<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
During 1996, the economy grew at a modest pace, the dollar strengthened and
inflation was subdued. Corporate earnings continued to grow and U.S. equity
markets provided attractive returns. In contrast, bond prices weakened over the
course of 1996, due to inflationary fears and concerns that the Federal Reserve
might raise interest rates. While we believe that the growth of the U.S. economy
will slow, we do not anticipate a severe recession. Assuming the continuation of
a steady, subdued rate of inflation, we expect interest rates will fall in 1997.
These conditions should produce an attractive investment climate for both stocks
and bonds.
WINTHROP AGGRESSIVE GROWTH FUND
The Class "A" shares of the Winthrop Aggressive Growth Fund returned 13.80% for
the fiscal year ended October 31, 1996, versus 16.61% for the Russell 2000
Index. For the second year in a row, small company shares, as measured by the
Russell 2000, under-performed large company stocks, as measured by the S&P 500.
Our underweighted exposure to the energy sector hampered our relative
performance, but in the financial services sector, First American Corp. of
Tennessee, ReliaStar Financial and Washington Mutual performed strongly in 1996.
During 1996, investor concern about a possible slowdown in the U.S. economy
stimulated interest in industries that exhibited strong earnings momentum. While
the Fund's holdings appear to be very inexpensive relative to the Russell 2000
Index on a price earnings basis, many of our holdings currently have only
moderate earnings momentum, consistent with our "value" style of investment
management. We remain committed to locating and purchasing high quality, low
volatility companies at a fair price. While we cannot estimate the timing, we
believe that over time the relative attractiveness of the Fund's holdings will
be recognized and provide attractive rewards to investors.
WINTHROP GROWTH AND INCOME FUND
The Winthrop Growth and Income Fund "A" shares returned a solid 22.60% during
the fiscal year ended October 31, 1996, driven by the strong performance of
consumer staple stocks such as Gillette and Procter & Gamble. Despite rising
interest rates, financial services stocks like Freddie Mac and BankAmerica
delivered outstanding returns. A notable success was our exploitation of the
litigation-related weakness in the shares of Philip Morris; today it is one of
the Fund's top holdings. We expect Philip Morris to grow earnings at 15% per
year and believe dividends should rise at the same pace. Thus, we expect that
the current annual dividend of $4.80 per share will grow to $9.65, which is
nearly a 9% yield on the current price of $109. The 22.60% return for the
Winthrop Growth and Income Fund was modestly below the 24.11% return for the S&P
500 as performance was held back by our typical 10% portfolio allocation to
bonds.
WINTHROP GROWTH FUND
For the year ended October 31, 1996, the Winthrop Growth Fund "A" shares
returned 20.32%, while the S&P 500 earned 24.11%. Factors influencing the Fund's
performance included a strong performance by financial and
technology stocks. Some of the Fund's larger holdings, like MCI Communications,
lagged the market towards the end of the fiscal year. The announcement of
British Telecom's offer for MCI and the rebound in many of the Fund's other
holdings resulted in a more favorable performance in November.
WINTHROP FIXED INCOME FUND
The Class A shares of the Fund returned 4.34% for the fiscal year ended October
31, 1996, lagging the 5.81% return of the Lehman Government/Corporate
Intermediate Index. Like many investors, we were surprised by the strong upward
move in rates that began in February. Because of our optimistic view of the
market, the Fund's duration was longer than that of the Index at the wrong time.
We were further hurt by inflation fears and stronger than expected growth that
surfaced in the spring and increased long Treasury rates to 7.25%. Ultimately,
inflation proved not to be a problem and interest rates finally began to slide
in August, producing a dramatic bond rally in the fall. In this improved
investment climate our relative performance predictably showed great
improvement: for the most recent quarter ended October 31, 1996, the Fund's
Class A shares were up 3.32% vs. 3.27% for the Index.
In an environment in which lower quality bonds were significantly outperforming
Treasuries, we were able to remain competitive by focusing on sectors and
credits we felt had the best opportunities to improve, without compromising the
high quality profile of the Fund. Given the attractive real rates of return now
available in government bonds and the minimal risk premium currently available
in non-government sectors, we have now actively begun to reduce our exposure to
corporate bonds.
WINTHROP MUNICIPAL TRUST FUND
The Fund's Class A shares generated a total return of 3.83% for the year,
lagging the Lipper Intermediate Municipal Fund Index return of 4.29%. The Fund's
longer duration relative to that of its peer group in early 1996 was to our
detriment as interest rates spiked upward. Still, the Fund was able to make up
some lost ground at the close of the year as bond prices rallied. Consistent
with our opportunistic approach, we purchased California bonds, to capitalize on
credit improvements in that region and expectations of rating upgrades in the
coming year. The call structure of the Fund was actively managed throughout the
year--we replaced many bonds with call dates of less than ten years with longer,
non-callable bonds. Given our positive outlook for the fixed income markets as
we move into the next fiscal year, we intend to focus on higher credit quality,
longer non-call municipal securities.
The Officers & Trustees wish to take this opportunity to convey their gratitude
for your support as well as their hopes for a joyous, healthy and prosperous New
Year.
Sincerely,
[/S/ G. MOFFETT COCHRAN]
G. Moffett Cochran
President December, 1996
<PAGE>
FOCUS FUND HIGHLIGHTS
WINTHROP GROWTH FUND
PORTFOLIO CHANGES FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
MAJOR PURCHASES MAJOR SALES
Anheuser-Busch Cos., Inc.(1) Cellular Communications, Inc. Cl. A(2)
Barnett Banks, Inc.(1) First Chicago NBD Corp.(2)
Century Telephone Enterprises(1) General Mills, Inc.(2)
CPC International, Inc.(1) Heinz (H.J.) Co.(2)
Federated Department Stores, Inc.(1) Ingersoll-Rand Co.(2)
First Bank Systems, Inc.(1) Loews Corp.(2)
Lucent Technologies, Inc.(1) May Department Stores Co.(2)
Philip Morris Cos., Inc.(1) Motorola, Inc.(2)
Raytheon Co.(1) Nabisco Holding Corp. Cl. A(2)
Tyco International Ltd.(1) News Corp. Ltd. ADRs(2)
(1) New Holdings (2) Deletions
</TABLE>
TEN LARGEST HOLDINGS OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
------------ -------
<S> <C> <C>
PepsiCo, Inc. .......................... $ 2,909,175 4.1%
MCI Communications Corp ................ 2,341,650 3.3%
Procter & Gamble Co. ................... 2,306,700 3.2%
Merck & Co. ............................ 2,297,875 3.2%
Exxon Corp. ............................ 2,215,625 3.1%
BankAmerica Corp. ...................... 2,159,400 3.0%
Schering-Plough Corp. .................. 2,105,600 3.0%
American International Group, Inc....... 2,063,875 2.9%
Federal Home Loan Mortgage Corp. ....... 2,040,200 2.9%
Sears Roebuck & Co. .................... 1,886,625 2.6%
------------ -------
$ 22,326,725 31.3%
------------ -------
------------ -------
</TABLE>
INVESTMENT RESULTS FOR THE PERIODS ENDED OCTOBER 31, 1996
(UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WINTHROP GROWTH FUNDCL.A
<S> <C> <C> <C>
Without Sales Load With Sales Load S&P 500
12/86 10,000 9,525 10,000
10/87 9,650 9,192 10,418
10/88 10,781 10,269 11,960
10/89 13,123 12,500 15,116
10/90 11,673 11,118 13,985
10/91 15,141 14,421 18,671
10/92 15,846 15,093 20,529
10/93 18,121 17,260 23,596
10/94 18,873 17,977 24,507
10/95 21,177 20,172 30,984
10/96 25,481 24,270 38,454
</TABLE>
COMPARISON OF CHANGE IN VALUE
<TABLE>
<CAPTION>
OF $10,000 INVESTMENT
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------
WINTHROP GROWTH FUND
--------------------------------- S&P
WITHOUT LOAD WITH LOAD 500
------- ------- ------
Class A:
1 year...................... 20.32% 14.60% 24.11%
5 years..................... 10.97 9.90 15.55
From inception 12/86........ 9.93 9.39 14.61
Class B:
From inception 2/96......... 6.40 2.40 11.01
</TABLE>
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO
INDICATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. NO ADJUSTMENT HAS BEEN MADE FOR ANY
INCOME TAXES PAYABLE BY SHAREHOLDERS ON DIVIDENDS OR CAPITAL GAINS, BUT
THE RETURNS CALCULATED ABOVE HAVE BEEN COMPUTED AFTER DEDUCTION OF ALL
FUND EXPENSES INCLUDING ADVISORY FEES. CLASS A RETURNS SHOWN ABOVE ARE
COMPUTED WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4.75% FRONT-END
SALES LOAD. EFFECTIVE FEBRUARY 28, 1996, THE FUND BEGAN OFFERING CLASS B
SHARES WHICH, INSTEAD OF A FRONT-END SALES LOAD, ARE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE (CDSC) RANGING FROM 4% DURING THE FIRST
YEAR TO 0% AFTER 4 YEARS. ACCORDINGLY, RETURNS ON CLASS B SHARES WILL
DIFFER FROM THOSE OF CLASS A SHARES AND ARE REFERENCED IN THE TABLE ABOVE
WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4% CDSC. TOTAL RETURN
CALCULATED FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
<PAGE>
FOCUS FUND HIGHLIGHTS
WINTHROP GROWTH AND INCOME FUND
PORTFOLIO CHANGES FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
MAJOR PURCHASES MAJOR SALES
Airtouch Communications, Inc. Cl. B Armor All Products Corp.(2)
Cv. Pfd. 6.000%(1) Bay Networks, Inc.(2)
Airtouch Communications, Inc. Cl. C Caremark International, Inc.(2)
Cv. Pfd. 4.250%(1) Cellular Communications, Inc. Cl. A(2)
Arrow Electronics, Inc.(1) CSX Corp.(2)
Block (H&R), Inc.(1) Donnelley (R.R.) & Sons, Inc.(2)
Burlington Northern Santa Fe(1) Dorchester Hugoton, Ltd.(2)
General Instruments Corp.(1) ITT Industries, Inc.(2)
Halliburton Co.(1) Jostens, Inc.(2)
Mobil Corp.(1) PepsiCo, Inc.(2)
Raytheon Co.(1) (2) Deletions
Union Pacific Resources Group(1)
(1) New Holdings
</TABLE>
TEN LARGEST EQUITY HOLDINGS OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
------------ -------
<S> <C> <C>
First Bank Systems, Inc. ............... $ 3,665,112 3.1%
Loews Corp. ............................ 3,635,500 3.0%
Federal Home Loan Mortgage Corp. ....... 3,535,000 2.9%
American International Group............ 3,454,275 2.9%
Amoco Corp. ............................ 3,030,000 2.5%
Gillette Co. ........................... 2,930,200 2.4%
Philip Morris Cos., Inc. ............... 2,871,375 2.4%
Procter & Gamble Co. ................... 2,574,000 2.1%
United Technologies Corp. .............. 2,510,625 2.1%
BankAmerica Corp. ...................... 2,488,800 2.1%
------------ -------
$ 30,694,887 25.5%
------------ -------
------------ -------
</TABLE>
INVESTMENT RESULTS FOR THE PERIODS ENDED OCTOBER 31, 1996
(UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WINTHROP GROWTH AND INCOME FUNDCL. A
<S> <C> <C> <C>
Without Sales Load With Sales Load S&P 500
1986 10,000 9,525 10,000
1987 9,458 9,009 10,641
1988 10,776 10,264 12,216
1989 13,099 12,477 15,439
1990 12,079 11,505 14,284
1991 15,321 14,594 19,072
1992 16,416 15,636 20,969
1993 19,196 18,284 24,102
1994 20,076 19,122 25,018
1995 23,308 22,202 31,630
1996 28,576 27,218 39,256
</TABLE>
COMPARISON OF CHANGE IN VALUE
<TABLE>
<CAPTION>
OF $10,000 INVESTMENT
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------
WINTHROP GROWTH AND INCOME FUND
--------------------------------- S&P
WITHOUT LOAD WITH LOAD 500
------- ------- ------
Class A:
1 year...................... 22.60% 16.77% 24.11%
5 years..................... 13.28 12.18 15.55
10 years.................... 11.07 10.53 14.66
Class B:
From inception 2/96......... 7.67 3.67 11.01
</TABLE>
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO
INDICATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. NO ADJUSTMENT HAS BEEN MADE FOR ANY
INCOME TAXES PAYABLE BY SHAREHOLDERS ON DIVIDENDS OR CAPITAL GAINS, BUT
THE RETURNS CALCULATED ABOVE HAVE BEEN COMPUTED AFTER DEDUCTION OF ALL
FUND EXPENSES INCLUDING ADVISORY FEES. CLASS A RETURNS SHOWN ABOVE ARE
COMPUTED WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4.75% FRONT-END
SALES LOAD. EFFECTIVE FEBRUARY 28, 1996, THE FUND BEGAN OFFERING CLASS B
SHARES WHICH, INSTEAD OF A FRONT-END SALES LOAD, ARE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE (CDSC) RANGING FROM 4% DURING THE FIRST
