The
Gabelli
U.S. Treasury
Money Market
Fund
PROSPECTUS
February 1, 2000
The Securities and Exchange Commission has not approved or disapproved the
shares described in this prospectus or determined whether this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
<PAGE>
The Gabelli U.S. Treasury
Money Market Fund Table of Contents
Investment and Performance Summary
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3 - 5
Investment and Risk Information
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5
Management of the Fund
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6
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6 Purchase of Shares
8 Redemption of Shares
9 Exchange of Shares
10 Pricing of Fund Shares
10 Dividends and Distributions
10 Tax Information
Financial Highlights
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11
<PAGE>
INVESTMENT AND PERFORMANCE SUMMARY
Investment Objective:
The Gabelli U.S. Treasury Money Market Fund (the "Fund"), the only series of The
Gabelli Money Market Funds, seeks to provide high current income consistent with
the preservation of principal and liquidity. The investment objective of the
Fund is fundamental and may not be changed without shareholder approval.
Principal Investment Strategies:
The Fund invests exclusively in U.S. Treasury obligations, including U.S.
Treasury bills, U.S. Treasury notes, U.S. Treasury bonds and U.S. Treasury
strips, which have remaining maturities of 397 days or less.
Principal Risks:
An investment in the Fund is subject to the risk that the Fund's yield will
decline due to falling interest rates. Other factors may affect the market price
and yield of the Fund's securities, including investor demand and domestic and
worldwide economic conditions. An investment in the Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund. There is
no guarantee that the Fund can achieve its investment objective.
Who May Want to Invest:
The Fund may appeal to you if:
- - you are a long-term investor
- - you desire a fund with lower fund expenses than the average U.S. Treasury
money market fund
- - you seek stability of principal more than growth or high current income
- - you seek income free from state and local taxe
- - you intend to exchange into other Gabelli-sponsored mutual funds
You may not want to invest in the Fund if:
- - you are a short-term investor, since the Fund may impose certain
transaction charges
- - you are aggressive in your investment approach or
- - you desire a relatively high rate of return
Performance:
The bar chart and table shown below provide an indication of the risks of
investing in the Fund by showing changes in the Fund's performance from year to
year (since 1992). For current yield information on the Fund, call 1-800-GABELLI
(1-800-422-3554). The Fund's yield appears in The Wall Street Journal each
Thursday.
As with all mutual funds, the Fund's past performance does not predict how the
Fund will perform in the future.
THE GABELLI U.S. TREASURY MONEY MARKET FUND
Bar Chart [GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Calendar Year Total Return
1993 2.76%
1994 3.81%
1995 5.5%
1996 4.99%
1997 5.3%
1998 5.08%
1999 4.46%
During the period shown in the bar chart, the highest return for a quarter was
1.44% (quarter ended December 31, 1997) and the lowest return for a quarter was
0.66% (quarter ended March 31, 1993).
Average Annual Total Returns
(for the periods ended Since October 1,
December 31, 1999) Past One Year Past Five Years 1992*
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The Gabelli U.S. Treasury
Money Market Fund 4.46% 5.07% 4.49%
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* From October 1, 1992, the date the Fund commenced investment operations.
Fees and Expenses of the Fund:
The tables below describe the fees and expenses that you may pay if you buy and
hold shares of the Fund.
Shareholder Fees:
(fees paid directly from your investment)*
Redemption Fees(1) $ 5.00
Account Closeout Fee(1) $ 5.00
Annual Fund Operating Expenses:
(expenses that are deducted from Fund assets)
Management Fees 0.30%
Other Expenses 0.10%
Total Annual Fund Operating Expenses 0.40%
--------
Expense Reimbursement(2)
0.10%
Net Annual Fund Operating Expenses(2) 0.30%
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* No sales load is imposed on purchases, exchanges or redemptions.
(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.
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. See
"Redemption of Shares." The charges will be paid to State Street Bank and
Trust Company ("State Street") and will reduce the transfer agency expenses
otherwise payable by the Fund.
(2) Gabelli Funds, LLC contractually has agreed to waive its management fee
and/or reimburse expenses to the extent necessary to maintain the Fund's
Total Annual Fund Operating Expenses at 0.30% of the Fund's average daily
net assets. This arrangement is in effect through the Fund's fiscal year
ending September 30, 2000 and is renewable annually by the Manager.
Expense Example:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual Funds. The example assumes that (1)
you invest $10,000 in the Fund for the time periods shown, (2) you redeem your
shares at the end of those periods, (3) your investment has a 5% return each
year and (4) the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
--------- ---------- ---------- -----------
$31 $118 $214 $495
INVESTMENT AND RISK INFORMATION
Under normal market conditions, the Fund invests exclusively in U.S. Treasury
obligations, including U.S. Treasury bills, U.S. Treasury notes, U.S. Treasury
bonds and U.S. Treasury strips. The Fund attempts to maintain a constant net
asset value of $1.00 per share by purchasing only securities with 397 days or
less remaining to maturity and limiting the dollar-weighted average maturity of
its portfolio to 90 days. There is no guarantee that the Fund will achieve its
investment objective since there is uncertainty in every investment.
