<PAGE>
As filed with the Securities and Exchange Commission on February 22, 1999
Registration No. 33-03706
Registration No. 811-04604
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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. 21 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 22 /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)
/X/ on February 23, 1999 pursuant to paragraph (b), or
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) 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
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered........................shares of beneficial
interest $.01 par value
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<PAGE>
PROSPECTUS
February 23, 1999
DLJ WINTHROP FUNDS
Leadership t h r o u g h
E x p e r i e n c e
________________________________________
DLJ Winthrop Growth Fund
DLJ Winthrop Growth and Income Fund
DLJ Winthrop Small Company Value Fund
DLJ Winthrop Fixed Income Fund
DLJ Winthrop Municipal Trust Fund
DLJ Winthrop International Equity Fund
DLJ Winthrop Developing Markets Fund
DLJ Winthrop High Income Fund
DLJ Winthrop Municipal Money Fund
DLJ Winthrop U.S. Government Money Fund
This prospectus provides information about two separate series of Funds:
the DLJ Winthrop Focus Funds and the DLJ Winthrop 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.
<PAGE>
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CONTENTS
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4 DLJ Winthrop Focus Funds' Risk Return Summary
9 DLJ Winthrop Opportunity Funds' Risk Return Summary
13 Summary of DLJ Winthrop Fund Expenses
14 Annual Fund Operating Expenses
16 Purchase Information
17 DLJ Winthrop Focus Funds' Investment Objectives and Policies
23 DLJ Winthrop Opportunity Funds' Investment Objectives and Policies
29 Additional Information on Investment Policies and Risks
33 Fund Management
35 How to Buy and Sell Shares
38 Other Shareholder Information
42 Additional Shareholder Services
44 Distribution Charges
45 Dividend and Distribution Information
45 Taxes
47 Financial Highlights
52 For More Information
<PAGE>
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 DLJ Winthrop Funds is
contained in "DLJ Winthrop Focus Funds' Investment Objectives and Policies" and
"DLJ Winthrop Opportunity Funds' 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 WINTHROP FOCUS FUNDS' RISK RETURN SUMMARY
THE DLJ WINTHROP GROWTH FUND
The DLJ Winthrop Growth Fund's investment objective is long-term
capital appreciation. The Fund seeks to achieve this objective by
investing in companies that offer long-term capital 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 FundOs requirements. Generally, the Fund attempts to
identify companies with growth rates that will exceed that of the S&P
500 Index. The Fund may also make an investment to earn income when
its Adviser believes that it will not compromise the investment
objective. To achieve this objective, 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 also invest in non-U.S. securities.
Like any investment, an investment in the DLJ Winthrop 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 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 and table illustrate the variability of the
Fund's returns by showing the rate of return from year to year and
how annual returns for 1, 5 and 10 years compare to those of the S&P
500 Composite Index, which is a broad measure of market performance.
The Fund's past performance is not necessarily an indication of how
it will perform in the future.
[BAR CHART]
1989 26%
1990 -7%
1991 28%
1992 2%
1993 14%
1994 -4%
1995 24%
1996 20%
1997 28%
1998 28%
Average Annual Total Returns
(for the periods ending December 31, 1998)
Past Year Past 5 Years Past 10 Years
--------- ------------ -------------
Growth Fund Class A 20.98% 17.16% 14.38%
Growth Fund Class B 23.40% N/A N/A
S&P 500* 28.59% 24.07% 19.21%
During the 10 year period shown in the bar chart for Class A shares, the highest
return for a quarter was 21.16% (quarter ending 12/31/98) and the lowest return
for a quarter was -15.22% (quarter ending 9/30/90).
The annual returns, referenced in the bar chart, do not include sales charges.
If sales charges were included, the annual returns would be lower than those
shown.
* The S & P 500(Registered) 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. The returns for the Fund reflect the maximum applicable sales
charges currently in effect.
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4
<PAGE>
THE DLJ WINTHROP GROWTH AND INCOME FUND
The DLJ Winthrop 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, with a focus on stability. The Adviser identifies companies
that it believes are undervalued, and waits for the market to discover
that value. A portion of the Fund is invested in debt securities that
are of investment-grade quality, U.S. Government securities, and money
market instruments. The Fund may also invest in non-U.S. securities.
There is no fixed proportion of the DLJ Winthrop Growth and Income
Fund's assets that must be invested in any particular type of security.
Like any investment, an investment in the DLJ Winthrop 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 and table illustrate the variability of the Fund's
returns by showing the rate of return from year to year and how annual
returns for 1, 5 and 10 years compare to those of the S&P 500 Composite
Index, which is a broad measure of market performance. The Fund's past
performance is not necessarily an indication of how it will perform in
the future.
[BAR CHART]
1989 25%
1990 -3%
1991 24%
1992 6%
1993 16%
1994 -2%
1995 30%
1996 22%
1997 33%
1998 19%
Average Annual Total Returns
(for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Past Year Past 5 Years Past 10 Years
--------- ------------ -------------
<S> <C> <C> <C>
Growth and
Income Fund Class A 11.77% 17.99% 15.41%
Growth and
Income Fund Class B 13.78% N/A N/A
S&P 500* 28.59% 24.07% 19.21%
</TABLE>
During the 10 year period shown in the bar chart for Class A shares, the highest
return for a quarter was 16.00% (quarter ending 12/31/98) and the lowest return
for a quarter was -9.97% (quarter ending 9/30/90).
The annual returns, referenced in the bar chart, do not include sales charges.
If sales charges were included, the annual returns would be lower than those
shown.
* The S & P 500(Registered) 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. The returns for the Fund reflect the maximum applicable sales
charges currently in effect.
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5
<PAGE>
THE DLJ WINTHROP SMALL COMPANY VALUE FUND
The DLJ Winthrop 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 capitalization 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 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 and other factors could
adversely affect your investment.
The following chart and table illustrate the variability of the Fund's
returns by showing the rate of return from year to year and how annual
returns for 1, 5 and 10 years compare to those of the Russell 2000
Index, which is a broad measure of market performance. The Fund's past
performance is not necessarily an indication of how it will perform in
the future.
[BAR CHART]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
16% -13% 51% 18% 22% -1% 20% 15% 26% -5%
Average Annual Total Returns
(for the periods ending December 31, 1998)
Past Year Past 5 Years Past 10 Years
Small Company
Value Fund Class A -10.10% 9.17% 13.01%
Small Company
Value Fund Class B -9.19% N/A N/A
Russell 2000* -2.55% 11.86% 12.92%
During the 10 year period shown in the bar chart for Class A shares, the highest
return for a quarter was 17.81% (quarter ending 3/31/91) and the lowest return
for a quarter was -18.15% (quarter ending 9/30/98).
The annual returns, referenced in the bar chart, do not include sales charges.
If sales charges were included, the annual returns would be lower than those
shown.
*The Russell(Registered) 2000 Index is an unmanaged index of common stock prices
and is composed of the 2,000 smallest companies in the Russell 3000 Index. The
Russell 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. The returns for the Index not include any sales charges, fees
or other expenses. The returns for the Fund reflect the maximum applicable sales
charges currently in effect.
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6
<PAGE>
THE DLJ WINTHROP FIXED INCOME FUND
The DLJ Winthrop 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. The Fund seeks to
achieve its objective by investing primarily in a diversified portfolio
of high-grade intermediate-term corporate bonds and U.S. Government
securities, as well as in commercial paper and obligations issued or
guaranteed by national or state banks. 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. The Fund seeks to limit risk by selecting
investment-grade debt securities.
While the Fund seeks investments that will satisfy its 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. As interest rates rise, absent other
factors, bond prices and the value of your investments will fall. These
factors could adversely affect your investment.
The following chart and table illustrate the variability of the Fund's
returns by showing the rate of return from year to year and how annual
returns for 1, 5 and 10 years compare to those of the Lehman Brothers
Government/Corporate Intermediate Index, which is a broad measure of
market performance. The Fund's past performance is not necessarily an
indication of how it will perform in the future.
