchase
payments will be
invested in full and fractional shares at the per share
public offering price
(i.e., the net asset value per share) of the Fund next
determined after
effectiveness. To reduce costs, the Trust has determined
that the Transfer Agent
will not issue stock certificates evidencing Fund shares.
Prospectuses, sales material and applications may be
obtained from the
Distributor. The Trust and the Distributor reserve the right
in their sole
discretion (1) to suspend the offering of the Fund's shares
and (2) to reject
purchase orders when, in the judgment of the Fund's
management, such rejection
is in the best interest of the Fund.
Mail
- ----
To make an initial purchase by mail, send a completed
subscription order
form with a check for the amount of the investment payable
to "The Gabelli U.S.
Treasury Money Market Fund" to:
The Gabelli Funds
P.O. Box 8308
Boston, MA 02266-8308
Subsequent purchases do not require a completed
application and can be made
(1) by mailing a check to the same address noted above or
(2) by bank wire as
indicated below. The exact name and number of the
shareholder's account should
be clearly indicated.
U.S. dollar denominated checks drawn against a non-U.S.
bank may be subject
to collection delays and will be accepted only upon actual
receipt of funds by
the Transfer Agent. Bank collection fees may apply. If
shares are purchased by
check and redeemed before the check has cleared, the
transmittal of redemption
proceeds will be delayed until funds are collected. The Fund
may reject purchases
made by a check payable to a person other than the Fund.
Bank Wire
- -----
To make initial purchases of Fund shares using the wire
system for
transmittal of money among banks, an investor should first
telephone the Fund at
- ----------------------------
10
<PAGE>
- ----------------------------
1-800-422-3554 to obtain a new account number. The investor
should then instruct
a Federal Reserve System member bank to wire funds to:
State Street Bank and Trust Company
ABA #011-0000-28 REF DDA #99046187
Attn.: Shareholder Services
Re: The Gabelli U.S. Treasury Money Market Fund
A/C #9904-6187
Account of __________ (Registered Owner)
225 Franklin Street, Boston, MA 02110
For initial purchases, the investor should also promptly
complete and mail
the subscription order form to the address shown above for
mail purchases. There
may be a charge by your bank for transmitting the money by
bank wire but State
Street Bank and Trust Company does not charge investors in
the Fund for the
receipt of wire transfers. If you are planning to wire
funds, it is suggested
that you instruct your bank early in the day so the wire
transfer can be
accomplished the same day. The Fund must receive immediately
available Federal
funds by 12:00 Noon (New York time) in order to begin
earning dividends on that
day. If Federal funds are received after 12:00 Noon,
dividends will begin
accruing on the next business day.
Personal Delivery
- ---------
Deliver a check made payable to "The Gabelli U.S. Treasury
Money Market
Fund" along with a completed subscription order form to:
The Gabelli Funds
The BFDS Building, 7th Floor
Two Heritage Drive
Quincy, Massachusetts 02171
Other Investors
- -------
No minimum initial investment is required for (1) officers
or Trustees of
the Trust; and (2) officers, directors or full-time
employees of the Manager,
the Sub-Adviser, the Sub-Administrator, the
Distributor or their affiliates,
including members of the "immediate family" of such
individuals and retirement
plans and trusts for their benefit. The term "immediate
family" refers to
spouses, children and grandchildren (adopted or natural),
parents, grandparents,
siblings, a spouse's siblings, a sibling's spouse and a
sibling's children.
RETIREMENT PLANS
- --------
The Trust has available a form of IRA for investment in
Fund shares which
may be obtained from the Distributor. The minimum investment
required to open an
IRA for investment in shares of the Fund is $1,000 for an
individual. There is
no minimum for additional investments in IRAs.
Investors should be aware that they may be subject to
penalties or
additional tax on contributions or withdrawals from IRAs or
other retirement
plans which are not permitted by the applicable provisions
of the Internal
Revenue Code of 1986, as amended (the "Code"). Persons
desiring information
concerning investments through IRAs or other retirement
plans should write or
telephone the Distributor.
REDEMPTION OF SHARES
- --------
Shares of the Fund may be redeemed through the
Distributor, directly from
the Trust through the Transfer Agent or through
Participating Organizations. The
following redemption procedures apply to investors who wish
to redeem shares
from the Trust directly and not through Participating
Organizations which are
described under "Investment Through Participating
Organizations" below.
Shares of the Fund may be redeemed at any time through the
Distributor or
directly from the Fund through the Transfer Agent at net
asset value next
determined after the redemption request in proper form is
received. Redemption
requests received prior to 12:00 Noon (New York time) are
effected at 12:00 Noon
and redemption proceeds are available that day; redemption
requests received
after 12:00 Noon are effected at 4:00 P.M. and redemption
proceeds are available
the next business day.
- ----------------------------
11
<PAGE>
- ----------------------------
Checks for redemption proceeds, if desired, will normally
be mailed to the
shareholder's address of record within seven (7) days, but
will not be mailed
until all checks in payment for the purchase of the shares
to be redeemed have
been honored, which may take up to fifteen (15) days. The
proceeds of a
redemption may be more or less than the amount invested and,
therefore, a
redemption may result in gain or loss for income tax
purposes. You will be
charged $5.00 when you voluntarily redeem all shares in your
account. The
account closeout fee does not apply to wire redemptions, to
which a $5.00 fee
applies, nor does it apply to exchanges out of the Fund.
By Letter
- -----
Redemption requests may be made by letter to the Transfer
Agent, specifying
the name of the Fund, the dollar amount or number of shares
to be redeemed, and
the account number. The letter must be signed in exactly the
same way the
account is registered (if there is more than one owner of
the shares, all must
sign). Signatures on a redemption request must be guaranteed
by an "eligible
guarantor institution" as such term is defined in Rule 17Ad-
15 under the
Securities Exchange Act of 1934, which includes certain
banks, brokers, dealers,
credit unions, securities exchanges and associations,
clearing agencies and
savings associations (signature guarantees by notaries
public are not
acceptable).
Telephone Redemption
- --------
By Check. The Trust accepts telephone requests for
redemption of Fund
shares, subject to a $25,000 limitation. By calling either
1-800 GABELLI
(1-800-422-3554) or 1-800-872-5365 (or 617-328-5000 from
outside the United
States), you may request that a check be mailed to the
address of record on the
account, provided that the address has not changed within
thirty (30) days prior
to your request. The check will be made payable to the name
in which the account
is registered and normally mailed within seven (7) days.
Each time a shareholder
uses this telephone redemption service, $5.00 will be
charged against such
shareholder's account.
By Bank Wire. The Trust accepts telephone requests for
wire redemption of
Fund shares in excess of $1,000 (but subject to a $25,000
limitation) to a bank
predesignated either on the subscription order form or in a
subsequent written
authorization with the signature guaranteed. The Trust
accepts signature
guaranteed written requests for redemption by bank wire
without limitation. A
wire fee (currently $5.00) will be deducted from the
proceeds if you redeem less
than $5,000. Your bank must be either a member of the
Federal Reserve System or
have a correspondent bank which is a member. Any change to
the banking
information made at a later date must be submitted in
writing with an
appropriate signature guarantee.
Telephone requests for wire redemption must be received
between 9:00 A.M.
and 12:00 Noon (New York time) in order for your bank to
receive the wire the
same day. If your telephone call is received after 12:00
Noon or on a day when
the New York Stock Exchange is not open, your bank will
receive the wire on the
following business day. Shares are redeemed at the net asset
value next
determined following your request. Fund shares purchased by
check will not be
available for redemption for up to fifteen (15) days
following the purchase.
Telephone redemption is not available for IRAs.
The Trust and its transfer agent will not be liable for
following telephone
instructions reasonably believed to be genuine. In this
regard the Trust and its
transfer agent require personal identification information
before accepting a
telephone redemption.
Redemption by Check
- -------
Shareholders of the Fund may redeem shares by writing
checks drawn on their
accounts in the amounts of $500 or more. Investors
requesting this service on
- ----------------------------
12
<PAGE>
- ----------------------------
the order form will receive a supply of checks. There is a
$2.00 charge to
establish the check-writing privilege. In addition, each
time a shareholder uses
the check-writing service, a check fee, currently $2.00,
will be charged against
such shareholder's account by redeeming shares in the
account and paid to the
Transfer Agent. These fees do not apply to shareholders
who are participants in
payroll deduction or direct deposit plans. However, all
charges associated with
the check-writing privilege will be waived through January
31, 1997.
The Fund will refuse to honor a check if payment for the
shares to be
redeemed has not cleared (see above information for shares
paid for by check).
In addition, if (1) the check exceeds the value of shares
held in the
shareholder's account, (2) the check is issued for less than
$500, or (3) the
check contains an irregularity in signature or otherwise,
the Transfer Agent
will refuse to honor the check and will charge the
shareholder's account $15 by
redeeming shares in the account.
Checks cannot be used to close a shareholder's Fund
account because, when
the check is written, the shareholder has no way of knowing
what the exact
balance will be on the date the check clears. The Trust, on
behalf of the Fund,
and the Transfer Agent reserve the right to modify or
terminate the
check-writing service at any time or to impose additional
service charges.
Systematic Withdrawal Plan
- ----------
The Trust offers a systematic withdrawal program for Fund
shareholders
whereby they can authorize an automatic redemption on a
monthly, quarterly or
annual basis. Details can be obtained from the Distributor.
Further Redemption Information
- ----------
Further documentation, such as copies of corporate
resolutions and
instruments of authority, are normally requested from
corporations,
administrators, executors, personal representatives,
trustees or custodians to
evidence the authority of the person or entity making a
redemption request.
The Trust may suspend the right of redemption or postpone
the date of
payment for more than seven days during any period when (1)
trading on the New
York Stock Exchange is restricted or the New York Stock
Exchange is closed,
other than customary weekend and holiday closings; (2) the
SEC has by order
permitted such suspension; or (3) an emergency, as defined
by rules of the SEC,
exists making disposal of portfolio investments or
determination of the value of
the net assets of the Fund not reasonably practicable.