MANAGEMENT OF THE FUND
The Manager. Gabelli Funds, LLC, with principal offices located at One Corporate
Center, Rye, New York 10580-1434, serves as investment manager to the Fund. The
Manager makes investment decisions for the Fund and continuously reviews and
administers the Fund's investment program under the supervision of the Fund's
Board of Trustees. The Manager also manages several other open-end and
closed-end investment companies in the Gabelli Family of Funds. The Manager is a
New York limited liability company organized in 1999 as successor to Gabelli
Group Capital Partners, Inc. (formerly named Gabelli Funds, Inc.), a New York
corporation organized in 1980. The Manager is a wholly-owned subsidiary of
Gabelli Asset Management Inc. ("GAMI"), a publicly held company listed on the
New York Stock Exchange ("NYSE"). As compensation for its services and the
related expenses borne by the Manager, the Manager is entitled to receive a fee,
computed daily and payable monthly, equal on an annual basis of 0.30% of the
Fund's average daily net assets (the "Management Fee"). The Manager
contractually has agreed to waive all or a portion of its Management Fee and/or
to assume certain expenses of the Fund to the extent necessary to maintain the
total expense ratio of the Fund at 0.30% of average daily net assets (excluding
interest, taxes and extraordinary expenses). This arrangement is in effect
through the Fund's fiscal year ending September 30, 2000 and is renewable
annually by the Manager. This arrangement has the effect of lowering the overall
expense ratio of the Fund and increasing yield to investors in the Fund. For the
fiscal year ended September 30, 1999, the Manager received management fees at
the rate of 0.30% of the value of the Fund's average daily net assets.
PURCHASE OF SHARES
You can purchase the Fund's shares on any day the NYSE is open for trading (a
"Business Day"). You may purchase shares through Gabelli & Company, Inc. (the
"Distributor"), directly from the Fund through the Fund's transfer agent or
through organizations that have special arrangements with the Fund
("Participating Organizations").
- By Mail or In Person. You may open an account by mailing a completed
subscription order form with a check or money order payable to "The
Gabelli U.S. Treasury Money Market Fund" to:
By Mail By Personal Delivery
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The Gabelli Funds The Gabelli Funds
P.O. Box 8308 c/o BFDS
Boston, MA 02266-8308 66 Brooks Drive
Braintree, MA 02184
You can obtain a subscription order form by calling 1-800-GABELLI
(1-800-422-3554). Checks made payable to a third party and endorsed by the
depositor are not acceptable. For additional investments, send a check to the
above address with a letter stating your exact name and account number, and the
name of the Fund.
- By Bank Wire. To open an account using the bank wire transfer system,
first telephone the Fund at 1-800-GABELLI (1-800-422-3554) to obtain a
new account number. Then instruct a Federal Reserve System member bank
to wire funds to:
State Street Bank and Trust Company
[ABA #011-0000-28 REF DDA #99046187]
Re: The Gabelli U.S. Treasury Money Market Fund
Account #__________
Account of [Registered Owners]
225 Franklin Street, Boston, MA 02110
If you are making an initial purchase, you should also complete and mail a
subscription order form to the address shown under "By Mail." Note that banks
may charge fees for wiring Funds, although State Street will not charge you for
receiving wire transfers. If your wire is received by the Fund before noon,
Eastern Standard Time, you will begin earning dividends on the day of receipt.
Participating Organizations. You may purchase shares from a Participating
Organization. The Participating Organization will transmit a purchase order and
payment to State Street on your behalf. Participating Organizations may send you
confirmations of your transactions and periodic account statements showing your
investments in the Fund.
Share Price. The Fund sells its shares at the net asset value next determined
after the Fund receives your completed subscription order form and your payment.
See "Pricing of Fund Shares" for a description of the calculation of net asset
value.
Minimum Investments. Your minimum initial investment must be at least $10,000
($3,000 for registered shareholders of other mutual funds managed by the Manager
or its affiliates). See "Retirement Plans" and "Automatic Investment Plan"
regarding minimum investment amounts applicable to such plans. There is no
minimum for subsequent investments. Participating Organizations may have
different minimum investment requirements.
Retirement Plans. The Fund has available a form of IRA and a "Roth" IRA for
investment in Fund shares that may be obtained from the Distributor by calling
1-800-GABELLI (1-800-422-3554). Self-employed investors may purchase shares of
the Fund through tax-deductible contributions to existing retirement plans for
self-employed persons, known as "Keogh" or "H.R.-10" plans. The Fund does not
currently act as sponsor to 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." The minimum initial investment in all such
retirement plans is $1,000. There is no minimum subsequent investment
requirement for retirement plans.
Automatic Investment Plan. The Fund offers an automatic monthly investment plan.
There is no minimum monthly investment for accounts establishing an automatic
investment plan. Call the Distributor at 1-800-GABELLI (1-800-422-3554) for more
details about the plan.
Telephone or Internet Investment Plan. You may purchase additional shares of the
Fund by telephone and/or over the Internet if your bank is a member of the
Automated Clearing House ("ACH") system. You must also have a completed and
approved Investment Plan application on file with the Fund's Transfer Agent.
There is a minimum of $100 for each telephone or Internet investment. To
initiate an ACH purchase, please call 1-800-GABELLI (1-800-422-3554) or
1-800-872-5365 or visit our website at www.gabelli.com.
General. State Street will not issue share certificates unless requested by you.
The Fund reserves the right to (i) reject any purchase order if, in the opinion
of the Fund's management, it is in the Fund's best interest to do so, (ii)
suspend the offering of shares for any period of time and (iii) waive the Fund's
minimum purchase requirement.
REDEMPTION OF SHARES
You can redeem shares on any Business Day. The Fund may temporarily stop
redeeming its shares when the NYSE is closed or trading on the NYSE is
restricted, when an emergency exists and the Fund cannot sell its shares or
accurately determine the value of its assets, or if the Securities and Exchange
Commission orders the Fund to suspend redemptions.
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. 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. If you request redemption
proceeds by check, the Fund will normally mail the check to you within seven
days.
You may redeem shares of the Fund through the Distributor, directly from the
Fund through its transfer agent or through Participating Organizations.
- By Letter. You may mail a letter requesting redemption of shares to:
The Gabelli Funds, P.O. Box 8308, Boston, MA 02266-8308. Your letter
should state the name of the Fund, the dollar amount or number of
shares you wish to redeem and your account number. You must sign the
letter in exactly the same way the account is registered and if there
is more than one owner of shares, all must sign. A signature guarantee
is required for each signature on your redemption letter. You can
obtain a signature guarantee from financial institutions such as
commercial banks, brokers, dealers and savings associations. A notary
public cannot provide a signature guarantee.