[BAR CHART]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
14% 9% 14% 7% 10% -4% 15% 3% 8% 8%
Average Annual Total Returns
(for the periods ending December 31, 1998)
Past Year Past 5 Years Past 10 Years
Fixed Income
Fund Class A 2.47% 4.52% 7.67%
Fixed Income
Fund Class B 2.83% N/A N/A
Lehman Index* 8.42% 6.59% 8.51%
During the 10 year period shown in the bar chart for Class A shares, the highest
return for a quarter was 7.54% (quarter ending 6/30/89) and the lowest return
for a quarter was -2.88% (quarter ending 3/31/94).
This annual returns, referenced in the bar chart, do not include sales charges.
If sales charges were included, the annual returns would be lower than those
shown.
* 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 and does not include fees or expenses in its calculation.
The returns for the Fund reflect the maximum applicable sales charges.
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7
<PAGE>
THE DLJ WINTHROP MUNICIPAL TRUST FUND
The DLJ Winthrop 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. By high-grade tax-exempt municipal securities we
mean securities rated Aaa, Aa, A or MIG-1 by Moody's or AAA, AA, A or
SP-1 by S&P. It is important to note that unlike most other municipal
bond funds, this Fund's objective is not 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 investment-grade debt securities and by maintaining
an average maturity of between five and ten years.
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. As interest rates rise, absent
other factors, bond prices and the value of your investment will fall.
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. These factors and others could adversely
affect your investment.
The following chart and table illustrate the variability of the Fund's
returns by showing the rate of return from year to year and how annual
returns for 1 and 5 years and from inception, compare to those of the
Lipper Intermediate Municipal Fund Index, which is a broad measure of
market performance. The Fund's past performance is not necessarily an
indication of how it will perform in the future.
[BAR CHART]
1994 1995 1996 1997 1998
- -3% 12% 4% 8% 5%
Average Annual Total Returns
(for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
Past Year Past 5 Years From Inception on 7/28/93
<S> <C> <C> <C>
Municipal Trust
Fund Class A 0.11% 3.91% 4.10%
Municipal Trust
Fund Class B 0.36% N/A N/A
LIMI* 5.62% 5.13% 5.41%
</TABLE>
During the 5 year period shown in the bar chart for Class A shares, the highest
return for a quarter was 4.52% (quarter ending 3/31/95) and the lowest return
for a quarter was -4.18% (quarter ending 3/31/94). 1994 was the first full year
of operations.
The annual returns, referenced in the bar chart, do not include sales charges.
If sales charges were included, the annual returns would be lower than those
shown.
*The Lipper Intermediate Municipal Fund Index ("LIMI") is an equally weighted
index of the largest funds in the Lipper Analytical Intermediate Municipal Debt
Funds, adjusted for capital gains and income dividends. The returns for the Fund
reflect the maximum applicable sales charges.
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8
<PAGE>
DLJ WINTHROP OPPORTUNITY FUNDS' RISK RETURN SUMMARY
THE DLJ WINTHROP DEVELOPING MARKETS FUND
The DLJ Winthrop 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 its objective by investing in companies from the countries
included in the Morgan Stanley Capital Index ("MSCI") Emerging Markets
Free Index that are identified by the Adviser as being best positioned
to take advantage of certain economic and political factors. The Fund
seeks to identify countries, and then the industries, where economic
and political factors are likely to produce above average growth. The
Fund uses a fundamental analysis on common stock in countries the
Adviser believes demonstrate a strong potential for expansion, a trend
toward modernizing production and high levels of economic growth. The
Fund invests in securities of issuers in at least three different
developing countries. You should not invest in this Fund if your
principal objective is assured income or capital preservation.
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.
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) from issuers in developing markets. Investments in
non-U.S. securities present additional risks including 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 and foreign
exchange rates. These and other factors could adversely affect your
investment.
The following chart and table illustrate the variability of the Fund's
returns by showing the rate of return from year to year and how annual
returns for 1 year and from inception, compare to those of the MSCI
Emerging Markets Free Index, which is a broad measure of market
performance. The Fund's past performance is not necessarily an
indication of how it will perform in the future.
[BAR CHART]
1996 1997 1998
4% -6% -22%
Average Annual Total Returns
(for the periods ending December 31, 1998)
Past Year From inception on 9/8/95
Developing Markets
Fund Class A -26.61% -10.1%
Developing Markets
Fund Class B -25.89% -9.38%
MSCI Emerging
Markets Free Index* -25.34% -11.04%
During the 3 year period shown in the bar chart for Class A shares, the highest
return for a quarter was 13.43% (quarter ending 12/31/98) and the lowest return
for a quarter was -21.96% (quarter ending 6/30/98). 1996 was the first full
calendar year of operation.
The annual returns, referenced in the bar chart, do not include sales charges.
If sales charges were included, the annual returns would be lower than those
shown.
* 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. The returns for the Fund reflect the maximum applicable sales
charges.
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9
<PAGE>
THE DLJ WINTHROP INTERNATIONAL EQUITY FUND
The DLJ Winthrop 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 1,000 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 greater price
volatility and a lack of liquidity. The Fund is also subject to risks
that affect equity securities markets in general, such as general
economic conditions and adverse changes in interest and foreign
exchange rates. These and other factors could adversely affect your
investment.
The following chart and table illustrate the variability of the Fund's
returns by showing the rate of return from year to year and how annual
returns for 1 year and from inception, compare to those of the
MSCI-EAFE Index, which is a broad measure of market performance. The
Fund's past performance is not necessarily an indication of how it will
perform in the future.
[BAR CHART]
1996 1997 1998
6% 7% 18%
Average Annual Total Returns
(for the periods ending December 31, 1998)
Past Year From inception on 9/8/95
International Equity
Fund Class A 10.90% 7.70%
International Equity
Fund Class B 12.82% 8.59%
MSCI-EAFE* 20.33% 10.24%
During the 3 year period shown in the bar chart for Class A shares, the highest
return for a quarter was 18.19% (quarter ending 12/31/98) and the lowest return
for a quarter was -15.46% (quarter ending 9/30/98). 1996 was the first full
calendar year of operation.
The annual returns, referenced in the bar chart, do not include sales charges.
If sales charges were included, the annual returns would be lower than those
shown.
* The MSCI-EAFE(Registered) 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.
The returns for the Fund reflect the maximum applicable sales charges.
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10
<PAGE>
THE DLJ WINTHROP MUNICIPAL MONEY FUND
The DLJ Winthrop 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. The Fund earns income at current money market
rates, and its yield generally reflects short-term interest rates which
vary from day to day. Such municipal securities will have varying
lengths of maturities but will generally have remaining maturities of
one year or less. In general, securities with longer maturities are
more vulnerable to price changes, although they may provide higher
yields.
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.
Because this Fund began operations in February, 1997, the chart only
shows the first full calendar year of performance which is 1998. The
Fund's past performance is not necessarily an indication of how it will
perform in the future.
[BAR CHART]
1998
3%
Average Annual Total Returns
(for the periods ending December 31, 1998)
Past Year From inception on 2/24/97
Municipal
Money Fund 2.65% 2.77%
Seven Day Yield as of December 31, 1998 was 2.77%
During the one year period shown in the bar chart, the highest return for a
quarter was 0.70% (quarter ending 6/30/98) and the lowest return for a quarter
was 0.62% (quarter ending 3/31/98).
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11
<PAGE>
THE DLJ WINTHROP U.S. GOVERNMENT MONEY FUND
The DLJ Winthrop 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, including issues of the U.S.
Treasury and other government agencies, which generally have remaining
maturities of one year or less and collateralized repurchase
agreements.
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 Fund earns income at current market rates,
and its yield generally reflects short-term interest rates, which vary
from day to day.
Because this Fund began operations in February, 1997, the chart only
shows the first full calendar year of performance which is 1998. The
Fund's past performance is not necessarily an indication of how it will
perform in the future.
[BAR CHART]
1998
5%
Average Annual Total Returns
(for the periods ending December 31, 1998)
Past Year From inception on 2/24/97
U.S. Government
Money Fund 4.69% 4.73%
Seven Day Yield as of December 31, 1998 was 4.18%
During the 1 year period shown in the bar chart, the highest return for a
quarter was 1.19% (quarter ending 9/30/98) and the lowest return for a quarter
was 1.08% (quarter ending 12/31/98).
THE DLJ WINTHROP HIGH INCOME FUND
The DLJ Winthrop High Income Fund's primary investment objective is to
provide a high level of current income and a secondary objective is
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 fixed income securities
deemed to be of comparable quality. Lower grade fixed income securities
are commonly known as "junk bonds".