YEAR TO 0% AFTER 4 YEARS. ACCORDINGLY, RETURNS ON CLASS B SHARES WILL
DIFFER FROM THOSE OF CLASS A SHARES AND ARE REFERENCED IN THE TABLE ABOVE
WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4% CDSC. TOTAL RETURN
CALCULATED FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
<PAGE>
FOCUS FUND HIGHLIGHTS
WINTHROP AGGRESSIVE GROWTH FUND
PORTFOLIO CHANGES FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
MAJOR PURCHASES MAJOR SALES
Dean Foods Co.(1) Anthony Industries, Inc.(2)
First Virginia Banks, Inc.(1) Big B, Inc.(2)
General Nutrition Cos.(1) Bob Evans Farms, Inc.(2)
K2, Inc.(1) Cellular Communications, Inc. Cl. A(2)
Loctite Corp.(1) HCC Insurance Holdings, Inc.(2)
MAPCO, Inc.(1) Oxford Industries, Inc.(2)
Mark IV Industries, Inc.(1) Platinum Technology, Inc.(2)
Nellcor Puritan Bennett(1) Rollins, Inc.(2)
Old Republic International Corp.(1) Tech Data Corp.(2)
Washington Mutual, Inc.(1) Worldtex, Inc.(2)
(1) New Holdings (2) Deletions
</TABLE>
TEN LARGEST HOLDINGS OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT
VALUE OF FUND
------------ -------
<S> <C> <C>
Carlisle Companies, Inc................. $ 5,386,063 2.3%
First American Corp. of Tennessee....... 5,174,000 2.2%
Methode Electronics, Inc. .............. 4,712,175 2.0%
Lydall, Inc. ........................... 4,692,712 2.0%
Hanna (M.A.) Co. ....................... 4,536,875 1.9%
Unitog Co. ............................. 4,117,500 1.8%
Teleflex, Inc. ......................... 4,114,687 1.8%
First Commerce Corp. ................... 3,802,050 1.6%
K2, Inc. ............................... 3,753,600 1.6%
Sbarro, Inc. ........................... 3,739,975 1.6%
------------ -------
$ 44,029,637 18.8%
------------ -------
------------ -------
</TABLE>
INVESTMENT RESULTS FOR THE PERIODS ENDED OCTOBER 31, 1996
(UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WINTHROP AGGRESSIVE GROWTH FUNDCL.A
<S> <C> <C> <C>
Without Sales Load With Sales Load Russell 2000
1986 10,000 9,525 10,000
1987 8,493 8,090 8,633
1988 11,096 10,569 10,975
1989 12,884 12,272 12,683
1990 10,423 9,929 9,220
1991 15,798 15,048 14,623
1992 19,061 18,156 16,010
1993 23,891 22,756 21,197
1994 25,006 23,820 21,132
1995 27,782 26,464 25,005
1996 31,615 30,117 29,159
</TABLE>
COMPARISON OF CHANGE IN VALUE
<TABLE>
<CAPTION>
OF $10,000 INVESTMENT
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------
WINTHROP AGGRESSIVE GROWTH FUND
--------------------------------- RUSSELL
WITHOUT LOAD WITH LOAD 2000
------- ------- ------
Class A:
1 year...................... 13.80% 8.40% 16.61%
5 years..................... 14.89 13.77 14.80
10 years.................... 12.20 11.66 11.30
Class B:
From inception 2/96......... 5.28 1.28 5.75
</TABLE>
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO
INDICATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. NO ADJUSTMENT HAS BEEN MADE FOR ANY
INCOME TAXES PAYABLE BY SHAREHOLDERS ON DIVIDENDS OR CAPITAL GAINS, BUT
THE RETURNS CALCULATED ABOVE HAVE BEEN COMPUTED AFTER DEDUCTION OF ALL
FUND EXPENSES INCLUDING ADVISORY FEES. CLASS A RETURNS SHOWN ABOVE ARE
COMPUTED WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4.75% FRONT-END
SALES LOAD. EFFECTIVE FEBRUARY 28, 1996, THE FUND BEGAN OFFERING CLASS B
SHARES WHICH, INSTEAD OF A FRONT-END SALES LOAD, ARE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE (CDSC) RANGING FROM 4% DURING THE FIRST
YEAR TO 0% AFTER 4 YEARS. ACCORDINGLY, RETURNS ON CLASS B SHARES WILL
DIFFER FROM THOSE OF CLASS A SHARES AND ARE REFERENCED IN THE TABLE ABOVE
WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4% CDSC. TOTAL RETURN
CALCULATED FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
<PAGE>
FOCUS FUND HIGHLIGHTS
WINTHROP FIXED INCOME FUND
PORTFOLIO CHANGES FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
MAJOR PURCHASES MAJOR SALES
Duke Power Co.(1) AAB Global Bond(2)
6.375%, 03/01/08 7.250%, 05/31/05
Federal National Mortgage Assn.(1) American General Corp.(2)
Pool #312088 7.000%, 06/01/01 7.750%, 04/01/05
Federal Home Loan Mortgage Corp.(1) Philip Morris Cos., Inc.(2)
Pool #270674 9.000%, 04/01/17 7.250%, 01/15/03
Santander Financial Issuances(1) Province of Ontario Canada(2)
7.875% 04/15/05 7.750%, 06/04/02
United States Treasury Notes(1) United States Treasury Notes(2)
6.500%, 08/15/05 6.875%, 08/31/99
(1) New Holdings (2) Deletions
</TABLE>
PORTFOLIO CHARACTERISTICS OCTOBER 31, 1996* (UNAUDITED)
<TABLE>
<S> <C>
30 DAY YIELD, CLASS A: 5.43% AVERAGE YEARS TO MATURITY: 7.4 YEARS
30 DAY YIELD, CLASS B: 4.99% AVERAGE COUPON: 7.09%+
AVERAGE RATING: AA AVERAGE DURATION: 4.3 YEARS
* Weighted Averages
+ Exclusive of U.S. Treasury Bills and Commercial Paper
</TABLE>
INVESTMENT RESULTS FOR THE PERIODS ENDED OCTOBER 31, 1996
(UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WINTHROP FIXED INCOME FUND CL.A
<S> <C> <C> <C>
Without Sales Load With Sales Load LBGCI
12/86 10,000 9,525 10,000
10/87 9,788 9,323 10,194
10/88 10,891 10,373 11,144
10/89 12,134 11,558 12,318
10/90 13,000 12,383 13,228
10/91 14,810 14,106 15,058
10/92 16,346 15,570 16,564
10/93 18,272 17,405 18,209
10/94 17,472 16,643 17,858
10/95 19,608 18,722 20,094
10/96 20,459 19,534 21,264
</TABLE>
COMPARISON OF CHANGE IN VALUE
OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------
WINTHROP FIXED INCOME FUND
LEHMAN BROS. GOV'T
-------------------- CORP. INTERMEDIATE
WITHOUT LOAD WITH LOAD BOND INDEX
------- -------- --------------------
Class A:
1 year...................... 4.34% -.62% 5.82%
5 years..................... 6.68 5.65 7.14
From inception 12/86........ 7.55 7.04 7.97
Class B:
From inception 2/96......... 2.23 -1.77 3.69
</TABLE>
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO
INDICATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. NO ADJUSTMENT HAS BEEN MADE FOR ANY
INCOME TAXES PAYABLE BY SHAREHOLDERS ON DIVIDENDS OR CAPITAL GAINS, BUT
THE RETURNS CALCULATED ABOVE HAVE BEEN COMPUTED AFTER DEDUCTION OF ALL
FUND EXPENSES INCLUDING ADVISORY FEES. CLASS A RETURNS SHOWN ABOVE ARE
COMPUTED WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4.75% FRONT-END
SALES LOAD. EFFECTIVE FEBRUARY 28, 1996, THE FUND BEGAN OFFERING CLASS B
SHARES WHICH, INSTEAD OF A FRONT-END SALES LOAD, ARE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE (CDSC) RANGING FROM 4% DURING THE FIRST
YEAR TO 0% AFTER 4 YEARS. ACCORDINGLY, RETURNS ON CLASS B SHARES WILL
DIFFER FROM THOSE OF CLASS A SHARES AND ARE REFERENCED IN THE TABLE ABOVE
WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4% CDSC. TOTAL RETURN
CALCULATED FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
<PAGE>
FOCUS FUND HIGHLIGHTS
WINTHROP MUNICIPAL TRUST FUND
PORTFOLIO CHANGES FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
MAJOR PURCHASES MAJOR SALES
Chicago, Illinois O'Hare International Georgia State General Obligation
Airport(1) Ser. B(2)
5.500%, 01/01/08 5.500%, 04/01/99
New York State Urban Development Kentucky State Turnpike Authority(2)
Corp.(1) 6.500%, 07/01/07
5.300%, 01/01/05 Orlando, Florida Utilities Commission
New York State Dormitory Authority Water & Electric Revenue(2)
Revenue(1) 6.375%, 04/01/08
6.500%, 05/15/06 New York State Local Assistance Corp.
University of Texas, Permanent Ser. B(2)
University 7.125%, 04/01/03
Funding(1) Tarrant County, Texas Junior College
4.600%, 07/01/08 District Refunding Ser. A(2)
Washington Public Power Supply Ser. 6.375%, 02/15/04
1B(1) (2) Deletions
7.100%, 07/01/00
(1) New Holdings
</TABLE>
PORTFOLIO CHARACTERISTICS OCTOBER 31, 1996* (UNAUDITED)
<TABLE>
<S> <C>
30 DAY YIELD, CLASS A: 4.46% AVERAGE YEARS TO MATURITY: 8.4 YEARS
30 DAY YIELD, CLASS B: 3.97% AVERAGE COUPON: 5.71%
AVERAGE RATING: AA AVERAGE DURATION: 6.4 YEARS
* Weighted Averages
</TABLE>
INVESTMENT RESULTS FOR THE PERIODS ENDED OCTOBER 31, 1996
(UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
WINTHROP MUNICIPAL TRUST FUND-CL.A
<S> <C> <C> <C>
Without Sales Load With Sales Load Lipper Intermediate Municipal Fund Index
7/93 10,000 9,525 10,000
10/93 10,183 9,699 10,309
10/94 9,952 9,479 10,060
10/95 10,953 10,433 11,160
10/96 11,373 10,831 11,639
</TABLE>
COMPARISON OF CHANGE IN VALUE
<TABLE>
<CAPTION>
OF $10,000 INVESTMENT
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------
WINTHROP MUNICIPAL
TRUST FUND
-------------------- LIPPER INTERMEDIATE
WITHOUT LOAD WITH LOAD MUNICIPAL FUND INDEX
------- -------- --------------------
Class A:
1 year...................... 3.83% -1.10% 4.29%
From inception 7/93......... 4.03 2.49 4.78
Class B:
From inception.............. 1.42 -2.58 1.80
</TABLE>
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO
INDICATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. NO ADJUSTMENT HAS BEEN MADE FOR ANY
INCOME TAXES PAYABLE BY SHAREHOLDERS ON DIVIDENDS OR CAPITAL GAINS, BUT
THE RETURNS CALCULATED ABOVE HAVE BEEN COMPUTED AFTER DEDUCTION OF ALL
FUND EXPENSES INCLUDING ADVISORY FEES. CLASS A RETURNS SHOWN ABOVE ARE
COMPUTED WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4.75% FRONT-END
SALES LOAD. EFFECTIVE FEBRUARY 28, 1996, THE FUND BEGAN OFFERING CLASS B
SHARES WHICH, INSTEAD OF A FRONT-END SALES LOAD, ARE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE (CDSC) RANGING FROM 4% DURING THE FIRST
YEAR TO 0% AFTER 4 YEARS. ACCORDINGLY, RETURNS ON CLASS B SHARES WILL
DIFFER FROM THOSE OF CLASS A SHARES AND ARE REFERENCED IN THE TABLE ABOVE
WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4% CDSC. TOTAL RETURN
CALCULATED FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
<PAGE>
Winthrop Focus Funds--Statement of Investments OCTOBER 31, 1996
- --------------------------------------------------------------------------------
WINTHROP GROWTH FUND
COMMON STOCKS--97.0%
<TABLE>
<CAPTION>
BASIC MATERIALS--4.8% SHARES VALUE
----------- ------------
<S> <C> <C>
CHEMICALS-3.0%
Dow Chemical Co.............................. 21,600 $ 1,679,400
Chemicals, metals, plastics, packaging
Morton International, Inc.................... 11,000 433,125
------------
Specialty chemicals, salt, airbags
2,112,525
------------
METALS & MINING-0.5%
Nucor Corp................................... 7,500 355,313
------------
Manufacturer of steel & steel products
PAPER-1.3%
Mead Corp.................................... 16,100 913,675
------------
Manufacturer of paper, lumber & wood
products
3,381,513
------------
CAPITAL GOODS--8.4%
AEROSPACE & DEFENSE-3.0%
General Dynamics Corp........................ 12,500 857,813
Builds & designs nuclear submarines
Raytheon Co.................................. 26,000 1,280,500
------------
Defense: commercial electronics:
construction
2,138,313
------------
BUILDING & CONSTRUCTION-0.7%
Tyco International Ltd....................... 10,000 496,250
------------
Fire protection systems: cable: solar
ELECTRICAL EQUIPMENT-1.3%
Emerson Electric Co.......................... 10,200 907,800
------------
Manufacturer of electric/electronic
products
ENVIRONMENTAL CONTROL-0.5%
WMX Technologies, Inc........................ 10,700 367,813
------------
Comprehensive waste management services
MACHINERY-2.9%
AGCO Corp.................................... 11,400 289,274
Manufacturer and distributor of
agricultural equipment
Deere & Co................................... 42,900 1,791,075
------------
Largest manufacturer of farm equipment:
construction machinery
2,080,349
------------
5,990,525
------------
CONSUMER CYCLICAL--11.9%
APPAREL/TEXTILE-0.7%
Warnaco Group, Inc........................... 21,000 522,375
------------
Apparel manufacturer
AUTO & TRUCKS-1.8%
General Motors Corp.......................... 23,500 1,266,062
------------
Largest manufacturer of automotive products
AUTO RELATED-0.9%
Goodyear Tire & Rubber Co.................... 6,400 293,600
Manufacturer of tires & rubber products
Lear Seating Corp.*.......................... 10,000 370,000
------------
Automobile and light truck seating systems
663,600
------------
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
LEISURE RELATED-2.3%
Disney (Walt) Co............................. 22,067 $ 1,453,664
Diversified international entertainment
company
Hasbro, Inc.................................. 5,000 194,375
------------
Manufacturer of toys & games
1,648,039
------------
PHOTO & OPTICAL-1.0%
Eastman Kodak Co............................. 9,200 733,700
------------
Photograph apparatus, chemicals
PRINTING & PUBLISHING-0.9%
Belo (A.H.) Corp............................. 17,000 663,000
------------
Newspaper publishing: broadcasting
RETAIL-GENERAL-4.3%
Federated Department Stores, Inc.*........... 34,800 1,148,400
Operates department stores in U.S.
