<PAGE>
File No. 33-3706
811-04604
As filed with the Securities and Exchange Commission on July 24, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- -------------------------------------------------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No.____ / /
Post-Effective Amendment No. 17 /X/
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 18 /X/
---
- -------------------------------------------------------------------------------
Winthrop Focus Funds
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
277 Park Avenue, New York, New York 10172
- -------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's Telephone Number: 212-892-4000
Brian E. Kammerer
One Pershing Plaza,
Jersey City, NJ 07399
- -------------------------------------------------------------------------------
(Name and address of agent for service)
Copies To: Stephen K. West
125 Broad Street
New York, New York 10004
- -------------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate
box).
/X/ immediately upon filing pursuant to /_/ on (date) pursuant to
paragraph (b) of Rule 485. paragraph (b) of Rule 485.
/_/ 60 days after filing pursuant to /_/ on (date) pursuant to
paragraph (a)(1) of Rule 485. paragraph (a)(1) of Rule 485.
/_/ 75 days after filing pursuant to /_/ on (date) pursuant to
paragraph (a)(2) of Rule 485. paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/_/ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Registrant registers an indefinite amount of securities under the Securities Act
of 1933 pursuant to Rule 24f-2(a)(1) and a Rule 24f-2 Notice for Registrant's
most recent fiscal year was filed with the Commission on December 27, 1996.
===============================================================================
<PAGE>
Cross Reference Sheet (Pursuant to Rule 495)
Form N-1A Item No. Location in Prospectus
- ------------------ ----------------------
Part A
- ------
Item 1. Cover Cover Page
Item 2. Synopsis Summary of Fund Expenses
Item 3. Condensed Financial Highlights
Financial
Information
Item 4. General Investment Objectives and
Description of Policies; General
Registrant Information
Item 5. Management of the Management; General
Fund Information
Item 6. Capital Stock and General Information
Other Securities
Item 7. Purchase of Purchases, Redemptions
Securities Being and Shareholder Services;
Offered Net Asset Value; Expenses
of Winthrop
Item 8. Redemption or Purchases, Redemptions
Repurchase and Shareholder Services
Item 9. Legal Proceedings Not Applicable
Location in Statement of
Part B Additional Information
- ------ ----------------------
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
Item 12. General Management; General
Information and Information
History
Item 13. Investment Investment Policies and
Objectives and Restrictions
Policies
Item 14. Management of the Management
Registrant
Item 15. Control Persons General Information
and Principal
Holders of
Securities
Item 16. Investment Management; General
Advisory and Other Information
Services
<PAGE>
Item 17. Brokerage Portfolio Transactions
Allocation
Item 18. Capital Stock and General Information
Other Securities
Item 19. Purchase, Net Asset Value
Redemption and
Pricing of
Securities Being
Offered
Item 20. Tax Status Investment Policies and
Restrictions; Dividends,
Distributions and Taxes
Item 21. Underwriters General Information
Item 22. Calculation of Computation of the
Performance Data Average Total Return;
Computation of Yield
Item 23. Financial Financial Statements
Statements
Part C
- ------
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this
Post-Effective Amendment to the Registration Statement.
<PAGE>
A SPECTRUM OF INVESTMENT
ALTERNATIVES
The Winthrop Family of Mutual Funds ('Winthrop') gives investors the opportunity
to invest in pools of managed assets, or 'Funds,' with differing investment
objectives as stated below:
WINTHROP FOCUS FUNDS
GROWTH FUND
Seeks . . . Long-term growth of capital by investing principally in equity
securities with long-term capital appreciation potential.
GROWTH AND INCOME FUND
Seeks . . . Long-term growth of capital and continuity of income by investing
principally in dividend-paying common stocks and other equity securities.
SMALL COMPANY VALUE FUND
Seeks . . . A high level of growth of capital by investing principally in equity
securities selected on the basis, in the investment adviser's opinion, of their
potential for a high level of growth of capital.
FIXED INCOME FUND
Seeks . . . To provide as high a level of total return as is consistent with
capital preservation by investing principally in debt securities.
MUNICIPAL TRUST FUND
Seeks . . . To provide as high a level of total return as is consistent with
capital preservation by investing principally in municipal securities. This
investment objective, unlike most other municipal bond funds, is not to provide
current income which is exempt from U.S. federal and/or state income tax. Please
read carefully 'Investment Objectives and Policies-- Municipal Trust Fund.'
WINTHROP INTERNATIONAL FUNDS
DEVELOPING MARKETS FUND
Seeks . . . Long-term growth of capital by investing primarily in common stocks
and other equity securities from developing countries.
INTERNATIONAL EQUITY FUND
Seeks . . . Long-term growth of capital by investing primarily in common stocks
and other equity securities from established markets outside the United States.
WINTHROP MONEY FUNDS
MUNICIPAL MONEY FUND
Seeks . . . Maximum current income, consistent with liquidity and safety of
principal, that is exempt from Federal income taxes by investing principally in
a diversified portfolio of municipal securities.
U.S. GOVERNMENT MONEY FUND
Seeks . . . Maximum current income, consistent with liquidity and safety of
principal, by investing in a portfolio of U.S. Government securities.
Each Winthrop Fund is a diversified, open-end investment management company
commonly known as a 'mutual fund.' The Focus Funds are portfolios of the
Winthrop Focus Funds. The International Funds and the Money Funds are portfolios
of the Winthrop Opportunity Funds (the 'Opportunity Funds'). Because the Focus
Funds and the Opportunity Funds each offer multiple Funds, they are known as
'series funds.' They are empowered to establish additional Funds with different
investment objectives and policies and offer additional classes of shares.
There can, of course, be no assurance that any Winthrop Fund will achieve its
investment objective. See 'Investment Objectives and Policies' for a more
detailed description of the investment objectives and policies of each of the
Winthrop Funds.
PURCHASE INFORMATION
Shares of Winthrop Funds may be purchased directly by using the Share Purchase
Application found in this Prospectus, or through Winthrop's Distributor,
Donaldson, Lufkin & Jenrette Securities Corporation, or by contacting your
securities dealer.
The minimum initial investment in each Fund is $250 and the minimum for
subsequent investments is $25. These minimums are waived for investments by
certain types of accounts. Further information can be obtained from Winthrop at
the address and telephone number shown on the back cover of this Prospectus. See
'Purchases, Redemptions and Shareholder Services.'
Shares of the Focus and International Funds may be purchased at a price equal to
the net asset value of the Fund (i) plus, in the case of Class A shares, an
initial sales charge imposed at the time of purchase or (ii) in the case of
Class B shares, subject to a contingent deferred sales charge ('CDSC') upon
redemption, which declines from 4% during the first year of purchase to zero
after four years. See 'Expenses of Winthrop' and 'Purchases, Redemptions and
Shareholder Services.'
Shares of the Money Funds may be purchased at a price equal to the net asset
value of the Money Fund, which is expected to be $1.00 per share. See 'Net Asset
Value.'
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF WINTHROP FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES--Fund investors pay various expenses, either
directly or indirectly. The purpose of the following tables and Examples is to
assist investors in understanding the various costs which shareholders of
Winthrop may bear. Maximum transaction costs when investing in a Fund have been
summarized, and the annual expenses you would pay are estimated based on the
expenses which were incurred by each Fund during the past fiscal year or for the
most recent reimbursement policy in effect for the current fiscal year.
<TABLE>
<CAPTION>
FOCUS FUNDS INTERNATIONAL FUNDS MONEY FUNDS
-------------------------------- -------------------------------- ---------------
SHAREHOLDER TRANSACTION CLASS A CLASS B CLASS A CLASS B
EXPENSES SHARES(1) SHARES(2) SHARES(1) SHARES(2)
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Maximum sales load imposed on
purchases
(as a percentage of offering
price)...................... 4.75% None 5.75% None None
Maximum sales load imposed on
reinvested dividends (as a
percentage of offering
price)...................... None None None None None
Deferred sales load (as a
percentage of original
purchase price or redemption
proceeds, as applicable).... None(3) 4%-0%(4) None 4%-0%(4) None
Redemption fees (as a
percentage of amount
redeemed)................... None None None None None
Exchange fee.................. None None None None None
</TABLE>
(1) The maximum sales charge imposed is reduced for larger purchases. Purchases
of $1,000,000 or more are not subject to an initial sales charge but may be
subject to a 1% CDSC on redemptions within one year of purchase. See
'Purchase and Sale of Shares.'
(2) Class B shares of each Fund automatically convert to Class A shares after
eight years. See 'Purchase and Sale of Shares.'
(3) Focus Fund Class A shareholders who received their shares upon conversion of
shares purchased prior to February 28, 1996 may be subject to a CDSC as
described under 'Purchases, Redemptions and Shareholder Services--Contingent
Deferred Sales Charge on Converted Shares.'
(4) 4% during the first year decreasing 1% annually to 0% after the fourth year.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES EXAMPLES++
------------------- --------------------------------------------------------------------
FOCUS FUNDS+
GROWTH FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.75% 0.75% After 1 year $ 61 $ 62 $ 22
12b-1 fees(a) 0.30% 1.00% After 3 years $ 90 $ 86 $ 66
Other expense 0.37% 0.37% After 5 years $121 $114 $ 114
------- ------- After 10 years $210 $227 $ 227
Total fund operating expenses 1.42% 2.12%
------- -------
------- -------
<CAPTION>
GROWTH AND INCOME FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.68% 0.68% After 1 year $ 60 $ 60 $ 20
12b-1 fees(a) 0.30% 1.00% After 3 years $ 87 $ 83 $ 63
Other expense 0.32% 0.32% After 5 years $115 $108 $ 108
------- ------- After 10 years $197 $214 $ 214
Total fund operating expenses 1.30% 2.00%
------- -------
------- -------
<CAPTION>
SMALL COMPANY VALUE FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.80% 0.80% After 1 year $ 61 $ 61 $ 21
12b-1 fees(a) 0.30% 1.00% After 3 years $ 90 $ 86 $ 66
Other expense 0.31% 0.31% After 5 years $121 $113 $ 113
------- ------- After 10 years $209 $226 $ 226
Total fund operating expenses 1.41% 2.11%
------- -------
------- -------
<CAPTION>
FIXED INCOME FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.63% 0.63% After 1 year $ 57 $ 57 $ 17
12b-1 fees(a) 0.30% 1.00% After 3 years $ 78 $ 74 $ 54
Other expense(b) 0.07% 0.07% After 5 years $100 $ 92 $ 92
------- ------- After 10 years $164 $182 $ 182
Total fund operating
expenses(b) 1.00% 1.70%
------- -------
------- -------
<CAPTION>
MUNICIPAL TRUST FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.63% 0.63% After 1 year $ 57 $ 57 $ 17
12b-1 fees(a) 0.30% 1.00% After 3 years $ 78 $ 74 $ 54
Other expense(b) 0.07% 0.07% After 5 years $100 $ 92 $ 92
------- ------- After 10 years $164 $182 $ 182
Total fund operating
expenses(b) 1.00% 1.70%
------- -------
------- -------
</TABLE>
- --------------------------------------------------------------------------------
Refer to footnotes on following page.
3
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF WINTHROP FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES EXAMPLES++
------------------- --------------------------------------------------------------------
INTERNATIONAL FUNDS
DEVELOPING MARKETS FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 1.25% 1.25% After 1 year $ 78 $ 69 $ 29
12b-1 fees(a) 0.25% 1.00% After 3 years $121 $110 $ 9
Other expense(b) 0.65% 0.65% After 5 years $166 $153 $ 153
------- ------- After 10 years $291 $304 $ 304
Total fund operating
expenses(b) 2.15%(c) 2.90%(c)
------- -------
------- -------
<CAPTION>
INTERNATIONAL EQUITY FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 1.25% 1.25% After 1 year $ 78 $ 69 $ 29
12b-1 fees(a) 0.25% 1.00% After 3 years $121 $110 $ 90
Other expense(b) 0.65% 0.65% After 5 years $166 $153 $ 153
------- ------- After 10 years $291 $305 $ 305
Total fund operating
expenses(b) 2.15%(c) 2.90%(c)
------- -------
------- -------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES EXAMPLES++
------------------ ----------
<S> <C> <C> <C>
MONEY FUNDS
MUNICIPAL MONEY FUND
Management fees 0.40% After 1 year $ 9
12b-1 fees 0.25% After 3 years $ 29
Other expense(b) 0.25%
---
Total fund operating
expenses(b) 0.90%
---
---
U.S. GOVERNMENT MONEY FUND
Management fees 0.40% After 1 year $ 9
12b-1 fees 0.25% After 3 years $ 29
Other expense(b) 0.25%
---
Total fund operating
expenses(b) 0.90%
---
---
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
* Assumes reinvestment of all dividends and redemption at end of
period.
** Assumes reinvestment of all dividends and no redemption at end of
period.
+ Total Fund Operating Expenses for the Focus Funds are based on
expenses expected to have been incurred if Class A Shares and
Class B Shares had been outstanding during the entire fiscal year
ended October 31, 1996. Prior to February 28, 1996, only one
class of shares was issued. As a result, the above information is
based on restated data for each Fund's fiscal year ended October
31, 1996.
++ Shares purchased directly into a Money Fund will not be subject
to Winthrop's CDSC and therefore the expenses paid by a Money
Fund shareholder will remain unaffected by redemption.
++ Ten year figures assume conversion of Class B Shares to Class A
shares at the end of the eighth year following the date of
purchase.
(a) Long-term Class B shareholders may, over time, pay more in 12b-1
Fees than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities
Dealers, Inc. A portion of the 12b-1 Fees represents an
asset-based sales charge. See 'Expenses of Winthrop-Distribution
Agreement.'
(b) Other Expenses and Total Fund Operating Expenses have been
adjusted to reflect the most recent reimbursement policy in
effect. Referenced below is the amount of management fees
voluntarily waived or expenses assumed by each Fund's adviser or
its affiliates or, in the case of the International Equity Fund
and the Developing Markets Fund, the Funds' adviser and
subadviser. In addition, the table below shows what Other
Expenses and Total Fund Operating Expenses would have been
without such reimbursement during the past fiscal year or, in the
case of the Municipal Money Fund and U.S. Government Money Fund,
during the period from the Funds' inception on February 24, 1997
through April 30, 1997.
</TABLE>
<TABLE>
<CAPTION>
VOLUNTARY ASSUMPTION OTHER TOTAL FUND
OF EXPENSES EXPENSES OPERATING EXPENSES
-------------------- -------- ------------------
<S> <C> <C> <C>
Fixed Income Fund Class A 0.28% 0.35% 1.28%
Fixed Income Fund Class B 0.28% 0.35% 1.98%
Municipal Trust Fund Class A 0.37% 0.44% 1.37%
Municipal Trust Fund Class B 0.37% 0.44% 2.07%
Developing Markets Fund Class A 0.54% 1.19% 2.69%
Developing Markets Fund Class B 0.54% 1.19% 3.44%
International Equity Fund Class A 0.27% 0.92% 2.42%
International Equity Fund Class B 0.27% 0.92% 3.17%
Municipal Money Fund(d) 0.24% 0.49% 1.14%
U.S. Government Money Fund(d) 0.22% 0.47% 1.12%
</TABLE>
<TABLE>
<S> <C>
For the Funds referenced, the Funds' investment adviser or its
affiliates or, in the case of the Developing Markets Fund and the
International Equity Fund, the Funds' investment adviser and
investment subadviser have agreed to the current reimbursement
policy through October 31, 1997. After October 31, this practice
may be discontinued with respect to any of the above Winthrop
Funds.
(c) The expense ratios for each class of shares of the Developing
Markets Fund and the International Equity Fund are higher than
those paid by most other investment companies, but Wood,
Struthers & Winthrop Management Corp. (as adviser) and AXA Asset
Management Partenaires (as subadviser) believe the fees are
comparable to those paid by investment companies of similar
investment orientation.
(d) Annualized
</TABLE>
For each Fund and share class, the Examples show the cumulative expenses a
shareholder would pay on a hypothetical $1,000 investment over various periods
assuming that the investment appreciated at a 5% annual rate of return. The
Examples should not be considered a representation of past or future expenses
and actual expenses may be greater or less than those shown. Winthrop has
entered into a Distribution Agreement and 12b-1 Plan for each class of each Fund
pursuant to which a 12b-1 fee is paid to Winthrop's distributor each month. The
12b-1 fee for each class is comprised of a service fee not exceeding .25% of the
average daily net assets of the Fund attributable to the class and an
asset-based sales charge equal to the remaining portion of the rule 12b-1 fee.
See 'Expenses of Winthrop--Distribution Agreement.'
4
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following financial highlights, except as noted otherwise, have been audited
by Ernst & Young LLP, the Fund's independent auditors, whose unqualified report
thereon appears in the Statement of Additional Information. Financial statements
and related notes are included in the Statement of Additional Information, which
is available upon request. Additional information about the performance of the
Focus Funds and the International Funds is contained in each Fund's annual
report to shareholders, which may be obtained without charge.
Contained on the following pages is per share operating performance data for a
share of beneficial interest outstanding for each class of each Fund, total
investment return, ratios to average net assets and other supplemental data for
each period indicated. Prior to February 28, 1996, the Focus Funds offered only
a single class of shares. Accordingly, the data presented below with respect to
Class A shares of the Focus Funds for periods prior to such date have been
obtained from the financial statements for the Funds' sole class of shares
outstanding during such prior fiscal years.
5
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DIVIDENDS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT GAINS/(LOSSES) INVESTMENT INVESTMENT FROM CAPITAL
OF PERIOD INCOME (LOSS) ON SECURITIES OPERATIONS INCOME GAINS
--------- ------------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
GROWTH FUND
CLASS A
Six Months Ended April 30,
1997 (1)................ $ 12.69 $ 0.014 $ 1.583 $ 1.597 $ (0.048) $(1.175)
Year Ended October 31,
1996.................... 11.35 0.053 2.107 2.160 (0.038) (0.782)
Year Ended October 31,
1995.................... 10.82 0.037 1.190 1.227 (0.012) (0.685)
Year Ended October 31,
1994.................... 10.97 0.014 0.435 0.449 -- (0.599)
Year Ended October 31,
1993.................... 11.10 0.061 1.386 1.447 (0.077) (1.500)
Year Ended October 31,
1992.................... 11.45 0.123 0.418 0.541 (0.163) (0.728)
Year Ended October 31,
1991.................... 9.20 0.148 2.512 2.660 (0.198) (0.212)
Year Ended October 31,
1990.................... 11.69 0.270 (1.355) (1.085) (0.244) (1.161)
Year Ended October 31,
1989.................... 10.49 0.276 1.832 2.108 (0.437) (0.471)
Year Ended October 31,
1988.................... 9.65 0.210 0.888 1.098 (0.051) (0.207)
Year Ended October 31,
1987++.................. 10.00 0.044 (0.394) (0.350) -- --
CLASS B
Six Months Ended April 30,
1997 (1)................ 12.63 (0.015) 1.562 1.547 (0.031) (1.175)
Year Ended October 31,
1996@@.................. 11.88 (0.013) 0.763 0.750 -- --
GROWTH AND INCOME FUND
CLASS A+
Six Months Ended April 30,
1997 (1)................ $ 17.18 $ 0.122 $ 1.807 $ 1.929 $ (0.117) $(1.635)
Year Ended October 31,
1996.................... 14.57 0.266 2.935 3.201 (0.241) (0.350)
Year Ended October 31,
1995.................... 13.38 0.254 1.769 2.023 (0.266) (0.567)
Year Ended October 31,
1994.................... 13.42 0.244 0.358 0.602 (0.223) (0.419)
Year Ended October 31,
1993.................... 12.35 0.270 1.720 1.990 (0.271) (0.649)
Year Ended October 31,
1992*................... 12.03 0.083 0.572 0.655 (0.165) (0.170)
Year Ended June 30,
1992.................... 11.70 0.320 0.916 1.236 (0.234) (0.672)
Year Ended June 30,
1991.................... 12.48 0.380 0.010 0.390 (0.386) (0.784)
Year Ended June 30,
1990.................... 12.68 0.565 0.703 1.268 (0.562) (0.906)
Year Ended June 30,
1989.................... 11.64 0.464 1.549 2.013 (0.577) (0.396)
Year Ended June 30,
1988.................... 14.58 0.423 (2.016) (1.593) (0.415) (0.932)
Year Ended June 30,
1987.................... 14.38 0.456 1.209 1.665 (0.365) (1.100)
CLASS B
Six Months Ended April 30,
1997 (1)................ 17.15 0.061 1.800 1.861 (0.058) (1.635)
Year Ended October 31,
1996@@.................. 16.05 0.136 1.109 1.245 (0.145) --
SMALL COMPANY VALUE FUND(4)
CLASS A+
Six Months Ended April 30,
1997 (1)................ $ 18.41 $ 0.026 $ 0.960 $ 0.986 $ (0.081) $(0.723)
Year Ended October 31,
1996.................... 16.61 0.084 2.162 2.246 (0.037) (0.409)
Year Ended October 31,
1995.................... 15.65 0.035 1.621 1.656 -- (0.696)
Year Ended October 31,
1994.................... 16.11 0.105 0.603 0.708 (0.026) (1.142)
Year Ended October 31,
1993.................... 14.00 0.123 3.195 3.318 (0.011) (1.197)
Year Ended October 31,
1992**.................. 14.16 0.011 1.482 1.493 (0.027) (1.626)
Year Ended December 31,
1991.................... 10.16 0.023 5.090 5.113 (0.024) (1.089)
Year Ended December 31,
1990.................... 11.90 0.157 (1.720) (1.563) (0.177) --
Year Ended December 31,
1989.................... 12.64 0.062 1.962 2.024 (0.062) (2.702)
Year Ended December 31,
1988.................... 11.52 0.018 3.391 3.409 (0.009) (2.280)
Year Ended December 31,
1987.................... 13.35 (0.066) (1.225) (1.291) -- (0.540)
Year Ended December 31,
1986.................... 15.21 (0.071) 1.467 1.396 (0.044) (3.212)
CLASS B
Six Months Ended April 30,
1997 (1)................ 18.34 (0.022) 0.941 0.919 (0.052) (0.723)
Year Ended October 31,
1996@@.................. 17.41 (0.023) 0.953 0.930 -- --
</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 Growth Fund was December 15, 1986.
+ Financial highlights for the years ended June 30 for the Growth and Income
Fund and December 31 for the Small Company Value Fund were previously
audited by auditors other than Ernst & Young LLP whose reports thereon
were unqualified.
@@ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
## 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.
6
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
NET ASSET NET ASSETS EXPENSES
TOTAL VALUE, TOTAL END OF PERIOD TO AVERAGE
DISTRIBUTIONS END OF PERIOD RETURN++ (000 OMITTED) NET ASSETS(3)
------------- ------------- -------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ (1.223) $ 13.06 13.45% $ 75,802 1.40%(2)
(0.820) 12.69 20.32 68,096 1.48
(0.697) 11.35 12.21 55,946 1.63
(0.599) 10.82 4.15 52,455 1.65
(1.577) 10.97 14.36 49,446 1.36
(0.891) 11.10 4.66 48,678 1.26
(0.410) 11.45 29.71 50,426 1.34
(1.405) 9.20 (11.05) 42,937 1.33
(0.908) 11.69 21.72 53,142 1.37
(0.258) 10.49 11.72 52,626 1.37
-- 9.65 (3.99) (2) 54,809 1.69(2)
(1.206) 12.97 13.10 6,165 2.10(2)
-- 12.63 6.40 3,177 2.17(2)
$ (1.752) $ 17.36 12.01% $ 125,947 1.22%(2)
(0.591) 17.18 22.60 113,803 1.36
(0.833) 14.57 16.10 87,975 1.58
(0.642) 13.38 4.58 67,020 1.64
(0.920) 13.42 16.93 52,166 1.33
(0.335) 12.35 16.39(2) 46,457 1.32(2)
(0.906) 12.03 10.45 45,342 1.35
(1.170) 11.70 3.86 47,340 1.23
(1.468) 12.48 10.13 50,687 1.21
(0.973) 12.68 18.36 52,337 1.19
(1.347) 11.64 (10.20) 55,404 1.17
(1.465) 14.58 13.04 70,753 1.14
(1.693) 17.32 11.59 12,426 1.92(2)
(0.145) 17.15 7.67 6,545 1.99(2)
$ (0.804) $ 18.59 5.52% $ 220,864 1.39%(2)
(0.446) 18.41 13.80 227,716 1.47
(0.696) 16.61 11.10 202,730 1.64
(1.168) 15.65 4.67 144,624 1.70
(1.208) 16.11 25.34 77,903 1.44
(1.653) 14.00 13.95(2) 39,683 1.74(2)
(1.113) 14.16 50.55 33,340 1.89
(0.177) 10.16 (13.12) 22,041 1.98
(2.764) 11.90 16.25 24,999 1.84
(2.289) 12.64 29.59 21,821 1.93
(0.540) 11.52 (10.61) 21,081 1.69
(3.256) 13.35 8.53 23,338 1.78
(0.775) 18.48 5.15 9,564 2.09(2)
-- 18.34 5.28 6,305 2.15(2)
<CAPTION>
RATIO OF NET AVERAGE
INVESTMENT INCOME PORTFOLIO COMMISSION
(LOSS) TO AVERAGE TURNOVER RATE
NET ASSETS(3) RATE PAID(5)
----------------- -------- ----------
<S> <C> <C> <C>
0.77%(2) 46.5% $ 0.07
0.47 60.6 0.06
0.35 101.7 N/A
0.06 28.2 N/A
0.56 61.7 N/A
1.11 65.7 N/A
1.40 31.7 N/A
2.53 68.2 N/A
2.53 64.3 N/A
2.15 42.3 N/A
0.60(2) 90.6 N/A
0.45(2) 46.5 0.07
(0.34)(2) 60.6 0.06
1.39%(2) 16.9% $ 0.07
1.68 44.0 0.06
1.94 31.8 N/A
1.88 25.9 N/A
2.12 36.4 N/A
1.99(2) 14.4 N/A
2.62 29.0 N/A
3.25 48.0 N/A
4.35 41.0 N/A
3.92 46.0 N/A
3.35 38.0 N/A
3.23 48.0 N/A
0.71(2) 16.9 0.07
1.06(2) 44.0 0.06
0.89%(2) 21.0 $ 0.06
0.48 35.1 0.06
0.23 25.1 N/A
(0.04) 31.6 N/A
0.32 134.3 N/A
0.10(2) 164.1 N/A
0.18 91.3 N/A
1.45 87.6 N/A
0.43 107.4 N/A
0.13 107.9 N/A
(0.49) 117.4 N/A
(0.45) 73.7 N/A
0.54(2) 21.0 0.06
(0.34)(2) 35.1 0.06
</TABLE>
- ------------------------------------------
(1) Unaudited
(2) Annualized
(3) Net of voluntary assumption by the investment adviser of expenses, expressed
as a percentage of average net assets, as follows: Growth and Income Fund,
.01%. .08%, .03%, .03%, and .03% for the years ended 6/30/92, 91, 90, 89 and
88, respectively; and Small Company Value Fund, .01% and .06% for the years
ended 12/31/91 and 90, respectively.
(4) Effective February 20, 1997, the Winthrop Aggressive Growth Fund's name was
changed to the Winthrop Small Company Value Fund.
(5) For fiscal years beginning after September 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of equity securities.
7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DIVIDENDS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT GAINS/(LOSSES) INVESTMENT INVESTMENT FROM CAPITAL
OF PERIOD INCOME (LOSS) ON SECURITIES OPERATIONS INCOME GAINS
--------- ------------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
FIXED INCOME FUND
CLASS A
Six Months Ended April 30,
1997(1)................. $ 10.07 $ 0.291 $ (0.171) $ 0.120 $ (0.291) $ --
Year Ended October 31,
1996++++................ 10.22 0.577 (0.150) 0.427 (0.577) --
Year Ended October 31,
1995.................... 9.660 0.588 0.560 1.148 (0.588) --
Year Ended October 31,
1994.................... 10.930 0.567 (1.027) (0.460) (0.567) (0.243)
Year Ended October 31,
1993.................... 10.400 0.622 0.567 1.189 (0.622) (0.037)
Year Ended October 31,
1992.................... 10.080 0.695 0.320 1.015 (0.695) --
Year Ended October 31,
1991.................... 9.570 0.773 0.510 1.283 (0.773) --
Year Ended October 31,
1990.................... 9.720 0.809 (0.150) 0.659 (0.809) --
Year Ended October 31,
1989.................... 9.520 0.830 0.200 1.030 (0.830) --
Year Ended October 31,
1988.................... 9.260 0.749 0.260 1.009 (0.749) --
Year Ended October 31,
1987++.................. 10.000 0.554 (0.740) (0.186) (0.554) --
CLASS B
Six Months Ended April 30,
1997(1)................. 10.07 0.256 (0.167) 0.089 (0.256) --
Year Ended October 31,
1996++++................ 10.22 0.339 (0.150) 0.189 (0.339) --
MUNICIPAL TRUST FUND
CLASS A
Six Months Ended April 30,
1997 (1)................ $ 10.01 $ 0.232 $ (0.038) $ 0.194 $ (0.232) $ --
Year Ended October 31,
1996.................... 10.06 0.425 (0.050) 0.375 (0.425) --
Year Ended October 31,
1995.................... 9.51 0.389 0.550 0.939 (0.389) --
Year Ended October 31,
1994.................... 10.10 0.365 (0.590) (0.225) (0.365) --
Year Ended October 31,
1993*................... 10.00 0.085 0.100 0.185 (0.085) --
CLASS B
Six Months Ended April 30,
1997 (1)................ 10.01 0.197 (0.039) 0.158 (0.197) --
Year Ended October 31,
1996++++................ 10.12 0.248 (0.110) 0.138 (0.248) --
INTERNATIONAL EQUITY FUND
CLASS A
Six Months Ended April 30,
1997(1)................. $ 10.38 $(0.050) $ 0.520 $ 0.470 $ -- $ --
Year Ended October 31,
1996.................... 9.58 (0.040) 0.840 0.800 -- --
Year Ended October 31,
1995**.................. 10.00 -- (0.420) (0.420) -- --
CLASS B
Six Months Ended April 30,
1997(1)................. 10.29 (0.090) 0.530 0.440 -- --
Year Ended October 31,
1996.................... 9.57 (0.130) 0.850 0.720 -- --
Year Ended October 31,
1995**.................. 10.00 (0.020) (0.410) (0.430) -- --
DEVELOPING MARKETS FUND
CLASS A
Six Months Ended April 30,
1997(1)................. $ 9.96 $ -- $ 1.160 $ 1.160 $ -- $(0.020)
Year Ended October 31,
1996.................... 9.53 (0.010) 0.440 0.430 -- --
Year Ended October 31,
1995**.................. 10.00 -- (0.470) (0.470) -- --
CLASS B
Six Months Ended April 30,
1997(1)................. 9.860 (0.040) 1.150 1.110 -- (0.020)
Year Ended October 31,
1996.................... 9.520 (0.080) 0.420 0.340 -- --
Year Ended October 31,
1995**.................. 10.00 (0.010) (0.470) (0.480) -- --
MUNICIPAL MONEY FUND
Period Ended April 30,
1997+................... $ 1.00 $ 0.005 $ -- $ 0.005 $ (0.005) $ --
U.S. GOVERNMENT MONEY FUND
Period Ended April 30,
1997++(1)............... $ 1.00 $ 0.008 $ -- $ 0.008 $ (0.008) $ --
</TABLE>
- ------------------------------------------
<TABLE>
<S> <C>
* Commencement of operations for the Municipal Trust Fund was July 28,
1993.
** Commencement of operations for the International Equity Fund and the
Developing Markets Fund was September 8, 1995.
+ Commencement of operations for the Municipal Money Fund and the U.S.
Government Money Fund was February 24, 1997.
## 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.
++ Commencement of operations for the Fixed Income Fund was December 15,
1986.
++++ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
(1) Unaudited
(2) Annualized
</TABLE>
8
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
NET ASSET NET ASSETS EXPENSES INVESTMENT INCOME
TOTAL VALUE, TOTAL END OF PERIOD TO AVERAGE (LOSS) TO AVERAGE
DISTRIBUTIONS END OF PERIOD RETURN++ (000 OMITTED) NET ASSETS(3) NET ASSETS(3)
------------- ------------- -------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$(0.291) $ 9.90 1.21% $52,793 1.00%(2) 5.87%(2)
(0.577) 10.07 4.34 56,388 1.00 5.72
(0.588) 10.22 12.23 53,885 1.00 5.90
(0.810) 9.66 (4.37) 39,150 0.93 5.58
(0.659) 10.93 11.79 40,881 0.83 5.79
(0.695) 10.40 10.37 32,358 0.51 6.71
(0.773) 10.08 13.92 23,783 -- 7.75
(0.809) 9.57 7.14 10,300 -- 8.34
(0.830) 9.72 11.42 5,861 -- 8.74
(0.749) 9.52 11.27 5,335 0.32 7.96
(0.554) 9.26 (2.15)(2) 4,697 1.00(2) 6.60(2)
(0.256) 9.90 0.86 2,548 1.70(2) 5.12(2)
(0.339) 10.07 2.23 1,629 1.70(2) 5.03(2)
$(0.232) $ 9.97 1.92% $36,991 0.50%(2) 4.65%(2)
(0.425) 10.01 3.83 38,794 0.80 4.26
(0.389) 10.06 10.06 39,059 1.00 3.97
(0.365) 9.51 (2.27) 34,470 0.83 3.71
(0.085) 10.10 7.15(2) 33,794 0.75(2) 3.28(2)
(0.197) 9.97 1.57 567 1.20(2) 3.95(2)
(0.248) 10.01 1.42 489 1.23(2) 3.81(2)
$ -- $ 10.85 0.28% $38,499 2.15%(2) (0.25)%(2)
-- 10.38 8.35 42,170 2.15 (0.39)
-- 9.58 (4.20) 28,819 2.15(2) (0.02)(2)
-- 10.73 (0.46) 5,960 2.90(2) (0.42)(2)
-- 10.29 7.52 4,955 2.90 (1.25)
-- 9.57 (4.30) 1,803 2.90(2) (1.77)(2)
$(0.020) $ 11.10 5.28% $35,509 2.15%(2) (0.05)%(2)
-- 9.96 4.51 36,918 2.15 (0.14)
-- 9.53 (4.70) 14,622 2.15(2) 0.32(2)
(0.020) 10.95 4.35 4,622 2.90(2) (0.73)(2)
-- 9.86 3.57 3,641 2.90 (0.83)
-- 9.52 (4.80) 1,004 2.90(2) (1.00)(2)
$(0.005) $ 1.00 0.05% $21,824 0.90%(2) 2.74%(2)
$(0.008) $ 1.00 0.08% $21,610 0.90%(2) 4.51%(2)
<CAPTION>
AVERAGE
PORTFOLIO COMMISSION
TURNOVER RATE
RATE PAID(4)
-------- ----------
<S> <C> <C>
104.0% N/A
90.2 N/A
66.1 N/A
55.9 N/A
95.6 N/A
62.8 N/A
35.9 N/A
37.9 N/A
30.3 N/A
48.2 N/A
51.1 N/A
104.0 N/A
90.2 N/A
95.9% N/A
79.3 N/A
49.3 N/A
42.5 N/A
-- N/A
95.9 N/A
79.3 N/A
51.1% $ 0.05
94.1 0.04
-- N/A
51.1 0.05
94.1 0.04
-- N/A
48.6% $ 0.02
26.8 0.03
-- N/A
48.6 0.02
26.8 0.03
-- N/A
N/A N/A
N/A N/A
</TABLE>
------------------------------------------
(3) Net of voluntary assumption by the investment adviser of expenses, expressed
as a percentage of average net assets, as follows: Fixed Income Fund Class A
shares, .30% (annualized) for the six months ended 4/30/97 .34%, .51%, .67%,
.58%, .98%, 2.19%, 2.92%, 2.91%, 1.68% and 1.00% for the years ended
10/31/96, 95, 94, 93, 92, 91, 90, 89, 88, and 87, respectively; Fixed Income
Fund Class B shares, .30% (annualized) for the six months ended 4/30/97,
.34% (annualized) for the period 2/28/96 through 10/31/96; Municipal Trust
Fund Class A shares, .97% (annualized) for the six months ended 4/30/97,
.64%, .58%, .77% and 1.15% (annualized) for the years ended 10/31/96, 95, 94
and 93, respectively, Municipal Trust Fund Class B shares, .97% (annualized)
for the six months ended 4/30/97, .64% (annualized ) for the period 2/28/96
through 10/31/96; Developing Markets Fund Class A and Class B shares, .42%
(annualized) for the six months ended 4/30/97, .54% and .60% (annualized),
respectively, for the years ended 10/31/96 and 95; International Equity Fund
Class A and Class B shares, .23% (annualized) for the six months ended
4/30/97, .27% and .60% (annualized), respectively, for the years ended
10/31/96 and 95; Municipal Money Fund, .24% (annualized) for the period
ended 4/30/97; and U.S. Government Money Fund, .22% (annualized) for the
period ended 4/30/97.