To minimize expenses of maintaining smaller sized
accounts, the Trust
reserves the right to redeem, upon not less than thirty (30)
days notice, all
shares of the Fund in an account (other than an IRA) if the
value of such
account falls below $1,000 by reason of redemption.
However, a shareholder will
be allowed to make additional investments prior to the date
fixed for redemption
to avoid liquidation of the account.
Shareholders voluntarily liquidating an account in full
are currently
charged a $5.00 account closeout fee which will be deducted
from the proceeds.
INVESTMENT THROUGH PARTICIPATING ORGANIZATIONS
- ------------------
Persons who maintain an account with a Participating
Organization may, if
they wish, invest in the Fund through such Participating
Organization. When
instructed by its customer to purchase or redeem Fund
shares, the Participating
Organization, on behalf of the customer, transmits to the
Trust's Transfer Agent
a purchase or redemption order, and in the case of a
purchase order, payment for
the shares being purchased. Participating Organizations may
have minimum initial
and subsequent investment requirements which differ from
those applicable to
shareholders who invest in the Fund directly.
- ----------------------------
13
<PAGE>
- ----------------------------
Participating Organizations may confirm to their customers
who are
shareholders in the Fund each purchase and redemption of
Fund shares for the
customers' accounts. Also, Participating Organizations may
send their customers
periodic account statements showing the total number of Fund
shares owned by
each customer as of the statement closing date, purchases
and redemptions of
Fund shares by each customer during the period covered by
the statement and the
income earned by Fund shares of each customer during the
statement period
(including dividends paid in cash or reinvested in
additional Fund shares). Fund
purchase orders made through Participating Organizations
will be effected at the
net asset value next determined after receipt of Federal
funds by the Transfer
Agent. Participating Organizations have established
procedures whereby a
shareholder repurchase or redemption request will be
effected at the net asset
value next determined after receipt of such request.
Investors should contact
their respective Participating Organization for details.
EXCHANGE OF SHARES
- ------
A shareholder may exchange shares from the Fund into (i)
an account in any
other fund advised or distributed by the Manager or
Distributor, subject to the
minimum initial investment requirements and the maintenance
of the suggested
minimum balances of those funds and provided the account is
registered in the
redeeming shareholder's name, and (ii) any other portfolio
of the Trust that may
be created in the future, subject to the minimum initial
investment requirement
of the respective portfolio and the maintenance of the
suggested minimum balance
of $1,000. The Fund offers an automatic monthly exchange
privilege in this
regard. Details may be obtained from the Distributor.
Exchanges are made on the basis of relative net asset
value of the shares
involved at the time of the exchange. A shareholder
exchanging shares of the
Fund for shares of a load fund must pay the applicable sales
charge with credit
given for any sales charge previously paid to the
Distributor. Shares acquired
through an exchange must be qualified for sale in the state
in which the
shareholder resides.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------
The Fund expects to declare daily and pay monthly
dividends of net
investment income and short-term capital gains and make
distributions annually
of any net long-term capital gains. The net income of the
Fund is determined on
each business day and is declared payable pro rata to
shareholders of record as
of 12:00 Noon (New York time). Purchases effective prior to
12:00 Noon are paid
the full dividend for that day; purchases effective after
12:00 Noon do not
begin to receive daily dividends until the next business
day. Redemption
requests effected at 12:00 Noon on any business day do not
earn that day's
dividend but the redemption proceeds are available that day;
redemption requests
effected at 4:00 P.M. earn that day's dividend but the
redemption proceeds are
not available until the next business day.
Dividends and distributions will be paid in additional
shares of the Fund
based on the net asset value of the Fund's shares on the
payment date, unless
the shareholder elects in writing not less than five
business days prior to the
payment date to receive such dividends and distributions in
cash. Such election
should be submitted to the Transfer Agent.
The Fund and each series of the Trust created in the
future will be treated
as a separate entity for Federal income tax purposes.
Therefore, the performance
and tax qualification of one series of the Trust will have
no effect on the
Federal income tax liability of shareholders of the other
series. The Fund has
qualified and intends to continue to qualify as a
regulated investment company
- ----------------------------
14
<PAGE>
- ----------------------------
under the Code. Accordingly, the Fund will not be subject to
Federal income
taxes on its net investment income and capital gains, if
any, that it
distributes to its shareholders, provided at least 90% of
its net investment
income and net short-term capital gains earned in the
taxable year is so
distributed.
The Fund will be subject to a 4% nondeductible excise tax
imposed under the
Code to the extent the Fund does not meet certain minimum
distribution
requirements by the end of each calendar year. For this
purpose, dividends
declared in October, November and December payable to
shareholders of record on
a specified date in October, November and December and paid
in the following
January will be treated as having been paid by the Trust and
received by
shareholders in such prior year. Under this rule,
shareholders may be taxed in
one year on dividends or distributions actually received in
January of the
following year.
Distributions of net investment income and short-term
capital gains, if
any, will be taxable as ordinary income to shareholders
whether or not
reinvested, subject to certain exceptions set forth
below. The Fund
does not
expect to realize long-term capital gains or losses;
however, to the extent that
net long-term capital gains or losses are realized,
distributions of net capital
gain will be taxable to shareholders as long-term capital
gains regardless of
the length of time such shareholders have held their Fund
shares. To the extent
not distributed by the Fund, taxable net investment income
and capital gains and
losses are taxable to the Fund.
The Fund will invest in U.S. Treasury obligations whose
interest is
specifically exempted from state and local income taxes
under Federal law.
Currently, all states allow the character of the Fund's
income to pass through
to the shareholders. Investors should recognize that the
state and local income
tax rules that apply to the Fund and its shareholders may be
subject to change
in the future and that such changes could have an adverse
impact on the Fund and
its shareholders. Shareholders are urged to contact
their tax advisers regarding
the Federal, state and local tax treatment of distributions
received from the
Trust. The Fund will inform shareholders as to the
percentage of income that is
derived from direct U.S. Treasury obligations.
Under U.S. Treasury Regulations, the Trust is required to
withhold and
remit to the U.S. Treasury 31% of dividend, capital gain
income and redemption
proceeds on the accounts of those shareholders who fail to
furnish their tax
identification numbers on Internal Revenue Service ("IRS")
Form W-9 (or IRS Form
W-8 in the case of certain foreign shareholders) with the
required
certifications regarding the shareholder's status under the
Federal income tax
law.
GENERAL INFORMATION
- -------
Description of Shares, Voting Rights and Liabilities
- --------------------
The Trust was organized on May 21, 1992 as an
unincorporated business trust
under the laws of Delaware.
The Fund is the initial series of shares of beneficial
interest (par value
$.001) of the Trust. The Trustees are authorized to
designate one or more
additional series of shares of beneficial interest of the
Trust, each series
representing a separate investment portfolio. 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, liquidation (see
"Redemption of Shares")
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
- ----------------------------
15
<PAGE>
- ----------------------------
offering, will be fully paid and nonassessable. Shares will
be redeemed at net
asset value, at the option of the shareholder.
The Fund sends semi-annual and annual reports to all of
its shareholders
which include a list of portfolio securities and the Fund's
financial statements
which shall be audited annually. Unless it is clear that a
shareholder holds as
nominee for the account of an unrelated person or a
shareholder otherwise
specifically requests in writing, the Fund may send a single
copy of
semi-annual, annual and other reports to shareholders of
all
accounts at the
same address and all accounts of any person at that address.
It is the intention of the Trust not to hold annual
meetings of
shareholders. The Trustees may call a special meeting of
shareholders for action
by shareholder vote as may be required by the 1940 Act, the
Declaration of Trust
of the Trust or the By-Laws of the Trust. In addition, the
Trust will call a
special meeting of shareholders for the purpose of voting
upon the question of
removal of a Trustee or Trustees, if requested to do so by
the holders of at
least 10% of the Trust's outstanding shares, and the Trust
will assist in
communications with other shareholders as required by
Section 16(c) of the 1940
Act.
The shares of the Trust have noncumulative voting rights
which means that
the holders of more than 50% of the shares can elect 100% of
the Trustees 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 as Trustees.
Shareholder Approval
- --------
Any matter requiring approval by the Fund's shareholders
requires the
affirmative vote of at least a majority of the outstanding
voting securities of
the Fund (as defined by the 1940 Act) at a meeting called
for the purpose of
considering such approval. A majority of the Fund's
outstanding securities is
the lesser of (1) 67% of the shares represented at a meeting
at which more than
50% of the outstanding shares of the Fund are present in
person or by proxy or
(2) more than 50% of the Fund's outstanding shares.
Custodian, Transfer Agent and Dividend Disbursing Agent
- -------------------
State Street Bank and Trust Company, located at 225
Franklin Street,
Boston, MA 02110, is the Custodian for the Trust's cash and
securities as well
as the Transfer and Dividend Disbursing Agent for its
shares. Boston Financial
Data Services, Inc. ("BFDS"), an affiliate of State Street
Bank and Trust
Company, performs the shareholder services on behalf of
State Street and is
located at The BFDS Building, Two Heritage Drive, Quincy, MA
02171. State Street
Bank and Trust Company does not assist in and is not
responsible for investment
decisions involving assets of the Trust.
Information for Shareholders
- ------------
All shareholder inquiries regarding administrative
procedures including the
purchase and redemption of shares should be directed to the
Distributor, Gabelli
& Company, Inc., One Corporate Center, Rye, New York 10580-
1434, or to the
respective Participating Organization, as the case may be.
For assistance, call
1-800-GABELLI (1-800-422-3554).
This Prospectus omits certain information contained in the
Registration
Statement filed with the SEC. Copies of the Registration
Statement, including
items omitted herein, may be obtained from the SEC by paying
the charges
prescribed under its rules and regulations. The Statement of
Additional
Information included in such Registration Statement may be
obtained without
charge from the Fund or its Distributor.
Upon request, Gabelli & Company will provide, without
charge, a paper copy
of this Prospectus to investors or their representatives who
received this
Prospectus in an electronic format.