This investment objective causes it 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 market value of
longer maturity debt securities, like those held by the Fund, is more
- --------------------------------------------------------------------------------
12
<PAGE>
sensitive to interest rate changes than the market value of shorter
maturity debt securities. 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.
SUMMARY OF DLJ WINTHROP FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
This table describes the fees and expenses that you may pay if you buy
and hold shares of the DLJ Winthrop Funds.
<TABLE>
<CAPTION>
Money
Fixed Income Funds* Equity Funds** Funds**
------------------------------------ ------------------------------------ --------
SHAREHOLDER FEES: Class A (1) Class B (2) Class D Class A (1) Class B (2) Class D
(These fees are paid directly from ----------- ----------- ------- ----------- ----------- -------
your investment.)
<S> <C> <C> <C> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a percentage of offering
price) 4.75% None None 5.75% None None None
Maximum sales charge (load) imposed on
reinvested dividends (as a percentage
of offering price) None None None None None None None
Maximum deferred sales charge (as a
percentage of original purchase price
or redemption proceeds, as applicable) None (3) 4% (4) None None 4% (4) None None
Redemption Fees None None None None None None None
Exchange Fee None None None None None None None
</TABLE>
* Includes the Fixed Income Fund, Municipal Trust Fund and the High Income Fund.
** Includes the Growth Fund, the Growth and Income Fund, the Small Company
Value Fund, the Developing Markets Fund, and the International Equity Fund.
(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 (Contingent Deferred Sales Charge) on redemptions made
within one year of purchase. See "Other Shareholder Information."
(2) Class B shares of each Fund automatically convert to Class A shares after
eight years. The effect of the automatic conversion feature is reflected in the
Examples on page 14. See "Other Shareholder Information."
(3) DLJ Winthrop 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 "Other Shareholder Information"--"Contingent
Deferred Sales Charge on Converted Shares."
(4) 4% during the first year decreasing 1% annually to 0% after the fourth
year.
- --------------------------------------------------------------------------------
13
<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. For those Funds that have Waived
Fees below, only the After 1 Year Examples reflect the waived fees.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
Annual Fund Operating Expenses
(Expenses that are deducted from Fund assets.) 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% .73% After 1 Year $ 699 $ 602 $ 202 $ 101
Distribution (12b-1) and Service
Fees(a) .30% 1.00% .00% After 3 Years $ 960 $ 824 $ 624 $ 315
Other Expenses .26% .26% .26% After 5 Years $1,242 $1,073 $1,073 $ 547
---- ---- ---
Total Annual Fund Operating Expenses 1.29% 1.99% .99% After 10 Years $2,042 $2,136 $2,136 $1,213
Growth and Income Fund Class A Class B Class D Examples++ Class A Class B* Class B** Class D
Management Fee .60% .60% .60% After 1 Year $ 684 $ 586 $ 186 $ 85
Distribution (12b-1) and Service
Fees(a) .30% 1.00% .00% After 3 Years $ 913 $ 776 $ 576 $ 265
Other Expenses .23% .23% .23% After 5 Years $1,161 $ 990 $ 990 $ 460
---- ---- ---
Total Annual Fund Operating Expenses 1.13% 1.83% .83% After 10 Years $1,871 $1,965 $1,965 $1,025
Small Company Value Fund Class A Class B Examples++ Class A Class B* Class B**
Management Fee .75% .75% After 1 Year $ 699 $ 602 $ 202
Distribution (12b-1) and Service
Fees(a) .30% 1.00% After 3 Years $ 960 $ 824 $ 624
Other Expenses .24% .24% After 5 Years $1,242 $1,073 $1,073
---- ----
Total Annual Fund Operating Expenses 1.29% 1.99% After 10 Years $2,042 $2,136 $2,136
Fixed Income Fund Class A Class B Class D Examples++ Class A Class B* Class B** Class D
Management Fee .63% .63% .63% After 1 Year $ 572 $ 573 $ 173 $ 72
Distribution (12b-1) and Service
Fees(a) .30% 1.00% .00% After 3 Years $ 839 $ 798 $ 598 $ 289
Other Expenses .37% .37% .37% After 5 Years $1,127 $1,050 $1,050 $ 523
---- ---- ---
Total Annual Fund Operating Expenses 1.30% 2.00% 1.00% After 10 Years $1,943 $2,122 $2,122 $1,197
---- ---- ---
Waived Fees(d) (.30%) (.30%) (.30%)
Total Expenses Less Waived Fees 1.00% 1.70% .70%
Municipal Trust Fund Class A Class B Examples++ Class A Class B* Class B**
Management Fee .63% .63% After 1 Year $ 572 $ 573 $ 173
Distribution (12b-1) and Service
Fees(a) .30% 1.00% After 3 Years $ 862 $ 821 $ 621
Other Expenses .48% .48% After 5 Years $1,172 $1,096 $1,096
---- ----
Total Annual Fund Operating Expenses 1.41% 2.11% After 10 Years $2,052 $2,230 $2,230
Waived Fees(e) (.41%) (.41%)
---- ----
Total Expenses Less Waived Fees 1.00% 1.70%
Developing Markets Fund Class A Class B Examples++ Class A Class B* Class B**
Management Fee 1.25% 1.25% After 1 Year $ 781 $ 693 $ 293
Distribution (12b-1) and Service
Fees(a) .25% 1.00% After 3 Years $1,328 $1,221 $1,021
Other Expenses 1.26% 1.26% After 5 Years $1,900 $1,770 $1,770
----- -----
Total Annual Fund Operating
Expense(b) 2.76% 3.51% After 10 Years $3,445 $3,575 $3,575
Waived Fees(f) (.61%) (.61%)
Total Expenses Less Waived Fees 2.15% 2.90%
----- -----
</TABLE>
- --------------------------------------------------------------------------------
14
<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% 1.25% After 1 Year $781 $693 $293 $193
Distribution (12b-1) and Service Fees(a) .25% 1.00% .00% After 3 Years $1,229 $1,118 $918 $618
Other Expenses .75% .75% .75% After 5 Years $1,702 $1,568 $1,568 $1,069
----- ----- -----
Total Annual Fund Operating Expenses(b) 2.25% 3.00% 2.00% After 10 Years $3,004 $3,135 $3,135 $2,319
Waived Fees (g) (.10%) (.10%) (.10%)
Total Expenses Less Waived Fees 2.15% 2.90% 1.90%
----- ----- -----
Municipal Money Fund Examples+
Management Fees .40% After 1 Year $92
Distribution (12b-1) and Service Fees(c) .25% After 3 Years $319
Other Expenses .40% After 5 Years $565
-----
Total Annual Fund Operating Expenses 1.05% After 10 Years $1,269
Waived Fees (h) (.15%)
-----
Total Expenses Less Waived Fees .90%
U.S. Government Money Fund Examples+
Management Fees .40% After 1 Year $92
Distribution (12b-1) and Service Fees(c) .25% After 3 Years $341
Other Expenses .50% After 5 Years $609
-----
Total Annual Fund Operating Expenses 1.15% After 10 Years $1,375
Waived Fees (i) (.25%)
Total Expenses Less Waived Fees .90%
-----
High Income Fund Class A Class B Class D Examples Class A Class B* Class B** Class D
Management Fees .70% .70% .70% After 1 Year $582 $588 $188 $87
Distribution (12b-1) and Service Fees (a) .25% 1.00% .00% After 3 Years $849 $823 $623 $314
Other Expenses (k) .35% .35% .35%
----- ----- -----
Total Annual Fund Operating Expenses(k) 1.30% 2.05% 1.05%
Waived Fees (j) (.20%) (.20%) (.20%)
Total Expenses Less Waived Fees 1.10% 1.85% .85%
----- ----- -----
</TABLE>
* 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.
(d) Adviser has undertaken, in writing, to limit Total Expenses of the Fixed
Income Fund to .70%, 1.00%, and 1.70% per year for the Fund's Class D,
Class A and Class B shares, respectively. This arrangement will remain in
place at least until October 31, 1999.
(e) The Adviser has undertaken, in writing, to limit Total Expenses of the
Municipal Trust Fund to 1.00% and 1.70% per year for the Fund's Class A and
Class B shares, respectively. This arrangement will remain in place at
least until October 31, 1999.