(4) For fiscal years beginning after September 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of equity securities.
9
<PAGE>
---------------------------------------------------------------
INTRODUCTION
---------------------------------------------------------------
Each of Winthrop's Funds is a separate pool of assets constituting, in effect, a
separate Fund with its own investment objective and policies. (See 'Investment
Objectives and Policies.') A shareholder may utilize Winthrop's exchange
privilege to transfer assets to the same class of shares in another Winthrop
Fund or to shares of the Money Funds in accordance with his or her changing
perception of the relative investment potential of each investment alternative.
(See 'Purchases, Redemptions and Shareholder Services-- Additional Shareholder
Services.') Shareholders of all classes of a Fund are entitled to their pro rata
share of any dividends and distributions arising from that Fund's assets except
that with respect to each Fund, each class of shares bears different
distribution expenses. (See 'Dividends, Distributions and Taxes.') Upon
redeeming shares of a Fund, the shareholder will receive the next-determined net
asset value of that Fund represented by the redeemed shares less the applicable
contingent deferred sales charge, if any. (See 'Purchases, Redemptions and
Shareholder Services.')
A shareholder will pay a higher 12b-1 Fee after exchanging Class A shares of the
International Funds (.25 of 1% annually) for Class A shares of the Focus Funds
(.30 of 1% annually) or after exchanging shares of the Money Funds (.25 of 1%
annually) for Class A shares of the Focus Funds or for Class B shares of either
the Focus Funds or the International Funds (1% annually). (See 'Purchases,
Redemptions and Shareholder Services.')
Wood Struthers & Winthrop Management Corp. ('WSWMC') acts as the investment
adviser to the Focus Funds and the International Funds. DLJ Investment
Management Corp. ('DLJIM') acts as the investment adviser to the Money Funds.
WSWMC and DLJIM (each, an 'Adviser' and together, the 'Advisers') are
subsidiaries of Donaldson, Lufkin & Jenrette Securities Corporation, the Funds'
distributor. (See 'Management' for a more detailed discussion of the Funds'
investment advisers and investment advisory services).
This Prospectus sets forth information about all the Funds. The Opportunity
Funds and the Focus Funds are different legal entities and are separately
offering their securities hereby. Based on the advice of counsel, the Funds
believe that the potential liability of each Fund with respect to the disclosure
in this Prospectus extends only to the disclosure relating to that Fund.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of each Fund are fundamental policies of that Fund and
may not be changed without the approval of that Fund's shareholders. Except as
set forth in the Funds' Statements of Additional Information, or as otherwise
indicated below, the investment policies and restrictions of each Fund are not
fundamental policies and may be changed by the Board of Trustees (the
'Trustees') of such Fund without a shareholder vote. A more detailed explanation
of the Funds' policies and the securities and instruments they may buy or use is
contained in the Funds' Statement of Additional Information, which is available
upon request.
The investment objectives and policies of each Fund are set forth below. There
can be, of course, no assurance that any of the Funds will achieve its
respective investment objective.
---------------------------------------------------------------
THE FOCUS FUNDS
---------------------------------------------------------------
THE WINTHROP GROWTH FUND
The investment objective of the Winthrop Growth Fund (the 'Growth Fund') is
long-term capital appreciation. Investments will be made based upon their
potential for long-term capital appreciation. However, the Growth Fund may make
an investment to earn income when, in the opinion of the Adviser, such an
investment will not compromise the Growth Fund's investment objective.
It is the policy of the Growth Fund to invest principally in common stock,
securities convertible into common stock and other equity securities (i.e.,
preferred stock, interests in master limited partnerships) of well-known and
established companies (generally, companies in operation for more than three
years) as well as new and unseasoned companies which, in the opinion of the
Adviser, have the potential for long-term capital appreciation. Investments in
new and unseasoned companies which have limited operating histories may involve
risks not present in investments in established and well-known companies.
Under normal circumstances, the Growth Fund will have at least 65% of the value
of its total assets invested in equity securities of companies which in the
opinion of the Adviser have long-term capital appreciation potential. The
selection of securities on the basis of their appreciation possibilities
provides an opportunity for greater capital gain which may involve a
corresponding greater risk of capital loss than would the selection of a more
conservative equity portfolio. However, the Growth Fund reserves the right, when
the Adviser determines it is appropriate, to invest in investment grade
short-term fixed income securities and other investment grade debt securities,
enter into repurchase agreements and hold cash for temporary defensive purposes
without regard for the above limitation. In addition, under normal circumstances
the Growth Fund may invest up to 35% of the value of its total assets in equity
securities selected on a basis other than long-term capital appreciation
potential, investment grade fixed income securities, including bonds,
debentures, notes, asset and mortgage-backed securities and money market
instruments such as commercial paper and bankers acceptances and other financial
10
<PAGE>
instruments. The Growth Fund may invest only in debt securities that are of
investment grade quality at the time of purchase. (See 'Additional General
Investment Policies--Mortgage and Asset-Backed Securities' and 'Investment Grade
Debt Securities.')
It is the policy of the Growth Fund to invest in companies or industries
believed to offer the opportunity for long-term capital appreciation.
The Adviser applies extensive research on the growth prospects of stocks the
Growth Fund is considering buying. Target companies normally have a market
capitalization of at least $1 billion at the time of purchase, and the Adviser
seeks to identify companies with growth rates that it expects will exceed that
of the S&P 500 index. In addition, with the exception of the electric and the
gas utilities sectors, the Fund is 'sector neutral,' which means that the
Adviser allocates its assets among industries in proportion to the sector
allocation of the S&P 500 index. Other factors considered in the selection of
securities include the economic and political outlook, the value of a particular
security relative to another security, trends in the determinants of corporate
profits, and management capability and practices.
The Growth Fund may invest in both listed and unlisted securities. Unlisted
securities may be less liquid and more volatile than listed securities. The
Growth Fund may also (i) invest up to 10% of the value of its total assets in
foreign securities, (ii) invest no more than 10% of its net assets (determined
at the time of purchase) in restricted securities or other instruments having no
ready market, (iii) invest up to 5% of its total assets in warrants, and (iv) to
minimize the effect of a market decline on the value of its securities, write
covered call options on securities or stock indices.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
THE WINTHROP GROWTH AND INCOME FUND
The investment objective of the Winthrop Growth and Income Fund (the 'Growth and
Income Fund') is long-term capital appreciation and continuity of income. The
Growth and Income Fund pursues its investment objective by investing principally
in dividend-paying common stock and diversifying its investments among different
industries and different companies. Accordingly, the Growth and Income Fund
invests in securities on the basis of the Adviser's evaluation of their
investment merit and their potential for appreciation in value and/or income.
The selection of securities on the basis of their capital appreciation or income
potential cannot ensure against possible loss in value.
The Growth and Income Fund may invest in common stock, securities convertible
into common stock, preferred stock, debt securities that are of investment grade
quality at the time of purchase (including bonds, debentures, notes and asset
and mortgage-backed securities), marketable obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities ('U.S. Government
Securities'), municipal securities (including general and special obligation
securities and industrial revenue bonds) and money market instruments, such as
commercial paper, bankers acceptances and other financial instruments. (See
'Additional General Investment Policies--Mortgage and Asset-Backed Securities'
and 'Investment Grade Debt Securities.') Although the Growth and Income Fund
emphasizes investment in common stock, there is no fixed proportion of the
Growth and Income Fund's assets that must be invested in particular types of
securities. The proportion of assets to be invested in various types of
securities will be determined from time to time by the Adviser.
The Growth and Income Fund may invest in both listed and unlisted securities.
Unlisted securities may be less liquid and more volatile than listed securities.
The Growth and Income Fund may also (i) invest up to 10% of the value of its
total assets in foreign securities, (ii) invest no more than 10% of its net
assets (determined at the time of purchase) in restricted securities or other
instruments having no ready market, and (iii) to minimize the effect of a market
decline in the value of its securities, write covered call options on securities
or stock indices.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
THE WINTHROP SMALL COMPANY VALUE FUND
The investment objective of the Winthrop Small Company Value Fund (the 'Small
Company Value Fund') is a high level of growth of capital. The Small Company
Value Fund is not intended for investors whose principal objective is assured
income or preservation of capital.
It is the policy of the Small Company Value Fund to invest principally in common
stock and securities convertible into common stock, but it may, when deemed
appropriate by the Adviser, invest part of its assets in preferred stock, other
equity securities, bonds or other debt securities as described below. Under
normal market conditions, at least 65% of the Small Company Value Fund's total
assets will be invested in equity securities of small market capitalization
companies, which, for the purposes of the Small Company Value Fund, are those
companies with a market capitalization of $2 billion or less at the time of
purchase. While smaller companies generally have potential for rapid growth,
investments in smaller companies often involve greater risks than investments in
larger, more established companies because smaller companies may lack the
management experience,
11
<PAGE>
financial resources, product diversification, and competitive strengths of
larger companies. In addition, in many instances the securities of smaller
companies are traded only over-the-counter or on a regional securities exchange,
and the frequency and volume of their trading is substantially less than is
typical of larger companies. As a result, the securities of smaller companies
may be subject to greater and more abrupt price fluctuations. When making larger
sales of portfolio securities, the Small Company Value Fund may have to sell
such securities at discounts from quoted prices or may have to make a series of
small sales over an extended period of time due to the trading volume of smaller
company securities. Investors should be aware that, based on the foregoing
factors, an investment in the Small Company Value Fund may be subject to greater
price fluctuations than an investment in a fund that invests primarily in
larger, more established companies. The Adviser's research efforts may also play
a greater role in selecting securities for the Small Company Value Fund than in
a fund that invests in larger, more established companies.
The Small Company Value Fund will pursue its investment objective by employing
the value-oriented investment approach. The Small Company Value Fund seeks
securities that appear to be underpriced and are issued by companies with proven
management, consistent earnings, sound finances and strong potential for market
growth. By investing in such companies, the Small Company Value Fund tries to
enhance the potential for appreciation and limit the risk of decline in the
value of its portfolio. The Small Company Value Fund focuses on the fundamentals
of each small-cap company instead of trying to anticipate what changes might
occur in the stock market, the economy, or the political environment. This
approach differs from that used by many other funds investing in small-cap
company stocks. Those funds often buy stocks of companies they believe will have
above-average earnings growth, based on anticipated future developments. In
contrast, the Small Company Value Fund's securities are generally selected with
the belief that they are currently undervalued, based on existing conditions and
that their earning power or franchise value does not appear to be reflected in
their current stock price. In addition, to further reduce risk, the Small
Company Value Fund diversifies its holdings among many companies and industries.
Other factors considered in the selection of securities include whether a
company has an established presence in its industry, a product or market niche
or whether management owns a significant stake in the company's operation.
The Small Company Value Fund may also invest in special situations, that is, in
securities the values of which may be affected by particular developments
unrelated to business conditions generally, and which may fluctuate without
relation to general market trends. In general, a special situation company is a
company whose securities could reasonably be expected to be accorded market
recognition within a foreseeable period of time at an appreciated value solely
by reason of a development particularly or uniquely applicable to that company.
The principal risk associated with investment in special situation companies is
that if the anticipated development does not occur, the investment is likely not
to appreciate or may decline. Examples of special situations are companies being
reorganized or merged, having unusual new products, enjoying particular tax
advantages, or acquiring new management. The Small Company Value Fund will not,
however, invest more than 10% of its assets (at the time of purchase) in equity
securities of companies (including predecessors) that have less than three years
of operations.
In addition to common stock and securities convertible into common stock, the
Small Company Value Fund may invest in preferred stock, investment grade debt
securities (including bonds, debentures, notes, asset and mortgage-backed
securities and convertible securities), U.S. Government Securities, municipal
securities (including general and special obligation securities and industrial
revenue bonds), money market instruments (such as commercial paper and bankers'
acceptances) and other financial instruments. (See 'Additional General
Investment Policies--Mortgage and Asset-Backed Securities' and 'Investment Grade
Debt Securities.') The Small Company Value Fund will not invest more than 35% of
its total assets in investment grade debt securities, each determined at the
time of purchase.
The Small Company Value Fund may invest in securities listed on a securities
exchange and securities traded in the over-the-counter markets. A greater
proportion of the securities in which the Fund invests may not be listed on any
national securities exchange as compared with an investment company that invests
primarily in securities of larger companies. Securities not listed on a national
securities exchange may be less liquid and more volatile than listed securities.
The Small Company Value Fund may purchase or sell options on individual
securities as well as on indices of securities as a means of achieving
additional return or of hedging the value of its portfolio. However, the Small
Company Value Fund will not purchase options if, as a result, the aggregate cost
of all outstanding options exceeds 10% of its assets. The Small Company Value
Fund may also purchase and sell financial futures contracts and options thereon
for hedging and risk management purposes. A financial futures contract is an
agreement to purchase or sell an agreed amount of securities at a set price for
delivery in the future. To the extent that puts, calls, straddles and similar
investment strategies involve instruments regulated by the Commodity Futures
Trading Commission, the Small Company Value Fund is limited to an investment not
in excess of 5% of its total assets.
The Small Company Value Fund may also (i) invest up to 20% of the value of its
total assets in foreign
12
<PAGE>
securities, (ii) invest up to 5% of its total assets in rights or warrants, and
(iii) invest no more than 10% of its net assets (determined at the time of
purchase) in restricted securities or other instruments having no ready market.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
THE WINTHROP FIXED INCOME FUND
The investment objective of the Winthrop Fixed Income Fund (the 'Fixed Income
Fund') is to provide as high a level of total return as is consistent with
capital preservation by investing principally in debt securities, including,
without limitation, convertible and nonconvertible debt securities of foreign
and domestic companies, including both well-known and established and new and
lesser-known companies. Total return means the sum of interest income, dividend
income (if any) and capital gains less capital losses. Capital preservation
means minimizing the risk of capital loss in a period of falling prices (rising
interest rates) for debt securities.
Specifically, the investment policies of the Fixed Income Fund permit it to
invest, without restriction, in the following types of securities:
(1) Bonds, including municipal bonds (taxable and tax-exempt, including, among
others, special and general obligation bonds and industrial development
bonds) and other debt securities, which are rated Aaa, Aa, A or MIG-1 by
Moody's Investors Service, Inc. ('Moody's'), or AAA, AA, A or SP-1 by
Standard & Poor's Ratings Group ('S&P');
(2) U.S. Government Securities;
(3) Obligations issued or guaranteed by national or state bank holding
companies, which obligations are not rated as a matter of policy by either
Moody's or S&P, but which, in the opinion of the Adviser (on the basis of
criteria believed by the Adviser to be comparable to that used by
nationally recognized statistical rating organizations for assigning
ratings), meet the Fixed Income Fund's investment objective; and
(4) Commercial paper rated Prime-1 by Moody's or A-1 + or A-1 by S&P.
The Fixed Income Fund may also invest not more than 25% (in the aggregate) of
its total assets at the time of investment in (i) debt securities rated Baa or
MIG-2 by Moody's or BBB or SP-2 by S&P and (ii) commercial paper rated Prime-2
by Moody's or A-2 by S&P, to the extent that such investments would, in the
opinion of the Adviser, be consistent with the Fixed Income Fund's investment
objective. (See 'Additional General Investment Policies,' for a description of
securities rated BBB by S&P and Baa by Moody's and of asset and mortgage-backed
securities.)
The Fixed Income Fund may enter into repurchase agreements, terminable within
seven days or less, with respect to issues of the U.S. Treasury, with member
banks of the Federal Reserve System or primary dealers in U.S. Government
Securities, as long as such investments do not in the aggregate exceed 15% of
the total assets of the Fixed Income Fund (except where such investments are
made for temporary defensive purposes, in which case no limit is applicable).
As a matter of fundamental policy, which cannot be changed without approval by
the vote of a majority of the Fixed Income Fund's outstanding voting securities
(as defined in the Statement of Additional Information), the Fixed Income Fund
will invest at least 80% of the value of its total assets at the time of
investment in debt securities. In normal circumstances, the Fixed Income Fund
will invest at least 65% of the value of its total assets in fixed income
securities. However, the Fixed Income Fund reserves the right to hold cash and
short-term fixed income securities and to enter into repurchase agreements as
necessary for temporary defensive or emergency purposes as determined by the
Adviser without regard for the above limitations.
The Fixed Income Fund may also invest in restricted securities and in
instruments having no ready market if such purchases at the time thereof would
not cause more than 10% of the value of its net assets to be invested in not
readily marketable assets. (See 'Investment Restrictions.')
The Adviser intends to adjust the average maturity of the Fund's portfolio
depending upon its assessment of the relative yields on debt securities of
different maturities and its expectations of future interest rate patterns.
Because a change in the market value of a debt security generally is inversely
related to market interest rates, the market value of the Fixed Income Fund's
investments will tend to decrease during periods of rising interest rates and to
increase during periods of falling rates. The magnitude of the fluctuations in
the market value of the Fund's portfolio as a result of fluctuations in interest
rates will generally be greater at times when the average maturity of the Fund's
portfolio is longer. The Fixed Income Fund will invest and hold debt securities
which, in the opinion of the Adviser, will maximize the total return of the
portfolio.
THE WINTHROP MUNICIPAL TRUST FUND
The investment objective of the Winthrop Municipal Trust Fund (the 'Municipal
Trust Fund') is to provide as high a level of total return as is consistent with
capital preservation by investing principally in high grade tax-exempt municipal
securities. This investment objective, unlike most other municipal bond funds,
is not to provide current income which is exempt from federal and/or state
income tax. Total return means the sum of interest income and capital gains less
capital losses. The Municipal Trust Fund intends to distribute annually its net
capital gains. Any such distributions
13
<PAGE>
will be taxable to a shareholder as capital gain. (See 'Dividends, Distributions
and Taxes.')
The Municipal Trust Fund attempts to provide high total return by actively
managing the maturities of the bonds in the portfolio in response to the
Adviser's anticipation of the movement of interest rates and its assessment of
the relative yields. The Fund will shorten the portfolio's maturities when the
Adviser believes that interest rates will rise, and lengthen maturities when the
Adviser believes that rates will fall. Currently, the Fund invests primarily in
securities to maintain an average maturity of 10 years or less to help reduce
the risk associated with long-term bonds, as is consistent with its objective
of capital preservation. To a lesser extent, the Municipal Trust Fund will also
attempt to enhance total return by selecting municipal securities which the
Adviser believes are undervalued. The success of these strategies depends upon
the Adviser's ability to accurately forecast changes in interest rates and to
properly assess the value of municipal securities. The investor should be aware
that there can be no assurances that the Municipal Trust Fund's investment
strategies will be successful.
Under normal circumstances, it is the Municipal Trust Fund's policy to invest at
least 80% of the value of its net assets at the time of investment in tax-exempt
municipal securities. However, the Municipal Trust Fund reserves the right to
hold cash and short-term fixed income securities and to enter into repurchase
agreements as necessary for temporary defensive or emergency purposes as
determined by the Adviser without regard for the above limitation.
The Municipal Trust Fund seeks to achieve its objective by investing primarily
in a diversified portfolio of high grade, intermediate term municipal
securities. Municipal securities fall into two principal classes: bonds and
notes which may have fixed, variable or floating rates of interest. The
investment policies of the Municipal Trust Fund permit it to invest, without
restriction, in tax-exempt municipal bonds and notes which are rated Aaa, Aa, A
or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. For a more complete discussion
of Municipal Securities, see 'Additional General Investment Policies--Municipal
Securities.'
The Municipal Trust Fund may also invest not more than 25% (in the aggregate) of
its total assets at the time of investment in (i) municipal securities rated Baa
or MIG-2 by Moody's or BBB or SP-2 by S&P and (ii) commercial paper rated
Prime-2 by Moody's or A-2 by S&P, to the extent that such investments would, in
the opinion of the Adviser, be consistent with the Municipal Trust Fund's
investment objective. (See 'Additional General Investment Policies--Investment
Grade Debt Securities' for a description of securities rated BBB by S&P and Baa
by Moody's.) Non-rated municipal securities will also be considered for
investment by the Municipal Trust Fund when the Adviser believes that the
financial condition of the issuers of such obligations and the protection
afforded by the terms of the obligations themselves limit the risk to the
Municipal Trust Fund to a degree comparable to that of rated securities which
are consistent with the Municipal Trust Fund's objective and policies.
Because a change in the market value of a debt security generally is inversely
related to market interest rates, the market value of the Municipal Trust Fund's
investments will tend to decrease during periods of rising interest rates and to
increase during periods of falling rates. The magnitude of the fluctuations in
market value of the Municipal Trust Fund's portfolio as a result of fluctuations
in interest rates will generally be greater at times when the average maturity
of the Municipal Trust Fund's portfolio is longer.
The Municipal Trust Fund may enter into repurchase agreements, terminable within
seven days or less, with respect to issues of the U.S. Treasury, with member
banks of the Federal Reserve System or primary dealers in U.S. Government
Securities, as long as such investments do not in the aggregate exceed 15% of
the total assets of the Municipal Trust Fund (except where such investments are
made for temporary defensive purposes in which case no limit is applicable).
The Municipal Trust Fund may also invest in (i) restricted securities and in
instruments having no ready market if such purchases at the time thereof would
not cause more than 15% of the value of its net assets to be invested in not
readily marketable assets and (ii) municipal bonds that are subject to the
alternative minimum tax ('AMT-Subject Bonds').
Dividends of the Municipal Trust Fund will consist of income exempt from federal
income tax, income subject to the federal AMT, and taxable ordinary income and
capital gains. (See 'Dividends, Distributions and Taxes.')
See the Statement of Additional Information for a more complete description of
the Municipal Trust Fund's investment practices and the risks associated
therewith.
---------------------------------------------------------------
THE INTERNATIONAL FUNDS
---------------------------------------------------------------
THE WINTHROP DEVELOPING MARKETS FUND
The investment objective of the Winthrop Developing Markets Fund (the
'Developing Markets Fund') is to seek long-term growth of capital by investing
primarily in common stocks and other equity securities from developing
countries. Under normal market conditions, the Developing Markets Fund intends
to invest at least 65% of its total assets in the equity securities of
developing countries.
The Developing Markets Fund considers developing countries to be all countries
that are designated as
14
<PAGE>
developing or emerging countries by the International Bank for Reconstruction
and Development (the World Bank) or the International Finance Corporation, as
well as countries that are classified by the United Nations or otherwise
regarded by their authorities as developing. Currently, the countries not
included in this category are Ireland, Spain, New Zealand, Australia, the United
Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada, Germany,
Denmark, the United States, Sweden, Finland, Norway, Japan and Switzerland. As
used in this Prospectus, a company in a developing country is an entity: (i) for
which the principal securities trading market is in a developing country, as
defined above or (ii) organized under the laws of and with a principal office in
a developing country.
As an operating policy, the Developing Markets Fund currently intends to invest
primarily in countries represented within the Morgan Stanley Capital
International ('MSCI') Emerging Market Indices. Those countries currently
include Argentina, Brazil, Chile, Colombia, Mexico, Peru, Venezuela, India,
Indonesia, Korea, Malaysia, Philippines, South Africa, Thailand, Sri Lanka,
Greece, Israel, Jordan, Pakistan, Poland, Portugal, Taiwan and Turkey. The
Adviser and the International Funds investment subadviser, AXA Asset Management
Partenaires (the 'Subadviser'), do not currently intend to invest more than 25%
of the Developing Markets Fund's total assets (at the time of investment) in
developing countries not represented within the MSCI Emerging Market Indices.
The Developing Markets Fund seeks to identify those countries and industries
where economic and political factors are likely to produce above average growth
rates. The Developing Markets Fund then seeks to invest in those companies in
such countries and industries that are best positioned and managed to take
advantage of these economic and political factors. The assets of the Developing
Markets Fund ordinarily will be invested in the securities of issuers in at
least three different developing countries.
Characteristics of developing countries that may affect investment in their
markets include certain national policies that may restrict investment by
foreigners and the absence of developed legal structures governing private and
foreign investments and private property. The typically small size of the
markets for securities issued by issuers located in developing countries and the
possibility of a low or nonexistent volume of trading in those securities may
also result in a lack of liquidity and in substantial price volatility of those
securities. Shareholders should be aware that investing in developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less stability
than those of developed countries.
THE WINTHROP INTERNATIONAL EQUITY FUND
The investment objective of the Winthrop International Equity Fund (the
'International Equity Fund') is to seek long-term growth of capital by investing
primarily in common stocks and other equity securities from established markets
outside the United States. Under normal market conditions, the International
Equity Fund intends to invest at least 65% of its total assets in equity
securities of issuers from at least three different countries outside the United
States. The International Equity Fund considers it consistent with this
objective to acquire securities of companies incorporated in the United States
and having their principal activities and interests outside of the United
States.
In pursuing its investment objective, the International Equity Fund intends to
diversify its equity investments primarily among countries represented within
the EAFE Index, also known as the Morgan Stanley Capital International Europe,
Australia, Far East index, an unmanaged index of over 1,000 foreign stock
prices. Those countries currently include Germany, the Netherlands, Belgium,
Austria, France, Italy, Spain, the United Kingdom, Switzerland, Japan,
Hong-Kong, Australia, New Zealand, Malaysia, Singapore and the Scandinavian
countries. The Adviser and Subadviser do not currently intend to invest more
than 10% of the International Equity Fund's total assets (at the time of
investment) in countries outside the United States not represented within the
EAFE Index.
The International Equity Fund seeks to identify those countries and industries
with favorable growth prospects. The International Equity Fund then seeks to
invest in those companies in such countries and industries that are reasonably
valued with reliable earnings and high quality management.
ADDITIONAL INVESTMENT POLICIES OF THE INTERNATIONAL FUNDS Each International
Fund may invest up to 25% of its assets in convertible securities. The Adviser
and Subadviser currently do not intend to invest over 5% of each International
Fund's assets in convertible securities rated below investment grade by Standard
and Poor's Ratings Group ('S&P') and Moody's Investor Service, Inc. ('Moody's'),
or convertible securities not rated by S&P or Moody's, unless believed by the
Adviser or Subadviser to be of comparable quality to instruments rated
investment grade by S&P or Moody's. The International Funds will not invest in
convertible securities rated below B by S&P or Moody's, or unrated convertible
securities of comparable quality. See the Appendix to the Statement of
Additional Information of the International Funds for the risks associated with
investing in convertible securities with such ratings. For a further discussion
on Convertible Securities, see 'Additional General Investment
Policies--Convertible Securities.'
The International Funds may purchase sponsored or unsponsored ADRs, EDRs and
GDRs (collectively,
15
<PAGE>
'Depositary Receipts'). ADRs are Depositary Receipts typically issued by a U.S.
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. EDRs and GDRs are Depositary Receipts typically issued
by foreign banks or trust companies, although they also may be issued by U.S.
banks or trust companies, and evidence ownership of underlying securities issued
by either a foreign or a United States corporation.
Each International Fund may invest up to 15% of its net assets in illiquid
investments. In accordance with procedures adopted by the Trustees, the Adviser
and Subadviser determine the liquidity of an International Fund's investments.
The absence of a trading market can make it difficult to ascertain a market
value for illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for an International Fund to sell them promptly at an acceptable
price.
The International Funds reserve the right as a defensive measure to hold
temporarily other types of securities without limit, including commercial paper,
bankers' acceptances, short-term debt securities (corporate and government) or
government and high quality money market securities of U.S. and non-U.S.
issuers, repurchase agreements, time deposits or cash (foreign currencies or
U.S. dollars), in such proportions as, in the opinion of the Adviser or
Subadviser, prevailing market, economic or political conditions warrant. Each
International Fund may also temporarily hold cash and invest in high quality
foreign or domestic money market instruments up to 35% of its assets, pending
investment of proceeds from new sales of International Fund shares or to meet
ordinary daily cash needs.
Each International Fund may also (i) invest up to 35% of its total assets in
investment grade fixed income securities, (ii) invest up to 5% of its net assets
in warrants, (iii) purchase and sell put and call options, (iv) invest up to 15%
of its net assets in restricted securities or other instruments having no ready
market, (v) enter into forward foreign currency exchange contracts to protect
the value of its assets against future changes in the level of currency exchange
rates, (vi) purchase and sell financial futures contracts and options thereon
which are traded on a commodities exchange or board of trade for certain
hedging, return enhancement and risk management purposes in accordance with the
regulations of the Commodity Futures Trading Commission and (vii) purchase and
sell financial futures contracts and related options, without limitation, for
bona fide hedging purposes. Subject to the foregoing, the value of all financial
futures contracts sold will not exceed the total market value of each
International Fund's portfolio.
Because the markets for certain options and futures contracts in which the
International Funds will invest (including markets located in foreign countries)
are relatively new and still developing and may be subject to regulatory
restraints, each International Fund's ability to engage in transactions using
such investments may be limited.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
---------------------------------------------------------------
THE MONEY FUNDS
---------------------------------------------------------------
THE WINTHROP MUNICIPAL MONEY FUND
The Winthrop Municipal Money Fund's (the 'Municipal Money Fund') investment
objective is to seek maximum current income, consistent with liquidity and
safety of principal, that is exempt from Federal income taxation to the extent
described below. As a matter of fundamental policy, the Municipal Money Fund
pursues its objectives by investing in high quality municipal securities having
remaining maturities of one year or less, which maturities may extend to 397
days, and at least 80% of the Municipal Money Fund's total assets will be
invested in such securities (as opposed to the taxable investments described
below). However, the Municipal Money Fund reserves the right to lower the
percentage to 65% if economic or political conditions warrant. To increase the
Municipal Money Fund's ability to reach its investment objectives, the dollar
weighted average maturity of its portfolio securities is always 90 days or less.
In general, securities with longer maturities are more vulnerable to price
changes, although they may provide higher yields. It is possible that a major
change in interest rates or a default on the Municipal Money Fund's investments
could cause their share prices to change.
Normally, substantially all the Municipal Money Fund's income will be tax-exempt
as described below. Such income may be subject to state or local and or Federal
AMT income taxes.
The municipal securities in which the Municipal Money Fund invests include
municipal notes and short-term municipal bonds which may have fixed, variable or
floating rates of interest. Municipal securities with variable rates may include
participation interests in industrial development bonds which may be backed by
letters of credit from banking or other financial institutions. The letters of
credit of any single of such institutions in respect of all variable rate
obligations will not cover more than the allowable percentage of the Municipal
Money Fund's total assets in accordance with Rule 2a-7 of the Investment Company
Act of 1940, as amended ('1940 Act'). For a more complete discussion of
Municipal Securities, see 'Additional General Investment Policies--Municipal
Securities.'
The Municipal Money Fund may also invest without limitation in tax-exempt
municipal securities subject to
16
<PAGE>
the alternative minimum tax (the 'AMT'). (See 'Dividends, Distributions and
Taxes.')
All of the Municipal Money Fund's municipal securities at the time of purchase
are rated within the two highest quality ratings of Moody's (Aaa and Aa, MIG 1
and MIG 2 or VMIG1 and VMIG2) or S&P's (AAA and AA or SP-1 and SP-2), or judged
by the Adviser to be of comparable quality.
The Municipal Money Fund may also invest (i) up to 10% of its net assets in
stand-by commitments, delayed-delivery, when-issued securities and other
illiquid securities, (ii) more than 5% of its net assets in municipal leases,
which are leases or installment purchases used by state and local governments as
a means to acquire property, equipment or facilities without involving debt
issuance limitations and (iii) in taxable securities including obligations of
the U.S. Government and its agencies, high quality certificates of deposit and
bankers' acceptances, prime commercial paper, and repurchase agreements.
To seek to reduce investment risk, the Municipal Money Fund may not invest in
the securities of any one issuer, except the U.S. Government, in excess of the
percentage of the Municipal Money Fund's total assets allowed under Rule 2a-7 of
the 1940 Act.
The Municipal Money Fund earns income at current money market rates, and its
yield will vary from day to day and generally reflects current short-term
interest rates and other market conditions. It is important to note that neither
the Municipal Money Fund nor its yield are insured or guaranteed by the U.S.
Government.
THE WINTHROP U.S. GOVERNMENT MONEY FUND
The Winthrop U.S. Government Money Fund (the 'Government Fund') investment
objective is to seek maximum current income, consistent with liquidity and
safety of principal. As a matter of fundamental policy, the Government Fund
pursues its objectives by maintaining a portfolio of high quality money market
securities, including the types described in the succeeding paragraph, which at
the time of investment generally have remaining maturities of one year or less,
although maturities may extend to 397 days. The dollar weighted average maturity
of the Government Fund's portfolio securities will vary, but will always be 90
days or less. In general, securities with longer maturities are more vulnerable
to price changes, although they may provide higher yields. It is possible that a
major change in interest rates or a default on the Government Fund's investments
could cause their share prices to change.
The securities in which the Government Fund primarily invests are: (1) U.S.
Government Securities, including issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an act of Congress,
including variable rate obligations such as floating rate notes; and (2)
repurchase agreements that are collateralized in full each day by mortgage
related securities or the types of securities listed above. These agreements are
entered into with 'primary dealers' (as designated by the Federal Reserve Bank
of New York) in U.S. Government Securities and would create a loss to the
Government Fund if, in the event of a dealer default, the proceeds from the sale
of the collateral were less than the repurchase price. In addition, if the
seller of repurchase agreements becomes insolvent, the Government Fund's right
to dispose of the securities might be restricted.
The Government Fund may commit up to 10% of its net assets to the purchase of
illiquid securities, which includes when-issued U.S. Government Securities,
whose value may fluctuate prior to their settlement, thereby creating an
unrealized gain or loss to the Government Fund.
The Government Fund earns income at current money market rates and its yield
will vary from day to day and generally reflects current short-term interest
rates and other market conditions. It is important to note that neither the
Government Fund nor its yield is insured or guaranteed by the U.S. Government.
ADDITIONAL INVESTMENT POLICIES OF THE MONEY FUNDS To maintain portfolio
diversification and reduce investment risk, the Money Funds may not: (1) borrow
money except from banks on a temporary basis or via entering into reverse
repurchase agreements to be used exclusively to facilitate the orderly
maturation and sale of portfolio securities during any periods of abnormally
heavy redemption requests, if they should occur; such borrowings may not be used
to purchase investments; or (2) pledge, hypothecate or in any manner transfer,
as security for indebtedness, its assets except to secure such borrowings.
In addition to the above referenced securities, the Money Funds reserve the
right as a defensive measure to hold temporarily other types of securities which
are permitted by Rule 2a-7 of the 1940 Act. See 'Investment Policies and
Restrictions' in the Statement of Additional Information for a more complete
description of the Money Funds' objectives, strategies, instruments to be used
in connection therewith, and risks associated therewith.
---------------------------------------------------------------
ADDITIONAL GENERAL
---------------------------------------------------------------
INVESTMENT POLICIES
---------------------------------------------------------------
The following general investment policies supplement those set forth above for
each Fund.
17
<PAGE>
EQUITY SECURITIES 'Equity Securities,' as used in this Prospectus, refers to
common stock, preferred stock (including convertible preferred), bonds
convertible into common or preferred stock, rights and warrants, equity
interests in trusts and depositary receipts for equity securities.
CONVERTIBLE SECURITIES A convertible security is a bond or preferred stock which
may be converted at a stated price within a specified period of time into a
certain quantity of the common or preferred stock of the same or a different
issuer. Convertible securities have characteristics of both bonds and equity
securities. Like a bond, a convertible security tends to increase in market
value when interest rates decline and tends to decrease in market value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the underlying stock. The price of a
convertible security tends to increase as the market value of the underlying
stock rises, whereas it tends to decrease as the market value of the underlying
stock declines.