- ----------------------------
16
<PAGE>
- ----------------------------
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY ..... 2
TABLE OF FEES AND EXPENSES OF THE FUND ... 3
FINANCIAL HIGHLIGHTS ...... 4
INVESTMENT OBJECTIVE AND POLICIES ..... 4
OTHER INVESTMENTS AND POLICIES ..... 5
INVESTMENT RESTRICTIONS ...... 6
MANAGEMENT OF THE TRUST ......... 6
CALCULATION OF INVESTMENT PERFORMANCE ....... 8
NET ASSET VALUE ........... 9
PURCHASE OF SHARES ........... 9
RETIREMENT PLANS .......... 10
REDEMPTION OF SHARES ......... 10
INVESTMENT THROUGH PARTICIPATING ORGANIZATIONS .... 12
EXCHANGE OF SHARES ........... 13
DIVIDENDS, DISTRIBUTIONS AND TAXES ....... 13
GENERAL INFORMATION .......... 14
- ----------------------------
No dealer, salesman or other person has been authorized to
give any information
or to make any representation other than those contained in
this Prospectus, and
if given or made, such information or representation may not
be relied upon as
being authorized by the Fund, the Manager, the Sub-
Adviser, the
Sub-Administrator, the Distributor or any affiliate
thereof. This Prospectus
does not constitute an offer to sell or a solicitation of
any offer to buy in
any state to any person to whom it is unlawful to make such
offer in such state.
- ----------------------------
The
Gabelli
U.S. Treasury
Money Market
Fund
PROSPECTUS
February 1, 1996
GABELLI FUNDS, INC.
Manager
GABELLI & COMPANY, INC.
Distributor
- ----------------------------
- --------------------------------------------------------------------------------
The Gabelli U.S. Treasury Money
Market Fund
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1996
This Statement of Additional Information relates to
The Gabelli U.S. Treasury Money Market Fund (the
"Fund") which is the first series of The Gabelli Money
Market Funds, a Delaware business trust (the "Trust").
This Statement of Additional Information is not a
prospectus and is only authorized for distribution
when preceded or accompanied by the Fund's prospectus
dated February 1, 1996, as supplemented from time to
time (the "Prospectus"). This Statement of Additional
Information contains additional and more detailed
information than that set forth in the Prospectus and
should be read in conjunction with the Prospectus,
additional copies of which may be obtained without
charge by writing or telephoning the Fund at the
address and telephone number set forth above.
TABLE OF CONTENTS
Page
Investment Objective and Policies 2
Investment Techniques 2
U.S. Treasury Obligations 2
Repurchase Agreements 3
When-Issued and Delayed Delivery Securities 3
Illiquid Securities 3
Certain Risk Considerations 5
Investment Restrictions 6
Trustees and Officers 8
The Manager 12
Expenses 14
The Sub-Adviser 15
The Sub-Administrator 16
The Distributor 16
The Custodian, Transfer Agent and Dividend Disbursing
Agent 17
Purchase of Shares 17
Retirement Plans 17
Redemption of Shares 18
Net Asset Value 18
Portfolio Turnover 19
Portfolio Transactions and Brokerage 20
Performance Information 20
Description of Trust 21
General Information 22
Counsel and Independent Auditors 22
Financial Statements 23
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is high current
income consistent with preservation of capital and
liquidity. The Fund seeks to achieve this objective by
investing in U.S. Treasury obligations which have
remaining maturities of 397 days or less. There can be
no assurance that the Fund can achieve its investment
objective. Currently the Fund will invest exclusively
in U.S. Treasury obligations. Although the Fund
reserves the right to use repurchase agreements, the
Fund will not engage in such activity until further
notice. The investment objective stated above is
fundamental and may be changed only by the affirmative
vote of at least a majority of the Fund's outstanding
voting securities as defined in the Investment Company
Act of 1940, as amended (the "1940 Act"). A majority
of the Fund's outstanding securities is the lesser of
(i) 67% of the shares represented at a meeting of
shareholders at which the holders of 50% or more of
the Fund's outstanding shares are represented in
person or by proxy or (ii) more than 50% of the Fund's
outstanding shares.
For a further description of the investment
objective and policies of the Fund, see "Investment
Objective and Policies" and "Other Investments and
Policies" in the Fund's Prospectus.
INVESTMENT TECHNIQUES
In order to achieve its investment objective, the
Fund invests in the following types of instruments and
uses certain strategies described below.
U.S. Treasury Obligations
As set forth in the Prospectus, under normal
conditions the Fund will invest at least 65% of its
assets in the following types of U.S. Treasury
obligations:
U.S. Treasury Securities. The Fund will invest in
U.S. Treasury securities, including bills, notes and
bonds. These instruments are direct obligations of the
U.S. Government and, as such, are backed by the "full
faith and credit" of the United States. They differ
primarily in their interest rates and the lengths of
their maturities.
Components of U.S. Treasury Securities. The Fund
may also invest in component parts of U.S. Treasury
notes or bonds, namely, either the corpus (principal)
of such Treasury obligations or one or more of the
interest payments scheduled to be paid on such
obligations. Component parts of U.S. Treasury notes or
bonds are created through the U.S. Treasury
Department's STRIPS program and certain other programs
stripping government securities. These obligations may
take the form of (i) Treasury obligations from which
the interest coupons have been stripped, (ii) the
interest coupons that are stripped, or (iii) book-
entries at a Federal Reserve member bank representing
ownership of Treasury obligation components, and may
be acquired by the Fund in the form of custodial
receipts that evidence ownership of future interest
payments, principal payments or both on certain U.S.
Treasury notes or bonds. The underlying U.S. Treasury
notes and bonds are held in custody by a bank on
behalf of the owners. These custodial receipts are
commonly referred to as Treasury strips.
Repurchase Agreements
The Board has authorized the Fund to engage in
repurchase agreements, however, the Manager does not
currently intend to employ such investments. A
repurchase agreement is an instrument under which the
purchaser (i.e., the Fund) acquires a debt security
and the seller agrees, at the time of sale, to
repurchase the obligation at a mutually agreed upon
time and price, thereby determining the yield during
the purchaser's holding period. This results in a
fixed rate of return insulated from market
fluctuations during such period. The underlying
securities are ordinarily U.S. Treasury or other
government obligations or high quality money market
instruments. The Fund's repurchase obligations will at
all times be fully collateralized by U.S. Treasury
obligations in an amount at least equal to the
purchase price including accrued interest earned on
the underlying securities.
If the Fund were to enter into repurchase
transactions it would only do so with parties meeting
creditworthiness standards approved by the Trustees of
the Trust. The Trust's investment adviser would
monitor the creditworthiness of such parties, under
the general supervision of the Trustees. For a
description of the risks associated with repurchase
agreements, see "Certain Risk Considerations".
When-Issued and Delayed Delivery Securities
The Board has authorized the Fund from time to
time, in the ordinary course of business, to purchase
securities on a when-issued or delayed delivery basis
(i.e., delivery and payment can take place a month or
more after the date of the transaction), however, the
Manager does not currently intend to employ such
investments. The securities so purchased would be
subject to market fluctuation and no interest would
accrue to the purchaser during this period. While the
Fund would only purchase securities on a when-issued
or delayed delivery basis with the intention of
acquiring the securities, the Fund may sell the
securities before the settlement date, if it is deemed
advisable. At the time the Fund makes the commitment
to purchase securities on a when-issued or delayed
delivery basis, the Fund will record the transaction
and thereafter reflect the value, each day, of such
security in determining the net asset value of the
Fund. At the time of delivery of the securities, the
value may be more or less than the purchase price. The
Fund would also establish a segregated account with
the Trust's Custodian in which it would continuously
maintain cash and U.S. Government securities equal in
value to commitments for such when-issued or delayed
delivery securities; subject to this requirement, the
Fund may purchase securities on such basis without
limit. For a description of the risks associated with
the purchase of securities on a when-issued or delayed
delivery basis, see "Certain Risk Considerations".
Illiquid Securities
The Board has authorized the Fund to invest up to
10% of its net assets in repurchase agreements which
have a maturity of longer than seven days or in other
illiquid securities, including securities that are
illiquid by virtue of the absence of a readily
available market or subject to legal or contractual
restrictions on resale, however, the Manager does not
currently intend to employ such investments.
Historically, illiquid securities have included
securities subject to contractual or legal
restrictions on resale because they have not been
registered under the Securities Act of 1933, as
amended (the "Securities Act"), securities which are
otherwise not readily marketable and repurchase
agreements having a maturity of longer than seven
days. Securities which have not been registered under
the Securities Act are referred to as private
placements or restricted securities and are purchased
directly from the issuer or in the secondary market.
Mutual funds do not typically hold a significant
amount of these restricted or other illiquid
securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability
of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might
thereby experience difficulty satisfying redemptions
within seven days. A mutual fund might also have to
register such restricted securities in order to
dispose of them resulting in additional expense and
delay. Adverse market conditions could impede such a
public offering of securities.
In recent years, however, a large institutional
market has developed for certain securities that are
not registered under the Securities Act including
repurchase agreements, commercial paper, foreign
securities, municipal securities and corporate bonds
and notes. Institutional investors depend on an
efficient institutional market in which the
unregistered security can be readily resold or on an
issuer's ability to honor a demand for repayment. The
fact that there are contractual or legal restrictions
on resale to the general public or to certain
institutions may not be indicative of the liquidity of
such investments.
Rule 144A of the Securities Act allows for a
broader institutional trading market for securities
otherwise subject to restriction on resale to the
general public. Rule 144A establishes a "safe harbor"
from the registration requirements of the Securities
Act for resales of certain securities to qualified
institutional buyers. The investment adviser
anticipates that the market for certain restricted
securities such as institutional commercial paper will
expand further as a result of this new regulation and
the development of automated systems for the trading,
clearance and settlement of unregistered securities of
domestic and foreign issuers, such as the PORTAL
System sponsored by the NASD.
Restricted securities eligible for resale pursuant
to Rule 144A under the Securities Act are not deemed
to be illiquid. The Fund would treat such securities
as illiquid until such time that the investment
adviser determines that they are readily marketable.