(f) The Adviser has undertaken, in writing, to limit Total Expenses of the
Developing Markets Fund to 2.15% and 2.90% per year for the Fund's Class A
and Class B shares, respectively. This arrangement will remain in place at
least until October 31, 1999.
(g) The Adviser has undertaken, in writing, to limit Total Expenses of the
International Equity Fund to 1.90%, 2.15% and 2.90% per year for the Fund's
Class D, Class A and Class B shares, respectively. This arrangement will
remain in place at least until October 31, 1999.
(h) The Adviser has undertaken, in writing, to limit Total Expenses of the
Municipal Money Fund to .90% per year. This arrangement will remain in
place at least until October 31, 1999.
(i) The Adviser has undertaken, in writing, to limit Total Expenses of the U.S.
Government Money Fund to .90% per year. This arrangement will remain in
place at least until October 31, 1999.
(j) The Adviser has undertaken, in writing, to limit Total Expenses, of the
High Income Fund to .85%, 1.10% and 1.85% per year for the Fund's Class D,
Class A and Class B shares, respectively. This arrangement will remain in
place at least until October 31, 1999.
(k) Prior to the date of this prospectus, the High Income Fund had not
commenced operations. Accordingly, these percentages are estimates.
- --------------------------------------------------------------------------------
15
<PAGE>
PURCHASE INFORMATION
Shares of the DLJ Winthrop Municipal Money Fund and the DLJ Winthrop
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. Share certificates will not be issued for full or
fractional shares of the Fund. Further information can be obtained
from DLJ Winthrop at the address and telephone number shown on the
back cover of this Prospectus. See "How to Buy and Sell Shares" and
"Other Shareholder Information."
The Funds, except the Money Funds, offer Class A and Class B shares.
Class A shares may be purchased at the net asset value per share 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 at the net asset
value per share, but are subject to a CDSC upon redemption. The CDSC
applicable to Class B shares declines from 4% for redemptions made
during the first 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 401(k)
Retirement Savings Plan. These employees should contact the DLJ 401(k)
Hotline at 1-877-401k-DLJ concerning how to purchase Class D shares.
See "How to Buy and Sell Shares."
Shares of the Money Funds may be purchased at a price equal to the net
asset value per share of each Money Fund, which is expected to be
$1.00 per share. See "Net Asset Value" in the side-bar included on
this page.
The DLJ Winthrop Opportunity Funds and the DLJ Winthrop Focus Funds
are different legal entities and are separately offering their
securities through this Prospectus. Based on the advice of counsel,
the Funds believe that the potential liability of each Fund with
respect to the disclosure in this Prospectus extends only to the
disclosure relating to that Fund.
- -------------------------------------------------------------------------------
Net Asset Value: [GRAPHIC]
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. The price at which a purchase
or redemption is effected is based on the next calculation of NAV after the
order is placed.
For the Money Funds, the NAV 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 Winthrop 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.
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
16
<PAGE>
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.
DLJ WINTHROP FOCUS FUNDS' INVESTMENT OBJECTIVES AND POLICIES
DLJ WINTHROP GROWTH FUND
Goal: The investment objective of the DLJ Winthrop 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 and 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 new and unseasoned 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 Fund's 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. (See "Risks for the Growth Fund and the
Growth and Income Fund" on page 18.)
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 the potential for 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
non-U.S. 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
- --------------------------------------------------------------------------------
17
<PAGE>
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
Information on Investment Policies and Risks.")
DLJ WINTHROP GROWTH AND INCOME FUND
Goal: The investment objective of the DLJ Winthrop 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 Information on 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. The Growth and Income Fund may invest in non-U.S.
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 Information on
Investment Policies and Risks."
- --------------------------------------------------------------------------------
Risks for the Growth Fund and the Growth and Income Fund: [GRAPHIC]
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.
The Growth Fund and Growth and Income Fund may each invest in unlisted
securities. 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.
The Growth Fund and the Growth and Income Fund may each invest in non-
U.S. securities. 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 involve political systems, economies
and markets that may not be as developed as in the U.S. See "Additional
Information on Investment Policies and Risks".
- --------------------------------------------------------------------------------
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18
<PAGE>
DLJ WINTHROP SMALL COMPANY VALUE FUND
Goal: The investment objective of the DLJ Winthrop 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 the
purpose 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
devel-
- --------------------------------------------------------------------------------
Risks for the Small [GRAPHIC]
Company Value Fund:
The investment objective for the 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 typical "large company" mutual fund.
The 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.
The Small Company Value Fund may invest in various types of debt securities.
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.
(Continued on next page)
- --------------------------------------------------------------------------------
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19
<PAGE>
opment 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, 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), 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 non-U.S. securities;
o invest up to 5% of total assets in rights or warrants; and
o invest not more than 10% of net assets in instruments having
no ready market.
However, the Fund does not invest in restricted securities.
DLJ WINTHROP FIXED INCOME FUND
Goal: The investment objective of the DLJ Winthrop 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 non-convertible 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.
- --------------------------------------------------------------------------------
(continued from previous page)
The Fund may also invest in unlisted securities. 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.
The Fund may also invest in non-U.S. securities. 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.
The Fund also may invest in options, warrants and financial futures contracts.
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 Information on
Investment Policies and Risks."
- --------------------------------------------------------------------------------
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20
<PAGE>
Capital preservation means minimizing the risk of capital loss in a
period of falling prices (rising interest rates) for debt securities.
Strategy: This 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 this Fund's portfolio is
adjusted based on the Adviser'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 least 65% of the value of its total
assets in fixed income securities. The 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.
The Fixed Income Fund may also invest not more than 25% 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 Information on Investment Policies and Risks" for a
description of securities rated BBB by S&P and Baa by Moody's.) 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.
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Risks for the Fixed Income
Fund and the Municipal [GRAPHIC]
Trust Fund:
While these 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.
Each Fund may invest in unlisted securities. 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 statuses, political and legislative changes and
the rights of their holders. These factors could adversely affect your
investment.
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High Quality Ratings: [GRAPHIC]
High quality ratings are Aaa, Aa, A or MIG-1 by Moody's, or AAA, AA, A or SP-1
by S&P.
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21
<PAGE>
DLJ WINTHROP MUNICIPAL TRUST FUND
Goal: The investment objective of the DLJ Winthrop 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 exempt from federal and/or state income tax. Total return means
the sum of net investment 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 "Dividend 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 Adviser's assessment of anticipated interest rate
movements and relative yields. The Municipal Trust Fund currently
maintains an average maturity of between 5 and 10 years in 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 Adviser'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. (See "Risks for the Fixed
Income Fund and the Municipal Trust Fund" on page 21.)
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 Information on
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.
Fluctuations in market value of the Municipal Trust Fund's portfolio
resulting from fluctuations in interest rates will generally be
greater at times when the average maturity of the Municipal Trust
Fund's portfolio is longer.
The Municipal Trust Fund may enter into repurchase agreements,
terminable within seven days or less. 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. The
Municipal Trust Fund reserves the right to hold cash and short-term
fixed income
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22
<PAGE>
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
alternative minimum tax ("AMT"), and taxable ordinary income and
capital gains. (See "Dividend and Distribution Information" and
"Taxes.")
DLJ WINTHROP OPPORTUNITY FUNDS'
INVESTMENT OBJECTIVES AND POLICIES
The International Funds
DLJ WINTHROP DEVELOPING MARKETS FUND
Goal: The investment objective of the DLJ Winthrop 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 and
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.
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 non-U.S. securities in the form of
sponsored or unsponsored depository receipts or other securities
restricted or otherwise representing underlying shares of non-U.S.
issuers. This 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 man-
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Developing Markets [GRAPHIC]
Fund Risks:
Like any investment, an investment in the Developing Markets Fund is subject to
risk and you could lose money. While the Fund selects investments that the Fund
believes will experience long-term appreciation, their value could decline. 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.
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
non-U.S. 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 securities markets and the possibility
of a low or nonexistent volume of trading in developing countries 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.
- --------------------------------------------------------------------------------
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23
<PAGE>
agement 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 Markets Free Index. Those countries currently include
Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt,
Greece, Hungary, India, Indonesia, Israel, Jordan, Korea, Mexico,
Pakistan, Peru, Philippines, Poland, 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.