Sears Roebuck & Co........................... 39,000 1,886,625
------------
Large retailer of general merchandise:
insurance
3,035,025
------------
8,531,801
------------
CONSUMER STAPLES--24.1%
BEVERAGE & TOBACCO-6.6%
PepsiCo, Inc................................. 98,200 2,909,175
Provides soft drinks/food services
Anheuser-Busch Cos., Inc..................... 16,000 616,000
Largest U.S. brewer: baking
Philip Morris Cos., Inc...................... 12,500 1,157,812
------------
Tobacco, brewing, soft drinks
4,682,987
------------
DRUGS-7.0%
American Home Products Corp.................. 9,600 588,000
Drugs, food, household/ware
Merck & Co., Inc............................. 31,000 2,297,875
Human & animal pharmaceuticals
Schering-Plough Corp......................... 32,900 2,105,600
------------
Pharmaceutical/consumer products
4,991,475
------------
FOODS-2.6%
CPC International, Inc....................... 23,000 1,814,125
------------
International food processor
HOSPITAL SUPPLIES & SERVICES-2.8%
Columbia/HCA Healthcare Corp................. 44,400 1,587,300
Healthcare facilities/services
Health Management Associates Cl. A*.......... 19,500 429,000
------------
Operates acute care hospitals
2,016,300
------------
RETAIL-FOOD-1.2%
Safeway, Inc.*............................... 20,000 857,500
------------
Food supermarket chain
SOAPS & TOILETRIES-3.9%
Colgate-Palmolive Co......................... 5,100 469,200
Household and personal care
Procter & Gamble Co.......................... 23,300 2,306,700
------------
Household, personal care, food products
2,775,900
------------
17,138,287
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
ENERGY--9.5%
OIL-DOMESTIC-6.4%
Kerr-McGee Corp.............................. 29,500 $ 1,851,125
Petroleum, chemicals, coal
Unocal Corp.................................. 24,000 879,000
Holding co.; integrated domestic oil
Texaco, Inc.................................. 15,000 1,524,375
Explore, produce, transport, refine and
market crude oil, natural gas, etc.
Union Pacific Resources Group................ 10,163 279,483
------------
Oil & gas exploration, development,
production
4,533,983
------------
OIL-INTERNATIONAL-3.1%
Exxon Corp................................... 25,000 2,215,625
------------
World's leading oil company
6,749,608
------------
FINANCIAL--17.9%
BANKING-9.3%
BankAmerica Corp............................. 23,600 2,159,400
Diverse financial products & services
Barnett Banks, Inc........................... 44,800 1,708,000
Commercial banking: Florida, Georgia
First Bank Systems, Inc...................... 18,000 1,188,000
Commercial banking: MN and Upper Midwest
Wells Fargo & Co............................. 5,900 1,576,038
------------
Commercial banking: CA
6,631,438
------------
FINANCIAL SERVICES-4.7%
Capital One Financial Corp................... 41,900 1,304,137
Bank card issuer/services
Federal Home Loan Mortgage Corp.............. 20,200 2,040,200
------------
Provides residential mortgage funds
3,344,337
------------
INSURANCE-3.9%
American International Group, Inc............ 19,000 2,063,875
International insurance holding company
AON Corp..................................... 12,700 733,425
------------
Insurance holding company
2,797,300
------------
12,773,075
------------
TECHNOLOGY--19.1%
ELECTRONICS-2.9%
First Data Corp.............................. 9,000 717,750
Information processing & related services
Intel Corp................................... 9,000 988,875
Semiconductor memory circuits
Molex, Inc................................... 10,000 360,000
------------
Terminals, connectors, switches
2,066,625
------------
<CAPTION>
SHARES VALUE
----------- ------------
<S> <C> <C>
OFFICE EQUIPMENT/SERVICE-8.1%
Cisco Systems, Inc.*......................... 15,000 $ 928,125
Manufacturer of computer network products
Hewlett-Packard Co........................... 35,000 1,544,375
Electronic measurement, analysis &
computation instruments
Microsoft Corp.*............................. 10,000 1,372,500
Software for microcomputers
Oracle Systems Corp.*........................ 24,750 1,047,234
Markets database management software
Pitney Bowes, Inc............................ 16,000 894,000
------------
Postage equipment and related mailing
equipment
5,786,234
------------
TELECOMMUNICATIONS-8.1%
ALLTEL Corp.................................. 23,500 716,750
Telecommunications & information services
holding company
Century Telephone Enterprises................ 39,000 1,252,875
Telephone service in parts of 14 states
Glenayre Technologies, Inc.*................. 17,900 460,925
Manufacturer of telecommunications
equipment
Lucent Technologies, Inc..................... 11,342 533,074
Manufacturer of telecommunications systems,
software, products
MCI Communications Corp...................... 93,200 2,341,650
Telecommunications network, services
Northern Telecom Ltd......................... 7,000 455,875
------------
Telecommunications equipment
5,761,149
------------
13,614,008
------------
TRANSPORT & SERVICE--1.3%
AIRLINES-0.4%
Delta Air Lines, Inc......................... 3,600 255,150
------------
Domestic & international air service
RAILROADS-0.9%
Union Pacific Corp........................... 12,000 673,500
------------
Railroad operator
928,650
------------
TOTAL COMMON STOCKS
(cost $54,837,291)......................... 69,107,467
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER--3.1%
(amortized cost $2,189,040)
Ford Motor Credit Corp.
5.26%, 11/04/96............................ $ 2,190,000 2,189,040
------------
TOTAL INVESTMENTS--100.1%
(cost $57,026,331)......................... 71,296,507
------------
CASH AND OTHER ASSETS
NET OF LIABILITIES--(0.1)%................. (23,706)
------------
NET ASSETS--100.0%........................... $ 71,272,801
------------
------------
</TABLE>
* Non-income producing
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
Winthrop Focus Funds--Statement of Investments OCTOBER 31, 1996
- --------------------------------------------------------------------------------
WINTHROP GROWTH AND INCOME FUND
COMMON STOCKS--86.2%
<TABLE>
<CAPTION>
BASIC MATERIALS--5.1% SHARES VALUE
----------- -------------
<S> <C> <C>
CHEMICALS-1.5%
DuPont (E.I.) de Nemours & Co. .............. 19,800 $ 1,836,450
-------------
Large chemical co.: oil & gas
OIL & GAS-3.6%
Amoco Corp. ................................. 40,000 3,030,000
Integrated domestic oil
San Juan Basin Royalty Trust ................ 190,000 1,330,000
-------------
Royalty gas interest in New Mexico
4,360,000
-------------
6,196,450
-------------
CAPITAL GOODS/
CONSTRUCTION--5.7%
AEROSPACE & DEFENSE-5.5%
General Dynamics Corp. ...................... 30,600 2,099,925
Builds & designs nuclear submarines
Raytheon Co. ................................ 39,900 1,965,075
Defense: commercial electronics:
construction
United Technologies Corp. ................... 19,500 2,510,625
-------------
Aerospace, climate control systems
6,575,625
-------------
BUILDING & CONSTRUCTION-0.2%
RPM, Inc. Ohio............................... 15,000 251,250
-------------
Protective coatings
6,826,875
-------------
CONSUMER PRODUCTS
& SERVICES--31.4%
BEVERAGES & TOBACCO-5.3%
American Brands, Inc. ....................... 5,000 238,750
Tobacco, life insurance
Guinness PLC ADRs............................ 23,100 838,068
Distiller, brewer and distributor of
distilled spirits and malt beverages
Philip Morris Cos., Inc. .................... 31,000 2,871,375
Tobacco, brewing, soft drinks
RJR Nabisco Holdings Corp. .................. 33,000 952,875
Manufactures tobacco and food products
UST, Inc. ................................... 50,000 1,443,750
-------------
Snuff, tobacco, wine, spirits
6,344,818
-------------
CONTAINERS-0.7%
Bemis Co. ................................... 24,000 840,000
-------------
Packaging/adhesive products
DRUGS-3.6%
Pfizer, Inc. ................................ 25,700 2,126,675
Healthcare consumer products, special
chemicals
Pharmacia & Upjohn, Inc. .................... 20,000 720,000
Int'l pharmaceutical & biotechnological
group of companies
Schering-Plough Corp. ....................... 24,100 1,542,400
-------------
Pharmaceutical/consumer products
4,389,075
-------------
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
FOODS-2.1%
Archer-Daniels-Midland Co. .................. 29,505 $ 641,734
Process soybeans: flour mills
Heinz (H.J.) Co. ............................ 52,700 1,870,850
-------------
Manufactures and markets food products
2,512,584
-------------
HOSPITAL SUPPLIES & SERVICES-2.8%
Abbott Laboratories.......................... 44,500 2,252,813
Diversified line of human healthcare
products & services
Columbia/HCA Healthcare Corp. ............... 30,000 1,072,500
-------------
Healthcare facilities/services
3,325,313
-------------
LEISURE-4.6%
Cedar Fair L.P. ............................. 55,700 1,949,500
Owns and operates amusement parks
Disney (Walt) Co. ........................... 20,739 1,367,478
Diversified international entertainment
company
Hasbro, Inc. ................................ 58,200 2,262,525
-------------
Manufacturer of toys & games
5,579,503
-------------
PRINTING & PUBLISHING-2.7%
Dun & Bradstreet Corp. ...................... 32,000 1,852,000
Business information: publishing,
marketing, TV
New York Times Co. Cl. A..................... 40,000 1,445,000
-------------
Publishes newspapers & magazines
3,297,000
-------------
RETAIL-FOOD & DRUGS-1.7%
Walgreen Co. ................................ 54,800 2,068,700
-------------
Major retail drug chain
RETAIL-GENERAL-3.3%
Federated Department Stores, Inc. ........... 54,000 1,782,000
Operates department stores in U.S.
Newell Co. .................................. 77,500 2,199,063
-------------
Manufacturer of high volume staple consumer
products
3,981,063
-------------
SOAPS & TOILETRIES-4.6%
Gillette Co. ................................ 39,200 2,930,200
Shaving, personal care products
Procter & Gamble Co. ........................ 26,000 2,574,000
-------------
Household, personal care, food products
5,504,200
-------------
37,842,256
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
ENERGY--4.4%
<S> <C> <C>
OIL-SUPPLIES & CONSTRUCTION-4.4%
Halliburton Co. ............................. 18,000 $ 1,019,250
Oil well services: engineering &
construction
Mobil Corp. ................................. 8,450 986,538
International oil & gas exploration,
development
Union Pacific Resources Group................ 35,500 976,250
Oil & gas exploration, development,
production
Western Atlas, Inc.*......................... 34,000 2,358,750
-------------
Oilfield information service/ automation
systems
5,340,788
-------------
FINANCIAL SERVICES--21.1%
BANKING-9.9%
BankAmerica Corp. ........................... 27,200 2,488,800
Diverse financial products & services
First Bank System, Inc. ..................... 55,532 3,665,112
Commercial banking: MN and Upper Midwest
Mellon Bank Corp. ........................... 20,000 1,302,500
Commercial banking: PA
Regions Financial Corp. ..................... 5,000 250,000
Commercial banking: AL
Republic New York Corp. ..................... 26,100 1,990,125
Commercial banking: NY & worldwide
Wells Fargo & Co. ........................... 8,500 2,270,562
-------------
Commercial banking: CA
11,967,099
-------------
INSURANCE-6.8%
Allmerica Financial Corp. ................... 34,000 1,032,750
Insurance and financial services & products
Allmerica Property & Casualty Cos., Inc. .... 10,000 276,250
Property-liability insurance
American International Group, Inc. .......... 31,800 3,454,275
International insurance holding company
Hartford Steam Boiler
Inspection & Insurance Co. ................ 15,000 646,875
Insurance/engineering services
ITT Hartford Group, Inc. .................... 26,900 1,694,700
Insurance provider
Progressive Corp. ........................... 16,100 1,106,875
-------------
Insurance holding company
8,211,725
-------------
OTHER-4.4%
Block (H&R), Inc. ........................... 70,000 1,732,500
Tax, computer & personal services
Federal Home Loan Mortgage Corp. ............ 35,000 3,535,000
-------------
Provides residential mortgage funds
5,267,500
-------------
25,446,324
-------------
PUBLIC UTILITIES--4.3%
ELECTRIC-1.1%
CIPSCO, Inc. ................................ 35,200 1,280,400
-------------
Holding co.: central IL public service
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
GAS-1.6%
Consolidated Natural Gas Co. ................ 21,000 $ 1,115,625
Integrated natural gas systems
New Jersey Resources Corp. .................. 29,000 801,125
-------------
Supplies gas in New Jersey
1,916,750
-------------
TELEPHONE-1.6%
GTE Corp. ................................... 45,000 1,895,625
-------------
Telephone holding company; manufacturing
5,092,775
-------------
SCIENCE & TECHNOLOGY--4.2%
COMPUTERS-0.3%
Automatic Data Processing.................... 10,000 416,250
-------------
Computer services
ELECTRONICS-3.0%
Arrow Electronics, Inc. ..................... 23,500 1,119,187
Distributes electronic components
General Instruments Corp.*................... 70,600 1,420,825
Supplies CATV/communications equipment
Motorola, Inc. .............................. 22,300 1,025,800
-------------
Semiconductors: communications equipment
3,565,812
-------------
TELECOMMUNICATIONS-0.9%
International Cabletel, Inc.*................ 13,333 316,659
Telecommunications services
Vodafone Group ADRs.......................... 20,326 785,092
-------------
British cellular operator
1,101,751
-------------
5,083,813
-------------
TRANSPORT & SERVICE--3.2%
PROFESSIONAL SERVICE-1.5%
United Healthcare Corp. ..................... 46,000 1,742,250
-------------
Manages health maintenance services
RAILROADS-1.7%
Burlington Northern Santa Fe................. 24,500 2,018,187
-------------
Railroad systems operations in U.S.