In reaching liquidity decisions, the investment
adviser would consider, inter alia, the following
factors: (1) the frequency of trades and quotes for
the security; (2) the number of dealers wishing to
purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make
a market in the security; and (4) the nature of the
security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the
method of soliciting offers and the mechanics of the
transfer). Repurchase agreements subject to demand are
deemed to have a maturity equal to the notice period.
CERTAIN RISK CONSIDERATIONS
An investment in the Fund involves certain risks,
including risks associated with entering into
repurchase agreements and the purchase of securities
on a when-issued or delayed delivery basis.
Repurchase Agreements
The Board has authorized the Fund to enter into
repurchase agreements, which are agreements to
purchase securities (the "underlying securities") from
a bank which is a member of the Federal Reserve
System, or from a well-established securities dealer,
and the bank or dealer agrees to repurchase the
underlying securities from the Fund, at the original
purchase price, plus specified interest, at a
specified future date, however, the Manager does not
currently intend to employ such investments. The Fund
will enter into repurchase agreements only where the
underlying securities (1) are of the type (excluding
maturity limitations) which the Fund's investment
policies and restrictions would allow it to purchase
directly and (2) are "marked to market" on a daily
basis, so that the market value of the underlying
securities, including interest accrued, is equal to or
in excess of the value of the repurchase agreement.
The period of maturity is usually quite short,
possibly overnight or a few days, although it may
extend over a number of months. The resale price is in
excess of the purchase price, reflecting an agreed-
upon rate of return effective for the period of time
the Fund's money is invested in the security. The U.S.
Treasury obligations held as collateral are valued
daily, and as the value of these instruments declines,
the Fund will require additional collateral.
With respect to engaging in repurchase agreements,
the Fund's risk would be primarily that, if the seller
defaults, the proceeds from the disposition of the
underlying securities and other collateral for the
seller's obligations are less than the repurchase
price. If the seller becomes insolvent, the Fund might
be delayed in or prevented from selling the
collateral. In the event of a default or bankruptcy by
a seller, the Fund will promptly seek to liquidate the
collateral. To the extent that the proceeds from any
sale of such collateral upon a default in the
obligation to repurchase are less than the repurchase
price, the Fund will experience a loss.
In addition, 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. In addition,
some states require that, in order for the tax exempt
character of the Fund's interest from U.S. Treasury
obligations to pass through to its shareholders, the
Fund must maintain specified minimum levels of the
Fund's total assets in U.S. Treasury obligations. If
the level of non-U.S. Treasury obligations (including
repurchase agreements) exceeds a state's limit for
this pass-through, then none of the Fund's interest
income would be exempt from state or local income tax
in the state for the applicable year. While the Fund
does not specifically limit the amount of repurchase
agreements which it can enter into, the Fund will
endeavor to maintain the levels necessary to preserve
the pass-through of the Fund's tax exempt interest
income from U.S. Treasury obligations.
In the event of a bankruptcy or default of certain
sellers of repurchase agreements, the Fund could
experience costs and delays in liquidating the
underlying securities, which are held as collateral,
and the Fund might incur a loss if the value of the
collateral held declines during this period.
When-Issued and Delayed Delivery Securities
The Board has authorized the Fund to purchase or
sell securities on a when-issued or delayed delivery
basis, however, the Manager does not currently intend
to employ such investments. When-issued or delayed
delivery transactions arise when securities are
purchased or sold by the Fund with payments and
delivery taking place in the future in order to secure
what is considered to be an advantageous price and
yield to the Fund at the time of entering into the
transaction. The Trust's Custodian would maintain, in
a segregated account of the Fund, cash or U.S.
Treasury obligations having a value equal to or
greater than the Fund's purchase commitments. The
Trust's Custodian will likewise segregate securities
sold on a delayed delivery basis.
If the Fund engages in when-issued transactions,
the Fund would rely on the seller to consummate the
sale. The seller's failure to do so may result in the
Fund losing an opportunity to obtain a favorable price
and yield. When-issued or delayed delivery securities
may decline or increase in value during the period
from the Fund's investment commitment to the
settlement of the purchase. In addition, an increase
in the percentage of the Fund's assets committed to
the purchase of securities on a when-issued or delayed
delivery basis may increase the volatility of the
Fund's net asset value. The investment adviser does
not believe that the Fund's net asset value or income
would be adversely affected by the Fund's purchase of
securities on such basis.
Illiquid Securities
The Board has authorized the Fund to invest up to
10% of its net assets in illiquid securities including
repurchase agreements collateralized by U.S. Treasury
obligations which have a maturity of longer than seven
days, securities with legal or contractual
restrictions on resale (restricted securities) and
securities that are not readily marketable, however,
the Manager does not currently intend to employ such
investments. Restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act that
have a readily available market are not considered
illiquid for purposes of this limitation. Investment
in certain restricted and other illiquid securities
may involve risks including the potential for delays
on resale and uncertainty in valuation. The investment
adviser would monitor the liquidity of such securities
under the supervision of the Trustees of the Trust.
Repurchase agreements subject to demand would be
deemed to have a maturity equal to the applicable
notice period.
INVESTMENT RESTRICTIONS
Unless specified to the contrary, the following
restrictions are fundamental and may not be changed as
to the Fund without the approval of the majority of
the outstanding voting securities of the Fund (as
defined in the 1940 Act).
As a matter of fundamental policy, the Trust may
not, on behalf of the Fund:
(1) purchase any security other than obligations of
the U.S. Government, including repurchase agreements
with respect to such securities.
(2) borrow money, except from banks for temporary,
extraordinary or emergency purposes, including the
meeting of redemption requests which might otherwise
require the untimely disposition of securities, or for
clearance of transactions; borrowing in the aggregate
may not exceed 30% of the value of the Fund's total
assets (including the amount borrowed), less
liabilities (not including the amount borrowed) at the
time the borrowing is made; investment securities will
not be purchased while borrowings exceed 5% of the
Fund's total assets.
(3) issue senior securities as defined in the 1940
Act except insofar as the Fund may be deemed to have
issued a senior security by reason of: (a) entering
into any repurchase agreement; (b) permitted
borrowings of money from banks; or (c) purchasing
securities on when-issued or delayed delivery basis.
(4) make loans of the Fund's portfolio securities,
except through repurchase agreements.
(5) purchase securities on margin (except that the
Fund may obtain such short-term credits as may be
necessary for clearance of transactions).
(6) act as underwriter of securities except to the
extent that, in connection with the disposition of
portfolio securities, it may be deemed to be an
underwriter under certain Federal securities laws.
(7) make short sales or maintain a short position.
(8) buy or sell real estate or interest in real
estate, including real estate limited partnerships.
(9) acquire securities of other investment
companies, except in connection with a merger,
consolidation, acquisition or reorganization
(10) make investments for the purpose of exercising
control or management.
(11) invest in interest in or leases related to
oil, gas or other mineral exploration or development
programs.
(12) buy or sell commodity or commodity contracts
(including futures contracts and options thereon).
In addition, as a matter of operating policy, the
Trust will not on behalf of the Fund:
(a) invest more than 25% of the Fund's total assets
in any industry other than the U.S. Government; and
(b) invest more than 5% of the Fund's total assets
in securities of issuers engaged in continuous
operation for less than three years.
If a percentage restriction is adhered to at the
time of investment, a later increase or decrease in
percentage resulting from a change in values of
portfolio securities or amount of total or net assets
will not be considered a violation of any of the
foregoing restrictions.
TRUSTEES AND OFFICERS
The Trustees and Officers of the Trust and their
principal occupations during the last five years are
set forth below. Unless otherwise specified, the
address of each such person is One Corporate Center,
Rye, New York, 10580-1434.
Name, Age, Position(s)
with Trust and Address Principal Occupations
During Past Five Years
*Mario J. Gabelli, 53
President and Trustee
Mr. Gabelli is Chairman of the Board, Chief Executive
Officer and Chief Investment Officer of Gabelli Funds,
Inc.; Chief Investment Officer of GAMCO Investors,
Inc.; President and Chairman of The Gabelli Equity
Trust Inc. and The Gabelli Multimedia Trust Inc.;
President, Chief Investment Officer and Director of
Gabelli Global Series Funds, Inc., Gabelli Investor
Funds, Inc., The Gabelli Value Fund Inc., Gabelli
Equity Series Funds, Inc., and The Gabelli Convertible
Securities Funds Inc.; Chairman of the Board,
President and Chief Investment Officer and Director of
Gabelli Capital Series Funds, Inc.; Trustee of The
Gabelli Asset Fund and The Gabelli Growth Fund;
Chairman of the Board of Gabelli Gold Fund, Inc.,
Gabelli International Growth Fund, Inc., and Chairman
and Chief Executive Officer of Lynch Corporation;
Director of Morgan Group, Inc. and Spinnaker
Industries, Inc.
Anthony J. Colavita, 60
Trustee
President and Attorney at Law in the law firm of
Anthony J. Colavita, P.C. since 1961. Director of
Gabelli Global Series Funds, Inc., Gabelli Investor
Funds, Inc., The Gabelli Value Fund Inc., The Gabelli
Series Funds, Inc., Gabelli Gold Fund, Inc., Gabelli
Capital Series Funds, Inc. and Gabelli Equity Series
Funds, Inc.; Trustee of The Westwood Funds, The
Gabelli Asset Fund and The Gabelli Growth Fund since
1989.
Vincent D. Enright, 54
Trustee
Senior Vice President and Chief Financial Officer
of Brooklyn Union Gas Company; Director of Gabelli
Equity Series Funds, Inc. and Gabelli Investors Funds,
Inc.
Name, Age, Position(s)
with Trust and Address Principal Occupations
During Past Five Years
*Thomas E. O'Connor, 51
Trustee
19 Old Kings Highway South
Darien, CT 06820
President of Thomas E. O'Connor & Co., Inc., the
general partner of Thomas E. O'Connor & Co. L.P.,
which is a general partner of Gabelli-O'Connor Fixed
Income Mutual Fund Management Co., Chairman of the
Board and Investment Officer of The Treasurer's Fund,
Inc.