WARRANTS A warrant gives the holder thereof the right to buy equity securities
at a specific price during a specified period of time. Warrants tend to be more
volatile than the underlying security, and if at a warrant's expiration date the
security is trading at a price below the price set in the warrant, the warrant
will expire worthless. Conversely, if at the expiration date the underlying
security is trading at a price higher than the price set in the warrant, the
holder of the warrant can acquire the stock at a price below its market value.
MORTGAGE AND ASSET-BACKED SECURITIES Except for the Municipal Trust Fund, the
Funds may invest in mortgage and asset-backed securities. 'Mortgage-backed
securities' are securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans on real property,
including pass-through securities such as Ginnie Mae, Fannie Mae and Freddie Mac
Certificates. The yield and credit characteristics of mortgage-backed securities
differ in a number of respects from traditional fixed income securities. The
major differences typically include more frequent interest and principal
payments, usually monthly, and the possibility that prepayment of principal may
be made at any time. Prepayment rates are influenced by changes in current
interest rates and a variety of other factors. In general, changes in the rate
of prepayment on a security will change the yield to maturity of the security.
Under certain interest rate or prepayment rate scenarios, a Fund may fail to
recoup fully its investment in such securities notwithstanding the credit
quality of the issuers of such securities. As a result of usual prepayment
patterns, amounts available for reinvestment are likely to be greater during a
period of declining interest rates and, thus, are likely to be invested at lower
interest rates, than during a period of rising interest rates. Mortgage-backed
securities may decrease in value as a result of increases in interest rates and
may benefit less than other fixed income securities from declining interest
rates because of the risk of prepayment. Except for the Municipal Trust Fund,
the Funds may also invest in private mortgage pass-through securities. Such
securities are not guaranteed by the U.S. Government or its agencies or
instrumentalities.
'Asset-backed securities' have similar structural characteristics to
mortgage-backed securities, but the underlying assets include assets such as
motor vehicle installment sales or installment loan contracts, leases of various
types of real and personal property, and receivables from revolving credit
agreements, rather than mortgage loans or interests in mortgage loans.
Asset-backed securities present certain risks that are not present in
mortgage-backed securities; primarily, these securities do not have the benefit
of the same security interest in the related collateral. There is the
possibility that recoveries of repossessed collateral may not, in some cases, be
available to support payments on these securities.
MUNICIPAL SECURITIES Municipal securities fall into two principal classes: bonds
and notes. Municipal bonds, which are longer-term debt obligations meeting long-
term capital needs, fall into two general classifications: 'general obligation'
bonds or 'revenue' bonds. Payment of principal and interest on general
obligation bonds is secured by the issuing municipality's pledge of its full
faith, credit, and taxing power. Payment on revenue bonds is met from the
revenues obtained from a certain facility, class of facilities, special excise
or other tax, but not from general tax revenues. Variations on these two
classifications exist, such as revenue bonds backed by a municipality's general
taxing power, or general obligation bonds backed by limited taxing power.
Municipal notes are short-term debt obligations generally maturing in a year or
less, meeting short-term capital needs and are also either 'general obligation'
or 'revenue' debt securities. They include tax anticipation notes, revenue
anticipation notes, bond anticipation notes, construction loan notes and tax-
exempt commercial paper.
Municipal securities may have fixed, variable or floating rates of interest.
Variable and floating rate securities pay interest at rates that are adjusted
periodically, according to a specified formula, in order to minimize fluctuation
in the principal value of the securities. A 'variable' interest rate adjusts at
predetermined intervals (e.g., daily, weekly, or monthly), while a 'floating'
interest rate adjusts whenever a specified benchmark rate (such as the bank
prime lending rate) changes.
The Municipal Money Fund and Municipal Trust Fund may invest in variable rate
obligations. Such adjustments minimize changes in the market value of the
obligation, and accordingly, enhance the ability of
18
<PAGE>
the Municipal Money Fund to maintain a stable $1.00 net asset value. (See 'Net
Asset Value').
INVESTMENT GRADE DEBT SECURITIES The Funds may invest in debt securities of
investment grade quality. Investment grade debt securities are debt securities
rated in one of the four highest rating categories by a nationally recognized
statistical rating organization and unrated debt securities believed by the
Adviser (on the basis of criteria believed by the Adviser to be comparable to
that applied by such rating agencies) to be of comparable quality to debt
securities so rated. Debt securities rated Baa or higher by Moody's or BBB or
higher by S&P are investment grade securities. Securities rated BBB are regarded
by S&P as having an adequate capacity to pay interest and repay principal;
whereas such securities normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely, in the opinion of
S&P, to lead to a weakened capacity to pay interest and repay principal for debt
in this category than in higher rated categories. Securities rated Baa by
Moody's are considered by Moody's to be medium grade obligations; they are
neither highly protected nor poorly secured; interest payments and principal
security appear to be adequate for the present but certain protective elements
may be lacking or may be characteristically unreliable over any great length of
time; in the opinion of Moody's, they lack outstanding investment
characteristics and in fact have speculative characteristics as well. For a more
complete description of Moody's and S&P's ratings, see the Appendix to the
Statement of Additional Information of the Focus Funds or the Money Funds.
The investment grade limitations referenced for each Fund are applicable at the
time of initial investment and the Fund may determine to retain securities the
issuers of which have had their credit characteristics downgraded.
REPURCHASE AGREEMENTS The Funds may enter into 'repurchase agreements' with
respect to U.S. Government Securities. The Funds may enter into repurchase
agreements with member banks of the Federal Reserve System or 'primary dealers'
(as designated by the Federal Reserve Bank of New York) in such securities.
Repurchase agreements permit a Fund to keep all of its assets at work while
retaining 'overnight' flexibility in pursuit of investments of a longer-term
nature. Winthrop requires continual maintenance of collateral with a Fund's
custodian in an amount equal to, or in excess of, the market value of the
securities which are the subject of a repurchase agreement. In the event a
vendor defaults on its repurchase obligation, the Fund might suffer a loss to
the extent that the proceeds from the sale of the collateral were less than the
repurchase price. If the vendor becomes the subject of bankruptcy proceedings,
the Fund might be delayed in selling the collateral.
FOREIGN SECURITIES The International Funds will, and the Focus Funds except for
the Municipal Trust Fund may, invest in foreign securities. There are certain
risks involved in investing in foreign securities which are not the usual risks
inherent in U.S. investments. These risks include those resulting from
fluctuations in currency exchange rates, revaluation of currencies, future
adverse political and economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or restrictions,
reduced availability of public information concerning issuers and the lack of
uniform accounting, auditing and financial reporting standards or of other
regulatory practices and requirements comparable to those applicable to domestic
companies. Additionally, foreign securities may be adversely affected by
fluctuations in value of one or more currencies relative to the U.S. dollar.
Moreover, securities of many foreign companies may be less liquid and their
prices more volatile than those of securities of comparable U.S. companies. In
addition, with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other assets of a foreign issuer, including the
withholding of dividends. Foreign securities may be subject to foreign
government taxes that would reduce the net yield on such securities. To the
extent a fund invests in securities denominated or quoted in currencies other
than the U.S. dollar, changes in foreign currency exchange rates will affect the
value of portfolio securities and the appreciation or depreciation of
investments. Investment in foreign securities may also result in higher expenses
due to the cost of converting foreign currency into U.S. dollars, the payment of
fixed brokerage commissions on foreign exchanges, which generally are higher
than commissions on U.S. exchanges, and the expense of maintaining securities
with foreign custodians.
INVESTMENT COMPANIES Pursuant to the 1940 Act, a fund generally may invest up to
10% of its total assets in the aggregate in shares of other investment companies
and up to 5% of its total assets in any one investment company as long as each
investment does not represent more than 3% of the outstanding voting stock of
the acquired investment company at the time of investment. Investment in other
investment companies may involve the payment of substantial premiums above the
value of such investment companies' portfolio securities and is subject to
limitations under the 1940 Act and market availability. The International Funds
or the Municipal Money Fund may invest in such investment companies if, in the
judgment of the Advisers or Subadviser, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in an investment company, the Municipal Money Fund or an
International Fund would bear its ratable share of that investment company's
expenses, including its advisory and administrative fees. At the same time the
19
<PAGE>
Municipal Money Fund or an International Fund would continue to pay its own
management fees and other expenses.
OPTIONS Each of the Growth Fund and the Growth and Income Fund may write covered
call options (as discussed below) on individual securities or stock indices, but
only in order to minimize the effect of a market decline in the value of
securities in its portfolio. The Small Company Value Fund may purchase or sell
put and call options on individual securities or stock indices as a means of
achieving additional return or of hedging the value of its portfolio. The
International Funds may purchase and sell put and call options on securities,
currencies and financial indices that are traded on U.S. or foreign securities
exchanges or in the over-the-counter market. (Options traded in the over-
the-counter market are considered illiquid investments.)
A call option is a contract that gives the holder of the option the right, in
return for a premium paid, to buy from the seller the security underlying the
option at a specified exercise price at any time during the term of the option
or, in some cases, only at the end of the term of the option. The seller of the
call option has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price. A put option is a
contract that gives the holder of the option the right, in return for a premium,
to sell to the seller of the option the underlying security at a specified
price. The seller of the put, on the other hand, has the obligation to buy the
underlying security upon exercise at the exercise price. The purchaser of an
option risks a total loss of the premium paid for the option if the price of the
underlying security does not increase or decrease sufficiently to justify
exercise. The seller of an option, on the other hand, will recognize the premium
as income if the option expires unexercised but forgoes any capital appreciation
in excess of the exercise price in the case of a call option and may be required
to pay a price in excess of current market value in the case of a put option.
Options purchased and sold in private transactions (other than on an exchange)
also impose on a fund the credit risk that the counterparty will fail to honor
its obligations.
An option is considered 'covered' for purposes of the Funds' investment
limitations if the party writing it owns, at all times during the option period,
either (i) the optioned securities, or securities convertible into or carrying
rights to acquire the optioned securities at no additional cost, or (ii) an
offsetting call option on the same securities at the same or lower price.
The success of a Fund's transactions with options depends on the ability of the
Adviser or Subadviser to predict the direction of the market and is subject to
certain additional risks, including generally greater volatility of options as
compared to common stocks and the risk that an option will expire without value.
RISKS OF OPTIONS, CURRENCY EXCHANGE CONTRACTS AND FINANCIAL FUTURES
STRATEGIES Participation in the options or futures markets and in currency
exchange transactions involves investment risks and transaction costs to which a
Fund would not be subject absent the use of these strategies. If the Adviser's
or Subadviser's predictions of movements in the direction of the securities,
foreign currency and interest rate markets are inaccurate, the adverse
consequences to a Fund may leave the Fund in a worse position than if such
strategies were not used. The loss from entering into futures contracts is
potentially unlimited. Risks inherent in the use of options, foreign currency
and futures contracts and options on futures contracts include (1) dependence on
the investment manager's ability to predict correctly movements in the direction
of interest rates, securities prices and currency markets; (2) imperfect
correlation between the price of options and futures contracts and options
thereon and movements in the prices of the securities or currencies being
hedged; (3) skills needed to use these strategies are different from those
needed to select portfolio securities; (4) the possible absence of a liquid
secondary market for any particular instrument at any time; (5) the possible
need to defer closing out certain hedged positions to avoid adverse tax
consequences; and (6) the possible inability of a Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable for it to do so,
or the possible need for a Fund to sell a portfolio security at a
disadvantageous time, due to the need for such Fund to maintain 'cover' or to
segregate securities in connection with hedging transactions. See 'Dividends,
Distributions and Taxes' in the Statement of Additional Information of each
Fund.
WHEN ISSUED, DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS The Funds may,
to the extent consistent with their other investment policies and restrictions,
enter into forward commitments for the purchase or sale of securities, including
on a 'when issued' or 'delayed delivery' basis in excess of customary settlement
periods for the type of security involved. In some cases, a forward commitment
may be conditioned upon the occurrence of a subsequent event, such as approval
and consummation of a merger, corporate reorganization or debt restructuring,
i.e., a when, as and if issued security. When such transactions are negotiated,
the price is fixed at the time of the commitment, with payment and delivery
taking place in the future, generally a month or more after the date of the
commitment. While the Funds will only enter into a forward commitment with the
intention of actually acquiring the security, the Funds may sell the security
before the settlement date if it is deemed advisable.
Securities purchased under a forward commitment are subject to market
fluctuations, and no interest (or dividends) accrues to a Fund prior to the
settlement date. The Funds will segregate with their custodian cash or other
liquid, unencumbered assets, in an
20
<PAGE>
aggregate amount at least equal to the amount of their respective outstanding
forward commitments.
STAND-BY COMMITMENTS The Municipal Trust Fund and the Municipal Money Fund may
invest in stand-by commitments which may involve certain additional expenses.
Each of these Fund's custodian will maintain a segregated account containing
liquid securities having value equal to, or greater than, such securities. The
price of such securities, which is generally expressed in yield terms, is fixed
at the time the commitment to purchase is made, but delivery and payment for
such securities takes place at a later time. Normally the settlement date occurs
within ten days to one month after the purchase of the issue. The value of such
securities may fluctuate prior to their settlement, thereby creating an
unrealized gain or loss to the Fund. Such securities are examples of what the
SEC considers 'illiquid securities' because their settlement date occurs more
than seven days after their purchase. The SEC limits money market funds to hold
only up to 10% of their net assets for securities which settle more than seven
days after purchase.
INVESTMENT RESTRICTIONS
Certain investment restrictions applicable to each Fund are fundamental policies
and may not be changed with respect to a Fund without the approval of a majority
of the shareholders of that Fund. See 'Investment Policies and Restrictions' in
the applicable Fund's Statement of Additional Information.
---------------------------------------------------------------
MANAGEMENT
---------------------------------------------------------------
The Board of Trustees of each Fund has the overall responsibility for the
management of the Funds.
Wood, Struthers & Winthrop Management Corp., a Delaware corporation with
principal offices at 277 Park Avenue, New York, New York 10172 ('WSWMC'), has
been retained under an investment advisory agreement to provide investment
advice and to supervise the management and investment programs of the Focus
Funds and International Funds described above, subject to the general
supervision and control of each Fund's Trustees.
Pursuant to a Subadvisory Agreement among the International Funds, WSWMC and AXA
Asset Management Partenaires, the Subadviser, a societe anonyme organized under
the laws of France with principal offices at 40, rue du Colisee, 75008 Paris,
France, furnishes investment advisory services in connection with the management
of the International Funds. WSWMC continues to have responsibility for all
investment advisory services pursuant to the investment advisory agreement and
supervises the Subadviser's performance of such services. The International
Funds are a party to the Subadvisory Agreement solely for purposes of
indemnification and termination.
The Subadviser is an indirect wholly-owned subsidiary of AXA, and the Subadviser
does not currently act as an investment adviser to any other investment
companies.
DLJ Investment Management Corp. ('DLJIM'), a Delaware corporation with principal
offices at 277 Park Avenue, New York, New York 10172, has been retained under an
investment advisory agreement to provide investment advice and to supervise the
management and investment programs of the Money Funds, subject to the general
supervision and control of the Trustees of the Money Funds. DLJIM was formed in
November 1995 for the initial purpose of acting as investment adviser to a
select group of individual and institutional investors, and hence, as an entity,
has not acted as an adviser to other investment companies in the past. DLJIM,
however, has hired personnel from both within and outside of DLJ who have
experience in the investment company industry, specifically the operation and
management of money market funds.
WSWMC and DLJIM (the 'Advisers') are subsidiaries of Donaldson, Lufkin &
Jenrette Securities Corporation, which is a member of the New York Stock
Exchange and a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, Inc.
('DLJ'), a major international supplier of financial services. DLJ is an
independently operated, indirect subsidiary of The Equitable Companies
Incorporated, a holding company controlled by AXA, a member of a large French
insurance group. AXA is indirectly controlled by a group of five French mutual
insurance companies.
The following individuals are responsible for management of Winthrop's
portfolios.
James A. Engle, currently the primary manager of the Growth and Income Fund,
acted as co-portfolio manager of the Growth and Income Fund (since July 1993)
prior to which he was its sole portfolio manager (since 1986, which includes its
predecessor, the Pine Street Fund, Inc.). Mr. Engle is also the co-portfolio
manager of the Growth Fund (since March 1993) and the Small Company Value Fund
(since 1989, which was previously named the Aggressive Growth Fund and includes
its predecessor, the Neuwirth Fund, Inc.). Mr. Engle is a Vice President of
Winthrop and is also the Chief Investment Officer and Managing Director of
WSWMC. Mr. Engle heads WSWMC's Investment Committee which focuses its attention
on identifying undervalued securities and has been an employee of the firm since
1983.
Cathy A. Jameson is the portfolio manager of the Fixed Income Fund, a position
she has held since the commencement of its operations and is a Vice President of
Winthrop. Ms. Jameson is also a Senior Vice President of WSWMC and has been an
employee of WSWMC since 1979.
21
<PAGE>
Roger W. Vogel, currently the primary manager of the Small Company Value Fund,
acted as the portfolio co-manager of the Growth Fund, the Growth and Income
Fund, and the Small Company Value Fund since July 1993. Mr. Vogel is a Vice
President of Winthrop, and a Senior Vice President and Director of Research of
WSWMC and the Chief Investment Officer--Equity of DLJIM. Prior to becoming
associated with Winthrop, Mr. Vogel was a Vice President and portfolio manager
with Chemical Banking Corp.
Marybeth B. Leithead is the portfolio manager of the Municipal Trust Fund, a
position she has held since the commencement of its operations on July 28, 1993.
Ms. Leithead is also a Vice President of Winthrop and of the Advisers and has
been an employee of WSWMC since 1989. A tax-exempt fixed income specialist, Ms.
Leithead is responsible for short and long municipal bond investment management
for clients of the Advisers. Prior to joining WSWMC, Ms. Leithead was an
employee of Citicorp Securities Markets Inc.
Hugh M. Neuburger, currently the primary portfolio manager of the Growth Fund,
was assigned as the co-portfolio manager of the Growth Fund, the Growth and
Income Fund and the Small Company Value Fund effective as of August 1995. Mr.
Neuburger is also a Senior Vice President and Director of Quantitative Analysis
of the Advisers and has been an employee of WSWMC since March 1995. Prior to
March 1995, Mr. Neuburger was the president of Hugh M. Neuburger, Inc., a
consulting firm providing domestic and global tactical asset allocation advice
and other consulting services to large corporate and state pension plans. From
1986 through 1991, Mr. Neuburger was Managing Director of Matrix Capital
Management, an investment management firm. Prior thereto, Mr. Neuburger was with
the Prudential Insurance Company of America managing asset allocation
portfolios.
Robert de Guigne, an employee of the Subadviser, is the portfolio manager of the
International Funds. Mr. de Guigne assumed the day-to-day investment
responsibilities of the International Equity Fund in August 1996 and the
Developing Markets Fund in June 1997. Mr. de Guigne has been an asset manager
responsible for emerging market equities for a subsidiary of AXA since April
1996. Previously, Mr. de Guigne was a portfolio manager for State Street Bank in
Paris.
Under the Advisory Agreements with Winthrop, the Advisers or its affiliates
provide investment advisory services and order placement facilities for each of
the Funds and pay all compensation of the Trustees of Winthrop who are
affiliated persons of the Adviser. The Adviser or its affiliates also furnish
Winthrop, without separate charge, management supervision and assistance and
office facilities in addition to administrative and other nonadvisory services
for which they may be reimbursed.
The Focus Funds pay a fee to WSWMC at the following annual percentage rates of
the average daily net assets of each Focus Fund: Growth Fund, .750 of 1% of the
first $100,000,000, .500 of 1% of the balance; Small Company Value 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; Municipal Trust Fund, .625 of 1%
of the first $100,000,000, .500 of 1% of the balance; and Growth and Income
Fund, .750 of 1% of the first $75,000,000, .500 of 1% of the balance. The
advisory fees to be paid by the Growth Fund, the Small Company Value Fund and
the Growth and Income Fund are higher than those paid by many other mutual funds
with similar investment objectives.
Pursuant to the Advisory Agreement, the Growth Fund has paid WSWMC an advisory
fee equivalent to .75% of the average daily net assets for the year ended
October 31, 1996. The Growth Fund's total operating expenses of $943,669 for
such period amounted to 1.48% of the average daily net assets of its Class A
shares and for the period February 28, 1996 (commencement of offering Class B
shares) through October 31, 1996, 2.17% (annualized) of the average daily net
assets of its Class B shares.
Pursuant to the Advisory Agreement, the Growth and Income Fund has paid WSWMC an
advisory fee equivalent to .68% of the average daily net assets for the year
ended October 31, 1996. The Growth and Income Fund's total operating expenses of
$1,441,692 for such period amounted to 1.36% of the average daily net assets of
its Class A shares and for the period February 28, 1996 (commencement of
offering Class B shares) through October 31, 1996, 1.99% (annualized) of the
average daily net assets of its Class B shares.
Pursuant to the Advisory Agreement, the Small Company Value Fund has paid WSWMC
an advisory fee equivalent to .80% of the average daily net assets for the year
ended October 31, 1996. The Small Company Value Fund's total operating expenses
of $3,300,408 for such period amounted to 1.47% of the average daily net assets
of its Class A shares and for the period February 28, 1996 (commencement of
offering Class B shares) through October 31, 1996, 2.15% (annualized) of the
average daily net assets of its Class B shares.
Pursuant to the Advisory Agreement, the Fixed Income Fund has paid WSWMC an
advisory fee equivalent to .625% of the average daily net assets for the year
ended October 31, 1996. The Fixed Income Fund's total operating expenses for
such period were $780,350. Commencing July 1, 1994, the Adviser reimbursed
through February 27, 1996 such operating expenses in excess of 1.00% of the
average daily net assets of the Fixed Income Fund. For the period February 28,
1996 through October 31, 1997 WSWMC has agreed to
22
<PAGE>
reduce its management fees and reimburse expenses by the amount that total fund
operating expenses exceed 1.00% of the average daily net assets of Class A
shares and 1.70% of the average daily net assets of Class B shares of the Fixed
Income Fund. After October 31, 1997, WSWMC may continue or it may determine to
discontinue this practice. As a result of the voluntary assumption of expenses,
WSWMC reimbursed the Fund $198,923 during the year ended October 31, 1996.
Absent such reimbursement, the Fixed Income Fund's total operating expenses for
the year ended October 31, 1996 would have amounted to 1.34% of the average
daily net assets of its Class A shares and for the period February 28, 1996
(commencement of offering Class B shares) through October 31, 1996, 2.04%
(annualized) of the average daily net assets of its Class B shares.
Pursuant to the Advisory Agreement, the Municipal Trust Fund has paid WSWMC an
advisory fee equivalent to .625% of the average daily net assets for the year
ended October 31, 1996. The Municipal Trust Fund's total operating expenses for
such period were $558,864. Commencing July 1, 1994 the Adviser reimbursed
through February 27, 1996 all operating expenses in excess of 1.00% of the
average daily net assets of the Fund. For the period February 28, 1996 through
May 31, 1996 the Adviser reduced its management fees and reimbursed expenses by
the amount that total operating expenses exceeded 1.00% of the average daily net
assets of Class A shares and 1.70% of the average daily net assets of Class B
shares of the Municipal Trust Fund. For the period June 1, 1996 through June 2,
1997, WSWMC, with respect to the Municipal Trust Fund, reduced its management
fees and reimbursed operating expenses by the amount that total operating
expenses exceeded .50% of the average daily net assets of the Fund's Class A
shares and 1.20% of the average daily net assets of the Fund's Class B shares.
For the period June 3, 1997 through October 31, 1997, WSWMC has agreed 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
Fund's Class A shares and 1.70% of the average daily net assets of the Fund's
Class B shares. After October 31, 1997, with respect to the Municipal Trust
Fund, the Adviser may, in its sole discretion, determine to continue to pay
certain expenses of the Fund or it may discontinue this practice. As a result of
the voluntary assumption of expenses, the Adviser reimbursed the Fund $249,651
during the year ended October 31, 1996. Absent such reimbursement, the Municipal
Trust Fund's total operating expenses for such period would have amounted to
1.44% of the average daily net assets of its Class A shares and for the period
February 28, 1996 (commencement of offering Class B shares) through October 31,
1996, 1.87% (annualized) of the average daily net assets of its Class B shares.
The International Funds pay a fee to WSWMC at the following annual percentage
rates of the average daily net assets of each International Fund: 1.25% of the
first $100,000,000, 1.15% of the next $100,000,000 and 1.00% of net assets in
excess of $200,000,000. The advisory fees to be paid by the International Funds
are higher than those paid by most other mutual funds.
Under the Subadvisory Agreement, WSWMC pays the Subadviser for its services, out
of the Adviser's own resources, at the following annual percentage rates of the
average daily net assets of each International Fund: .625% of each International
Fund's first $100,000,000, .575% of the next $100,000,000 and .50% of the
balance.
For the year ended October 31, 1996, pursuant to the Advisory Agreement, the
International Funds paid WSWMC advisory fees equivalent to 1.25% of the average
daily net assets of each Fund. The total operating expenses of the International
Equity Fund and the Developing Markets Fund for such period were $1,049,831 and
$921,943, respectively. Commencing at the inception of the International Funds
through October 31, 1997, WSWMC and the Subadviser have agreed to voluntarily
reduce their management fees by the amount that total operating expenses exceed
2.15% and 2.90% of the average daily net assets of the Class A and Class B
shares, respectively, of each International Fund. Any such reduction will be
borne equally between the Adviser and Subadviser. After October 31, 1997, WSWMC
and the Subadviser may, in their sole discretion, determine to discontinue this
practice with respect to either International Fund.
The Money Funds pay a fee of .40% of the average daily net assets of each Money
Fund to DLJIM, which is reduced to .35% of each Money Fund's average daily net
assets in excess of $1 billion. The advisory fees to be paid by the Money Funds
are similar to those paid by other money market mutual funds.
For the period from the inception of the Money Funds on February 24, 1997
through April 30, 1997, pursuant to the Advisory Agreement, the Money Funds paid
DLJIM advisory fees equivalent to .40% (annualized) of the average daily net
assets of each Fund. The total operating expenses of the Municipal Money Fund
and the U.S. Government Money Fund for such period were $52,536 and $45,574,
respectively. Commencing at the inception of the Money Funds through October 31,
1997, DLJIM has agreed to reduce its management fees and DLJIM or its affiliates
have agreed to reimburse operating expenses by the amount that total operating
expenses exceed .90% of the average daily net assets of each Money Fund. After
October 31, 1997, DLJIM or its affiliates may, in their discretion, determine to
discontinue this practice with respect to either Money Fund.
23
<PAGE>
---------------------------------------------------------------
EXPENSES OF WINTHROP
---------------------------------------------------------------
GENERAL
In addition to payments to each Fund's Adviser under the investment advisory
agreements described above, Winthrop pays the other expenses incurred in its
organization and operations, including the costs of printing prospectuses and
other reports to existing shareholders; all expenses and fees related to
registration and filing with the SEC and with state regulatory authorities;
custody, transfer and dividend disbursing expenses; legal and auditing costs;
clerical, accounting, and other office costs; fees and expenses of Trustees who
are not affiliated with the Advisers or Subadviser; costs of maintenance of
existence; and interest charges, taxes, brokerage fees, and commissions. As to
the obtaining of clerical and accounting services not required to be provided to
the Focus Funds by WSWMC under the investment advisory agreement, Winthrop may
employ its own personnel. For such services, it also may utilize personnel
employed by the Adviser or by its affiliates. In such event, the services shall
be provided to the Focus Funds at cost and the payments therefor must be
specifically approved in advance by the Focus Funds' Trustees, including a
majority of its disinterested Trustees. Under the terms of the investment
advisory agreements with the International Funds and the Money Funds, management
supervision and assistance and office facilities, in addition to administrative
and nonadviser services provided to the Adviser or their affiliates, may be
reimbursed.
DISTRIBUTION AGREEMENT
Rule 12b-1 adopted by the SEC under the 1940 Act permits an investment company
directly or indirectly to pay expenses associated with the distribution of its
shares. Under SEC regulations, some of the payments described below to be made
by Winthrop could be deemed to be distribution expenses within the meaning of
such rule. Thus, pursuant to Rule 12b-1, the Trustees of each Fund (including a
majority of its disinterested Trustees) have adopted separate 12b-1 Plans for
expenses incurred in distributing Class A shares (the '12b-1 Class A Plans') and
Class B shares (the '12b-1 Class B Plans') of the Focus Funds and International
Funds and in distributing shares of the Money Funds ('Money Fund 12b-1 Plans'
and collectively, the '12b-1 Plans'). Winthrop, on behalf of each Fund, has
entered into a Distribution Agreement (the 'Agreements') with Donaldson, Lufkin
& Jenrette Securities Corporation, Winthrop's distributor (the 'Distributor').
The Distributor may enter into service agreements with other entities. The
Distributor is located at 277 Park Avenue, New York, New York 10172.
In adopting the 12b-1 Plans, the Trustees of each Fund determined that there is
a reasonable likelihood that the 12b-1 Plans may benefit such Fund and its
shareholders.
With respect to each Focus Fund, the maximum amount payable under the 12b-1
Class A Plans is .30 of 1% of the average daily net assets of the Class A shares
during the year consisting of (i) an asset-based sales charge of .05 of 1% of
the average daily net assets of the Class A shares and (ii) a service fee of up
to .25 of 1% of the average daily net assets of the Class A shares. With respect
to each International Fund, the maximum amount payable under the Rule 12b-1
Class A Plans is .25 of 1% of the average daily net assets of the Class A shares
during the year. Under the 12b-1 Class B Plans, the maximum amount payable by
each Fund is 1% of the average daily net assets of the Class B shares during the
year consisting of (i) an asset-based sales charge of up to .75 of 1% of the
average daily net assets of the Class B shares and (ii) a service fee of up to
.25 of 1% of the average daily net assets of the Class B shares. The Agreements,
but not the Rule 12b-1 Plans, will terminate in the event of their assignment.
With respect to each Money Fund, the maximum amount payable by the Money Funds
under the Money Fund 12b-1 Plans for distributing shares is .40 of 1% of the
average daily net assets of each Money Fund during the year. The current amount
payable by the Money Funds under the Money Fund 12b-1 Plans to the Distributor
is .25 of 1% of the average daily net assets of each Money Fund during the year.
Pursuant to the Money Fund's Agreement, the Trustees can raise the distribution
fees up to the maximum amount by a majority vote if the Trustees, in their
opinion, feel that the raise is in the best interest of the Money Funds and
their shareholders. The Agreements, but not the Money Fund 12b-1 Plans, will
terminate in the event of their assignment.
With respect to the 12b-1 Class A Plans and 12b-1 Class B Plans plans for the
International Funds (the 'International Fund 12b-1 Plans'), amounts paid by the
International Funds are used in their entirety to reimburse the Distributor for
actual expenses incurred. In contrast, under the 12b-1 Class A Plans, and 12b-1
Class B Plans for the Focus Funds (the 'Focus Fund 12b-1 Plans'), each Focus
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.
Amounts paid under the 12b-1 Plans and the Agreements are used in their entirety
to pay the Distributor for expenses incurred to (i) promote the sale of shares
of each Fund by, for example, paying for the preparation, printing and
distribution of prospectuses, sales brochures and other
24
<PAGE>
promotional materials sent to prospective shareholders, by directly or
indirectly purchasing radio, television, newspaper and other advertising or by
compensating the Distributor's employees or employees of the Distributor's
affiliates for their distribution assistance, (ii) make payments to the
Distributor to compensate broker-dealers or other persons for providing
distribution assistance and (iii) make payments to compensate financial
intermediaries for providing administrative and accounting services with respect
to Winthrop's shareholders.
With respect to sales of Class B shares through a broker-dealer, the
broker-dealer is paid a concession at the time of sale. In addition, an ongoing
maintenance fee may be paid to broker-dealers on sales of shares of the Funds.
The payments to the broker-dealer, although a Fund expense which is paid by all
shareholders, will only directly benefit investors who purchase their shares
through a broker-dealer rather than directly from the Funds. Broker-dealers who
sell shares of the Funds may provide services to their customers that are not
available to investors who purchase their shares directly. Investors who
purchase their shares directly from a Fund will pay a pro rata share of such
Fund's expenses of encouraging broker-dealers to provide such services but will
not receive any of the direct benefits of such services. The payments to the
broker-dealers will continue to be paid for as long as the related assets remain
in the Fund.
The International Fund 12b-1 Plans and the Money Fund 12b-1 Plans permit
payments to be made in subsequent years for expenses incurred in prior years if
the Funds' Trustees specifically authorize such payment. For the year ended
October 31, 1996, the amounts eligible for payment in subsequent years were
$125,483 and $166,103 for the Developing Markets Fund and the International
Equity Fund, respectively, which represents .31% and .35% of the Fund's October
31, 1996 net assets, respectively.
The tables below shows distribution costs incurred during the past fiscal year
or, in the case of the Municipal Money Fund and U.S. Government Money Fund,
during the period from the Funds' inception on February 24, 1997 through April
30, 1997.
<TABLE>
<CAPTION>
DISTRIBUTION COSTS
-------------------
CLASS A CLASS B
-------- -------
<S> <C> <C>
Growth Fund........................ $225,915 $ 9,651*
Growth and Income Fund............. 372,389 21,572*
Small Company Value Fund........... 802,958 22,502*
Fixed Income Fund.................. 208,372 6,565*
Municipal Trust Fund............... 141,896 1,775*
International Equity Fund.......... 96,395 37,341
Developing Markets Fund............ 77,456 25,620
</TABLE>
* For the period February 28, 1996 (commencement of offering Class B shares) to
October 31, 1996.
<TABLE>
<CAPTION>
DISTRIBUTION COSTS
------------------
<S> <C>
Municipal Money Fund.................... $ 11,501
U.S. Government Money Fund.............. 10,194
</TABLE>
Under the Agreements, the Adviser may make payments to the Distributor from the
Adviser's own resources, which may include the management fees paid by Winthrop.
In addition to the concession and maintenance fee paid to dealers or agents, the
Distributor will from time to time pay additional compensation to dealers or
agents in connection with the sale of shares. Such additional amounts may be
utilized, in whole or in part, in some cases together with other revenues of
such dealers or agents, to provide additional compensation to registered
representatives of such dealers or agents who sell shares of the Fund. On some
occasions, such compensation will be conditioned on the sale of a specified
minimum dollar amount of the shares of the Funds during a specific period of
time. Such incentives may take the form of payment for meals, entertainment, or
attendance at educational seminars and associated expenses such as travel and
lodging. Such dealer or agent may elect to receive cash incentives of equivalent
amounts in lieu of such payments.
---------------------------------------------------------------
PURCHASES, REDEMPTIONS
---------------------------------------------------------------
AND SHAREHOLDER SERVICES
---------------------------------------------------------------
PURCHASES
Shares of the Funds will be offered on a continuous basis directly by the Funds
and by the Distributor, acting as agent for the Funds, at the respective net
asset value per share determined as of the close of the regular trading session
of the New York Stock Exchange (the 'NYSE'), currently 4:00 p.m., New York City
time, following receipt of a purchase order in proper form plus, in the case of
Class A shares of each Focus Fund and International Fund, an initial sales
charge imposed at the time of purchase or, subject to a contingent deferred
sales charge upon (i) redemption of Class B shares of each Focus Fund and
International Fund, (ii) certain redemptions of Class A shares of each Focus
Fund and International Fund and (iii) certain redemptions of shares of each
Money Fund. The investor should send a completed Share Purchase Application
(found in this Prospectus) and enclose a check in the amount of the initial
investment to the Transfer Agent, FPS Services, Inc., P.O. Box 61503, King of
Prussia, PA 19406-0903, Attn: Winthrop Mutual Funds. (For overnight courier
deliveries, replace P.O. Box 61503 on the address label with 3200 Horizon
Drive). The account will be established once the application and check are
received in good order. Checks should be made payable to 'Winthrop Mutual
Funds.' Checks made payable to the shareholder or another third party (third
party checks) will not be accepted for investment in Winthrop.
To open a new account by wire, first call Winthrop Mutual Funds at
1-800-225-8011 (option #2) to obtain an account number. A representative will
instruct you to send a completed, signed application to the Transfer Agent.