3,760,437
-------------
MISCELLANEOUS--6.8%
DIVERSIFIED-4.9%
Loews Corp. ................................. 44,000 3,635,500
Tobacco; hotel; insurance subsidiary
Tyco International Ltd. ..................... 44,600 2,213,275
-------------
Fire protection systems: cable, solar
5,848,775
-------------
LIMITED PARTNERSHIP-TIMBER-1.2%
Plum Creek Timber Co. L.P. .................. 55,000 1,471,250
-------------
Lumber and wood products
REAL ESTATE INVESTMENT TRUST-0.7%
General Growth Properties, Inc. ............. 35,000 883,750
-------------
Real estate investment trust
8,203,775
-------------
TOTAL COMMON STOCKS
(cost $78,415,496)......................... 103,793,493
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
CONVERTIBLE
PREFERRED STOCK--3.3%
<S> <C> <C>
Airtouch Communications, Inc. Cl. B Cv. Pfd.
6.000%..................................... 40,728 $ 1,155,657
Wireless communications services
Airtouch Communications, Inc. Cl. C Cv. Pfd.
4.250%..................................... 21,156 981,109
Wireless communications services
Corning, Inc. Mips, Cv. Pfd 6.000%........... 10,000 560,000
Specialty material communications, consumer
products/services
RJR Nabisco Holdings Corp., Cv. Pfd. ........ 230,000 1,293,750
-------------
Manufactures tobacco and food products
TOTAL PREFERRED STOCKS
(cost $4,033,838).......................... 3,990,516
-------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
U.S. GOVERNMENT
AGENCIES--1.8%
Federal National Mortgage Assn. 7.400%,
07/01/04................................... $ 1,000,000 1,051,690
Federal Home Loan Bank
7.460%, 09/09/04........................... 1,000,000 1,056,320
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $1,953,819).......................... 2,108,010
-------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -------------
<S> <C> <C>
U.S. GOVERNMENT
OBLIGATIONS--5.2%
United States Treasury Strips
0.000%, 05/15/11........................... $ 1,425,000 $ 542,796
United States Treasury Strips
0.000%, 11/15/11........................... 3,000,000 1,102,199
United States Treasury Strips
0.000%, 02/15/12........................... 3,100,000 1,111,908
United States Treasury Strips
0.000%, 11/15/14........................... 4,000,000 1,178,600
United States Treasury Strips
0.000%, 11/15/18........................... 10,294,000 2,283,826
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(cost $6,157,079).......................... 6,219,329
-------------
COMMERCIAL PAPER--3.3%
General Electric Capital Corp.
5.200%, 11/01/96........................... 1,225,000 1,225,000
General Electric Capital Corp.
5.35%, 11/06/96............................ 1,470,000 1,468,908
Ford Motor Credit Corp.
5.250%, 11/05/96........................... 1,315,000 1,314,233
-------------
TOTAL COMMERCIAL PAPER
(amortized cost $4,008,141)................ 4,008,141
-------------
TOTAL INVESTMENTS--99.8%
(cost $94,568,373)......................... 120,119,489
-------------
CASH AND OTHER ASSETS
NET OF LIABILITIES-0.2%.................... 228,627
-------------
NET ASSETS--100.0%........................... $ 120,348,116
-------------
-------------
</TABLE>
* Non-income producing
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
Winthrop Focus Funds--Statement of Investments OCTOBER 31, 1996
- --------------------------------------------------------------------------------
WINTHROP AGGRESSIVE GROWTH FUND
COMMON STOCKS--99.3%
<TABLE>
<CAPTION>
BASIC MATERIALS--5.7% SHARES VALUE
----------- -------------
<S> <C> <C>
CHEMICALS-4.8%
Puron Co..................................... 91,700 $ 1,925,700
Manufactures non-metallic industrial
products
Hanna (M.A.) Co.............................. 213,500 4,536,875
Special chemicals, polymers
LeaRonal, Inc................................ 105,600 2,336,400
Electroplating process
Loctite Corp. ............................... 44,000 2,579,500
-------------
Chemical sealants, adhesives
11,378,475
-------------
PAPER-0.9%
Caraustar Industries, Inc. .................. 69,400 2,029,950
-------------
Manufactures low-cost recycled paperboard
13,408,425
-------------
CAPITAL GOODS/
CONSTRUCTION--21.2%
AEROSPACE-2.4%
Teleflex, Inc................................ 85,500 4,114,687
Aerospace controls; medical products
Whittaker Corp.*............................. 114,000 1,610,250
-------------
Aerospace: fluid control/electric systems
5,724,937
-------------
BUILDING & CONSTRUCTION-10.9%
Applied Power, Inc. Cl. A.................... 101,900 3,668,400
Manufactures hydraulic industrial/
construction equipment materials
Carlisle Companies, Inc...................... 94,700 5,386,063
Manufactures rubber, plastic, metal
products
Clarcor, Inc................................. 77,050 1,675,838
Manufactures filtration/consumer products
Cuno, Inc.*.................................. 66,250 1,060,000
Manufactures filtration products
Lydall, Inc.*................................ 212,100 4,692,712
Engineered fiber materials
Osmonics, Inc.*.............................. 174,900 3,716,625
Reverse osmosis/ultrafiltration
Regal Beloit Corp............................ 158,000 2,804,500
Manufactures tools and power transmissions
RPM, Inc., Ohio.............................. 149,750 2,508,313
-------------
Protective coatings
25,512,451
-------------
ELECTRICAL EQUIPMENT-4.9%
AptarGroup, Inc.............................. 77,300 2,492,925
Manufacturer of packaging components:
pumps, valves
Bearings, Inc................................ 71,450 1,857,700
Distributor of bearings & power
transmissions
Belden, Inc.................................. 105,200 3,024,500
Manufacturer of electrical wire, cable
EG & G, Inc.................................. 67,900 1,196,738
Scientific equipment, systems & services
Woodhead Industries, Inc..................... 211,800 2,912,250
-------------
Electrical specialty products
11,484,113
-------------
ENVIRONMENTAL CONTROL-1.4%
Donaldson, Inc............................... 109,200 3,194,100
-------------
Engine air cleaners, mufflers
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
MACHINERY-1.6%
AGCO Corp.................................... 65,000 $ 1,649,375
Manufacturer and distributor of
agricultural equipment
Commercial Intertech Corp.................... 46,650 518,981
Engineers metal components
Core Industries, Inc......................... 125,900 1,668,175
-------------
Manufacturer of specialty products
3,836,531
-------------
49,752,132
-------------
CONSUMER CYCLICAL--28.0%
APPAREL/TEXTILE-3.4%
Interface, Inc. Cl. A........................ 76,300 1,287,563
Manufacturer of carpet/tile
Unifi, Inc................................... 82,500 2,567,813
Texturizing polyester yarns
Unitog Co.................................... 152,500 4,117,500
-------------
Rent/sell industrial uniforms
7,972,876
-------------
AUTO RELATED-7.1%
Amcast Industrial Corp. ..................... 134,700 2,744,512
Technology-intensive metal products
Armor All Products Corp. .................... 109,000 1,825,750
Produces auto cleaners and protectants
Augat, Inc. ................................. 57,900 1,592,250
Manufactures electromechanical components
Donnelly Corp. Cl. A......................... 141,600 2,814,300
Manufactures auto glass products
Modine Manufacturing Co. .................... 96,400 2,385,900
Auto parts: heating, air-conditioning
Myers Industries, Inc. ...................... 157,295 2,438,072
Tire service/plastic products
Smith (A.O.) Corp. .......................... 89,500 2,349,375
Automotive products, electric motors,
piping systems
Thompson PBE, Inc.*.......................... 51,900 376,275
-------------
Distributor of auto paints/supplies
16,526,434
-------------
FOOD SERVICE/LODGING-4.1%
Marcus Corp.................................. 115,650 2,573,212
Hotels, restaurants, theatres
Sbarro, Inc.................................. 141,800 3,739,975
Italian fast food restaurant
Universal Foods Corp. ....................... 93,400 3,304,025
-------------
Specialty products: yeast, cheese
9,617,212
-------------
HOUSEHOLD FURNITURE/APPLIANCE-4.2%
Chromcraft Revington, Inc.*.................. 115,800 2,981,850
Designs/manufactures furniture
Crown Crafts, Inc. .......................... 26,800 257,950
Manufactures home furnishing products
Ekco Group, Inc.*............................ 88,900 300,037
Manufactures kitchen/household products
HON Industries, Inc.......................... 75,000 2,625,000
Manufacturer of office furniture/ home
building products
Rival Co. ................................... 82,000 1,927,000
Small household appliances and personal
care products
Stanhome, Inc. .............................. 68,400 1,812,600
-------------
Consumer products/household items
9,904,437
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
LEISURE RELATED-2.4%
Jostens, Inc. ............................... 91,800 $ 1,973,700
School class rings, yearbooks
K2, Inc. .................................... 163,200 3,753,600
-------------
Snow skis, fish tackle, industrial products
5,727,300
-------------
PRINTING & PUBLISHING-4.8%
American Business Products, Inc. ............ 142,000 3,159,500
Business forms and supplies
Banta Corp. ................................. 139,250 2,941,656
Printing/graphic/video services
Lee Enterprises, Inc......................... 136,200 3,115,575
Newspaper publishing: radio, TV
Meredith Corp................................ 39,000 1,959,750
-------------
Publishing, broadcasting, real estate &
cable TV
11,176,481
-------------
RETAIL-GENERAL-2.0%
Arbor Drugs, Inc. ........................... 111,150 2,514,769
Operates drugstores in Michigan
Department 56, Inc.*......................... 98,000 2,156,000
-------------
Distributor of collectibles & gifts
4,670,769
-------------
65,595,509
-------------
CONSUMER STAPLES--12.3%
DRUGS-3.0%
Bergen Brunswig Corp. Cl. A.................. 91,700 2,877,088
Pharmaceutical suppliers
Scherer (R.P.) Corp.*........................ 55,900 2,592,362
Manufacturer of drug delivery systems
West Co., Inc................................ 61,100 1,642,063
-------------
Pharmaceutical packaging
7,111,513
-------------
FOODS-2.9%
Dean Foods Co................................ 50,000 1,450,000
Milk & dairy: food items
Flowers Industries, Inc...................... 149,550 3,495,731
Baked, convenience, snack food
Longhorn Steaks, Inc.*....................... 68,600 1,097,600
Operates full-service restaurants
Sanfilippo (John B. & Son), Inc.*............ 142,400 854,400
-------------
Processes/packages/distributes snacks
6,897,731
-------------
HOSPITAL SUPPLIES & SERVICES-4.0%
Beckman Instruments, Inc. ................... 87,600 3,219,300
Manufactures laboratory instruments
Nellcor Puritan Bennett*..................... 77,000 1,501,500
Electronic patient monitoring systems
Sierra Health Services*...................... 95,600 2,736,550
Healthcare provider
SpaceLabs Medical, Inc.*..................... 92,700 1,877,175
-------------
Manufactures patient monitoring products
9,334,525
-------------
RETAIL-FOOD & DRUGS-2.4%
General Nutrition Cos.*...................... 80,000 1,460,000
Operates chain health product stores
Hannaford Brothers Co. ...................... 69,600 2,096,700
Distributor: food/supermarkets
Luby's Cafeterias, Inc....................... 95,300 2,001,300
-------------
Cafeteria style restaurants
5,558,000
-------------
28,901,769
-------------
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
ENERGY--2.2%
OIL-DOMESTIC-1.0%
MAPCO, Inc. ................................. 51,900 $ 1,615,387
Coal, LP-gas pipeline: crude
Wiser Oil Co................................. 45,000 708,750
-------------
Exploration and production of oil and gas
in fifteen states
2,324,137
-------------
OIL-SUPPLIES & CONSTRUCTION-1.2%
Tidewater, Inc............................... 62,100 2,716,875
-------------
Offshore service vessels
5,041,012
-------------
FINANCIAL--14.8%
BANKS-8.0%
First American Corp. of Tennessee............ 104,000 5,174,000
Commercial banking: TN
First Commerce Corp.......................... 107,100 3,802,050
Commercial banking: LA, MS
FirstMerit Corp.............................. 110,000 3,575,000
Commercial banking: OH
First Virginia Banks, Inc.................... 60,200 2,693,950
Commercial banking: VA
Washington Mutual, Inc....................... 80,200 3,388,450
-------------
Savings bank, Pacific, NW
18,633,450
-------------
INSURANCE-6.8%
Hartford Steam Boiler Inspection &
Insurance Co. ............................. 65,700 2,833,313
Insurance/engineering services
Mercury Finance Co........................... 187,500 2,156,250
Consumer finance & insurance
Old Republic International Corp.............. 115,200 2,851,200
Insurance: life, disability, property,
casualty
Poe & Brown, Inc. ........................... 87,700 2,263,756
General insurance agency
Protective Life Corp......................... 71,100 2,452,950
Financial service provider
ReliaStar Financial Corp..................... 63,000 3,339,000
-------------
Insurance/financial services
15,896,469
-------------
34,529,919
-------------
PUBLIC UTILITIES--1.0%
GAS-1.0%
WICOR, Inc................................... 67,450 2,402,906
-------------
Utility holding: Wisconsin gas
TECHNOLOGY--7.8%
ELECTRONICS-4.6%
DH Technology, Inc.*......................... 53,700 1,248,525
Manufactures dot matrix printheads
Mark IV Industries, Inc...................... 65,000 1,405,625
Power transfer equipment/audio transfer
equipment
Methode Electronics, Inc. Cl. A.............. 241,650 4,712,175
Electronic component devices
Pioneer Standard Electronics, Inc............ 234,450 2,461,725
Distributor: electronic components
VeriFone, Inc.*.............................. 30,000 1,008,750
-------------
Manufactures transaction automation systems
10,836,800
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
OFFICE EQUIPMENT-2.6%
Hunt Manufacturing Corp. .................... 173,500 $ 2,927,813
Manufactures & distributes office and art
products
Miller (Herman), Inc......................... 75,000 3,234,375
-------------
Manufacturer of office furniture
6,162,188
-------------
TELECOMMUNICATIONS-0.6%
Glenayre Technologies, Inc.*................. 50,000 1,287,500
-------------
Manufacturer of telecommunications
equipment
18,286,488
-------------
TRANSPORT & SERVICE--3.5%
PROFESSIONAL SERVICES-1.9%
CDI Corp.*................................... 53,000 1,457,500
Engineering & technical services
Interim Services, Inc.*...................... 25,200 1,008,000
Temporary help services
Jacobs Engineering Group, Inc.*.............. 92,450 2,045,456
-------------
Full service engineering organization
4,510,956
-------------
TRUCKING & SHIPPING-1.6%
Werner Enterprises, Inc...................... 207,000 3,622,500
-------------
Motor carrier: general freight
8,133,456
-------------
MISCELLANEOUS--2.8%
DIVERSIFIED-2.0%
Brady (W.H.) Cl. A........................... 107,700 2,544,413
Manufactures adhesives & coatings
Ruddick Corp................................. 166,600 2,165,800
-------------
Food supermarkets; thread/yarn
4,710,213
-------------
<CAPTION>
SHARES VALUE
----------- -------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST-0.8%
Merry Land & Investment Co., Inc. ........... 85,000 $ 1,785,000
-------------
Acquisition, development & operation of
income producing properties
6,495,213
-------------
TOTAL COMMON STOCKS
(cost $191,840,461)........................ 232,546,829
-------------
<CAPTION>
COMMERCIAL PRINCIPAL
PAPER--0.8% AMOUNT
-----------
<S> <C> <C>
General Electric Capital Corp.