John J. Parker, 64
Trustee
Attorney at the law firm of McCarthy, Fingar,
Donovan, Drazen & Smith, since August, 1989.
*Karl Otto Pohl, 65
Trustee Partner of Sal Oppenheim Jr. & Cie. (private
investment bank) since 1991; Former President of the
Deutsche Bundesbank and Chairman of its Central Bank
Council (1980-1991); currently board member of IBM
World Trade Europe/Middle East/Africa Corp.;
Bertelsmann AG; Zurich Versicherungs-Gesellschaft
(insurance); the International Advisory Board of
General Electric Company; the International Council
for JP Morgan & Co.; the Board of Supervisory
Directors of ROBECo/o Group; and the Supervisory Board
of Royal Dutch (petroleum company); Advisory Director
of Unilever N.V. and Unilever Deutschland; German
Governor, International Monetary Fund (1980-1991);
Board Member, Bank for International Settlements
(1980-1991); Director or Trustee of all funds advised
by Gabelli Funds, Inc.
Anthonie C. van Ekris, 61
Trustee
Managing Director of Balmac International;
Director, Stahel Hardmeyer A.G. (through present);
Trustee, The Gabelli Asset Fund and The Gabelli Growth
Fund; Director, The Gabelli Convertible Securities
Fund, Inc., Gabelli Equity Series Funds, Inc., The
Gabelli Global Series Fund Inc., Gabelli Capital
Series Funds, Inc., Gabelli Gold Fund, Inc. and
Gabelli International Growth Fund.
Name, Age, Position(s)
with Trust and Address Principal Occupations
During Past Five Years
Bruce N. Alpert, 44
Vice President & Treasurer
Vice President, Treasurer and Chief Financial Officer
and Administrative Officer of the investment advisory
division of the Adviser; President and Treasurer of
The Gabelli Asset Fund and The Gabelli Growth Fund;
Vice President and Treasurer of Gabelli Equity Series
Funds, Inc., Gabelli International Growth Fund, Inc.,
The Gabelli Equity Trust Inc., The Gabelli Global
Multimedia Trust Inc., The Gabelli Value Fund Inc.,
Gabelli Investor Funds, Inc., Gabelli Global Series
Funds, Inc., The Gabelli Convertible Securities Fund,
Inc., Gabelli Capital Series Funds, Inc. and Vice
President of the Westwood Funds and Manager of Teton
Advisers LLC.
Ronald S. Eaker, 35
Vice President
19 Old Kings Highway South
Darien, CT 06820
A Senior Portfolio Manager of the Sub-Adviser since
1987. President and Chief Investment Officer of The
Treasurer's Fund, Inc.
Henley L. Smith, 39
Vice President
19 Old Kings Highway South
Darien, CT 06820
A Senior Portfolio Manager of the Sub-Adviser since
1987. Vice President and Investment Officer of The
Treasurer's Fund, Inc.
James E. McKee, 32
Secretary
Vice President and General Counsel of GAMCO
Investors, Inc. since 1993 and of Gabelli Funds, Inc.
since August 1995; Secretary of all Funds advised by
Gabelli Funds, Inc. and Teton Advisers LLC since
August 1995. Branch Chief with the U.S. Securities and
Exchange Commission in New York 1992 through 1993.
Staff attorney with the U.S. Securities and Exchange
Commission in New York from 1989 through 1992.
* "Interested person" of the Fund, as defined in the
1940 Act. Mr. Gabelli is an affiliated person of the
Manager. Mr. O'Connor is an affiliated person of the
Sub-Adviser. Mr. Pohl received fees from the Manager
but has no obligation to provide any services to the
Manager. Although this relationship does not appear to
require designation of Mr. Pohl as an interested
person, the Trust has made such a designation in order
to avoid the possibility that Mr. Pohl's independence
would be questioned.
No Director, officer or employee of the Manager, Sub-
Adviser or any affiliate of the Manager or Sub-Adviser
will receive compensation from the Trust for serving
as an officer or Trustee of the Fund. The Trust pays
each of its Trustees who is not a director, officer or
employee of the Manager or Sub-Adviser or any of their
affiliates $3,000 per annum plus $500 per meeting
attended plus reimbursement of relevant travel and
out-of-pocket expenses.
TRUSTEE COMPENSATION TABLE
The following table sets forth certain information
regarding the compensation of the Trust's Trustees. No
executive officer or person affiliated with the Trust
received compensation from the Trust for the fiscal
year ended September 30, 1995 in excess of $60,000.
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Annual Total Compensation
Person Compensation Retirement Ben-efits upon from Registrant and
from Registrant Benefit Retirement Fund Complex
for Fiscal Year Accrued as Paid to Trustees
Part of Fund for Calendar
Expenses Year*
Anthony J. Colavit $5,000 0 0 $65,753(11)
Vincent D. Enright $5,000 0 0 $17,000(4)
John J. Parker $5,000 0 0 $5,000(1)
Karl Otto Pohl $4,000 0 0 $80,253(15)
Anthonie C. van Ekris $5,000 0 0 $45,253(10)
No compensation was received by either Mr. Mario J.
Gabelli or Mr. Thomas E. O'Connor from the Registrant.
* The total compensation paid to such persons during
the calendar year ending December 31, 1995. The
parenthetical number represents the number of
investment companies (including the Fund) from which
such person receives compensation that are considered
part of the same Fund complex as the Fund, because,
among other things, they have a common investment
adviser.
On January 2, 1996, the outstanding voting
securities of the Fund consisted of 235,349,839 shares
of beneficial interest. As a group, the Officers and
Trustees of the Fund (other than Mr. Gabelli) owned
beneficially, directly or indirectly, less than 1% of
its outstanding voting shares.
Set forth below is certain information as to
persons who owned 5% or more of the Fund's outstanding
shares as of January 2, 1996:
Name and Address % of Class Nature of
Ownership
GAMCO Investors Inc. 38.66% Beneficially*
One Corporate Center
Rye, New York 10580-1442
Gabelli Funds, Inc. 6.09% Record**
One Corporate Center
Rye, New York 10580-1442
Mario J. Gabelli 72.4%
Beneficially***
One Corporate Center
Rye, New York 10580-1434
* Includes 70,921,195 Shares (30.13% of the number of shares
outstanding) held by discretionary client accounts of GAMCO
Investors, Inc.
** Includes 11,004,546.71 Shares (4.68% of the number of shares
outstanding) which are subject to security interest in favor of
State Street Bank and Trust Co.
*** Includes 156,044,895 Shares (66.3% of the number of shares
outstanding) indirectly beneficially owned by Mr. Gabelli as a
result of his position as a controlling person of certain
shareholders, including those listed in the table above.
THE MANAGER
The Manager is a New York corporation with
principal offices located at One Corporate Center,
Rye, New York 10580-1434. The Manager also serves as
adviser to The Gabelli Growth Fund, The Gabelli Asset
Fund, The Gabelli Equity Income Fund, The Gabelli
Small Cap Growth Fund, The Gabelli Value Fund Inc.,
The Gabelli ABC Fund, The Gabelli Global
Telecommunications Fund, The Gabelli Global
Convertible Securities Fund, The Gabelli Global
Interactive Couch Potato Fund, Gabelli Gold Fund,
Inc., Gabelli Capital Asset Fund and Gabelli
International Growth Fund, Inc., open-end investment
companies, The Gabelli Equity Trust Inc., The Gabelli
Global Multimedia Trust Inc. and The Gabelli
Convertible Securities Fund, closed-end investment
companies. The Manager is a registered investment
adviser under the Investment Advisers Act of 1940, as
amended (the "Advisers Act").
Pursuant to a management agreement with the Trust
(the "Management Agreement"), the Manager, subject to
the supervision of the Trustees and in conformity with
the stated policies of the Trust, manages both the
investment operations of the Trust and the composition
of the Trust's portfolio, including the purchase,
retention, disposition of securities and other
investments. The Manager is obligated to keep certain
books and records of the Trust in connection
therewith. The Manager is also obligated to provide
research and statistical analysis and to pay costs of
certain clerical and administrative services involved
in portfolio management. The management services of
the Manager to the Trust are not exclusive under the
terms of the Management Agreement and the Manager is
free to, and does, render management services to
others.
The Manager has authorized any of its directors,
officers and employees who have been elected as
Trustees or Officers of the Trust to serve in the
capacities in which they have been elected. Services
furnished by the Manager under the Management
Agreement may be furnished by any such directors,
officers or employees of the Manager. In connection
with the services it renders, the Manager bears the
following expenses:
(a) the salaries and expenses of all personnel
of the Trust and the Manager, except the fees and
expenses of Trustees who are not affiliated persons of
the Manager or the Trust's investment adviser;
(b) all expenses incurred by the Manager or by
the Trust in connection with managing the ordinary
course of the Trust's business, other than those
assumed by the Trust, as described below;
(c) the costs and expenses payable to Gabelli-
O'Connor Fixed Income Mutual Funds Management Company
(the "Sub-Adviser") pursuant to a sub-advisory
agreement between the Manager, the Sub-Adviser and the
Trust (the "Sub-Advisory Agreement"); and
(d) the costs and expenses payable to First Data
Investor Services Group, Inc. (the "Sub-
Administrator") pursuant to a sub-administration
agreement between the Manager and the Sub-
Administrator (the "Sub-Administration Agreement").
