<PAGE>
As filed with the Securities and Exchange Commission on December 9, 1998
Registration No. 33-03706
Registration No. 811-04604
- --------------------------------------------------------------------------------
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. 19 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 20 /X/
(Check appropriate box or boxes)
WINTHROP FOCUS FUNDS
(Exact name of registrant as specified in charter)
277 Park Avenue
New York, New York 10172
(Address of Principal Executive Offices)
(212) 892-4000
(Registrant's Telephone Number, Including Area Code)
Brian A. Kammerer
One Pershing Plaza
10th Floor
Jersey City, New Jersey 07399
(Name and Address of Agent for Service)
Copy to:
Stephen K. West
125 Broad Street
New York, NY 10004
As soon as practicable after the effective date of the Registration Statement
(Approximate date of Proposed Public Offering)
It is proposed that this filing will become effective (check appropriate box)
/ / Immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b), or
/ / 60 days after filing pursuant to paragraph (a)(1)
/X/ on February 22, 1999 pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2), or
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
Title of Securities Being Registered........................shares of beneficial
interest $.01 par value
- -------------------------------------------------------------------------------
<PAGE>
DLJ Mutual Funds
Prospectus
February , 1999
DLJ FOCUS FUNDS
DLJ Growth Fund DLJ Growth and Income Fund DLJ Small Company Value Fund
DLJ Fixed Income Fund DLJ Municipal Trust Fund
DLJ OPPORTUNITY FUNDS
DLJ High Income Fund DLJ Developing Markets Fund DLJ International
Equity Fund
DLJ Municipal Money Fund DLJ U.S. Government Money Fund
This prospectus provides information about two separate series of Funds: the
DLJ Focus Funds and the DLJ Opportunity Funds. Each series has a number of
individual Funds. Each Fund has a separate investment objective and portfolio
of investments.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
An investment in any of the Funds is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
TABLE OF CONTENTS
Risk/Return Summary
Investment Objectives and Policies
Fund Management
How to Buy and Sell Shares
Other Shareholder Information
Dividend and Distribution Information
Taxes
Financial Highlights
For More Information
<PAGE>
RISK/RETURN SUMMARY
This part of the prospectus summarizes each Fund's investment objective,
principal investment strategies and principal risks. This section also contains
limited performance data. More information about the Funds is contained in
"Investment Objectives and Policies" and "Additional Information on Investment
Policies and Risks." Please read the entire prospectus carefully before
investing and save it for future reference.
DLJ FOCUS FUNDS
The DLJ GROWTH FUND's investment objective is long-term capital appreciation.
The Fund seeks to achieve the objective by investing in companies that offer
long-term appreciation. This Fund invests in common stock, securities
convertible into common stock and other equity securities of well known and
established companies. The Fund takes a long-term view of each stock it buys,
holding each company until its long-term growth potential no longer meets the
Fund's requirements. The Fund may also make an investment to earn income when
its Adviser believes that it will not compromise the investment objective.
Like any investment, an investment in the DLJ Growth Fund is subject
to risk and you could lose money. While investments are selected that the
Adviser believes will experience long-term appreciation, their value could
decline. The Fund is subject to risks that affect equity securities markets in
general, such as general economic conditions and adverse changes (generally
increases) in interest rates. These and other factors could adversely affect
your investment.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
During the 10-year period shown in the bar chart for Class A shares,
the highest return for a quarter was xx.x% (quarter ending [date] and
the lowest return for a quarter was xxx% (quarter ending [date]). The
annual returns do not include sales charges. If sales charges were
included, the annual returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ============================= ============================ ============================
Average Annual Total Returns One Year Past 5 years Past 10 years
(for the periods ending
December 31, 1998)
============================= ============================= ============================ ============================
<S> <C> <C> <C>
Growth Fund Class A % % %
Growth Fund Class B
============================= ============================= ============================ ============================
S & P 500* Xx.xx% xx.xx% xx.xx%
============================= ============================= ============================ ============================
2
<PAGE>
<FN>
*The S & P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices. The returns for the
S&P 500 do not include any sales charges, fees or other expenses.
</TABLE>
The DLJ GROWTH AND INCOME FUND's investment objective is long-term capital
appreciation and continuity of income. The Fund seeks to achieve this objective
by investing in dividend paying common stock and by diversifying its
investments among different industries and different companies. Securities are
selected on the basis of their investment merit and their potential for
appreciation in value and/or income. A portion of the Fund is invested in debt
securities that are of investment-grade quality, U.S. Government securities,
and money market instruments. There is no fixed proportion of the DLJ Growth
and Income Fund's assets that must be invested in any particular type of
securities.
Like any investment, an investment in the DLJ Growth and Income Fund
is subject to risk and you could lose money. While the Fund seeks investments
that will appreciate in value and/or provide income, the Adviser could select
securities that will decline in value and provide no income. The Fund is also
subject to risks that affect equity securities markets in general, such as
general economic conditions and adverse changes (generally increases) in
interest rates. These and other factors could adversely affect your investment.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
During the 10-year period shown in the bar chart for Class A shares,
the highest return for a quarter was xx.x% (quarter ending [date]) and
the lowest return for a quarter was xx.x% (quarter ending [date]). The
annual returns do not include sales charges. If sales charges were
included, the annual returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ============================= ============================ ============================
Average Annual Total Returns
(for the periods ending
December 31, 1998)
Past One Year Past 5 years Past 10 years
============================= ============================= ============================ ============================
<S> <C> <C> <C>
Growth and Income Fund % % %
Class A
Growth and Income Fund
Class B
============================= ============================= ============================ ============================
S & P 500* % % %
============================= ============================= ============================ ============================
3
<PAGE>
<FN>
*The S & P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices. The returns for the
S&P 500 do not include any sales charges, fees or other expenses.
</TABLE>
The DLJ SMALL COMPANY VALUE FUND's investment objective is a high level of
growth of capital. The Fund seeks to achieve this objective by investing in
common stock and other equity securities of "small cap" companies that appear
to be undervalued. Companies with market capitalizations of $2 billion or less
at the time of purchase are considered to be "small cap" companies.
This Fund's investment objective causes it to be riskier than other
funds and you could lose money. While the Fund seeks investments that provide a
high level of growth of capital, they may decline in value. You should not
invest in this Fund if your principal objective is assured income or capital
preservation. Investments in smaller companies often involve greater risks than
investments in larger, more established companies. Smaller companies may have
less management experience, fewer financial resources, and limited product
diversification. The frequency and trading volume for securities of smaller
companies is substantially less than for larger companies. This can result in
greater and more abrupt price fluctuations and can cause the small cap stock to
be less liquid than securities of larger companies. The Fund is also subject to
risks that affect equity securities markets in general, such as general
economic conditions and adverse changes (generally increases) in interest
rates. These factors could adversely affect your investment.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
During the 10-year period shown in the bar chart for Class A shares,
the highest return for a quarter was xx%(quarter ending [date] and the
lowest return for a quarter was % (quarter ending [date]. The annual
returns do not include sales charges. If sales charges were included,
the annual returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ============================= ============================ ============================
Average Annual Total Returns
(for the periods ending
December 31, 1998)
Past One Year Past 5 years Past 10 years
============================= ============================= ============================ ============================
<S> <C> <C> <C>
Small Company Value Fund % % %
Class A
Small Company Value Class B
============================= ============================= ============================ ============================
Russell 2000* % % %
============================= ============================= ============================ ============================
<FN>
* The Russell 2000 Index is an unmanaged index and is composed of the 2,000
smallest companies in the Russell 3000 Index. The Russell 3000 Index is
composed of 3,000 of the largest U.S. companies by market capitalization. The
returns for the Index do not include any sales charges, fees or other expenses.
</TABLE>
4
<PAGE>
The DLJ FIXED INCOME FUND's investment objective 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
non-convertible debt securities of foreign and domestic companies, including
both well-known and established and new and lesser- known companies. To achieve
this objective, the Fund invests in corporate bonds, U.S. Government
securities, commercial paper and other obligations issued or guaranteed by
national or state bank holding companies. The Fund seeks to limit risk by
selecting higher-quality debt securities.
While the Fund seeks investments that will satisfy the investment
objective, the investments could decline in value and you could lose money.
Concerns about an issuer's ability to repay its borrowings or to pay interest
will adversely affect the value of its securities. The Fund is subject to risks
that affect the bond markets in general, such as general economic conditions
and adverse changes (generally increases) in interest rates. These factors
could adversely affect your investment.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
During the 10-year period shown in the bar chart for Class A shares,
the highest return for a quarter was xxxx% (quarter ending [date]) and
the lowest return for a quarter was xxx% (quarter ending [date]).
The annual returns do not include sales charges. If sales charges were
included, the annual returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ============================= ============================ ============================
Average Annual Total Returns
(for the year ending
December 31, 1998)
Past One Year Past 5 years Past 10 years
============================= ============================= ============================ ============================
<S> <C> <C> <C>
Fixed Income Fund Class A % % %
============================= ============================= ============================ ============================
Fixed Income Fund Class B % % %
============================= ============================= ============================ ============================
Lehman Index
============================= ============================= ============================ ============================
<FN>
*The Lehman Brothers Government/Corporate Intermediate Index is comprised of
securities in the Lehman Brothers Government/Corporate Bond Index that have
maturities of 5-10 years. The Lehman Brothers Government/Corporate Bond Index
includes the Lehman Brothers Government Bond Index and the Lehman Brothers
Corporate Bond Index.
</TABLE>
The DLJ MUNICIPAL TRUST FUND's investment objective 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. It is
important to note that unlike most other municipal bond funds, this Fund's
objective is not
5
<PAGE>
to provide current income that is exempt from federal and/or state income
tax. The Fund seeks to achieve its objective by investing primarily in a
diversified portfolio of high-grade, intermediate-term municipal securities. In
addition, the Adviser actively manages the maturities of the securities in the
portfolio in response to the Adviser's anticipation of the movement of interest
rates and relative yields. Certain investments are selected that the Adviser
believes are undervalued. The Fund attempts to limit risk by selecting
higher-quality debt securities.
While the Fund seeks investments that will satisfy its investment objective,
these investments could decline in value and you could lose money. Concerns
about an issuer's ability to repay its borrowings or to pay interest will
adversely affect the value of its securities. The Fund is also subject to the
risk that, in seeking to enhance total return, the Adviser will incorrectly
forecast changes in interest rates or improperly assess the value of municipal
securities. Like all bond funds, this Fund is subject to risks that affect the
bond markets in general, such as general economic conditions and adverse
changes (generally increases) in interest rates.
These factors and others could adversely affect your investment.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
1997
1996
1995
1994
During the period shown in the bar chart for Class A shares, the
highest return for a quarter was xxxx% (quarter ending [date]) and the
lowest return for a quarter was xxxx% (quarter ending [date]). The
annual returns do not include sales charges. If sales charges were
included, the annual returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ============================= ============================ ============================
Average Annual Total Returns From inception on 7/28/93
(for the periods ending
December 31, 1998)
Past One Year Past 5 years
============================= ============================= ============================ ============================
<S> <C> <C> <C>
Municipal Trust Fund Class A % %
Municipal Trust Fund Class B
============================= ============================= ============================ ============================
LIMI* % %
============================= ============================= ============================ ============================
<FN>
* The Lipper Intermediate Municipal Fund Index is an equally weighted
performance index of the largest funds in the Lipper Analysts intermediate
municipal debt funds, adjusted for capital gains and income dividends.
</TABLE>
DLJ OPPORTUNITY FUNDS
The DLJ DEVELOPING MARKETS FUND's investment objective is to provide long-term
growth by investing in common stocks and other equity securities of companies
from developing countries. The Fund seeks to achieve itsobjective by investing
in companies from the countries included in the Morgan Stanley Capital Index
("MSCI") Emerging Market Free Index that are identified by the Adviser as being
best positioned to take advantage of certain economic and political factors.
The Fund invests in securities of issuers in at least three different
developing countries.
This Fund's investment objective causes it to be riskier than other funds and
you could lose money. While the Fund seeks investments that provide a high
level of growth of capital, they may decline in value. You
6
<PAGE>
should not invest in this fund if your principal objective is assured income or
capital preservation. This fund invests primarily in non-U.S. securities
(securities of non-U.S. based issuers or issuers that do business principally
outside the United States) of issuers in developing markets. Investments in
non-U.S. securities present additional risks including that securities may
experience greater price volatility and a lack of liquidity. Investments in
developing markets present further risks because they tend to be smaller, less
mature and less stable than developed markets. The Fund is also subject to risks
that affect equity securities markets in general, such as general economic
conditions and adverse changes in interest rates. These and other factors could
adversely affect your investment.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
1997
1996
During the period shown in the bar chart for Class A shares, the
highest return for a quarter was % (quarter ending ) and the lowest
return for a quarter was % (quarter ending ). The annual returns do
not include sales charges. If sales charges were included, the annual
returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ============================= ============================
Average Annual Total Returns
(for the periods ending From Inception on 9/8/95
December 31, 1998)
Past One Year
============================= ============================= ============================
<S> <C> <C>
Developing Markets Fund % %
Class A
Developing Markets Fund
Class B
============================= ============================= ============================
MSCI Emerging Markets Free % %
Index*
============================= ============================= ============================
<FN>
* The MSCI Emerging Markets Free Index is an unmanaged index composed of a
sample of companies representative of the market structure of developing
countries worldwide. The index is the property of Morgan Stanley & Co.
Incorporated. The returns for the Index do not include any sales charges, fees
or other expenses.
</TABLE>
The DLJ INTERNATIONAL EQUITY FUND's investment objective is long-term growth by
investing in equity securities from established international markets. The Fund
seeks to achieve this objective by investing in a diversified portfolio of
investments that include companies from the countries of the MSCI Europe,
Australia and Far East Index (the "EAFE Index"), an unmanaged index of over
1000 foreign stock prices. The Fund seeks to identify countries and industries
with favorable growth prospects. Once the countries have been selected, the
Adviser chooses the stocks and industries in each country. The Adviser employs
a comprehensive top-down approach to invest in industries in each country that
are likely to do well and in stocks with reasonable value, reliable earnings
and high quality management.
Like any investment, an investment in the Fund is subject to risk and you could
lose money. While the Fund selects investments that the Adviser believes will
appreciate in value, those securities could decline in value and provide no
income. The Fund invests primarily in non-U.S. securities (securities of
non-U.S. based issuers or issuers that do business principally outside the
United States ). Investments in non-U.S. securities present additional risks
including that securities may experience greater price volatility and a lack of
liquidity. The Fundisalso subject to risks that affect equity securities
markets in general, such as general
7
<PAGE>
economic conditions and adverse changes in interest rates. These and other
factors could adversely affect your investment.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
1997
1996
During the period shown in the bar chart for Class A shares, the
highest return for a quarter was % (quarter ending ) and the lowest
return for a quarter was (quarter ending ). The annual returns do not
include sales charges. If sales charges were included, the annual
returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ====================== ======================
Average Annual Total Returns From inception 9/8/95
(for the periods ending Past One Year
December 31, 1998)
============================= ====================== ======================
<S> <C> <C>
International Equity Fund
Class A
International Equity Fund
Class B
============================= ====================== ======================
MSCI -EAFE*
============================= ====================== ======================
<FN>
* The MSCI-EAFE(R) is an unmanaged index composed of a sample of companies
representative of the market structure of European and Pacific Basin Countries.
The index is the property of Morgan Stanley & Co. Incorporated. The returns for
the Index do not include any sales charges, fees or other expenses.
</TABLE>
The DLJ MUNICIPAL MONEY FUND's investment objective is maximum current income,
consistent with liquidity and safety of principal. The Fund seeks to achieve
this objective by investing in a diversified portfolio of municipal securities,
that is intended to be exempt from Federal income taxes.
Like any money market fund investment, this investment is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The Fund seeks to preserve the value of your investment at $1.00 per
share, however, it is possible to lose money by investing in the Fund.
The following chart illustrates how Fund results may vary over time. The Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
During the year shown in the bar chart, the highest return for a
quarter was % (quarter ending) and the lowest return for a quarter was
% (quarter ending). The annual returns do not include sales charges.
If sales charges were included, the annual returns would be lower than
those shown.
8
<PAGE>
<TABLE>
<CAPTION>
===================== ============================ ===========================
Average Annual
Total Returns Past One Year From Inception on 2/27/97
(for the periods
ending December 31,
1998)
===================== ============================ ===========================
<S> <C> <C>
Municipal Money Fund
%
%
===================== ============================ ===========================
</TABLE>
The DLJ U.S. GOVERNMENT MONEY FUND's investment objective is maximum current
income, consistent with liquidity and safety of principal. The Fund seeks to
achieve its objective by investing in a portfolio of U.S. Government
securities.
Like any money market fund investment, this investment is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The Fund seeks to preserve the value of your investment at $1.00 per
share, however, it is possible to lose money by investing in the Fund.
The following chart illustrates how Fund results vary over time. This Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1998
During the period shown in the bar chart, the highest return for a
quarter was % (quarter ending ) and the lowest return for a quarter
was % (quarter ending ).
The annual returns do not include sales charges. If sales charges were
included, the annual returns would be lower than those shown.
<TABLE>
<CAPTION>
============================= ================================== =================================
Average Annual Total Returns Past One Year From Inception on 2/24/97
(for the periods ending
December 31, 1998)
============================= ================================== =================================
<S> <C> <C>
U.S. Government Money Fund % %
Class A
U.S. Government Money Fund
Class B
============================= ================================== =================================
</TABLE>
The DLJ HIGH INCOME FUND's investment objective is to provide a high
level of current income and capital appreciation. The Fund seeks to achieve its
objective by investing in fixed income securities of U.S. issuers that are
rated below investment-grade quality or unrated income securities deemed to be
of comparable quality. Lower grade income securities are commonly known
as "junk bonds".
Our investment objective causes us to be riskier than other funds and you could
lose money. Investments in lower grade securities are subject to special risks,
including greater price volatility and a greater risk of loss of principal and
non-payment of interest. The Fund is not recommended for investors whose
principal objectives are assured income or capital preservation. This Fund is
designed for investors willing to assume additional risk in return primarily
for the potential for high current income and secondarily capital appreciation.
This is a new Fund and does not have any performance history.