5.200%, 11/01/96........................... $ 1,447,000 1,447,000
General Electric Capital Corp.
5.250%, 11/04/96........................... 320,000 319,860
-------------
TOTAL COMMERCIAL PAPER
(amortized cost $1,766,860)................ 1,766,860
-------------
TOTAL INVESTMENTS--100.1%
(cost $193,607,321).......................... 234,313,689
-------------
CASH AND OTHER ASSETS
NET OF LIABILITIES--(0.1)%................. (292,508)
-------------
NET ASSETS--100.0%........................... $ 234,021,181
-------------
-------------
</TABLE>
* Non-income producing
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
Winthrop Focus Funds--Statement of Investments OCTOBER 31, 1996
- --------------------------------------------------------------------------------
WINTHROP FIXED INCOME FUND
<TABLE>
<CAPTION>
U.S. GOVERNMENT PRINCIPAL
OBLIGATIONS--52.3% AMOUNT VALUE
----------- -------------
<S> <C> <C>
United States Treasury Notes
9.000%, 05/15/98........................... $ 500,000 $ 524,485
United States Treasury Notes
8.250%, 07/15/98........................... 950,000 989,026
United States Treasury Notes
9.250%, 08/15/98........................... 500,000 529,615
United States Treasury Notes
8.000%, 08/15/99........................... 750,000 790,050
United States Treasury Notes
7.500%, 10/31/99........................... 4,000,000 4,169,160
United States Treasury Notes
7.750%, 01/31/00........................... 2,500,000 2,631,600
United States Treasury Notes
8.500%, 02/15/00........................... 500,000 537,660
United States Treasury Notes
7.750%, 02/15/01........................... 2,000,000 2,128,020
United States Treasury Notes
8.000%, 05/15/01........................... 1,400,000 1,506,890
United States Treasury Notes
7.500%, 11/15/01........................... 3,500,000 3,709,685
United States Treasury Notes
7.250%, 05/15/04........................... 3,500,000 3,705,555
United States Treasury Notes
7.250%, 08/15/04........................... 4,250,000 4,500,325
United States Treasury Notes
6.500%, 08/15/05........................... 2,000,000 2,022,400
United States Treasury Strips
0.000%, 11/15/07........................... 5,300,000 2,588,042
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(cost $29,691,678)......................... 30,332,513
-------------
U.S. GOVERNMENT
AGENCIES--30.8%
Federal Home Loan Mortgage Corp.
Pool #90350 7.000%, 07/01/99............... 1,126,841 1,139,870
Federal National Mortgage Assn.
8.550%, 08/30/99........................... 400,000 426,028
Federal Home Loan Mortgage Corp.
Pool #22016 8.750%, 10/01/01............... 29,453 30,346
Tennessee Valley Power Authority
7.450%, 10/15/01........................... 1,500,000 1,565,625
Federal National Mortgage Assn.
Pool #312088 7.000%, 06/01/02.............. 2,353,181 2,372,300
Federal National Mortgage Assn.
Pool #76368 9.250%, 09/01/03............... 140,333 147,876
Federal National Mortgage Assn.
Pool #76378 9.250%, 09/01/03............... 249,343 262,745
Federal National Mortgage Assn.
7.600%, 04/14/04........................... 1,000,000 1,003,310
Federal National Mortgage Assn.
8.250%, 10/12/04........................... 600,000 623,166
Federal National Mortgage Assn.
8.400%, 10/25/04........................... 650,000 678,528
Federal Home Loan Mortgage Corp.
8.800%, 11/17/04........................... 500,000 513,535
Federal National Mortgage Assn.
8.550%, 12/10/04........................... 1,000,000 1,025,980
Federal National Mortgage Assn.
6.700%, 11/10/05........................... 1,000,000 986,040
Government National Mortgage Assn.
Pool #93401 9.500%, 01/15/10............... 319,399 342,955
Federal Home Loan Mortgage Corp.
5.000%, 12/15/12........................... 1,000,000 993,839
Federal Home Loan Mortgage Corp.
Pool #260499 10.000%, 04/01/16............. 208,037 226,240
Federal Home Loan Mortgage Corp.
Pool #292065 8.500%, 04/01/17.............. 2,084,395 2,161,257
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -------------
<S> <C> <C>
Federal National Mortgage Assn.
Pool #270674 9.000%, 09/01/17.............. $ 762,878 $ 802,929
Federal Home Loan Mortgage Corp.
Pool #606523 7.779%, 10/01/19.............. 995,900 1,030,757
Federal National Mortgage Assn.
Pool #224635 9.000%, 09/01/20.............. 272,836 287,160
Government National Mortgage Assn.
Pool #296254 9.500%, 09/15/20.............. 16,902 18,243
Federal National Mortgage Assn.
Pool #124211 7.038%, 12/01/21.............. 1,202,979 1,233,805
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $17,659,806)......................... 17,872,534
-------------
CORPORATE BONDS--14.6%
FOREIGN-4.5%
Santander Financial Issuances
7.875%, 04/15/05........................... 1,500,000 1,580,625
Santander Financial Issuances
7.250%, 05/30/06........................... 1,000,000 1,017,500
-------------
2,598,125
-------------
CONSUMER PRODUCTS & SERVICES-1.7%
Anheuser Busch Cos.
7.000%, 09/01/05........................... 1,000,000 1,010,000
-------------
FINANCIAL-4.1%
First National Bank of Boston
7.375%, 09/15/06........................... 1,000,000 1,025,000
Ford Motor Credit Co.
7.750%, 11/15/02........................... 350,000 371,000
Sears Roebuck Acceptance Corp.
6.900%, 08/01/03........................... 1,000,000 1,013,750
-------------
2,409,750
-------------
INDUSTRIAL-1.7%
DuPont (E.I.) de Nemours & Co.
8.500%, 02/15/03........................... 900,000 966,375
-------------
PUBLIC UTILITIES-2.6%
Duke Power Co.
6.375%, 03/01/08........................... 1,550,000 1,491,875
-------------
TOTAL CORPORATE BONDS
(cost $8,203,878).......................... 8,476,125
-------------
COMMERCIAL PAPER--1.8%
General Electric Capital Corp.
5.250%, 11/01/96........................... 420,000 420,000
General Electric Capital Corp.
5.350%, 11/05/96........................... 640,000 639,620
-------------
TOTAL COMMERCIAL PAPER
(amortized cost $1,059,620)................ 1,059,620
-------------
TOTAL INVESTMENTS--99.5%
(cost $56,614,982)......................... 57,740,792
-------------
CASH AND OTHER ASSETS
NET OF LIABILITIES--0.5%................... 276,560
-------------
NET ASSETS--100.0%........................... $ 58,017,352
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
Winthrop Focus Funds--Statement of Investments OCTOBER 31, 1996
- --------------------------------------------------------------------------------
WINTHROP MUNICIPAL TRUST FUND
<TABLE>
<CAPTION>
PRINCIPAL
MUNICIPAL BONDS--98.1% AMOUNT VALUE
----------- -------------
<S> <C> <C>
ALABAMA-0.5%
McIntosh, Alabama (Ciba Geigy Project),
Variable Rate
3.600%, 07/01/04........................... $ 200,000 $ 200,000
-------------
ARIZONA-3.7%
Arizona State Wastewater
Management Authority
6.000%, 07/01/00........................... 600,000 631,500
Arizona State University
Refunding Ser. A
6.500%, 07/01/01........................... 750,000 810,000
-------------
1,441,500
-------------
CALIFORNIA-5.2%
California State
5.500%, 04/01/07........................... 1,000,000 1,037,500
Los Angeles County, California
5.125%, 09/01/08........................... 1,000,000 986,250
-------------
2,023,750
-------------
COLORADO-5.3%
Denver, Colorado City &
County Airport
6.750%, 11/15/22........................... 2,000,000 2,087,500
-------------
ILLINOIS-10.6%
Chicago, Illinois Metropolitan Water
Reclamation District
5.750%, 12/01/01........................... 1,000,000 1,053,750
Chicago, Illinois
5.800%, 01/01/08........................... 1,000,000 1,042,500
Chicago, Illinois O'Hare International
Airport
5.500%, 01/01/08........................... 1,000,000 1,011,250
Chicago, Illinois Metropolitan Water
Reclamation District
6.300%, 12/01/09........................... 1,000,000 1,071,250
-------------
4,178,750
-------------
INDIANA-5.3%
Indiana University Revenue
Student Fee Ser. K
6.500%, 08/01/05........................... 1,000,000 1,101,250
Indiana Highway Transportation
Finance Authority Ser. A
5.250%, 06/01/09........................... 1,000,000 995,000
-------------
2,096,250
-------------
IOWA-2.7%
Iowa Student Loan Liquidation Corp.
6.800%, 03/01/05........................... 1,000,000 1,077,500
-------------
LOUISIANA-2.7%
Louisiana Public Facility Authority
Revenue Student Loan Ser. A
6.750%, 09/01/06........................... 1,000,000 1,057,500
-------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -------------
<S> <C> <C>
MASSACHUSETTS-5.3%
Massachusetts State
Water Resources Ser. B
5.700%, 11/01/02........................... $ 1,000,000 $ 1,052,500
Massachusetts State
Refunding Ser. B
5.500%, 11/01/07........................... 1,000,000 1,036,250
-------------
2,088,750
-------------
MISSOURI-5.2%
Missouri State Health & Education Facility
5.100%, 05/15/09........................... 1,000,000 981,250
Missouri State Environment Import & Energy
Resource Authority Pollution Control
Revenue
5.800%, 09/01/09........................... 1,000,000 1,043,750
-------------
2,025,000
-------------
NEBRASKA-2.5%
Omaha Public Power District,
Nebraska Electric Ser. D
5.100%, 02/01/08........................... 1,000,000 998,750
-------------
NEW JERSEY-2.8%
University of Medicine & Dentistry
New Jersey Ser. E
6.400%, 12/01/07........................... 1,000,000 1,098,750
-------------
NEW YORK-14.5%
New York City Municipal Assistance Corp.
4.300%, 07/01/99........................... 1,000,000 1,001,250
New York State Urban Development Corp.