Under the terms of the Management Agreement, the
Trust is responsible for the payment of the following
expenses, including (a) the fee payable to the
Manager, (b) the fees and expenses of Trustees who are
not affiliated with the Manager or the Sub-Adviser,
(c) the fees and certain expenses of the Trust's
Custodian and Transfer and Divided Disbursing Agent,
including the cost of providing records to the Manager
in connection with its obligation of maintaining
required records of the Trust and of pricing the
Trust's shares, (d) the fees and expenses of the
Trust's legal counsel and independent auditors, (e)
brokerage commissions and any issue or transfer taxes
chargeable to the Trust in connection with its
securities transactions, (f) all taxes and business
fees payable by the Trust to governmental agencies,
(g) the fees of any trade association of which the
Trust is a member, (h) the cost of share certificates
representing shares of the Trust, if any, (i) the cost
of fidelity insurance, and Trustees' and Officers' and
errors and omissions insurance, if any, (j) the fees
and expenses involved in registering and maintaining
registration of the Trust and of its shares with the
Securities and Exchange Commission (the "SEC") and
registering the Trust as a broker or dealer and
qualifying its shares under state securities laws,
including the preparation and printing of the Trust's
registration statement and prospectuses for such
purposes, (k) allocable communications expenses with
respect to investor services and all expenses of
shareholders and Trustees' meetings and of preparing,
printing and mailing reports to shareholders, (l)
litigation and indemnification expenses and any other
extraordinary expenses not incurred in the ordinary
course of the Trust's business, (m) any expenses
assumed by the Trust pursuant to a plan of
distribution adopted in conformity with Rule 12b-1
under the 1940 Act, if any, and (n) the fees and
expenses of each series of the Trust in connection
with the management, investment and reinvestment of
the assets of each such series.
The Management Agreement provides that the Manager
shall not be liable to the Trust for any error of
judgment by the Manager or for any loss sustained by
the Trust except in the case of a breach of fiduciary
duty with respect to the receipt of compensation for
services (in which case any award of damages will be
limited as provided in the 1940 Act) or of willful
misfeasance, bad faith, gross negligence or reckless
disregard of duty. The Management Agreement in no way
restricts the Manager from acting as adviser to
others. The Trust has agreed by the terms of the
Management Agreement that the Trust may use the name
"Gabelli" only for so long as the Management Agreement
or any amendment, renewal or extension thereof remains
in effect or for so long as the Manager is responsible
for the portfolio management and administrative
services for the Trust. The Trust has further agreed
that in the event that for any reason, the Manager
ceases to be responsible for the portfolio management
and administrative services of the Trust, the Trust
will, unless the Manager otherwise consents in
writing, promptly take all steps necessary to change
its name to one which does not include "Gabelli".
The Management Agreement is terminable without
penalty by either party upon not more than sixty (60)
days' written notice. The Management Agreement will
automatically terminate in the event of its
assignment, as defined in the 1940 Act and rules
thereunder, except to the extent otherwise provided by
order of the SEC or any rule under the 1940 Act and
except to the extent the 1940 Act no longer provides
for automatic termination, in which case the approval
of a majority of the disinterested Trustees is
required for any "assignment".
By its terms, the Management Agreement which was
approved on December 16, 1994 will remain in effect
until December 16, 1996 and from year to year
thereafter, provided each such annual continuance is
specifically approved by the Fund's Board of Trustees
or "majority" (as defined in the 1940 Act) vote of its
shareholders and, in either case, by a majority vote
of the Trustees who are not parties to the Management
Agreement or interested persons of any such party,
cast in person at a meeting called specifically for
the purpose of voting on the Management Agreement.
As compensation for its services and the related
expenses borne by the Manager, the Trust pays the
Manager a fee (the "Management Fee"), computed daily
and payable monthly, equal, on an annual basis, to
.30% of the Fund's average daily net assets, payable
out of the Fund's net assets.
Expenses
To the extent necessary, the Manager has undertaken
to waive voluntarily fees provided for in the
Management Agreement and/or voluntarily to assume
certain expenses of the Trust so that total expenses
of the Fund do not exceed .30% of the Fund's average
daily net assets. The Management Agreement also
provides that the Manager is obligated to reimburse to
the Trust any amount necessary (up to the amount of
the Management Fee) to prevent the Trust's aggregate
expenses with respect to the Fund (including
management fees payable to the Manager, but excluding
interest, taxes, brokerage commissions and
extraordinary expenses) from exceeding the most
restrictive expense limitation imposed by the
securities law of any state in which the shares of the
Fund are registered or qualified for sale. Such
limitation is currently believed to be 2.5% of the
first $30 million of average net assets, 2.0% of the
next $70 million of average net assets and 1.5% of
average net assets in excess of $100 million. Fund
expenses are accrued daily and paid monthly and the
fee otherwise payable by the Trust to the Manager is
reduced to the extent that Fund expenses exceed the
amount of such limitation.
During the fiscal years ended September 30, 1995,
September 30, 1994 and September 30, 1993, the
investment advisory fees paid to the Manager were
$627,450, $491,888 and $482,814, respectively. During
such years the Manager waived advisory fees in the
amounts of $278,588, $245,944 and $264,238,
respectively.
THE SUB-ADVISER
The Sub-Adviser is a Delaware partnership organized
in 1987 and has its principal offices at 19 Old Kings
Highway South, Darien, Connecticut 06820.
Pursuant to the Sub-Advisory Agreement, the Sub-
Adviser provides investment advisory services in
connection with the management of the Trust. In
connection therewith, the Sub-Adviser is obligated to
keep certain books and records of the Trust. The
Manager continues to have overall responsibility for
all investment advisory services pursuant to the
Management Agreement and supervises the Sub-Adviser's
performance of those services. The Manager pays the
Sub-Adviser a fee, computed daily and payable monthly,
equal, on an annual basis, to .08% of the Fund's
average daily net assets.
The Sub-Advisory Agreement provides that it will
terminate in the event of its assignment or upon the
termination of the Management Agreement. The Sub-
Advisory Agreement may be terminated by the Trust, the
Manager or the Sub-Adviser upon not less than thirty
(30) days' nor more than sixty (60) days' written
notice to the other parties. The Sub-Advisory
Agreement was approved on December 16, 1994 by the
Trustees, including a majority of those Trustees who
are not interested persons as defined in the 1940 Act,
and by the Manager, the Trust's initial shareholder.
The Sub-Advisory Agreement will continue in effect for
two years from the date of its adoption. Thereafter,
it will remain in effect from year to year so long as
such continuance is specifically approved annually in
accordance with the requirements of the 1940 Act
applicable to continuance of investment advisory
contracts.
As of the date of this Statement of Additional
Information, the Sub-Adviser is an investment manager,
administrator, adviser or sub-adviser for the assets
of The Treasurer's Fund, Inc. and the Trust. The Sub-
Adviser is a registered investment adviser. Mr.
O'Connor is President and sole shareholder of Thomas
E. O'Connor & Co. Inc., the general partner of Thomas
E. O'Connor & Co. L.P., which is a general partner of
the Sub-Adviser. Thomas E. O'Connor & Co. L.P. and
Gabelli Funds, Inc., the other general partner of the
Sub-Adviser, have authority and control
over the management of the Sub-Adviser's business and
affairs. Mr. Mario J. Gabelli is the Chairman of the
Board of Directors of Gabelli Funds, Inc. As a result of
these relationships, Messrs. Thomas E. O'Connor and
Mario J. Gabelli may each be deemed to be a
"controlling person" of the Sub-Adviser. As of
December 29, 1995 the Sub-Adviser served as investment
adviser for assets aggregating in excess of $641
million. The Sub-Adviser is an affiliate of Gabelli-
O'Connor Fixed Income Management Co., a registered
investment adviser under the Advisers Act that is an
investment manager or adviser to corporations,
institutions, pension trusts, profit sharing trusts
and high net worth individuals and which, as of
December 29, 1995, served as an investment adviser for
assets aggregating in excess of $1.1 billion. The
Sub-Adviser is also an affiliate
of the Manager.
THE SUB-ADMINISTRATOR
The Sub-Administrator is located at One Exchange
Place, Boston, Massachusetts 02109. Pursuant to a Sub-
Administration Agreement, the Sub-Administrator
provides certain administrative services necessary for
the Trust's operations but which do not concern the
investment advisory and portfolio management services
provided by the Manager or the Sub-Adviser. For such
services and the related expenses borne by the Sub-
Administrator, the Manager pays an annual fee of .10%
of the average daily net assets of the Trust and
certain other affiliated funds not exceeding $1
billion, .08% of net assets exceeding $1 billion but
not exceeding $1.5 billion, .03% of net assets
exceeding $1.5 billion but not exceeding $3 billion,
and .02% of net assets exceeding $3 billion. The Sub-
Administrator's fee is paid by the Manager and will
result in no additional expense to the Trust.
THE DISTRIBUTOR
The Trust on behalf of the Fund has entered into a
Distribution Agreement with Gabelli & Company, Inc.
(the "Distributor"), a New York corporation which is a
subsidiary of Gabelli Funds, Inc., having principal
offices located at One Corporate Center, Rye, New York
10580-1434. The Distributor acts as agent of the Fund
for the continuous offering of its shares on a no-load
basis at no cost to the Fund. In connection with the
sale of the Fund's shares, the Trust has authorized
the Distributor to give only such information and to
make only such statements and representations as are
contained in the Fund's Prospectus or Statement of
Additional Information. Sales may be made only by
Prospectus, which may be delivered personally or
through the mails. The Distributor is the Fund's
"principal underwriter" within the meaning of the 1940
Act, and bears all costs of preparing, printing and
distributing reports and prospectuses used by the
Trust in connection with the sale of the Fund's shares
and all sales literature printed, counsel fees and
expenses in connection with the foregoing.
The Distribution Agreement is terminable by the
Distributor or the Trust at any time without penalty
on not more than sixty (60) days' nor less than thirty
(30) days' written notice, provided, that termination
by the Trust must be directed or approved by the
Trustees, by the vote of the holders of a majority of
the outstanding voting securities of the Trust, or by
written consent of a majority of the Trustees who are
not interested persons of the Trust or the
Distributor. The Distribution Agreement will
automatically terminate in the event of its
assignment, as defined in the 1940 Act. The
Distribution Agreement provides that, unless
terminated, it will remain in effect from year to
year, so long as continuance of the Distribution
Agreement is approved annually by the Trustees or by a
majority of the outstanding voting securities of the
Trust, and in either case, also by majority of the
Trustees who are not interested persons of the Trust,
or the Distributor, as defined in the 1940 Act.