25
<PAGE>
Accounts cannot be opened without a completed, signed application and a fund
account number. Contact your bank to arrange a wire transfer to:
United Missouri Bank KC NA
ABA #10-10-00695
For: FPS Services, Inc.
A/C #98-7037-0719
Attn: Winthrop Mutual Funds
Your wire instructions must also include:
-- the name of the Fund in which the money
is to be invested,
-- your account number at the Fund, and
-- the name(s) of the account holder(s).
Investors who purchase shares of the Money Funds through a wire transfer will be
eligible to receive the daily dividend declared on the date of purchase if the
Transfer Agent is notified of such purchase by 12:00 Noon and wired funds are
received by the Transfer Agent by 4:00 p.m. (See 'Dividends, Distributions and
Taxes.')
Investors may also open Winthrop accounts via their securities dealer. In
addition, securities dealers may offer an automatic sweep for the shares of the
Money Funds in the operation of cash accounts for its customers. Shares of the
Money Funds purchased through an automatic sweep by 1:00 p.m. are eligible to
receive that day's daily dividend. Contact your securities dealer to determine
if a sweep is available and what the sweep parameters are.
The initial minimum investment in each Fund is $250 and $25 for subsequent
investments in a Fund. (For example, an investor wishing to make an initial
investment in shares of two Funds would be required to invest at least $250 in
each Fund.) Full and fractional shares will be credited to an investor's account
in the amount of the investment. Share certificates will not be issued for full
or fractional shares of the Money Funds. Each Fund reserves the right to reject
any initial or subsequent investment in its sole discretion. Shareholder
accounts established on behalf of the following types of plans will be exempt
from the Fund's minimum initial investment and minimum subsequent investment
requirements: (i) retirement plans qualified under section 401(k) of the Code;
(ii) plans described in section 403(b) of the Code; (iii) deferred compensation
plans described in section 457 of the Code; (iv) simplified employee pension
(SEP) plans; and (v) savings incentive match plans for employees (SIMPLE) plans.
With respect to Class B shares of an International Fund or Focus Fund, an
investor's maximum purchase of such shares is $250,000.
Existing shareholders wishing to purchase additional shares of a Fund may use
the investment stub found at the bottom of the Funds' Shareholder Statement form
or, if one is not available, they may send a check payable to such Fund directly
to Winthrop's Transfer Agent, FPS Services, Inc. at the address indicated on the
back cover of this Prospectus. Any check for additional shares sent directly to
Winthrop should reference the account number to which it should be credited.
Existing shareholders may also purchase additional shares of a Fund via a wire
transfer by contacting and providing the Fund account information to the
Transfer Agent and following the wire instructions above.
Further information and assistance is available by contacting Winthrop at the
address or telephone number listed on the back cover of this Prospectus.
REDEMPTIONS
Shares of Winthrop may be redeemed at a redemption price equal to the net asset
value per share, as next computed following the receipt in proper form by
Winthrop of shares tendered for redemption, less any applicable contingent
deferred sales charge in the case of Class B shares and certain redemptions of
Class A shares and certain redemptions of shares of the Money Funds.
The value of a shareholder's shares on redemption may be more or less than the
cost of such shares to the shareholder, depending upon the value of the Fund's
portfolio securities at the time of such redemption or repurchase. (See
'Dividends, Distributions and Taxes' for a discussion of the tax consequences of
a redemption.)
To redeem shares for which no share certificates have been issued, the
registered owner or owners should forward a letter to Winthrop's Transfer Agent,
FPS Services, Inc. containing a request for redemption of such shares at the
next determined net asset value per share. Alternatively, the shareholder may
elect the right to redeem shares by telephone. (See 'Additional Shareholder
Services--Telephone Redemption and Exchange Privilege'). The address of the
Transfer Agent can be found on the back cover of this Prospectus.
If the total value of the shares being redeemed exceeds $50,000 (before
deducting any applicable contingent deferred sales charge) or a redemption
request directs proceeds to a party other than the registered account owner(s),
the signature or signatures on the letter or the endorsement must be guaranteed
by an 'eligible guarantor institution' as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include banks,
brokers, dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations. A
broker-dealer guaranteeing signatures must be a member of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. Additional documents may be
26
<PAGE>
required for redemption of corporate, partnership or fiduciary accounts.
The requirement for a guaranteed signature is for the protection of the
shareholder in that it is intended to prevent an unauthorized person from
redeeming his shares and obtaining the redemption proceeds.
Winthrop may request in writing that a shareholder whose account in a Fund has
an aggregate balance of less than $250 increase his account to at least that
amount within 60 days. If the shareholder fails to do so, Winthrop reserves the
right to close such account and send the proceeds to the shareholder. IRAs and
other qualified retirement accounts are not subject to mandatory redemption. A
Fund will not redeem involuntarily any shareholder account with an aggregate
balance of less than $250 based solely on the market movement of such Fund's
shares.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after shares are tendered in
proper form for redemption, except for any period during which the NYSE is
closed (other than customary weekend and holiday closings) or during which
trading on the exchange is deemed to be restricted under rules of the SEC, or
for any period during which an emergency (as determined by the SEC) exists as a
result of which disposal by Winthrop of its portfolio securities is not
reasonably practicable, or as a result of which it is not reasonably practicable
for Winthrop to determine the value of its net assets, or for such other period
as the SEC may by order permit for the protection of shareholders. Generally,
redemptions will be made by payment in cash or by check. (See the Statement of
Additional Information.)
For information concerning circumstances in which redemptions may be effected
through the delivery of in kind portfolio securities, see the Statement of
Additional Information.
INITIAL SALES CHARGE
Class A shares of each International Fund and Focus Fund are offered at the net
asset value next determined plus a sales charge, as follows:
FOCUS FUNDS:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
-----------------------------------------------
AS A % OF COMMISSION TO
NET AMOUNT AS A % OF DEALER/AGENT AS A
AMOUNT PURCHASED INVESTED OFFERING PRICE % OF OFFERING PRICE
- --------------------- ---------- -------------- -------------------
<S> <C> <C> <C>
Less than $50,000.... 4.99% 4.75% 4.25%
$50,000 to less than
$100,000........... 4.71 4.50 4.00
$100,000 to less than
$250,000........... 3.90 3.75 3.25
$250,000 to less than
$500,000........... 2.56 2.50 2.25
$500,000 to less than
$1,000,000......... 1.78 1.75 1.60
$1,000,000 or more... 0 0 0
</TABLE>
INTERNATIONAL FUNDS:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
-----------------------------------------------
AS A % OF COMMISSION TO
NET AMOUNT AS A % OF DEALER/AGENT AS A
AMOUNT PURCHASED INVESTED OFFERING PRICE % OF OFFERING PRICE
- --------------------- ---------- -------------- -------------------
<S> <C> <C> <C>
Less than $50,000.... 6.10% 5.75% 5.00%
$50,000 to less than
$100,000........... 4.71 4.50 3.75
$100,000 to less than
$250,000........... 3.63 3.50 2.80
$250,000 to less than
$500,000........... 2.56 2.50 2.00
$500,000 to less than
$1,000,000......... 2.04 2.00 1.60
$1,000,000 or more... 0 0 0
</TABLE>
On purchases of $1,000,000 or more, there is no initial sales charge; the
Distributor may pay the dealer a fee of up to 1% as follows: 1% on purchases up
to $2 million, plus .80% on the next $1 million up to $3 million, .50% on the
next $47 million up to $50 million, .25% on purchases over $50 million. In
addition, Class A shares issued upon conversion of other shares of the Fund are
not subject to an initial sales charge.
From time to time, the Distributor may re-allow the full amount of the sales
charge to brokers as a commission for sales of such shares.
SALES AT NET ASSET VALUE
The initial sales charge will be waived for the following shareholders or
transactions:
(1) investment advisory clients of the Advisers;
(2) officers and Trustees of the Funds, directors or trustees of other
investment companies managed by the Adviser, officers, directors and
full-time employees of the Adviser and of its wholly-owned subsidiaries or
parent entities ('Related Entities'); or the spouse, siblings, children,
parents or grandparents (collectively, 'relatives') of any such person, or
any trust or individual retirement account or self-employed retirement plan
for the benefit of any such person or relative; or the estate of any such
person or relative, if such sales are made for investment purposes (such
shares may not be resold except to the Funds);
(3) certain employee benefit plans for employees of the Adviser and Related
Entities;
(4) an agent or broker of a dealer that has a sales agreement with the
Distributor, for their own account or an account of a relative of any such
person, or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the
estate of any such person or relative, if such sales are made for
investment purposes (such shares may not be resold except to the Funds). To
qualify, the Distributor or Transfer Agent must be notified at the time of
purchase;
(5) shares purchased by registered investment advisors on behalf of fee-based
accounts or by broker-dealers that have sales agreements with the Funds
27
<PAGE>
and which shares have been purchased on behalf of wrap fee client accounts
and for which such registered investment advisors or broker-dealers perform
advisory, custodial, record keeping or other services;
(6) shareholders who received shares in Winthrop as a result of the merger of
Neuwirth Fund, Inc., Pine Street Fund, Inc. or deVegh Mutual Fund, Inc.,
and who have maintained their investment in such shares of Winthrop; and
(7) shares purchased for the following types of retirement plan accounts: (i)
retirement plans qualified under section 401(k) of the Code; (ii) plans
described in section 403(b) of the Code and (iii) deferred compensation
plans described in section 457 of the Code.
REDUCED SALES CHARGES
A reduction of sales charge rates in the tables above may be obtained for
participants in any of the following discount programs. These programs allow an
investor to receive a reduced offering price based upon the assets held or
pledged by the investor. The term 'investor' refers to (i) an individual, (ii)
an individual and spouse purchasing shares of the Fund for their own account or
for the trust or custodial accounts of their minor children, or (iii) a
fiduciary purchasing for any one trust, estate or fiduciary account, including
employee benefit plans of a single employer.
LETTER OF INTENT By initially investing $250 and submitting a Letter of Intent
to the Funds' Distributor or Transfer Agent, an investor may purchase shares of
Winthrop over a 13-month period at the reduced sales charge applying to the
aggregate amount of the intended purchases stated in the Letter. The Letter may
apply to purchases made up to 90 days before the date of the Letter. However,
the reduced sales charge would not apply to such purchases. It is the investor's
responsibility to notify the Transfer Agent at the time the Letter is submitted
that there are prior purchases that may apply.
5% of the total amount to be invested pursuant to the Letter will be held in
escrow by the Transfer Agent until the investment contemplated by the Letter is
completed within the 13-month period. The 13-month period begins on the date of
the earliest purchase. If the intended investment is not completed, the Transfer
Agent will redeem an appropriate number of the escrowed shares in order to
realize the difference between the sales charge on the shares purchased at the
reduced rate and the sales charge applicable to the total shares purchased.
RIGHT OF ACCUMULATION For investors who already have an account with the Funds,
reduced sales charges based upon the Funds' sales charge schedule are applicable
to subsequent purchases. The sales charge on each additional purchase is
determined by adding the current market value of the shares the investor
currently owns to the amount being invested. The Right of Accumulation is
illustrated by the following example:
If a previous purchase currently valued in the amount of $50,000 had been made
subject to a sales charge and the shares are still held, a current purchase of
$50,000 will qualify for a reduced sales charge (i.e. the sales charge on a
$100,000 purchase).
The reduced sales charge is applicable only to current purchases. It is the
investor's responsibility to notify the Transfer Agent at the time of subsequent
purchases that the account is eligible for the Right of Accumulation.
To be entitled to a reduced sales charge based upon shares already owned, the
investor must notify the Distributor or the Transfer Agent at the time of the
purchase that he wishes to take advantage of such entitlement, and give the
numbers of his accounts and those accounts held in the name of his spouse or for
minor children, the age of any such child and the specific relationship of each
such person to the investor.
CONCURRENT PURCHASES To qualify for a reduced sales charge, the investor may
combine concurrent purchases of shares purchased in any Winthrop Fund. For
example, if the investor concurrently invests $25,000 in one Fund and $25,000 in
another, the sales charge would be reduced to reflect a $50,000 purchase. In
order to exercise the Concurrent Purchases privilege, the investor must notify
the Distributor or Transfer Agent prior to his or her purchase.
COMBINED PURCHASE PRIVILEGE By combining the investor's holdings of shares in
any Winthrop Fund, the investor can reduce the initial sales charges on any
additional purchases of Class A shares. The investor may also use these
combinations under a Letter of Intent. This allows the investor to make
purchases over a 13-month period and qualify the entire purchase for a reduction
in initial sales charges on Class A shares. A combined purchase of $1,000,000 or
more may trigger the payment of a dealer's commission and the applicability of a
Limited CDSC. (See 'Contingent Deferred Sales Charge on Class A Shares.')
REINSTATEMENT PRIVILEGE The Reinstatement Privilege permits shareholders to
reinvest the proceeds of each Fund's Class A shares redeemed, within 120 days
from the date of redemption, without an initial sales charge. It is the
investor's responsibility to notify the Transfer Agent prior to his or her
purchase in order to exercise the Reinstatement Privilege. In addition, a CDSC
paid to Winthrop will be eligible for reimbursement at the current net asset
value of the applicable Fund if a shareholder reinstates his Winthrop account
holdings within 120 days from the date of redemption.
CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES
A shareholder can purchase Class B shares at net asset value without an initial
sales charge. However, a shareholder may pay a CDSC if such shareholder
28
<PAGE>
redeems within four years after purchase. The CDSC will be assessed on an amount
equal to the lesser of the then current net asset value or the original purchase
price of the Class B shares being redeemed. Accordingly, no Class B CDSC will be
imposed on amounts representing increases in net asset value above the initial
purchase price of the shares identified for redemption. In determining the Class
B CDSC, Class B shares are redeemed in the following order: (i) those acquired
pursuant to reinvestment of dividends or distributions, (ii) those held for over
four years, and (iii) those held longest during the four-year period.
Where the CDSC is imposed, the amount of the CDSC will depend on the number of
years since the shareholder made the purchase according to the table below.
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE PERCENTAGE CONTINGENT
PAYMENT WAS MADE DEFERRED SALES CHARGE
- -------------------------- --------------------------
<S> <C>
First 4%
Second 3%
Third 2%
Fourth 1%
Fifth and thereafter 0%
</TABLE>
The amount of any CDSC will be paid by the shareholder to and retained by the
Distributor and will not offset the amounts which may be paid to the Distributor
under the Agreement. For federal income tax purposes, the amount of the CDSC
will reduce the gain or increase the loss, as the case may be, recognized by a
shareholder on the redemption of shares.
The CDSC on Class B shares will be waived for the following shareholders or
transactions:
(1) shares received pursuant to the exchange privilege which are currently
exempt from a contingent deferred sales charge;
(2) redemptions as a result of shareholder death or disability (as defined in
the Internal Revenue Code of 1986, as amended) (the 'Code');
(3) redemptions made pursuant to Winthrop's systematic withdrawal plan pursuant
to which up to 1% monthly or 3% quarterly of an account (excluding dividend
reinvestments) may be withdrawn, provided that no more than 10% of the
total market value of an account may be withdrawn over any 12 month period
(shareholders who elect systematic withdrawals on a semi-annual or annual
basis are not eligible for the waiver); and
(4) liquidations, distributions or loans from the following types of retirement
plan accounts: (i) retirement plans qualified under section 401(k) of the
Code; (ii) plans described in section 403(b) of the Code and (iii) deferred
compensation plans described in section 457 of the Code.
Redemptions effected by the Funds pursuant to their right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the CDSC.
CONTINGENT DEFERRED SALES CHARGE ON CLASS A SHARES
A Limited Contingent Deferred Sales Charge ('Limited CDSC') will be imposed by
the Funds upon certain redemptions of Class A shares (or shares into which such
Class A shares are exchanged) made within 12 months of purchase, if such
purchases were made at net asset value and triggered the payment by the
Distributor of the dealer's commission described above (i.e., purchases of
$1,000,000 or more).
The Limited CDSC will be paid to the Distributor and will be equal to the lesser
of 1% of (i) the net asset value at the time of purchase of the Class A shares
being redeemed or (ii) the net asset value of such Class A shares at the time of
redemption. For purposes of this formula, the 'net asset value at the time of
purchase' will be the net asset value at the time of purchase of such Class A
shares even if those shares are later exchanged, and, in the event of an
exchange of such Class A shares, the 'net asset value of such shares at the time
of redemption' will be the net asset value of the shares into which the Class A
shares have been exchanged.
Redemptions of such Class A shares held for more than 12 months will not be
subjected to the Limited CDSC, and an exchange of such Class A shares will not
trigger the imposition of the Limited CDSC at the time of such exchange. The
period a shareholder owns shares into which Class A shares are exchanged will
count towards satisfying the 12-month holding period. The Funds will assess the
Limited CDSC if such 12-month period is not satisfied irrespective of whether
the redemption triggering its payment is of the Class A shares of the Funds or
shares into which the Class A shares have been exchanged.
In determining whether a Limited CDSC is payable, it will be assumed that shares
not subject to the Limited CDSC are the first redeemed followed by other shares
held for the longest period of time. The Limited CDSC will not be imposed upon
shares representing reinvested dividends or upon amounts representing share
appreciation. All investments made during a calendar month, regardless of when
during the month the investment occurred, will age one month on the last day of
that month and each subsequent month.
The Limited CDSC will be waived for the shareholders and transactions described
above as eligible for waiver under 'Contingent Deferred Sales Charge on Class B
Shares' and 'Sales at Net Asset Value.'
CONTINGENT DEFERRED SALES CHARGE ON CONVERTED SHARES--FOCUS FUNDS
Class A shares issued upon conversion of shares of a Focus Fund purchased prior
to February 28, 1996 ('Converted Shares') will be subject to the same contingent
deferred sales charge with the same terms as
29
<PAGE>
the Converted Shares were subject to at the time of purchase. This CDSC is
similar in all respects to the CDSC charged on Class B shares except that the
CDSC will not be imposed if the amount redeemed is obtained from increases in
the value of the account in a Fund (whether from appreciation or reinvestment of
dividends and capital gains distributions) above the amounts of purchase
payments during the past four years.
For purposes of the CDSC on Class A shares issued upon conversion of Converted
Shares, it is assumed that the redemption is made from the earliest purchase
payment from which a redemption (or exchange) has not already been effected.
Therefore, redemptions will first be made from increases in the value of the
account without imposition of a CDSC and then, if necessary, from the shares
which have been held the longest.
Because the CDSC on Class A shares issued upon conversion of Converted Shares is
based on dollar value rather than number of shares, it may be imposed even if
the number of shares in the investor's account has increased through
reinvestment of dividends and capital gains distributions.
The CDSC on Class A shares issued upon conversion of Converted Shares will be
waived for the following shareholders or transactions:
(1) investment advisory clients of the Advisers;
(2) officers, directors and full-time employees and Trustees of Winthrop and
Related Entities; or the relatives of any such person, or any trust or
individual retirement account or self-employed retirement plan for the
benefit of any such person or relative; or the estate of any such person or
relative, if such sales are made for investment purposes (such shares may
not be resold except to Winthrop);
(3) certain employee benefit plans for employees of the Adviser and Related
Entities;
(4) an agent or broker of a dealer that has a sales agreement with the
Distributor, for their own account or an account of a relative of any such
person, or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the
estate of any such person or relative, if such sales are made for
investment purposes (such shares may not be resold except to the Funds). To
qualify, the Distributor or Transfer Agent must be notified at the time of
purchase;
(5) shares purchased by registered investment advisers or by broker-dealers
that have sales agreements with the Funds and which shares have been
purchased on behalf of wrap fee client accounts and for which such
registered investment advisers or broker-dealers charge a fixed fee and
perform advisory, custodial, record keeping or other services.
(6) shareholders of Neuwirth Fund, Inc., Pine Street Fund, Inc. and deVegh
Mutual Fund, Inc., which were diversified, no-load open-end management
investment companies to which the Adviser provided investment advisory
services;
(7) liquidations, distributions or loans from the following types of retirement
plans established on or after February 1, 1995: (i) retirement plans
qualified under section 401(k) of the Code; (ii) plans described in section
403(b) of the Code; and (iii) deferred compensation plans described in
section 457 of the Code;
(8) redemptions as a result of shareholder death or disability (as defined in
the Code); and
(9) redemptions made pursuant to Winthrop's systematic withdrawal plan up to 1%
monthly or 3% quarterly of the account's total purchase payments (excluding
dividend reinvestment) not to exceed 10% of total purchase payments over
any 12 month rolling period (systematic withdrawals elected on a
semi-annual or annual basis are not eligible for the waiver).
Redemptions effected by Winthrop pursuant to its right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the CDSC.
AUTOMATIC CONVERSION OF CLASS B SHARES
Class B shares held for eight years after purchase will be automatically
converted into Class A shares. Winthrop will effect conversions of Class B
shares into Class A shares only four times in any calendar year, on the last
business day of the second full week of March, June, September and December
(each, a 'Conversion Date'). If the eighth anniversary after a purchase of Class
B shares falls on a Conversion Date, an investor's Class B shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth anniversary
falls on the day after a Conversion Date, that shareholder will have to hold
Class B shares for as long as an additional three months after the eighth
anniversary after purchase before the shares will automatically convert into
Class A shares.
All such automatic conversions of Class B shares will constitute a tax-free
exchange for federal income tax purposes.
ADDITIONAL SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE Shares of one class of a Fund can be exchanged for the same
class of another Fund. Shareholders whose initial investment was directly into a
Money Fund may exchange such shares into either class of the International Funds
or the Focus Funds. Shares of each Money Fund established pursuant to
30
<PAGE>
Winthrop's exchange privilege will be eligible for exchange into the
International Funds or Focus Funds provided that the exchange is directed into
the same class of shares upon which the initial investment was made. Unless
otherwise indicated in the initial Share Purchase Application or by written
notice to Winthrop or its Transfer Agent, shareholders whose initial investment
was invested directly into a Money Fund will, upon an exchange request,
automatically be exchanged into Class A shares of the requested International
Fund or Focus Fund. Exchanges may be made by mail or telephone (see 'Telephone
Redemption and Exchange Privilege'). The exchange privilege for all the Funds
are available only in states in which shares of the relevant Fund may be legally
sold. An exchange is effected on the basis of each Fund's relative net asset
value per share next computed following receipt of an order for such exchange
from the shareholder.
Class A shares subject to a contingent deferred sales charge as described in
'Contingent Deferred Sales Charge on Class A Shares,' and 'Contingent Deferred
Sales Charge on Converted Shares--Focus Funds,' and Class B shares which are
exchanged will continue to be subject to the same contingent deferred sales
charge at the same rate and for the same period of time as they were prior to
exchange. A shareholder will pay a higher 12b-1 Fee when exchanging (i) shares
of the Money Funds or Class A shares of the International Funds(.25 of 1%
annually) for Class A shares of the Focus Funds (.30 of 1% annually) or (ii)
shares of the Money Funds for Class B shares of the International Funds or Focus
Funds (1% annually).
Winthrop imposes no separate charge for exchanges. However, a shareholder may be
subject to an initial sales charge upon exchanging shares of a Money Fund for
Class A shares of the International Funds or Focus Funds. (See 'Purchases,
Redemptions and Shareholder Services--Initial Sales Charge.') A shareholder will
not be assessed any contingent deferred sales charge at the time of an exchange
between the Funds. Any applicable contingent deferred sales charge will be
assessed when the shareholder redeems shares of a Fund or from an account
established pursuant to Winthrop's exchange privilege in the Money Funds or
Alliance Money Market Funds. The period of time during which a shareholder owns
shares in any of the Funds will be credited to such shareholders holding period
in determining the applicable contingent deferred sales charge, if any. However,
the period of time during which a shareholder's funds are held in the Alliance
Money Market Funds will not be included in the holding period used to determine
the applicable contingent deferred sales charge.
The exchange privilege is intended to provide shareholders with a convenient way
to switch their investments when their objectives or perceived market conditions
suggest a change. Winthrop reserves the right to reject any exchange request or
otherwise modify, restrict or terminate the exchange privilege at any time upon
at least 60 days prior written notice. The exchange privilege is not meant to
afford shareholders an investment vehicle to play short term swings in the stock
market by engaging in frequent transactions in and out of the Funds.
Shareholders who engage in such frequent transactions may be prohibited from or
restricted in placing future exchange orders.
Exchanges of shares are subject to the other requirements of the Fund into which
exchanges are made. Annual fund operating expenses for such Fund may be higher
and a sales charge differential may apply. Shareholders should be aware that an
exchange is treated for federal income tax purposes as a sale and a purchase of
shares which may result in recognition of a gain or loss.
AUTOMATIC MONTHLY INVESTMENT PLAN A shareholder may elect on the Share Purchase
Application to make additional investments in a Fund automatically by
authorizing Winthrop to draw on the shareholder's bank account.
A shareholder may change the date (either the 10th, 15th or 20th of each month)
or amount (subject to a minimum of $25) of the shareholder's monthly investment
at any time by letter to Winthrop at least three business days before the change
becomes effective. The plan may be terminated at any time without penalty by the
shareholder or Winthrop.
AUTOMATIC EXCHANGE PLAN. Shareholders may authorize Winthrop to exchange an
amount established in advance automatically for shares of the same class of
another series of Winthrop or for shares of the Money Funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange Plan. The
minimum exchange into another Fund under the Automatic Exchange Plan is $50.
These exchanges are subject to the terms of the Exchange Privilege described
above. See 'Additional Shareholder Services--Exchange Privilege.'
DIVIDEND DIRECTION OPTION A shareholder may elect on the Share Purchase
Application to have his or her dividends paid to another individual or directed
for reinvestment within the same class of another series of Winthrop or into the
Money Funds provided that an existing account in such other Fund is maintained
by the shareholder.
SYSTEMATIC WITHDRAWAL PLAN Any shareholder who owns or purchases shares of a
Fund having a current net asset value of at least $10,000 may establish a
systematic withdrawal plan under which the shareholder or a third party will
receive payment by check in a stated amount of not less than $50 on a monthly,
quarterly, semi-annual or annual basis. A contingent deferred sales charge which
may otherwise be imposed on a withdrawal redemption will be waived in connection
with redemptions made pursuant to Winthrop's systematic withdrawal plan up to 1%
monthly or 3% quarterly of an account's total purchase payments (excluding
dividend reinvestment) not to
31
<PAGE>
exceed 10% of total purchase payments over any 12-month rolling period.
Systematic withdrawals elected on a semi-annual or annual basis are not eligible
for the waiver. See 'Purchases, Redemptions and Shareholder Services.'
CHECKWRITING PRIVILEGES. Shareholders of the Money Funds may redeem shares by
writing checks against their account balance for at least $100. Investments in
the Money Funds will continue to earn dividends until a shareholder's check is
presented to the Money Funds for payment. Checks will be returned by the
Transfer Agent if there are insufficient shares to meet the withdrawal amount.
Shareholders should not attempt to close an account by check because the exact
balance at the time the check clears will not be known when the check is
written. There is currently no charge to shareholders for checkwriting, but the
Money Funds reserve the right to impose a charge in the future. The Money Funds
may modify, suspend or terminate checkwriting privileges at any time upon notice
to shareholders and will terminate checkwriting privileges without notice for
accounts whose assets are exchanged completely out of the Money Funds. In
addition, United Missouri Bank N.A., as agent for the Transfer Agent in
processing redemptions via the checkwriting privilege, reserves the right to
terminate checkwriting privileges at any time without notice to shareholders.
Checkwriting privileges will not be available for accounts whose shares are
subject to a contingent deferred sales charge.
TELEPHONE REDEMPTION AND EXCHANGE PRIVILEGE A shareholder may elect on the
Share Purchase Application to be eligible to make withdrawals from such
shareholder's account via telephone orders (toll free (800) 225-8011) given to
Winthrop by the shareholder or the shareholder's investment dealer of record.
The maximum amount of such withdrawals is $50,000 per day. A shareholder may
also transfer assets via telephone from such shareholder's account to purchase
shares of another Fund. Winthrop will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. Such procedures include
the requirement that redemption or transfer orders must include the account name
and the account number as registered with Winthrop. The minimum amount for a
wire transfer is $1,000. Proceeds of telephone redemptions may also be sent by
automated clearing house funds to a shareholder's designated bank account.
Neither Winthrop, the Advisers, nor any transfer agent for any of the foregoing
will be responsible for following instructions communicated by telephone that
are reasonably believed to be genuine; accordingly, investors bear the risk of
loss. The Telephone Exchange Privilege will be offered automatically unless a
shareholder declines such option on the Share Purchase Application or by writing
to the Fund's Transfer Agent at the address listed on the back cover of this
Prospectus.
TIMING OF REDEMPTIONS AND EXCHANGES If a redemption or transfer order for a
Fund is received on a Fund Business Day prior to the close of the regular
session of the NYSE, which is generally 4:00 p.m. New York City time, the
proceeds will be transferred as soon as possible (in accordance with industry
settlement procedures), and shares of each Fund will be priced that Fund
Business Day. If the redemption or transfer order is received after the close of
the regular session of the NYSE, shares of each Fund will be priced the next
Fund Business Day and the proceeds will be transferred as soon as possible after
such pricing (also in accordance with industry settlement procedures). A
shareholder also may request that proceeds be sent by check to a designated
bank. Transfers are made without any charge by Winthrop.
With respect to the Money Funds, if you wish to have Federal funds wired the
same day as your telephone redemption request, make sure that your request will
be received by the Money Funds prior to 12:00 Noon. (See 'Additional Shareholder
Services--Telephone Redemption and Exchange Privilege.') If a shareholder's
securities dealer offers an automatic sweep service, the sweep will
automatically transfer from the Money Fund account sufficient cash to cover any
debit balance that may occur in your cash account. Shares of the Money Funds
redeemed prior to 1:00 p.m. through an automatic sweep service will be eligible
for same day federal funds wiring.
Purchases by check may not be redeemed by a Fund until after a reasonable time
necessary to verify that the purchase check has been paid (approximately ten
Fund Business Days from receipt of the purchase check). When a purchase is made
by wire and subsequently redeemed, the proceeds from such redemption normally
will not be transmitted until two Fund Business Days after the purchase by wire.
Bank acknowledgment of payment initialed by the shareholder may shorten delays.
Additional information concerning these Additional Shareholder Services may be
obtained by contacting Winthrop at the address or telephone number listed on the
back cover of this Prospectus.
---------------------------------------------------------------
NET ASSET VALUE
---------------------------------------------------------------
The net asset value per share for purchases and redemptions of shares of each
Fund is determined as of the close of the regular session of the NYSE, which is
generally 4:00 p.m. New York City time, on each day that trading is conducted
during such session on the NYSE. In accordance with the Funds' Agreement and
Declaration of Trust and By-Laws, net asset value for each Fund is determined
separately for each class, if applicable, by dividing the value of each class's
net assets allocable to such class, less its liabilities, by the total number of
each class's shares then outstanding. With regard to the Money Funds, Winthrop
currently
32
<PAGE>
offers only one class of shares. All expenses, including investment advisory
fees, are accrued daily.
For purposes of this computation, the securities in each portfolio of the Focus
and International Funds are, except as described below, valued at their current
market value determined on the basis of market quotations or, if such quotations
are not readily available, such other method as the applicable Trustees believe
in good faith would accurately reflect their fair value.
For the Money Funds, the net asset value is expected to be maintained at a
constant $1.00 per share although this price is not guaranteed. For purposes of
this computation, the securities in each Money Fund's portfolio are valued at
amortized cost, which minimizes the effect of changes in a security's market
value and helps maintain a stable $1.00 per share price.
Short-term securities purchased within the Focus Funds or International Funds
which mature in more than 60 days are valued based on current market quotations.
Short-term securities which mature in 60 days or less are valued at amortized
cost, if their original maturity was 60 days or less, or by amortizing their
value on the 61st day prior to maturity, if their original term to maturity
exceeded 60 days, where it has been determined in good faith under procedures
approved by the applicable Trustees that amortized cost equals fair value.
For net asset value determination purposes, the value of a foreign security is
determined as of the close of trading on the foreign exchange on which it is
traded and that value is then converted into U.S. dollars at the foreign
exchange rate in effect as of the close of trading (4:00 p.m.) London time on
the day the value of the foreign security is determined. As a result, to the
extent a Fund holds securities quoted or denominated in a foreign currency,
fluctuations in the value of such currencies in relation to the U.S. dollar will
affect the net asset value of such Fund's shares even though there has not been
any change in the value of such securities as quoted in the foreign currency.
Foreign securities trading may not take place on all days on which the NYSE is
open. Further, trading takes place in various foreign markets on days on which
the NYSE is not open. Accordingly, the determination of the net asset value of
an International Fund's shares may not take place contemporaneously with the
determination of the prices of investments held by such International Fund.
Events affecting the values of investments that occur between the time their
prices are determined and 4:00 P.M. on each day that the NYSE is open will not
be reflected in the net asset value of an International Fund's shares unless the
Adviser or Subadviser, under the supervision of such International Fund's Board
of Trustees, determines that the particular event would materially affect net
asset value. As a result, the net asset value of an International Fund's shares
may be significantly affected by such trading on days when a shareholder has no
access to such International Fund.
---------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS
---------------------------------------------------------------
AND TAXES
---------------------------------------------------------------
Each of the Funds has qualified and intends to qualify in the future as a
regulated investment company under Subchapter M of the Internal Revenue Code, so
that it will not be liable for federal income taxes to the extent that its net
taxable income and net capital gains are distributed. Annual statements as to
the current Federal tax status of distributions, if applicable, are mailed to
shareholders by January 31 each year.
Winthrop intends to distribute to shareholders of the Growth Fund, the Small
Company Value Fund and the International Funds on an annual basis and to
shareholders of the Growth and Income Fund on a quarterly basis substantially
all of such respective periods' net investment income, if any, for the
respective Funds. Dividends from net investment income on shares of the Money
Funds, Fixed Income Fund and Municipal Trust Fund are declared daily and paid
monthly. For purposes of this calculation, net investment income consists of all
accrued interest income on fund assets less the fund's expenses applicable to
that dividend period.
There is no fixed dividend rate, and there can be no assurance that a Fund will
distribute any net investment income. The amount of any distribution paid by
each Fund depends upon the realization by the Fund of income from that Fund's
investments. All distributions will be made to shareholders of a Fund solely
from assets of that Fund. Capital gains (short-term and long-term), if any,
realized by each of the Funds during a fiscal year of Winthrop will be
distributed to the respective shareholders shortly after the end of such fiscal
year.
Distributions may be subject to certain state and local taxes.
Each income dividend and capital gains distribution, if any, declared by
Winthrop on the outstanding shares of any Fund will, at the election of each
shareholder, be paid in cash or reinvested in additional full and fractional
shares of that Fund. An election to receive dividends and distributions in cash
or shares is made at the time of the initial investment and may be changed by
notice received by Winthrop from a shareholder or the shareholder's investment
dealer of record at least 30 days prior to the payable date for a particular
dividend or distribution on shares of each Fund. There is no charge in
connection with the reinvestment of dividends and capital gains distributions.
Such dividends and capital gains distributions, to the extent they would
otherwise be taxable, will be taxable to shareholders regardless of whether paid
in cash or reinvested in additional shares.
33
<PAGE>
Distributions to shareholders out of tax-exempt interest income earned by the
Municipal Trust Fund and the Municipal Money Fund ('Exempt-Interest Dividends')
are not subject to federal income tax if, at the close of each quarter of each
Fund's taxable year, at least 50% of the value of each Fund's total assets
consists of tax-exempt obligations. Both Funds intend to meet this requirement.
Because the Municipal Trust Fund and Municipal Money Fund can invest in taxable
municipal bonds and other taxable securities as well as tax-exempt municipal
bonds, the portion of its dividends exempt from or subject to regular federal
income taxes cannot be predicted.
Interest on certain tax-exempt municipal securities issued after August 7, 1986
is a preference item for purposes of the alternative minimum tax ('AMT')
applicable to individuals and corporations. Under tax regulations to be issued,
the portion of any exempt-interest dividends paid by a regulated investment
company that is allocable to these obligations will be treated as a preference
item for purposes of the AMT. Corporations should, however, be aware that
interest on all municipal securities will be included in calculating among other
things 'adjusted current earnings' of corporations for AMT purposes. Such bonds
have provided, and may continue to provide, somewhat higher yields than other
comparable municipal securities. While the Municipal Trust and Municipal Money
Fund may invest without limitation in securities subject to AMT, the AMT affects
only a small percentage of all tax paying investors.