FUND EXPENSES SUMMARY
9
<PAGE>
ANNUAL FUND OPERATING EXPENSES
These examples help you compare the cost of investing in the Funds with the
cost of investing in other mutual funds. They assume that you invest $10,000 in
the Fund for the periods indicated and then sell all of your shares at the end
of those periods. The examples also assume that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
Annual Fund Operating Expenses Examples
------------------------------ --------
Growth Fund Class A Class B Class D Examples++ Class A Class B* Class B** Class D
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fee .73% .73% After 1 Year $60 $60 $20
Distribution (12b-1) and Service Fees(a) .30% 1.00% After 3 Years $87 $83 $63
Other Expenses .27% .27% After 5 Years $115 $108 $108
Total Annual Fund Operating Expenses 1.30% 2.00% After 10 Years $187 $214 $214
<CAPTION>
Growth and Income Fund Class A Class B Class D Examples++ Class A Class B* Class B** Class D
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fee .60% .60% After 1 Year $58 $59 $19
Distribution (12b-1) and Service Fees(a) .30% 1.00% After 3 Years $82 $78 $58
Other Expenses .23% .23% After 5 Years $107 $99 $99
Total Annual Fund Operating Expenses 1.13% 1.83% After 10 Years $178 $196 $196
<CAPTION>
Small Company Value Fund Class A Class B Examples++ Class A Class B* Class B**
<S> <C> <C> <C> <C> <C> <C>
Management Fee .75% .75% After 1 Year $60 $60 $20
Distribution (12b-1) and Service Fees(a) .30% 1.00% After 3 Years $86 $82 $62
Other Expenses .24% .24% After 5 Years $115 $107 $107
Total Annual Fund Operating Expenses 1.29% 1.99% After 10 Years $196 $213 $213
<CAPTION>
Fixed Income Fund Class A Class B Class D Examples++ Class A Class B* Class B** Class D
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fee .63% .63% After 1 Year $57 $57 $17
Distribution (12b-1) and Service Fees(a) .30% 1.00% After 3 Years $78 $74 $54
Other Expenses 1.30% 2.00% After 5 Years $100 $92 $92
Total Annual Fund Operating Expenses .37% .37% After 10 Years $164 $182 $182
Waived Fees (.30%) (.30%)
Total Expenses Less Waived Fees 1.00% 1.70%
<CAPTION>
Municipal Trust Fund Class A Class B Examples++ Class A Class B* Class B**
<S> <C> <C> <C> <C> <C> <C>
Management Fee .63% .63% After 1 Year $57 $57 $17
Distribution (12b-1) and Service Fees(a) .30% 1.00% After 3 Years $78 $74 $54
Other Expenses .49% .49% After 5 Years $100 $92 $92
Total Annual Fund Operating Expenses 1.42% 2.12% After 10 Years $164 $182 $182
Waived Fees (.42%) (.42%)
Total Expenses Less Waived Fees 1.00% 1.70%
<CAPTION>
Developing Markets Fund Class A Class B Examples++ Class A Class B* Class B**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.25% 1.25% After 1 Year $78 $69 $29
Distribution (12b-1) and Service Fees(a) .25% 1.00% After 3 Years $121 $110 $90
Other Expenses 1.26% 1.26% After 5 Years $166 $153 $153
Total Annual Fund Operating Expenses 2.76%(b) 2.51%(b) After 10 Years $291 $304 $304
Waived Fees (.61%) (.61%)
Total Expenses Less Waived Fees 2.15% 2.90%
<CAPTION>
Developing Markets Fund Class A Class B Examples++ Class A Class B* Class B**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.25% 1.25% After 1 Year $78 $69 $29
Distribution (12b-1) and Service Fees(a) .25% 1.00% After 3 Years $121 $110 $90
Other Expenses 1.26% 1.26% After 5 Years $166 $153 $153
Total Annual Fund Operating Expenses 2.76%(b) 2.51%(b) After 10 Years $291 $304 $304
Waived Fees (.61%) (.61%)
Total Expenses Less Waived Fees 2.15% 2.90%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
International Equity Fund Class A Class B Class D Examples++ Class A Class B* Class B** Class D
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.25% 1.25% After 1 Year $78 $69 $29
Distribution (12b-1) and Service
Fees(a) .25% 1.00% After 3 Years $121 $110 $90
Other Expenses .75% .75% After 5 Years $166 $153 $153
Total Annual Fund Operating
Expenses 2.25%(b) 3.00%(b) After 10 Years $291 $305 $305
Waived Fees (.10%) (.10%)
Total Expenses Less Waived Fees 2.15% 2.90%
<CAPTION>
Municipal Money Fund Examples+
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .40% After 1 Year $9
Distribution (12b-1) and Service
Fees(c) .25% After 3 Years $29
Other Expenses .40% After 5 Years $50
Total Annual Fund Operating
Expenses 1.05% After 10 Years $111
Waived Fees (.15%)
Total Expenses Less Waived Fees .90%
<CAPTION>
U.S. Government Money Examples+
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees .40% After 1 Year $9
Distribution (12b-1) and Service
Fees(c) .25% After 3 Years $29
Other Expenses .50% After 5 Years $50
Total Annual Fund Operating
Expenses 1.15% After 10 Years $111
Waived Fees (.25%)
Total Expenses Less Waived Fees .90%
<CAPTION>
High Income Fund Class A Class B Class D Examples Class A Class B Class B** Class D
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees After 1 Year
Distribution (12b-1) and Service
Fees After 3 Years
Other Expenses
Total Annual Fund Operating
Expenses
Waived Fees
Total Expenses Less Waived Fees
11
<PAGE>
<FN>
* Assumes reinvestment of all dividends and redemption at end of period.
** Assumes reinvestment of all dividends and no redemption at end of period.
+ Shares purchased directly into a Money Fund will not be subject to a CDSC and
therefore expenses paid 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 Fee
represents an asset-based sales charge.
(b) 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.
(c) The maximum allowable amount payable for distributing shares is .40 of 1% of
the average daily net assets of each Money Fund. The Board of Trustees has
currently limited the amount payable to .25 of 1% of the average daily net
assets of each Money Fund.
</TABLE>
SHAREHOLDER TRANSACTION EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the DLJ Funds. These fees are paid directly from your investment.
12
<PAGE>
<TABLE>
<CAPTION>
DLJ Focus Funds DLJ Opportunity Funds DLJ Money
SHAREHOLDER FEES Class A(1) Class B(2) Class D Class A(1) Class B(2) Class D Funds
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum sales charge (load) imposed on 4.75% None None 5.75% None None None
purchases (as a percentage of offering price)
Maximum sales charge load imposed on
reinvested dividends (as a percentage of None None None None None None None
offering price)
Maximun deferred sales charge (as a
percentage of original purchase price or None (3) 4% (4) None None 4% (4) None None
redemption proceeds, as applicable)
Redemption fees None None None None None None None
Exchange Fee None None None None None None None
Maximum Account Fee None None None None None None None
<FN>
(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 "Purchases, Redemptions and Shareholder Services."
(2) Class B shares of each Fund automatically convert to Class A shares after
eight years. See "Purchases, Redemptions and Shareholder Services."
(3) DLJ Focus Funds 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>
PURCHASE INFORMATION
Shares of the DLJ Municipal Money Fund and the DLJ U.S. Government Money Fund
(the "Money Funds") or Class A or Class B shares of the other Funds may be
purchased directly by using the Share Purchase Application found in this
Prospectus, or through Donaldson, Lufkin & Jenrette Securities Corporation, the
Funds' distributor, or by contacting your securities dealer.
The minimum initial investment in each Fund is $250. The minimum for additional
investments is $25. These minimums are waived for certain types of accounts.
Further information can be obtained from DLJ at the address and telephone
number shown on the back cover of this Prospectus. See "How to Buy and Sell
Shares of the Fund" and "Other Shareholder Information."
The Funds, except the Money Funds, offer Class A and Class B shares. Class A
shares may be purchased for net asset value of the Fund plus an initial sales
charge imposed at the time of purchase and may be subject to a contingent
deferred sales charge ("CDSC") in cases where the initial sales charge was not
applied because of the size of the purchase. Class B shares may be purchased for
net asset value, but are subject to a CDSC upon redemption. The CDSC applicable
to Class B shares declines from 4% for redemptions made during the year
of purchase to zero after four years. The Growth Fund, Growth and Income Fund,
Fixed Income Fund, High Income Fund and the International Equity Fund also offer
Class D shares. Class D shares are offered without any initial sales charge or
CDSC to employees of Donaldson, Lufkin & Jenrette Inc. ("DLJ, Inc.") and its
subsidiaries that are eligible to participate in the DLJ Profit Sharing Plan.
See "How to Buy and Sell Shares."
Shares of the Money Funds may be purchased at a price equal to the net asset
value of each Money Fund, which is expected to be $1.00 per share. See "Net
Asset Value."
13
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
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
investment objective. The Funds' investment objectives are fundamental policies
that cannot be changed without the approval of the shareholders of the
applicable Fund. The Board of Trustees of a Fund may change non-fundamental
policies without shareholder approval.
FOCUS FUNDS
DLJ GROWTH FUND
Goal: The investment objective of the DLJ Growth Fund (the "Growth Fund") is
long-term capital appreciation. Investments are made based on their potential
for long-term capital appreciation. 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.
Strategy: The Growth Fund invests in common stock, securities convertible into
common stock and other equity securities (e.g., preferred stock, interests in
master limited partnerships). It invests primarily in well-known and
established companies (generally, companies in operation for more than three
years). The Fund may occasionally invest in young companies which, in the
opinion of the Adviser, have the potential for long-term capital appreciation.
The Adviser applies extensive research that has been conducted primarily by
research analysts employed by DLJ on the growth prospects of stocks that are
considered for the portfolio. Target companies normally have market
capitalizations of at least $1 billion at the time of purchase. Generally, the
Adviser attempts to identify companies with growth rates that will exceed that
of the S&P 500 Index. The Growth Fund is "sector neutral." This means that its
investments are allocated to industries in proportion to the sector allocation
of the S&P 500 index, with the exception of the electric and the gas utilities
sectors. 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.
Investments: Under normal circumstances, the Growth Fund invests at least 65%
of its total assets in equity securities of companies that the Adviser believes
have above-average long-term capital appreciation potential. For temporary
defensive purposes, the Growth Fund may invest in investment-grade short-term
fixed-income securities, enter into repurchase agreements and hold cash. A
temporary defensive position could affect the Fund's ability to achieve its
investment objective. In addition, the Fund may invest in equity securities
selected on a basis other than long-term capital appreciation. The Fund may
invest up to 35% of the value of its assets in 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 instruments. The Fund may invest in both listed
and unlisted securities and may also
o invest up to 10% of the value of its total assets in foreign securities
o invest no more than 10% of its net assets in restricted securities or other
instruments with no ready market
o invest up to 5% of its total assets in warrants, and
o attempt to minimize the effect of a market decline on the value of its
securities, subject to market conditions, by writing covered call options on
securities or stock indices. (See "Additional General Investment Policies and
Risks")
14
<PAGE>
[side bar for Growth Fund and Growth and Income Fund]
Risks. Like any investment, an investment in the Growth Fund or Growth and
Income Fund is subject to risk and you could lose money. While the Funds seek
investments that will appreciate in value and/or provide income, the value of
the securities could decline and provide no income. The Funds are subject to
risks that affect equity securities markets in general, such as general
economic conditions and adverse changes in interest rates (generally
increases). If the value of equity markets in general declines, you can expect
the value of your investment in the Funds to decline, possibly to a greater
extent than the decline in equity markets generally.
The Growth Fund may invest in new and unseasoned companies. Stocks of these
companies tend to be more volatile than stocks of larger and more established
companies. In addition, because stocks are selected on the basis of their
appreciation potential, they tend to be more risky than many investments that
provide current income. The Growth and Income Fund may invest in debt
securities. Debt securities are subject to risks that the issuer will not repay
its borrowings or pay interest. They are also subject to the risk of declines
in value because of increases in interest rates and decreases in the credit
quality of the issuer.
Investments in unlisted securities may be less liquid and more volatile than
investments in listed securities and could result in losses to the Funds if
they had to be sold quickly. Non-U.S. securities carry the same risks as
securities of U.S. companies and the added risks of being traded in less liquid
markets than U.S. securities. Non-U.S. securities are also issued by companies
that are not subject to U.S. reporting requirements and may have political
systems, ecomomies and markets that may not be as developed as in the U.S. See
"Additional Investment Policies and Risks".
[end side bar]
DLJ GROWTH AND INCOME FUND
Goal: The investment objective of the DLJ Growth and Income Fund (the "Growth
and Income Fund") is long-term capital appreciation and continuity of income.
Strategy: The Growth and Income Fund pursues its investment objective by
investing principally in dividend-paying common stock and by diversifying its
investments among different industries and companies. Securities are selected
based on 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 does not ensure against
possible loss in value.
Investments: The Growth and Income Fund invests in common stock, preferred
stock and securities convertible into common stock. The Growth and Income Fund
may invest in debt securities that are of investment-grade quality at the time
of purchase (including bonds, debentures, notes and asset and mortgage-backed
securities), U.S. government securities, municipal securities (including
general and special obligation securities and industrial revenue bonds) and
money market instruments. (See '"Additional Investment Policies and
Risks"--"Mortgage and Asset-Backed Securities" and "Investment-Grade Debt
Securities.") There is no fixed proportion of the Growth and Income Fund's
assets that must be invested in particular types of securities. The percentage
of assets invested in various types of securities may be changed from time to
time by the Adviser.
The Growth and Income Fund invests in both listed and unlisted securities.
Unlisted securities may be less liquid and more volatile than listed
securities. The Growth and Income Fund may invest in foreign securities and
restricted securities. To minimize the effect of a market decline in the value
of its securities, the Fund may, depending on market conditions, write covered
call options on securities or stock indices. The Fund may invest up to 10% of
its assets in non-U.S. securities and up to 10% of its assets in restricted
securities. For additional information on the use, risks and costs of the above
referenced policies and practices, see "'Additional Investment Policies and
Risks."'
15
<PAGE>
DLJ SMALL COMPANY VALUE FUND
Goal: The investment objective of the DLJ 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.
Strategy: The Small Company Value Fund invests primarily in common stock and
may also invest in securities convertible into common stock, preferred stock,
other equity securities, bonds or other debt securities as described below.
Under normal market conditions, at least 65% of the Fund's assets are invested
in equity securities of small market capitalization companies. Small cap
companies for purposes of this Fund are considered to be companies with market
capitalizations of $2 billion or less at the time of purchase.
Investments: The Small Company Value Fund pursues its investment objective by
employing a value-oriented investment approach. This means that the Adviser
seeks securities that appear to be underpriced. The Adviser looks for stocks
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 its 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 other 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.
To further reduce risk, the Small Company Value Fund diversifies its holdings
among many companies and industries. The Adviser also considers whether a
company has an established presence in its industry, a product or market niche
and whether management owns a significant stake in the company.
The Small Company Value Fund may also invest in special situation companies. A
special situation company is a company whose value may increase within a
reasonable period of time solely by reason of a development particularly or
uniquely applicable to that company. The securities of these companies may be
affected by particular developments unrelated to business conditions generally.
These investments may fluctuate without relation to general market trends. In
general, the principal risk associated with investing in special situation
companies is the potential decline in the value of these securities likely to
occur if the anticipated development fails to take place. Examples of special
situation companies are companies that are being reorganized or merged, that
have unusual new products, enjoy particular tax advantages, or acquire new
management.
The Fund invests primarily in common stock. It may also invest in securities
convertible into common stock, 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.
The Small Company Value Fund also may invest in unlisted securities and
securities traded in the over-the-counter markets. The Small Company Value Fund
may allocate a larger percentage of its assets to unlisted securities than
would a typical large company mutual fund. The Small Company Value Fund may
also:
o purchase or sell options on securities and on indices to seek to enhance
return or hedge its portfolio
o purchase or sell financial futures contracts and options thereon for hedging
and risk management purposes
o invest up to 20% of total assets in foreign securities
o invest up to 5% of total assets in rights or warrants
o invest not more than 10% of net assets in instruments having no ready
market.
However, the Fund does not invest in restricted securities.
16
<PAGE>
Risks: The investment objective for Small Company Value Fund causes it to be
riskier than other funds and you could lose money. While it seeks investments
that will provide a high level of growth of capital, they may decline in value.
You should not invest in the Small Company Value Fund if your principal
objective is assured income or capital preservation. While smaller companies
generally have the potential for rapid growth, they often involve greater risks
than investments in larger, more established companies. Small companies may
have less management experience, fewer financial resources, and limited product
diversification. In addition, in many instances the frequency and trading
volume for securities of smaller companies is substantially less than for
larger companies, causing such securities to be subject to greater and more
abrupt price fluctuations and to be less liquid than securities of larger
companies. When making large sales of portfolio securities, it may be necessary
for the Small Company Value Fund to sell such securities at discounts from
quoted prices or to execute a series of small sales over an extended period of
time. These factors cause an investment in the Small Company Value Fund to be
riskier than an investment in a "large company" mutual fund.
Small Company Value Fund also is subject to risks that affect equity securities
markets in general, such as general economic conditions and adverse changes in
interest rates. These factors also could adversely affect an investment in the
Fund. If the value of equity markets in general declines, the value of your
investment in the Small Company Value Fund could also decline, possibly to a
greater extent than the decline in equity markets generally.
Debt securities are subject to the risk that the issuer will not repay its
borrowings or pay interest. They are also subject to the risk of declines in
value because of increases in interest rates and decreases in the perceived
credit quality of the issuer.
Investments in unlisted securities may be less liquid and more volatile than
investments in listed securities and could result in losses if they had to be
sold quickly. Not only do non-U.S. securities carry the same risks as
securities of U.S. companies, they also have the added risks of generally being
traded in less liquid markets than U.S. securities, involve political systems,
economies and markets that may not be as developed as in the U.S. and may be
issued by companies that are not subject to reporting requirements that are as
rigorous as those imposed on U.S.issuers.
Selecting options, warrants and financial futures contracts involves
determinations as to how a particular security, index, interest rate, or
currency will change. If the Adviser is wrong on its prediction, the Fund could
lose money. In addition, such instruments may not be available, or if
available, may be too expensive to utilize. See "Additional Investment Policies
and Risks".
DLJ FIXED INCOME FUND
Goal: The investment objective of the DLJ Fixed Income Fund (" 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 domestic
and foreign companies, including both well-known and established and new and
lesser-known companies. The Fund invests at least 80% of its assets at the time
of investment in debt securities. Total return means the sum of net investment
income (if any) and realized and unrealized gains less losses. Capital
preservation means minimizing the risk of capital loss in a period of falling
prices (rising interest rates) for debt securities.
Strategy: The Fund invests in and holds debt securities that the Adviser
believes will maximize total return at a level consistent with capital
preservation. The average maturity of the Fund's portfolio is adjusted based on
the Advisor's assessment of relative yields on debt securities and expectations
of future interest rate patterns.
A change in the price of a debt security generally is inversely related to
market interest rates. This means that the value of the Fund's investments will
tend to decrease during periods of rising interest rates and to increase during
periods of falling rates. In general, as the average maturity of the portfolio
increases, so does the potential volatility in share price. In normal
circumstances, the Fixed Income Fund invests at
17
<PAGE>
least 65% of the value of its total assets in fixed income securities. Tthe
Fund may hold cash and short-term fixed income securities and may enter into
repurchase agreements for temporary defensive purposes as determined by the
Adviser without regard to the above limits. A temporary defensive position
could affect the Fund's ability to achieve its investment objective.
Investments: The Fixed Income Fund may invest in bonds, including municipal
bonds (taxable and tax-exempt, and other debt securities), 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"), U.S. Government Securities,
obligations issued or guaranteed by national or state bank holding companies,
and commercial paper rated Prime-1 by Moody's or A-1+ or A-1 by S&P.
.
[side bar]
High Quality Ratings are those securities rated Aaa, Aa, A or MIG-1 by Moody's
, or AAA, AA, A or SP-1 by S&P. [end of side bar]
The Fixed Income Fund may also invest not more than 25% (in the aggregate) of
its total assets in lower-rated debt securities that are not rated below BBB or
SP-2 by S&P or Baa or MIG-2 by Moody's to the extent the Adviser views such
investments as consistent with this fund's investment objective. (See
'"Additional Investment Policies and Risks",' 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, involving U.S. Treasury securities, with
member banks of the Federal Reserve System or primary dealers in U.S.
Government Securities. The Fixed Income Fund may invest up to 10% of its assets
in restricted securities and in instruments having no ready market value.
[side bar for Fixed Income Fund and Municipal Trust Fund]
Risks of the Fixed Income Fund and Municipal Trust Fund. While the Funds seek
investments that will satisfy their investment objectives, the Funds'
investments could decline in value and you could lose money. Concerns about an
issuer's ability to repay its borrowings or to pay interest will adversely
affect the value of the securities. The Funds' Adviser seeks to limit this risk
generally by selecting higher-quality debt securities. In addition, the Funds
are subject to risks that affect the bond markets in general, such as general
economic conditions and adverse changes (generally increases) in interest
rates. Investments in unlisted securities may be less liquid and more volatile
than listed securities and could result in losses if they had to be sold
quickly. The Municipal Trust Fund is also subject to risks of investing in
municipal securities. These risks include uncertainties regarding the
securities - tax status, political and legislative changes and the rights of
their holders. The Municipal Trust Fund may also experience risks as a result
of the Adviser incorrectly forcasting interest rates or improperly assessing
the value of municipal securities. These factors could adversely affect your
investment.
[end of side bar]
DLJ MUNICIPAL TRUST FUND
Goal: The investment objective of the DLJ Municipal Trust Fund ("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 that of most other
municipal bond funds, is not to provide current income. 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. Such
distributions, if any, will be taxable to a shareholder as capital gain. (See
"Dividends and Distribution Information" and "Taxes.")