THE CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT
State Street Bank and Trust Company is the
custodian for the Trust's cash and securities as well
as the transfer and dividend disbursing agent (the
"Custodian", "Transfer Agent" and "Dividend Disbursing
Agent") for its shares. Boston Financial Data
Services, Inc., an affiliate of State Street Bank and
Trust Company, performs the shareholder services on
behalf of State Street Bank and Trust Company,
performs the shareholder services on behalf of State
Street Bank and is located at the BFDS Building, Two
Heritage Drive, Quincy, MA 02171. State Street Bank
and Trust Company does not assist in and is not
responsible for investment decisions involving assets
of the Trust.
PURCHASE OF SHARES
The procedures for purchasing shares of the Fund
are summarized in the Prospectus under "Purchase of
Shares" and "Investment Through Participating
Organizations".
RETIREMENT PLANS
The Trust has available a form of Individual
Retirement Account ("IRA") for investment in Fund
shares which may be obtained from the Distributor. The
minimum investment required to open an IRA for
investment in shares of the Fund is $1,000 for an
individual. There is no minimum for additional
investments in an IRA.
Under the Internal Revenue Code of 1986, as amended
(the "Code"), individuals may make wholly or partly
tax-deductible IRA contributions of up to $2,000
annually, depending on whether they are active
participants in an employer-sponsored retirement plan
and/or their income level. However, dividends and
distributions held in the account are not taxed until
withdrawn in accordance with the provisions of the
Code. An individual with a non- working spouse may
establish a separate IRA for the spouse under the same
conditions and contribute a maximum of $2,250 annually
to either or both IRAs provided that no more than
$2,000 may be contributed to the IRA of either spouse.
Investors who are self-employed may purchase shares
of the Fund through tax-deductible contributions to
retirement plans for self-employed persons, known as
Keogh or H.R. 10 plans. The Fund does not currently
act as sponsor for such plans. Fund 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. The
minimum initial investment for such plans is $1,000
and there is no minimum for additional investments.
Investors should be aware that they may be subject
to penalties or additional tax on contributions or
withdrawals from IRAs or other retirement plans which
are not permitted by the applicable provisions of the
Code. Persons desiring information concerning
investments through IRAs or other retirement plans
should write or telephone the Distributor.
REDEMPTION OF SHARES
The procedures for redemption of shares of the Fund
are summarized in the Prospectus under "Redemption of
Shares" and "Investment Through Participation
Organizations". The Trust has elected to be governed
by Rule 18f-1 under the 1940 Act pursuant to which the
Trust is obligated to redeem shares solely in cash up
to the lesser of $250,000 or one percent of the net
asset value of the Fund during any 90-day period for
any one shareholder.
NET ASSET VALUE
The method for determining the public offering price
of the Fund's shares and the net asset value per share
is summarized in the Prospectus under "Net Asset
Value".
The Fund relies on Rule 2a-7 under the 1940 Act to
use the amortized cost valuation method to stabilize
the purchase and redemption price of its shares at
$1.00 per share. This method of valuation involves
valuing portfolio securities at their cost at the time
of purchase and thereafter assuming a constant
amortization to maturity of any discount or premium,
regardless of the impact of interest rate fluctuations
on the market value of the securities. While reliance
on Rule 2a-7 should enable the Fund, under most
conditions, to maintain a $1.00 share price, there can
be no assurance that the Fund will be able to do so,
and investment in the Fund is neither insured nor
guaranteed by the U.S. Government.
As required by Rule 2a-7, the Trustees have adopted
the following policies relating to the Fund's use of
the amortized cost method:
(a) the Trustees have established procedures which
they consider to be reasonably designed, taking into
account current market conditions affecting the Fund's
investment objective, to stabilize its net asset value
at $1.00 per share.
(b) the Trustees (i) have adopted procedures
whereby the extent of deviation between the current
net asset value per share calculated using available
market quotations or market-based quotations
from the
Fund's amortized cost price per share, will be
determined at such intervals as the Trustees deem
appropriate and as are reasonable in light of current
market conditions, (ii) will periodically review the
amount of deviation as well as the methods used to
calculate the deviation, and (iii) will maintain
records of the determination of deviation and the
Trustees' review thereof. In the event such deviation
exceeds 3/10 of 1%, the Trustees will promptly
consider what action, if any, should be taken to
prevent the deviation from exceeding 1/2 of 1%. Where
the Trustees believe the extent of deviation may
result in material dilution or other unfair results to
investors or exiting shareholders, they shall take
such action as they deem appropriate to eliminate or
reduce to the extent reasonably practicable such
dilution or unfair results.
(c) the Fund will seek to maintain a dollar-
weighted average portfolio maturity appropriate to its
objective of maintaining a stable net asset value per
share; provided, however, that it will not purchase
any instrument with a remaining maturity (as
determined pursuant to Rule 2a-7) longer than 397 days
nor maintain a dollar-weighted average portfolio
maturity which exceeds 90 days.
(d) the Fund will limit its portfolio investments,
including repurchase agreements, to those United
States dollar-denominated securities which the Manager
and the Sub-Adviser, acting in accordance with
procedures and guidelines approved by the Trustees,
determine to be of eligible quality and to present
minimal credit risks. The Fund will invest in U.S.
Treasury obligations and repurchase agreements
collateralized by U.S. Treasury obligations. The types
of U.S. Treasury obligations in which the Fund will
invest include (1) bills, notes and bonds issued by
the U.S. Treasury that are direct obligations of the
U.S. Government and (2) component parts of U.S.
Treasury notes and bonds, namely, either the corpus
(principal) of such Treasury obligations or one of the
interest payments scheduled to be paid on such
obligations. See "Investment Objective and Policies"
in the Prospectus.
(e) the Fund will record, maintain and preserve
permanently in an easily accessible place a written
copy of the procedures described above and will
record, maintain and preserve for a period of not less
than six years (two years in an easily accessible
place) a written record of the Trustees'
considerations and actions taken in connection with
the discharge of their obligations set forth above.
While the procedures adopted by the Trustees have
been designed to enable the Fund to achieve its
investment objective of maintaining a $1.00 share
price, there can be no assurance that a constant share
price will be maintained. In the event that market
conditions or changes in issuer creditworthiness
result in a substantial deviation between a Fund's
$1.00 amortized cost price per share and its net asset
value per share based on the market value of the
Fund's portfolio, the Trustees will take such action
as they deem appropriate to eliminate or reduce to the
extent possible any dilution of shareholder interests
or other unfair results to existing shareholders or
investors. Such action may include basing the purchase
and redemption price of Fund shares on the Fund's
market-based net asset value, with the result that the
Fund's price per share may be higher or lower than
$1.00.
PORTFOLIO TURNOVER
The Fund normally intends to hold its portfolio
securities to maturity. The Fund normally does not
expect to trade portfolio securities although it may
do so to take advantage of short-term market
movements. The Fund will make purchases and sales of
portfolio securities on a net price basis; brokerage
commissions are not normally charged on the purchase
or sale of U.S. Treasury securities. See "Portfolio
Transactions and Brokerage".
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Sub-Adviser, subject to review by the Manager,
is responsible for decisions to buy and sell
securities for the Fund, arranging the execution of
portfolio transactions on the Fund's behalf, and
selection of brokers and dealers to effect the
transactions. Purchases of portfolio securities are
made from dealers, underwriters and issuers; sales, if
any, prior to maturity, are made to dealers and
issuers. The Fund does not normally incur any
brokerage commission expense on such transactions.
There were no brokerage commissions incurred by the
Fund since its commencement of operations. The
instruments purchased by the Fund are generally traded
on a "net" basis with dealers acting as principal for
their own accounts without a stated commission,
although the price of the security usually includes a
profit to the dealer. Securities purchased in
underwritten offerings include a fixed amount of
compensation to the underwriter, generally referred to
as the underwriter's concession or discount. When
securities are purchased or sold directly from or to
an issuer, no commissions or discounts are paid.
The policy of the Fund regarding purchases and
sales of securities is that primary consideration will
be given to obtaining the most favorable price and
efficient execution of transactions.
PERFORMANCE INFORMATION
The Fund will prepare a current quotation of yield
from time to time. The yield quoted will be the simple
annualized yield for an identified seven (7) calendar
day period. The yield calculation will be based on a
hypothetical account having a balance of exactly one
share at the beginning of the seven-day period. The
base period return will be the change in the value of
the hypothetical account during the seven-day period,
including dividends declared on any shares purchased
with dividends on the shares but excluding any capital
changes. The yield will vary as interest rates and
other conditions affecting money market instruments
change. The yield for the seven-day period ended
September 30, 1995 was 5.34% (5.08% without waivers),
which is equivalent to an effective yield of 5.48%
(5.21% without waivers). The yield also depends on the
quality, length of maturity and type of instruments in
the Fund's portfolio and its operating expenses. The
Fund may also prepare an effective annual yield
computed by compounding the unannualized seven-day
period return as follows: by adding 1 to the
unannualized seven-day period return, raising the sum
to a power equal to 365 divided by 7, and subtracting
1 from the result.
EFFECTIVE YIELD = [(base period return - 1)365/7-1]
The Fund may also calculate the tax equivalent
yield over a thirty-day period. The tax equivalent
yield will be determined by first computing the
current yield as discussed above. The Fund will then
determine what portion of the yield is attributable to
securities, the income of which is exempt for state
and local income tax purposes. This portion of the
yield will then be divided by one minus the maximum
state tax rate of individual taxpayers and then added
to portion of the yield that is attributable to other
securities.
The Fund's yield will fluctuate, and annualized
yield quotations are not a representation by the Fund
as to what an investment in the Fund will actually
yield for any given period. Actual yields will depend
upon not only changes in interest rates generally
during the period in which the investment in the Fund
is held, but also on any realized or unrealized gains
and losses and changes in the Fund's expenses.
The Fund may advertise certain total return
information computed in the manner described in the
Prospectus. An average annual compound rate of return
("T") will be computed by using the redeemable value
at the end of a specified period ("ERV" of a
hypothetical initial investment of $1,000 ("P") over a
period of time ["n"] according to the formula: P(1+T)n
= ERV.
Comparative performance information may be used
from time to time in advertising or marketing the
Fund's shares, including data from Lipper Analytical
Services, Inc., Donoghue's Money Fund Report, The Bank
Rate Monitor, other industry publications, business
periodicals, rating services and market indices.