Shareholders may be subject to state and local taxes on dividends from the
Municipal Trust Fund or Municipal Money Fund, including dividends which are
exempt from federal income taxes. In addition, for federal income tax purposes,
distributions of net short-term capital gains are taxable to shareholders of the
Municipal Trust Fund and Municipal Money Fund as ordinary income, and
distributions of net long-term capital gains are taxable to such shareholders as
long-term capital gains, regardless of the nature of the investments made by the
Fund.
Payment (either in cash or in portfolio securities) received by a shareholder
upon redemption of his shares, assuming the shares constitute capital assets in
his hands, will result in long-term or short-term capital gains (or losses)
depending upon the shareholder's holding period and basis in respect of shares
redeemed. Any loss realized by a shareholder on the sale of shares of a Fund
held for six months or less will be treated for federal income tax purposes as a
long-term capital loss to the extent of any distributions of long-term capital
gains received by the shareholder with respect to such shares. Any loss realized
on the sale of shares will be disallowed to the extent the shares disposed of
are replaced within a period of 61 days beginning 30 days before the disposition
of such shares. In such case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss.
The foregoing discussion is a general summary of certain current federal income
tax laws regarding the Funds. The discussion does not purport to deal with all
of the federal income tax consequences applicable to the Funds or to all
categories of investors, some of whom may be subject to special rules. In
addition, this discussion does not describe any of the state or local tax
consequences that may be applicable to distributions by the Funds. Each
prospective and current shareholder should consult with his or her own
professional tax adviser regarding federal, state and local tax consequences of
ownership of shares of the Funds. Certain additional matters related to the tax
implications of investing in the Winthrop Funds are referenced in the Funds'
Statements of Additional Information.
---------------------------------------------------------------
ADDITIONAL INFORMATION
---------------------------------------------------------------
RETIREMENT PLANS
Winthrop offers a range of qualified retirement plans including IRAs, SEPs,
SIMPLE plans and other pension and profit sharing plans. Semper Trust Company
serves as custodian under these prototype retirement plans and charges an annual
account maintenance fee of $15 per participant, regardless of the number of
Funds selected. Persons desiring information concerning these plans should write
or telephone Winthrop's Transfer Agent at 1-800-225-8011. For a more detailed
explanation of the retirement plans offered by the Funds, see each Fund's
Statement of Additional Information.
CAPITALIZATION
The Focus Funds were organized as a Massachusetts business trust under the laws
of Massachusetts on November 26, 1985. The Focus Funds have an unlimited number
of authorized shares of beneficial interest, par value $.01 per share, which
may, without shareholder approval, be divided into an unlimited number of series
and an unlimited number of classes. Such shares are currently divided into five
series.
The Opportunity Funds were organized as a Delaware business trust under the laws
of Delaware on May 31, 1995. The Opportunity Funds have an unlimited number of
authorized shares of beneficial interest, par value $.001 per share, which may,
without shareholder approval, be divided into an unlimited number of series and
an unlimited number of classes. Such shares are currently divided into four
series, two series in each of the International Funds and Money Funds.
Shares of the Focus Funds and the International Funds are divided into Class A
and Class B shares. Winthrop currently offers only one class of shares for the
Money Funds. Shares held in each Fund are normally entitled to one vote (with
proportional voting for fractional shares) for all purposes. Generally, shares
of the International Funds and Money Funds vote as a single
34
<PAGE>
series on matters that affect all Funds within the Opportunity Funds in
substantially the same manner and shares of the Focus Funds vote as a single
series on matters that affect all Funds within the Focus Funds in substantially
the same manner. As to matters affecting each Focus Fund, International Fund or
Money Fund separately, such as approval of the investment advisory agreement,
shares of each Focus Fund, International Fund or Money Fund would vote as
separate series.
With respect to the Focus Funds and International Funds, each Class is identical
in all respects except that (i) each Class bears different distribution service
fees, (ii) each Class has exclusive voting rights with respect to its 12b-1
Plan, (iii) each Class has different exchange privileges, and (iv) only Class B
shares have a conversion feature.
The Funds will not have annual meetings of shareholders so long as at least
two-thirds of their Trustees then in office have been elected by their
shareholders. Section 16(c) of the 1940 Act provides certain rights to
shareholders which Winthrop will honor regarding the calling of meetings of
shareholders and other communications with shareholders. Trustees also may call
meetings of shareholders from time to time as the Trustees deem necessary or
desirable.
Shares of a Fund are freely transferable, are entitled to dividends as
determined by the Trustees and, in liquidation of Winthrop, are entitled to
receive the net assets of that Fund. Since Class B shares of the Focus Funds and
International Funds are subject to greater distribution services fees than Class
A shares of such Funds, the liquidation proceeds to shareholders of Class B
shares are likely to be less than proceeds to Class A shareholders. Shareholders
have no preemptive rights.
PORTFOLIO TRANSACTIONS
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking best execution, Winthrop may
consider sales of its shares as a factor in the selection of brokers and dealers
to execute portfolio transactions for Winthrop.
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of the
Advisers, serves as Winthrop's Distributor.
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT
Citibank, N.A. acts as Custodian for the securities and cash of Winthrop, but
plays no part in deciding on the purchase or sale of portfolio securities. FPS
Services, Inc. acts as dividend disbursing agent, registrar and transfer agent
of Winthrop.
HOW WINTHROP CALCULATES PERFORMANCE
From time to time Winthrop may advertise its total return (including 'average
annual' total return and 'aggregate' total return) and yield in advertisements
or sales literature. Total return and yield are calculated separately for Class
A and Class B shares. These figures are based on historical earnings and are not
intended to indicate future performance. The 'total return' shows how much an
investment in a Fund would have increased (decreased) over a specified period of
time (i.e., one, five or ten years or since inception of that Fund) assuming
that all distributions and dividends by the Fund were reinvested on the
reinvestment dates during the period and less all recurring fees. The
'aggregate' total return reflects actual performance over a stated period of
time. 'Average annual' total return is a hypothetical rate of return that, if
achieved annually, would have produced the same aggregate total return if
performance had been constant over the entire period. 'Average annual' total
return smoothes out variations in performance. Winthrop's advertisements of
total return and average total return may not reflect any applicable initial or
contingent deferred sales charge, but such charges will be disclosed. Neither
'average annual' total return nor 'aggregate' total return takes into account
any federal or state income taxes which may be payable upon redemption. The
'yield' refers to the income generated by an investment in a Fund over a one-
month or 30-day period. This income is then 'annualized,' that is, the amount of
income generated by the investment during that 30-day period is assumed to be
generated each 30-day period for twelve periods and is shown as a percentage of
the investment. The income earned on the investment is also assumed to be
reinvested at the end of the sixth 30-day period. Winthrop may also include
comparative performance information in advertising or marketing Winthrop's
shares. Such performance information may include data from Lipper Analytical
Services, Inc., Morningstar Publications, Inc., other industry publications,
business periodicals, and market indices. Further performance information is
contained in Winthrop's annual reports to shareholders, which may be obtained
without charge.
INFORMATION FOR SHAREHOLDERS
Any shareholder inquiry regarding Winthrop or the status of the shareholder's
account can be made to Winthrop or to FPS Services, Inc. by telephone or by mail
at the telephone number or the addresses listed on the back cover of this
Prospectus.
Following any purchase or redemption, a shareholder will receive a statement
confirming the transaction. Annual audited and semi-annual unaudited financial
statements, which include a list of investments held by Winthrop, will be sent
to shareholders.
35
<PAGE>
WINTHROP MUTUAL FUNDS
277 Park Avenue, New York, NY 10172
(800) 225-8011
ADVISERS
DLJ INVESTMENT MANAGEMENT CORP.
277 Park Avenue, New York, NY 10172
WOOD, STRUTHERS & WINTHROP MANAGEMENT CORP.
277 Park Avenue, New York, NY 10172
SUBADVISER
AXA ASSET MANAGEMENT PARTENAIRES
40 rue du Colisee, 75008 Paris, France
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
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
COUNSEL
OPPORTUNITY FUNDS
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 Third Avenue, New York, NY 10022
FOCUS FUNDS
SULLIVAN & CROMWELL
125 Broad Street, New York, NY 10004
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF WINTHROP FUND EXPENSES 3
FINANCIAL HIGHLIGHTS 5
INTRODUCTION 10
INVESTMENT OBJECTIVES AND POLICIES 10
ADDITIONAL GENERAL INVESTMENT POLICIES 17
INVESTMENT RESTRICTIONS 21
MANAGEMENT 21
EXPENSES OF WINTHROP 24
PURCHASES, REDEMPTIONS AND SHAREHOLDER SERVICES 25
NET ASSET VALUE 32
DIVIDENDS, DISTRIBUTIONS AND TAXES 33
ADDITIONAL INFORMATION 34
</TABLE>
This Prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
PROS-7/97
<PAGE>
WINTHROP MUTUAL FUNDS PURCHASE APPLICATION
<TABLE>
<S> <C>
THE WINTHROP FOCUS FUNDS THE WINTHROP OPPORTUNITY FUNDS
Winthrop Growth Fund Winthrop Developing Markets Fund
Winthrop Growth and Income Fund Winthrop International Equity Fund
Winthrop Small Company Value Fund Winthrop Municipal Money Fund
Winthrop Fixed Income Fund Winthrop U.S. Government Money Fund
Winthrop Municipal Trust Fund
</TABLE>
Complete the entire application and return it to your financial advisor or mail
it to: WINTHROP MUTUAL FUNDS, C/O FPS SERVICES, INC. P.O. BOX 61503, (3200
HORIZON DR.), KING OF PRUSSIA, PA 19406-0903. For assistance, call (800)
225-8011, option 2.
1. ACCOUNT REGISTRATION
<TABLE>
<S> <C>
Todays Date:____________________, 19 _____ Existing Account #________________________
(if applicable)
</TABLE>
<TABLE>
<S> <C>
/ / INDIVIDUAL OR JOINT ACCOUNT
- -
- ------------------------------------------------------------------ -----------------------------
Owner's Name (first name) (MI) (last name) Social Security Number
(required to open account)
</TABLE>
- -------------------------------------------------------------------------------
Joint Owner's Name* (first name) (MI) (last name) *Joint Tenants with
right of survivorship
unless otherwise
indicated.
/ / GIFT TO A MINOR
- --------------------------------------------------------------------------------
Custodian (first name) (MI) (last name)
- --------------------------------------------------------------------------------
Minor (first name) (MI) (last name)
- -
- ------------------------ UNDER THE _______ UNIFORM GIFTS TO
Minor's Social Security Number MINOR'S ACT (Minor's state
(required to open account) residence)
/ / OTHER
- -
- ----------------------------------------------------------- -----------------
Name of corporation, organization, trusts, etc. Tax ID Number
/ / ADDRESS
- --------------------------------------------------------------------------------
Street City State
- --------------------------------------------------------------------------------
Zip Code Daytime Phone Evening Phone
2. INITIAL INVESTMENT
Please indicate the dollar amount you will invest in each fund and the class of
shares you will purchase. If no class is selected, Class A shares will be
purchased. Initial minimum per fund is $250. Maximum for Class B is $250,000.
Minimums are waived for SEP, SIMPLE, 401(k), 403B and 457 plans. Subsequent
purchases can be made for $25 or more. MAKE CHECKS PAYABLE TO WINTHROP MUTUAL
FUNDS.
<TABLE>
<CAPTION>
$ AMOUNT CLASS(FUND NUMBER)
<S> <C> <C> <C>
Winthrop Growth Fund --------------- / / Class A (530) / / Class B (630)
Winthrop Growth and Income Fund --------------- / / Class A (535) / / Class B (635)
Winthrop Small Company Value Fund --------------- / / Class A (531) / / Class B (631)
Winthrop Fixed Income Fund --------------- / / Class A (534) / / Class B (634)
Winthrop Municipal Trust Fund --------------- / / Class A (536) / / Class B (636)
Winthrop Developing Markets Fund --------------- / / Class A (540) / / Class B (640)
Winthrop International Equity Fund --------------- / / Class A (541) / / Class B (641)
Winthrop Municipal Money Fund ---------------
Winthrop U.S. Government Money Fund ---------------
</TABLE>
<PAGE>
3. REDUCED SALES CHARGES (CLASS A ONLY)
If you, your spouse or minor children own shares in other Winthrop Funds, you
may be eligible for a reduced sales charge. List any existing accounts to be
considered and, if eligible, complete the Rights of Accumulation or the Letter
of Intent sections below.
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------- ------------------------------ --------------------------
Fund Account Number Fund Account Number
</TABLE>
/ / RIGHT OF ACCUMULATION Please link the accounts listed above for Right of
Accumulation privileges so that this purchase will receive any allowable
discount.
/ / LETTER OF INTENT I agree to the terms of the Letter of Intent set forth in
the prospectus (including escrowing of shares). Although I am not obligated to
do so, it is my intention to invest the following amount over a 13-month period
in one or more Winthrop mutual funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000
If the full amount indicated is not purchased within 13 months, I understand an
additional sales charge must be paid from my account.
4. DISTRIBUTION OPTIONS
If no instructions are given, all distributions will be reinvested in additional
shares of the Fund.
INCOME DIVIDENDS (SELECT ONE): / / Reinvest / / Pay in cash
/ / Use Dividend Direction Option
CAPITAL GAINS DISTRIBUTION (SELECT ONE): / / Reinvest / / Pay in cash
/ / Use Dividend Direction Option
DIVIDEND DIRECTION OPTION-I/we hereby authorize and request that my/our
distributions be either (A) paid to the person and/or address designated below
or (B) reinvested into my/our account which we currently maintain in another
Winthrop Fund:
A
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
City, State, Zip
- --------------------------------------------------------------------------------
Account or Policy Number (if applicable)
B
- --------------------------------------------------------------------------------
Fund Name Existing Account Number
- --------------------------------------------------------------------------------
Fund Name Existing Account Number
5. SHAREHOLDER OPTIONS
A. AUTOMATIC MONTHLY INVESTMENT PLAN
I hereby authorize Winthrop to draw on my bank account on or about the
/ / 10th / / 15th or / / 20th day of each month for regular investment
in my Fund account in the amount of $_________.
ATTACH A PREPRINTED VOIDED CHECK FROM THE BANK ACCOUNT YOU WISH TO USE.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------- --------- ------------------------------------ ---------
Individual Account Owner Signature Date Joint Account Owner Signature Date
</TABLE>
B. TELEPHONE TRANSACTIONS
TELEPHONE EXCHANGE PRIVILEGE-I understand that unless I have checked the
box below, this privilege will automatically apply.
NOTE: Telephone exchanges may only be processed between accounts that
have identical registrations.
/ / I do not elect the telephone exchange privilege.
TELEPHONE REDEMPTION PRIVILEGE-I authorize the Funds or their transfer
agent to effect the redemption of Fund shares for my account according to
my telephone instructions or telephone instructions from my Broker/Agent
as follows:
/ / Mail Redemption proceeds to the name and address in which my Fund
Account is registered.
/ / Deposit via ACH to the commercial bank referenced in Section 6.
/ / Wire Redemption proceeds to the Bank referenced in Section 6 and
charge my Fund account the applicable wire fee.
NOTE: The maximum telephone redemption amount is $50,000. Telephone
redemption checks will only be mailed to the name and address of record;
and the address must have no change within the last 30 days.
<PAGE>
C. SYSTEMATIC CASH WITHDRAWAL PLAN (ALSO COMPLETE SECTION E) -- ($50 MINIMUM)
In order to establish systematic withdrawal, an investor must own or purchase
shares of the Fund having a current value of at least $10,000.
<TABLE>
<CAPTION>
FUND AMOUNT
- --------------------------------- --------
<S> <C> <C>
- --------------------------------- -------- Frequency: / / monthly / / quarterly / / semi-annually / / annually
- --------------------------------- -------- Frequency: / / monthly / / quarterly / / semi-annually / / annually
</TABLE>
Payments under this plan should be sent:
/ / by check to the name and address in which my/our Fund account is
registered.
/ / by automated clearing house 'ACH' deposits to my Bank and account
referenced in Section 6.
/ / by wire to the bank account referenced in Section 6 and charge my Fund
account the applicable wire fee.
/ / by check to the Special Payee referenced below:
- --------------------------------------------------------------------------------
Name of Payee Account or Policy Number Address
(if applicable)
NOTE: Systematic withdrawals selected on a semi-annual or annual
basis are not eligible for Winthrop's CDSC waiver.
D. AUTOMATIC EXCHANGE PLAN (ALSO COMPLETE SECTION E)
<TABLE>
<CAPTION>
SHARE CLASS* FREQUENCY
FROM* FUND TO FUND (CIRCLE ONE) AMOUNT (CIRCLE ONE)+
- --------------------------------- ----------------------------------- -------- ------------- -----------
<S> <C> <C> <C> <C>
A or B M Q S A
- --------------------------------- ----------------------------------- -------------
A or B M Q S A
- --------------------------------- ----------------------------------- -------------
A or B M Q S A
- --------------------------------- ----------------------------------- -------------
A or B M Q S A
- --------------------------------- ----------------------------------- -------------
</TABLE>
* Automatic exchange selection must be between Winthrop Funds WITHIN THE SAME
SHARE CLASS unless it is directed to a Winthrop Money Fund, where class
designation will not be required. Automatic exchanges are only available for
accounts with identical registrations.
+ Monthly, quarterly, semi-annual or annual processing.
E. WITHDRAWAL OR EXCHANGE DATE
/ / I authorize this service to begin on the / / 5th / / 10th / / 15th or
/ / 25th day of ______________ 19__.
F. CONSOLIDATED ACCOUNT STATEMENTS
If you prefer to receive one quarterly combined statement instead of
individual account statements, please reference the Winthrop Fund name
(include share class) and account numbers that you would like consolidated.
<TABLE>
<S> <C>
- ----------------------------------------------------- ------------------------------------------------
Fund name/class/account number Fund name/class/account number
- ----------------------------------------------------- ------------------------------------------------
Fund name/class/account number Fund name/class/account number
</TABLE>
CHECKWRITING APPLICATION / SIGNATURE CARD
Check the Winthrop Money Fund(s) that are to have checkwriting privileges.
Minimum check amount: $100.
<TABLE>
<CAPTION>
[ ] MUNICIPAL MONEY FUND [ ] U.S. GOVERNMENT MONEY FUND
<S> <C>
- ------------------------------------------------ ------------------------------------------------
Fund or Brokerage Account Number (if applicable) Fund or Brokerage Account Number (if applicable)
</TABLE>
Checkwriting is available only for accounts holding shares not subject to
Winthrop's contingent deferred sales charge. By signing this checkwriting
privilege authorization, the undersigned agree(s): (1) the use of the Money
Funds' checkwriting privilege shall be subject to all of the terms and
conditions contained in the Funds' prospectus in effect at the time each check
is presented, and to the rules and regulations as set forth on the reverse side
of this form; and (2) each signatory guarantees the genuineness of the other's
signature.
ALL REGISTERED OWNER(S) OF THE FUND(S) MUST SIGN BELOW:
<TABLE>
<S> <C> <C>
Account Name(s) as Registered Social Security Number Authorized Signature*
- ----------------------------------- ------------------------------------- --------------------------------------
- ----------------------------------- ------------------------------------- --------------------------------------
</TABLE>
* For joint accounts, all owners, or their legal representatives, must sign this
card.
[ ] Check here if all signatures are required on checks. [ ] Check if not all
signatures are required on checks. Number of signatures required ______.
<PAGE>
6. BANK ACCOUNT INFORMATION
To be completed if applicable under Sections B or C. ATTACH VOIDED BLANK CHECK
FROM YOUR BANK ACCOUNT TO THIS FORM.
<TABLE>
<S> <C>
- -------------------------------------------------------------- --------------------------------------
Name of bank Branch (if applicable)
- -------------------------------------------------------------- --------------------------------------
Name in which bank account is established Bank account number
</TABLE>
7. SHAREHOLDER AUTHORIZATION
REQUIRED BY FEDERAL TAX LAW TO AVOID 31% BACKUP WITHOLDING: I certify under
penalties of perjury that the social security or taxpayer identification number
entered in Section 1 is correct and that I have not been notified by the IRS
that I am subject to backup withholding unless I have checked this box: / / I AM
SUBJECT TO BACKUP WITHHOLDING.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING:
<TABLE>
<S> <C>
- -------------------------------------------------------------- --------------------------------------
Signature Date
</TABLE>
By selecting any of the above telephone privileges, I agree that neither
the Winthrop Funds, the Advisers, the Subadviser nor any transfer agent for any
of the foregoing will be liable for any loss, injury, damage or expense as a
result of acting upon telephone instructions purporting to be on my behalf, that
the Funds reasonably believe to be genuine, and that neither the Funds nor any
such party will be responsible for the authenticity of such telephone
instructions. I understand that any or all of these privileges may be
discontinued by me or the Funds at any time. I understand and agree that the
Funds reserve the right to refuse any telephone instructions and that my
investment dealer or agent reserves the right to refuse to issue any telephone
instructions I may request.
I am of legal age and capacity and have received and read the Prospectus
and agree to its terms.
The person(s), if any, signing on behalf of the investor (i.e. corporation,
organization, trust, etc.) represent and warrant that they are authorized to
sign this application and purchase, redeem, or exchange shares on behalf of such
investor.
<TABLE>
<S> <C>
- -------------------------------------------------------------- --------------------------------------
SIGNATURE DATE
- -------------------------------------------------------------- --------------------------------------
SIGNATURE DATE
(If an institution, please include documentation establishing authorized signatories).
</TABLE>
8. DEALER/AGENT AUTHORIZATION
We guarantee the signature(s) set forth in Section 7, as well as the legal
capacity of the shareholder.
<TABLE>
<S> <C> <C>
Name No.
---------------------------------------- -------------------------
Office Name Office No.
---------------------------------------- -------------------------
Office Address
----------------------------------------
Representative's Name Representative's No.
---------------------------------------- -------------------------
Representative's Phone No. ( ) - Authorized Signature
----- ---- ------------------------- -------------------------
</TABLE>
- --------------------------------------------------------------------------------
CHECKWRITING TERMS AND CONDITIONS
1. REDEMPTION AUTHORIZATION: The Signatory(s) whose signature(s) appear on the
reverse side, intending to be legally bound, hereby agree each with the other
and with United Missouri Bank N.A. (Bank) that the Bank is appointed agent for
such person(s) and, as such agent, is directed to request FPS Services, Inc.,
the Transfer Agent of the Winthrop Money Funds (each a Fund and collectively the
Funds), to redeem shares of the Fund registered in the name of such Signatory(s)
upon receipt of, and in the amount of, checks drawn upon the above numbered
account. The Fund or its Transfer Agent shall deposit the proceeds of such
redemptions in said account or otherwise arrange for application of such
proceeds to payments of said checks. The Bank and the Transfer Agent are
expressly authorized to commingle such proceeds in this account with the
proceeds of the redemption of the shareholders of the Fund. The Signatory(s)
understand that the Bank may also act as an agent and custodian for the Fund.
The Bank and Transfer Agent are expressly authorized to honor checks as
redemption instructions hereunder and may require signature guarantees in
accordance with the policies stated in the Prospectus, but neither the Fund's
Transfer Agent, the Bank, the Funds, the Funds' Adviser nor any clearing agent
of the foregoing shall be liable for any loss or liability resulting from the
absence of any such guarantee.
2. CHECK PAYMENT: The Signatory(s) authorize and direct the Bank to pay each
check presented hereunder, subject to all laws and Bank rules and regulations
pertaining to checking accounts. In addition, the Signatory(s) agree that: (a)
No check shall be issued or honored, or any redemption effected, in an amount
less than stated in the Prospectus; (b) No check shall be issued or honored, or
redemption effected, for any amounts represented by shares unless payment for
such shares has been made in full and any checks given in such payment have been
collected through normal banking channels; (c) No check shall be honored unless
the Fund has provided the Bank, from the proceeds of redemption or otherwise,
collected funds for the payment of such check; (d) Checks issued hereunder
cannot be cashed over the counter at the Bank; and (e) Checks shall be subject
to any further limitations set forth in the Prospectus issued by the Fund
including without limitation any additions, amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered owner of
the Fund shares, such as by joint ownership, ownership in common or tenants by
the entirety, then (a) each registered owner must sign the signature card, (b)
each registered owner must sign each check issued hereunder unless the parties
have indicated on the front of this card that not all Signatory(s) need sign, in
which case the Bank and the Transfer Agent are authorized to act upon the
indicated number of signatures, and (c) each Signatory guarantees to Bank and
Transfer Agent the genuineness and accuracy of the signature of the other
Signatory(s).
4. TERMINATION: The Bank may at any time terminate this account, related share
redemption service and Bank's agency for the Signatory(s) hereto without prior
notice by Bank to any of the Signatory(s). The Funds may terminate this
checkwriting privilege in accordance with the procedures stated in the
Prospectus.
5. HEIRS AND ASSIGNS: These terms and conditions shall bind the respective
heirs, executors, administrators and assigns of the Signatory(s).
<PAGE>
WINTHROP FOCUS FUNDS
- --------------------------------------------------------------------------------
277 PARK AVENUE, NEW YORK, NEW YORK 10172
Toll Free (800) 225-8011
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
dated July 24, 1997
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Winthrop Focus Fund's ("Winthrop") current Prospectus
dated July 24, 1997 (the "Prospectus"), as supplemented from time to time, which
is incorporated herein by reference. A copy of the Prospectus may be obtained by
contacting Winthrop at the address or telephone number listed above. On February
20, 1997, the name of Winthrop's Aggressive Growth Fund was changed to "Small
Company Value Fund".
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Investment Policies and Restrictions................................................... 1
Management............................................................................ 38
Expenses of Winthrop.................................................................. 49
Purchases, Redemptions, Exchanges and Systematic Withdrawal Plan...................... 53
Retirement Plans..................................................................... 60
Net Asset Value....................................................................... 63
Dividends, Distributions and Taxes.................................................... 67
Portfolio Transactions................................................................ 75
Performance Information............................................................... 80
General Information................................................................... 83
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Financial Statements.................................................................. 85
Report of Independent Auditors........................................................ __
Appendix A -- Securities Ratings...................................................... A-1
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT POLICIES AND RESTRICTIONS
- --------------------------------------------------------------------------------
The following investment policies and restrictions
supplement, and should be read in conjunction with, the information set forth
under the heading "Investment Objectives and Policies" in Winthrop's Prospectus.
Except as noted in the Prospectus, Winthrop's investment policies are not
fundamental and may be changed by the Trustees of Winthrop without shareholder
approval; however, shareholders will be notified prior to a significant change
in such policies. Winthrop's fundamental investment restrictions may not be
changed without shareholder approval as defined on page 23. Winthrop's
investment adviser is Wood, Struthers & Winthrop Management Corp. (the
"Adviser").
Growth Fund, Small Company Value Fund and Growth and Income Fund
It is the policy of the Growth Fund to invest principally in
equity securities with long-term capital appreciation potential; it is the
policy of the Small Company Value Fund to invest principally in equity
securities selected on the basis, in the Adviser's opinion, of their potential
for a high level of growth of capital; and it is the policy of the Growth and
Income Fund to invest principally in dividend paying common stocks.
Warrants
The Growth Fund and the Small Company Value Fund each may
invest up to 5% of their respective total assets in warrants. Warrants may be
considered more speculative than certain other types
<PAGE>
of investments in that they do not entitle a holder to dividends or voting
rights with respect to the securities which may be purchased nor do they
represent any rights in the assets of the issuing company. Also, the value of a
warrant does not necessarily change with the value of the underlying securities
and a warrant ceases to have value if it is not exercised prior to the
expiration date.
Foreign Securities
The Growth Fund may invest up to 10% of the value of its total
assets in foreign securities and the Small Company Value Fund and the Growth and
Income Fund may invest up to 20% of the value of their respective total assets
in foreign securities. Investment in foreign securities involves certain risks
not ordinarily associated with investments in securities of domestic issuers.
These risks include fluctuations in foreign exchange rates, future political and
economic developments, and the possible imposition of exchange controls or other
foreign governmental laws or restrictions. In addition, with respect to certain
countries, there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments which could
adversely affect investments in those countries.
There may be less publicly available information about a
foreign company than about a U.S. company, and foreign companies may not be
subject to accounting, auditing and financial reporting standards and
requirements comparable to or as uniform as those of U.S. companies. Non-U.S.
securities markets, while growing in
-2-
<PAGE>
volume, have, for the most part, substantially less volume than U.S. markets,
and securities of many foreign companies are less liquid and their prices more
volatile than securities of comparable U.S. companies. Transaction costs of
investing in non-U.S. securities markets are generally higher than in the U.S.
There is generally less government supervision and regulation of exchanges,
brokers and issuers than there is in the U.S. The Funds might have greater
difficulty taking appropriate legal action in non-U.S. courts. Non-U.S. markets
also have different clearance and settlement procedures which in some markets
have at times failed to keep pace with the volume of transactions, thereby
creating substantial delays and settlement failures that could adversely affect
the Funds' performance. Dividend and interest income from non-U.S. securities
will generally be subject to withholding taxes by the country in which the
issuer is located and may not be recoverable by the Funds or investors.
Investment Grade Securities
The Growth Fund and Small Company Value Fund may invest up to
35% of the value of its total assets in investment grade fixed income securities
and the Growth and Income Fund and the Fixed Income Fund may invest in
investment grade fixed income securities without limitation. Investment grade
obligations are those obligations rated BBB or better by Standard and Poor's
Ratings Group ("S&P") or Baa or better by Moody's Investors Service ("Moody's")
in the case of long-term obligations and equivalently
-3-
<PAGE>
rated obligations in the case of short-term obligations, or unrated instruments
believed by the Adviser to be of comparable quality to such rated instruments.
Securities rated BBB by S&P are regarded by S&P as having an adequate capacity
to pay interest and repay principal; whereas such securities normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely, in the opinion of S&P, to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
higher rated categories. Securities rated Baa by Moody's are considered by
Moody's to be medium grade obligations; they are neither highly protected nor
poorly secured; interest payments and principal security appear to be adequate
for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; in the opinion of
Moody's, they lack outstanding investment characteristics and in fact have
speculative characteristics as well. Fixed income securities in which the Funds
may invest include asset and mortgage backed securities. Prepayments of
principal may be made at any time on the obligations underlying asset and
mortgage backed securities and are passed on to the holders of the assets and
mortgage backed securities. As a result, if a Fund purchases such a security at
a premium, faster than expected prepayments will reduce and slower than expected
prepayments will increase yield to maturity. Conversely, if the Fund purchases
these securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity.
-4-
<PAGE>
Options
The Growth Fund, the Growth and Income Fund and the Small
Company Value Fund may write covered calls on securities or stock indices for
purposes of hedging against the value of a decline in the value of its portfolio
securities, and, in the case of the Small Company Value Fund, as a means of
achieving additional return. The Small Company Value Fund may also purchase
calls and write put options on securities and securities indices for hedging and
return enhancement purposes.
A call option on a security gives the purchaser of the option,
upon payment of a premium to the writer of the option, the right to purchase
from the writer of the option a specified number of shares of a specified
security on or before a fixed date, at a predetermined price. A call option on a
securities index represents the holder's right to obtain from the writer in cash
a fixed multiple of the amount by which the exercise price is less than the
value of the underlying securities index on the exercise date. So long as a Fund
remains obligated as a writer of a covered call option, it will forego the
opportunity to profit from increases in the market price of the underlying
security or index above the exercise price of the option. A Fund will not write
a call option on a security unless at all times during the option period the
Fund owns either (i) the optioned securities, or securities convertible into or
carrying rights to acquire the optioned securities at no additional cost, or
(ii) an offsetting
-5-
<PAGE>
call option on the same securities at the same or a lower price. When a Fund
writes a call option on a securities index, it will establish a segregated
account with its custodian in which it will deposit cash or other liquid
unencumbered assets, marked to market daily, or a combination of both with a
value equal to or greater than the market value of the option and will maintain
the account while the option is open.
If the Growth Fund, the Growth and Income Fund or the Small
Company Value Fund desires to sell a particular security from its portfolio on
which it has written an option, the Fund will seek to effect a closing purchase
transaction prior to or concurrently with the sale of the portfolio security. A
Fund may also enter into a closing purchase transaction in order to terminate
its obligation under an option it has written. A closing purchase transaction is
a transaction in which an investor who is obligated as the writer of an option
terminates his obligation by purchasing an option on the same security and same
terms as the option previously written. There can be no assurances that a
closing purchase can be effected. If a closing purchase transaction cannot be
effected, a Fund will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise. A Fund
realizes a profit from a closing purchase transaction for an option it has
written if the cost of such transaction is less than the premium received from
the writing of the option and will realize a loss if the cost of such
transaction is more than the premium received. The Growth Fund and
-6-
<PAGE>
Growth and Income Fund will only purchase call options in closing purchase
transactions. As indicated above, the Small Company Value Fund may write or
purchase a put option on securities or securities indices. A put option is a
contract that gives the holder of the option the right, in return for a premium,
to sell to the writer of the option the underlying security at a specified
price. The seller of the put, on the other hand, has the obligation to buy the
underlying security at the exercise price. The Small Company Value Fund will
only write "covered" put options, i.e., so long as the Fund is obligated under
the put, it will have on deposit cash or other liquid unencumbered assets,
marked to market daily, with a value equal to or greater than the exercise price
of the underlying securities or index. It is possible that as a result of
writing a put, the Fund may have to purchase the underlying securities at an
amount that is greater than their current market price.
If the Small Company Value Fund purchases an option, it runs
the risk that the option will expire "out of the money" with the result that the
Fund will incur a loss equal to the amount of the premium paid plus any
transaction costs. Thus, in some periods the Small Company Value Fund may
receive less total return in connection with its options transactions than it
would have received from the underlying securities had options not been written.
The Growth Fund and the Growth and Income Fund may not write a
call option if as a result thereof, the aggregate value of
-7-
<PAGE>
such Fund's portfolio securities subject to outstanding call options (valued at
the lower of the option price or the market value of the securities) or the
amount deposited in a segregated account would exceed 5% of such Fund's total
assets. The Small Company Value Fund will not purchase options if as a result
the aggregate cost of all outstanding options exceeds 10% of its assets.
Special Risks of Writing Calls on Indices. Because exercises
of index options are settled in cash, a call writer such as the Growth Fund, the
Growth and Income Fund or the Small Company Value Fund cannot determine the
amount of its settlement obligation in advance and, unlike call writing on
specific stocks, cannot provide in advance for, or cover, its potential
obligations by acquiring and holding a particular security.
Price movements in a Fund's portfolio probably will not
correlate precisely with movements in the level of the index and, therefore, a
Fund bears the risk that the price of the securities held by such Fund may not
increase as much as the index. In such event, a Fund would bear a loss on the
call that is not completely offset by movements in the price of such Fund's
portfolio. It is also possible that the index may rise when the Fund's portfolio
does not rise. If this occurred, a Fund would experience a loss on the call that
is not offset by an increase in the value of its portfolio and might also
experience a loss in its portfolio. However, because the value of a diversified
portfolio will, over time, generally tend to move in the same direction as the
market,
-8-
<PAGE>
movements in the value of a Fund in the opposite direction as the market would
be likely to occur for only a short period or to a small degree.
Unless a Fund has other liquid assets which are sufficient to
satisfy the exercise of a call on an index, such Fund would be required to
liquidate portfolio securities in order to satisfy the exercise.
When a Fund has written a call, there is also a risk that the
market may decline between such time such Fund has a call exercised against it,
at a price which is fixed as of the closing level of the index on the date of
exercise, and the time such Fund is able to sell stocks in its portfolio. As
with stock options, the Fund will not learn that an index option has been
exercised until the day following the exercise date but, unlike a call on stock
where a Fund would be able to deliver the underlying securities in settlement,
such Fund may have to sell part of its investment portfolio in order to make
settlement in cash, and the price of such investments might decline before they
can be sold. This timing risk makes certain strategies involving more than one
option substantially more risky with index options than with stock options. For
example, even if an index call which a Fund has written is "covered" by an index
call held by such Fund with the same strike price, such Fund will bear the risk
that the level of the index may decline between the close of trading on the date
the exercise notice is filed with the clearing corporation and the close of
trading on the date such Fund exercises the call it holds
-9-
<PAGE>
or the time such Fund sells the call which, in either case, would occur no
earlier than the day following the day the exercise notice was filed.