For additional information on the use, risks and costs of the above
referenced policies and practices, see "Additional Information on
Investment Policies and Risks."
DLJ WINTHROP INTERNATIONAL EQUITY FUND
Goal: The investment objective of the DLJ Winthrop International
Equity Fund is long-term growth of capital by investing primarily in
common stocks and other equity securities from established non-U.S.
markets. During normal market conditions, the Fund invests most of its
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, the Netherlands, New Zealand, Portugal,
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,
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ADRs: [GRAPHIC]
ADRs are Depositary Receipts typically issued by a U.S. bank or trust company
which evidence ownership of the underlying securities issued by a non-U.S.
corporation.
EDRs and GDRs are Depositary Receipts typically issued by non-U.S. banks or
trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of the underlying securities issued by either
a non-U.S. 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, 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
with up to 35% of their assets, pending investment of proceeds from new sales
of International Funds' shares or to meet ordinary daily cash needs.
- --------------------------------------------------------------------------------
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24
<PAGE>
warrants, 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 non-U.S. securities in the form of
sponsored or unsponsored depositary receipts or other securities
representing underlying shares of non-U.S. issuers. This Fund may
invest a limited amount of 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 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.
For additional information on the use, risks and costs of the above
referenced policies and practices, see "Additional Information on
Investment Policies and Risks."
The Money Funds
DLJ WINTHROP MUNICIPAL MONEY FUND
Goal: The DLJ Winthrop 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 municipal securities. One hundred percent of the
securities the Fund invests in are high quality having remaining
maturities of one year or less, although their 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
- --------------------------------------------------------------------------------
Risks for the International [GRAPHIC]
Equity Fund:
Like any investment, an investment in the International Equity Fund is subject
to risk and you could lose money. While the Fund selects investments the Fund
believes will experience long-term appreciation, their value could decline.
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.
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 non-U.S.
custodians.
- --------------------------------------------------------------------------------
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25
<PAGE>
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
Information on Investment Policies and Risks--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 "Dividend and
Distribution Information" 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.
For additional information on the use, risks and costs of the above
referenced policies and practices, see "Additional Information on
Investment Policies and Risks."
DLJ WINTHROP U.S. GOVERNMENT MONEY FUND
Goal: The DLJ Winthrop U.S. Government Money 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 U.S.
Government Money 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 U.S. Government Money Fund's investments
could cause its net asset value per share to deviate from $1.00.
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Risks for the Municipal [GRAPHIC]
Money Fund:
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 Funds total assets allowed under Rule 2a-7
of the 1940 Act.
The Municipal Money Fund earns income at current money market rates and its
yield varies 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.
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26
<PAGE>
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. Investments in young companies with
limited operating histories may involve risks not present in
investments in established and well-known companies.
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.
For additional information on the use, risks and costs of the above
referenced policies and practices, see "Additional Information on
Investment Policies and Risks."
DLJ WINTHROP HIGH INCOME FUND
Goal: The DLJ Winthrop High Income Fund seeks a high level of current
income and a secondary objective of 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
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U.S. Government Money [GRAPHIC]
Fund 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 U.S. Government 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 U.S. Government Money Fund nor
its yield is insured or guaranteed by the U.S. Government.
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To maintain portfolio diversification [GRAPHIC]
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.
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27
<PAGE>
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.
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High Income Fund Risks: [GRAPHIC]
While the Fund seeks 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. The Fund is 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 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.
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28
<PAGE>
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" include 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 Winthrop 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.
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 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
- --------------------------------------------------------------------------------
29
<PAGE>
DLJ WINTHROP FUNDS PURCHASE APPLICATION
<TABLE>
<S> <C>
THE DLJ WINTHROP FOCUS FUNDS THE DLJ WINTHROP OPPORTUNITY FUNDS
DLJ Winthrop Growth Fund DLJ Winthrop International Equity Fund
DLJ Winthrop Growth and Income Fund DLJ Winthrop Developing Markets Fund
DLJ Winthrop Small Company Value Fund DLJ Winthrop High Income Fund
DLJ Winthrop Fixed Income Fund DLJ Winthrop Municipal Money Fund
DLJ Winthrop Municipal Trust Fund DLJ Winthrop U.S. Government Money Fund
</TABLE>
Complete the entire application and return it to your financial advisor or mail
it to: DLJ WINTHROP FUNDS, C/O FIRST DATA INVESTOR SERVICES, INC., P.O. BOX
61503, (211 S. GULPH RD.), KING OF PRUSSIA, PA 19406-3101. For assistance, call
(800) 225-8011, option 2.
1. ACCOUNT REGISTRATION
<TABLE>
<S> <C>
Today's Date:________________________, Yr _____ Existing Account #______________________________
(if applicable)
</TABLE>
<TABLE>
<S> <C>
/ / INDIVIDUAL OR JOINT ACCOUNT
- -
- ------------------------------------------------------------------ ----------------------
Owner's Name (first name) (MI) (last name) Social Security Number
(required to open account)
- ------------------------------------------------------------------
Joint Owner's Name (first name) (MI) (last name) *Joint Tenants with right of survivorship unless otherwise indicated.
/ / GIFT TO A MINOR
- ---------------------------------------------------------------
Custodian (first name) (MI) (last name)
- ---------------------------------------------------------------
Minor (first name) (MI) (last name)
- -
- ---------------------- UNDER THE _________ UNIFORM GIFTS TO MINORS ACT
Minor's Social Security Number (required to open account) (Minor's state residence)
/ / OTHER
- -
- ------------------------------------------------------------------ ----------------------
Name of corporation, organization, trust, etc. Tax ID Number
/ / ADDRESS
- -------------------------------------------------------------------------------------------------------
Street City State
- -------------------------------------------------------------------------------------------------------
Zip Code Daytime Phone Evening Phone
</TABLE>
2. INITIAL INVESTMENT
Please indicate the dollar amount you will invest in each Fund and the class of
shares you will purchase. If no class is selected, Class A shares will be
purchased. Initial minimum per fund is $250. Maximum for Class B is $250,000.
Minimums are waived for SEP, SIMPLE, 401(k), 403B and 457 plans. Subsequent
purchases can be made for $25 or more. MAKE CHECKS PAYABLE TO DLJ WINTHROP
FUNDS.
<TABLE>
<CAPTION>
$ AMOUNT CLASS(FUND NUMBER)
------ ------------------
<S> <C> <C> <C>
DLJ Winthrop Growth Fund --------------- / / Class A (530) / / Class B (630)
DLJ Winthrop Growth and Income Fund --------------- / / Class A (535) / / Class B (635)
DLJ Winthrop Small Company Value Fund --------------- / / Class A (534) / / Class B (634)
DLJ Winthrop Fixed Income Fund --------------- / / Class A (531) / / Class B (631)
DLJ Winthrop Municipal Trust Fund --------------- / / Class A (536) / / Class B (636)
DLJ Winthrop International Equity Fund --------------- / / Class A (541) / / Class B (641)
DLJ Winthrop Developing Markets Fund --------------- / / Class A (540) / / Class B (640)
DLJ Winthrop High Income Fund --------------- / / Class A (544) / / Class B (644)
DLJ Winthrop Municipal Money Fund --------------- (042)
DLJ Winthrop U.S. Government Money Fund --------------- (043)
</TABLE>
<PAGE>
3. REDUCED SALES CHARGES (CLASS A ONLY)
If you, your spouse or minor children currently own shares in DLJ Winthrop
Funds, you may be eligible for a reduced sales charge. List any existing
accounts to be considered and, if eligible, complete the Rights of Accumulation
or the Letter of Intent sections below.
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------- ------------------------------ --------------------------
Fund Account Number Fund Account Number
- ----------------------------- ----------------------- ------------------------------ --------------------------
Fund Account Number Fund Account Number
</TABLE>
/ / RIGHT OF ACCUMULATION Please link the accounts listed above for Right of
Accumulation privileges so that this purchase will receive any allowable
discount.
/ / LETTER OF INTENT I agree to the terms of the Letter of Intent set forth in
the prospectus (including escrowing of shares). Although I am not obligated to
do so, it is my intention to invest the following amount over a 13-month period
in one or more DLJ Winthrop Funds in an aggregate amount at least equal to:
/ / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000
If the full amount indicated is not purchased within 13 months, I understand an
additional sales charge must be paid from my account.