5.300%, 01/01/05........................... 1,670,000 1,655,388
New York, New York Ser. E
5.500%, 08/01/05........................... 1,000,000 981,250
New York State Dormitory Authority Revenue
6.500%, 05/15/06........................... 1,000,000 1,070,000
New York City, New York Ser. G
5.750%, 02/01/08........................... 1,000,000 980,000
-------------
5,687,888
-------------
OHIO-4.8%
Columbus, Ohio Sewer Refunding
6.200%, 06/01/04........................... 740,000 804,750
Ohio State Water Development
Authority Revenue
5.750%, 06/01/04........................... 1,000,000 1,062,500
-------------
1,867,250
-------------
PENNSYLVANIA-2.6%
Allegheny County, Pennsylvania
Sanitation Authority Sewer Revenue
5.200%, 12/01/00........................... 1,000,000 1,030,000
-------------
PUERTO RICO-2.6%
Puerto Rico Commonwealth Refunding
5.100%, 07/01/02........................... 1,000,000 1,020,000
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP MUNICIPAL TRUST FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -------------
<S> <C> <C>
TEXAS-13.4%
Texas Water Development Board Revenue
5.000%, 07/15/07........................... $ 1,100,000 $ 1,090,375
Dallas, Texas
5.500%, 02/15/08........................... 1,000,000 1,013,750
University of Texas, Permanent
University Funding
4.600%, 07/01/08........................... 1,200,000 1,129,500
Texas State Refunding Ser. A
6.000%, 10/01/08........................... 1,000,000 1,071,250
San Antonio, Texas Electric & Gas
5.000%, 02/01/12........................... 1,000,000 956,250
-------------
5,261,125
-------------
UTAH-0.5%
Carbon County, Utah Pollution Control
Revenue, Variable Rate
3.600%, 11/01/24........................... 200,000 200,000
-------------
VIRGINIA-2.6%
Arlington County, Virginia
5.250%, 08/01/98........................... 1,000,000 1,022,500
-------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -------------
<S> <C> <C>
WASHINGTON-5.3%
Washington State Public Power Supply Ser. 1B
7.100%, 07/01/00........................... $ 1,000,000 $ 1,073,750
Washington State Public Power Supply
5.500%, 07/01/10........................... 1,000,000 986,250
-------------
2,060,000
-------------
TOTAL INVESTMENTS--98.1%
(cost $37,970,658)......................... 38,522,763
-------------
CASH AND OTHER ASSETS
NET OF LIABILITIES--1.9%................... 759,820
-------------
NET ASSETS--100.0%........................... $ 39,282,583
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND AGGRESSIVE FIXED MUNICIPAL
GROWTH FUND INCOME FUND GROWTH FUND INCOME FUND TRUST FUND
------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $57,026,331, $94,568,373,
$193,607,321, $56,614,982, and
$37,970,658, respectively)............... $ 71,296,507 $ 120,119,489 $234,313,689 $ 57,740,792 $ 38,522,763
Cash....................................... 83,876 4,074 5,808 2,762 90,825
Receivable for investment securities sold.. -- 191,519 1,022,634 -- --
Receivable for capital stock sold.......... 54,017 167,121 43,944 48,763 --
Dividends and interest receivable.......... 71,476 253,389 190,682 854,589 677,353
Reimbursement due from advisor............. -- -- -- 36,458 --
Deferred organization costs (Note A)....... -- -- -- -- 36,849
------------ ------------- ------------ ------------ ------------
Total assets........................... 71,505,876 120,735,592 235,576,757 58,683,364 39,327,790
------------ ------------- ------------ ------------ ------------
LIABILITIES:
Payable to investment advisor.............. 44,782 65,898 156,714 -- 9,347
Payable for investment securities
purchased................................ -- -- 882,831 -- --
Payable for capital stock redeemed......... 1,755 66,027 156,496 568,673 --
Dividend payable........................... -- -- -- 81,215 26,090
Accrued expenses and other liabilities..... 186,538 255,551 359,535 16,124 9,770
------------ ------------- ------------ ------------ ------------
Total liabilities...................... 233,075 387,476 1,555,576 666,012 45,207
------------ ------------- ------------ ------------ ------------
NET ASSETS..................................... $ 71,272,801 $ 120,348,116 $234,021,181 $ 58,017,352 $ 39,282,583
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
NET ASSETS CONSIST OF:
Captial paid-in............................ $ 50,170,496 $ 83,140,185 $198,457,734 $ 57,869,723 $ 39,456,749
Undistributed net investment income........ 249,883 299,663 987,511 -- --
Accumulated net realized gain (loss) on
investments.............................. 6,582,246 11,357,152 (6,130,432) (978,181) (726,271)
Net unrealized appreciation of
investments.............................. 14,270,176 25,551,116 40,706,368 1,125,810 552,105
------------ ------------- ------------ ------------ ------------
$ 71,272,801 $ 120,348,116 $234,021,181 $ 58,017,352 $ 39,282,583
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
CLASS A SHARES:
Net assets................................. $ 68,096,263 $ 113,803,332 $227,716,423 $ 56,388,381 $ 38,793,745
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
Shares outstanding......................... 5,366,136 6,623,733 12,367,697 5,600,504 3,876,067
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
Net asset value and redemption value per
share...................................... $12.69 $17.18 $18.41 $10.07 $10.01
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Maximum offering price per share (net asset
value plus sales charge of 4.75% of
offering price)............................ $13.32 $18.04 $19.33 $10.57 $10.51
----- ----- ----- ----- -----
----- ----- ----- ----- -----
CLASS B SHARES:
Net assets................................. $ 3,176,538 $ 6,544,784 $ 6,304,758 $ 1,628,971 $ 488,838
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
Shares outstanding......................... 251,457 381,690 343,773 161,789 48,842
------------ ------------- ------------ ------------ ------------
------------ ------------- ------------ ------------ ------------
Net asset value and offering price per
share...................................... $12.63 $17.15 $18.34 $10.07 $10.01
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31,
1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND AGGRESSIVE FIXED MUNICIPAL
INVESTMENT INCOME: GROWTH FUND INCOME FUND GROWTH FUND INCOME FUND TRUST FUND
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Dividends......................... $ 1,121,267 $ 2,501,284 $ 4,159,903 $ -- $ --
Interest.......................... 112,421 700,142 186,769 3,878,126 1,958,533
------------ ------------ ------------ ------------ ------------
Total investment income....... 1,233,688 3,201,426 4,346,672 3,878,126 1,958,533
------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fees (Note
B).............................. 476,341 714,397 1,774,607 360,520 242,321
Distribution fees--Class A (Note
B).............................. 225,915 372,389 802,958 208,372 141,896
Distribution fees--Class B (Note
B).............................. 9,651 21,572 22,502 6,565 1,775
Legal fees........................ 12,000 20,000 41,000 10,000 8,000
Transfer agent fees............... 100,000 141,000 318,000 63,000 44,000
Custodian fees.................... 53,000 76,000 129,000 61,500 46,000
Auditing fees..................... 10,000 16,000 38,000 9,000 8,500
Printing fees..................... 15,000 20,000 51,000 14,000 11,000
Trustees' fees.................... 7,500 8,000 20,000 7,500 5,500
Registration Fees................. 21,400 23,699 43,453 23,000 19,700
Miscellaneous..................... 12,862 28,635 59,888 16,893 8,929
Amortization of organization costs
(Note A)........................ -- -- -- -- 21,243
------------ ------------ ------------ ------------ ------------
943,669 1,441,692 3,300,408 780,350 558,864
Less expenses reimbursed by
investment advisor.......... -- -- -- (198,923) (249,651)
------------ ------------ ------------ ------------ ------------
Net expenses.................. 943,669 1,441,692 3,300,408 581,427 309,213
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME................. 290,019 1,759,734 1,046,264 3,296,699 1,649,320
------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS--Note C:
Net realized gain (loss)
on investments.................. 6,591,571 11,355,940 9,125,357 (765,991) 172,684
Net change in unrealized
appreciation on investments..... 4,528,416 7,715,321 18,057,004 (148,726) (352,918)
------------ ------------ ------------ ------------ ------------
Net realized and unrealized gain
(loss) on investments........... 11,119,987 19,071,261 27,182,361 (914,717) (180,234)
------------ ------------ ------------ ------------ ------------
INCREASE IN NET ASSETS FROM
OPERATIONS.......................... $11,410,006 $20,830,995 $28,228,625 $ 2,381,982 $ 1,469,086
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND GROWTH AND INCOME FUND
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/96 10/31/95 10/31/96 10/31/95
----------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income............................. $ 290,019 $ 184,388 $ 1,759,734 $1,462,066
Net realized gain on investments.................. 6,591,571 3,855,434 11,355,940 2,114,892
Net change in unrealized appreciation on
investments..................................... 4,528,416 2,214,074 7,715,321 8,320,026
----------------- ------------ ----------------- ------------
Increase in net assets from operations............ 11,410,006 6,253,896 20,830,995 11,896,984
----------------- ------------ ----------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income:
Class A......................................... (199,179) (58,068) (1,560,079) (1,501,908)
Class B......................................... -- -- (26,691) --
Realized gains on investments--Class A............ (3,854,607) (3,314,586) (2,114,222) (2,851,832)
----------------- ------------ ----------------- ------------
Total Dividends and Distributions to
Shareholders.................................... (4,053,786) (3,372,654) (3,700,992) (4,353,740)
----------------- ------------ ----------------- ------------
CAPITAL STOCK TRANSACTIONS--(NET) Note D.............. 7,970,431 610,099 15,243,210 13,411,750
----------------- ------------ ----------------- ------------
Total increase in net assets...................... 15,326,651 3,491,341 32,373,213 20,954,994
NET ASSETS:
Beginning of year................................. 55,946,150 52,454,809 87,974,903 67,019,909
----------------- ------------ ----------------- ------------
End of year (including undistributed net
investment income of $249,883 and $159,043 for
the Growth Fund at 10/31/96 and 10/31/95,
respectively, and $299,663 and $126,699 for the
Growth and Income Fund at 10/31/96 and 10/31/95,
respectively)................................... $71,272,801 $55,946,150 $ 120,348,116 $87,974,903
----------------- ------------ ----------------- ------------
----------------- ------------ ----------------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH FUND FIXED INCOME FUND
----------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/96 10/31/95 10/31/96 10/31/95
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................ $ 1,046,264 $ 405,162 $ 3,296,699 $ 2,662,154
Net realized gain (loss) on investments.............. 9,125,357 4,891,763 (765,991) 221,384
Net change in unrealized appreciation on
investments........................................ 18,057,004 13,889,695 (148,726) 2,303,777
------------- ------------- ------------ ------------
Increase in net assets from operations............... 28,228,625 19,186,620 2,381,982 5,187,315
------------- ------------- ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income:
Class A............................................ (463,915) -- (3,263,578) (2,662,154)
Class B............................................ -- -- (33,121) --
Realized gains on investments--Class A............... (4,882,667) (6,165,603) -- --
------------- ------------- ------------ ------------
Total Dividends and Distributions to Shareholders.... (5,346,582) (6,165,603) (3,296,699) (2,662,154)
------------- ------------- ------------ ------------
CAPITAL STOCK TRANSACTIONS--(NET) Note D................. 8,409,509 45,084,159 5,047,283 12,209,472
------------- ------------- ------------ ------------
Total increase in net assets......................... 31,291,552 58,105,176 4,132,566 14,734,633
NET ASSETS:
Beginning of year.................................... 202,729,629 144,624,453 53,884,786 39,150,153
------------- ------------- ------------ ------------
End of year (including undistributed net investment
income of $987,511 and $405,162 for the Aggressive
Growth Fund at 10/31/96 and 10/31/95,
respectively)...................................... $234,021,181 $202,729,629 $58,017,352 $53,884,786
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL
TRUST FUND
---------------------------
YEAR ENDED YEAR ENDED
10/31/96 10/31/95
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................... $ 1,649,320 $ 1,426,670
Net realized gain (loss) on investments......................................... 172,684 (559,335)
Net change in unrealized appreciation on investments............................ (352,918) 2,549,446
------------ ------------
Increase in net assets from operations.......................................... 1,469,086 3,416,781
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment Income:
Class A....................................................................... (1,642,490) (1,426,670)
Class B....................................................................... (6,830) --
------------ ------------
Total Dividends and Distributions to Shareholders............................... (1,649,320) (1,426,670)
------------ ------------
CAPITAL STOCK TRANSACTIONS--(NET) Note D............................................ 404,039 2,598,461
------------ ------------
Total increase in net assets.................................................... 223,805 4,588,572
NET ASSETS:
Beginning of year............................................................... 39,058,778 34,470,206
------------ ------------
End of year..................................................................... $39,282,583 $39,058,778
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP FOCUS FUNDS--NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996
- --------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES. Winthrop Focus Funds ("Winthrop" or
"Funds") operates as a series company currently consisting of five portfolios
(the "Portfolios"): Winthrop Growth Fund, Winthrop Growth and Income Fund,
Winthrop Aggressive Growth Fund, Winthrop Fixed Income Fund, and Winthrop
Municipal Trust Fund. Winthrop, organized as a Massachusetts business trust on
November 26, 1985, constitutes a diversified, open-end investment company which
is registered under the Investment Company Act of 1940, as amended ("Act").
The Funds account separately for the assets, liabilities and operations of each
Portfolio. Expenses directly attributable to each Portfolio are charged to that
Portfolio's operations; expenses which are applicable to all Portfolios are
allocated among them on a pro rata basis. On February 7, 1996, at a special
meeting, the shareholders of Winthrop approved a new multiple class distribution
structure.
Effective February 28, 1996, each Fund commenced offering two classes of shares.