If a Fund holds an index option and exercises it before final
determination of the closing index value for that day, it runs the risk that the
level of the underlying index may change before closing. If such a change causes
the exercised option to fall out-of-the-money, such Fund will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer. Although a Fund
may be able to minimize this risk by withholding exercise instructions until
just before the daily cutoff time or by selling rather than exercising an option
when the index level is close to the exercise price, it may not be possible to
eliminate this risk entirely because the cutoff times for index options may be
earlier than those fixed for other types of options and may occur before
definitive closing index values are announced.
Financial Futures and Options Thereon
The Small Company Value Fund may also seek to increase
its return or to hedge all or a portion of its portfolio investments through the
use of financial instruments currently or hereafter available, such as financial
future contracts and options thereon.
On the futures markets, the Adviser may with respect to the
Small Company Value Fund adopt an overall strategy in response
-10-
<PAGE>
to expected market movements. Such a strategy would involve the purchase or sale
of securities index futures contracts and related options traded on regulated
exchanges, to the extent permitted by the Commodity Futures Trading Commission
("CFTC"), for bona fide hedging purposes or for other appropriate risk
management purposes permitted under regulations promulgated by the CFTC. A
securities index futures contract is an agreement to take or make delivery of an
amount of cash equal to the difference between the value of the index at the
beginning and at the end of the contract period. The Small Company Value Fund
may enter into securities index futures contracts in anticipation of or during a
market decline to attempt to offset the decrease in market value of securities
in its portfolio that might otherwise result.
An option on a futures contract gives the purchaser the right,
but not the obligation, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the writer and holder of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin account
which represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less
-11-
<PAGE>
than, in the case of a put, the exercise price of the option on the futures
contract. With respect to stock indices, options are traded on futures contracts
for various U.S. and foreign stock indices including the S&P 500 Stock Index and
the NYSE Composite Index. The holder or writer of an option may terminate its
position by selling or purchasing an option of the same series. There is no
guarantee that such closing transactions can be effected.
The Small Company Value Fund will only invest in futures
contracts and related options to the extent that the Fund would not be required
to register with the CFTC. The Small Company Value Fund will not engage in
financial futures or related options transactions for speculative purposes but
only in an effort to hedge portfolio risks as described above. In accordance
with the foregoing, under current regulations the Small Company Value Fund may
not purchase or sell futures contracts if, immediately thereafter, the sum of
the amount of initial margin deposits on the Fund's open futures positions and
premiums on open positions thereon would exceed 5% of the market value of the
Small Company Value Fund's total assets. Certain provisions of the federal tax
laws may limit the extent to which the Small Company Value Fund may engage in
options and financial futures transactions. Such transactions may also affect
the amount, character and timing of income, gain or loss recognized by a Fund
for federal tax purposes.
The Small Company Value Fund's successful use of options and
financial futures depends on the ability of the Adviser to
-12-
<PAGE>
predict the direction of the market and is subject to various additional risks.
The investment techniques and skills required to use options and futures
successfully are different from those required to select equity and debt
securities for investment. The correlation between movements in the price of
the option or future and the price of the securities index futures and options
declines, as the composition of the Fund's portfolio diverges from the
composition of the index underlying such index futures and options. In addi-
tion, the ability of the Fund to close out an option or futures position depends
on a liquid secondary market. There is no assurance that liquid secondary
markets will exist for any particular option or futures contract at any
particular time. A Fund's losses on futures transactions could be unlimited.
New options and futures contracts and other financial
products, securities options, securities index futures contracts and options on
securities indices with respect to securities in which the Small Company Value
Fund may invest, and various combinations thereof, continue to be developed and
the Small Company Value Fund may invest in any such options, contracts and
products as may be developed to the extent consistent with its investment
objective and policies and the regulatory requirements applicable to the Fund.
Small Company Stocks
At least 65% of the Small Company Value Fund's total assets
will normally be invested in equity securities of small
-13-
<PAGE>
market capitalization companies, which for the purposes of this Fund, are those
companies with a market capitalization of $2 billion or less at the time of the
Fund's investment. Small-cap company stocks generally are considered to offer
greater potential for appreciation than securities of companies with larger
market capitalizations. Most small-cap company stocks pay low or no dividends,
and the Fund seeks long-term appreciation, rather than income. Small-cap company
stocks also have higher risk and volatility, because most are not as broadly
traded as stocks of companies with larger capitalizations and their prices thus
may fluctuate more widely and abruptly. Small-cap company securities are also
less researched and often overlooked and undervalued in the market.
Special Situation Companies
The Small Company Value Fund has a policy of investing in
special situations and accordingly may invest a substantial portion of its
assets in securities for which a tender or exchange offer has been made or
announced and in securities of companies for which a merger, consolidation,
liquidation or similar reorganization proposal has been announced if, in the
judgment of the Adviser, there is a reasonable prospect of capital appreciation.
The principal risk is that such offers or proposals may not be consummated
within the time and under the terms contemplated at the time of the investment,
in which case, unless such offers or proposals are
-14-
<PAGE>
replaced by equivalent or increased offers or proposals which are consummated,
the Fund may sustain a loss.
Short-Term Portfolio Transactions
The Small Company Value Fund may engage in short-term
portfolio transactions in an attempt to generate capital gains when deemed
appropriate by the Adviser under the circumstances, taking into consideration
the market analysis factors of any particular security and the technical
conditions of the securities markets. In accordance with the investment policy
of engaging in short-term portfolio transactions, the Small Company Value Fund
has no restrictions with respect to portfolio turnover and the rate of portfolio
turnover is not considered a prohibitive factor by the Adviser when considering
short-term portfolio transactions. As a result of this policy, it is possible
that the Small Company Value Fund's annual portfolio turnover rate may exceed
100%, although the Adviser anticipates that such rate will not exceed 100%.
Because it is difficult to predict accurately portfolio turnover rates, actual
turnover may be higher or lower. The portfolio turnover rate is computed by
dividing the lesser of the amount of the securities purchased or the securities
sold by the average monthly value of securities owned during the year, excluding
securities whose maturities at the time of acquisition were one year or less. A
high degree of portfolio turnover results in increased transaction costs. In
addition, a high degree of portfolio
-15-
<PAGE>
turnover will make it more difficult for the Small Company Value Fund to qualify
as a pass-through entity for federal tax purposes due to a requirement under
federal law that a registered investment company, such as the Small Company
Value Fund, obtain less than 30% of its gross income in any tax year from gains
on the sale of securities held less than three months. The Small Company Value
Fund intends to so qualify as a pass-through entity. Failure to so qualify would
result in federal taxation of the Small Company Value Fund at the standard
effective corporate rate of up to 35%.
IOs and POs
The Small Company Value Fund may invest in securities
representing interests in a pool of mortgages or other assets the cash flow of
which has been separated into its interest and principal components, commonly
known as "IOs" (interest only) and "POs" (principal only), although the Small
Company Value Fund has no present intention to so invest. IOs and POs issued by
parties other than agencies or instrumentalities of the U.S. Government are
considered, under current guidelines of the staff of the Securities and Exchange
Commission, to be illiquid securities.
Additional Investment Policies
The following additional policies have been adopted by the
Growth Fund and the Growth and Income Fund and may be changed by the Trustees
without shareholder approval:
1. The Funds will not make or maintain a short position (other
than short sales against the box) or write, pur-
<PAGE>
chase or sell puts, calls, straddles, spreads or
combinations thereof, provided, however, the Growth Fund
and Growth and Income Fund may write covered call options
and purchase call options in closing purchase transactions.
2. The Funds will not invest in oil, gas or other mineral
exploration or development programs, but this shall not
prohibit the Funds from investing in securities of companies
engaged in oil, gas or mineral activities or investigations.
Fixed Income Fund
The Fixed Income Fund generally does not intend to acquire
common stocks or equity securities exchangeable for common stock or rights or
warrants to subscribe for or purchase common stock, except that with respect to
convertible debt securities, the Fund may acquire common stock through the
exercise of conversion rights in situations where it believes such exercise is
in the best interest of the Fixed Income Fund and its shareholders. In such
event, the Fixed Income Fund will sell the common stock resulting from such
conversion as soon as practical. The Fixed Income Fund may, as set forth in the
Prospectus, acquire debt securities, including convertible and non-convertible
debt securities which may have voting rights, but in no case will the Fixed
Income Fund acquire more than 10% of the voting securities of any one issuer.
The relative size of the Fixed Income Fund's investments in any grade or type of
security will vary from time to time. Critical
-17-
<PAGE>
factors which are considered in the selection of securities or other investment
alternatives include trends in the determinates of interest rates, corporate
profits and management capabilities and practices.
The Fixed Income Fund may use a variety of techniques in
seeking to attain its investment objective. In making investment decisions, for
example, the Fixed Income Fund seeks to balance favorable factors, such as high
yields to maturity and high current rates of income, against unfavorable
factors, such as increased risk which accompanies longer maturities.
The Fixed Income Fund may use trading to attain its investment
objectives and policies. Trading may be used in anticipation of market
developments or to take advantage of yield disparities between major sectors of
the investment grade market. Examples of circumstances in which the Fixed Income
Fund may employ trading are (i) shortening of the average maturity of the
portfolio in anticipation of higher interest rates, (ii) lengthening of the
average maturity of the portfolio in anticipation of lower interest rates, (iii)
changing the average coupon of the portfolio when yield disparities occur
between debt securities selling at differing levels of premium or discount,
(iv) selling one type of debt security (e.g., industrial bonds) and buying
another type of debt security (e.g., Federal agency bonds or notes) when
disparities arise in the relative value of each, and (v) selling one class of
fixed-income securities (e.g., preferred stocks) and buying another
-18-
<PAGE>
class (e.g., publicly offered utility bonds) when disparities arise in the
relative values of each.
Debt securities acquired for the Fixed Income Fund's portfolio
may be subject to call by the issuer prior to maturity, in which case the Fixed
Income Fund may be forced to sell such securities at prices below market value.
The Fixed Income Fund may seek protection against calls at prices below market
value. Such protection may be sought by (i) purchasing securities with high call
prices relative to their market prices, (ii) purchasing securities with sinking
fund features which are selling at a premium where the period before inception
of the sinking fund payments is relatively long, (iii) selling a security whose
market price has risen above its call price and purchasing another security of
comparable quality whose market price is below its call price and (iv)
substituting for a security with a refunding date a comparable security with a
more distant refunding date. Depending on market conditions, debt securities may
be purchased at a discount or premium from face value, producing a yield of more
or less than the coupon rate. The market value of the Fixed Income Fund's assets
will reflect yields generally available on debt securities of similar quality.
When such yields decline, the market value of the Fixed Income Fund's assets
already invested can be expected to rise. Similarly, when such yields increase,
the market value of the Fund's assets already invested can be expected to
decline.
-19-
<PAGE>
Municipal Trust Fund
Municipal securities include municipal bonds as well as
short-term (i.e., maturing in under one year to as much as three years)
municipal notes, demand notes and tax-exempt commercial paper. In the event the
Municipal Trust Fund invests in demand notes, the Adviser will continually
monitor the ability of the obligor under such notes to meet its obligations.
Typically, municipal bonds are issued to obtain funds used to construct a wide
range of public facilities, such as schools, hospitals, housing, mass
transportation, airports, highways and bridges. The funds may also be used for
general operating expenses, refunding of outstanding obligations and loans to
other public institutions and facilities.
Municipal bonds fall into two general classes: general
obligation bonds and revenue or special obligation bonds. Payment of principal
of and interest on general obligation bonds is secured by the issuer's pledge of
its faith, credit and taxing power. Payment on revenue or special obligation
bonds is met only from the revenues obtained from a particular facility or class
of facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source but not from general tax and other unrestricted
revenues of the issuer. The term "issuer" means the agency, authority,
instrumentality or other political subdivision whose assets and revenues are
available for the payment of principal of and interest on the bonds. Certain
types of private
-20-
<PAGE>
activity bonds are also considered municipal bonds if the interest thereon is
exempt from federal income tax. Private activity bonds are issued by or on
behalf of public authorities to obtain funds for various privately-operated
manufacturing facilities, airports, housing projects, resource recovery
programs, solid waste disposal facilities, student loan programs and water and
sewage disposal facilities.
Private activity bonds are in most cases revenue bonds and do
not generally constitute the pledge of the credit or taxing power of the issuer
of such bonds. The payment of the principal and interest on such industrial
revenue bonds depends solely on the ability of the user of the facilities
financed by the bonds to meet its financial obligations and the pledge, if any,
of real and personal property so financed as security for such payment.
Municipal notes in which the Municipal Trust Fund may invest
include demand notes, which are tax-exempt obligations that have stated
maturities in excess of one year, but permit the holder to sell back the
security (at par) to the issuer within 1 to 7 days' notice. The payment of
principal and interest by the issuer of these obligations will ordinarily be
guaranteed by letters of credit offered by banks. The interest rate on a demand
note may be based upon a known lending rate, such as a bank's prime rate, and
may be adjusted when such rate changes, or the interest rate on a demand note
may be a market rate that is adjusted at specified intervals.
-21-
<PAGE>
Other short-term obligations constituting municipal notes
include tax anticipation notes, revenue anticipation notes and bond anticipation
notes, and tax-exempt commercial paper.
Tax anticipation notes are issued to finance working capital
needs of municipalities. Generally, they are issued in anticipation of various
seasonal tax revenues, such as income, sales, use and business taxes. Revenue
anticipation notes are issued in expectation of receipt of other types of
revenues, such as federal revenues available under the Federal Revenue Sharing
Programs. Bond anticipation notes are issued to provide interim financing until
long-term financing can be arranged. In most such cases, the long-term bonds
provide the money for the repayment of the notes.
Tax-exempt commercial paper is a short-term obligation with a
stated maturity of 365 days or less (however, issuers typically do not issue
such obligations with maturities longer than seven days). Such obligations are
issued by state and local municipalities to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term financing.
There are, of course, variations in the terms of, and the
security underlying, municipal securities, both within a particular rating
classification and between such classifications, depending on many factors. The
ratings of Moody's and S&P represent their opinions of the quality of the
municipal securities rated by them. It should be emphasized that such ratings
are general and are not absolute standards of quality. Consequently, municipal
securities
-22-
<PAGE>
with the same maturity, coupon and rating may have different yields, while the
municipal securities of the same maturity and coupon, but with different ratings
may have the same yield. The Adviser appraises independently the fundamental
quality of the securities included in the Fund's portfolio.
Yields on municipal securities are dependent on a variety of
factors, including the general conditions of the municipal securities market,
the size of a particular offering, the maturity of the obligation and the rating
of the issue. Municipal securities with longer maturities tend to produce
higher yields and are generally subject to greater price movements than
obligations with shorter maturities. An increase in interest rates generally
will reduce the market value of portfolio investments, and a decline in interest
rates generally will increase the value of portfolio investments. The
achievement of the Fund's investment objectives depends in part on the
continuing ability of the issuers of municipal securities in which the Fund
invests to meet their obligations for the payment of principal and interest when
due. Municipal securities historically have not been subject to registration
with the Securities and Exchange Commission, although from time to time there
have been proposals which would require registration in the future.
After purchase by the Municipal Trust Fund, a municipal
security may cease to be rated or its rating may be reduced below the minimum
required for purchase by the Municipal Trust Fund. Neither event requires sales
of such security by the Municipal
-23-
<PAGE>
Trust Fund, but the Adviser will consider such event in its determination of
whether the Municipal Trust Fund should continue to hold the security. To the
extent that the ratings given by Moody's or S&P may change as a result of
changes in such organizations or their rating systems, the Adviser will attempt
to use such changed ratings in a manner consistent with the Fund's quality
criteria as described in the Prospectus.
Obligations of issuers of municipal securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the Federal Bankruptcy Code. In addition, the
obligations of such issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of
such obligations or upon the ability of municipalities to levy taxes. There is
also the possibility that, as a result of litigation or other conditions, the
ability of any issuer to pay, when due, the principal or the interest on its
municipal bonds may be materially affected.
From time to time, proposals have been introduced before
Congress for the purpose of restricting or eliminating the federal income tax
exemption for interest on municipal securities. It can be expected that similar
proposals may be introduced in the future. If such a proposal were enacted, the
availability of municipal securities for investment by the Fund and the value of
the Fund's
-24-
<PAGE>
portfolio would be affected. Additionally, the Fund would reevalu-
ate its investment objectives and policies.
Additional General Investment Policies
The following general investment policies supplement
those set forth above for each Fund.
Subchapter M Qualification
In accordance with the requirements for qualification as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"), it is the policy of each Fund to limit its short-term trading so
that less than 30% of its annual gross income (including all dividends and
interest income and gross realized capital gains, both short- and long-term,
without offset for realized capital losses) will be derived from gross gains
realized on the sale or other disposition of securities held for less than three
months.
Short Sales ("Against the Box")
Except for the Municipal Trust Fund, a Fund may effect short
sales "against the box". While a short sale is a sale of a security the Fund
does not own, it is "against the box" if at all times during which a short
position is open, the Fund owns an equal amount of the securities, or, by virtue
of the ownership of securities, has the right, without further consideration,
to obtain an equal amount of the securities sold short. No more than 10% of each
Fund's net assets (taken at the then current market value) will be held as
collateral for its short sales at any time.
-25-
<PAGE>
Neither the Growth Fund, the Fixed Income Fund nor the Growth and Income Fund
have an intention to enter into short sales against the box in the foreseeable
future. Any gains on short sale transactions will generally be short-term,
capital gains to a Fund. A Fund's ability to enter into short sale transactions
will be limited by the requirement for qualification as a regulated investment
company that less than 30% of a Fund's annual gross income be obtained from the
sale or other disposition of securities held for less than three months. See
"Dividends, Distributions and Taxes" in the Prospectus and herein.
Repurchase Agreements
A Fund may enter into repurchase agreements with respect to
U.S. Government Securities (as defined in the Prospectus). While the maturities
of the underlying securities may exceed one year, the term of the repurchase
agreement is always less than one year. Repurchase agreements often are for
short periods such as one day or a week, but may be longer. In the event that a
vendor defaults on its repurchase obligation, a Fund might suffer a loss to the
extent that the proceeds from the sale of the collateral were less than the
repurchase price. If the vendor becomes the subject of bankruptcy proceedings, a
Fund might be delayed in selling the collateral.
Reverse Repurchase Agreements
The Growth Fund, Small Company Value Fund, Fixed Income
Fund and Municipal Trust Fund each may also enter into reverse
-26-
<PAGE>
repurchase agreements. Under a reverse repurchase agreement a Fund would sell
securities and agree to repurchase them at a mutually agreed upon date and
price. At the time a Fund enters into a reverse repurchase agreement, it would
establish and maintain with an approved custodian a segregated account
containing liquid high-grade debt securities having a value not less than the
repurchase price. Reverse repurchase agreements involve the risk that the market
value of the securities subject to such agreement could decline below the
repurchase price to be paid by a Fund for such securities. In the event the
buyer of securities under a reverse repurchase agreement filed for bankruptcy or
became insolvent, such buyer or receiver would receive an extension of time to
determine whether to enforce the Fund's obligations to repurchase the securities
and the Fund's use of the proceeds of the reverse repurchase could effectively
be restricted pending such decision. Reverse repurchase agreements create
leverage, a speculative factor, but are not considered senior securities by the
Funds or the Securities and Exchange Commission to the extent liquid,
unencumbered assets, marked to market daily, are segregated in an amount at
least equal to the amount of the liability.
Securities Lending
The Growth Fund, Small Company Value Fund, Fixed Income Fund
and Municipal Trust Fund each may seek to receive or increase income by lending
their respective portfolio securities. Under present regulatory policies, such
loans may be made to member firms
-27-
<PAGE>
of the New York Stock Exchange and are required to be secured continuously by
collateral held by the Custodian consisting of cash, cash equivalents or U.S.
Government Securities maintained in an amount at least equal to the market value
of the securities loaned. Accordingly, the Funds will continuously secure the
lending of portfolio securities by collateral held by the Custodian consisting
of cash, cash equivalents or U.S. Government Securities maintained in an amount
at least equal to the market value of the securities loaned. The Funds have the
right to call such a loan and obtain the securities loaned at any time on five
days' notice. As is the case with any extension of credit, loans of portfolio
securities involve special risks in the event that the borrower should be unable
to repay the loan, including delays or inability to recover the loaned
securities or foreclose against the collateral. The aggregate value of
securities loaned by a Fund may not exceed 25% of the value of its total assets.
Restricted Securities
The Growth Fund, the Growth and Income Fund, the Fixed Income
Fund and the Municipal Trust Fund may invest in restricted securities and all of
the Funds may invest in other assets having no ready market if such purchases at
the time thereof would not cause more than 10% (or 15% in the case of the
Municipal Trust Fund) of the value of a Fund's net assets to be invested in not
readily marketable assets. However, the Adviser presently intends that not more
than 5% of the net assets of any Fund will be so
-28-
<PAGE>
invested. Restricted securities may be sold only in privately negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 or pursuant to Rule 144
promulgated under such Act. Where registration is required, Winthrop may be
obligated to pay all or part of the registration expense, and a considerable
period may elapse between the time of the decision to sell and the time Winthrop
may be permitted to sell a security under an effective registration statement.
If during such a period adverse market conditions were to develop, Winthrop
might obtain a less favorable price than that which prevailed when it decided to
sell. Securities saleable without restriction among qualified institutional
investors pursuant to rules (e.g., Rule 144A) promulgated under the Securities
Act of 1933 are not considered to be subject to legal restrictions on transfer
and may be considered liquid if they satisfy liquidity standards established by
the Board of Trustees. The continued liquidity of such securities is not as well
assured as that of publicly traded securities, and accordingly the Board of
Trustees will monitor their liquidity. Restricted securities will be valued in
such manner as the Trustees of Winthrop in good faith deem appropriate to
reflect their fair value.
The staff of the SEC has taken the position that purchased
over the counter ("OTC") options and the assets used as cover for written OTC
options are illiquid securities. However, a Fund may treat the securities it
uses as cover for written OTC options on U.S. Government securities as liquid
provided the Fund
-29-
<PAGE>
follows a specified procedure. A Fund may sell OTC options on U.S. Government
securities only to qualified dealers who agree that the Fund may repurchase
options it writes for a maximum price to be calculated by a predetermined
formula. In such cases, OTC options would be considered liquid only to the
extent that the maximum repurchase price exceeds the intrinsic value of the
option.
State Undertakings
The Funds have also made undertakings to certain States which
(a) limit investment in warrants to not more than 5% of the value of each Fund's
net assets (only 2% of the value of each Fund's net assets may be invested in
warrants not listed on the New York or American Stock Exchange), (b) generally
prohibit any investment in oil, gas and other mineral leases, and (c) prohibit
purchases or sales of real property (including limited partnership interests,
but excluding readily marketable interests in real estate investment trusts or
readily marketable securities of companies which invest in real estate).
The Small Company Value Fund has made additional undertakings
to certain States which (a) limit to not more than 5% of its total assets
investments in not readily marketable securities, (b) prohibit investment in
commodities and commodity futures contracts, and (c) limit investment in
options, financial futures and stock index futures to 5% of the value of its net
assets. The Municipal Trust Fund has made additional undertakings to certain
States which (a) prohibit the purchase of securities of
-30-
<PAGE>
companies which have been in operation for less than three years, (b) limit to
no more than 10% of its total assets its investments in equity securities and to
no more than 5% of its total assets its investment in equity securities which
are not readily marketable, and (c) limit to no more than 5% of its total assets
its aggregate investment in puts, calls, straddles, spreads, and any
combinations thereof.
The Funds intend to withdraw such undertakings at the
earliest practicable date. Such withdrawals are not expected to
have a material effect on the portfolio of the affected Fund.
Additional Fundamental Investment Restrictions
The following fundamental investment restrictions are
applicable to each of the Funds as indicated and may not be changed with respect
to a Fund without the approval of a majority of the shareholders of that Fund,
which means the affirmative vote of the holders of (a) 67% or more of the shares
of that Fund represented at a meeting at which more than 50% of the outstanding
shares of the Fund are represented or (b) more than 50% of the outstanding
shares of that Fund, whichever is less. The following fundamental investment
restrictions are in addition to those set forth in the Prospectus.
A Fund may not:
1. Purchase the securities of any one issuer other than the
United States Government or any of its agencies or
instrumentalities, if immediately after such purchase
-31-
<PAGE>
more than 5% of the value of the Fund's assets would be
invested in such issuer or the Fund would own more than 10% of
the outstanding voting securities of such issuer, except that
up to 25% of the value of the Fund's total assets may be
invested without regard to such 5% and 10% limitations;
2. Invest more than 25% of its total assets in the
securities of issuers conducting their principal business
activities in any one industry, provided that, for
purposes of this policy, consumer finance companies,
industrial finance companies and gas, electric, water and
telephone utility companies are each considered to be
separate industries, and provided further, that there is
no limitation for the Fixed Income Fund, the Municipal
Trust Fund, the Small Company Value Fund or the Growth
and Income Fund in respect of investments in U.S.
Government Securities or, for the Fixed Income Fund, the
Municipal Trust Fund and the Small Company Value Fund, in
municipal bonds (including industrial development bonds).
A Fund may be deemed to be concentrated to the extent
that it invests more than 25% of its total assets in
taxable municipal securities issued by a single issuer;
3. Purchase securities on margin, but a Fund may obtain such
short-term credits from banks as may be necessary for the
clearance of purchases and sales of securities;
-32-
<PAGE>
4. Make loans of its assets to any person, except for (i) the
purchase of publicly distributed debt securities, (ii) the
purchase of non-publicly distributed securities subject to
paragraph 7, (iii) the lending of portfolio securities, and
(iv) the entering of repurchase agreements;
5. Borrow money except for (i) the short-term credits from
banks referred to in paragraph 3 above and
(ii) borrowings from banks for temporary or emergency
purposes, including the meeting of redemption requests
which might require the disposition of securities.
Borrowing in the aggregate may not exceed 15%, and
borrowing for purposes other than meeting redemptions may
not exceed 5% of the value of the Fund's total assets
(including all amounts borrowed) less liabilities (not
including all amounts borrowed) at the time the borrowing
is made. Outstanding borrowings in excess of 5% of the
value of the Fund's total assets will be repaid before
any subsequent investments are made. This restriction
and asset limitation on borrowing shall not prohibit the
Funds from entering into reverse repurchase agreements;
6. Mortgage, pledge or hypothecate any of its assets, except as
may be necessary in connection with permissible borrowings
mentioned in paragraph 5 and except, with respect to the Small
Company Value Fund and the Growth and Income Fund, in
connection with hedging transactions,
-33-
<PAGE>
short sales (against the box), when issued and forward
commitment transactions and similar investment
strategies;
7. Act as an underwriter of securities of other issuers,
except that a Fund may acquire restricted or not readily
marketable securities under circumstances where, if such
securities were sold, the Funds or Winthrop might be
deemed to be an underwriter for purposes of the
Securities Act of 1933 and except, with respect to the
Small Company Value Fund, to the extent that in
connection with the disposition of portfolio securities
such Fund may be deemed to be an underwriter;
8. Invest more than 10%, or 15% in the case of the Municipal
Trust Fund, of the value of its net assets in the
aggregate in restricted securities or other instruments
not having a ready market, including repurchase
agreements not terminable within seven days; provided
that the Small Company Value Fund will not invest in
restricted securities. Securities freely saleable among
qualified institutional investors under special rules
adopted by the Securities and Exchange Commission
("Rule 144A Securities") are not considered to be subject
to legal restrictions on transfer and may be considered
liquid if they satisfy liquidity standards established by
the Board of Trustees. The continued liquidity of such
securities is not as well assured as that of publicly
-34-
<PAGE>
traded securities, and accordingly, the Board of Trustees will
monitor their liquidity. Restricted securities will be valued
in such manner as the Trustees of Winthrop in good faith deem
appropriate to reflect their value;
9. With respect to the Growth Fund, the Fixed Income Fund,
the Municipal Trust Fund and the Growth and Income Fund,
invest in the securities of any issuer which has a record
of less than three years of continuous operation
(including the operation of any predecessor) if such
purchase at the time thereof would cause more than 10% of
the value of the total assets of the Fund to be invested
in the securities of such issuer or issuers;
10. With respect to the Growth Fund, the Fixed Income Fund,
the Municipal Trust Fund and the Growth and Income Fund,
purchase or retain the securities of any issuer if, to
the knowledge of Winthrop's management, those officers
and Trustees of Winthrop and its Adviser who each own
beneficially more than one-half of 1% of the outstanding
securities of such issuer together own more than 5% of
the securities of such issuer;
11. With respect to the Growth Fund, the Fixed Income Fund, the
Municipal Trust Fund and the Growth and Income Fund, invest
more than 5% of the value of its total assets at the time an
investment is made in the non-convertible preferred stock of
issuers whose non-convertible
-35-
<PAGE>
preferred stock is not readily marketable, subject to the
limitation in paragraph 8;
12. With respect to the Growth Fund, the Fixed Income Fund,
the Municipal Trust Fund and the Growth and Income Fund,
participate on a joint or joint and several basis in any
securities trading account;
13. Issue any senior security within the meaning of the
Investment Company Act of 1940 (except to the extent that
when-issued securities transactions, forward commitments,
stand-by commitments or reverse repurchase agreements may
be considered senior securities and except, with respect
to the Small Company Value Fund and the Growth and Income
Fund, that the hedging transactions in which such Funds
may engage and similar investment strategies are not
treated as senior securities);
14. Invest in real estate (other than money market securities
secured by real estate or interests therein or money
market securities issued by companies which invest in
real estate or interests therein and, with respect to the
Small Company Value Fund and the Growth and Income Fund,
other than mortgage-backed securities and similar instru-
ments), or commodities or commodity contracts except,
with respect to the Small Company Value Fund, for hedging
purposes;
15. With respect to the Growth Fund, the Fixed Income Fund,
the Municipal Trust Fund and the Growth and Income Fund,
-36-
<PAGE>
invest in the securities of other investment companies or
investment trusts except by purchase in the open market where
no commission or profit to a sponsor or dealer results from
such purchase other than the customary broker's commission, or
except when such purchase, though not in the open market, is
part of a plan of merger, acquisition or transfer of assets,
or consolidation and except, with respect to the Growth and
Income Fund, for purchases of securities of money market
funds;
16. Invest in companies for the purpose of exercising control
or management; or
17. With respect to the Municipal Trust Fund, make short
sales of securities.
The Funds do not consider the segregation of assets in
connection with any of their investment practices to be a mortgage, pledge or
hypothecation of such assets.
The following fundamental investment restrictions are
applicable only to the Fixed Income Fund and may not be changed with respect to
the Fixed Income Fund without the approval of the shareholders of the Fixed
Income Fund (as described above).
1. The Fixed Income Fund may not:
Write, purchase or sell puts, calls, straddles or
spreads, or combinations thereof;
or
2. Invest in oil, gas or other mineral exploration or
development programs.
-37-
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
The Trustees and principal officers of Winthrop, their ages
and their primary occupations during the past five years are set forth below.
Unless otherwise specified, the address of each of such persons is 277 Park
Avenue, New York, New York 10172. Those Trustees whose names are preceded by an
asterisk are "interested persons" of Winthrop as defined by the Investment
Company Act of 1940.
*G. MOFFETT COCHRAN, 46, Chairman of the Board of Trustees and
President of Winthrop, is President and Chief Executive Officer of the Adviser
with which he has been associated since 1992. Prior to his association with
Winthrop and the Adviser, Mr. Cochran was a Senior Vice President with Bessemer
Trust Companies.
*CARL B. MENGES, 66, Trustee of Winthrop, is Vice
Chairman of Donaldson, Lufkin & Jenrette, Inc. with which he has
been associated since prior to 1990.
*JAMES A. ENGLE, 38, Vice President and Trustee of Winthrop,
is a Managing Director and Chief Investment Officer of the Adviser with which he
has been associated since prior to 1990.
ROGER W. VOGEL, 39, is Vice President of Winthrop, and a
Senior Vice President of the Adviser, positions he has held since
-38-
<PAGE>
July, 1993. Prior to his becoming associated with Winthrop and the Adviser, Mr.
Vogel was a Vice President with Chemical Banking Corp.
CATHY A. JAMESON, 43, Vice President of Winthrop, is a Senior
Vice President of the Adviser with which she has been associated since prior to
1990.
SAM M. D'AGOSTINO, 72, Vice President of Winthrop, is a Vice
President and Mutual Fund Compliance Director of Alliance Capital Management
Corporation, with which he has been associated since prior to 1990. His address
is 1345 Avenue of the Americas, New York, New York 10105.
MARTIN JAFFE, 50, Vice President, Treasurer and Secretary of
Winthrop, is a Managing Director, Treasurer and Chief Operating Officer of the
Adviser, with which he has been associated since prior to 1990.
MARYBETH B. LEITHEAD, 34, Vice President of Winthrop, is also
a Vice President of the Adviser, with which she has been associated since 1990.
HUGH M. NEUBURGER, 53, Vice President of Winthrop, is a Senior
Vice President of the Adviser, with which he has been associated since March,
1995. Prior to his association with Winthrop and the Adviser, Mr. Neuburger was
the President of Hugh M. Neuburger, Inc., a consulting firm.
ROBERT L. BAST, 71, Trustee of Winthrop, is Of Counsel to
Reed Smith Shaw & McClay, with which he has been associated since
-39-
<PAGE>
prior to 1990. His address is 2500 One Libery Place, Philadelphia, PA
19103-7301.
JOHN J. HALSEY, 77, Trustee of Winthrop, is a private investor
and retired Director of Management Sciences, General Foods Corp. with which he
had been associated since prior to 1990. His address is 9600 S. Ocean Drive,
Suite 1405, Jensen Beach, FL 34957.
STIG HOST, 70, Trustee of Winthrop, is Chairman of the Board
of Kriti Exploration, Inc., Kriti Properties and Development Corp. and
International Marine Sales, Inc., a Trustee of Alliance International Fund,
Alliance Global Environmental Fund, Alliance New Europe Fund, Alliance All-Asia
Investment Fund and Alliance Developing Markets Fund and a Director of Florida
Fuels, Inc. His address is 103 Oneida Drive, Greenwich, CT 06830.
PETER F. KROGH, 60, Trustee of Winthrop, Dean Emeritus and
Distinguished Professor of International Affairs, School of Foreign Service,
Georgetown University, Washington, D.C. since prior to 1987. He is moderator of
"Great Decisions", a foreign affairs television series, author of numerous
articles relating to international issues for professional publications and
serves on the board of the Carlisle Companies and several world affairs
organizations. His address is 3417 N. Street NW, Washington, DC 20007.
DENNIS G. LITTLE, 62, Trustee of Winthrop, is the former
Executive Vice President and Chief Financial Officer of Textron
-40-
<PAGE>
Inc. (conglomerate). His address is 28 Rumstick Drive, Barrington, RI 02806.
WILLIAM H. MATHERS, 82, Trustee of Winthrop, Of Counsel to the
law firm of Chadbourne & Parke, with which he had been associated since prior
to 1990. His address is c/o Gordon Farm, RR #1-Box 83, Sutton, VT 05867.
JAMES L. MCCABE, 54, Trustee of Winthrop, is President of
McCabe Capital Managers, Ltd. (registered investment adviser) with which he has
been associated since prior to 1990. His address is 101 Williamson Road, Bryn
Mawr, PA 19010.
JOHN J. SHEEHAN, 66, Trustee of Winthrop, consultant to
Financial Data Processing with which he has been associated since prior to 1990.
His address is 4 Bennington Place, Newton, PA 18940.
WILLIAM C. SIMPSON, 78, Trustee of Winthrop, former President
and Director of Royal Insurance Companies with which he has been associated
since prior to 1990. His address is 123 Cove Neck Road, Oyster Bay, NY 11771.
*STEPHEN K. WEST, 68, Trustee of Winthrop, is a partner of
Sullivan & Cromwell, counsel to Winthrop, with which he has been associated
since prior to 1990. His address is 42 Old Wood Road, Bernardsville, NJ 07924.