4. DISTRIBUTION OPTIONS
If no instructions are given, all distributions will be reinvested in additional
shares of the Fund.
<TABLE>
<S> <C> <C> <C>
INCOME DIVIDENDS (SELECT ONE): / / Reinvest / / Pay in cash / / Use Dividend Direction Option
CAPITAL GAINS DISTRIBUTION (SELECT ONE): / / Reinvest / / Pay in cash / / Use Dividend Direction Option
</TABLE>
DIVIDEND DIRECTION OPTION -- I/we hereby authorize and request that my/our
distributions be either (A) paid to the person and/or address designated below
or (B) reinvested into my/our account which we currently maintain in another DLJ
Winthrop Fund:
<TABLE>
<S> <C>
A.
-------------------------------------------------------------------------------------------------
Name Address
-------------------------------------------------------------------------------------------------
City, State, Zip
Account or Policy Number (if applicable) ____________________________________________
B.
-------------------------------------------------------------------------------------
Fund Name Existing Account Number
-------------------------------------------------------------------------------------
Fund Name Existing Account Number
</TABLE>
5. SHAREHOLDER OPTIONS
A. AUTOMATIC MONTHLY INVESTMENT PLAN -- ($25 MINIMUM)
I hereby authorize DLJ Winthrop to draw on my bank account on or about
the / / 10th / / 15th or / / 20th day of each month for regular
investment in my Fund account in the amount(s) referenced below.
ATTACH A PREPRINTED VOIDED CHECK FROM THE BANK ACCOUNT YOU WISH TO USE.
<TABLE>
<S> <C> <C> <C>
$ $
- ------------------------------------ -------------- ------------------------------------ --------------
Fund Name Amount Fund Name Amount
- ------------------------------------ -------------- ------------------------------------ --------------
Individual Account Owner Signature Date Joint Account Owner Signature Date
</TABLE>
B. TELEPHONE TRANSACTIONS
TELEPHONE EXCHANGE PRIVILEGE -- I understand that unless I have checked
the box below, this privilege will automatically apply.
NOTE: Telephone exchanges may only be processed between accounts that
have identical registrations.
/ / I do not elect the telephone exchange privilege.
TELEPHONE REDEMPTION PRIVILEGE -- I authorize the Funds or their transfer
agent to effect the redemption of Fund shares for my account according to
my telephone instructions or telephone instructions from my Broker/Agent.
I understand that unless I have checked a box below, this redemption
privilege will automatically apply: mail redemption proceeds to the name
and address in which my Fund account is registered.
I do not elect the proceeds to be mailed. I authorize the following:
/ / Deposit via automated clearing house (ACH) to the commercial bank
referenced in Section 6
/ / Wire redemption proceeds to the bank referenced in Section 6 and
charge my Fund account the applicable wire fee
/ / I do not elect the telephone redemption privilege
NOTE: The maximum telephone redemption amount is $50,000. Telephone
redemption checks will only be mailed to the name and address of record;
and the address must have no change within the last 30 days.
<PAGE>
C. SYSTEMATIC CASH WITHDRAWAL PLAN (ALSO COMPLETE SECTION E) -- ($50 MINIMUM)
In order to establish systematic withdrawal, an investor must own or purchase
shares of the Fund having a current value of at least $10,000.
<TABLE>
<CAPTION>
FUND AMOUNT
- ---- ------
<S> <C> <C>
- ------------------------------- ------ Frequency: / / monthly / / quarterly / / semi-annually / / annually
- ------------------------------- ------ Frequency: / / monthly / / quarterly / / semi-annually / / annually
</TABLE>
Payments under this plan should be sent:
/ / By check to the name and address in which my/our Fund account is
registered
/ / By automated clearing house (ACH) deposits to my bank and account
referenced in Section 6
/ / By wire to the bank account referenced in Section 6 and charge my Fund
account the applicable wire fee
/ / By check to the Special Payee referenced below:
---------------------- --------------------------- ----------------------
Name of Payee Account or Policy Number Address
(if applicable)
NOTE: Systematic withdrawals selected on a semi-annual or annual basis are
not eligible for DLJ Winthrop's CDSC waiver.
D. AUTOMATIC EXCHANGE PLAN (ALSO COMPLETE SECTION E) -- ($50 MINIMUM)
<TABLE>
<CAPTION>
SHARE CLASS* FREQUENCY
FROM* FUND TO FUND (CIRCLE ONE) AMOUNT (CIRCLE ONE)+
- ---------- ------- ------------ ------ -------------
<S> <C> <C> <C> <C>
- ---------------------------------- ---------------------------------- A or B ----------- M Q S A
- ---------------------------------- ---------------------------------- A or B ----------- M Q S A
</TABLE>
* Automatic exchange selection must be between DLJ Winthrop Funds WITHIN THE
SAME SHARE CLASS unless it is directed to a DLJ Winthrop Money Fund, in which
class designation is not required. Automatic exchanges are only available for
accounts with identical registrations.
+ Monthly, quarterly, semi-annually or annually.
E. WITHDRAWAL OR EXCHANGE DATE
/ / I authorize this service to begin on the / / 5th / / 10th / / 15th or
/ / 25th day of ______________ , Yr_____.
F. CONSOLIDATED ACCOUNT STATEMENTS
If you prefer to receive one quarterly combined statement instead of
individual account statements, please reference the DLJ Winthrop Fund name
(include share class) and account numbers that you would like consolidated.
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------ ----------------------------------------------------------
Fund Name Class Account Number Fund Name Class Account Number
- ------------------------------------------------------ ----------------------------------------------------------
Fund Name Class Account Number Fund Name Class Account Number
</TABLE>
- --------------------------------------------------------------------------------
CHECKWRITING APPLICATION / SIGNATURE CARD
Check the DLJ Winthrop Money Fund(s) that is (are) to have checkwriting
privileges. Minimum check amount: $100.
<TABLE>
<CAPTION>
[ ] MUNICIPAL MONEY FUND [ ] U.S. GOVERNMENT MONEY FUND
<S> <C>
- ------------------------------------------------ ------------------------------------------------
Fund or Brokerage Account Number (if applicable) Fund or Brokerage Account Number (if applicable)
</TABLE>
Checkwriting is available only for accounts holding shares not subject to DLJ
Winthrop's contingent deferred sales charge. By signing this checkwriting
privilege authorization, the undersigned agree(s): (1) the use of the Money
Funds' checkwriting privilege shall be subject to all of the terms and
conditions contained in the Funds' prospectus in effect at the time each check
is presented, and to the rules and regulations as set forth on the reverse side
of this form; and (2) each signatory guarantees the genuineness of the other's
signature.
ALL REGISTERED OWNER(S) OF THE FUND(S) MUST SIGN BELOW:
<TABLE>
<S> <C> <C>
Account Name(s) as Registered Social Security Number Authorized Signature*
- ------------------------------------------ -------------------------- ----------------------------
- ------------------------------------------ -------------------------- ----------------------------
- ------------------------------------------ -------------------------- ----------------------------
</TABLE>
* For joint accounts, all owners, or their legal representatives, must sign this
card.
[ ] Check here if all signatures are required on checks. [ ] Check if not all
signatures are required on checks. Number of signatures required ______.
<PAGE>
6. BANK ACCOUNT INFORMATION
To be completed if applicable under Shareholder Options--Sections B or C. ATTACH
VOIDED BLANK CHECK FROM YOUR BANK ACCOUNT TO THIS FORM.
<TABLE>
<S> <C>
- --------------------------------------------------- -----------------------------------------------
Name of Bank Branch (if applicable)
- --------------------------------------------------- -----------------------------------------------
Name in which Bank Account is Established Bank Account Number
</TABLE>
7. SHAREHOLDER AUTHORIZATION
By agreeing to the above telephone privileges, I agree that neither the DLJ
Winthrop Funds, the Advisers, the Subadviser nor any transfer agent for any of
the foregoing will be liable for any loss, injury, damage or expense as a result
of acting upon telephone instructions purporting to be on my behalf that the
Funds reasonably believe to be genuine, and that neither the Funds nor any such
party will be responsible for the authenticity of such telephone instructions. I
understand that any or all of these privileges may be discontinued by me or the
Funds at any time. I understand and agree that the Funds reserve the right to
refuse any telephone instructions and that my investment dealer or agent
reserves the right to refuse to issue any telephone instructions I may request.