- By Telephone or the Internet. You may redeem your shares in an account
directly registered with State Street by calling either 1-800-GABELLI
(1-800-422-3554) or 1-800-872-5365 (617-328-5000 from outside the
United States) or visiting our website at www.gabelli.com , subject to
a $25,000 limitation. You may not redeem shares held through an IRA by
telephone or the Internet. If State Street properly acts on telephone
or Internet instructions and follows reasonable procedures to protect
against unauthorized transactions, neither State Street nor the Fund
will be responsible for any losses due to telephone or Internet
transactions. You may be responsible for any fraudulent telephone or
Internet order as long as State Street or the Fund take reasonable
measures to verify the order. You may request that redemption proceeds
be mailed to you by check (if your address has not changed in the
prior 30 days), forwarded to you by bank wire or invested in another
mutual fund advised by the Manager (see "Exchanges of Shares").
1. Telephone or Internet Redemption By Check. The Fund will make
checks payable to the name in which the account is registered and
normally will mail the check to the address of record within
seven days and charge you $5.00 for this service.
2. Telephone or Internet Redemption By Bank Wire. The Fund accepts
telephone or Internet requests for wire redemption in amounts of
at least $1,000. The Fund will send a wire to either a bank
designated on your subscription order form or on a subsequent
letter with a guaranteed signature. The proceeds are normally
wired on the next Business Day. The Fund will deduct a wire fee
(currently $5.00) from your account if you redeem less than
$5,000.
- Participating Organizations. You may redeem shares through a
Participating Organization which will transmit a redemption order to
State Street on your behalf.
- Automatic Cash Withdrawal Plan. You may automatically redeem shares on
a monthly, quarterly or annual basis if you have at least $10,000 in
your account and if your account is directly registered with State
Street. Call 1-800-GABELLI (1-800-422-3554) for more information about
this plan.
- By Check Draft. You may write checks on your account with the Fund in
the amount of $500 or more. Simply request the checkwriting service on
your subscription order form and the Fund will send you checks. The
Fund will not honor a check if (1) you purchased shares by check and
the check has not cleared, (2) the check would close out your account,
(3) the amount of the check is higher than funds available in your
account, (4) the check is written for less than $500, or (5) the check
contains an irregularity in the signature or otherwise. In the case of
(3), (4) and (5), State Street will charge your account a $15 fee. The
Trust may change or terminate the check-writing service or impose
additional charges at any time.
Involuntary Redemption. The Fund may redeem all shares in your account (other
than an IRA account) if their value falls below $1,000 as a result of
redemptions (but not as a result of a decline in net asset value). You will be
notified in writing if the Fund initiates such action and allowed 30 days to
increase the value of your account to at least $1,000.
Redemption Proceeds. A redemption request received by the Fund will be effected
at the net asset value next determined after the Fund receives the request. If
you request redemption proceeds by check, the Fund will normally mail the check
to you within seven days after receipt of your redemption request. If you
purchased your Fund shares by check or through the Automatic Investment Plan,
you may not receive proceeds from your redemptions until the check clears, which
may take up to as many as 15 days following purchase. While the Fund will delay
the processing of the redemption until the check clears, yourshares will be
valued at the next determined net asset value after receipt of your redemption
request.
EXCHANGE OF SHARES
You can exchange shares of the Fund you hold for shares of any other open-end
fund managed by the Manager or its affiliates based on their relative net asset
values. The Fund also offers an automatic monthly exchange privilege. To obtain
a list of the funds whose shares you may acquire through an exchange or details
on the automatic monthly exchange privilege call 1-800-GABELLI (1-800-422-3554).
In effecting an exchange:
- you must meet the minimum purchase requirements for the fund whose
shares you purchase through exchange.
- if you are exchanging to a fund with a sales charge, you must pay the
sales charge at the time of exchange.
- you may realize a taxable gain or loss.
- you should read the prospectus of the fund whose shares you are
purchasing through exchange [call 1-800-GABELLI (1-800-422-3554) to
obtain the prospectus].
You may exchange shares through the Distributor, directly through the Fund's
transfer agent or through a Participating Organization.
- Exchange by Telephone. You may give exchange instructions by telephone
by calling 1-800-GABELLI (1-800-422-3554). You may not exchange shares
by telephone if you hold share certificates.
- Exchange by Mail. You may send a written request for exchanges to: The
Gabelli Funds, P.O. Box 8308, Boston, MA 02266-8308. You letter should
state your name, your account number, the dollar amount or number of
shares you wish to exchange, the name and class of the fund whose
shares you wish to exchange, and the name of the fund whose shares you
wish to acquire.
- Exchange through the Internet. You may also give exchange instructions
via the Internet at www.gabelli.com.
We may modify or terminate the exchange privilege at any time. You will be given
notice 60 days prior to any material change in the exchange privilege.
PRICING OF FUND SHARES
The Fund's net asset value per share is calculated on each Business Day. The
NYSE is open Monday through Friday, but currently is scheduled to be
closed on New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day and on the preceding Friday or subsequent Monday when a holiday
falls on a Saturday or Sunday, respectively.
The Fund's net asset value is determined at noon (Eastern time) and as of the
close of regular trading on the NYSE, normally 4:00 p.m., Eastern time. Net
asset value is computed 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
total number of its shares outstanding at the time the determination is made.
The Fund uses the amortized cost method of valuing its portfolio securities to
maintain a constant net asset value of $1.00 per share. Under this method of
valuation, the Fund values its portfolio securities at their cost at the time of
purchase and not at market value, thus minimizing fluctuations in value due to
interest rate changes or market conditions.