Strategy: The Municipal Trust Fund attempts to maximize total return by
actively managing the maturities of the bonds in its portfolio to reflect the
Advisor's assessment of anticipated interest rate movements and relative
yields. The Municipal Trust Fund currently maintains an average maturity of 10
years or less in
18
<PAGE>
order to help reduce the interest rate risk associated with investing in
long-term bonds. However, the Fund may adjust this average maturity as the
Advisor's views on interest rate movements change, shortening maturities in
periods of rising interest rates and lengthening maturities in periods of
falling interest rates. The Fund attempts to supplement total return by
identifying and purchasing undervalued municipal securities. As with any fixed
income investment, the success of these strategies depends upon the Adviser's
ability to accurately forecast changes in interest rates and to assess the
value of municipal securities. You should be aware that there are no assurances
that the Fund's investment strategies will be successful.
Investments: 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, both of which may have fixed, variable or floating rates of
interest. The Fund invests 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. The Fund may
also invest up to 25% of its total assets in lower-rated municipal securities
to the extent the Adviser views such investments as consistent with this Fund's
investment objective. (See "Additional Investment Policies and
Risks--Investment-Grade Debt Securities" for a description of securities rated
BBB by S&P and Baa by Moody's.) The Fund may also invest in unrated municipal
securities when the Adviser believes they are of comparable quality to that of
rated securities and are consistent with the 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. In general, as
the average maturity of the portfolio increases, so does the potential
volatility in share price. The market value of the Municipal Trust Fund's
portfolio as a result of fluctuations in interest rates will 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. The Fund may also invest in restricted securities,
in instruments having no ready market value and municipal bonds that are
subject to the alternative minimum tax ("AMT-Subject Bonds").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. A temporary defensive position could affect the Fund's
ability to achieve its investment objective. 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 and Distributions Information" and "Taxes."')
DLJ OPPORTUNITY FUNDS
THE INTERNATIONAL FUNDS
DLJ DEVELOPING MARKETS FUND
Goal: The investment objective of the DLJ Developing Markets Fund ("Developing
Markets Fund") is long-term growth of capital by investing primarily in common
stocks and other equity securities in developing countries. Under normal market
conditions, the Fund invests at least 65% of its assets in equity securities of
developing countries.
Strategy: The Fund seeks to identify those countries and industries where
economic and political factors are likely to produce above average growth
rates. The Fund seeks to invest in those companies in such industries and
countries that are best positioned and managed to take advantage of these
economic and political factors. The assets of the Fund ordinarily will be
invested in the securities of issuers in at least three different developing
countries.
19
<PAGE>
Investments: Equity securities include common and preferred stock, warrants,
rights or options that are convertible into common stock, debt securities that
are convertible into common stock, depository receipts for those securities and
other classes of stock that may exist. The Fund may purchase foreign securities
in the form of sponsored or unsponsored depository receipts or other securities
restricted or otherwise representing underlying shares of foreign issuers. The
Fund may purchase a limited amount of illiquid securities. The Fund may enter
into forward foreign currency exchange contracts to attempt to protect the
value of its assets against future changes in the level of currency exchange
rates. The Fund may 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. The Fund may
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 the Fund's portfolio.
As used in this Prospectus, a company in a developing country is an entity for
which either the principal securities trading market is in a developing
country, it is organized under the laws in a developing country or it has its
principal office in a developing country. The Fund invests primarily in
countries represented within the MSCI Emerging Market Free Index. Those
countries currently include Argentina, Brazil, Chile, China, Colombia, Czech
Republic, Egypt, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea,
Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Portugal, Russia, South
Africa, Sri Lanka, Taiwan, Thailand, Turkey and Venezuela. The Fund generally
does not invest more than 25% of its total assets in developing countries not
represented within the MSCI Emerging Markets Free Index.
Risks. Like any investment, an investment in the Developing Markets Fund is
subject to risk and you could lose money. While we select investments that we
believe will experience long-term appreciation, their value could decline. We
are also subject to risks that affect equity securities markets in general,
such as general economic conditions and adverse changes (generally increases)
in interest rates. There are certain risks involved in investing in non-U.S.
securities, in addition to the risks inherent in U.S. investments. These risks
may include currency fluctuations, currency revaluations, adverse political and
economic developments, currency exchange blockages, foreign governmental laws
or restrictions, reduced public information concerning issuers, and the lack of
uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements comparable for domestic companies.
Furthermore, non-U.S. securities may be less liquid and more volatile than
comparable U.S. securities. There is also a possibility of expropriation,
nationalization, confiscatory taxation, and limitations on use or removal of
Funds or assets. Investments in non-U.S. securities may result in higher
expenses due to currency conversions, brokerage commissions which generally are
higher than U.S. commissions and the expense of maintaining securities with
foreign custodians. In addition to the general risks of investing in non-U.S.
securities, characteristics of developing countries may affect certain
investments, such as national policies that restrict foreign investment and the
absence of developed legal structures governing private property and private
and foreign investments. The typically small size of the securities markets
issued in developing countries and the possibility of a low or nonexistent
volume of trading may also result in a lack of liquidity and substantial price
volatility. You should be aware that investing in developing countries
generally involves exposure to economic structures that are generally less
diverse and mature, and to political systems with less stability than those of
developed countries.
This Fund may from time to time take a defensive position by holding all or a
portion of the Fund in 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). The 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 the Fund's shares or
to meet ordinary daily cash needs.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional Investment Policies and Risks.'
DLJ INTERNATIONAL EQUITY FUND
20
<PAGE>
Goal: The investment objective of the DLJ International Equity Fund
("International Equity Fund")is long-term growth of capital by investing
primarily in common stocks and other equity securities from established foreign
markets. During normal market conditions, the Fund invests most of the assets
in securities of issuers from at least three different countries outside the
United States. The Fund may invest in securities of companies incorporated in
the United States but having their principal activities and interests outside
of the United States.
Strategy: In pursuing its investment objective, the International Equity Fund
attempts to diversify its equity investments primarily among countries
represented within the EAFE Index. Those countries currently include Australia,
Austria, Belgium,France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
the Netherlands, New Zealand, Singapore, Spain, Switzerland, the United
Kingdom, and the Scandinavian countries. The Fund generally does not intend to
invest more than 10% of its total assets in countries not represented within
the EAFE Index.
This Fund seeks to identify countries and industries with favorable growth
prospects. Then the Fund invests in the companies in such countries and
industries that are reasonably valued. Typically these companies offer reliable
earnings and high quality management.
Investments: Equity securities include common and preferred stock, warrants or
rights or options that are convertible into common stock, debt securities that
are convertible into common stock, depositary receipts for those securities and
other classes of stock that may exist. The Fund may purchase foreign securities
in the form of sponsored or unsponsored depositary receipts or other securities
representing underlying shares of foreign issuers. This Fund may purchase a
limited amountof its assets in restricted or otherwise illiquid securities. The
Fund may enter into forward foreign currency exchange contracts to protect the
value of its assets against future changes in the level of currency exchange
rates. The Fund may purchase and sell financial futures contracts and options
thereon which are traded on a commodities exchange or the board of trade for
certain hedging, return enhancement and risk management purposes. The Fund may
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 the Fund's portfolio.
[side bar for both International Funds]
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 U.S. corporation.
The International Funds may from time to time take a defensive position by
holding all or a portion of the Fund in 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). The International Funds
may also temporarily hold cash and invest in high quality foreign or domestic
money market instruments up to 35% of their assets, pending investment of
proceeds from new sales of International Funds' shares or to meet ordinary
daily cash needs.
[end side bar]
Risks. Like any investment, an investment in the International Equity Fund is
subject to risk and you could lose money. While we select investments that we
believe will experience long-term appreciation, their value could decline. We
are also subject to risks that affect equity securities markets in general,
such as general economic conditions and adverse changes (generally increases)
in interest rates. There are certain risks involved in investing in non-U.S.
securities, in addition to the risks inherent in U.S. investments. These risks
may include currency fluctuations, currency revaluations, adverse political and
economic developments, currency exchange blockages, foreign governmental laws
or restrictions, reduced public
21
<PAGE>
information concerning issuers, and the lack of uniform accounting, auditing
and financial reporting standards and other regulatory practices and
requirements comparable for domestic companies. Furthermore, non-U.S.
securities may be less liquid and more volatile than comparable U.S.
securities. There is also a possibility of expropriation, nationalization,
confiscatory taxation, and limitations on use or removal of funds or assets.
Investments in non-U.S. securities may result in higher expenses due to
currency conversions, brokerage commissions which generally are higher than
U.S. commissions and the expense of maintaining securities with foreign
custodians.
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Investment Policies and Risks."
THE MONEY FUNDS
DLJ MUNICIPAL MONEY FUND
Goal: The DLJ Municipal Money Fund ("Municipal Money Fund")seeks maximum
current income, consistent with liquidity and safety of principal, that is
exempt from Federal income taxation to the extent described herein.
Strategy: The Fund pursues its objectives by investing at least 80% of its
total assets in high quality municipal securities having remaining maturities
of one year or less, which maturities may extend to 397 days. The Fund reserves
the right to lower the percentage of investments in municipal securities if
economic or political conditions warrant. To increase the 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 its net asset
value per share to deviate from $1.00.
Investments: Normally, substantially all the Municipal Money Fund's income will
be exempt from Federal income taxation. Such income may be subject to state or
local and/or Federal AMT income taxes. The Fund invests in 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 institution 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 under 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.'
All of the Fund's municipal securities at the time of purchase are rated within
the two highest quality ratings of Moody's or S&P's, or judged by the Adviser
to be of comparable quality. The Municipal Money Fund may also invest without
limitation in tax-exempt municipal securities subject to the AMT. (See
'Dividends, Distributions and Taxes.')
The Municipal Money Fund may invest to a limited extent in stand-by
commitments, delayed-delivery, when-issued securities and other illiquid
securities. This Fund may also invest a small percentage 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. The Fund may from time to time
invest 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.
Risks: Like any money market fund investment, this investment is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. This fund seeks to preserve the value of your investment at $1.00 per
share, however, it is possible to lose money by investing in this Fund. 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
22
<PAGE>
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.
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Investment Policies and Risks."
DLJ U.S. GOVERNMENT MONEY FUND
Goal: The DLJ U.S. Government Money Fund ("Government Fund") seeks maximum
current income, consistent with liquidity and safety of principal.
Strategy: This 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. Some 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 its net asset value
per share to deviate from $1.00.
Investments: The Fund invests in 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. The Fund also invests in repurchase agreements that are
collateralized in full each day by eligible 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. This type of investment could create a loss to the
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 Fund's right to dispose of the
securities might be restricted. The Government Fund may also to a limited
extent, invest in illiquid securities, which includes when-issued U.S.
Government securities.
Side bar
To maintain portfolio diversification and reduce investment risk, the Money
Funds do 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 (the borrowings are not 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 investments listed the Money Funds may take temporary
defensive measures by holding other types of securities which are permitted by
Rule 2a-7 of the 1940 Act.
Risks: Like any money market fund investment, this investment is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. This Fund seeks to preserve the value of your investment at $1.00 per
share, however, it is possible to lose money by investing in this 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.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional Investment Policies and Risks.'
23
<PAGE>
DLJ HIGH INCOME FUND
Goal: The DLJ High Income Fund ("High Income Fund") seeks a high level of
current income and capital appreciation. This Fund is not recommended for
investors whose principal objective is assured income or capital preservation.
Strategy: This Fund seeks to achieve its investment objectives by investing in
fixed-income securities, including corporate bonds and notes, convertible
securities and preferred stocks, that are rated in the lower rating categories
of the established rating services (Baa or lower by Moody's and BBB or lower by
S & P), or, if unrated, are of comparable quality. Securities rated Baa or
lower by Moody's and BBB or lower by Standard & Poor's are commonly known as
"junk bonds." These bonds are considered by those rating agencies to have
speculative characteristics. These bonds can be expected to provide higher
yields. However these securities may be subject to greater market fluctuations
and risk of loss of income and principal than lower yielding, higher-rated
fixed-income securities. Investment in such high-yield securities entails
relatively greater risk of loss of income or principal.
Investments: This Fund seeks to achieve its objective by investing primarily in
a diversified portfolio of lower-rated fixed-income securities including
convertible and non-convertible debt securities and preferred stock. The Fund
may also hold assets in cash or cash equivalents. This Fund generally does not
invest in common stocks, rights or other equity securities. From time to time
the Fund may acquire or hold such securities (if consistent with its
objectives) when they are acquired in unit offerings with fixed-income
securities or in connection with an actual or proposed conversion, exchange or
restructuring of fixed-income securities.
Selection and supervision by the management of the Fund of investments in
lower-rated fixed-income securities involves continuous analysis of individual
issuers, general business conditions and other factors. The furnishing of these
services does not, of course, guarantee successful results. The Adviser's
analysis of issuers includes, among other things, historic and current
financial conditions, current and anticipated cash flow and borrowing
requirements, value of assets in relation to historical cost, strength of
management, responsiveness to business conditions, credit standing, and current
and anticipated results of operations. Analysis of general business conditions
and other factors may include anticipated changes in economic activity and
interest rates, the availability of new investment opportunities, and the
economic outlook for specific industries. While the Adviser considers as one
factor in its credit analysis the ratings assigned by the rating services, the
Adviser performs its own independent credit analysis of issuers and
consequently, the High Income Fund may invest, without limit, in unrated
securities. The Fund's ability to achieve its investment objective may depend
on the Adviser's own credit analysis to a greater extent than the funds that
invest in higher-rated securities.
Although the High Income Fund primarily invests in lower-rated securities, it
will generally not invest in securities rated at the time of investment in the
lowest rating categories (Ca or below for Moody's and CC or below for S & P).
Securities which are subsequently downgraded may continue to be held and will
be sold only if, in the judgment of the Adviser, it is advantageous to do so.
Risks: While we seek investments that will satisfy our investment objective,
our investments could decline in value and you could lose money. Concerns about
an issuer's ability to repay its borrowings or to pay interest will adversely
affect the value of its securities. We are also subject to risks that affect
the bond markets in general, such as general economic conditions and adverse
changes (generally increases) in interest rates. The market value of longer
maturity debt securities, like those held by the Fund, is more sensitive to
interest rate changes than the market value of shorter maturity debt
securities. In addition, the Fund's investments in lower grade securities will
subject investors to additional risk than normally experienced in other fixed
income securities. Lower grade securities are regarded as being predominantly
speculative as to the issuer's ability to pay the principal and interest.
Issuers of lower grade securities are more likely to experience financial
stress in periods of economic downturn or rising interest rates. The issuer's
ability to service its debt may be adversely affected by poor management,
inability to meet business forecasts or unavailability of additional financing.
There is a higher default rate with lower grade securities
24
<PAGE>
because they may be unsecured or subordinate to other securities of the issuer.
There are fewer dealers in lower grade securities which may make the market
less liquid and cause larger differences in prices quoted than that of
higher-rated fixed income securities. In addition, the Fund may incur
additional expense when it is required to seek recovery upon a default or
restructuring.
ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND RISKS
The following general investment policies and risks supplement those set forth
above for each Fund.
Equity Securities. "Equity Securities", includes common stock, preferred stock
(including convertible preferred stock), 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
DLJ 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 that 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. Based on historic prepayment patterns, amounts available for
reinvestment are likely to be greater during a period of declining interest
rates and, thus, are likely to be reinvested 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 DLJ Funds also may 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. "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
25
<PAGE>
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. For example, in
the event that the collateral underlying an asset-backed security must be
disposed of, it may be difficult to convert that collateral into a stream of
payments to be paid to the holders of the security.
Municipal Securities. "Municipal securities" are either bonds or notes.
Municipal bonds, which are longer-term debt obligations meeting long-term
capital needs, are either "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 one 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 value of the principal 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 the Municipal Money Fund to
maintain a stable $1.00 net asset value. (See "'Net Asset Value"').
Investment-Grade Debt Securities. All of the DLJ 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. Investment-grade debt
securities may also include 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
by the rating agencies.
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; while 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
to be medium-grade obligations. These securities are neither highly protected
nor poorly secured. The rating organization determines that 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. For a more complete description of Moody's and S&P's
ratings, see the Appendix to the Statement of Additional Information of each of
the DLJ Funds.
The investment-grade limitations referenced for each Fund are applicable at the
time of initial investment and a fund may determine to retain securities of
issuers which have had their credit characteristics downgraded.
Repurchase Agreements. The DLJ 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
26
<PAGE>
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. The Adviser 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 thatare the subject of a repurchase
agreement. In the event 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 are less than the repurchase price. If the vendor becomes the
subject of bankruptcy proceedings,the Fund might be delayed in selling the
collateral.
Non-U.S. Securities. All of the DLJ Funds, except the Money Funds and the
Municipal Trust Fund, may invest in non-U.S. securities. There are additional
risks involved in investing in non-U.S. securities. These risks include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, and the possible imposition of currency exchange blockages. In
addition, there are risks associated with future adverse political and economic
developments and a limited availability of public information concerning
issuers. Foreign issuers typically are subject to different accounting,
auditing and financial reporting standards. Securities of many foreign
companies may be less liquid and their prices more volatile than those of
domestic companies. 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.
Non-U.S.securities may be subject to taxes imposed by foreign governments that
would reduce the net yield on such securities. Investment in non-U.S.
securities may 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. Certain funds may invest a limited amount of their assets
in shares of other investment companies. Investments in other mutual funds may
involve the payment of substantial premiums above the value of such investment
companies' portfolio securities. In addition, such investments are subject to
limitations under the 1940 Act and market availability. Currently, the
International Funds and the Municipal Money Fund may invest in such investment
companies if, in the judgment of the Adviser 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 shareholders of the Municipal Money Fund or an International Fund would
continue to pay their own management fees and other expenses.
Options. The Growth Fund and the Growth and Income Fund may write covered call
options on individual securities or stock indices. For these Funds, this
practice will only be used to minimize the effect of a market decline in the
value of securities in their respective portfolios. We cannot guarantee that,
should a Fund seek to enter into such transactions, it could do so at all or on
terms that were acceptable. 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 the right to buy from the seller the security
underlying the call option at a pre-determined price while a put option is a
contract that gives the buyer the right to require the seller to purchase the
security underlying the put option at a pre-determined price.
Lower or Unrated Securities. The High Income Fund will purchase lower or
unrated securities. Lower-grade securities are regarded as being predominantly
speculative as to the issuer's ability to make payments of principal and
interest. Investment in these securities involves substantial risk. Lower-grade
securities are commonly referred to as "junk bonds". Issuers of lower-grade
securities may be highly leveraged and may not have traditional methods of
financing. The risks associated with acquiring the securities of these issuers
generally are greater than is the case with higher-rated securities. For
example, during an economic
27
<PAGE>
downturn or a sustained period of rising interest rates, issuers of lower grade
securities may be more likely to experience financial stress, especially if
such issuers are highly leveraged. The risk of loss due to default is
significantly greater for the holders of lower-grade securities because such
securities may be unsecured and may be subordinate to other securities of the
issuer.
Year 2000. Many computer systems used today cannot tell the year 2000 from the
year 1900 because of the way dates are encoded. This could be a problem when
the year 2000 arrives and could affect securities trades, interest and dividend
payments, pricing and account services. Although we can't guarantee that this
won't be a problem, the Funds' service providers have been working on adapting
their computer systems. They expect that their systems, and the systems of
their service providers, will be ready for the new millennium. In addition,
your investment in the Funds could be adversely affected if a company that your
Fund has invested in has, or is perceived to have, a Year 2000 problem.
FUND MANAGEMENT
Wood, Struthers & Winthrop Management Corp., a Delaware corporation with
principal offices at 277 Park Avenue, New York, New York 10172 ("WSWMC"),
serves as the investment adviser for the DLJ Focus Funds and the International
Funds. DLJ Investment Management Corp., a Delaware corporation with principal
offices at 277 Park Avenue, New York, New York 10172, ("DLJIM"), serves as
investment adviser for the Money Funds and the High Income Fund. AXA Asset
Management Partenaires, a societe anonyme organized under the laws of France
with principal offices at 46, avenue de la Grande Armee, Paris, France 75017
serves as sub-investment advisor for the International Funds and is a wholly
owned subsidiary of AXA-UAP ("AXA").