I am of legal age and capacity and have received and read the Prospectus
and agree to its terms.
The person(s), if any, signing on behalf of the investor (i.e. corporation,
organization, trust, etc.) represent and warrant that they are authorized to
sign this application and purchase, redeem or exchange shares on behalf of such
investor.
REQUIRED BY FEDERAL TAX LAW TO AVOID 31% BACKUP WITHHOLDING: I certify
under penalties of perjury that the social security or taxpayer identification
number entered in Section 1 is correct and that I have not been notified by the
IRS that I am subject to backup withholding unless I have checked this box: / /
I AM SUBJECT TO BACKUP WITHHOLDING.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING:
- -------------------------------------------------- ------------------------
Signature Date
- -------------------------------------------------- ------------------------
Signature Date
(If an institution, please include documentation establishing authorized
signatories.)
DEALER/AGENT AUTHORIZATION
We guarantee the signature(s) set forth in Section 7, as well as the legal
capacity of the shareholder.
<TABLE>
<S> <C> <C> <C>
Name ____________________________ Dealer No. _______________________
Office Name ____________________________ Branch Office No. _______________________
Office Address ____________________________
____________________________
Representative's Name ____________________________ Representative's No. _______________________
Representative's Phone No. ( )___ - _________________ Authorized Signature _______________________
</TABLE>
- --------------------------------------------------------------------------------
CHECKWRITING TERMS AND CONDITIONS
1. REDEMPTION AUTHORIZATION: The Signatory(s) whose signature(s) appear on the
reverse side, intending to be legally bound, hereby agree each with the other
and with UMB Bank, n.a. (Bank) that the Bank is appointed agent for such
person(s) and, as such agent, is directed to request First Data Investor
Services, Inc., the Transfer Agent of the DLJ Winthrop Money Funds (each a Fund
and collectively the Funds), to redeem shares of the Fund registered in the name
of such Signatory(s) upon receipt of, and in the amount of, checks drawn upon
the above numbered account. The Fund or its Transfer Agent shall deposit the
proceeds of such redemptions in said account or otherwise arrange for
application of such proceeds to payments of said checks. The Bank and the
Transfer Agent are expressly authorized to commingle such proceeds in this
account with the proceeds of the redemption of the shareholders of the Fund. The
Signatory(s) understand that the Bank may also act as an agent and custodian for
the Fund. The Bank and Transfer Agent are expressly authorized to honor checks
as redemption instructions hereunder and may require signature guarantees in
accordance with the policies stated in the Prospectus, but neither the Fund's
Transfer Agent, the Bank, the Funds, the Funds' Adviser nor any clearing agent
of the foregoing shall be liable for any loss or liability resulting from the
absence of any such guarantee.
2. CHECK PAYMENT: The Signatory(s) authorize and direct the Bank to pay each
check presented hereunder, subject to all laws and Bank rules and regulations
pertaining to checking accounts. In addition, the Signatory(s) agree that: (a)
No check shall be issued or honored, or any redemption effected, in an amount
less than stated in the Prospectus; (b) No check shall be issued or honored, or
redemption effected, for any amounts represented by shares unless payment for
such shares has been made in full and any checks given in such payment have been
collected through normal banking channels; (c) No check shall be honored unless
the Fund has provided the Bank, from the proceeds of redemption or otherwise,
collected funds for the payment of such check; (d) Checks issued hereunder
cannot be cashed over the counter at the Bank; and (e) Checks shall be subject
to any further limitations set forth in the Prospectus issued by the Fund
including without limitation any additions, amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered owner of
the Fund shares, such as by joint ownership, ownership in common or tenants by
the entirety, then (a) each registered owner must sign the signature card, (b)
each registered owner must sign each check issued hereunder unless the parties
have indicated on the front of this card that not all Signatory(s) need sign, in
which case the Bank and the Transfer Agent are authorized to act upon the
indicated number of signatures, and (c) each Signatory guarantees to Bank and
Transfer Agent the genuineness and accuracy of the signature of the other
Signatory(s).
4. TERMINATION: The Bank may at any time terminate this account, related share
redemption service and Bank's agency for the Signatory(s) hereto without prior
notice by Bank to any of the Signatory(s). The Funds may terminate this
checkwriting privilege in accordance with the procedures stated in the
Prospectus.
5. HEIRS AND ASSIGNS: These terms and conditions shall bind the respective
heirs, executors, administrators and assigns of the Signatory(s).
<PAGE>
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 and 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 such Funds to maintain a stable $1.00 net asset value. (See "Net
Asset Value" on page 16.)
Investment-Grade Debt Securities. All of the DLJ Winthrop 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
- --------------------------------------------------------------------------------
30
<PAGE>
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
Winthrop 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 Winthrop Funds may enter into
"repurchase agreements" with member banks of the Federal Reserve
System or "primary dealers" (as designated by the Federal Reserve Bank
of New York) in such securities. Repurchase agreements permit a Fund
to keep all of its assets at work while retaining "overnight"
flexibility in pursuit of investments of a longer-term nature. 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 that are 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 Winthrop 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. Non-U.S. issuers typically are subject to
different accounting, auditing and financial reporting standards.
Securities of many non-U.S. 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
non-U.S. 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 non-U.S. custodians.
Investments in non-U.S. securities include securities issued by
European issuers. On January 1, 1999, the countries participating in
the European Monetary Union ("EMU") implemented a new currency unit,
the Euro, which is reshaping financial markets, banking systems and
mon-
- --------------------------------------------------------------------------------
Year 2000 [GRAPHIC]
Readiness Disclosure
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 accounting services.
Although the Funds 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, issuers of securities may also encounter Year 2000 problems. If
these problems are significant and are not corrected, the securities markets in
general could decline and the issuers that have Year 2000 problems could see
the prices for their securities decline. If a Fund owns securities of an issuer
with a Year 2000 problem or securities markets in general decline, the NAV of
the Fund would likely decline and you could lose money.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
31
<PAGE>
etary policies in Europe and other parts of the world. Although it is
not possible to predict the eventual impact of the Euro implementation
plan on the Funds, the transition to the Euro may change the economic
environment and behavior of investors, particularly in European
markets. Certain European investments may be subject to additional
risks as a result of this conversion. These risks include adverse tax
and accounting consequences, as well as difficulty in processing
transactions. The Funds are aware of such potential problems and are
coordinating ways to prevent or alleviate their adverse impact on the
Funds.
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 investments 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. 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. 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 are 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 non-U.S. securities
exchanges or in the over-the-counter market. (Options traded in the
over-the-counter market are considered illiquid investments.)
Lower-Grade 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 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.
- --------------------------------------------------------------------------------
32
<PAGE>
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 Winthrop 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 adviser 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 DLJ, Inc., 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 following individuals are responsible for management of the DLJ
Winthrop 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 has served as co-portfolio manager of the Growth
Fund since March 1993 and of the Small Company Value Fund since 1989.
Mr. Engle is a Vice President of the DLJ Winthrop Focus Funds and the
DLJ Winthrop Opportunity Funds. He is also the Chief Investment
Officer and Managing Director of WSWMC. Mr. Engle heads WSWMC's
Investment Committee, which focuses its attention on identifying
undervalued securities and has been an employee of WSWMC 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 Winthrop 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
The fees paid for the fiscal year
ended October 31, 1998 are as follows:
- -------------------------------------------------------
<TABLE>
<CAPTION>
% of
Fund Average Fees
Net Assets Paid
<S> <C> <C>
Growth Fund .73% $ 791,152
Growth and Income Fund .60% $1,138,550
Small Company Value Fund .75% $2,257,326
Fixed Income Fund .625% $ 347,059
Municipal Trust Fund .625% $ 252,180
High Income Fund .70% *
International Equity Fund 1.25% $ 678,442
Developing Markets Fund 1.25% $ 327,927
U.S. Government Money Fund .40% $ 171,144
Municipal Money Fund .40% $ 246,668
</TABLE>
- -------------------------------------------------------
* Prior to the date of this prospectus, the High Income
Fund had not commenced operations.