Class A shares are sold with a front-end sales charge of up to 4.75%. Class B
shares are sold with a contingent deferred sales charge which declines from 4%
to zero depending on the period of time the shares are held. Both classes have
identical voting, dividend, liquidation and other rights, except that each class
bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. Wood Struthers & Winthrop Management Corp.
(the "Advisor") is a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette
Securities Corporation, which is a wholly-owned subsidiary of Donaldson, Lufkin
and Jenrette, Inc. ("DLJ"). DLJ is an independently operated, indirect
subsidiary of The Equitable Companies Incorporated. The Funds' financial
statements are prepared in accordance with generally accepted accounting
principles which may require the use of management estimates and assumptions.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by Winthrop.
(1) SECURITY VALUATION: Securities and options traded on national exchanges
and over-the-counter securities listed in the NASDAQ National Market System
are valued at the last reported sales price at the close of the New York Stock
Exchange. Securities for which there have been no sales on such day are valued
at the mean of the current bid and asked prices. Over-the-counter securities
not listed on the NASDAQ National Market System are valued at the mean of the
current bid and asked prices. Fixed-income securities, except short-term
securities, may be valued on the basis of prices provided by a pricing service
when such prices are believed by the Advisor to reflect the fair market value
of such securities. The prices provided by a pricing service are determined
without regard to bid or last sale prices but take into account institutional
size, trading in similar groups of securities and any developments related to
the specific securities. Short-term investments, those with a remaining
maturity of 60 days or less, are valued at amortized cost, which approximates
market value.
(2) REPURCHASE AGREEMENTS: The Funds may enter into repurchase agreements with
financial institutions, deemed to be credit worthy by the Funds' Advisor,
subject to the seller's agreement to repurchase and the Funds' agreement to
resell such securities at a mutually agreed-upon price. Securities purchased
subject to repurchase agreements are deposited with the Funds' custodian and,
pursuant to the terms of the repurchase agreement, must have an aggregate
market value greater than or equal to the repurchase price plus accrued
interest at all times. If the value of the underlying securities falls below
the value of the repurchase price plus accrued interest, the Funds will
require the seller to deposit additional collateral by the next business day.
If the request for additional collateral is not met, or the seller defaults on
its repurchase obligation, the Funds maintain the right to sell the underlying
securities at market value and may claim any resulting loss against the
seller.
(3) FEDERAL INCOME TAXES: The Funds intend to be treated as "regulated
investment companies" under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of their net taxable income. Accordingly, no
provisions for federal income taxes have been made in the accompanying
financial statements. The Fixed Income Fund has an unused capital loss
carryover of approximately $892,000 available for Federal income tax purposes
to be applied against future net securities profits, if any, realized
subsequent to October 31, 1996. If not applied, $155,000 of the carryover
expires in fiscal 2002 and $737,000 expires in fiscal 2004. The Municipal
Trust Fund has an unused capital loss carryover of approximately $726,000
available for Federal income tax purposes to be applied against future net
securities profits, if any, realized subsequent to October 31, 1996. If not
applied, $167,000 of the carryover expires in fiscal 2002 and $559,000 expires
in fiscal 2003.
(4) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Dividend income is recorded
on the ex-dividend date. Interest income is accrued daily. Security
transactions are accounted for on the date securities are purchased or sold.
Security gains and losses are determined on the identified cost basis.
Discounts on fixed income securities are accreted to interest income over the
life of the security or until an applicable call date if sooner, with a
corresponding increase in cost basis; premiums are amortized on municipal
securities only, with a corresponding decrease in cost basis.
<PAGE>
WINTHROP FOCUS FUNDS--NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
(5) DIVIDENDS AND DISTRIBUTIONS: Dividends and distributions to shareholders
are recorded on the ex-dividend date.
(6) DEFERRED ORGANIZATION COSTS: The Municipal Trust Fund will reimburse the
Advisor for costs incurred in connection with the Municipal Trust Fund's
organization. The costs are being amortized on a straight-line basis over five
years commencing July 28, 1993.
NOTE (B) ADVISORY AND DISTRIBUTION SERVICES AGREEMENT: Under its Advisory
Agreement with Winthrop, the Advisor will provide investment advisory services
and order placement facilities for Winthrop and pay all compensation of Trustees
of Winthrop who are affiliated persons of the Advisor. The Advisor or its
affiliates will also furnish Winthrop, without charge, management supervision
and assistance and office facilities. Winthrop will pay the Advisor at the
following annual percentage rates of the average daily net assets of each Fund:
Growth Fund, .750 of 1% of the first $100,000,000, .500 of 1% of the balance;
Growth and Income Fund, .750 of 1% of the first $75,000,000, .500 of 1% of the
balance; Aggressive Growth Fund, .875 of 1% of the first $100,000,000, .750 of
1% of the next $100,000,000 and .625 of 1% of net assets in excess of
$200,000,000; Fixed Income Fund, .625 of 1% of the first $100,000,000, .500 of
1% of the balance; and Municipal Trust Fund, .625 of 1% of the first
$100,000,000, .500 of 1% of the balance. Such fees will be accrued daily and
paid monthly.
The Advisory Agreement provides that the Advisor will reimburse Winthrop for its
expenses (exclusive of interest, taxes, brokerage, distribution services fees
and extraordinary expenses, all to the extent permitted by applicable state
securities law and regulations) which in any year exceed the limits prescribed
by any state in which shares of Winthrop are qualified for sale. Winthrop
believes that presently the most restrictive applicable expense ratio limitation
imposed on Winthrop by any state is 2 1/2% of average net assets of the first
$30 million, 2% of average net assets of the next $70 million and 1 1/2% of
average net assets in excess of $100 million. Commencing November 1, 1995
through April 30, 1997 the Advisor has agreed, in its sole discretion, to reduce
its management fees and reimburse operating expenses by the amount that Total
Fund Operating Expenses exceed 1.00% of the average daily net assets of the
Class A shares and 1.70% of the average daily net assets of the Class B shares
of the Fixed Income Fund. For the Municipal Trust Fund, during the period
November 1, 1995 through May 31, 1996, the Advisor reduced its management fees
and reimbursed operating expenses by the amount that Total Fund Operating
Expenses exceeded 1.00% of the average daily net assets of the Class A shares
and 1.70% of the average daily net assets of the Class B shares. For the period
June 1, 1996 through December 31, 1996, the Advisor has agreed, with respect to
the Municipal Trust Fund, to reduce its management fees and reimburse operating
expenses by the amount that Total Fund Operating Expenses exceed .50% of the
average daily net assets of its Class A shares and 1.20% of the average daily
net assets of its Class B shares. After April 30, 1997, with respect to the
Fixed Income Fund, and December 31, 1996, with respect to the Municipal Trust
Fund, the Advisor may, in its sole discretion, determine to continue to pay
certain expenses of the Fixed Income Fund or the Municipal Trust Fund or it may
discontinue this practice with respect to both or either of such Funds. As a
result of the voluntary assumption of expenses, the Advisor reimbursed the Fixed
Income Fund and Municipal Trust Fund $198,923 and $249,651, respectively, during
the year ended October 31, 1996.
Pursuant to Rule 12b-1 under the Act, Winthrop has entered into a Distribution
Services Agreement (the "Agreement") with Donaldson, Lufkin & Jenrette
Securities Corporation, Winthrop's Distributor, under which Winthrop pays a
distribution services fee to the Distributor at an annual rate of up to .30 of
1% of the average daily net assets attributable to Class A shares and 1% of the
average daily net assets attributable to Class B shares. Under the Agreement,
each Fund is obligated to pay distribution and/or service fees to the
Distributor as compensation for its distribution and service activities, not as
reimbursement for specific expenses incurred. If the Distributor's expenses
exceed its distribution and service fees, the Fund will not be obligated to pay
any additional expenses. If the Distributor's expenses are less than such
distribution and service fees, it will retain its full fees and realize a
profit. In addition, the Agreement provides that the Advisor may use its own
resources including fees from investment companies (including Winthrop) to
finance the distribution of Winthrop's shares.
<PAGE>
WINTHROP FOCUS FUNDS--NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
NOTE (C) INVESTMENT TRANSACTIONS: For federal income tax purposes, the cost of
securities owned at October 31, 1996, was substantially the same as the cost of
securities for financial statement purposes. At October 31, 1996, the components
of the net unrealized appreciation (depreciation) on investments were as
follows:
<TABLE>
<CAPTION>
GROWTH GROWTH & INCOME AGGRESSIVE GROWTH FIXED INCOME MUNICIPAL TRUST
FUND FUND FUND FUND FUND
------------ ---------------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Gross appreciation (investments having an
excess of value over cost)................ $ 15,219,174 $ 28,155,008 $ 45,002,877 $1,283,350 $ 692,298
Gross depreciation (investments having an
excess of cost over value)................ (948,998) (2,603,892) (4,296,509) (157,540) (140,193)
------------ ---------------- ----------------- ------------ ---------------
Net unrealized appreciation of investments.. $ 14,270,176 $ 25,551,116 $ 40,706,368 $1,125,810 $ 552,105
------------ ---------------- ----------------- ------------ ---------------
------------ ---------------- ----------------- ------------ ---------------
</TABLE>
For the year ended October 31, 1996, total aggregate purchases and sales of
portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
GROWTH GROWTH & INCOME AGGRESSIVE GROWTH FIXED INCOME MUNICIPAL TRUST
FUND FUND FUND FUND FUND
------------ ---------------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Purchases................................... $ 41,538,207 $ 55,336,292 $ 82,201,292 $54,993,415 $ 30,309,442
Sales....................................... 37,021,885 45,154,566 77,183,567 49,832,173 29,966,630
</TABLE>
NOTE (D) SHARES OF BENEFICIAL INTEREST: There is an unlimited number of shares
($0.01 par value) authorized.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
GROWTH FUND GROWTH & INCOME FUND
------------------------------------------------ -------------------------------------
YEAR ENDED
PERIOD ENDED YEAR ENDED PERIOD ENDED OCTOBER
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 31, 1995
----------------------- ----------------------- ------------------------- ----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
--------- ------------ --------- ------------ ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold......................... 659,662 $ 7,791,827 532,740 $ 5,466,192 1,164,764 $ 18,470,066 1,461,088
Shares issued through reinvestment
of dividends...................... 323,919 3,499,542 287,842 2,878,417 197,158 2,969,907 263,368
--------- ------------ --------- ------------ ---------- ------------- ----------
983,581 11,291,369 820,582 8,344,609 1,361,922 21,439,973 1,724,456
--------- ------------ --------- ------------ ---------- ------------- ----------
Shares redeemed..................... (544,548) (6,369,265) (743,608) (7,734,510) (775,120) (12,425,324) (697,917)
--------- ------------ --------- ------------ ---------- ------------- ----------
Net increase........................ 439,033 $ 4,922,104 76,974 $ 610,099 586,802 $ 9,014,649 1,026,539
--------- ------------ --------- ------------ ---------- ------------- ----------
--------- ------------ --------- ------------ ---------- ------------- ----------
CLASS B*
Shares sold......................... 257,899 $ 3,126,900 397,069 $ 6,478,685
Shares issued through reinvestment
of dividends...................... -- -- 1,551 25,566
--------- ------------ ---------- -------------
257,899 3,126,900 398,620 6,504,251
--------- ------------ ---------- -------------
Shares redeemed..................... (6,442) (78,573) (16,930) (275,690)
--------- ------------ ---------- -------------
Net increase........................ 251,457 $ 3,048,327 381,690 $ 6,228,561
--------- ------------ ---------- -------------
--------- ------------ ---------- -------------
<CAPTION>
AMOUNT
------------
<S> <C>
CLASS A
Shares sold......................... $ 19,316,205
Shares issued through reinvestment
of dividends...................... 3,373,871
------------
22,690,076
------------
Shares redeemed..................... (9,278,326)
------------
Net increase........................ $ 13,411,750
------------
------------
CLASS B*
Shares sold.........................
Shares issued through reinvestment
of dividends......................
Shares redeemed.....................
Net increase........................
</TABLE>
<PAGE>
WINTHROP FOCUS FUNDS--NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND FIXED INCOME FUND
------------------------------------------------------ ---------------------------------------
YEAR ENDED
PERIOD ENDED YEAR ENDED PERIOD ENDED OCTOBER 31,
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 1995
-------------------------- -------------------------- -------------------------- -----------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES
----------- ------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold................. 2,166,779 $ 37,617,929 4,656,242 $ 72,414,139 1,462,054 $ 14,868,063 2,205,344
Shares issued through
reinvestment of
dividends................. 299,334 4,999,339 382,815 5,692,460 228,562 2,298,998 178,087
----------- ------------- ----------- ------------- ----------- ------------- -----------
2,466,113 42,617,268 5,039,057 78,106,599 1,690,616 17,167,061 2,383,431
----------- ------------- ----------- ------------- ----------- ------------- -----------
Shares redeemed............. (2,302,746) (40,353,318) (2,074,286) (33,022,440) (1,365,005) (13,732,889) (1,159,789)
----------- ------------- ----------- ------------- ----------- ------------- -----------
Net increase................ 163,367 $ 2,263,950 2,964,771 $ 45,084,159 325,611 $ 3,434,172 1,223,642
----------- ------------- ----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- ----------- ------------- -----------
CLASS B*
Shares sold................. 349,790 $ 6,251,446 167,890 $ 1,673,750
Shares issued through
reinvestment of
dividends................. -- -- 3,016 29,872
----------- ------------- ----------- -------------
349,790 6,251,446 170,906 1,703,622
----------- ------------- ----------- -------------
Shares redeemed............. (6,017) (105,887) (9,117) (90,511)
----------- ------------- ----------- -------------
Net increase................ 343,773 $ 6,145,559 161,789 $ 1,613,111
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
AMOUNT
-------------
<S> <C>
CLASS A
Shares sold................. $ 21,904,065
Shares issued through
reinvestment of
dividends................. 1,772,956
-------------
23,677,021
-------------
Shares redeemed............. (11,467,549)
-------------
Net increase................ $ 12,209,472
-------------
-------------
CLASS B*
Shares sold.................