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 four French mutual
insurance companies.
The fees paid for the fiscal year ended October 31, 1998 are as follows:
<TABLE>
<CAPTION>
Fund % of average net assets Fees Paid
- -------------------------------------------------------------------------
<S> <C> <C>
Growth Fund .75% $
- -------------------------------------------------------------------------
Growth and Income Fund .63% $
- -------------------------------------------------------------------------
Small Company Fund .77% $
- -------------------------------------------------------------------------
Fixed Income Fund .625% $
- -------------------------------------------------------------------------
Municipal Trust Fund .625% $
- -------------------------------------------------------------------------
High Income Fund N/A *
- -------------------------------------------------------------------------
International Equity Fund 1.25% $
- -------------------------------------------------------------------------
Developing Markets Fund 1.25% $
- -------------------------------------------------------------------------
U.S. Government Fund .40% $
- -------------------------------------------------------------------------
Municipal Money Fund .40% $
- -------------------------------------------------------------------------
<FN>
*As of the date of this prospectus, the High Income Fund has not commenced
operations.
</TABLE>
The following individuals are responsible for management of the DLJ's Funds.
James A. Engle serves as the primary manager of the Growth and Income Fund. He
has been a manager of the Growth and Income Fund since July 1986. Mr. Engle
also serves as co-portfolio manager of the Growth Fund since March, 1993 and
the Small Company Value Fund since 1989. Mr. Engle is a Vice President of the
DLJ Focus Funds and the DLJ Opportunity Funds. Heis also the Chief Investment
Officer
28
<PAGE>
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 Fund was started in 1986. Ms. Jameson is a Vice
President of the DLJ Focus Funds. She is also a Managing Director of WSWMC and
has been an employee of WSWMC since 1979.
Roger W. Vogel serves as the primary portfolio manager of the Small Company
Value Fund. He has 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 the DLJ Focus Funds, and a Senior Vice President
of the Advisers and the Chief Investment Officer--Equities of DLJIM. Prior to
becoming associated with the Funds, 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 the DLJ Focus Funds 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-term and long-term
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, is the primary portfolio manager of the Growth Fund. He has
also served as the co-portfolio manager of the Growth Fund, the Growth and
Income Fund and the Small Company Value Fund since August 1995. Mr. Neuburger
is a Managing Director 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 to 1986, Mr. Neuburger managed asset
allocation portfolios for Prudential Insurance Company of America.
Michael A. Snyder is the portfolio manager of the High Income Fund. Mr. Snyder
was appointed Vice President of the Opportunity Funds and Managing Director of
DLJIM in October, 1998. Prior to becoming associated with the DLJ Funds and
joining DLJIM, Mr. Snyder spent two years as a managing director with Bear
Stearns Asset Management where he was responsible for the firm's high-yield
bond management effort. Prior to that position, Mr. Snyder spent ten years at
Prudential Investments where he was a senior portfolio manager in the firm's
High Yield Mutual Fund Group.
Robert de Guigne, an employee of the Subadviser, serves as portfolio manager of
the International Funds. Mr. de Guigne assumed the day-to-day investment
responsibilities of the Developing Markets Fund in August 1996 and the
International Equity 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.
HOW TO BUY AND SELL SHARES
How to Buy Shares of the DLJ Funds?
Shares of the Money Funds or Class A or Class B shares of the other DLJ Funds
may be purchased directly by using the Share Purchase Application found in this
prospectus, or through Donaldson, Lufkin & Jenrette Securities Corporation, or
by contacting your securities dealer. Shareholders should read the prospectus
carefully before investing in the Funds.
29
<PAGE>
The minimum initial investment in each Fund is $250. The minimum for
additional investments is $25. There is a maximum purchase limitation in the
Funds' Class B shares of $250,000. Each of the funds, except the Money Funds,
offers Class A and Class B shares. Class A shares may be purchased at a price
equal to net asset value of the Fund plus an initial sales charge imposed at
the time of purchase. On purchase of $1,000,000 or more, there is no initial
sales charge but there could be a CDSC if the shares are redeemed within one
year of purchase. Class B shares may be purchased for net asset value, but may
be subject to a CDSC upon redemption. The CDSC declines from 4% during the
first year of purchase to zero after four years. Class B shares will convert to
Class A shares approximately eight years from the time of purchase. Class D
shares are offered exclusively to employees of DLJ and its subsidiaries that
are eligible to participate in the DLJ Profit Sharing Plan. These employees
should contact their Profit Sharing Plan administrator to learn how to purchase
Class D shares. Shares of the Money Funds may be purchased at a price equal to
the net asset value which is expected to be $1.00 per share.
Opening an Account:
Decide whether your first payment will be delivered by check or wire. The
initial investment minimum is $250.
By check:
Complete an application and send it along with a check made payable to the DLJ
Mutual Funds, to:
Regular Mail Overnight Delivery
DLJ Funds DLJ Funds
First Data Investor Services Group First Data Investor Services Group
P.O. Box 61503 3200 Horizon Drive
King of Prussia, PA 19406-0903 King of Prussia, PA 19406-0903
By wire:
First call DLJ 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. Accounts cannot be opened without a completed, signed
application and a fund account number. Contact your bank to arrange a wire
transfer to:
UMB Bank, n.a.
ABA #10-10-00695
For: First Data Investor Services Group
A/C #98-7037-0719
Attn: DLJ Funds
Your wire instructions must also include: the name of the Fund, your account
number and the name(s) of the account holders.
The account will be established once the application and check are received in
good order. If you purchase shares of the Money Funds through a wire transfer,
you will be eligible to receive the daily dividend declared on the date of
purchase, as long as the Transfer Agent, First Data Investor Services Group
("Transfer Agent") is notified of such purchase by 12:00 Noon. The Funds must
be received by the Transfer Agent by 4:00 p.m.
Investors may also open accounts for their DLJ Funds through 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. For more information, contact
your securities dealer.
30
<PAGE>
Shareholder accounts established on behalf of the following types of plans will
be exempt from the Fund's minimum and additional investments: 401K Plans, 403B
Plans, 457 Plans, SEP plans, and SIMPLE plans.
Additional investments may be made at any time by sending a check payable to
the Funds along with an investment stub found at the bottom of the Funds'
Shareholder Statement form. If the stub is not available you may send a check
payable to the "DLJ Mutual Funds" directly to the Transfer Agent at the address
listed above.
[side bar]
Net Asset Value - Net asset value per share (or "NAV") is determined
separately for each class by taking the total assets of each class of a Fund
and subtracting its total liabilities and then dividing the difference by the
total number of each class's shares outstanding. The NAV is determined at the
close of the New York Stock Exchange each day that the New York Stock Exchange
is open for trading. 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 computing NAV, 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.
Shares of the DLJ Funds except the Money Funds are 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 Trustees of the
applicable Fund believe in good faith would accurately reflect their fair
value.
[end of side bar]
How to Sell Your Shares
You may sell shares of the Money Funds or Class A or Class B shares of the
other DLJ Funds on any day that the funds are open for business by calling or
writing the DLJ Funds. If you have completed the optional Telephone Redemption
Section of the Funds application, you may call the transfer agent at
1-800-225-8011. Requests for redemptions of more than $50,000 must be made in
writing and be accompanied by a signature guarantee.
Your redemption will be processed at the net asset value per share, next
computed following the receipt of your request in proper form. If you own Class
B shares or purchased Class A shares without paying an initial sales charge,
any applicable CDSC will be applied to the net asset value and deducted from
your redemption. The value of your shares may be more or less than your
investment depending on the net asset value of your Fund on the day you redeem.
The DLJ Funds have a minimum account size of $250. You may be requested to
increase your balance if it falls below $250. The Funds reserve the right to
close such account and send the proceeds to you. 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.
For information concerning circumstances in which redemptions may be effected
through the delivery of in-kind portfolio securities, see your Statement of
Additional Information.
OTHER SHAREHOLDER INFORMATION
Classes of Shares and Sales Charges
The DLJ Funds, except the Money Funds, offer Class A and Class B shares to the
public. Class D shares are offered exclusively to employees of DLJ. and its
subsidiaries that are eligible to participate in the DLJ Profit Sharing Plan.
Class D shares are only offered by the Growth Fund, the Growth and Income Fund,
the Fixed Income Fund, the High Income Fund and the International Equity Fund.
Shares held in each
31
<PAGE>
Fund are normally entitled to one vote (with proportional voting for fractional
shares) for all purposes. This is referred to as a multi-class fund.
With respect to the DLJ Focus Funds and DLJ Opportunity Funds, each class is
identical in all respects except that each Class bears different distribution
service fees. Each Class has different exchange privileges, and only Class B
shares have a conversion feature. Class D does not bear distribution services
fees. Class A and Class B have exclusive voting rights with respect to each
class's 12b-1 Plan.
CLASS A Shares
[side bar]
Offering Price - The offering price for Class A shares (with a sales charge) is
NAV plus the applicable sales charge (unless you are entitled to a waiver).
[end side bar]
The offering price for Class A shares of the Funds is the net asset value plus
the applicable sales charge from the schedule below.
Initial Sales Charge- Class A Shares
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Amount Purchased As a % of Amount Invested As a % of Offering Price Commission to
Dealer/Agent as a % of
Offering Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000.... 4.99% 4.75% 4.25%
- ------------------------------------------------------------------------------------------------------------
$50,000 to less than 4.71 4.50 4.00
$100,000...........
- ------------------------------------------------------------------------------------------------------------
$100,000 to less than 3.90% 3.75 3.25
$250,000...........
- ------------------------------------------------------------------------------------------------------------
$250,000 to less than 2.56 2.50 2.25
$500,000...........
- ------------------------------------------------------------------------------------------------------------
$500,000 to less than 1.78 1.75 1.60
$1,000,000.........
- ------------------------------------------------------------------------------------------------------------
$1,000,000 or more... 0 0 0
- ------------------------------------------------------------------------------------------------------------
</TABLE>
International Funds:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Amount Purchased As a % of Amount Invested As a % of Offering Price Commission to
Dealer/Agent as a % of
Offering Price
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000.... 6.10% 5.75% 5.00%
- ------------------------------------------------------------------------------------------------------------
$50,000 to less than 4.71 4.50 3.75
$100,000...........
- ------------------------------------------------------------------------------------------------------------
$100,000 to less than 3.63% 3.50 2.80
$250,000...........
- ------------------------------------------------------------------------------------------------------------
$250,000 to less than 2.56 2.50 2.00
$500,000...........
- ------------------------------------------------------------------------------------------------------------
$500,000 to less than 2.04 2.00 1.60
$1,000,000.........
- ------------------------------------------------------------------------------------------------------------
$1,000,000 or more... 0 0 0
- ------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
[High Income Information to Come]
On purchases of $1,000,000 or more, there is no initial sales charge although
there could be a Limited CDSC (as described below). 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, .50% on the next $47 million , .25% on purchases
over $50 million. In addition, Class A shares issued upon conversion of Class B
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. In addition, investors may be
charged a fee by a securities dealer if they effect transactions through a
broker or agent.
The initial sales charge is waived for the following shareholders or
transactions: (1) investment advisory clients of the Advisers;
(2) officers, Trustees and retired Trustees of the Funds, directors or
trustees of other investment companies managed by the Advisers, officers,
directors and full-time employees of the Advisers and of their wholly-owned
subsidiaries or parent entities ("Related Entities"); or the spouse, siblings,
children, parents or grandparents of any such person or any such person's
spouse (collectively, "relatives"), 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 Advisers 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);
(5) shares purchased by registered investment advisors on behalf of fee-based
accounts 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 advisors or broker-dealers perform advisory,
custodial, record keeping or other services;
(6) shares purchased as a client of DLJdirect Inc., a subsidiary of the
Distributor;
(7) shareholders who received shares in the DLJ Funds 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;
(8) shares purchased for 401K plans, 403(b) plans and 457 plans; and
(9) Class B Shares which are automatically converted to Class A Shares.
Reduced sales charges are available to participants in the following programs:
Letter of Intent. By initially investing at least $250 and submitting a Letter
of Intent to the Funds' Distributor or Transfer Agent, you may purchase shares
of a DLJ Fund over a 13-month period at the reduced sales charge, which
applies, to the aggregate amount of the intended purchases stated in the
Letter. The Letter only applies to purchases made up to 90 days before the date
of the Letter.
33
<PAGE>
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 net asset 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.
Concurrent Purchases. To qualify for a reduced sales charge, you may combine
concurrent purchases of shares purchased in any DLJ 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 DLJ 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 provided by a redemption of a fund's Class A shares
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 the Distributor will be eligible for reimbursement at the current
net asset value of the applicable Fund if a shareholder reinstates his fund
account holdings within 120 days from the date of redemption.
CLASS B SHARES
You may chose to purchase shares in Class B at the Fund's net asset value
although such shares may be, subject to a sales charge when you redeem your
investment. This redemption charge is known as a CDSC. The CDSC does not apply
to investments held for more than four years.
Where the CDSC is imposed, the amount of the CDSC will depend on the number of
years since that you have held the shares according to the table below. 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 shares identified for
redemption.
<TABLE>
<CAPTION>
Year after Purchase/ CDSC Percentage
<S> <C>
1st 4%
2nd 3%
3rd 2%
4th 1%
After 4th year None
</TABLE>
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 CDSC;
34
<PAGE>
(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 a DLJ Fund'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:
o Section 401(k) retirement plans
o Section 403(b) plans
o Section 457 plans.
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.
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.
Contingent Defered Sales Charge On Converted Shares--DLJ Focus Funds
Class A shares issued upon conversion of shares of a DLJ 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 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 a CDSC will not be imposed if
the amount redeemed is the result of 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.
Class D Shares
Class D shares are offered only to employees of DLJ and its subsidiaries that
are eligible to participate in the DLJ Profit Sharing Plan for Employees. Class
D shares are not subject to any sales charges or distribution fees. These
employees should contact their Profit Sharing Plan administrator to learn how
to purchase Class D shares.
ADDITIONAL SHAREHOLDER SERVICES
The following privileges are provided by the Transfer Agent and do not apply to
Class D shares.
Exchange Privilege. You may exchange shares of Class A or Class B shares of a
Fund for shares of the same class in any other DLJ Fund. Shareholders whose
initial investment was directly into a Money Fund may exchange such shares in
either class of the other DLJ Opportunity Funds or the DLJ Focus Funds. Shares
of each Money Fund established pursuant to the DLJ Funds' exchange privilege
will be eligible for exchange into the DLJ Opportunity Funds or DLJ Focus Funds
provided that the exchange is directed into the same class of shares upon which
the initial investment was made. Shareholders whose initial
35
<PAGE>
investment was invested directly into a Money Fund will, upon an exchange
request, automatically be exchanged into Class A shares of the requested Fund
(unless otherwise indicated on the purchase application or by written notice to
the Transfer Agent). You should be aware that for federal income tax purposes
an exchange is treated as a sale and a purchase of shares which may result in
recognition of a gain or loss.
Automatic Monthly Investment Plan. You may elect on the Application to make
additional investments in a Fund automatically by authorizing DLJ to withdraw
funds from your bank or other cash account and purchase additional shares with
those Funds. You select the date (either the 10th, 15th or 20th of each month)
and amount (subject to a minimum of $25). The plan may be terminated at any
time without penalty by you or the Fund.
Automatic Exchange Plan. You may authorize the DLJ Funds in advance to exchange
a set dollar amount of shares in one Fund for shares of the same class of
another Fund or for shares of the Money Funds on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum
exchange amount under the Automatic Exchange Plan is $50. These exchanges are
subject to the terms of the Exchange Privilege described above.
Dividend Direction Option. A shareholder may elect on the Application to have
his or her dividends paid to another individual or directed for reinvestment
within the same class of another Fund 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 CDSC which may otherwise be imposed
on a redemption will be waived in connection with redemptions made pursuant to
DLJ Funds Systematic Withdrawal Plan up to 1% monthly or 3% quarterly of an
account (excluding dividend reinvestment) not to exceed 10% over any 12-month
rolling period. Systematic withdrawals elected on a semi-annual or annual basis
are not eligible for the waiver.
Checkwriting Privileges. Shareholders of the Money Funds may redeem shares by
writing checks of at least $100 against their account balance. 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.
You 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, UMB 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 you. Checkwriting
privileges are not available for accounts subject to a CDSC.
Retirement Plans. DLJ offers a range of qualified retirement plans including
Traditional, Educational and Roth 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. For more
information you should write or telephone the 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.
Additional information concerning Shareholder Services is available by
contacting the Funds at the address or telephone number listed on the back
cover of this Prospectus.
DISTRIBUTION CHARGES
36
<PAGE>
Each Fund has adopted 12b-1 Plans pursuant to the rules of the
Investment Company Act of 1940. These plans allow each Fund to collect
distribution and service fees for the sale and servicing of the individual
classes of each Fund's shares. Since these fees are paid out of each Fund's
assets on an on-going basis, over time these fees will increase the cost of
your investment. These fees may cost you more than paying other types of sales
charges. The following payments were made in the fiscal year ending October 31,
1998. tThe Funds do not pay any of the expenses for distributing Class D
shares.
<TABLE>
<CAPTION>
Fund
Daily Net Assets
% of Average Class A Fees Paid
- -------------------------------------------------------------------------
<S> <C> <C>
Growth Fund Class A .30% $
- -------------------------------------------------------------------------
Growth Fund Class B 1.00%
- -------------------------------------------------------------------------
Growth and Income Fund Class A .30% $
- -------------------------------------------------------------------------
Growth and Income Fund Class B 1.00%
- -------------------------------------------------------------------------
Small Company Value Fund Class A .30% $
- -------------------------------------------------------------------------
Small Company Value Fund Class B 1.00%
- -------------------------------------------------------------------------
Fixed Income Fund Class A .30% $
- -------------------------------------------------------------------------
Fixed Income Fund Class B 1.00%
- -------------------------------------------------------------------------
Municipal Trust Fund Class A .30% $
- -------------------------------------------------------------------------
Municipal Trust Fund Class B 1.00%
- -------------------------------------------------------------------------
High Income Fund Class A* .30%
- -------------------------------------------------------------------------
High Income Fund Class B* 1.00%
- -------------------------------------------------------------------------
International Equity Fund Class A .25% $
- -------------------------------------------------------------------------
International Equity Fund Class B
- -------------------------------------------------------------------------
Developing Markets Fund Class A .25% $
- -------------------------------------------------------------------------
Developing Markets Fund Class B 1.00%
- -------------------------------------------------------------------------
U.S. Government Fund .40% $
- -------------------------------------------------------------------------
Municipal Money Fund .40% $
- -------------------------------------------------------------------------
<FN>
*As of the date of this prospectus, the High Income Fund had not commenced
operations.
</TABLE>
[side bar]
Distribution and Service Fees - are used to pay the distributor for expenses
incurred to promote the sale of shares and the servicing of accounts of each
Fund. The expenses incurred by the Distributor under the 12b-1 Plans include
the preparation, printing and distribution of prospectuses, sales brochures and
other promotional materials sent to prospective shareholders. They also include
purchasing radio, television, newspaper and other advertising and compensating
the Distributor's employees or employees of the Distributor's affiliates for
their distribution assistance. Distribution fees also allow the Distributor to
compensate broker-dealers or other persons for providing distribution
assistance, as well as financial intermediaries for providing administrative
and accounting services for their account holders.
[end side bar]
DIVIDEND AND DISTRIBUTION INFORMATION
Dividends are paid to shareholders of the Money Funds, Fixed Income Fund,
Municipal Trust Fund and the High Income Fund from net investment income every
month. Dividends are paid to shareholders of the Growth and Income Fund
quarterly and shareholders of the Growth Fund, the Small Company Value Fund and
the International Funds once a year. Capital gains earned in any of the Funds
are normally distributed to shareholders once a year. 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.
37
<PAGE>
For your convenience, dividends and capital gains are automatically reinvested
in your Fund. If you ask us to pay the distributions in cash, we will send you
a check instead of purchasing more shares of your Fund. You will receive
confirmation that shows the payment amount and a summary of all transactions.
Checks are normally mailed within five business days of the payment date.