DIVIDENDS AND DISTRIBUTIONS
Dividends of net investment income and short-term capital gains will be declared
daily and paid monthly, and distributions of net long term capital gains, if
any, will be paid annually. They will be automatically reinvested at net asset
value in additional shares of the Fund unless you instruct the Fund to pay all
dividends and distributions in cash. You will make an election to receive
dividends and distributions in cash or Fund shares at the time you purchase your
shares. You may change this election by notifying the Fund in writing at any
time prior to the record date for a particular dividend or distribution. There
are no sales or other charges in connection with the reinvestment of dividends
and capital gains distributions. There is no fixed dividend rate, and there can
be no assurance that the Fund will pay any dividends or realize any capital
gains.
If you purchase shares prior to 12:00 noon (Eastern time), you will receive the
full dividend for that day. If you redeem shares prior to 12:00 noon (Eastern
time) on any Business Day, you will not earn that day's dividend, but the
redemption proceeds are available that day. If you redeem shares between noon
and 4:00 p.m. (Eastern time), you will earn that day's dividend, but the
redemption proceeds are not available until the next Business Day.
TAX INFORMATION
The Fund expects that its distributions will consist primarily of net investment
income and net realized capital gains. Capital gains may be taxed at different
rates depending on the length of time the Fund holds the asset giving rise to
such gains. Dividends out of net investment income and distributions of net
realized short-term capital gains (i.e., gains from assets held by the Fund for
one year or less) are taxable to you as ordinary income. Distributions of net
long-term capital gains are taxable to you at long-term capital gain rates. The
Fund's distributions, whether you receive them in cash or reinvest them in
additional shares of the Fund, generally will be subject to federal taxes. An
exchange of the Fund's shares for shares of another fund will be treated for tax
purposes as a sale of the Fund's shares, and any gain you realize on such a
transaction generally will be taxable. Foreign shareholders generally will be
subject to a federal withholding tax.
This summary of tax consequences is intended for general information only. You
should consult a tax adviser concerning the tax consequences of your investment
in the Fund.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five fiscal years of the Fund. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the Fund's shares. This information has been audited by
Ernst & Young LLP, independent auditors, whose report, along with the Fund's
financial statements and related notes are included in the annual report, which
is available upon request. Per share amounts for a Fund share outstanding
throughout each fiscal year ended September 30,
1999 1998 1997(d) 1996 1995
Operating performance:
Net asset value,
beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
Net investment
income (a) 0.0422 0.0496 0.0485 0.0492 0.0528
Net realized gain
on investments 0.0005 0.0005 0.0013 0.0006 0.0002
Total from investment
operations 0.0427 0.0501 0.0498 0.0498 0.0530
Distributions to shareholders:
Net investment income (0.0422) (0.0496) (0.0485) (0.0492) (0.0528)
Net realized gain on
investments (0.0005) (0.0005) (0.0013) (0.0006) (0.0002)
Total distributions (0.0427) (0.0501) (0.0498) (0.0498) (0.0530)
Net asset value, end
of year $1.00 $1.00 $1.00 $1.00 $1.00
Total return (b) 4.35% 5.08% 5.08% 5.06% 5.38%
Ratios to average net assets and
supplemental data:
Net assets, end of year
(in 000s) $480,100 $314,394 $203,542 $216,038 $218,036
Ratio of net investment
income to average
net assets 4.19% 4.91% 4.85% 4.92% 5.30%
Ratio of operating
expenses to average
net assets (c) 0.30% 0.30% 0.30% 0.30% 0.27%
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(a) Net investment income before fees waived by the Manager for the fiscal
years ended September 30, 1999, 1998, 1997, 1996 and 1995 was $0.0412,
$0.0475, $0.0469, $0.0477 and $0.0516, respectively.
(b) 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.
(c) Operating expense ratio before fees waived by the Manager for the fiscal
years ended September 30, 1999, 1998, 1997, 1996 and 1995 were 0.40%,
0.46%, 0.45%, 0.45% and 0.39%, respectively.
(d) Gabelli Funds, LLC (formerly known as Gabelli Funds, Inc.) became the sole
manager of the Fund on April 15, 1997.
<PAGE>
The Gabelli U.S. Treasury Money Market Fund
For More Information:
For more information about the Fund, the following documents are incorporated
herein by reference and are available free upon request:
Annual/Semi-annual Reports:
The Fund's semi-annual and annual reports to shareholders contain additional
information on the Fund's investments. In the Fund's annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI):
The SAI provides more detailed information about the Fund, including its
operations and investments policies. It is incorporated by reference, and is
legally considered a part of this prospectus.
You can get free copies of these documents and prospectuses of other
funds in the Gabelli family, or request other information and
discuss your questions about the Fund by contacting:
The Gabelli U.S. Treasury Money Market Fund
One Corporate Center
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
You can review the Fund's reports and SAI at the Public Reference Room of the
Securities and Exchange Commission. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090. You
can get text-only copies:
- For a fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102 [or by calling 1-202-942-8090] or by
electronic request at the following email address: [email protected].
- Free from the Commission's Website at http://www.sec.gov
(Investment Company Act File Number 811-6687)
<PAGE>
The Gabelli U.S. Treasury Money Market Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
fax: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(Net Asset Value may be obtained daily by calling 1-800-GABELLI
after 6:00 P.M.)
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Questions?
Call 1-800-GABELLI
or your investment representative.