Shares issued through
reinvestment of
dividends.................
Shares redeemed.............
Net increase................
</TABLE>
* Winthrop commenced offering Class B shares on February 28, 1996.
<TABLE>
<CAPTION>
MUNICIPAL TRUST FUND
------------------------------------------------------
PERIOD ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold................. 778,590 $ 7,762,187 1,175,181 $ 11,478,178
Shares issued through
reinvestment of
dividends................. 130,153 1,298,598 112,223 1,098,286
----------- ------------- ----------- -------------
908,743 9,060,785 1,287,404 12,576,464
----------- ------------- ----------- -------------
Shares redeemed............. (916,513) (9,136,736) (1,030,022) (9,978,003)
----------- ------------- ----------- -------------
Net increase (decrease)..... (7,770) $ (75,951) 257,382 $ 2,598,461
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
CLASS B*
Shares sold................. 48,213 $ 473,753
Shares issued through
reinvestment of
dividends................. 629 6,237
----------- -------------
48,842 479,990
----------- -------------
Shares redeemed............. -- --
----------- -------------
Net increase................ 48,842 $ 479,990
----------- -------------
----------- -------------
<CAPTION>
<S> <C>
CLASS A
Shares sold.................
Shares issued through
reinvestment of
dividends.................
Shares redeemed.............
Net increase (decrease).....
CLASS B*
Shares sold.................
Shares issued through
reinvestment of
dividends.................
Shares redeemed.............
Net increase................
</TABLE>
* Winthrop commenced offering Class B shares on February 28, 1996.
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of capital stock
outstanding throughout each period presented. This information has been derived
from information provided in the financial statements.
<TABLE>
<CAPTION>
RATIO OF
NET NET
REALIZED RATIO INVESTMENT
AND NET NET OF INCOME
UNREALIZED ASSET ASSETS EXPENSES (LOSS)
NET ASSET GAINS OR DIVIDENDS DISTRIBUTIONS VALUE, END OF TO TO AVERAGE
VALUE, NET (LOSSES) FROM NET FROM END PERIOD AVERAGE AVERAGE PORTFOLIO COMMISSION
BEGINNING INVESTMENT ON INVESTMENT CAPITAL OF TOTAL (000 NET NET TURNOVER RATE
OF PERIOD INCOME SECURITIES INCOME GAINS PERIOD RETURN++ OMITTED) ASSETS(2) ASSETS(2) RATE PAID
--------- -------- -------- --------- --------- -------- -------- --------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND--YEARS ENDED OCTOBER 31,
Class A
1996 $ 11.35 $0.053 $2.107 ($0.038) ($0.782) $12.69 20.32% $68,096 1.48% 0.47% 60.6% $0.06
1995 10.82 0.037 1.190 (0.012) (0.685) 11.35 12.21 55,946 1.63 0.35 101.7 N/A
1994 10.97 0.014 0.435 -- (0.599) 10.82 4.15 52,455 1.65 0.06 28.2 N/A
1993 11.10 0.061 1.386 (0.077) (1.500) 10.97 14.36 49,446 1.36 0.56 61.7 N/A
1992 11.45 0.123 0.418 (0.163) (0.728) 11.10 4.66 48,678 1.26 1.11 65.7 N/A
Class B (3)
1996 11.88 (0.013) 0.763 -- -- 12.63 6.40 3,177 2.17(1) (0.34) (1) 60.6 0.06
GROWTH AND INCOME FUND--YEARS ENDED OCTOBER 31,
Class A
1996 $ 14.57 $0.266 $2.935 ($0.241) ($0.350) $17.18 22.60% $113,803 1.36% 1.68% 44.0% $0.06
1995 13.38 0.254 1.769 (0.266) (0.567) 14.57 16.10 87,975 1.58 1.94 31.8 N/A
1994 13.42 0.244 0.358 (0.223) (0.419) 13.38 4.58 67,020 1.64 1.88 25.9 N/A
1993 12.35 0.270 1.720 (0.271) (0.649) 13.42 16.93 52,166 1.33 2.12 36.4 N/A
1992* 12.03 0.083 0.572 (0.165) (0.170) 12.35 16.39(1) 46,457 1.32(1) 1.99(1) 14.4 N/A
YEAR ENDED JUNE 30,
Class A
1992 11.70 0.320 0.916 (0.234) (0.672) 12.03 10.45 45,342 1.35 2.62 29.0 N/A
YEAR ENDED OCTOBER 31,
Class B (3)
1996 16.05 0.136 1.109 (0.145) -- 17.15 7.67 6,545 1.99(1) 1.06(1) 44.0 0.06
AGGRESSIVE GROWTH FUND--YEARS ENDED OCTOBER 31,
Class A
1996 $ 16.61 $0.084 $2.162 ($0.037) ($0.409) $18.41 13.80% $227,716 1.47% 0.48% 35.1% $0.06
1995 15.65 0.035 1.621 -- (0.696) 16.61 11.10 202,730 1.64 0.23 25.1 N/A
1994 16.11 0.105 0.603 (0.026) (1.142) 15.65 4.67 144,624 1.70 (0.04) 31.6 N/A
1993 14.00 0.123 3.195 (0.011) (1.197) 16.11 25.34 77,903 1.44 0.32 134.3 N/A
1992** 14.16 0.011 1.482 (0.027) (1.626) 14.00 13.95(1) 39,683 1.74(1) 0.10(1) 164.1 N/A
YEAR ENDED DECEMBER 31,
Class A
1991 10.16 0.023 5.090 (0.024) (1.089) 14.16 50.55 33,340 1.89 0.18 91.3 N/A
YEAR ENDED OCTOBER 31,
Class B (3)
1996 17.41 (0.023) 0.953 -- -- 18.34 5.28 6,305 2.15(1) (0.34) (1) 35.1 0.06
FIXED INCOME FUND--YEARS ENDED OCTOBER 31,
Class A
1996 $ 10.22 $0.577 ($0.150) ($0.577) $ -- $10.07 4.34% $56,388 1.00% 5.72% 90.2% N/A
1995 9.66 0.588 0.560 (0.588) -- 10.22 12.23 53,885 1.00 5.90 66.1 N/A
1994 10.93 0.567 (1.027) (0.567) (0.243) 9.66 (4.37) 39,150 0.93 5.58 55.9 N/A
1993 10.40 0.622 0.567 (0.622) (0.037) 10.93 11.79 40,881 0.83 5.79 95.6 N/A
1992 10.08 0.695 0.320 (0.695) -- 10.40 10.37 32,358 0.51 6.71 62.8 N/A
Class B (3)
1996 10.22 0.339 (0.150) (0.339) -- 10.07 2.23 1,629 1.70(1) 5.03(1) 90.2 N/A
MUNICIPAL TRUST FUND--YEARS ENDED OCTOBER 31,
Class A
1996 $ 10.06 $0.425 ($0.050) ($0.425) $ -- $10.01 3.83% $38,794 0.80% 4.26% 79.3% N/A
1995 9.51 0.389 0.550 (0.389) -- 10.06 10.06 39,059 1.00 3.97 49.3 N/A
1994 10.10 0.365 (0.590) (0.365) -- 9.51 (2.27) 34,470 0.83 3.71 42.5 N/A
1993+ 10.00 0.085 0.100 (0.085) -- 10.10 7.15(1) 33,794 0.75(1) 3.28(1) -- N/A
Class B (3)
1996 10.12 0.248 (0.110) (0.248) -- 10.01 1.42 489 1.23(1) 3.81(1) 79.3 N/A
</TABLE>
- ------------------------
* FOR THE PERIOD 7/1/92 TO 10/31/92.
** FOR THE PERIOD 1/1/92 TO 10/31/92.
+ COMMENCEMENT OF OPERATIONS FOR THE MUNICIPAL TRUST FUND WAS JULY 28, 1993.
++ TOTAL RETURN IS CALCULATED ASSUMING AN INITIAL INVESTMENT MADE AT THE NET
ASSET VALUE AT THE BEGINNING OF THE PERIOD, REINVESTMENT OF ALL DIVIDENDS
AND DISTRIBUTIONS AT NET ASSET VALUE DURING THE PERIOD, AND REDEMPTION ON
THE LAST DAY OF THE PERIOD. INITIAL SALES CHARGE OR CONTINGENT DEFERRED
SALES CHARGE IS NOT REFLECTED IN THE CALCULATION OF TOTAL RETURN. TOTAL
RETURN CALCULATED FOR A PERIOD OF LESS THAN ONE YEAR IS NOT ANNUALIZED.
(1) ANNUALIZED
(2) NET OF VOLUNTARY ASSUMPTION BY ADVISOR OF EXPENSES, EXPRESSED AS A
PERCENTAGE OF AVERAGE NET ASSETS, AS FOLLOWS: GROWTH AND INCOME FUND, .01%,
FOR THE YEAR ENDED 6/30/92; AGGRESSIVE GROWTH FUND, .01% FOR THE YEAR ENDED
12/31/91; FIXED INCOME FUND CLASS A SHARES, .34%, .51%, .67%, .58% AND .98%
FOR THE YEARS ENDED 10/31/96, 95, 94, 93 AND 92, RESPECTIVELY; FIXED INCOME
CLASS B SHARES, .34% (ANNUALIZED) FOR THE PERIOD 2/28/96 THROUGH 10/31/96;
MUNICIPAL TRUST FUND CLASS A SHARES, .64%, .58%, .77% AND 1.15% (ANNUALIZED)
FOR THE YEARS ENDED 10/31/96, 95, 94 AND 93, RESPECTIVELY, AND MUNICIPAL
TRUST FUND CLASS B SHARES, .64% (ANNUALIZED) FOR THE PERIOD 2/28/96 THROUGH
10/31/96.
(3) WINTHROP COMMENCED OFFERING CLASS B SHARES ON FEBRUARY 28, 1996.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of Winthrop Focus Funds:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Winthrop Focus Funds (comprising, respectively,
the Winthrop Growth Fund, the Winthrop Growth and Income Fund, the Winthrop
Aggressive Growth Fund, the Winthrop Fixed Income Fund and the Winthrop
Municipal Trust Fund) as of October 31, 1996, 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,
with respect to the Winthrop Growth Fund, Winthrop Fixed Income Fund and
Winthrop Municipal Trust Fund, for each of the periods indicated therein and,
with respect to the Winthrop Aggressive Growth Fund and Winthrop Growth and
Income Fund, 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. The financial
highlights of Winthrop Aggressive Growth Fund (formerly Neuwirth Fund, Inc.) for
the year ended December 31, 1991 and Winthrop Growth and Income Fund (formerly
Pine Street Fund, Inc.) for the year ended June 30, 1992, were audited by other
auditors whose reports thereon dated January 27, 1992 and August 3, 1992
respectively, expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. 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 and audited by us present fairly, in all material respects, the financial
position of each of the respective Funds constituting the Winthrop Focus Funds
at October 31, 1996, the results of their operations for the year then ended,
the changes in their net assets for each of the two years in the period then
ended and financial highlights, with respect to the Winthrop Growth Fund,
Winthrop Fixed Income Fund and Winthrop Municipal Trust Fund, for each of the
indicated periods and, with respect to the Winthrop Aggressive Growth Fund and
Winthrop Growth and Income Fund for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
[SIG]
New York, New York
December 13, 1996
<PAGE>
WINTHROP FOCUS FUNDS
(800) 225-8011
TRUSTEES
G. Moffett Cochran Stig Host William H. Mathers
James L. McCabe William C. Simpson
Robert L. Bast
Carl B. Menges Peter F. Krogh
James A. Engle
John J. Sheehan Stephen K. West
John J. Halsey
Dennis G. Little
OFFICERS
G. Moffett Cochran, CHAIRMAN AND PRESIDENT
Sam M. D'Agostino, VICE PRESIDENT
James A. Engle, VICE PRESIDENT
Martin Jaffe, VICE PRESIDENT, TREASURER, AND SECRETARY
Cathy A. Jameson, VICE PRESIDENT
Marybeth B. Leithead, VICE PRESIDENT
Hugh M. Neuburger, VICE PRESIDENT
Roger W. Vogel, VICE PRESIDENT
Brian A. Kammerer, ASSISTANT TREASURER
INVESTMENT ADVISOR
Wood Struthers & Winthrop Management Corp.
AN INVESTMENT MANAGEMENT SUBSIDIARY OF DONALDSON, LUFKIN & JENRETTE
277 PARK AVENUE, NEW YORK, NY 10172
CUSTODIAN
Citibank, N.A.
111 WALL STREET, NEW YORK, NY 10043
TRANSFER AGENT
FPS Services, Inc.
P.O. BOX 61503 (3200 HORIZON DRIVE)
KING OF PRUSSIA, PA 19406-0903
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation
277 PARK AVENUE, NEW YORK, NY 10172
INDEPENDENT AUDITORS
Ernst & Young LLP
787 SEVENTH AVENUE, NEW YORK, NY 10019
LEGAL COUNSEL
Sullivan & Cromwell
125 BROAD STREET, NEW YORK, NY 10004
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE STOCKHOLDERS OF
THE FUND. IT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN
THE FUND UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS,
WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING.
W O O D, S T R U T H E R S & W I N T H R O P
ESTABLISHED 1871
[LOGO]
12458 12/96
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