TAXES
As with any investment, you should consider how your investment in the Funds
will be taxed. If your account is not a tax-deferred retirement account, you
should be aware of these tax consequences. For federal income tax purposes, a
Fund's income and short-term capital gain distributions are taxed as dividends.
Long-term capital gain distributions are taxed as long-term capital gains. These
may be taxed at different rates depending on the length of time a Fund holds its
assets. Your distributions may also be subject to state and local income taxes.
The distributions are taxable when they are paid, whether you receive them in
cash or participate in the dividend reinvestment program. Each January, your
Fund mails you a form indicating the federal tax status of your dividend and
capital gain distributions. For individuals, capital gains are generally subject
to a maximum tax rate of 20%.
Distributions to shareholders of tax-exempt interest income earned by the
Municipal Trust Fund and the Municipal Money Fund 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. In addition, these distributions may also be subject to state and
local taxes.
If you are subject to the alternative minimum tax ("AMT") you should be aware
that a portion of the distributions out of tax-exempt interest earned by the
Municipal Trust Fund and the Municipal Money Fund may be taxable.
When you redeem your shares, the tax treatment of any gains or losses may be
affected by the length of time for which you hold your shares.
As a shareholder, you must provide your Fund with a correct taxpayer
identification number (generally your Social Security number) and certify that
you are not subject to backup withholding. If you fail to do so, the IRS can
require your Fund to withhold 31% of your taxable distributions and
redemptions. Federal law also requires your Fund to withhold 30% of the
applicable tax treaty rate from dividends paid to certain non-resident alien,
non-U.S. partnership and non-U.S. corporation shareholder accounts.
Please see the Statement of Additional Information for your Fund for more
information on the tax consequences of your investment. You should also consult
your own tax adviser for further information.
[side bar]
The Taxpayer Relief Act of 1997 made certain changes to capital gains tax
rates. Under the law, taxpayers in all brackets will have an advantage when it
comes to capital gains tax rates. The Fund will provide information relating to
the portion of any Fund distribution that is eligible for the reduced capital
gains tax rate. [end side bar]
FINANCIAL HIGHLIGHTS
38
<PAGE>
The following financial highlights, except as noted otherwise, have
been audited by Ernst & Young LLP, the Funds' independent auditors,
whose unqualified report thereon, together with the Funds' Financial
Statements, appears in the applicable Statement of Additional
Information, which is available upon request. Additional information
about the performance of the Focus Funds and the Opportunity Funds is
contained in each Fund's annual report to shareholders, which may be
obtained without charge. The total returns presented in the highlights
represent the rate that an investor would have earned (or lost) on an
investment in the indicated Fund (assuming reinvestment of all
dividends and distributions).
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.
39
<PAGE>
<TABLE>
<CAPTION>
Net Realized Dividends
Net Asset Value Net and Unrealized Total from from Net Distributions
Beginning of Investment Gains/(Losses) Investment Investment from Capital
Period Income (Loss) on Securities Operations Income Gains
--------------- ------------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
GROWTH FUND CLASS A
Year Ended October 31, 1998
Year Ended October 31, 1997 12.69 0.028 3.065 3.093 (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)
CLASS B
Year Ended October 31, 1998
Year Ended October 31, 1997 12.63 (0.030) 3.016 2.986 (0.031) (1.175)
Year Ended October 31,
1996++ 11.88 (0.013) 0.763 0.750 - -
GROWTH AND INCOME FUND
CLASS A
Year Ended October 31, 1998
Year Ended October 31, 1997 17.18 0.211 4.588 4.799 (0.214) (1.675)
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)
CLASS B
Year Ended October 31, 1998
Year Ended October 31, 1997 17.15 0.079 4.577 4.656 (0.071) (1.675)
Year Ended October 31,
1996++ 16.05 0.136 1.109 1.245 (0.145) -
SMALL COMPANY VALUE FUND
CLASS A
Year Ended October 31, 1998
Year Ended October 31, 1997 18.41 0.073 5.661 5.734 (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)
CLASS B
Year Ended October 31, 1998
Year Ended October 31, 1997 18.34 (0.021) 5.576 5.555 (0.052) (0.723)
Year Ended October 31,
1996++ 17.41 (0.023) 0.953 0.930 - -
FIXED INCOME FUND CLASS A
Year Ended October 31, 1998
Year Ended October 31, 1997 10.07 0.575 0.090 0.665 (0.575) -
Year Ended October 31, 1996 10.22 0.577 (0.150) 0.427 (0.577) -
Year Ended October 31, 1995 9.66 0.588 0.560 1.148 (0.588) -
Year Ended October 31, 1994 10.93 0.567 (1.027) (0.460) (0.567) (0.243)
<FN>
+ Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestments 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.
++ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Net
Asset Ratio of Ratio of Net
Value Net Assets Expenses Investment Income Portfolio
Total End of Total End of Period to Average (Loss) to Average Turnover
Distributions Period Return+ (000 omitted) Net Assets Net Assets Rate
- ------------- ------ -------- ------------- ---------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(1.223) 14.56 26.48% 82,926 1.36% 0.21% 41.1%
(0.820) 12.69 20.32 68,096 1.48 0.47 60.6
(0.697) 11.35 12.21 55,946 1.63 0.35 101.7
(0.599) 10.82 4.15 52,455 1.65 0.06 28.2
(1.206) 14.41 25.66 10,378 2.06 (0.51) 41.1
- 12.63 6.40 3,177 2.17(1) (0.34)(1) 60.6
(1.889) 20.09 30.53% 145,586 1.22% 1.15% 19.8%
(0.591) 17.18 22.60 113,803 1.36 1.68 44.0
(0.833) 14.57 16.10 87,975 1.58 1.94 31.8
(0.642) 13.38 4.58 67,020 1.64 1.88 25.9
(1.746) 20.06 29.59 19,664 1.92 0.39 19.8
(0.145) 17.15 7.67 6,545 1.99(1) 1.06(1) 44.0
(0.804) 23.34 32.48 283,001 1.35% 0.37% 21.1%
(0.446) 18.41 13.80 227,716 1.47 0.48 35.1
(0.696) 16.61 11.10 202,730 1.64 0.23 25.1
(1.168) 15.65 4.67 144,624 1.70 (0.04) 31.6
(0.775) 23.12 31.55 18,395 2.05 (0.32) 21.1
- 18.34 5.28 6,305 2.15(1) (0.34)(1) 35.1
(0.575) 10.16 6.84 54,755 1.00 5.74% 119.3%
(0.577) 10.07 4.34 56,388 1.00 5.72 90.2
(0.588) 10.22 12.23 53,885 1.00 5.90 66.1
(0.810) 9.66 (4.37) 39,150 0.93 5.58 55.9
(0.504) 10.16 6.10 3,375 1.70 4.99 119.3
(0.339) 10.07 2.23 1,629 1.70(1) 5.03(1) 90.2
<FN>
(1) Annualized
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Net Realized Dividends
Net Asset Value Net and Unrealized Total from from Net Distributions
Beginning of Investment Gains/(Losses) Investment Investment from Capital
Period Income (Loss) on Securities Operations Income Gains
--------------- ------------- --------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Year Ended October 31, 1998
Year Ended October 31, 1997 10.07 0.504 0.090 0.594 (0.504) -
Year Ended October 31, 1996+++ 10.22 0.339 (0.150) 0.189 (0.339) -
MUNICIPAL TRUST FUND CLASS A
Year Ended October 31, 1998
Year Ended October 31, 1997 10.01 0.445 0.280 0.725 (0.445) -
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) -
CLASS B
Year Ended October 31, 1998
Year Ended October 31, 1997 10.01 0.370 0.280 0.650 (0.370) -
Year Ended October 31, 1996+++ 10.12 0.248 (0.110) 0.138 (0.248) -
INTERNATIONAL EQUITY CLASS A
Year Ended October 31, 1998
Year Ended October 31, 1997 10.38 (0.070) 1.110 1.04 - -
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
Year Ended October 31, 1998
Year Ended October 31, 1997 10.29 (0.150) 1.100 0.950 - -
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
Year Ended October 31, 1998
Year Ended October 31, 1997 9.96 (0.020) (0.400) (0.420) - (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
Year Ended October 31, 1998
Year Ended October 31, 1997 9.86 (0.190) (0.290) (0.480) - (0.020)
Year Ended October 31, 1996 9.52 (0.080) 0.420 0.340 - -
Year Ended October 31, 1995* 10.00 (0.010) (0.470) (0.480) - -
MUNICIPAL MONEY FUND
Year Ended October 31, 1998
Period Ended October 31, 1997+ 1.00 0.020 - 0.020 (0.020) -
U.S. GOVERNMENT MONEY FUND
Year Ended October 31, 1998
Period Ended October 31, 1997+ 1.00 .032 - .032 (0.032) -
<FN>
* 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.
+++ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Ratio of Ratio of Net
Net Asset value Net Assets Expenses Investment Income Portfolio
Total End of Total End of Period to Average (Loss to Average Turnover
Distributions Period Return++ (000 omitted) Net Assets(2) Net Assets(2) Rate
- ------------- --------------- --------- ------------- ------------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C>
(0.575) 10.16 6.84 54,755 1.00 5.74% 119.3%
(0.577) 10.07 4.34 56,388 1.00 5.72 90.2
(0.588) 10.22 12.23 53,885 1.00 5.90 66.1
(0.810) 9.66 (4.37) 39,150 0.93 5.58 55.9
(0.504) 10.16 6.10 3,375 1.70 4.99 119.3
(0.339) 10.07 2.23 1,629 1.70(1) 5.03(1) 90.2
(0.445) 10.29 7.37 35,878 0.70 4.38% 84.3%
(0.425) 10.01 3.83 38,794 0.80 4.26 79.3
(0.389) 10.06 10.06 39,059 1.00 3.97 49.3
(0.365) 9.51 (2.27) 34,470 0.83 3.71 42.5
(0.370) 10.29 6.62 546 1.40 3.66 84.3
(0.248) 10.01 1.42 489 1.23(1) 3.81(1) 79.3
-- 11.42 10.02 44,316 2.15 (0.59)% 73.9%
-- 10.38 8.35 42,170 2.15 (0.39) 94.1
-- 9.58 (4.20) 28,819 2.15(1) (0.02)(1) --
-- 11.24 9.23 6,821 2.90 (1.32) 73.9
-- 10.29 7.52 4,955 2.90 (1.25) 94.1
-- 9.57 (4.30) 1,803 2.90(1) (1.77)(1) --
(0.020) 9.52 (4.18) 29,402 2.15 (0.17) 52.8
-- 9.96 4.51 36,918 2.15 (0.14) 26.8
-- 9.53 (4.70) 14,622 2.15(1) 0.32(1) --
(0.020) 9.36 (4.83) 4,941 2.90 (1.74) 52.8
-- 9.86 3.57 3,641 2.90 (0.83) 26.8
-- 9.52 (4.80) 1,004 2.90(1) (1.00)(1) (1)
(0.020) 1.00 2.90%(1) 38,681 0.90%(1) 2.87% N/A
(0.032) 1.00 4.68%(1) 35,174 0.90%(1) 4.65%(1) N/A
<FN>
(1) Annualized
(2) 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%, .34%, .51%, and .67%, for the years ended 10/31/98,
97, 96, 95, and 94, respectively; Fixed Income Fund Class B shares, ?%, and
.30% for the years ended 10/31/98 and 97, and .34% (annualized) for the period
2/28/96 through 10/31/96; Municipal Trust Fund Class A shares, ?%, .74%, .64%,
.58%, and .77% (annualized) for the years ended 10/31/98, 97, 96, 95, and 94,
respectively; Municipal Trust Fund Class B shares, ?% and .74% for the years
ended 10/31/98 and 97, and .64% (annualized) for the period 2/28/96 through
10/31/96; Developing Markets Fund Class A and Class B shares, ?%, .34%, .54%
and .60% (annualized) for the years ended 10/31/98, 97, 96 and 95,
respectively; International Equity Fund Class A and Class B shares, ?%, .18%,
.27% and .60% for the years ended 10/31/98, 97, 96 and 95, respectively;
Municipal Money Fund, ?% and .40% (annualized) for the periods ended 10/31/98
and 97; and U.S. Government Money Fund, ?% and .45% (annualized) for the
periods ended 10/31/98 and 97.
</TABLE>
43
<PAGE>
BACK COVER
FOR MORE INFORMATION
General Information and Other Available Information The Funds send out a
semi-annual report and an annual report to all shareholders. These reports
include a list of your Fund's investments and financial statements. The annual
report contains a statement from the Fund's Adviser discussing market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.
The Funds have Statements of Additional Information that contain additional
information on all aspects of the Funds and are incorporated by reference into
this prospectus. The Statements of Additional Information have been filed with
the Securities and Exchange Commission and are available for review at the
SEC's Public Reference Room in Washington, DC (1-800-SEC-0330) or on the SEC's
web site at http://www.sec.gov. You can also obtain copies of Fund documents
filed with the SEC by writing:
Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-6009
Payment of a duplicating fee may be required. .
Shareholders may obtain any of these documents free of charge and may request
other information about the Funds by calling 800-225-8011.
DLJ FUNDS
SEC file numbers: 811-
811-
44
<PAGE>
DLJ Focus Funds
- -------------------------------------------------------------------------------
277 PARK AVENUE, NEW YORK, NEW YORK 10172
Toll Free (800) 225-8011
- -------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
dated February 27, 1999
The DLJ Focus Funds (the "DLJ Focus Funds") is a "series
fund" comprised of the following diversified, open-end investment management
companies, commonly known as "mutual funds": DLJ Growth Fund, DLJ Growth and
Income Fund, DLJ Small Company Value Fund, DLJ Fixed Income Fund and DLJ
Municipal Trust Fund (individually, a "Fund" and collectively, the "Focus
Funds" or the "Funds"). The DLJ Focus Funds is empowered to expand the series
by establishing additional Funds with investment objectives and policies that
differ from those of the current Funds. The DLJ Focus Funds also may offer
additional classes of shares.
This Statement of Additional Information (the "SAI") is not
a prospectus and should be read in conjunction with the DLJ Focus Funds'
current Prospectus dated February 27, 1999 (the "Prospectus"), as supplemented
from time to time, which is incorporated herein by reference. A copy of the
Prospectus may be obtained by contacting the DLJ Focus Funds at the address or
telephone number listed above.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
Fund History...................................................................3
Description of the Funds and Their Investments And Risks.......................4
Management of the Funds.......................................................42
Investment Advisory and Other Services........................................48
Brokerage Allocation and Other Practices......................................58
Capital Stock and Organization................................................63
Purchases, Redemptions, Exchanges and Pricing of Fund Shares..................66
Shareholder Investment Account................................................76
Net Asset Value...............................................................79
Taxes, Dividends, and Distributions...........................................82
Performance Information.......................................................90
General Information...........................................................93
Financial Statements..........................................................94
Report of Independent Auditors................................................95
Appendix I -- Description of Securities Ratings..............................A-1
- --------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
- ------------------------------------------------------------------------------
FUND HISTORY
- ------------------------------------------------------------------------------
The DLJ Focus Funds were organized under the laws of the
commonwealth of Massachusetts on November 26, 1985 as a "business trust"under
the name "Winthrop Focus Funds".
On __________, 199___ , the name was changed from
"Winthrop Focus Funds" to "DLJ Focus Funds."
In addition, on such date the names of Growth Fund, Growth and Income
Fund, Small Company Value Fund, Fixed Income Fund and Municipal Trust Fund
were changed to DLJ Growth Fund, DLJ Growth and Income Fund, DLJ Small Company
Value Fund, DLJ Fixed Income Fund and DLJ Municipal Trust Fund, respectively.
-3-
<PAGE>
- ------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
- ------------------------------------------------------------------------------
(a) Classification
Each of the Funds is a diversified open-end management
investment company.
(b) Investment Strategies and Risks
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 the Prospectus.
Except as noted in the Prospectus and in this SAI, Funds' investment policies
are not fundamental and may be changed by the Trustees of the DLJ Focus Funds
without shareholder approval; however, shareholders will be notified prior to
a significant change in such policies. A Fund's fundamental investment
restrictions may not be changed without shareholder approval as defined in
"Additional Fundamental Investment Restrictions" in this SAI. DLJ Focus Funds'
investment adviser is Wood, Struthers & Winthrop Management Corp. (the
"Adviser").
I. DLJ Growth Fund, DLJ Small Company Value Fund and
DLJ Growth and Income Fund
The investment objective of the DLJ Growth Fund is long-term
capital appreciation. It seeks to achieve this objective by investing
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) which, in the opinion of the Adviser,
have the potential for long-term capital
-4-
<PAGE>
appreciation. There can be no assurance that the DLJ Growth Fund's investment
objective will be achieved.
The investment objective of the DLJ Growth and Income Fund
is long-term capital appreciation and continuity of income. It seeks to
achieve this 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. There can be no assurance that
the DLJ Growth and Income Fund's investment objective will be achieved.
The investment objective of the DLJ Small Company Value Fund
is a high level of growth of capital. It seeks to achieve this objective by
investing 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. There can be no assurance that the DLJ Small
Company Fund's investment objective will be achieved.
The DLJ Small Company Value Fund will pursue its investment
objective by employing the value-oriented investment approach. The Adviser's
research efforts may also play a greater role in selecting securities for the
DLJ Small Company Value Fund than in a fund that invests in larger, more
established companies. The DLJ 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,
-5-
<PAGE>
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 DLJ 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 DLJ 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 DLJ 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.
For a further description of the Funds' investment objectives and
policies, see "Investment Objective and Policies" in the Prospectus.
-6-
<PAGE>
Warrants
The DLJ Growth Fund and the DLJ 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 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 in proportion to 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 DLJ Growth Fund and the DLJ Growth and Income Fund may
invest up to 10% of the value of their respective total assets in foreign
securities and the DLJ Small Company Value Fund may invest up to 20% of the
value of its 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 to which U.S. companies are
subject. Non-U.S. securities markets, while growing in volume, generally have
substantially less
-7-
<PAGE>
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
generally are 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 a Fund's 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 DLJ Growth Fund and DLJ Small Company Value Fund may
invest up to 35% of the value of their respective total assets in
investment-grade fixed-income securities, while the DLJ Growth and 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 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. Issuers with securities rated BBB by S&P are regarded
by S&P as having an adequate capacity to pay interest and repay principal.
While such securities normally exhibit adequate protection para meters,
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
-8-
<PAGE>
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 a Fund
purchases these securities at a discount, faster than expected prepayments
will increase, while slower than expected prepayments will reduce, yield to
maturity.
Options
The DLJ Growth Fund and the DLJ Growth and Income Fund may
write covered calls on securities or securities indices for purposes of
hedging against a decline in the value of their respective portfolio
securities. The DLJ Small Company Value Fund may write covered calls, purchase
calls and write put options on securities and securities indices both 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
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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 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 into 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 either the DLJ Growth Fund, the DLJ Growth and Income
Fund or the DLJ Small Company Value Fund desires to sell a particular security
from its portfolio on which it has written an option, such 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 previously
written option. 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
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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 DLJ Growth Fund and
DLJ Growth and Income Fund will only purchase call options in closing purchase
transactions. As indicated above, the DLJ 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 DLJ 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 greater than their current market price.
If the DLJ Small Company Value Fund purchases an option, it
runs the risk that the option will expire "out of the money", resulting in a
loss equal to the amount of the premium paid plus any transaction costs. Thus,
in some periods the DLJ Small Company Value Fund may receive a lower total
return in connection with its options transactions than it would have received
from the underlying securities had options not been written.
Neither the DLJ Growth Fund nor the DLJ Growth and Income
Fund may write a call option if, as a result thereof, the aggregate value of
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
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DLJ Small Company Value Fund may not purchase options if, as a result, the
aggregate cost of all outstanding options exceeds 10% of its assets.
Because exercises of index options are settled in cash, a
call writer such as the DLJ Growth Fund, the DLJ Growth and Income Fund or the
DLJ 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 an index underlying an
option 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 option 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 incur 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, 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 that has written a call option 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 on an index, 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
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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
riskier 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 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, the 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.