-41-
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
Compensation Table
Total
Pension or Compensation
Retirement From Winthrop
Aggregate Benefits Accrued Estimated Annual and Fund
Compensation As Part of Benefits Upon Complex Paid
Name and Position From Winthrop Winthrop Expenses Retirement to Trustees
- ----------------- ------------ ------------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Robert L. Bast $3,600 None None $3,600
(Trustee)
John J. Halsey $3,400 None None $3,400
(Trustee)
Stig Host $5,800 None None $5,800
(Trustee)
Peter F. Krogh $4,600 None None $4,600
(Trustee)
Dennis G. Little $3,600 None None $3,600
(Trustee)
William H. Mathers $5,800 None None $5,800
(Trustee)
James L. McCabe $3,600 None None $3,600
(Trustee)
John J. Sheehan $4,800 None None $4,800
(Trustee)
William C. Simpson $3,600 None None $3,600
(Trustee)
Stephen K. West $3,600 None None $3,600
(Trustee)
</TABLE>
The Trustees of Winthrop who are officers or employees of the Adviser or
any of its affiliates receive no remuneration from Winthrop. Each of the
Trustees who are not affiliated with the Adviser will be paid a $1,200 fee for
each board meeting attended and $500 for each Audit Committee meeting attended.
For the year ended October 31, 1996, such remuneration totalled $42,400. Messrs.
Halsey, Host, Krogh, and Mathers are members of the Audit Committee. Messrs.
Bast, Mathers and Cochran are members of the Dividend Committee whose function
is to declare dividends on behalf
-42-
<PAGE>
of the Trustees. All of the Trustees who are not "interested persons" of
Winthrop as defined by the Investment Company Act of 1940 are members of the
Nominating Committee. Messrs. Host and Cochran are members of the Valuation
Committee whose function is to value the securities of each Fund in emergency
situations. Messrs. Bast, Halsey, Menges, McCabe, Sheehan, and West are former
Directors of the Neuwirth Fund, Inc. Messrs. Engle, Little, Mathers, Menges,
and Simpson are former Directors of the Pine Street Fund, Inc. The Neuwirth
Fund, Inc. and the Pine Street Fund, Inc. were subject to a plan of
reorganization and a transfer of assets and liabilities to the Small Company
Value Fund and the Growth and Income Fund, respectively, two portfolios of the
Winthrop Focus Funds on July 10, 1992.
As of July 17, 1997, the Trustees and officers of Winthrop as
a group owned beneficially less than 1.0% of the shares of each Fund.
To the best of the Fund's knowledge as of July 8, 1997, no
shareholder owned 5% or more of the outstanding Class A or Class B shares of the
Growth Fund, the Small Company Value Fund, or the Growth and Income Fund. The
Adviser manages accounts over which it has discretionary power to vote or
dispose of securities held in such accounts and which accounts hold in the
aggregate, as of July 21, 1997, 1,506,158 shares (12.04%) of the Small Company
Value Fund, 428,306 shares (7.88%) of the Fixed Income Fund, and 479,184 shares
(13.49%) of the Municipal Trust Fund. Set forth below is
-43-
<PAGE>
certain information as to persons who owned 5% or more of a Fund's outstanding
shares as of July 8, 1997:
<TABLE>
<CAPTION>
Nature of
Name and Address % of Class Ownership
---------------- ---------- ---------
<S> <C> <C> <C>
Fixed Income Class B Virginia Abrasives 6.92% Beneficial
Tools Inc
5022 N Lakes OR NW
Roanoke VA 24019
Corestates 13.97% Record*
FBO D W Nicholson Assoc LTD
PO Box 7829
Philadelphia, PA
Tasia Cavas 5.56% Beneficial
7804 Ruxway Road
Towson, MD 21204
Municipal Robert Winthrop 6.02% Beneficial
Trust Class A BC 238-707848
c/o Wood Struthers & Winthrop
277 Park Ave, 24th Floor
New York, NY 10172
Municipal Trust Company of Louisiana 41.23% Beneficial
Trust Class B and Jon Babb
Trust Jasper L. Custer Trust
UA DTD 10/20/95
PO Drawer 1410
Ruston, LA 71273-1410
Municipal Donaldson Lufkin Jenrette 8.84% Record*
Trust Class B Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303
Municipal Donaldson Lufkin Jenrette 20.17% Record*
Trust Class B Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303
- -----------------
* Such Recordholder disclaims beneficial ownership.
</TABLE>
Adviser
-44-
<PAGE>
Wood, Struthers & Winthrop Management Corp., a Delaware
corporation with principal offices at 277 Park Avenue, New York, New York 10172,
has been retained under an Investment Advisory Agreement as Winthrop's
investment adviser (see "Management" in the Prospectus). The Adviser was
established in 1871, as a private concern to manage money for the Winthrop
family of Boston.
The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJ Securities" or the "Distributor"), the
distributor of the Funds' shares, which is a wholly-owned subsidiary of
Donaldson, Lufkin & Jenrette, Inc., which is in turn an independently operated,
indirect subsidiary of The Equitable Companies, Incorporated ("ECI"), a holding
company controlled by AXA, a French insurance holding company. The Adviser along
with its affiliates are an integral part of the DLJ Securities family, and as
one of the oldest money management firms in the country, they maintain a
tradition of personalized service and performance.
As of September 10, 1996, AXA owned 60.5% of the outstanding
shares of the common stock of ECI. AXA is the holding company for an
international group of insurance and related financial services companies. AXA's
insurance operations are comprised of activities in life insurance, property and
casualty insurance and reinsurance. The insurance operations are diverse
geographically with activities in France, the United States, the United Kingdom,
Canada and other countries, principally in Europe. AXA is also engaged in asset
management, investment banking and
-45-
<PAGE>
brokerage, real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, on September 10, 1996,
35.6% of the issued ordinary shares (representing 48.6% of the voting power) of
AXA were directly or indirectly owned by Finaxa, a French holding company
("Finaxa"). Such percentage of interest includes the interest of Colisee
Vendome, a wholly-owned subsidiary of Finaxa, which owned 5.3% of the issued
ordinary shares (representing 4.3% of the voting power) of AXA and the interest
of les Ateliers de construction du Nord de la France- ANF ("ANF"), a 95.4% owned
subsidiary of Finaxa, which owned 0.3% of the issued ordinary shares
(representing 0.4% of the voting power) of AXA. As of September 10, 1996, 61.3%
of the issued ordinary shares (representing 73.5% of the voting power) of Finaxa
were owned by five French mutual insurance companies (the "Mutuelles AXA") (one
of which, AXA Assurances I.A.R.D. Mutuelle, owned 34.8% of the issued ordinary
shares (representing 40.6% of the voting power) and 23.7% of the issued ordinary
shares (representing 15.0% of the voting power) of Finaxa were owned by Banque
Paribas, a French bank ("Paribas"). Including the ordinary shares owned by
Finaxa and its subsidiaries on September 10, 1996, the Mutuelles AXA directly
and indirectly owned 41.3% of the issued ordinary shares of AXA (representing
56.3% of the voting power). Acting as a group, the Mutuelles AXA will continue
to control AXA and Finaxa. The address of Donaldson, Lufkin & Jenrette, Inc. is
277 Park Avenue, New York, New York 10172. The address of ECI is 787 Seventh
Avenue, New York New York 10019.
-46-
<PAGE>
The Investment Advisory Agreement became effective on July 22,
1992. The Investment Advisory Agreement replaced an earlier, substantially
identical agreement (the "First Advisory Agreement") that terminated because of
its technical assignment as a result of AXA's acquisition of control over ECI.
In anticipation of the assignment of the First Advisory Agreement, on February
12, 1992, the Trustees approved the Investment Advisory Agreement and on June
15, 1992, a majority of the outstanding voting securities of Winthrop approved
the Investment Advisory Agreement. The Investment Advisory Agreement was
approved with respect to the Municipal Trust Fund by the Trustees on June 16,
1993 and by the then sole shareholder, the Adviser, on July 26, 1993 and became
effective with respect to the Municipal Trust Fund on the same date. The
Investment Advisory Agreement continues in force for successive twelve month
periods computed from the first day of each fiscal year of Winthrop provided
that such continuation is specifically approved at least annually by a majority
vote of the Trustees who neither are interested persons of Winthrop nor have any
direct or indirect financial interest in the Investment Advisory Agreement, cast
in person at a meeting called for the purpose of voting on such approval. The
Investment Advisory Agreement was continued until October 31, 1997 at a meeting
of the Trustees on October 24, 1996.
Under the Investment Advisory Agreement, Winthrop has agreed
to change its name to one that does not suggest an affiliation with the Adviser
in the event the Adviser ceases to act as
-47-
<PAGE>
Winthrop's investment adviser. Pursuant to the terms of the Investment Advisory
Agreement, the Adviser may retain, at its own expense, a sub-adviser to assist
in the performance of its services to Winthrop, although such an arrangement is
not currently contemplated.
Certain other clients of the Adviser may have investment
objectives and policies similar to those of Winthrop. The Adviser may, from time
to time, make recommendations which result in the purchase or sale of a
particular security by its other clients simultaneously with Winthrop. If
transactions on behalf of more than one client during the same period increase
the demand for securities being purchased or the supply of the securities being
sold, there may be an adverse effect on price. It is the policy of the Adviser
to allocate advisory recommendations and the placing of orders in a manner which
is deemed equitable by the Adviser to the accounts involved, including Winthrop.
When two or more of the clients of the Adviser (including Winthrop) are
purchasing the same security on a given day from the same broker-dealer, such
transactions may be averaged as to price.
For the fiscal years ending October 31, 1996, 1995 and 1994
the Growth Fund paid the Adviser fees of $476,341, $395,327 and $387,752,
respectively; the Small Company Value Fund paid the Adviser fees of $1,774,607,
$1,432,939 and $965,285, respectively; the Fixed Income Fund paid the Adviser
fees of $360,520, $281,997 and $240,985, respectively; the Growth and Income
Fund paid the Adviser fees of $714,397, $556,556 and $434,475, respectively; and
-48-
<PAGE>
the Municipal Trust Fund paid the Adviser fees of $242,321, $224,300, and
$219,851, respectively. As disclosed in the Prospectus, during the fiscal year
ended October 31, 1996, the Adviser reimbursed the Fixed Income Fund $198,923
and the Municipal Trust Fund $249,651, for operating expenses.
- --------------------------------------------------------------------------------
EXPENSES OF WINTHROP
- --------------------------------------------------------------------------------
Distribution Plans
Pursuant to Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940, Winthrop has adopted a
Distribution Agreement (the "Distribution Agreement") and 12b-1 Plans for each
class of shares of each Fund to permit Winthrop to compensate the Distributor
for activities associated with the distribution of shares.
Pursuant to the Distribution Agreement and the 12b-1 Plans,
the officers, Adviser or Distributor of Winthrop reports the amounts expended
under the Distribution Agreement and the purposes for which such expenditures
were made to the Trustees of Winthrop on a quarterly basis. Also, the 12b-1
Plans provide that the selection and nomination of disinterested Trustees (as
defined in the Investment Company of Act of 1940) are committed to the
discretion of the disinterested Trustees then in office. The Distribution
Agreement and 12b-1 Plans may be continued annually if approved by a majority
vote of the Trustees, including a majority
-49-
<PAGE>
of the Trustees who neither are interested persons of Winthrop nor have any
direct or indirect financial interest in the Distribution Agreement, the 12b-1
Plans or in any other agreements related to the 12b-1 Plans, cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement and 12b-1 Plans were initially approved by the Trustees, including a
majority of the disinterested Trustees, on October 19, 1995. The Class A 12b-1
Plans were approved by shareholders at a special meeting on February 7, 1996.
The Class B 12b-1 Plans were approved by the sole Class B shareholder of each
Fund on February 27, 1996. The 12b-1 Plans were last approved by the Board of
Trustees on October 24, 1996. Prior to February 28, 1996, the Funds operated
under 12b-1 Plans pursuant to which each Fund reimbursed the Distributor up to
.50 of 1% of the average daily net assets of such Fund. As approved, the Class A
Plans provide that: (i) an asset based sales charge of .05 of 1% per year and
(ii) a service fee of .25 of 1% per year, in each case, of the average daily net
assets of the Class A shares of the Fund may be paid as compensation to the
Distributor for its services. The Class B Plans provide that: (i) an asset based
sales charge of .75 of 1% per year and (ii) a service fee of .25 of 1% per year,
in each case, of the average daily net assets of the Class B shares of the Fund
may be paid as compensation to the Distributor for its services.
All material amendments to the 12b-1 Plans must be approved by
a vote of the Trustees, including a majority of the Trustees who neither are
interested persons of Winthrop nor have
-50-
<PAGE>
any direct or indirect financial interest in the 12b-1 Plans or any related
agreement, cast in person at a meeting called for the purpose of voting on such
approval. In addition to such Trustee approval, the 12b-1 Plans may not be
amended in order to increase materially the costs which the Funds may bear
pursuant to the 12b-1 Plans without the approval of a majority of the
outstanding shares of each class of shares of each Fund, voting separately. The
12b-1 Plans may be terminated without penalty at any time by a majority vote of
the disinterested Trustees, by a majority vote of the outstanding shares of each
class of shares of each Fund, voting separately or by the Adviser. Any agreement
related to the 12b-1 Plans may be terminated at any time, without payment of any
penalty, by a majority vote of the independent Trustees or by majority vote of
the outstanding shares of each class of shares of each Fund, voting separately
and will terminate automatically in the event of assignment.
The 12b-1 Plans require that the Board of Trustees shall
review at least quarterly a written report of the payments made pursuant to each
Plan and the purpose for which such payments were made. For the year ended
October 31, 1996, distribution fees paid or payable with respect to Class A
shares and Class B shares for each fund were as follows:
-51-
<PAGE>
Fund Class A Shares Class B Shares
- --------------------------------------------------------------------------------
Growth Fund $225,915 $ 9,651
Fixed Income Fund 208,372 6,565
Small Company Value Fund 802,958 22,502
Growth and Income Fund 372,389 21,572
Municipal Trust Fund 141,896 1,775
Distribution fees paid were used to compensate broker-dealers and other persons
for providing distribution assistance.
-52-
<PAGE>
- --------------------------------------------------------------------------------
PURCHASES, REDEMPTIONS, EXCHANGES AND
SYSTEMATIC WITHDRAWAL PLAN
- --------------------------------------------------------------------------------
The following information supplements that set forth in
Winthrop's Prospectus under the heading "Purchases, Redemptions and Shareholder
Services".
Purchases
Shares of the Funds are offered at the respective net asset
value per share next determined following receipt of a purchase order in proper
form by Winthrop or by the Distributor plus, in the case of Class A shares of
each Fund, an initial sales charge imposed at the time of purchase or, in the
case of Class B Shares of each Fund, subject to a contingent deferred sales
charge upon redemption. The Funds calculate net asset value per share as of the
close of the regular session of the New York Stock Exchange, which is generally
4:00 p.m. New York City time on each day that trading is conducted on the New
York Stock Exchange.
Orders for the purchase of shares of a Fund become effective
at the next transaction time after Federal funds or bank wire monies become
available to Citibank, N.A. ("Citibank") for a shareholder's investment.
Federal funds are a bank's deposits in a Federal Reserve Bank. These funds can
be transferred by Federal
-53-
<PAGE>
Reserve wire from the account of one member bank to that of another member bank
on the same day and are considered to be immediately available funds; similar
immediate availability is accorded monies received at Citibank by bank wire.
Investors should note that their banks may impose a charge for this service.
Money transmitted by a check drawn on a member of the Federal Reserve System is
converted to Federal Funds in one business day following receipt. Checks drawn
on banks which are not members of the Federal Reserve System may take longer.
All payments (including checks from individual investors) must be in United
States dollars.
All shares purchased are confirmed to each shareholder and are
credited to such shareholder's account at net asset value and with respect to
Class A shares, less any applicable sales charge. To avoid unnecessary expense
to Winthrop and to facilitate the immediate redemption of shares, share
certificates are not issued except upon the written request of a shareholder and
payment of a fee in the amount of $50 for such share issuance. Winthrop retains
the right to waive such fee in their sole discretion.
Redemptions
Payment of the redemption price may be made either in cash or
in portfolio securities (selected in the discretion of the Trustees and taken at
their value used in determining the redemption price), or partly in cash and
partly in portfolio securities. However, payments will be made wholly in cash
unless the Trustees believe that economic conditions exist which would make such
a
-54-
<PAGE>
practice detrimental to the best interest of Winthrop. Winthrop has filed a
formal election with the Securities and Exchange Commission pursuant to which
Winthrop will only effect a redemption in portfolio securities where the
particular shareholder of record is redeeming more than $250,000 or 1% of
Winthrop's total net assets, whichever is less, during any 90 day period. In the
opinion of Winthrop's management, however, the amount of a redemption request
would have to be significantly greater than $250,000 or 1% of total net assets
before a redemption wholly or partly in portfolio securities would be made. If
payment for shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the securities to
cash. See the Prospectus for a description of the contingent deferred sales
charge which may be applicable to certain redemptions.
To redeem shares represented by share certificates, investors
should forward the appropriate share certificates, endorsed in blank or with
blank stock powers attached, to Winthrop with the request that the shares
represented thereby or a specified portfolio thereof be redeemed at the next
determined net asset value per share. The share assignment form on the reverse
side of each share certificate surrendered to Winthrop for redemption must be
signed by the registered owner or owners exactly as the registered name appears
on the face of the certificate or, in the alternative, a stock power signed in
the same manner may be attached to the share certificate or certificates, or,
where tender is made by
-55-
<PAGE>
mail, separately mailed to Winthrop. The signature or signatures on the
assignment form must be guaranteed in the manner described below.
If the total value of the shares being redeemed exceeds
$50,000 (before deducting any applicable contingent deferred sales charge) or a
redemption request directs proceeds to a party other than the registered account
owner(s), the signature or signatures on the letter or the endorsement must be
guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934. Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
A broker-dealer guaranteeing signatures must be a member of a clearing
corporation or maintain net capital of at least $100,000. Credit unions must be
authorized to issue signature guarantees. Signature guarantees will be accepted
from any eligible guarantor institution which participates in a signature
guarantee program. Additional documents may be required for redemption of
corporate, partnership or fiduciary accounts.
The requirement for a guaranteed signature is for the
protection of the shareholder in that it is intended to prevent an unauthorized
person from redeeming his shares and obtaining the redemption proceeds.
-56-
<PAGE>
Exchanges
Shares of one class of a Fund may be exchanged by mail or
telephone for shares of the same class of another Fund or for shares of the
Winthrop Opportunity Funds, another investment company managed by the Adviser
and an affiliate of the Adviser, which is currently comprised of four
portfolios, the Winthrop Developing Markets Fund and the Winthrop International
Equity Fund (the "Opportunity Equity Funds") and the Winthrop Municipal Money
Fund and Winthrop U.S. Government Money Fund (the "Opportunity Money Funds").
Shares exchanged from a Fund must be exchanged for the same class of shares of
the Opportunity Equity Funds. Each Opportunity Equity Fund portfolio offers two
classes of shares: Class A shares which are sold with a front-end sales charge
of up to 5.75% and a 12b-1 fee of .25% annually and Class B shares which are
sold with a contingent deferred sales charge which declines from 4% to zero
depending on the period of time the shares are held and a 12b-1 fee of 1%
annually. Each Opportunity Money Fund Portfolio currently offers only one class
of shares.
Class A shares subject to a contingent deferred sales charge
as described in the Prospectus and Class B shares which are exchanged for shares
of the Winthrop Opportunity Funds will continue to be subject to the same
contingent deferred sales charge at the same rate and for the same period of
time as they were prior to exchange. The Telephone Exchange Privilege will be
offered automatically unless a shareholder declines such option on the
-57-
<PAGE>
Share Purchase Application found in the Funds' Prospectus, or by writing to the
Funds' Transfer Agent, FPS Services, Inc., P.O. Box 61503 (3200 Horizon Drive),
King of Prussia, PA 19406-0903, Attn.: Winthrop Mutual Funds.
In the case of each of the Winthrop Opportunity Funds, the
exchange privilege is available only in those jurisdictions where shares of the
relevant Fund may be legally sold. Prospectuses for the Winthrop Opportunity
Funds may be obtained from Winthrop at the address or telephone number listed on
the cover page of the Prospectus. An exchange is effected on the basis of each
Fund's relative net asset value per share next computed following receipt of an
order for such exchange from the shareholder. In addition, the exchange
privilege is available only when payment for the shares to be redeemed has been
made and the shares exchanged are held by the Transfer Agent or Distributor.
Only those shareholders who have had shares in a Fund for at
least seven days may exchange all or part of those shares for shares of another
Fund or one of the Winthrop Opportunity Funds and no partial exchange may be
made if, as a result, the shareholders' interest in a Fund would be reduced to
less than $250. The minimum initial exchange into another Fund is $250.
All exchanges into the Winthrop Opportunity Funds are subject
to the minimum investment requirements and any other applicable terms set forth
in the Prospectus for the relevant Winthrop Opportunity Fund whose shares are
being acquired. If for
-58-
<PAGE>
these or other reasons the exchange cannot be effected, the shareholder will be
so notified.
A shareholder of Winthrop who has exchanged shares for shares
of the Winthrop Opportunity Funds will have all of the rights and privileges of
a shareholder of the relevant Winthrop Opportunity Fund.
The exchange privilege is intended to provide shareholders
with a convenient way to switch their investments when their objectives or
perceived market conditions suggest a change. The exchange privilege is not
meant to afford shareholders an investment vehicle to play short term swings in
the stock market by engaging in frequent transactions in and out of the Funds or
the Winthrop Opportunity Funds. Shareholders who engage in such frequent
transactions may be prohibited from or restricted in placing future exchange
orders.
Systematic Withdrawal Plans
Shares of Winthrop owned by a participant in Winthrop's
systematic withdrawal plan will be redeemed as necessary to meet withdrawal
payments. A contingent deferred sales charge which would otherwise be imposed
will be waived in connection with redemptions made pursuant to Winthrop's
systematic withdrawal plan up to 1% monthly or 3% quarterly of an account's
total purchase payments (excluding dividend reinvestments) not to exceed 10% of
total purchase payments over any 12 month rolling period; however, the
contingent deferred sales charge will not be waived for systematic
-59-
<PAGE>
withdrawals elected on a semi-annual or annual basis. See the Prospectus for a
description of the contingent deferred sales charge. The systematic withdrawal
plan may be terminated at any time by the shareholder or Winthrop.
Redemption of shares for withdrawal purposes may reduce or
even liquidate an account. While an occasional lump sum investment may be made
by a shareholder who is maintaining a systematic withdrawal plan, such
investment should normally be an amount equivalent to three times the annual
withdrawal or $5,000 whichever is less.
- --------------------------------------------------------------------------------
RETIREMENT PLANS
- --------------------------------------------------------------------------------
Each of Winthrop's Funds may be a suitable investment vehicle
for part or all of the assets held in various tax-sheltered retirement plans,
such as those listed below. Semper Trust Company serves as custodian under these
prototype retirement plans and charges an annual account maintenance of $15 per
participant, regardless of the number of Funds selected. Persons desiring
information concerning these plans should write or telephone Winthrop's Transfer
Agent. While Winthrop reserves the right to suspend sales of its shares in
response to conditions in the securities markets or for other reasons, it is
anticipated that any such suspension of sales would not apply to sales to the
types of plans listed below.
-60-
<PAGE>
Individual Retirement Accounts ("IRA")
The Adviser has available a prototype form of IRA for
investment in shares of any one or more Funds. Under the Code, individuals may
make IRA contributions of up to $2,000 annually. An individual with a
non-working spouse may establish a separate IRA for the spouse and contribute a
combined maximum of $2,250 annually to one or both IRAs, provided that no more
than $2,000 may be contributed to the IRA of either spouse. Contributions to an
IRA may be wholly or partly tax-deductible, depending upon the contributor's
income level and participation in an employer-sponsored retirement plan. The
income earned on shares held in an IRA is not subject to federal income tax
until withdrawn in accordance with the Code. Investors may be subject to
penalties or additional taxes on contributions to or withdrawals from IRAs under
certain circumstances.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA is available for investment and may be established
on a group basis by an employer who wishes to sponsor a tax-sheltered retirement
program by making IRA contributions on behalf of all eligible employees.
Savings Incentive Match Plan for Employees ("SIMPLE")--SIMPLE IRA and
SIMPLE 401(k)
SIMPLE plans offer employers with 100 or fewer eligible
employees the ability to establish a retirement plan that permits employee
contributions. An employer may also elect to make
-61-
<PAGE>
additional contributions to these Plans. Please telephone Winthrop's
shareholder servicing representatives at (800) 225-8011 for more information.
Employer-Sponsored Retirement Plans
The Adviser has a prototype retirement plan available which
provides for investment of plan assets in shares of any one or more Funds. The
prototype retirement plan may be used by sole proprietors and partnerships as
well as corporations to establish a tax qualified profit sharing plan or money
purchase pension plan (or both) of their own.
Under the prototype retirement plan, an employer may make
annual tax-deductible contributions for allocation to the accounts of the plan
participants to the maximum extent permitted by the federal tax law for the type
of plan implemented. The Adviser has received favorable opinion letters from
the IRS that the prototype retirement plan is acceptable by qualified employers.
Self-Directed Retirement Plans
Shares of Winthrop may be suitable for self-directed IRA
accounts and prototype retirement plans such as those developed by Donaldson,
Lufkin & Jenrette Securities Corporation, an affiliate of
the Adviser and Winthrop's Distributor.
-62-
<PAGE>
- --------------------------------------------------------------------------------
NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value per share is computed each Fund Business Day
in accordance with Winthrop's Agreement and Declaration of Trust and By-Laws.
For this purpose, a Fund Business Day is any day on which the New York Stock
Exchange is open for business, typically, Monday through Friday exclusive of New
Year's Day, Washington's Birthday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day and Good Friday.
The Funds have one transaction time each Fund Business Day,
which is as of the close of the regular session of the New York Stock Exchange,
generally 4:00 p.m. New York City time. The net asset value per share is
calculated by taking the sum of the value of the Fund's investments and any cash
or other assets, subtracting liabilities, and dividing by the total number of
shares outstanding. All expenses, including the fees payable to the Adviser, are
accrued daily.
The net asset value is calculated separately for each class.
Although the legal rights of each class of shares are substantially identical,
the different expenses attributable to each class will result in different net
asset values and dividends. The net asset value of Class B shares will generally
be lower than the net asset value of Class A shares as a result of the larger
distribution services fee imposed on Class B shares. It is expected that the net
-63-
<PAGE>
asset value of Class A shares and Class B shares will tend to equate immediately
after the recording of dividends, if any, which will differ by approximately the
amount of any accrued distribution services fee.
For purposes of the computation of net asset value, each of
the Funds value securities held in their respective portfolios as follows:
readily marketable portfolio securities listed on the New York Stock Exchange
are valued, except as indicated below, at the last sale price at the close of
the New York Stock Exchange on the business day as of which such value is being
determined. If there has been no sale on such day, the securities are valued at
the mean of the closing bid and asked prices on such day, unless it is
determined that such mean does not reasonably reflect true market value, in
which case such value shall be taken at such amount as shall be deemed
reasonable by Trustees of Winthrop but not less than said bid price nor more
than said asked price. If no bid or asked prices are quoted on such day, then
the security is valued by such method as the Trustees of Winthrop shall
determine in good faith to reflect its fair value.
Readily marketable securities, including certain options, not
listed on the New York Stock Exchange but listed on other national securities
exchanges or admitted to trading on the National Association of Securities
Dealers Automatic Quotations, Inc. ("NASDAQ") National Market System (the
"System") are valued in like manner. Portfolio securities traded on more than
one national securities exchange are valued at the last sale price on the
business
-64-
<PAGE>
day as of which such value is being determined at the close of the exchange
representing the principal market for such securities.
Readily marketable securities, including certain options
traded only in the over-the-counter market and listed securities whose primary
market is believed by the Adviser to be over-the-counter (excluding those
admitted to trading on the System) are valued at the mean of the current bid and
asked prices as reported by NASDAQ, or in the case of securities not quoted by
NASDAQ, the National Quotation Bureau, Inc. or such other comparable sources as
the Trustees of the Fund deem appropriate to reflect their fair market value.
However, 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 Adviser 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 specific securities. The money market
securities in which each Fund invests are traded primarily in the
over-the-counter market and are valued at the mean between most recent bid and
asked prices as obtained from dealers that make markets in such securities,
except for securities having 60 days or less remaining until maturity which are
stated at amortized cost. Portfolio securities underlying listed call options
will be valued at their market price and reflected in net assets accordingly.
Premiums received on call options written by the Fund will be included in the
liability section of the Statement of Assets
-65-
<PAGE>
and Liabilities as a deferred credit and subsequently adjusted
(marked-to-market) to the current market value of the option written.
Investments for which market quotations are not readily available are valued at
fair value as determined in good faith by the Trustees of Winthrop.
-66-
<PAGE>
-------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
Each of the Funds has elected to qualify and intends to remain
qualified as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, a Fund will not be subject to federal income taxes if at least 90% of
its net investment income and net short-term capital gains less any available
capital loss carryforwards are distributed to shareholders within allowable time
limits. However, a Fund will be subject to tax on its income and gains to the
extent that it does not distribute to its shareholders an amount equal to such
income and gains. In addition, a Fund will be subject to a nondeductible 4%
excise tax to the extent that it does not make distributions to its shareholders
on a basis such that they are taxed to shareholders in the same year in which
the related income or gain was realized by such Fund. To the extent possible,
each Fund intends to make such distribution as may be necessary to avoid this
excise tax.
Each Fund normally will distribute substantially all of its
net investment income and net capital gain, if any, to shareholders in the form
of dividends to be paid from time to time. Any dividends or distributions paid
shortly after the purchase of shares by an investor may have the effect of
reducing the per share value of the shares owned by the investor by the per
share amount of the dividends
-67-
<PAGE>
or distributions. Furthermore, such dividends and distributions, although in
effect a return of capital, are subject to income taxes.
In the event that total distributions (including distributed
or designated net capital gain) of a Fund for a taxable year exceed its
investment company taxable income and net capital gain, a portion of each
distribution generally will be treated as a return of capital. Distributions
treated as a return of capital reduce a shareholder's basis in its shares and
could result in a tax on capital gain either when a distribution is in excess of
basis or, more likely, when a shareholder redeems shares.
Each Fund's ability to dispose of portfolio securities may be
limited by the requirement for qualification as a regulated investment company
that less than 30% of a Fund's gross income be derived from the disposition of
securities held for less than three months. Under proposed legislation, such
30-percent test will be repealed. However, there can be no assurance that such
legislation will be enacted, or if enacted, as to its effective date.
Dividends distributed by a Fund will be eligible for the
dividends-received deduction available to corporate shareholders only to the
extent of the portion of the Fund's gross income which consists of dividends
received on equity securities issued by domestic corporations with respect to
which such Fund meets the same holding period, risk of loss, and borrowing
limitations applicable to the Fund's shareholders. Section 246 of the Code
generally permits the dividends-received deduction to corporate shareholders
only if the shares with respect to which the dividends were paid have
-68-
<PAGE>
been held for more than 45 days. If the holding period is not satisfied, the
dividends-received deduction is disallowed, regardless of whether the shares
with respect to which the dividends were paid have been sold or otherwise
disposed of. The holding period requirements are separately applicable to each
block of shares acquired, including each block of shares received in payment of
the Fund's dividends. The Internal Revenue Service ("IRS") has specific
regulations governing the identification of shares to be redeemed by a
shareholder that wishes to redeem some, but not all, of its shares. For purposes
of determining whether this holding period requirement has been met, the day of
acquisition and any day after the first 45 days after the date on which such
shares become ex-dividend must be disregarded. In addition, the holding period
is suspended during periods in which the stock is subject to diminished risk of
loss including, for example, because the holder has acquired a put option or
sold a call option (other than certain covered call options where the exercise
price is not substantially below the selling price) or otherwise hedged his
position.
Under proposed legislation, a corporate shareholder would not be
entitled to a dividends-received deduction for dividends paid or accrued after
the 30th day after the date of the enactment of the legislation unless the 45
day holding period were satisfied over a period immediately before or
immediately after the shareholder became entitled to receive the dividend. Under
the Senate bill, a transition rule provides that the provision will not apply to
dividends received within two years of the date of enactment if
-69-
<PAGE>
(1) the dividend is paid with respect to stock held on June 8, 1997, and all
times thereafter until the dividend is received; (2) the stock is continuously
subject to a diminished risk of loss (as described above) on June 8, 1997, and
all times thereafter until the dividend is received; and (3) such stock and
related position is identified by the taxpayer within 30 days after enactment of
the legislation. There can be no assurance that such legislation will be
enacted, or if enacted, as to the date of such enactment.
The dividends-received deduction will also be reduced, for
shareholders who incur indebtedness that is directly attributable to the
purchase of shares, by the percentage of the cost of such shares. Such reduction
depends on the particular facts and circumstances of each situation and
accordingly shareholders are urged to consult their tax advisers.
Under section 1059 of the Code, a corporation which receives
an "extraordinary dividend" and disposes of the stock with respect to which such
dividend was paid is required to reduce its basis in such stock (but not below
zero) by the amount of the dividend which was not taxed because of the
dividends-received deduction, with such basis reduction generally being treated
as having occurred immediately before the sale or disposition of such stock
unless such stock has not been held for at least two years prior to the date of
declaration, announcement or agreement about the extraordinary dividend. To the
extent such untaxed amount exceeds the shareholder's basis, such excess will be
taxed as gain upon sale or disposition of such stock. An extraordinary dividend
generally is any dividend that
-70-
<PAGE>
equals or exceeds 10% of the shareholder's basis in the stock (5% in the case of
preferred stock). For this purpose, generally, all dividends having ex-dividend
dates within any 85-day period and, if such dividends total more than 20% of the
shareholder's basis in its stock, all dividends having ex-dividend dates within
one year, must be aggregated. The shareholder may elect to determine the status
of extraordinary dividends by reference to the fair market value of the stock as
of the date before the ex-dividend date, rather than by reference to the
adjusted basis of such stock (provided the shareholder establishes the fair
market value to the satisfaction of the Commissioner of the IRS). In determining
whether the above mentioned two-year holding period has been met, the same rules
apply as are applicable to the 45-day holding period requirement for the
dividends-received deduction.
Each Fund intends to declare and pay dividends and capital
gains distributions so as to avoid imposition of the 4% Federal excise tax
referred to above. Accordingly, each Fund expects to distribute during the
calendar year an amount at least equal to the sum of (i) 98% of its calendar
year net investment income, (ii) 98% of its capital gain net income (the excess
of short and long-term capital gain over short and long-term capital loss) for
each one-year period ending October 31, and (iii) 100% of any undistributed net
investment income or capital gain from the prior year which has not been
distributed by such Fund. Dividends declared in October, November, or December
and made payable to shareholders of record in such a month would be deemed paid
by a Fund and taxable to its
-71-
<PAGE>
shareholders on December 31 of such year provided that such dividends are
actually paid during or before January of the following year. A Fund may make a
deemed distribution with respect to its net capital gain by paying the tax with
respect to the net capital gain and then designating, but not distributing, all
or a portion of such gain as a capital gain dividend. Such Fund's shareholders
will treat such designated amounts as net capital gain on their income tax
returns, but will receive a credit or refund equal to Federal income taxes paid
by such Fund with respect to such capital gains. In addition, shareholders will
increase their basis in the Fund's shares by 65% of the amount subject to tax.
If a capital gain dividend is paid with respect to any shares of a Fund which
are sold at a loss after being held for less than six months, any loss realized
upon the sale of such shares will be treated as long-term capital loss to the
extent of such capital gain dividend. There are special rules for determining
holding periods for the purpose of the preceding sentence.
Some of the investment practices of the Growth Fund, Small
Company Value Fund and the Growth and Income Fund are subject to special
provisions that, among other things, may defer the use of certain losses of such
Funds and affect the holding period of the securities held by the Funds and the
character of the gains or losses realized. These provisions may also require the
Growth Fund, the Small Company Value Fund and the Growth and Income Fund to mark
to market some of the positions in its portfolio (i.e., treat them as if they
were closed out), which may cause such Funds to recognize income without
receiving cash with which to make distributions in amounts
-72-
<PAGE>
necessary to satisfy the distribution requirements for qualification as a
regulated investment company and for avoiding income and excise taxes. Each Fund
will monitor its transactions and may make certain tax elections in order to
mitigate the effect of these rules and prevent disqualification of the Fund as a
regulated investment company.