- --------------------------------------------------------------------------------
<PAGE>
The Gabelli U.S. Treasury Money Market Fund
Statement of Additional Information
February 1, 2000
This Statement of Additional Information ("SAI") 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 SAI is
not a prospectus and should be read in conjunction with the Fund's Prospectus
dated February 1, 2000, a copy of which may be obtained without charge by
contacting the Fund at the address, telephone number or Internet website printed
below. This SAI is incorporated by reference in its entirety into the
Prospectus.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
TABLE OF CONTENTS
General Information...........................................................2
Investment Strategies and Risks...............................................2
U.S. Treasury Obligations............................................2
When-Issued and Delayed Delivery Securities..........................3
Illiquid Securities..................................................3
Repurchase Agreements................................................4
Investment Restrictions.......................................................5
Trustees and Officers.........................................................6
Control Persons and Principal Shareholders....................................9
The Manager ..................................................................10
The Sub-Administrator.........................................................12
The Distributor...............................................................13
Counsel .....................................................................14
Independent Auditors..........................................................14
Custodian, Transfer Agent, and Dividend Disbursing Agent......................14
Purchase of Shares............................................................14
Retirement Plans..............................................................14
Redemption of Shares..........................................................15
Net Asset Value...............................................................16
Portfolio Transactions and Brokerage..........................................17
Taxation......................................................................18
Investment Performance Information............................................18
Description of the Fund's Shares..............................................19
Financial Statements..........................................................21
<PAGE>
GENERAL INFORMATION
The Fund is a diversified, open-end, management investment company which
commenced investment operations on October 1, 1992. The Fund was organized on
May 21, 1992 as an unincorporated Delaware business trust.
INVESTMENT STRATEGIES AND RISKS
The Fund's Prospectus discusses the investment objective of the Fund and
the principal strategies to be employed to achieve that objective. This section
contains supplemental information concerning certain types of securities and
other instruments in which the Fund may invest, additional strategies that the
Fund may utilize and certain risks associated with such investments and
strategies. Although the Fund reserves the right to use repurchase agreements,
the Fund will not engage in such activity until further notice. The Fund's
investment objective 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 defined as the lesser of (i)
67% of the Fund's 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.
U.S. Treasury Obligations
As set forth in the Prospectus, 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. 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.
<PAGE>
When-Issued and Delayed Delivery Securities
The Fund may, in the ordinary course of business, purchase securities on a
"when-issued" or "delayed delivery" basis (i.e., delivery and payment may take
place a month or more after the date of the transaction). The Trust's investment
adviser ("Manager"), however, does not currently intend to employ such
investments. Securities so purchased are subject to market fluctuation, and no
interest would accrue to the Fund during this period. While the Fund would only
purchase securities on a "when-issued" or "delayed delivery" basis with the
intention of actually 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, in determining its net asset
value, will reflect the value of the security daily. 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.
Illiquid Securities
The Fund may 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. The
Manager, however, 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 under 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 Trust's Manager 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 National Association of Securities Dealers, Inc. ("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 Manager determines that they are
readily marketable. In reaching liquidity decisions, the Trust's Manager 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.
Repurchase Agreements
The Fund may 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 that 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.
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 interests 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 interests in or leases related to oil, gas or other mineral
exploration or development programs; or
(12) buy or sell commodities 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 invest more than 25% of the Fund's total assets in any industry
other than the U.S. Government.
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
Under Delaware law, the Trust's Board of Trustees is responsible for
establishing the Fund's policies and for overseeing management of the Fund. The
Board also elects the Trust's officers who conduct the daily business of the
Fund. The Trustees and principal officers of the Trust, their ages, and their
principal occupations for the past 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) Principal Occupations
with Trust and Address During Past Five Years
Mario J. Gabelli,* 57 Chairman of the Board, Chief Executive
President and Trustee Officer and Chief Investment Officer of
Gabelli Asset Management Inc. (since
1999) and Gabelli Funds, LLC; Director
or Trustee and Officer of various other
mutual funds advised by Gabelli Funds,
LLC and its affiliates; Chairman of the
Board and Chief Executive Officer of
Lynch Corporation (diversified manu-
facturing and communication services
company); and Director of East/West
Communications, Inc.
Anthony J. Colavita, 64 President and Attorney at Law in the law
Trustee firm of Anthony J. Colavita, P.C. since
1961; Director or Trustee of sixteen
other mutual funds advised by Gabelli
Funds, LLC and its affiliates.
Vincent D. Enright, 56 Former Senior Vice President and Chief
Trustee Financial Officer of KeySpan Energy
Corporation; Director or Trustee of six
other registered investment companies
advised by Gabelli Funds, LLC and its
affiliates.
John J. Parker, 67 Attorney at the law firm of McCarthy,
Trustee Fingar, Donovan, Drazen & Smith, since
August 1989.
Karl Otto Pohl,+ 69 Member of the Shareholder Committee of
Trustee Sal Oppenheim Jr. & Cie (private invest-
ment bank); Director of Gabelli Asset
Management Inc. (investment management),
Zurich Allied (insurance), and Trizec-
Hahn Corp. (real estate); Former
President of the Deutsche Bundesbank
and Chairman of its Central Bank Council
from 1980 through 1991; Director or
Trustee of all other mutual funds advis-
ed by Gabelli Funds, LLC and its affil-
iates.
Anthonie C. van Ekris, 64 Managing Director of Balmac Internation-
Trustee al; Director, Stahel Hardmeyer A.G.;
Director or Trustee of ten other regist-
ered investment companies in the Gabelli
family.
Bruce N. Alpert, 48 Executive Vice President and Chief
Vice President and Operating Officer of the Manager;
Treasurer Director and President of Gabelli
Advisers, Inc. and an Officer of all
all funds advised by Gabelli Funds, LLC
and its affiliates.
Judith A. Raneri, 31 Portfolio Manager, Gabelli Funds, LLC
Vice President since April 1997. Senior Portfolio
Manager, Secretary and Treasurer of The
Treasurer's Fund, Inc. A member of the
the Investment and Credit Review
Committees.
Ronald S. Eaker, 38 Senior Portfolio Manager of Gabelli
Vice President Fixed Income LLC and its predecessors
since 1987. President and Chief Invest-
ment Officer of The Treasurer's Fund,
Inc.
Henley L. Smith, 42 Senior Portfolio Manager of Gabelli
Vice President Fixed Income LLC and its predecessors
since 1987. Vice President and Invest-
ment Officer of The Treasurer's Fund,
Inc.
James E. McKee, 36 Vice President, General Counsel and
Secretary Secretary of the Manager; Vice President
and General Counsel of GAMCO Investors,
Inc.since 1993 and Gabelli Asset Manage-
ment Inc. since 1999; Secretary of all
funds advised by Gabelli Funds, LLC and
its affiliates since August 1995.