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Financial Futures and Options Thereon
The DLJ 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
DLJ Small Company Value Fund, adopt an overall strategy in response 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 DLJ 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 the 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 holder and writer of the
option will be accompanied by delivery of the accumulated cash balance in the
writer's futures margin account
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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 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 DLJ Small Company Value Fund may only invest in futures
contracts and related options to the extent that the Fund would not be
required to register with the CFTC. The DLJ 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 DLJ 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 DLJ Small Company Value Fund's total assets.
Certain provisions of the federal tax laws may limit the extent to which the
DLJ 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 the Fund for federal tax
purposes.
The DLJ Small Company Value Fund's successful use of options
and financial futures depends on the ability of the Adviser to predict the
direction of the market and is subject to various additional risks. The
investment techniques and skills required to develop and implement a
successful options and futures strategy 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
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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 addition, the ability of the
Fund to close out an option or futures position depends on the existence of a
liquid secondary market for those contracts. 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 and innovative financial instruments continue to be
developed and the DLJ Small Company Value Fund may invest in any such
instrument as may be developed to the extent that the utilization of such
instrument is consistent with its investment objective and policies and the
regulatory requirements applicable to the Fund.
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 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 which are different from those needed to
select portfolio securities; (4) the
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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.
Small Company Stocks
At least 65% of the DLJ Small Company Value Fund's total
assets normally will be invested in equity securities of small 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. While small-cap company stocks generally pay low or no
dividends, they are considered to offer greater potential for appreciation
than securities of companies with larger market capitalizations. Small-cap
company stocks generally 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 generally are also less researched.
Special Situation Companies
The DLJ 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
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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 DLJ 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.
Short-Term Portfolio Transactions
The DLJ 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 general. In accordance with the
investment policy of engaging in short-term portfolio transactions, the DLJ
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 DLJ 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.
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IOs and POs
Although the DLJ Small Company Value Fund has no present
intention to so invest, the DLJ 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). 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 of the DLJ Growth Fund and DLJ Growth and
Income Fund
The following additional policies have been adopted by the
DLJ Growth Fund and the DLJ 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, purchase or sell puts, calls,
straddles, spreads or combinations thereof, provided, however, that the Funds
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.
II. DLJ Fixed Income Fund
The investment objective of the DLJ 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,
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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 net
investment income (if any) and realized and unrealized gains less 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
or AAA, AA, A or SP-1 by 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 + A-1 by
S&P.
The DLJ 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, 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
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Policies," in the Prospectus for a description of securities rated BBB and S&P
and Baa by Moody's and of asset and mortgage-backed securities.
As a matter of fundamental policy, which cannot be changed
without approval by the vote of a majority of the DLJ Fixed Income Fund's
outstanding voting securities (as defined in this SAI), the DLJ 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 DLJ Fixed Income
Fund will invest at least 65% of the value of its total assets in fixed income
securities. However, the DLJ 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 DLJ 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.
The DLJ 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 DLJ Fixed Income Fund and its
shareholders. In such event, the DLJ Fixed Income Fund will sell the common
stock resulting from such conversion as soon as practical. The DLJ 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 DLJ Fixed Income Fund acquire more than
10% of the voting securities of any one issuer. The
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relative size of the DLJ Fixed Income Fund's investments in any grade or type
of security will vary from time to time. Critical 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 DLJ Fixed Income Fund may use a variety of techniques in
seeking to attain its investment objective. In making investment decisions,
for example, the DLJ 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 DLJ 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
DLJ 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 class (e.g., publicly offered utility bonds) when disparities arise in
the relative values of each.
Debt securities acquired for the DLJ Fixed Income Fund's
portfolio may be subject to call by the issuer prior to maturity, in which
case the DLJ Fixed Income Fund may be forced to sell such securities at prices
below market value. The DLJ Fixed Income Fund may seek protection
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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 DLJ Fixed Income Fund's
assets will reflect yields generally available on debt securities of similar
quality. When such yields (i.e., interest rates) decline, the market value of
the DLJ 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.
III. DLJ Municipal Trust Fund
The investment objective of the DLJ 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 net investment income (if any) and
realized and unrealized gains less losses. The DLJ Municipal Trust Fund
intends to distribute annually its net capital gains. Any such distributions
will be taxable to a shareholder as capital gain. (See "Dividends,
Distributions and Taxes.")
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The DLJ 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. To a
lesser extent, the DLJ 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 DLJ Municipal Trust Fund's investment
strategies will be successful.
Under normal circumstances, it is the DLJ 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 DLJ
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 DLJ 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 or
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."
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Non-rated municipal securities will also be considered for
investment by the DLJ 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 DLJ
Municipal Trust Fund to a degree comparable to that of rated securities which
are consistent with the DLJ Municipal Trust Fund's objective and policies.
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 DLJ 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 systems, 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 activity bonds are also considered municipal
bonds if the interest thereon is exempt from federal income tax.
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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 DLJ 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.
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
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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 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
-27-
<PAGE>
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 DLJ 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 DLJ Municipal Trust Fund. Neither event requires
the sale of such security by the DLJ Municipal Trust Fund, but the Adviser
will consider such event in its determination of whether the DLJ 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
-28-
<PAGE>
enacted, the availability of municipal securities for investment by the Fund
and the value of the Fund's portfolio would be affected. Additionally, the
Fund would reevaluate its investment objectives and policies.
IV. Additional General Investment Policies
The following general investment policies supplement those
set forth above for each Fund.
Short Sales ("Against the Box")
Except for the DLJ 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. Neither the DLJ
Growth Fund, the DLJ Fixed Income Fund nor the DLJ Growth and Income Fund have
an intention of entering into short sales against the box in the foreseeable
future.
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 must always be less than one year. Repurchase agreements
often are for short periods such as one day or one 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
-29-
<PAGE>
vendor becomes the subject of bankruptcy proceedings, a Fund might be delayed
in selling the collateral.
Reverse Repurchase Agreements
The DLJ Growth Fund, DLJ Small Company Value Fund, DLJ Fixed
Income Fund and DLJ Municipal Trust Fund each may enter into reverse
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 DLJ Growth Fund, DLJ Small Company Value Fund, DLJ Fixed
Income Fund and DLJ 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
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<PAGE>
member firms of the New York Stock Exchange and are required to be secured
continuously by collateral held by Citibank, N.A. (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 DLJ Growth Fund, the DLJ Growth and Income Fund, the DLJ
Fixed Income Fund and the DLJ 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 DLJ Municipal Trust Fund) of the value of a Fund's net
assets to be invested which are assets not readily marketable. 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 available or required, the Fund may be obligated to pay
all or part of the registration expense, and a considerable period of time may
elapse between the time of the decision to sell and the time the Fund may be
permitted to sell a security under an effective registration
-31-
<PAGE>
statement. If during such a period adverse market conditions were to develop,
the Fund might obtain a less favorable price than that which prevailed when it
decided to sell. Securities salable without restriction among qualified
institutional investors pursuant to rules promulgated under the Securities Act
of 1933 (e.g., Rule 144A) 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 less certain than 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 DLJ Focus Funds 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 satisfies the following condition: 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.
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
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<PAGE>
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 the Custodian cash or
other liquid, unencumbered assets, in an aggregate amount at least equal to
the amount of their respective outstanding forward commitments.
Stand-By Commitments
The DLJ Municipal Trust Fund may invest in stand-by commitments which
may involve certain additional expenses. The 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 the settlement date occurs more than seven days after the
purchase.
-33-
<PAGE>
State Undertakings
The Funds also have entered into agreements with 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 com panies
which invest in real estate).
The DLJ Small Company Value Fund has entered into additional
agreements with 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 DLJ Municipal Trust Fund entered into additional
agreements with certain States which (a) prohibit the purchase of securities
of 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.
-34-
<PAGE>
(c) Investment Restrictions
The following restrictions are fundamental policies.
Fundamental policies are those which cannot be changed without the approval of
the holders of a majority of the Fund's outstanding voting securities. A
"majority of the Fund's outstanding voting securities," when used in this
Statement of Additional Information, means the lesser of (i) 67% of the voting
shares represented at a meeting at which more than 50% of the outstanding
voting shares are present in person or represented by proxy or (ii) more than
50% of the outstanding voting shares.
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 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 DLJ
Fixed Income Fund, the DLJ Municipal Trust Fund, the DLJ
Small Company Value
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<PAGE>
Fund or the DLJ Growth and Income Fund in respect of
investments in U.S. Government Securities or, for the DLJ
Fixed Income Fund, the DLJ Municipal Trust Fund and the DLJ
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;
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
-36-
<PAGE>
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 DLJ
Small Company Value Fund and the DLJ Growth and Income Fund,
in connection with hedging transactions, 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 DLJ 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 DLJ 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 DLJ 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
-37-
<PAGE>
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 DLJ Focus Funds in
good faith deem appropriate to reflect their value;
9. With respect to the DLJ Growth Fund, the DLJ Fixed Income
Fund, the DLJ Municipal Trust Fund and the DLJ 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 DLJ Growth Fund, the DLJ Fixed Income
Fund, the DLJ Municipal Trust Fund and the DLJ Growth and
Income Fund, purchase or retain the securities of any issuer
if, to the knowledge of DLJ's management, those officers and
Trustees of DLJ 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 DLJ Growth Fund, the DLJ Fixed Income
Fund, the DLJ Municipal Trust Fund and the DLJ 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 preferred stock is not readily marketable,
subject to the limitation in paragraph 8;
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<PAGE>
12. With respect to the DLJ Growth Fund, the DLJ Fixed Income
Fund, the DLJ Municipal Trust Fund and the DLJ 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
DLJ Small Company Value Fund and the DLJ 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 DLJ Small
Company Value Fund and the DLJ Growth and Income Fund, other
than mortgage-backed securities and similar instruments), or
commodities or commodity contracts except, with respect to
the DLJ Small Company Value Fund, for hedging purposes;
15. With respect to the DLJ Growth Fund, the DLJ Fixed Income
Fund, the DLJ Municipal Trust Fund and the DLJ Growth and
Income Fund, 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
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<PAGE>
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 DLJ 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 DLJ 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 DLJ Fixed Income Fund and may not be changed with
respect to the DLJ Fixed Income Fund without the approval of the shareholders
of the DLJ Fixed Income Fund (as described above).
The DLJ Fixed Income Fund may not:
1. 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.
(d) Temporary Defensive Position
The DLJ Growth Fund reserves the right, when the Adviser
determines it 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.
The DLJ Fixed Income Fund may enter into repurchase agreements,
terminable within 7 days or less, with respect to issues of the U.S. Treasury,
with member banks of the Federal
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<PAGE>
Reserve System or primary dealers in U.S. Government Securities, without limit
for temporary defensive purposes.
The DLJ 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, without limit, as
determined by the Adviser.
(e) Portfolio Turnover
[Discussion to be included of any significant variation in a
Fund's portfolio turnover rate over the two most recently completed fiscal
years or any anticipated variation in the portfolio turnover rate from that
reported for the last fiscal year.]
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<PAGE>
- ------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- ------------------------------------------------------------------------------
(a) Trustees
The DLJ Focus Funds has Trustees who, in addition to overseeing the
actions of the Funds' Adviser and Distributor, decide upon matters of general
policy. The Trustees also review the actions of the officers of the DLJ Focus
Funds who conduct and supervise the daily business operations of the Funds.
The Trustees and principal officers of the DLJ Focus Funds,
their ages and their primary occupations during the past five years are set
forth below.
<TABLE>
<CAPTION>
Name, Address and Age (1) Position(s) Held with DLJ Focus Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------------- -------------------------------------------
Funds
-----
<S> <C> <C>
ROBERT L. BAST (73) Trustee An attorney under private practice and was
formerly Of Counsel and partner to Reed
Smith Shaw & McClay, with which he has
been associated since prior to 1990. His
address is 110 Spruce Lane, Ambler, PA
19002.
*G. MOFFETT COCHRAN (48) Chairman of the Board of Trustees President and Chief Executive Officer of
and President 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.
SAM M. D'AGOSTINO (73) Vice President Vice President and Mutual Fund Compliance
Director of Alliance Capital Management
Corporation, with which he has been
associated since prior to 1992. His
address is 1345 Avenue of the Americas,
New York, New York 10105.
*JAMES A. ENGLE (40) Vice President and Trustee Managing Director and Chief Investment Officer
of the Adviser with which he has been
associated since prior to 1992.
RICHARD J. HANLON (33) Vice President Vice President of the Adviser, with which
he has been associated since 1994. Prior
to his becoming associated with Winthrop
and the Adviser, Mr. Hanlon was a
portfolio manager at Manufacturers
Hanover/Chemical Bank.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name, Address and Age (1) Position(s) Held with DLJ Focus Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------------- -------------------------------------------
Funds
-----
<S> <C> <C>
STIG HOST (72) Trustee 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.
MARTIN JAFFE (52) Vice President, Treasurer and Managing Director and Chief Operating
Secretary Officer of the Adviser, with which he has
been associated since prior to 1992.
CATHY A. JAMESON (45) Vice President Managing Director of the Adviser with
which she has been associated since prior
to 1992.
BRIAN A. KAMMERER (41) Vice President Vice President of the Adviser, with which
he has been associated since prior to
1992.
PETER F. KROGH (62) Trustee Dean Emeritus and Distinguished Professor
of International Affairs, School of
Foreign Service, Georgetown University,
Washington, D.C. with which he has been
associated since 1992. 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.
MARYBETH B. LEITHEAD (36) Vice President Vice President of the Adviser, with which
she has been associated since 1992.
DENNIS G. LITTLE (63) Trustee The former Executive Vice President and
Chief Financial Officer of Textron Inc.
(conglomerate). His address is 1915
Cutlass Cove Drive, Vero Beach, FL 32963.
WILLIAM H. MATHERS (84) Trustee 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.
*CARL B. MENGES (68) Trustee Retired Vice Chairman of Donaldson, Lufkin
& Jenrette, Inc. with which he had been
associated since prior to 1992.
HUGH M. NEUBURGER (55) Vice President Managing Director 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.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name, Address and Age (1) Position(s) Held with DLJ Focus Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------------- -------------------------------------------
Funds
-----
<S> <C> <C>
JOHN J. SHEEHAN (68) Trustee 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 (79) Trustee 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.
ROGER W. VOGEL (42) Vice President Senior Vice President of the Adviser,
positions he has held since July, 1993.
Prior to his becoming associated with
Winthrop and the Adviser, Mr. Vogel was a
Vice President with Chemical Banking Corp.
*STEPHEN K. WEST (70) Trustee Counsel to Sullivan & Cromwell, is counsel
to - Winthrop, with which he has been
associated since prior to 1992. His
address is 42 Old Wood Road,
Bernardsville, NJ 07924.
<FN>
- ----------
(1) 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 DLJ Focus Funds as defined by the Investment Company Act
of 1940.
</TABLE>
Messrs. Halsey, Host, Krogh, and Mathers are members of the
Audit Committee whose function is to[ ]. Messrs. Bast, Mathers and
Cochran are members of the Dividend Committee whose function is to declare
dividends on behalf of the Trustees. All of the Trustees who are not
"interested persons" of DLJ Focus Funds as defined by the Investment Company
Act of 1940 are members of the Nominating Committee whose function is
to [ ]. Messrs. Host, Bast and Sheehan are members of the
Valuation Committee whose function is to value the securities of each Fund in
emergency situations.
-44-
<PAGE>
The following table sets forth the aggregate compensation
paid by the DLJ Focus Funds to the Trustees who are not affiliated with the
Manager for the fiscal year ended October 31, 1998 and the aggregate
compensation paid to such Trustees for service on the Funds' Boards and that
of all other investment companies that are part of the same fund complex.
Below are listed the Trustees who have served the DLJ Focus Funds during its
most recent fiscal year.
Compensation Table
<TABLE>
<CAPTION>
Total Compensation
Pension or from DLJ Focus
Aggregate Retirement Benefits Estimated Funds and Fund
Compensation Accrued As Part of Annual Complex Paid to
From DLJ DLJ Focus Funds Benefits Upon Trustees in
Name and Position Focus Funds Expenses Retirement Current Fiscal Year
- ----------------- ----------------------- ---------- ----------------------- --------------------
<S> <C> <C> <C> <C>
Robert L. Bast $ 8,400 None None $ 8,400
(Trustee)
John J. Halsey 2,900 None None 2,900
(Trustee)
Stig Host 9,400 None None 9,400
(Trustee)
Peter F. Krogh 7,400 None None 7,400
(Trustee)
Dennis G. Little 7,200 None None 7,200
(Trustee)
William H. Mathers 9,400 None None 9,400
(Trustee)
John J. Sheehan 8,400 None None 8,400
(Trustee)
William C. Simpson 8,400 None None 8,400
(Trustee)
Stephen K. West 5,200 None None 5,200
(Trustee)
</TABLE>
The Trustees of DLJ Focus Funds who are officers or
employees of the Adviser or any of its affiliates receive no remuneration from
DLJ Focus Funds. Each of the Trustees who is not affiliated with the Adviser
will be paid a $2,000 fee for each board meeting attended, a $500
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<PAGE>
fee for each Audit Committee meeting attended and an annual retainer of
$2,000. For the year ended October 31, 1998, such remuneration totaled
$66,700.
Messrs. Bast, Halsey, Menges, 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 DLJ Small
Company Value Fund and the DLJ Growth and Income Fund, respectively, two
portfolios of the DLJ Focus Funds, on July 10, 1992.
(b) Control Persons
[State name and address of each person who controls a Fund.]
(c) Principal Holders
To the best of the Fund's knowledge as of November 25, 1998,
no shareholder owned 5% or more of the outstanding Class A or Class B shares
of the DLJ Growth Fund, the DLJ Small Company Value Fund, or the DLJ 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 November 25, 1998, 104,036 shares
(1.74%) of the DLJ Growth Fund, 144,309 shares (1.84%) of the DLJ Growth and
Income Fund, 1,818,170 shares (15.06%) of the DLJ Small Company Value Fund,
367,718 shares (8.03%) of the DLJ Fixed Income Fund, and 517,313 shares
(12.39%) of the DLJ Municipal Trust Fund.
Set forth below is certain information as to persons who
owned 5% or more of a Fund's outstanding shares as of November 25, 1998:
-46-
<PAGE>
<TABLE>
<CAPTION>
Name and Address % of Class Nature of Ownership
<S> <C> <C> <C>
DLJ Fixed Income Class B Rush Family Limited Partnership 8.20% [ ]*
12 Cloister Pky.
Amarillo, TX 79121-1716
DLJ Municipal Robert Winthrop 5.87% Beneficial
Trust Class A BC 238-707848
c/o Wood Struthers & Winthrop
277 Park Ave, 24th Floor
New York, NY 10172
Donaldson Lufkin Jenrette 18.29% Record*
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303
DLJ Municipal Robert C. Grant 13.24% Record*
Trust Class B 99 J Arrowood Road
Manalapan, NJ 07726
Donaldson Lufkin Jenrette 61.78% Record*
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303
<FN>
- -----------------
* Such Recordholder disclaims beneficial ownership.
</TABLE>
(d) Management Ownership
As of November 23, 1998, the Trustees and officers of DLJ
Focus Funds as a group owned beneficially less than 1.0% of all Funds except
the DLJ Small Company Value Fund, of which they owned beneficially 1.2%.
-47-
<PAGE>
- ------------------------------------------------------------------------------
INVESTMENT ADVISORY AND OTHER SERVICES
- ------------------------------------------------------------------------------
(a) Investment Adviser
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 DLJ Focus
Funds' 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-UAP ("AXA"), a
French insurance holding company. The Adviser, along with its affiliates, is
an integral part of the DLJ Securities family, and as one of the oldest money
management firms in the country, maintains a tradition of personalized service
and performance.
As of July 1, 1998, 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
-48-
<PAGE>
other countries, principally in Europe. AXA is also engaged in asset
management, investment banking and brokerage, real estate and other financial
services activities in the United States and Europe. Based on information
provided by AXA, on November 30, 1998, 18.2% of the issued ordinary shares
(representing 28.2% 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 3.1% of the issued ordinary shares (representing 2.7%
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 0.2% of the issued ordinary shares (representing 0.3% of the voting
power) of AXA. As of November 30, 1998, 61.5% of the issued ordinary shares
(representing 72.3% of the voting power) of Finaxa were owned by four French
mutual insurance companies (the "Mutuelles AXA") and 23.7% of the issued
ordinary shares (representing 14.7% 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 November 30, 1998, the Mutuelles AXA
directly and indirectly owned 24.8% of the issued ordinary shares of AXA
(representing 35.9% 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.