Dividend and interest income from non-U.S. equity and debt
securities may be subject to a withholding tax imposed by the country in which
the issuer is located. Each Fund expects to claim a deduction or foreign tax
credit with respect to any such withholding tax, to the extent allowable under
the Code, regulations thereunder, or an applicable treaty. Since Winthrop's
investment policies would preclude it from investing more than 50% of the value
of the total assets of any Fund in non-U.S. equity and debt securities,
shareholders are not expected to be eligible for a pass-through of the credit
for foreign taxes paid.
For shareholders' Federal income tax purposes, distributions
to shareholders out of tax-exempt interest income (less expenses applicable
thereto) earned by the Municipal Trust Fund are not subject to Federal income
tax if, at the close of each quarter of the Municipal Trust Fund's taxable year,
at least 50% of the value of the Municipal Trust Fund's total assets consists of
tax-exempt obligations. The Municipal Trust Fund intends to meet this
requirement. However, under current tax law, some individuals and corporations
may be subject to an alternative minimum tax (the "AMT") with respect to their
receipt of certain distributions of tax-exempt
-73-
<PAGE>
interest income from the Municipal Trust Fund. Distributions out of taxable
interest income, other investment income, and short-term capital gains are
taxable to shareholders as ordinary income. Since the Municipal Trust Fund's
investment income is derived from interest rather than dividends, no portion of
such distributions is eligible for the dividends-received deduction available to
corporations. Long-term capital gains, if any, distributed by the Municipal
Trust Fund to a shareholder are taxable to the shareholder as long-term capital
gain, regardless of the length of time the shareholder may have held the
Municipal Trust Fund shares.
Each fund is required to withhold and remit to the U.S.
Treasury 31% of the dividends or proceeds of any redemptions or exchanges of
shares with respect to any shareholder who fails to furnish Winthrop with a
correct taxpayer identification number, who has been notified by the U.S.
Treasury that he or she has under-reported dividend or interest income or who
fails to certify to Winthrop that he or she is not subject to such withholding.
An individual's tax identification number is generally his or her social
security number.
Shareholders will be notified annually by the Funds as to the
Federal tax status of dividends and distributions paid during the calendar year.
Dividends and distributions may also be subject to state and local taxes. State
and local tax treatment may vary according to applicable laws.
The foregoing discussion is a general summary of certain
current federal income tax laws regarding the Funds and relates
-74-
<PAGE>
solely to the application of that law to (i) citizens or residents of the United
States, (ii) domestic corporations or partnerships, or (iii) entities otherwise
subject to U.S. taxation on a net income basis. The discussion does not purport
to deal with all of the Federal income tax consequences applicable to the Funds,
or to all categories of investors, some of whom may be subject to special rules.
Each prospective and current shareholder should consult with his or her own
professional tax adviser regarding federal, state and local tax consequences of
ownership of shares of the Funds.
-75-
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to the general supervision of the Board of Trustees of
Winthrop, the Adviser is responsible for the investment decisions and the
placing of the orders for portfolio transactions for Winthrop. Portfolio
transactions for the Municipal Trust Fund and the Fixed Income Fund occur
primarily with issuers, underwriters or major dealers acting as principals,
while transactions for the Growth Fund, the Small Company Value Fund and the
Growth and Income Fund are normally effected by brokers.
Winthrop has no obligation to enter into transactions in
portfolio securities with any broker, dealer, issuer, underwriter or other
entity. In placing orders, it is the policy of Winthrop to obtain the best price
and execution for its transactions. Where best price and execution may be
obtained from more than one broker or dealer, the Adviser may, in its
discretion, purchase and sell securities through brokers and dealers who provide
research, statistical and other information to the Adviser. Such services may be
used by the Adviser for all of its investment advisory accounts, and
accordingly, not all such services may be used by the Adviser in connection with
Winthrop. If Winthrop determines in good faith that the amount of transaction
costs charged by a broker or dealer is reasonable in relation to the value of
the brokerage and research and statistical services provided by the executing
broker or dealer,
-76-
<PAGE>
Winthrop may utilize such broker or dealer although the transaction costs of
another broker or dealer are lower. The supplemental information received from a
broker or dealer is in addition to the services required to be performed by the
Adviser under the Investment Advisory Agreement, and the expenses of the Adviser
will not necessarily be reduced as a result of the receipt of such information.
Neither Winthrop nor the Adviser has entered into agreements
or understandings with any broker or dealer regarding the placement of
securities transactions. Because of research or information to the Adviser for
use in rendering investment advice to Winthrop, such information may be supplied
at no cost to the Adviser and, therefore, may have the effect of reducing the
expenses of the Adviser in rendering advice to Winthrop. While it is impossible
to place an actual dollar value on such investment information, its receipt by
the Adviser probably does not reduce the overall expenses of the Adviser to any
material extent.
The investment information provided to the Adviser is of the
types described in Section 28(e)(3) of the Securities Exchange Act of 1934 and
is designed to augment the Adviser's own internal research and investment
strategy capabilities. Research and statistical services furnished by brokers
through which Winthrop effects securities transactions are used by the Adviser
in carrying out its investment management responsibilities with respect to all
its client accounts but not all such services may be utilized by the Adviser in
connection with Winthrop.
-77-
<PAGE>
The Growth Fund, the Small Company Value Fund and the Growth
and Income Fund may deal in some instances in equity securities which are not
listed on a national securities exchange but are traded in the over-the-counter
market. In addition, most transactions for the Municipal Trust Fund and the
Fixed Income Fund are executed in the over-the-counter market. Where
transactions are executed in the over-the-counter market, Winthrop seeks to deal
with the primary market-makers; but when necessary in order to obtain the best
price and execution, it utilizes the services of others. In all cases, Winthrop
will attempt to negotiate best execution.
Winthrop may from time to time place orders for the purchase
or sale of securities (including listed call options) with DLJ Securities,
Winthrop's Distributor, or other affiliates in accordance with the provisions of
Section 11(a) of the Securities Exchange Act of 1934 referred to below. With
respect to orders placed with DLJ Securities for execution on a national
securities exchange, commissions received must conform to Section 17(e)(2)(A) of
the Investment Company Act of 1940 and Rule 17e-1 thereunder, which permit an
affiliated person of a registered investment company (such as Winthrop), or any
affiliated person of such person, to receive a brokerage commission from such
registered investment company provided that such commission is reasonable and
fair compared to the commissions received by other brokers in connection with
comparable transactions involving similar securities during a comparable period
of time.
-78-
<PAGE>
Pursuant to Section 11(a) of the Securities Exchange Act of
1934, DLJ Securities and its affiliates are restricted as to the nature and
extent of the brokerage services they may perform for Winthrop. The Securities
and Exchange Commission has adopted rules under Section 11(a) which permit an
investment adviser to a registered investment company, or the adviser's
affiliates, to receive compensation for effecting, on a national securities
exchange, transactions in portfolio securities of such investment company,
including causing such transactions to be transmitted, executed, cleared and
settled and arranging for unaffiliated brokers to execute such transactions.
To the extent permitted by such rule, DLJ Securities and its
affiliates may receive compensation relating to transactions in portfolio
securities of Winthrop provided that Winthrop enters into a written agreement,
as required by such rules, with that firm authorizing it to retain compensation
for such services. The Trustees of Winthrop have granted authorization
conforming to the requirements of Section 11(a) to the Adviser to effect
transactions in portfolio securities of Winthrop through its affiliates, DLJ
Securities and Autranet, Inc.
The Growth Fund incurred brokerage commissions of $53,166,
$124,640 and $87,799 during its fiscal years ended October 31, 1994, 1995 and
1996 of which $12,491, $20,641, and $427, respectively, or approximately 23.5%,
$16.6% and .5%, respectively, was paid to Autranet, Inc. In the fiscal year
ended October 31, 1996, the Growth Fund effected .8% of the aggregate dollar
amount of transactions
-79-
<PAGE>
involving the payment of commissions through Autranet, Inc. In addition, of the
brokerage commissions incurred in 1995 and 1996, $63,217 and $49,673,
respectively, or approximately 50.7% and 56.6%, respectively, was paid to
Donaldson, Lufkin & Jenrette Securities Corporation which accounted for 59.1%
and 64.4%, respectively, of the aggregate dollar amount of transactions
involving the payment of commissions.
For the fiscal years ended October 31, 1996, 1995 and 1994,
the Small Company Value Fund incurred brokerage commissions of $323,577,
$248,826, and $216,506 respectively, of which $45,893, $31,035, and $28,518 or
approximately 14.2%, 12.5% and 13.2%, respectively, was paid to Autranet, Inc.
In the fiscal year ended October 31, 1996, the Small Company Value Fund effected
13.3% of the aggregate dollar amount of transactions involving the payment of
commissions through Autranet, Inc.
For the fiscal years ended October 31, 1996, 1995 and 1994,
the Growth and Income Fund incurred brokerage commissions of $110,073, $85,577,
and $47,707, respectively, of which $26,317, $33,120, and $13,152, or
approximately 23.9%, 38.7% and 27.6%, respectively, was paid to Autranet, Inc.
In the fiscal year ended October 31, 1996, the Growth and Income Fund effected
22.8% of the aggregate dollar amount of transactions involving the payment of
commissions through Autranet, Inc.
-80-
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
Presented below is certain performance information with
respect to an investment in Class A shares and Class B shares of beneficial
interest of the Funds. Prior to February 28, 1996, Class A shares were not
offered. Accordingly, the information presented below with respect to Class A
shares has been obtained from the financial statements for the Funds' prior
fiscal years.
Computation of Winthrop's Average Annual Total Return
The average annual total return of Class A shares for the one,
five and ten year periods ended April 30, 1997 was 13.90%, 11.68% and 9.43% for
the Growth Fund and (.47)%, 5.18% and 7.27%% for the Fixed Income Fund,
respectively. The average annual total return of Class A shares for the one,
five and ten year periods ended April 30, 1997 for the Small Company Value Fund
(which was previously named the Aggressive Growth Fund and which includes its
predecessor, the Neuwirth Fund, Inc.) and the Growth and Income Fund (which
includes its predecessor, the Pine Street Fund, Inc.) was 2.91%, 13.13% and
10.53% for the Small Company Value Fund and 14.84%, 14.14% and 10.48% for the
Growth and Income Fund. The average annual total return of Class A shares for
the one year period ended April 30, 1997 for the Municipal Trust Fund was .64%
and 2.68% for the period July 28, 1993 (commencement of operations) through
April 30, 1997. The average annual total return for Class B shares for the one
year period ended
-81-
<PAGE>
April 30, 1997 was 14.74%, (.73)%, 3.38%, 15.75% and (1.02)% and for the period
February 28, 1996 (commencement of offering of Class B shares) through April 30,
1997 was 14.61%, .10%, 6.53%, 14.46% and .01%, for the Growth Fund, the Fixed
Income Fund, the Small Company Value Fund, the Growth and Income Fund and the
Municipal Trust Fund, respectively. These amounts were computed by assuming a
hypothetical initial investment of $1,000. It was then assumed that all of the
dividends and distributions by each of the Funds over the relevant time periods
were reinvested. It was then assumed that with respect to Class A shares, the
maximum initial sales charge of 4.75% was deducted at the time of investment
and, with respect to Class B shares, at the end of these periods, the entire
amount was redeemed and the appropriate sales load, if any, was deducted. With
respect to the Class B shares, for the period February 28, 1996 (commencement of
offering of Class B shares) to April 30, 1997, the applicable deferred sales
load charged was 3% for each of the Growth Fund, Fixed Income Fund, Small
Company Value Fund, the Growth and Income Fund and the Municipal Trust Fund. The
average annual total return was then calculated by using the annual rate
required for the initial payment to grow to the amount which would have been
received upon redemption (i.e., the average annual compounded rate of return).
The results shown should not be considered an indication of future performance
from an investment in the Winthrop Fund today.
Computation of the Fixed Income Fund's and Municipal Trust Fund's 30-
Day Yield Quotation
-82-
<PAGE>
The 30-day yield for each of the Fixed Income Fund and the
Municipal Trust Fund for the period ended April 30, 1997 was with respect to
Class A shares, 5.66% and 4.49%, respectively and, with respect to Class B
shares, 5.24% and 4.02%, respectively. The Fund's yield is based on a 30-day
period and is computed by dividing the net investment income per share earned
during the period by the maximum offering price per share on the last day of the
period, according to the following formula:
YIELD = 2[(a-b/cd+1)6-1]
Where: a = dividends and interest earned during the
period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends.
d = the maximum offering price per share on the
last day of the period.
-83-
<PAGE>
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Organization and Capitalization
The Trust was formed on November 26, 1985 as a "business
trust" under the laws of The Commonwealth of Massachusetts. Under Massachusetts
law, shareholders of a business trust, unlike shareholders of a corporation,
could be held personally liable as partners for the obligations of the trust
under certain circumstances. The Amended and Restated Agreement and Declaration
of Trust, however, provides that shareholders of Winthrop shall not be subject
to any personal liability for the acts or obligations of Winthrop and that every
written obligation, contract, instrument or undertaking made by Winthrop shall
contain a provision to that effect. Upon payment of any liability, the
shareholder will be entitled to reimbursement from the general assets of the
appropriate Fund. The Trustees intend to conduct the operation of Winthrop, with
the advice of counsel, in such a way as to avoid, to the extent possible,
ultimate liability of the shareholders for liabilities of Winthrop.
The Amended and Restated Agreement and Declaration of Trust
further provide that no Trustee, officer, employee or agent of Winthrop is
liable to Winthrop or to a shareholder, nor is any Trustee, officer, employee or
agent liable to any third persons in connection with the affairs of Winthrop,
except as such liability may
-84-
<PAGE>
arise from his or its own bad faith, willful misfeasance, gross negligence or
reckless disregard of his or its duties. It also provides that all third
parties shall look solely to the property of Winthrop or the property of the
appropriate Fund for satisfaction of claims arising in connection with the
affairs of Winthrop or of the particular Fund, respectively. With the exceptions
stated, the Amended and Restated Agreement and Declaration of Trust permits the
Trustees to provide for the indemnification of Trustees, officers, employees or
agents of Winthrop against all liability in connection with the affairs of
Winthrop.
All shares of Winthrop when duly issued will be fully paid and
non-assessable. The Trustees are authorized to re-classify and issue any
unissued shares to any number of additional series or classes without
shareholder approval. Accordingly, the Trustees in the future, for reasons such
as the desire to establish one or more additional Funds with different
investment objectives, policies or restrictions, may create additional series or
classes of shares. Any issuance of shares of such additional series or classes
would be governed by the Investment Company Act of 1940 and the laws of The
Commonwealth of Massachusetts.
Counsel and Auditors
Sullivan & Cromwell, 125 Broad Street, New York, New York
10004, serves as legal counsel for Winthrop.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, have been appointed as independent auditors for Winthrop.
-85-
<PAGE>
Additional Information
This Statement of Additional Information does not contain all
the information set forth in the Registration Statement filed by Winthrop with
the Securities and Exchange Commission under the Securities Act of 1933. Copies
of the Registration Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the offices of the Commission
in Washington, D.C.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Winthrop's financial statements are incorporated by reference
to Winthrop's Annual Report to Shareholders for the year ended October 31, 1996
and to Winthrop's Semi-Annual Report to Shareholders for the period ended
April 30, 1997, each of which was filed with the Securities and Exchange
Commission.
-86-
<PAGE>
APPENDIX
SECURITIES RATINGS
Bond Ratings
Municipal and Corporate Bonds. The four highest ratings of
Moody's Investors Service, Inc. ("Moody's") for municipal corporate bonds are
Aaa, Aa, A and Baa. Bonds rated Aaa are judged by Moody's to be of the best
quality. Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. Moody's states that Aa bonds are rated lower than the best
bonds because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat larger
than in Aaa securities. Bonds which are rated A are judged by Moody's to possess
many favorable investment attributes and are considered "upper medium grade
obligations". Factors giving security to principal and interest of A-rated bonds
are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Bonds rated Baa are
considered as medium grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time.
A-1
<PAGE>
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well. The generic ratings Aa through Baa may be
modified by the addition of the numerals 1, 2 or 3. The modifier 1 indicates
that the security ranks in the higher end of the rating category; the modifier 2
indicates a mid-range rating; and the modifier 3 indicates that the issue ranks
in the lower end of such rating category.
Moody's highest rating for short-term municipal loans is
MIG-1. Moody's states that short-term municipal securities rated MIG-1 are of
the best quality, enjoying strong protection from established cash flows of
funds for their servicing and broad-based access to the market for refinancing,
or both. Loans bearing the MIG-2 designation are judged to be of high quality,
with margins of protection ample although not so large as in the MIG-1 group.
The four highest ratings of Standard & Poor's Ratings Group
("S&P") for municipal and corporate bonds are AAA, AA, A and BBB. Bonds rated
AAA have the highest rating assigned by S&P to a debt obligation and indicate an
extremely strong capacity to pay interest and repay principal. Bonds rated AA
also qualify as high-quality debt obligations and have a very strong capacity to
pay interest and repay principal and in the majority of instances differ from
AAA issues only in a small degree. Bonds rated A have a strong capacity to pay
interest and repay principal although they are
A-2
<PAGE>
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions than bonds in higher rated categories. The BBB rating, which
is the lowest "investment grade" security rating of S&P, indicates an adequate
capacity to pay principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the A category. The ratings AA through
BBB may be modified by the addition of a plus (+) or minus (-) sign to show
relative standing within such rating categories.
Notes rated SP-1 have a very strong capacity to pay principal
and interest. Those issues determined by S&P to possess overwhelming safety
characteristics are given an SP-1+ rating. Notes rated SP-2 have a satisfactory
capacity to pay principal and interest. Notes rated SP-3 have a speculative
capacity to pay principal and interest. The rating scale for notes is closely
related to long-term bond ratings; notes rated SP-1+ compare with bonds rated
AAA, AA+, AA and AA-; notes rated SP-1 compare with bonds rated A+, A and A-;
and notes rated SP-2 compare with bonds rated BBB+, BBB and BBB-.
Other Municipal Securities and Commercial Paper
"Prime-1" is the highest rating assigned by Moody's
for other short-term municipal securities and commercial
A-3
<PAGE>
paper, and "A-1+" and "A-1" are the two highest ratings for commercial paper
assigned by S&P (S&P does not rate short-term tax-free obligations). Moody's
uses the numbers 1, 2 and 3 to denote relative strength within its highest
classification of "Prime", while S&P uses the numbers 1+, 1, 2 and 3 to denote
relative strength within the highest classification of "A". Issuers rated
"Prime" by Moody's have the following characteristics: their short-term debt
obligations carry the smallest degree of investment risk, margins or support for
current indebtedness are large or stable with cash flow and asset protection
well assured, current liquidity provides ample coverage of near-term liabilities
and unused alternative financing arrangements are generally available. While
protective elements may change over the intermediate or longer term, such
changes are most unlikely to impair the fundamentally strong position of
short-term obligations. Commercial paper issuers rated "A" by S&P have the
following characteristics: liquidity ratios are better than industry average,
long-term debt rating is A or better, the issuer has access to at least two
additional channels of borrowing, and basic earnings and cash flow are in a
upward trend. Typically, the issuer is a strong company, is in a
well-established industry and has superior management.
A-4
<PAGE>
PART C
Other Information
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Included in the Prospectus:
Financial Highlights
Included in Part B of this Registration Statement by
reference to the Funds' SemiAnnual Report to Shareholders
for the period ended April 30, 1997 (unaudited):
Statement of Investments, April 30, 1997
Statement of Assets and Liabilities, April 30, 1997
Statement of Operations for the Period Ended April 30,
1997
Statement of Changes in Net Assets for the Year Ended
October 31, 1996, and the Period Ended April 30,
1997
Notes to Financial Statements
Financial Highlights
Report of Ernst & Young LLP, Independent Auditors
Included in Part B of this Registration Statement by reference
to the Funds' Annual Report to Shareholders for the year ended
October 31, 1996:
Statement of Investments, October 31, 1996
Statement of Assets and Liabilities, October 31, 1996
Statement of Operations for the Year Ended October 31,
1996
Statement of Changes in Net Assets for the Years Ended
October 31, 1995 and October 31, 1996
Notes to Financial Statements
Financial Highlights
Report of Ernst & Young LLP, Independent Auditors
Included In Part C of the Registration Statement:
None
(b) Exhibits
(1) (a) Amended and Restated Declaration of Trust(10)
(b) Amendment to Amended and Restated
Declaration of Trust(12)
(2) Bylaws(1)
(3) Not Applicable
(4) Specimen Stock Certificates
a. Growth Fund and Fixed Income Fund(2)
b. Aggressive Growth Fund(3)
c. Growth and Income Fund(4)
d. Municipal Trust Fund(8)
(5) Investment Advisory Contract
a. Growth Fund, Fixed Income Fund, Aggressive
Growth Fund and Growth and Income Fund(3)
b. Municipal Trust Fund(9)
(6) Distribution Agreement dated as of February
25, 1996(11)
(7) Not Applicable
(8) Custodial Services Agreement(5)
(9) Shareholder Services Agreement(5)
(10) Legal Opinion(2)
(11) Consent of Independent Auditors*
<PAGE>
(12) Not Applicable
(13) Investment Representation Letter(6)
(14) Prototype Retirement Plans(7)
(15) Rule 12b-1 Plan
a. Aggressive Growth Fund - Class A Plan(11)
b. Aggressive Growth Fund - Class B Plan(11)
c. Growth and Income Fund - Class A Plan(11)
d. Growth and Income Fund - Class B Plan(11)
e. Growth Fund - Class A Plan(11)
f. Growth Fund - Class B Plan(11)
g. Fixed Income Fund - Class A Plan(11)
h. Fixed Income Fund - Class B Plan(11)
i. Municipal Trust Fund - Class A Plan(11)
j. Municipal Trust Fund - Class B Plan(11)
(16) Schedules for Computation of Performance
Quotation(10)
(18) Rule 18F-3 Plan(10)
- ------------
(1) Incorporated herein by reference to Registration Statement of Winthrop
Focus Funds on Form N-1A (File No. 3706) filed March 4, 1986.
(2) Incorporated herein by reference to Pre-Effective Amendment No. 2 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
3706) filed on November 3, 1986.
(3) Incorporated herein by reference to Post-Effective Amendment No. 8 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
3706) filed on February 24, 1992.
(4) Incorporated herein by reference to Post-Effective Amendment No. 7 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
3706) filed on February 3, 1992.
(5) Incorporated herein by reference to Post-Effective Amendment No. 9 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
3706) filed on December 31, 1992.
(6) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
3706) filed on October 21, 1986.
(7) Incorporated herein by reference to Post-Effective Amendment No. 2 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
3706) filed on February 26, 1988.
(8) Incorporated herein by reference to Post-Effective Amendment No. 10 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File
No. 3706) filed on April 22, 1993.
(9) Incorporated herein by reference to Post-Effective Amendment No. 12
to Registration Statement of Winthrop Focus Funds on Form N-1A (File
No. 3706) filed on January 28, 1994.
(10) Incorporated herein by reference to Post-Effective Amendment No. 14
to Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
33-3706) filed via EDGAR on December 29, 1995.
(11) Incorporated herein by reference to Post-Effective Amendment No. 15 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
33-3706) filed via EDGAR on December 31, 1996.
(12) Incorporated herein by reference to Post-Effective Amendment No. 16 to
Registration Statement of Winthrop Focus Funds on Form N-1A (File No.
33-3706) filed via EDGAR on February 20, 1997.
* Filed herewith.
<PAGE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable
Item 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of June 30, 1997
-------------- -------------------
<S> <C>
Growth Fund Shares Class A: 2,969
par value $.01 per shares Class B: 561
Aggressive Growth Fund Shares Class A: 9,219
par value $.01 per share Class B: 1,1256
Fixed Income Fund Shares Class A: 1,253
par value $.01 per share Class B: 163
Growth and Income Fund Shares Class A: 4,401
par value $.01 per share Class B: 924
Municipal Trust Fund Shares Class A: 415
par value $.01 per share Class B: 23
</TABLE>
Item 27. INDEMNIFICATION
Registrant's Amended and Restated Agreement and Declaration of Trust
provides that the Trust (or the appropriate Fund) shall indemnify each person
who is or has been a trustee or officer of the Trust (including persons who
serve, or have served, at the Trust's request as directors, officers or trustees
of another organization in which the Trust has any interest as a
shareholder,creditor or otherwise) against all liabilities, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable accountants' and counsel fees,
incurred in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or legislative body, in which such person may be or may have been threatened,
while in office or thereafter, by reason of being or having been such a person,
except with respect to any matter as to which it has been determined that such
person (i) did not act in good faith in the reasonable belief that his action
was in or not opposed to the best interests of the Trust or (ii) had acted with
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The Advisory Agreement between Registrant and Wood, Struthers &
Winthrop Management Corp. provides that Wood, Struthers & Winthrop Management
Corp. will not be liable thereunder for any mistake of
<PAGE>
judgment or in any event whatsoever except for lack of good faith and that
nothing therein shall be deemed to protect Wood, Struthers & Winthrop Management
Corp. against any liability to Registrant or its security holders to which it
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties thereunder, or by reason of reckless
disregard of its duties and obligations thereunder.
The Distribution Services Agreement between the Registrant and
Donaldson, Lufkin & Jenrette Securities Corporation provides that Registrant
will indemnify, defend and hold Donaldson, Lufkin & Jenrette Securities
Corporation, and any other person who controls it within the meaning of Section
15 of the Investment Company Act of 1940, free and harmless from and against any
and all claims, demands, liabilities and expenses which Donaldson, Lufkin &
Jenrette Securities Corporation or any controlling person may incur arising out
of or based upon any alleged untrue statement of a material fact contained in
Registrant's Registration Statement, Prospectus or Statement of Additional
Information or arising out of, or based upon any alleged omission to state a
material fact required to be stated in any one of the foregoing or necessary to
make the statements in any one of the foregoing not misleading.
The foregoing summaries are qualified by the entire text of
Registrant's Agreement and Declaration of Trust, the Advisory Agreement between
Registrant and Wood, Struthers & Winthrop Management Corp. and the Distribution
Services Agreement between Registrant and Donaldson, Lufkin & Jenrette
Securities Corporation. The Registrant's Amended and Restated Agreement and
Declaration of Trust is filed herewith. The Advisory Agreement and Distribution
Services Agreement are incorporated by reference herein as Exhibits 5 and 6, in
response to Item 24.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
trustees,officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Equitable Life Assurance Society of the United States (the parent
of Adviser's parent) carries for itself and its subsidiaries Directors and
Officers Liability Insurance. Coverage under this policy has been extended to
directors and officers of the investment companies managed by Wood, Struthers &
Winthrop Management Corp. Under this policy, outside directors would be covered
up to the limits specified for any claim against them for acts committed in
their capacities as members of the Board.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The description of Wood, Struthers & Winthrop Management Corp. under
the caption "Management" in the Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively, of this Registration
Statement are incorporated by reference herein.
The following are Directors and Officers of the Adviser including
their other business connections which are of a substantial nature.
POSITION WITH OTHER BUSINESS
NAME THE ADVISER CONNECTION
---- ----------- -----------
<PAGE>
G. Moffett Chairman of the Board Director of Palmer
Cochran and President National Bank; President
of Winthrop Focus Funds. and Chairman
Martin Jaffe Managing Director, Chief President, International
Operating Officer and Association for Financial
Treasurer Planning, New York
Vice President, Secretary Chapter;
and Treasurer of Winthrop
Focus Funds; Vice President
of Donaldson Lufkin &
Jenrette Securities
Corporation.
Guy S. Waltman Vice Chairman Chairman, Winthrop
Company Trust
Thomas E. Siegler Secretary
Item 29. PRINCIPAL UNDERWRITERS
(a) Donaldson, Lufkin & Jenrette Securities Corporation, the
Registrant's Distributor (Underwriter) also acts as Distributor for the
following investment companies:
None
(b) The following are the Directors and Officers of Donaldson,
Lufkin & Jenrette Securities Corporation, none of whom hold
any post or office with the Registrant. Donaldson, Lufkin and
Jenrette Securities Corporation's principal place of business
is 277 Park Avenue, New York, New York 10272.
(c) DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION OFFICERS AND
DIRECTORS
OFFICE
------
John S. Chalsty Director, Chairman of the Board and Chief Executive
Officer
Joe L. Ruby Director, President and Chief Operating Officer
Anthony F. Daddino Director, Executive Vice President and Chief
Financial Officer
<PAGE>
Hamilton E. James Director, Managing Director (Chairman - DLJ Banking
Group)
Richard S. Pechter Director, Managing Director (Chairman - DLJ
Financial Services Group)
Theodore P. Shen Director, Managing Director (Chairman - DLJ
Capital Markets Group)
Robert J. Albano Senior Vice President and Director of Compliance
and Regulatory Affairs
James L. Alexandre Senior Vice President (Managing Director -
Institutional Equities Division)
Michael M. Bendik Senior Vice President and Chief Accounting Officer
Rhodes R. Bobbitt Senior Vice President (Investment Services Group)
Richard Browne Senior Vice President (Managing Director - Pershing
Division)
Richard F. Brueckner Senior Vice President (Managing Director - Pershing
Division)
Van Vechten Burger, Jr. Senior Vice President (Chairman - Pershing
Division)
Joseph P. Bzezinski Senior Vice President (Managing Director -
Fixed Income Division)
Michael J. Campbell Senior Vice President (Managing Director -
Investment Services Group
Anthony R. Chidoni Senior Vice President (Managing Director -
Investment Services Group
Peter C. Cohan Senior Vice President (Managing Director - Pershing
Division)
Mark A. Compebello Senior Vice President and Tax Manager
Kathleen Daly Senior Vice President (Administrative Division)
Vincent DeGiaimo Senior Vice President (Managing Director -
Investment Banking)
John M. Diamantis Senior Vice President (Pershing Division)
Robert W. Diemer Senior Vice President (Chief Finacial Officer -
and Managing Director - Pershing Division)
Joseph D. Donnelly Senior Vice President and Associate General
Counsel (Managing Director/General Counsel -
Pershing Division)
<PAGE>
Matthew C. Donner Senior Vice President (Investment Services Group)
Michael A. Dreitlein Senior Vice President (Managing Director - Pershing
Division)
Stuart S. Flamberg Senior Vice President and Director of Taxes
John A. Friel Senior Vice President (Managing Director - Fixed
Income Division)
Roy A. Garman Senior Vice President and Controller
Theodore D. Galman Senior Vice President (Investment Services Group)
Gates H. Hawn Senior Vice President (Chief Operating Officer -
Pershing Division)
Charles J. Hendrickson Senior Vice President and Treasurer
Frank L. Hohmann, III Senior Vice President (Managing Director - Equity
Derivatives Division
Alan C. Jones Senior Vice President (Managing Director - Pershing
Division)
Todd N. Kanter Senior Vice President (Managing Director -
Investment Services Group)
Steve Laden Senior Vice President (Investment Services Group)
Eric T. Miller Senior Vice President (Institutional Equities
Division)
George J. Minnig Senior Vice President (Managing Director - Pershing
Division)
David S. Moore Senior Vice President (Managing Director -
Institutional Equities Division)
Garrett M. Moran Senior Vice President (Vice Chairman - Investment
Banking Division)
Eugene T. Pape Senior Vice President (Institutional Equities
Division)
Leon M. Pollack Senior Vice President (Managing Director - Fixed
Income Division)
Stephen M. Raeber Senior Vice President (Investment Services Group)
Richard W. Reinemann Senior Vice President (Managing Director - Pershing
Division)
Edward J. Resch Senior Vice President (Chief Finacial Officer -
Capital Markets Group)
<PAGE>
Stuart M. Robbins Senior Vice President (Managing Director -
Instututional Equities Division)
Peter O. Skoglund Senior Vice President (Investment Services Group)
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
OFFICERS AND DIRECTORS
----------------------
(c) Not Applicable
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The majority of accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of Wood, Struthers & Winthrop
Management Corp., 277 Park Avenue, New York, New York 10272 (see "Investment
Adviser" in the Prospectus). Additional records are maintained at the offices of
Citibank, N.A., the Registrant's Custodian, 111 Wall Street, New York, New York
10043.
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered, a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for the effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York and the State of New York on the 23rd
day of July, 1997.
Winthrop Focus Funds
By: G. Moffett Cochran*
------------------
G. Moffett Cochran
President
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
G. Moffet Cochran* President July 23, 1997
------------------
G. Moffet Cochran Chairman of the Board
/s/ Martin Jaffe Treasurer July 23, 1997
------------------
Martin Jaffe
Robert L. Bast* Trustee July 23, 1997
------------------
Robert L. Bast
James Engle* Trustee July 23, 1997
------------------
James Engle
John J. Halsey* Trustee July 23, 1997
------------------
John J. Halsey
Dennis Little Trustee July 23, 1997
------------------
Dennis Little
William H. Mathers* Trustee July 23, 1997
------------------
William H. Mathers
James L. McCabe* Trustee July 23, 1997
------------------
James L. McCabe
Carl B. Menges* Trustee July 23, 1997
------------------
Carl B. Menges
John J. Sheehan Trustee July 23, 1997
------------------
John J. Sheehan
William C. Simpson* Trustee July 23, 1997
------------------
William C. Simpson
<PAGE>
Stephen K. West* Trustee July 23, 1997
------------------
Stephen K. West
*By:
/s/ Martin Jaffe
----------------------------
Martin Jaffe
(Attorney-in-fact)
Pursuant to
Power of Attorney
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned has
constituted and appointed, and by these presents does constitute and appoint, G.
Moffet Cochran and Martin Jaffe, or either of them, the true and lawful agents
and attorneys-in-fact of each of the undersigned with respect to all matters
arising in connection with the filing with the Securities and Exchange
Commission of this Post-Effective Amendment No. 17 to the Registration Statement
under the Securities Act of 1933 and under the Investment Company Act of 1940 on
Form N-1A and any subsequent amendments to the Registration Statement with full
power and authority to execute and deliver for and on behalf of each of the
undersigned all such consents and documents in connection therewith as said
agents and attorneys-in-fact may deem advisable. Each of the undersigned hereby
gives to said agents and attorneys-in-fact full power and authority to act in
the premises, including, but not limited to, the power and authority to execute
and file with the Securities and Exchange Commission this Post-Effective
Amendment No. 17 to the Registration Statement on Form N-1A and any amendments
thereto, and/or other documents in connection therewith, and to appoint a
substitute or substitutes to act hereunder with the same power and authority as
said agents and attorneys-in-fact would have if personally acting. Each of the
undersigned hereby ratifies and confirms all that said agents and
attorneys-in-fact, or any substitute or substitutes, may do by virtue hereof.
This Power of Attorney may be signed in more than one counterpart,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
/s/ Carl B. Menges /s/ Robert L. Bast
- - ---------------------------------- --------------------------
Carl B. Menge Robert L. Bast
/s/ G. Moffett Cochran /s/ James A. Engle
- - ---------------------------------- --------------------------
G. Moffett Cochran James A. Engle
/s/ John J. Halsey /s/ Stig Host
<PAGE>
- - ---------------------------------- --------------------------
John J. Halsey Stig Host
/s/ Peter F. Krogh /s/ Dennis G. Little
- - ---------------------------------- -------------------------
/s/ Peter F. Krogh Dennis G. Little
/s/ William H. Mathers /s/ James L. McCabe
- - ---------------------------------- --------------------------
William H. Mathers James L. McCabe
/s/ John J. Sheehan /s/ William C. Simpson
- - ---------------------------------- --------------------------
John J. Sheehan William C. Simpson
/s/ Stephen K. West
- -----------------------------
Stephen K. West
Dated as of July 23, 1997
<PAGE>
Exhibit Index
-------------
A complete list of exhibits is included in Part C, Item 24(b) of the
registration Statement. The following exhibits are filed herewith:
Page
----
(11) Consent of Independent Auditors
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights" and General Information - Counsel and Auditors" and to the use of
our report dated December 13, 1996 incorporated by reference in this
Registration Statement (Form N-1A No. 33-3706) of Winthrop Focus Funds.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
July 23, 1997