- ------------
* "Interested person" of the Fund, as defined in the 1940 Act. Mr. Gabelli is
an affiliated person of the Manager.
+ Mr. Pohl is a director of the parent company of the Manager.
No director, officer or employee of the Manager or any affiliate of the
Manager receives any compensation from the Trust for serving as an officer or
Trustee of the Trust. The Trust pays each of its Trustees who is not a director,
officer or employee of the Manager or any of its affiliates, $3,000 per annum
plus $500 per meeting attended and reimburses each Trustee for related travel
and out-of-pocket expenses. The Trust also pays each Trustee serving as a member
of the Audit, Proxy or Nominating Committees a fee of $500 per committee
meeting, if held on a day other than a regularly scheduled board meeting. For
the fiscal year ended September 30, 1999, Trustee fees totaled $23,250.
COMPENSATION TABLE
The following table sets forth certain information regarding the
compensation of the Trust's Trustees. Except as disclosed below, no executive
officer or person affiliated with the Trust received compensation in excess of
$60,000 from the Trust for the fiscal year ended September 30, 1999.
(1) (2) (3)
Name of Person Aggregate Compensation Total Compensation
and Position from the Fund from The Fund and
Fund Complex*
- --------------------------------------------------------------------------------
Anthony J. Colavita $5,000 $95,375 (17)
Trustee
Vincent D. Enright $6,000 $25,500 (7)
Trustee
John J. Parker $6,000 $6,000 (1)
Trustee
Karl Otto Pohl $2,500 $24,625 (19)
Trustee
Anthonie C. van Ekris $3,750 $59,750 (11)
Trustee
* Represents the total compensation paid to such persons during the calendar
year ended December 31, 1999. The parenthetical number represents the
number of investment companies (including the Fund) from which such person
receives compensation that are considered part of the same Fund complex as
the Fund because they have a common or affiliated investment adviser.
No compensation was received by Mr. Mario J. Gabelli from the Registrant. Mr.
Pohl became affiliated with the Adviser on February 10, 1999.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of January 7, 2000, the outstanding voting securities of the Fund
consisted of 534,237,456 shares of beneficial interest and the following persons
owned of record or beneficially 5% or more of the Fund's outstanding shares:
Name and Address % of Class Nature of Ownership
Gabelli Group Capital
Partners, Inc. 19.89% Beneficially
Attn: John Fodera
One Corporate Center
Rye, New York
10580-1442
Gabelli Asset Management,Inc. 15.98% Beneficially
Attn: John Fodera
One Corporate Center
Rye, New York
10580-1442
As of January 7, 2000, as a group, the Trustees and officers of the Trust
(other than Mr. Gabelli) owned less than 1% of the Fund's outstanding shares.
THE MANAGER AND OTHER SERVICES
Manager
Gabelli Funds, LLC is a New York limited liability company which also
serves as an investment adviser to 15 other open-end investment companies, and 4
closed-end investment companies with aggregate assets in excess of $10.6 billion
as of December 31, 1999. The Manager is a registered investment adviser under
the Investment Advisers Act of 1940, as amended. Mr. Mario J. Gabelli may be
deemed a "controlling person" of the Manager on the basis of his controlling
interest of the ultimate parent company of the Manager. The Manager has several
affiliates that provide investment advisory services: GAMCO Investors, Inc.
("GAMCO"), acts as investment adviser for individuals, pension trusts,
profit-sharing trusts and endowments, and had assets under management of
approximately $9.4 billion under its management as of December 31, 1999; Gabelli
Advisers, Inc. acts as investment adviser to the Gabelli Westwood Funds with
assets under management of approximately $390 million as of December 31, 1999;
Gabelli Securities, Inc. acts as investment adviser to certain alternative
investments products, consisting primarily of risk arbitrage and merchant
banking limited partnerships and offshore companies, with assets under
management of approximately $230 million as of December 31, 1999; and Gabelli
Fixed Income LLC acts as investment adviser for the three portfolios of The
Treasurer's Fund and separate accounts having assets under management of
approximately $1.4 billion as of December 31, 1999.
The Manager currently serves as investment adviser to the Fund pursuant to
a management agreement with the Trust (the "Management Agreement"). Under 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; and
(c) 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, (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 less 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 independent Trustees is required for any "assignment."
By its terms, the Management Agreement, which was last approved by the
Board of Trustees on November 17, 1999, will remain in effect from year to year,
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, 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.
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.
During the fiscal years ended September 30, 1999, September 30, 1998 and
September 30, 1997, the investment advisory fees paid to the Manager were
$1,257,595, $865,180 and $635,419, respectively. During such years, the Manager
waived advisory fees in the amounts of $407,351, $461,367 and $343,237,
respectively.
The Sub-Administrator
On December 1, 1999, First Data Investor Services Group, Inc. ("Investor
Services Group") became a majority-owned subsidiary of PNC Bank Corp. As a
result of this transaction, Investor Services Group is now known as PFPC Inc.