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
-49-
<PAGE>
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 DLJ 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 DLJ
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, 1999 at a meeting of the
Trustees on October 20, 1998.
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 the Focus Funds' 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 DLJ Focus Funds, although such an arrangement
is not currently contemplated.
Certain other clients of the Adviser may have investment
objectives and policies similar to those of the Focus Funds. 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 the Focus
Funds. 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
-50-
<PAGE>
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 the Focus Funds. When two or more of the clients of the Adviser
(including the Focus Funds) 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, 1998, 1997 and 1996
the DLJ Growth Fund paid the Adviser fees of $_____, $636,464 and $476,341
respectively; the DLJ Small Company Value Fund paid the Adviser fees of $____,
$1,993,178 and $1,774,607 respectively; the DLJ Fixed Income Fund paid the
Adviser fees of $_____, $354,902 and $360,520 respectively; the DLJ Growth and
Income Fund paid the Adviser fees of $_____, $915,897 and $714,397
respectively; and the DLJ Municipal Trust Fund paid the Adviser fees of
$_____, $234,803 and $242,321 respectively. During the fiscal years ended
October 31, 1998, 1997 and 1996, the Adviser reimbursed the DLJ Fixed Income
Fund $_____, $164,718 and $198,923 respectively, and the DLJ Municipal Trust
Fund $_____, $269,050 and $249,651 respectively, for operating expenses.
The Fund intends to enter into arrangements with certain
broker-dealers (including affiliates of the Distributor) whose customers are
DLJ Focus Funds shareholders pursuant to which the broker-dealers may perform
shareholder servicing functions, such as opening new shareholder accounts,
processing purchase and redemption transactions, and responding to certain
inquiries regarding a Fund's performance and the status of shareholder
accounts. A Fund may pay for the electronic communications equipment
maintained at the
-51-
<PAGE>
broker-dealers' offices that permits access to the Fund's computer files and,
in addition, may reimburse the broker-dealers at cost for personnel expenses
involved in providing the services .
(b) Principal Underwriter, Distributor and Rule 12b-1 Plans
The address of the Distributor is 277 Park Avenue, New York,
New York 10172.
Pursuant to Rule 12b-1 adopted by the Securities and
Exchange Commission under the Investment Company Act of 1940, DLJ Focus Funds
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 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
agreement 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
-52-
<PAGE>
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 20, 1998. 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 currently 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 currently
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 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
-53-
<PAGE>
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, 1998, distribution fees paid or payable with respect to
Class A shares and Class B shares for each fund were as follows:
<TABLE>
<CAPTION>
Fund Class A Shares Class B Shares
- ---------------------------------- --------------------- ------------------
<S> <C> <C>
DLJ Growth Fund $ $
DLJ Fixed Income Fund $ $
DLJ Small Company Value Fund $ $
DLJ Growth and Income Fund $ $
DLJ Municipal Trust Fund $ $
</TABLE>
During the year ended October 31, 1998, the Distributor received from
each Fund the following amounts as initial sales charges, which are paid in
respect of Class A shares, and contingent deferred sales charges ("CDSC"),
which are paid in respect of Class B shares:
<TABLE>
<CAPTION>
Fund Initial Sales Charges CDSC
<S> <C> <C>
DLJ Growth Fund $ $
DLJ Fixed Income Fund
DLJ Small Company Value Fund
DLJ Growth and Income Fund
DLJ Municipal Trust Fund
</TABLE>
-54-
<PAGE>
During the year ended October 31, 1998, the Distributor expended $ in
respect of the DLJ Growth Fund in distributing such Fund's shares. Of such
amount, it is estimated that $______ was spent on advertising; $______ was
spent on printing and mailing of prospectuses to other than current
shareholders; $_____ was spent on compensation to underwriters; $______ was
spent on compensation to broker-dealers; $______ was spent on compensation to
sales personnel; and $________ was spent on [describe other].
During the year ended October 31, 1998, the Distributor expended $ in
respect of the DLJ Fixed Income Fund in distributing such Fund's shares. Of
such amount, it is estimated that $______ was spent on advertising; $______
was spent on printing and mailing of prospectuses to other than current
shareholders; $_____ was spent on compensation to underwriters; $______ was
spent on compensation to broker-dealers; $______ was spent on compensation to
sales personnel; and $________ was spent on [describe other].
During the year ended October 31, 1998, the Distributor expended $ in
respect of the DLJ Small Company Value Fund in distributing such Fund's
shares. Of such amount, it is estimated that $______ was spent on advertising;
$______ was spent on printing and mailing of prospectuses to other than
current shareholders; $_____ was spent on compensation to underwriters;
$______ was spent on compensation to broker-dealers; $______ was spent on
compensation to sales personnel; and $________ was spent on [describe other].
During the year ended October 31, 1998, the Distributor expended $ in
respect of the DLJ Growth and Income Fund in distributing such Fund's shares.
Of such amount, it is estimated that $______ was spent on advertising; $______
was spent on printing and mailing of prospectuses to other than current
shareholders; $_____ was spent on compensation to
-55-
<PAGE>
underwriters; $______ was spent on compensation to broker-dealers; $______ was
spent on compensation to sales personnel; and $_______ was spent on [describe
other].
During the year ended October 31, 1998, the Distributor expended $ in
respect of the DLJ Municipal Trust Fund in distributing such Fund's shares. Of
such amount, it is estimated that $______ was spent on advertising; $______
was spent on printing and mailing of prospectuses to other than current
shareholders; $_____ was spent on compensation to underwriters; $______ was
spent on compensation to broker-dealers; $______ was spent on compensation to
sales personnel; and $________ was spent on [describe other].
In addition to distribution and service fees paid by a Fund under its
Class A or Class B Plans, the Adviser (or one of its affiliates) may make
payments out of its own resources to dealers and other persons that distribute
shares of the Funds (including Class D shares). Such payments may be
calculated by reference to the net asset value of shares sold by such persons
or otherwise.
(c) Other Service Providers
Citibank, N.A. serves as Custodian for the Funds' portfolio
securities and cash and in that capacity maintains certain records pursuant to
an agreement with the DLJ Focus Funds.
First Data Investor Services Group, P.O. Box 61503 (3200
Horizon Drive), King of Prussia, PA 19406-0903, serves as Transfer Agent to
the DLJ Focus Funds and provides customary transfer agency services to the
Funds, including the handling of shareholder communications, the processing of
shareholder transactions, the maintenance of shareholder account records, the
payment of dividends and distributions and related functions.
-56-
<PAGE>
Ernst & Young LLP, 787 Seventh Avenue, New York, NY 10019,
serves as the independent auditor of the DLJ Focus Funds.
-57-
<PAGE>
- ------------------------------------------------------------------------------
BROKERAGE ALLOCATION AND OTHER PRACTICES
- ------------------------------------------------------------------------------
Subject to the general supervision of the Board of Trustees
of DLJ Focus Funds, the Adviser is responsible for the investment decisions
and the placing of the orders for portfolio transactions for DLJ Focus Funds.
Portfolio transactions for the DLJ Focus Funds Municipal Trust Fund and the
DLJ Fixed Income Fund occur primarily with issuers, underwriters or major
dealers acting as principals, while transactions for the DLJ Growth Fund, the
DLJ Small Company Value Fund and the DLJ Growth and Income Fund are normally
effected by brokers.
DLJ Focus Funds 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 DLJ Focus Funds 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 DLJ Focus Funds. If DLJ Focus Funds 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, DLJ Focus
Funds 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
-58-
<PAGE>
Advisory Agreement, and the expenses of the Adviser will not necessarily be
reduced as a result of the receipt of such information.
During the fiscal year ended October 31, 1998, commissions
of $______, $______ and $______ related to transactions of $ ,$______ and
$______ were paid to brokers that provided research or other services to the
DLJ Growth Fund, the DLJ Growth and Income Fund and the DLJ Small Company
Value Fund, respectively.
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 DLJ Focus Funds 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.
The DLJ Growth Fund, the DLJ Small Company Value Fund and
the DLJ 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 DLJ Municipal
Trust Fund and the DLJ Fixed Income Fund are executed in the over-the-counter
market. Where transactions are executed in the over-the-counter market, DLJ
Focus Funds 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, DLJ Focus Funds will attempt to negotiate best
execution.
-59-
<PAGE>
DLJ Focus Funds may from time to time place orders for the
purchase or sale of securities (including listed call options) with DLJ
Securities, DLJ Focus Funds' 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 DLJ Focus Funds), 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.
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 DLJ Focus Funds. 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 DLJ Focus Funds provided that Winthrop enters into a written
agreement, as required by such rules, with that firm authorizing it
-60-
<PAGE>
to retain compensation for such services. The Trustees of DLJ Focus Funds have
granted authorization conforming to the requirements of Section 11(a) to the
Adviser to effect transactions in portfolio securities of DLJ Focus Funds
through its affiliates, DLJ Securities and Autranet, Inc.
The tables below show certain information regarding the payment of
commissions by the DLJ Growth Fund, the DLJ Small Company Value Fund and the
DLJ Growth and Income Fund for the three years ending October 31, 1998.
<TABLE>
<CAPTION>
Fiscal Years ended October 31,
-----------------------------------------------
1998 1997 1996
------ ------ -----
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Growth Fund............ $ $ 97,707 $ 87,799
Total dollar amount paid to Autranet, Inc.............................. $ $ 1,722 $ 427
Percentage of total brokerage commissions paid to Autranet, Inc........ % 1.8% .5%
Total dollar amount paid to Donaldson, Lufkin & Jenrette Securities $ $ 2,105 $ 49,673
Corporation............................................................
Percentage of total brokerage commissions paid to Donaldson, % 2.2% 56.6%
Lufkin & Jenrette Securities Corporation...............................
Percentage of aggregate dollar amount of transactions involving the % 2.1% 64.4%
payment of commissions to Donaldson, Lufkin & Jenrette Securities
Corporation............................................................
<CAPTION>
Fiscal Years ended October 31,
-----------------------------------------------
1998 1997 1996
------ ------ -----
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Small Company $ $ 228,166 $ 323,577
Fund...................................................................
Total dollar amount paid to Autranet, Inc.............................. $ $ 18,403 $ 323,577
Percentage of total brokerage commissions paid to Autranet, Inc........ % 8.1% 14.2%
</TABLE>
-61-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Years ended October 31,
--------------------------------------
1998 1997 1996
------ ------ -----
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Growth and $ $ 111,814 $ 110,073
Income Fund............................................................
Total dollar amount paid to Autranet, Inc.............................. $ $ 17,752 $ 26,317
Percentage of total brokerage commissions paid to Autranet, Inc........ % 15.9% 23.9%
</TABLE>
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<PAGE>
- ------------------------------------------------------------------------------
CAPITAL STOCK
AND ORGANIZATION
- ------------------------------------------------------------------------------
Each Fund of the DLJ Focus Funds is authorized to issue an
unlimited number of shares of beneficial interest per share divided into the
classes, designated Class A and Class B. The DLJ Growth Fund, DLJ Growth and
Income Fund and DLJ Fixed Income Fund are also authorized to issue an
unlimited number of shares of beneficial interest per share, designated Class
D. Each class of shares represents an interest in the same assets of a Fund
and is identical in all respects except that (i) each class is subject to
different sales charges and distribution and/or service fees (except for Class
D shares, which are not subject to any sales charges and distribution and/or
service fees), which may affect performance, (ii) each class has exclusive
voting rights on any matter submitted to shareholders that relates solely to
its arrangement and has separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv)
only Class B shares have a conversion feature and (v) Class D shares are
offered exclusively for sale to employees of Donaldson, Lufkin & Jenrette Inc.
and its subsidiaries that are eligible to participate in the Profit Sharing
Plan for Employees of Donaldson Lufkin & Jenrette Inc. In accordance with the
DLJ Focus Funds' Amended and Restated Agreement and Declaration of Trust, the
Trustees may authorize the creation of additional series and classes within
such series, with such preferences, privileges, limitations and voting and
dividend rights as the Trustees may determine. Currently, the Fund is offering
two classes of shares, designated
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<PAGE>
Class A and Class B, for each of the DLJ Focus Funds and, in addition, Class D
shares for the DLJ Growth Fund, DLJ Growth and Income Fund and DLJ Fixed
Income Fund.
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 DLJ Focus
Funds shall not be subject to any personal liability for the acts or
obligations of DLJ Focus Funds and that every written obligation, contract,
instrument or undertaking made by DLJ Focus Funds 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 DLJ Focus Funds , with the advice of
counsel, in such a way as to avoid, to the extent possible, ultimate liability
of the shareholders for liabilities of DLJ Focus Funds.
The Amended and Restated Agreement and Declaration of Trust
further provide that no Trustee, officer, employee or agent of DLJ Focus Funds
is liable to DLJ Focus Funds or to a shareholder, nor is any Trustee, officer,
employee or agent liable to any third persons in connection with the affairs
of DLJ Focus Funds, except as such liability may 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 DLJ Focus Funds or the property of the appropriate Fund for
satisfaction of claims arising in connection with the affairs of DLJ Focus
Funds 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
-64-
<PAGE>
the indemnification of Trustees, officers, employees or agents of DLJ Focus
Funds against all liability in connection with the affairs of DLJ Focus Funds.
All shares of DLJ Focus Funds 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.
-65-
<PAGE>
- ------------------------------------------------------------------------------
PURCHASES, REDEMPTIONS, EXCHANGES AND PRICING OF FUND SHARES
- ------------------------------------------------------------------------------
The following information supplements that set forth in the Prospectus under
the heading "How to Buy and Sell Shares".
(a) Purchases
Shares of the Funds are offered at the respective net asset
value per share ("NAV") 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 or "CDSC" upon redemption. Class D shares of the DLJ
Growth Fund, the DLJ Growth and Income Fund, and the DLJ Fixed Income Fund are
offered to employees of Donaldson, Lufkin & Jenrette Inc. and its subsidiaries
that are eligible to participate in the Profit Sharing Plan for Employees of
Donaldson Lufkin & Jenrette Inc. at NAV without any sales charge. The Funds
calculate NAV 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.
Each class of shares of a Fund represents an interest in the
same assets of such Fund and is identical in all respects except that (i) each
class is subject to different sales charges and distribution and/or service
fees (except for Class D shares, which are not subject to any sales charges
and distribution and/or service fees), which may affect performance, (ii) each
class has exclusive voting rights on any matter submitted to shareholders that
relates solely to its arrangement and has
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separate voting rights on any matter submitted to shareholder in which the
interests of one class differ from the interests of any other class, (iii)
each class has a different exchange privilege, (iv) only Class B shares have a
conversion feature and (v) Class D shares are offered exclusively for sale to
employees of Donaldson, Lufkin & Jenrette Inc. and its subsidiaries that are
eligible to participate in the Profit Sharing Plan for Employees of Donaldson
Lufkin & Jenrette Inc.
To open a new account by wire, first call DLJ 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.
Accounts cannot be opened without a completed, signed application and a fund
account number. Contact your bank to arrange a wire transfer to:
UMB Bank, n.a.
ABA #10-10-00695
For: First Data Investor Services Group
A/C #98-7037-0719
Attn: DLJ 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)
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 share holder's investment. Federal funds
are a bank's deposits in a Federal Reserve Bank. These funds can be
transferred by Federal 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
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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 NAV 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.
Shareholders maintaining Fund accounts through brokerage
firms and other institutions should be aware that such institutions may
necessarily set deadlines for receipt of transaction orders from their clients
that are earlier than the transaction times of the Fund itself so that the
institutions may properly process such orders prior to their transmittal to
the Fund or the Distributor. Should an investor place a transaction order with
such an institution after its deadline, the institution may not effect the
order with the Fund until the next business day. Accordingly, an investor
should familiarize himself or herself with the deadlines set by his or her
institution. (For example, a brokerage firm may accept purchase orders from
its customers up to 2:15 p.m. for issuance at the 4:00 p.m. transaction time
and price.) A brokerage firm acting on behalf of a customer in connection with
transactions in Fund shares is subject to the same legal obligations imposed
on it generally in connection with transactions in securities for a customer,
including the obligation to act promptly and accurately.
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(b) Contingent Deferred Sales Charges
Redemptions of Class B shares will be subject to a
contingent deferred sales charge or CDSC declining from 4% to zero over a
four-year period. Class A shares issued upon conversion of shares of a DLJ
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
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 a
CDSC will not be imposed if the amount redeemed is the result of 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. The CDSC will be deducted from the
redemption proceeds and reduce the amount paid to you. The CDSC will be
imposed on any redemption by you which reduces the current value of your
Converted Shares to an amount which is lower than the amount of all payments
of Converted Shares during the preceding four years. In the case of Class B
shares, a CDSC will be applied on the lesser of the original purchase price or
the current value of the shares being identified for redemption. Increases in
the value of your shares or shares acquired through reinvestment of dividends
or distributions are not subject to a CDSC. The amount of any CDSC will be
paid to and retained by the Distributor.
The amount of the CDSC, if any, will vary depending on the
number of years from the time of payment for the purchase of shares until the
time of redemption of such shares. Solely for purposes of determining the
number of years from the time of any payment for the purchase of shares, all
payments during a month will be aggregated and deemed to have been made on the
last
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day of the month. The CDSC will be calculated form the first day of the month
after the initial purchase, excluding the time shares were held in a money
market fund.
The following table sets forth the rates of the CDSC
applicable to redemptions of Class B shares:
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge as a
Percentage of Dollars
Year Since Purchase Invested of
Payment Made Redemption Proceeds
------------ -------------------
<S> <C>
First................................................... 4.0%
Second.................................................. 3.0%
Third................................................... 2.0%
Fourth.................................................. 1.0%
Fifth................................................... 0.0%
Sixth................................................... 0.0%
Seventh................................................. 0.0%
</TABLE>
[Insert discussion of new methodology.]
For federal income tax purposes, the amount of the CDSC will
reduce the gain or increase the loss, as the case may be, on the amount
recognized on the redemption of shares.
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(c) 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 practice detrimental to the best interest of DLJ Focus Funds. DLJ
Focus Funds has filed a formal election with the Securities and Exchange
Commission pursuant to which DLJ Focus Funds will only effect a redemption in
portfolio securities where the particular shareholder of record is redeeming
more than $250,000 or 1% of a Fund's total net assets, whichever is less,
during any 90 day period. In the opinion of DLJ Focus Funds' management,
however, the amount of a redemption request would have to be significantly
greater than $250,000 or 1% of total net assets of a Fund 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 DLJ Focus Funds 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 DLJ Focus Funds for
redemption must be signed by the registered owner or owners exactly as the
registered name appears on the face of
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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 mail, separately mailed to DLJ Focus Funds. 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.
(d) Exchanges
Class A or Class B shares of a Fund may be exchanged by mail
or telephone for shares of the same class of another Fund or for shares of the
DLJ Opportunity Funds, another investment company managed by the Adviser and
an affiliate of the Adviser, which is currently
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comprised of five portfolios: the DLJ Developing Markets Fund, the DLJ
International Equity Fund and the DLJ High Income Fund (the "Opportunity
Long-term Funds"), and the DLJ Municipal Money Fund and DLJ U.S. Government
Money Fund (the "DLJ Opportunity Money Funds"). Shares exchanged from a Fund
must be exchanged for the same class of shares of the DLJ Opportunity
Long-term Funds. Each DLJ Opportunity Long-term 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 CDSC which declines from 4% to zero depending on the period of
time the shares are held and a 12b-1 fee of 1% annually. In addition, the DLJ
High Income Fund and DLJ International Equity Fund offer Class D shares which
are sold without an initial sales charge or CDSC at net asset value to
employees of Donaldson, Lufkin & Jenrette Inc. and its subsidiaries that are
eligible to participate in the Profit Sharing Plan for Employees of Donaldson
Lufkin & Jenrette Inc. Each DLJ Opportunity Money Fund Portfolio currently
offers only one class of shares.