DESCRIPTION OF TRUST
The Trust is organized as an unincorporated
business trust under the laws of Delaware.
The Fund is the initial series of shares of
beneficial interest (par value $.001) of the Trust.
The Trustees are authorized to designate one or more
additional series of shares of beneficial interest of
the Trust, each series representing a separate
investment portfolio. 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, liquidation
(see "Redemption of Shares") 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.
Shares have no preference, preemptive, conversion
or similar rights. All shares, when issued in
accordance with the terms of the offering, will be
fully paid and nonassessable. Shares will be redeemed
at net asset value, at the option of the shareholder.
The Fund sends semi-annual and annual reports to
all of its shareholders which include a list of the
Fund's portfolio securities and the Fund's financial
statements which shall be audited annually. Unless it
is clear that a shareholder holds as nominee for the
account of an unrelated person or a shareholder
otherwise specifically requests in writing, the Fund
may send a single copy of semi-annual, annual and
other reports to shareholders to all accounts at the
same address and all accounts of any person at that
address.
It is the intention of the Trust not to hold annual
meetings of shareholders. The Trustees may call a
special meeting of shareholders for action by
shareholder vote as may be required by the 1940 Act,
the Declaration of Trust of the Trust or the By-Laws
of the Trust. In addition, the Trust will call a
special meeting of shareholders for the purpose of
voting upon the question of removal of a Trustee or
Trustees, if requested to do so by the holders of at
least 10% of the Trust's outstanding shares, and the
Trust will assist in communications with other
shareholders as required by Section 16(c) of the 1940
Act.
Shares of the Trust have noncumulative voting
rights which means that the holders of more than 50%
of shares can elect 100% of the Trustees if the
holders choose to do so, and, in that event, the
holders of the remaining shares will not be able to
elect person or persons as Trustees. The Transfer
Agent does not issue certificates evidencing Fund
shares.
GENERAL INFORMATION
Counsel and Independent Auditors
Willkie Farr & Gallagher, 153 East 53rd Street, New
York, New York 10022, is counsel to the Trust.
Ernst & Young LLP, 787 Seventh Avenue, New York,
New York 10019, has been selected as independent
auditors for the Trust.
FINANCIAL STATEMENTS
<TABLE>
The Gabelli U.S. Treasury Money Market Fund
Statement of Net Assets -- September 30, 1995
===================================================================================================================
<CAPTION>
Annualized
Principal Yield at Date Maturity
Amount of Purchase Date Value
------ ----------- ---- -----
<C> <S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 99.8%
U.S. Treasury Bills -- 78.2%
$171,483,000 U.S. Treasury Bills ........ 5.240% to 5.430% 10/05/1995-12/21/1995 $170,529,396
------------
Interest Rate
-------------
U.S. Treasury Notes -- 21.6%
20,000,000 U.S. Treasury Notes ........ 4.250% 11/30/1995 19,958,252
26,880,000 U.S. Treasury Notes ........ 7.875 02/15/1996 27,105,521
------------
47,063,773
------------
TOTAL INVESTMENTS (Cost $217,593,169) (a) ........................................ 99.8% 217,593,169
Payable for Fund shares redeemed ................................................. (74,680)
Payable Manager .................................................................. (63,192)
Cash and Other Assets in Excess of Liabilities ................................... 0.2 580,811
----- ------------
NET ASSETS (applicable to 218,036,108 shares of beneficial interest issued
and outstanding, $0.001 par value, one billion shares authorized) .............. 100.0% $218,036,108
===== ============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE $1.00
=====
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
===================================================================================================================
Per share amounts for a Fund share outstanding throughout each year ended September 30,
1995 1994 1993*
-------- -------- --------
<S> <C> <C> <C>
Operating performance:
Net asset value, beginning of year ............................... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
Net investment income (a) ........................................ 0.0528 0.0323 0.0271
Net gain on investments .......................................... 0.0002 0.0002 0.0002
-------- -------- --------
Total from investment operations ................................. 0.0530 0.0325 0.0273
-------- -------- --------
Distributions to shareholders from:
Net investment income .......................................... (0.0528) (0.0323) (0.0271)
Net realized gains ............................................. (0.0002) (0.0002) (0.0002)
-------- -------- --------
Total distributions ............................................ (0.0530) (0.0325) (0.0273)
-------- -------- --------
Net asset value, end of year ..................................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return** ................................................... 5.4% 3.3% 2.8%
======== ======== ========
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's) ............................... $218,036 $186,020 $187,709
Ratio of net investment income to average net assets ........... 5.30% 3.23% 2.73%
Ratio of operating expenses to average net assets (b) .......... 0.27% 0.30% 0.30%
</TABLE>
- ------------
* The Fund commenced operations on October 1, 1992.
** 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 expenses reimbursed by Manager for the years
ended September 30, 1995 and 1994 and the period ended September 30, 1993
was $0.0516, $0.0312 and $0.0255, respectively.
(b) Operating expense ratios before expenses reimbursed by Manager for the
years ended September 30, 1995 and 1994 and the period ended September 30,
1993 were 0.39%, 0.43% and 0.46%, respectively.
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
The Gabelli U.S. Treasury Money Market Fund
Statement of Operations
Year Ended September 30, 1995
==================================================================================================================
<S> <C> <C>
Investment Income:
Interest income $12,934,225
-----------
Expenses:
Management fee ............................................................. $ 627,450
Transfer agent fees ........................................................ 120,658
Legal and audit fees ....................................................... 39,819
Trustees' fees ............................................................. 27,053
Amortization of organization expenses ...................................... 20,962
Other ...................................................................... 72,375
---------
Total expenses before fees waived by Manager ........................... 908,317
Fees waived by Manager ................................................. (278,588)
-----------
Total Expenses-- Net ................................................... 629,729
Net investment income ......................................................... 12,304,496
-----------
Net realized gain on investments .............................................. 78,346
-----------
Net increase in net assets resulting from operations .......................... $12,382,842
===========
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
===================================================================================================================
Year Year
Ended Ended
9/30/95 9/30/94
-------------- ------------
<S> <C> <C>
Net investment income .................................................... $ 12,304,496 $ 5,942,885
Net realized gain on investments ......................................... 78,346 44,354
-------------- ------------
Net increase in net assets resulting from operations ..................... 12,382,842 5,987,239
Distributions to shareholders from:
Net investment income .................................................. (12,304,496) (5,942,885)
Net realized gain on investments ....................................... (78,346) (44,354)
Share transactions ($1.00 per share):
Shares sold ............................................................ 1,143,159,517 827,577,627
Shares issued on reinvestment of dividends and distributions ........... 11,856,303 5,684,079
Shares redeemed ........................................................ (1,123,000,143) (834,950,737)
--------------- -------------
Net increase/(decrease) in net assets .................................... 32,015,677 (1,689,031)
NET ASSETS:
Beginning of year ........................................................ 186,020,431 187,709,462
-------------- ------------
End of year .............................................................. $218,036,108 $186,020,431
============== ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
The Gabelli U.S. Treasury Money Market Fund
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies. The Gabelli U.S. Treasury Money Market Fund
(the "Fund") is a series of The Gabelli Money Market Funds, a Delaware business
trust (the "Trust"). The Fund is a no-load, diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund commenced operations on October 1, 1992. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
Security Valuation. Investments are valued at amortized cost (which approximates
market value) whereby, a portfolio instrument is valued at cost and any discount
or premium is amortized on a constant basis to the maturity of the instrument.
Security Transactions and Investment Income. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and discount) is recorded as earned.
Dividends and Distributions. Dividends from investment income (including
realized capital gains and losses) are declared daily and paid quarterly.
Beginning in October 1995, dividends and distributions to shareholders will be
declared daily and paid monthly. At September 30, 1995 the dividends payable
were $63,051.
Provision for Income Taxes. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not required.
Deferred Organization Expenses. A total of $104,264 was incurred in connection
with the organization of the Fund. These costs have been deferred and are being
amortized on a straight-line basis over a period of 60 months from the date the
Fund commenced investment operations.
2. Agreements with Affiliated Parties. The Trust has entered into a management
agreement (the "Management Agreement") with Gabelli Funds, Inc. (the "Manager")
which provides that the Trust will pay the Manager a fee, computed daily and
paid monthly, at the annual rate of 0.30 percent of the value of the Fund's
average daily net assets. In accordance with the Management Agreement, the
Manager provides a continuous investment program for the Fund's portfolio,
provides all facilities and personnel, including officers required for its
administrative management, and pays the compensation of all officers and
Trustees of the Fund who are its affiliates. To the extent necessary, the
Manager has undertaken to assume certain expenses of the Trust so that the total
expenses do not exceed 0.30 percent of the Fund's average daily net assets.
During the period October 1, 1994 through November 15, 1994, the Trust was
operating without a Management Agreement. The Manager agreed to provide services
without compensation until the Trustees approved a new Management Agreement
identical to the terms of the original agreement on November 16, 1994. For the
year ended September 30, 1995, the Manager voluntarily waived management fees of
$278,588.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
================================================================================
To the Shareholders and Board of Trustees
The Gabelli U.S. Treasury Money Market Fund
(a series of The Gabelli Money Market Funds)
We have audited the accompanying statement of net assets of The Gabelli U.S.
Treasury Money Market Fund (a series of The Gabelli Money Market Funds) as of
September 30, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the years indicated
therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of The
Gabelli U.S. Treasury Money Market Fund at September 30, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the indicated periods, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
New York, New York
October 25, 1995
- --------------------------------------------------------------------------------
1995 TAX NOTICE TO SHAREHOLDERS (Unaudited)
U.S. Government Income:
The percentage of the ordinary income dividend paid by the Fund
during the period from October 1, 1994 to September 30, 1995 which was
derived from U.S. Treasury Securities was 100%. Such income is exempt
from state and local income tax in all states. Due to the diversity in
state and local tax laws, it is recommended that you consult your
personal tax advisor for the applicability of the information provided
as to your own situation.
- --------------------------------------------------------------------------------
<PAGE>