(the Sub-Administrator"). The Sub-Administrator, which is located at 101 Federal
Street, Boston, Massachusetts 02110, serves as Sub-Administrator to the Fund
pursuant to a Sub-Administration Agreement with the Adviser (the
"Sub-Administration Agreement"). Under the Sub-Administration Agreement, the
Sub-Administrator (a) assists in supervising all aspects of the Fund's
operations except those performed by the Adviser under its advisory agreement
with the Fund; (b) supplies the Fund with office facilities (which may be in the
Sub-Administrator's own offices), statistical and research data, data processing
services, clerical, accounting and bookkeeping services, including, but not
limited to, the calculation of the net asset value of shares in the Fund,
internal auditing and legal services, internal executive and administrative
services, and stationery and office supplies; (c) prepares and distributes
materials for all Fund Board of Trustees' Meetings including the mailing of all
Board materials and collates the same materials into the Board books and assists
in the drafting of minutes of the Board Meetings; (d) prepares reports to Fund
shareholders, tax returns and reports to and filings with the SEC and state
"Blue Sky" authorities; (e) calculates the Fund's net asset value per share,
provides any equipment or services necessary for the purpose of pricing shares
or valuing the Fund's investment portfolio and, when requested, calculates the
amounts permitted for the payment of distribution expenses under any
distribution plan adopted by the Fund; (f) provides compliance testing of all
Fund activities against applicable requirements of the 1940 Act and the rules
thereunder, the Internal Revenue Code of 1986, as amended (the "Code"), and the
Fund's investment restrictions; (g) furnishes to the Adviser such statistical
and other factual information and information regarding economic factors and
trends as the Adviser from time to time may require; and (h) generally provides
all administrative services that may be required for the ongoing operation of
the Fund in a manner consistent with the requirements of the 1940 Act.
For such services and the related expenses borne by the Sub-Administrator,
the Manager pays an annual fee of .0275% of the average daily net assets of the
Trust and certain other affiliated funds not exceeding $10 billion, .0125% of
net assets exceeding $10 billion but not exceeding $15 billion, and .01% of net
assets exceeding $15 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.
Counsel
Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York
10019-6099, is counsel to the Trust.
Independent Auditors
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has been
selected as independent auditors for the Trust.
Custodian, Transfer Agent and Dividend Disbursing Agent
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110 is the custodian for the Fund's cash and securities 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. ("BFDS"), an affiliate of State Street located at
the BFDS Building, Two Heritage Drive, Quincy, Massachusetts 02171, performs the
services of transfer agent and dividend disbursing agent for the Fund. Neither
BFDS nor State Street assists in or is responsible for investment decisions
involving assets of the Fund.
PURCHASE OF SHARES
The procedures for purchasing shares of the Fund are summarized in the
Fund's Prospectus under "Purchase of Shares."
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 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 $4,000 annually to both IRAs provided
that no more than $2,000 may be contributed to the IRA of either spouse.
Investors satisfying statutory income levels requirements may make
non-deductible contributions up to $2,000 annually to a Roth IRA, distributions
from which are not subject to tax if a statutory five year holding period
requirement is satisfied.
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." 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.
None of the Manager, the Transfer Agent, the Trust or any of their
affiliates or agents will be liable for any loss, expense, or cost when acting
upon any oral, wired, or electronically transmitted instructions or inquiries
believed by them to be genuine. While precautions will be taken, as more fully
described below, shareholders bear the risk of any loss as the result of
unauthorized telephone redemptions or exchanges believed by the Transfer Agent
to be genuine. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. These procedures include
recording all phone conversations, sending confirmations to shareholders within
72 hours of the telephone transaction, verifying the account name and sending
redemption proceeds only to the address of record or to a previously authorized
bank account. If a shareholder is unable to contact the Trust by telephone, a
shareholder must also mail the redemption request to the Distributor at The
Gabelli Funds, P.O. Box 8308, Boston, Massachusetts 02266-8308.
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 "Pricing
of Fund Shares."
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, acting in accordance with procedures and guidelines
approved by the Trustees, determines 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 and
Risk Information" 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 the 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 TRANSACTIONS AND BROKERAGE
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.
TAXATION
The Fund has qualified, and intends to continue to qualify, as a "Regulated
Investment Company" under Subchapter M of the Code. If so qualified, the Fund
will not be subject to federal income tax on its net investment income and
capital gains, if any, realized during any taxable year in which it distributes
such income to its shareholders. However, the Fund may still be liable for an
excise tax on income that is not distributed in accordance with a calendar year
requirement. The Fund intends to avoid the excise tax by making timely
distributions.
Generally, you will owe tax on the amounts distributed to you, regardless
of whether you receive these amounts in cash or reinvest them in additional Fund
shares. Shareholders not subject to tax on their income generally will not be
required to pay any tax on amounts distributed to them. Federal income tax on
distributions to an IRA or to a qualified retirement plan will generally be
deferred.
Capital gains, if any, derived from sales of portfolio securities held by
the Fund will generally be designated as long-term or short-term. Distributions
from the Fund's long-term capital gains are generally taxed at a favorable
long-term capital gains rate regardless of how long you have owned shares in the
Fund. Dividends from other sources are generally taxed as ordinary income.
Distributions from capital gains may be subject to state and local taxes.
Dividends and capital gain distributions are generally taxable when you
receive them; however, if a distribution is declared in October, November or
December, but not paid until January of the following year, it will be
considered to be paid on December 31 in the year in which it was declared.
Shortly after the end of each year, you will receive from the Fund a statement
of the amount and nature of the distributions made to you during the year.
INVESTMENT 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, 1999 was 4.46% (4.36% without waivers), which is equivalent to an
effective yield of 4.56% (4.46% 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
the 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, Inc.,
IBC Money Fund Report, The Bank Rate Monitor, other industry publications,
business periodicals, rating services and market indices.
DESCRIPTION OF THE FUND'S SHARES
Description of Shares, Voting Rights and Liabilities
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.