Class A shares subject to a CDSC as described in the
Prospectus and Class B shares which are exchanged for shares of the DLJ
Opportunity Funds will continue to be subject to the same CDSC 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 Share Purchase Application found in
the Funds' Prospectus, or by writing to the Funds' Transfer Agent, First Data
Investor Services Group, P.O. Box 61503 (3200 Horizon Drive), King of Prussia,
PA 19406-0903, Attn.: DLJ Mutual Funds. Participants within DLJ's Employee
Profit Sharing Plan should contact __________________ for information regarding
the exchange of Class D shares.
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<PAGE>
In the case of each of the DLJ Opportunity Funds, the
exchange privilege is available only in those jurisdictions where shares of
the relevant Fund may be legally sold. Prospectuses for the DLJ Opportunity
Funds may be obtained from DLJ 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 NAV 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 DLJ 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 DLJ Opportunity Funds are subject to
the minimum investment requirements and any other applicable terms set forth
in the Prospectus for the relevant DLJ Opportunity Fund whose shares are being
acquired. If for these or other reasons the exchange cannot be effected, the
shareholder will be so notified.
A shareholder of DLJ Focus Funds who has exchanged shares
for shares of the DLJ Opportunity Funds will have all of the rights and
privileges of a shareholder of the relevant DLJ 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
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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 DLJ Opportunity Funds.
Shareholders who engage in such frequent transactions may be prohibited or
restricted from placing future exchange orders.
(e) Systematic Withdrawal Plan
Shares of a Fund owned by a participant in DLJ Focus Funds'
systematic withdrawal plan will be redeemed as necessary to meet withdrawal
payments. A CDSC which would otherwise be imposed will be waived in connection
with redemptions made pursuant to DLJ Focus Funds' systematic withdrawal plan
up to 1% monthly or 3% quarterly of an account (excluding dividend
reinvestments) not to exceed 10% over any 12 month rolling period; however,
the CDSC will not be waived for systematic withdrawals elected on a
semi-annual or annual basis. See "How to Buy and Sell Shares" in the
Prospectus for a description of the CDSC. A shareholder's systematic
withdrawal plan may be terminated at any time by the shareholder or DLJ Focus
Funds.
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 main taining a systematic withdrawal plan, such
investment should normally be an amount equivalent to three times the annual
withdrawal or $5,000 whichever is less.
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- ------------------------------------------------------------------------------
SHAREHOLDER INVESTMENT ACCOUNT
- ------------------------------------------------------------------------------
Each Fund 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 the Focus Funds'
Transfer Agent, First Data Investor Services Group, at P.O. Box 61503 (1302
Horizon Drive), King of Prussia, PA 19406- 0903. While the Focus Funds
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.
(a) Individual Retirement Accounts ("IRA")
The Adviser has available a prototype form of a traditional
IRA for investment in shares of any one or more Funds. Under the Code,
individuals may currently make tax-deferred IRA contributions of up to $2,000
annually. Married individuals filing jointly may make tax-deferred
contributions of up to $2,000 for each spouse if the combined compensation of
both spouses is at least equal to the contributed amount. Contributions to a
traditional 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 a traditional IRA is not
subject to federal income tax until withdrawn in accordance with the Code.
Investors may
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<PAGE>
be subject to penalties or additional taxes on contributions to or withdrawals
from traditional IRAs under certain circumstances.
The Adviser has available a prototype form of the new Roth
IRA. Unlike traditional IRAs, contributions to a Roth IRA are not currently
deductible. However, amounts within a Roth IRA account will accumulate
tax-free, and qualified distributions from a Fund held within such an account
will not be included in a shareholder's taxable income. An individual may
contribute a maximum of $2,000 annually to a Roth IRA ($4,000 for joint
returns). However, such limit is calculated in the aggregate with
contributions to traditional IRAs. Roth IRAs are not available to individuals
above certain income levels.
The Adviser also has available a prototype form of the new
Education IRA for investment in shares of any one or more DLJ Focus Funds.
Like the Roth IRA, contributions are not currently deductible. However, the
investment earnings accumulate tax-free, and qualifying distributions used for
higher education expenses are not taxable. An individual may contribute a
maximum of $500 per account annually. In addition, Educational IRA's are not
available to individuals above certain income levels.
(b) 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.
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(c) Savings Incentive Match Plan for Employees ("SIMPLE")--SIMPLE IRA and
SIMPLE 401(k)
SIMPLE plans offer employers with 100 or fewer eligible
employees who earned at least $5,000 from the employer in the preceding
calendar year the ability to establish a retirement plan that permits employee
contributions. An employer may also elect to make additional contributions to
these Plans. Please telephone DLJ Focus Funds' shareholder servicing
representatives at (800) 225-8011 for more information.
(d) 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 of the
Focus 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 stating that the prototype retirement plan is acceptable by
qualified employers.
(e) Self-Directed Retirement Plans
Shares of the Focus Funds 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 DLJ Focus Funds' Distributor.
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<PAGE>
- ------------------------------------------------------------------------------
NET ASSET VALUE
- ------------------------------------------------------------------------------
Net asset value per share is computed each Fund Business Day
in accordance with the Focus Funds' Amended and Restated 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, Martin Luther King Jr. 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 NAV is calculated by
taking the sum of the value of a 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
of shares. 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 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 in amount by approximately the differential of the accrual of
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distribution fees. The net asset value of Class D shares will generally be
higher than for Class A or Class B shares due to the lack of distribution or
service fees.
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 DLJ Focus Funds, 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 DLJ Focus
Funds 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 a like manner. Portfolio securities traded
on more than one national securities exchange are valued at the last sale
price on the business day as of which such value is being determined at the
close of the exchange representing the principal market for such securities.
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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
source that 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
prices 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 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 DLJ Focus Funds.
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- ------------------------------------------------------------------------------
TAXES, DIVIDENDS, AND DISTRIBUTIONS
- ------------------------------------------------------------------------------
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 the distributions 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
distributions 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 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
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gain, a portion of each distribution generally will be treated as a tax free
return of capital. Dis tributions 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.
Upon a redemption or other disposition of shares of a Fund,
a shareholder will generally recognize gain or loss in an amount equal to the
difference between the amount realized and the shareholder's tax basis in such
shares. Generally, such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the shareholder's holding period for such
shares exceeds one year. Long-term capital gain of a non-corporate shareholder
is generally subject to a maximum tax rate of 28% in respect of property held
for more than one year and to a maximum tax rate of 20% in respect of property
held in excess of 18 months.
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 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
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("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 dimin ished 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 recently enacted legislation, a corporate shareholder
would not be entitled to a dividends-received deduction for dividends paid or
accrued after September 5, 1997 unless the 45 day holding period were
satisfied over a period immediately before or immediately after the
shareholder became entitled to receive the dividend. A transition rule
provides that the provision will not apply to dividends received within two
years of the date of enactment if (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 was identified
by the taxpayer by September 30, 1997.
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.
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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 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 net capital gain income (the
excess of short
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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 month would be deemed paid
by a Fund and taxable to its 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 the difference between the amount of such includible gains
and the tax deemed paid by such shareholders in respect of such gains. 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 DLJ Growth Fund, DLJ
Small Company Value Fund and the DLJ 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 periods of the securities held by
the Funds and the character of the gains or losses realized. These
-86-
<PAGE>
provisions may also require the DLJ Growth Fund, the DLJ Small Company Value
Fund and the DLJ Growth and Income Fund to mark-to-market some of the
positions in their 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 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 DLJ'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 DLJ Municipal Trust Fund are not subject to federal
income tax if, at the close of each quarter of the DLJ Municipal Trust Fund's
taxable year, at least 50% of the value of the DLJ Municipal Trust Fund's
total assets consist of tax-exempt obligations. The DLJ 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
-87-
<PAGE>
of tax-exempt interest income from the DLJ Municipal Trust Fund. Distributions
of taxable interest income, other investment income, and short-term capital
gains are taxable to shareholders as ordinary income. Since the DLJ 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, distri
buted by the DLJ 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 DLJ 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 DLJ 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 DLJ 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 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
-88-
<PAGE>
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.
-89-
<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. Because Class D shares have not yet been issued, no performance
information is included for Class D shares.
(a) Average Annual Total Return
The average annual total return of Class A shares for the
one, five and ten year periods ended October 31, 1998 was ____%, ____% and
____% for the Growth Fund and ____%, ____% and _____% for the DLJ Fixed Income
Fund, respectively. The average annual total return of Class A shares for the
one, five and ten year periods ended October 31, 1998 for the DLJ Small
Company Value Fund (which was previously named the Aggressive DLJ Growth Fund
and which includes its predecessor, the Neuwirth Fund, Inc.) and the DLJ
Growth and Income Fund (which includes its predecessor, the Pine Street Fund,
Inc.) was ____%, ____% and ____% for the DLJ Small Company Value Fund and
____%, ____% and ____% for the DLJ Growth and Income Fund, respectively. The
average annual total return of Class A shares for the one year period ended
October 31, 1998 for the DLJ Municipal Trust Fund was ____% and % for the
period July 28, 1993 (commencement of operations) through October 31, 1998.
The average annual total return for Class B shares for the one year period
ended October 31, 1998
-90-
<PAGE>
was _________%, ________%, _________%, ________% and ________% and for the
period February 28, 1996 (commencement of offering of Class B shares) through
October 31, 1998 was _______%, _______%, _______%, _______% and ________%, for
the DLJ Growth Fund, the Fixed Income Fund, the DLJ Small Company Value Fund,
the DLJ Growth and Income Fund and the DLJ 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 October 31, 1998, the applicable deferred sales load charged was 3%
for each of the DLJ Growth Fund, DLJ Fixed Income Fund, DLJ Small Company
Value Fund, the DLJ Growth and Income and the DLJ 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 any Fund today.
(b) Computation of the DLJ Fixed Income Fund's and DLJ Municipal Trust Fund's
30-Day Yield Quotation
The 30-day yield for each of the DLJ Fixed Income Fund and
the DLJ Municipal Trust Fund for the year ended October 31, 1998 was with
respect to Class A shares, ______% and ______%, respectively and, with respect
to Class B shares, ______% and ________%, respectively.
-91-
<PAGE>
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:
6
YIELD = 2[(a-b/cd+1) -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.
-92-
<PAGE>
- ------------------------------------------------------------------------------
GENERAL INFORMATION
- ------------------------------------------------------------------------------
(a) Counsel and Auditors
Sullivan & Cromwell, 125 Broad Street, New York, New York
10004, serves as legal counsel for DLJ.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, has been appointed as independent auditors for DLJ.
(b) Additional Information
This Statement of Additional Information does not contain
all the information set forth in the Registration Statement filed by DLJ 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.
-93-
<PAGE>
- ------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The audited financial statements of DLJ for the fiscal year
ended October 31, 1998 and the report of DLJs' independent auditors in
connection therewith are included in the October 31, 1998 Annual Report to
Shareholders. The Annual Report is incorporated by reference into this
Statement of Additional Information. You can obtain a copy of DLJ's Annual
Report by writing or calling DLJ at the address or telephone numbers set forth
on the cover of this Statement of Additional Information.
-94-
<PAGE>
- ------------------------------------------------------------------------------
Report of Independent Accountants
- ------------------------------------------------------------------------------
-95-
<PAGE>
- ------------------------------------------------------------------------------
Appendix I - Description of Security Ratings
- ------------------------------------------------------------------------------
A-1
<PAGE>
PART C
Other Information
Item 23. EXHIBITS
<TABLE>
<S> <C>
(a) Declaration of Trust
(i) Amended and Restated Declaration of Trust(1)
(ii) Amendment to Amended and Restated Declaration
of Trust(2)
(iii) Amendment No. 2 to Amended and Restated
Declaration of Trust**
(b) By-laws(3)
(c) Specimen Stock Certificates
(i) DLJ Growth Fund and Fixed Income Fund(4)
(ii) DLJ Small Company Value Fund(5)
(iii) DLJ Growth and Income Fund(6)
(iv) DLJ Municipal Trust Fund(7)
(d) Investment Advisory Contracts
(i) DLJ Growth Fund, DLJ Fixed Income Fund,
DLJ Small Company Value Fund and DLJ Growth
and Income Fund(5)
(ii) DLJ Municipal Trust Fund(8)
(e) Distribution Contracts
(i) Distribution Agreement dated as of February 25,
1996(9)
(ii) Distribution Agreement dated as of _____, 1999,
in respect of Class D Shares **
(f) Not Applicable
(g) Custodial Services Agreement(10)
(h) Form of Fidelity Bond
(i) Legal Opinion(4)
(j) Consent of Independent Auditors**
(k) Not Applicable
(l) Not Applicable
(m) Rule 12b-1 Plan
(i) DLJ Small Company Value Fund - Class A Plan(9)
(ii) DLJ Small Company Value Fund - Class B Plan(9)
(iii) DLJ Growth and Income Fund - Class A Plan(9)
(iv) DLJ Growth and Income Fund - Class B Plan(9)
(v) DLJ Growth Fund - Class A Plan(9)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(vi) DLJ Growth Fund - Class B Plan(9)
(vii) DLJ Fixed Income Fund - Class A Plan(9)
(viii) DLJ Fixed Income Fund - Class B Plan(9)
(ix) DLJ Municipal Trust Fund - Class A Plan(9)
(x) DLJ Municipal Trust Fund - Class B Plan(9)
(n) Financial Data Schedule**
(o) (i) Rule 18f-3 Plan(1)
(ii) Ameded Rule 18f-3 Plan**
<FN>
- ------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 14
to Registration Statement of DLJ Focus Funds on Form N-1A (File No.
33-3706) filed via EDGAR on December 29, 1995.
(2) Incorporated herein by reference to Post-Effective Amendment No. 16
to Registration Statement of DLJ Focus Funds on Form N-1A (File No.
33-3706) filed via EDGAR on February 20, 1997.
(3) Incorporated herein by reference to Registration Statement of DLJ
Focus Funds on Form N-1A (File No. 3706) filed March 4, 1986.
(4) Incorporated herein by reference to Pre-Effective Amendment No. 2 to
Registration Statement of DLJ Focus Funds on Form N-1A (File No.
3706) filed on November 3, 1986.
(5) Incorporated herein by reference to Post-Effective Amendment No. 8 to
Registration Statement of DLJ Focus Funds on Form N-1A (File No.
3706) filed on February 24, 1992.
(6) Incorporated herein by reference to Post-Effective Amendment No. 7 to
Registration Statement of DLJ Focus Funds on Form N-1A (File No.
3706) filed on February 3, 1992.
(7) Incorporated herein by reference to Post-Effective Amendment No. 10 to
Registration Statement of DLJ Focus Funds on Form N-1A (File
No. 3706) filed on April 22, 1993.
(8) Incorporated herein by reference to Post-Effective Amendment No. 12
to Registration Statement of DLJ Focus Funds on Form N-1A (File
No. 3706) filed on January 28, 1994.
(9) Incorporated herein by reference to Post-Effective Amendment No. 15
to Registration Statement of DLJ Focus Funds on Form N-1A (File No.
33-3706) filed via EDGAR on December 31, 1996.
(10) Incorporated herein by reference to Post-Effective Amendment No. 9 to
Registration Statement of DLJ Focus Funds on Form N-1A (File No.
3706) filed on December 31, 1992.
* Filed herewith.
** To be filed by amendment.
</TABLE>
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None.
Item 25. 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 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 (d) and (e), in response to Item 23.
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
<PAGE>
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 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
The description of Wood, Struthers & Winthrop Management Corp. under
the caption "Fund Management" in the Prospectus and "Management of the Funds"
in the Statement of Additional Information constituting Parts A and B,
respectively, of this Post-Effective Amendment to the Registration Statement
are incorporated by reference herein.
The business and other connections of the Advisor's directors and
principal executive officers are set forth below. Except as otherwise
indicated, the address of each person is 277 Park Avenue, New York, N.Y.
10272.
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS
NAME THE ADVISER CONNECTIONS
- ---- ----------- -----------
<S> <C> <C>
G. Moffett Cochran Chairman of the Board and Director of Palmer National
President of DLJ Focus Funds. Bank; President and Chairman
Martin Jaffe Managing Director, Chief President, International
Operating Officer and Treasurer Association for Financial
Vice President, Secretary and Planning, New York Chapter
Treasurer of DLJ Focus Funds;
Vice President of Donaldson
Lufkin & Jenrette Securities
Corporation.
Guy S. Waltman Vice Chairman Company Chairman, Winthrop Trust
Thomas E. Siegler Secretary
</TABLE>
<PAGE>
Item 27. PRINCIPAL UNDERWRITERS
(a) Donaldson, Lufkin & Jenrette Securities Corporation, the
Registrant's Distributor (Underwriter) also acts as a principal
underwriter, depositor, or investment advisor the following
investment companies:
DLJ Opportunity Funds
(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.
<TABLE>
<CAPTION>
OFFICE
------
<S> <C>
John S. Chalsty Director, Chairman of the Board and Chief Executive
Officer
Joe L. Roby Director, President and Chief Operating Officer
Anthony F. Daddino Director, Executive Vice President and Chief
Financial Officer
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)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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. Competiello 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 Financial Officer - and
Managing Director - Pershing Division)
Joseph D. Donnelly Senior Vice President and Associate General Counsel
(Managing Director/General Counsel - Pershing
Division)
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)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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 Financial Officer -
Capital Markets Group)
Stuart M. Robbins Senior Vice President (Managing Director -
Institutional Equities Division)
Peter O. Skoglund Senior Vice President (Investment Services Group)
</TABLE>
(c) Registrant has no principal underwriter who is not an affiliated
person of the Registrant.
Item 28. 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 "Fund
Management" in the Prospectus constituting Part A of this Post-Effective
Amendment to the Registration Statement). Additional records are maintained at
the offices of Citibank, N.A., the Registrant's Custodian, 111 Wall Street,
New York, New York 10043.
Item 29. MANAGEMENT SERVICES
Other than as set forth under the captions "Fund Management" in the
Prospectus and "Management of the Funds" in the Statement of Additional
Information, constituting Parts A and B,
<PAGE>
respectively, of this Post-Effective Amendment to the Registration Statement,
Registrant is not a party to any management-related service contract.
Item 30. UNDERTAKINGS
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant 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 9th day of December, 1998.
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:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
G. Moffet Cochran* President December 9, 1998
Chairman of the Board
- ------------------------
G. Moffet Cochran
/s/ Martin Jaffe Treasurer December 9, 1998
- ------------------------
Martin Jaffe
Robert L. Bast* Trustee December 9, 1998
- ------------------------
Robert L. Bast
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
James Engle* Trustee December 9, 1998
- ------------------------
James Engle
John J. Halsey* Trustee December 9, 1998
- ------------------------
John J. Halsey
Stig Host* Trustee December 9, 1998
- ------------------------
Stig Host
Peter F. Krogh* Trustee December 9, 1998
- ------------------------
Peter F. Krogh
Dennis Little Trustee December 9, 1998
- ------------------------
Dennis Little
William H. Mathers* Trustee December 9, 1998
- ------------------------
William H. Mathers
James L. McCabe* Trustee December 9, 1998
- ------------------------
James L. McCabe
Carl B. Menges* Trustee December 9, 1998
- ------------------------
Carl B. Menges
John J. Sheehan Trustee December 9, 1998
- ------------------------
John J. Sheehan
William C. Simpson* Trustee December 9, 1998
- ------------------------
William C. Simpson
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Stephen K. West* Trustee December 9, 1998
- ------------------------
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. 19 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. 19 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.
<TABLE>
<S> <C>
/s/ Carl B. Menges /s/ Robert L. Bast
- ------------------------ ------------------------
Carl B. Menge Robert L. Bast
<PAGE>
/s/ G. Moffett Cochran /s/ James A. Engle
- ------------------------ ------------------------
G. Moffett Cochran James A. Engle
/s/ John J. Halsey /s/ Stig Host
- ------------------------ ------------------------
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 December 9, 1998
</TABLE>
<PAGE>
Exhibit Index
A complete list of exhibits is included in Part C, Item 23 of the Registration
Statement.