<PAGE>
FINANCIAL STATEMENTS
THE GABELLI U.S. TREASURY MONEY MARKET FUND
STATEMENT OF NET ASSETS -- SEPTEMBER 30, 1999
Annualized
Principal Yield at Date Maturity Market
Amount of Purchase Date Value
U.S. TREASURY OBLIGATIONS -- 99.8%
U.S. Treasury Bills -- 72.7%
$350,690,000 U.S. Treasury Bills
4.439% to 4.887% 10/14/99-11/26/99 $348,858,078
Interest Rate
U.S. Treasury Notes -- 27.1%
30,000,000 U.S. Treasury Notes -- 5.625% 11/30/99 30,037,932
40,000,000 U.S. Treasury Notes -- 5.375% 01/31/00 40,034,095
15,000,000 U.S. Treasury Notes -- 5.500% 02/29/00 15,014,305
25,000,000 U.S. Treasury Notes -- 5.500% 03/31/00 25,026,682
40,000,000 U.S. Treasury Notes -- 5.875% 11/15/99 20,022,440
----------
130,135,454
----------
TOTAL INVESTMENTS (Cost $478,993,532)(a) 99.8% 478,993,532
Other Assets and Liabilities (Net) 0.2 1,105,980
----- ----------
NET ASSETS (applicable to 480,099,512 shares outstanding,
$0.001 par value, one billion shares authorized) 100.0% $480,099,512
NET ASSET VALUE, Offering and Redemption Price Per Share $1.00
=====
- ----------------------------------------------
(a) Aggregate cost for Federal tax purposes.
THE GABELLI U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999 1998 1997(d) 1996 1995
---- ---- ---- ---- ----
Operating performance:
Net asset value, beginning of year.... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net investment income (a)............. 0.0422 0.0496 0.0485 0.0492 0.0528
Net realized gain on investments...... 0.0005 0.0005 0.0013 0.0006 0.0002
------ ------ ------ ------ ------
Total from investment operations...... 0.0427 0.0501 0.0498 0.0498 0.0530
------ ------ ------ ------ ------
Distributions to shareholders:
Net investment income................. (0.0422) (0.0496) (0.0485) (0.0492) (0.0528)
Net realized gain on investments.. (0.0005) (0.0005) (0.0013) (0.0006) (0.0002)
------ -------- -------- -------- --------
Total distributions................... (0.0427) (0.0501) (0.0498) (0.0498) (0.0530)
------ -------- -------- -------- --------
Net asset value, end of year.......... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return (b)...................... 4.4% 5.1% 5.1% 5.1% 5.4%
==== ==== ==== ==== ====
Ratios to average net assets and
supplemental data:
Net assets, end of year (in 000s)... $480,100 $314,394 $203,542 $216,038 $218,036
Ratio of net investment income
to average net assets.............. 4.19% 4.91% 4.85% 4.92% 5.30%
Ratio of operating expenses
to average net assets (c).......... 0.30% 0.30% 0.30% 0.30% 0.27%
- ------------------
</TABLE>
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends.
(a) Net investment income before fees waived by the Manager for the fiscal years
ended September 30, 1999, 1998, 1997, 1996 and 1995 were $0.0412, $0.0475,
$0.0469, $0.0477 and $0.0516, respectively.
(b) Operating expense ratios before fees waived by the Manager for the fiscal
years ended September 30, 1999, 1998, 1997, 1996 and 1995 were 0.40%, 0.46%,
0.45%, 0.45% and 0.39%, respectively.
(c) Gabelli Funds, LLC (formerly known as Gabelli Funds, Inc.) became the sole
investment adviser of the Fund on April 15, 1997.
See accompanying notes to financial statements.
THE GABELLI U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED SEPTEMBER 30, 1999
Investment Income:
Interest. $19,227,778
------------
Expenses:
Management fee 1,257,445
Transfer agent fees 169,462
Custodian fees 70,007
Registration fees 49,500
Legal and audit fees 33,700
Trustees' fees 26,163
Shareholder communications expenses 36,631
Miscellaneous expenses 22,038
------------
Total Expenses before fees waived
by Manager 1,664,946
Fees waived by Manager (407,351)
- ------------
Total Expenses - Net 1,257,595
- ------------
Net Investment Income 17,970,183
Net realized gain on investments 230,183
- -------------
Net Increase in net assets resulting from operations $18,200,366
THE GABELLI U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
September September
30, 1999 30, 1998
-------- --------
Operations:
Net investment income $17,970,183 $14,145,169
Net realized gain on
investments 230,183 240,664
-------- --------
Net increase in net assets
resulting from operations 18,200,366 14,385,833
-------- --------
Distribution to shareholders:
Net investment income (17,970,183) (14,145,169)
Net realized gain on
investments (230,183) (245,894)
-------- --------
Total distribution to
shareholders (18,200,366) (14,391,063)
-------- --------
Share transactions ($1.00 per share):
Shares sold 2,175,277,133 1,769,620,862
Shares issued upon reinvestment
of dividends and
distributions 17,576,389 13,843,721
Shares redeemed (2,027,147,677) (1,672,607,748)
-------- --------
Net increase in net assets 165,705,845 110,851,605
Net Assets:
Beginning of period 314,393,667 203,542,062
-------- --------
End of period $480,099,512 $314,393,667
======== ========
See accompanying notes to financial statements.
THE GABELLI U.S. TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. The Gabelli U.S. Treasury Money Market Fund (the "Fund"), a
series of The Gabelli Money Market Funds (the "Trust"), was organized on May 21,
1992 as a Delaware business trust. The Fund is a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Fund's primary objective is high current
income consistent with the preservation of principal and liquidity. The Fund
commenced investment operations on October 1, 1992.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
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.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
DIVIDENDS AND DISTRIBUTIONS. Dividends from investment income (including
realized capital gains and losses) are declared daily and paid monthly.
Distributions of long term capital gains, if any, are paid annually.
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.
3. AGREEMENTS WITH AFFILIATED PARTIES. The Trust has entered into a management
agreement (the "Management Agreement") with Gabelli Funds, LLC (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,
oversees the administration of all aspects of the Fund's business and affairs
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. For the year ended September 30,
1999, the Manager voluntarily waived management fees of $407,351.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
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 (the "Fund") (a series of The Gabelli Money Market
Funds) as of September 30, 1999, 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
five years in the period then ended. 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, 1999 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 as of September 30, 1999, the results of
its operations for the year then ended, the changes in their net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
New York, New York
November 1, 1999
1999 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, 1998 through September 30, 1999 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 law, it is
recommended that you consult your personal tax advisor as to the applicability
of the information provided to your specific situation.