- --------------------------------------------------------------------------------
33
<PAGE>
July 1993. Mr. Vogel is a Vice President of the DLJ Winthrop 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
Winthrop 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 DLJ Winthrop
Opportunity Funds and Managing Director of DLJIM in October 1998.
Prior to becoming associated with the DLJ Winthrop 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.
- --------------------------------------------------------------------------------
34
<PAGE>
HOW TO BUY AND SELL SHARES
Opening an Account
Decide if your first payment will be delivered by check or wire. Initial
payment must be at least $250.
(arrow down)
By check using U.S. mail.
(arrow down)
Complete application and send it along with a check made payable to the DLJ
Winthrop Funds to:
DLJ Winthrop Funds
First Data Investor Services Group, Inc.
King of Prussia, PA 19406-3101
By check using overnight delivery.
(arrow down)
Complete application and send it along with a check made payable to the DLJ
Winthrop Funds to:
DLJ Winthrop Funds
First Data Investor Services Group, Inc.
211 S. Gulph Road
King of Prussia, PA 19406-3101
By wire.
(arrow down)
Call DLJ Winthrop 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. Your account cannot be opened without a
completed, signed application and a Fund account number.
(arrow down)
Contact your bank and arrange a wire transfer to:
UMB Bank, n.a.
ABA #10-10-00695
For: First Data Investor Services Group, Inc.
A/C #98-7037-0719
Attn: DLJ Winthrop 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, Inc. ("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 Winthrop 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 their 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.
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. An account established under the Funds' Class D shares will
also be exempt from the Fund's minimum and subsequent purchase
requirements. In addition, the Funds reserve the right to waive their
minimum purchase requirements.
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 Winthrop Funds" directly to
the Transfer Agent at the address listed above. Please reference the
account number to be credited on the check, as well as the Fund you
have selected to purchase.
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35
<PAGE>
Selling Shares of the Money Funds
or Class A or Class B shares of the Other DLJ Winthrop Funds
Will you be requesting a redemption of
your holdings in the DLJ Winthrop Funds through the
Funds' Telephone Redemption Privilege?
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Yes.
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Call 1-800-225-8011 to sell your shares. Requests for redemptions of more than
$50,000 must be made in writing and be accompanied by a signature guarantee.
(A "signature guarantee" is a signature guaranteed by an eligible bank, broker,
dealer, credit union, national securities exchange, registered securities
association, clearing agency, or saving association.)
Remember, DLJ has a minimum account size of $250.
No.
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For shares held at the Fund, write to the Fund at:
DLJ Winthrop Funds
First Data Investor Services Group, Inc.
P.O. Box 61503
(211 S. Gulph Road)*
King of Prussia, PA 19406-3101
Remember, any account that has less than $250, the Fund may redeem.
*For overnight delivery.
For shares purchased through a broker-dealer: call your broker or
securities dealer representative.
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 the Fund on the day you redeem.
The DLJ Winthrop 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.
- --------------------------------------------------------------------------------
36
<PAGE>
Purchasing additional shares
Decide if you are making additional purchases by mail, wire, or automatic
investment. If using mail or wire, please check to make sure funds meet the
$25.00 minimum.
(arrow down)
By Mail:
(arrow down)
Complete the investment stub found at the bottom of the Funds' shareholder
statement form, or if an investment stub is not available, reference on the
check the account number to be credited and the Fund you have selected to
purchase and mail to:
DLJ Winthrop Funds
First Data Investor Services Group, Inc.
P.O. Box 61503
King of Prussia, PA 19406-3101
By Wire:
(arrow down)
Please call the Transfer Agent at 800-225-8011 (option #2) to notify them of
the impending wire.
Provide your bank with funds and with the following information:
UMB Bank, n.a.
ABA #10-10-00695
Attn: DLJ Winthrop Funds
For: First Data Investor Services Group, Inc.
A/C #98-7037-0719
(arrow down)
Purchase should reference your name, account number, and name of Fund.
Automatic
Investment Program:
(arrow down)
The automatic investment program requires purchases of at least $25.00. Fill
out the application, designating the automatic investment option and provide
your bank information. The Fund automatically deducts payment from your account
on a regular basis.
(arrow down)
Provide your bank with funds and with the following information:
UMB Bank, n.a.
ABA #10-10-00695
Attn: DLJ Winthrop Funds
For: First Data Investor Services Group, Inc.
A/C #98-7037-0719
Shares of the Money Funds or Class A or Class B shares of the other
DLJ Winthrop 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.
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 a 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
401(k) Retirement Savings Plan. These employees should contact the DLJ
Hotline at 1-877-401k-DLJ 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 per share which is expected to be $1.00.
- --------------------------------------------------------------------------------
37
<PAGE>
- --------------------------------------------------------------------------------
Offering Price: [GRAPHIC]
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).
- --------------------------------------------------------------------------------
OTHER SHAREHOLDER INFORMATION
CLASSES OF SHARES AND SALES CHARGES
The DLJ Winthrop Funds, except the Money Funds, offer Class A shares
and Class B shares to the general public. Class D shares are offered
exclusively to employees of DLJ and its subsidiaries who are eligible
to participate in the DLJ 401(k) Retirement Savings 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 Fund are normally
entitled to one vote (with proportional voting for fractional shares)
for all purposes.
With respect to the DLJ Winthrop Focus Funds and DLJ Winthrop
Opportunity Funds, each class is identical in all respects except that
each class bears different distribution service fees (except for Class
D shares, which are not subject to any distribution service fees and
are offered only to a limited group of investors). Each class has
different exchange privileges and only Class B shares have a
conversion feature. Class A and Class B have exclusive voting rights
with respect to each class's 12b-1 Plan.
INITIAL SALES CHARGE -- CLASS A
Fixed Income Funds (1)
Amount As a % of As a % of Commission to
Purchased Amount Offering Dealer/Agent as a
Invested Price % of Offering Price
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 3.63% 3.50% 3.25%
$250,000
$250,000 to less than 2.56% 2.50% 2.25%
$500,000
$500,000 to less than 2.04% 2.00% 1.75%
$1,000,000
$1,000,000 or more 0 0 0
Equity Funds (2)
Amount As a % of As a % of Commission to
Purchased Amount Offering Dealer/Agent as a
Invested Price % of Offering Price
Less than $50,000 6.10% 5.75% 5.00%
$50,000 to less 4.99% 4.75% 4.00%
than $100,000
$100,000 to less 3.90% 3.75% 3.00%
than $250,000
$250,000 to less 2.56% 2.50% 2.00%
than $500,000
$500,000 to less 2.04% 2.00 1.75%
than $1,000,000
$1,000,000 or more 0 0 0
(1) The Fixed Income Funds include the Fixed Income Fund, the Municipal Trust
Fund and the High Income Fund.
(2) The Equity funds include the Growth Fund, Growth and Income Fund, the Small
Company Value Fund, the Developing Markets Fund and the International Equity
Fund.
- --------------------------------------------------------------------------------
38
<PAGE>
CLASS A SHARES
The offering price for Class A shares of the Funds is the net asset
value plus the applicable sales charge from the schedule below.
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 $3 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 Funds 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) full-time employees of the Funds' Transfer Agent or an entity that
provides distribution to the Funds, 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 advisers on behalf of
fee-based accounts or by broker-dealers that have sales agreements
with the Funds and for which shares have been purchased on behalf of
wrap fee client accounts and for which such registered investment
advisers 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, through a DLJdirect Fund Account;
(7) shareholders who received shares in the DLJ Winthrop Funds as a
result of the merger of Neuwirth Fund, Inc., Pine
- --------------------------------------------------------------------------------
39
<PAGE>
Street Fund, Inc. or deVegh Mutual Fund, Inc., and who have maintained
their investment in such shares;
(8) shares purchased for 401(k) 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 Winthrop 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.
Right of Accumulation. For investors who already have an account with
the Funds, reduced sales charges based upon the Funds' sales charge
schedules 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 Winthrop
Fund. For example, if the investor concurrently invests $25,000 in one
Fund and $25,000 in another, the sales charge would be reduced to
reflect a $50,000 purchase. In order to exercise the Concurrent
Purchases privilege, the investor must notify the Distributor or
Transfer Agent prior to his or her purchase.
Combined Purchase Privilege. By combining the investor's holdings of
shares in any DLJ Winthrop Fund, the investor can reduce the initial
sales charges on any additional purchases of Class A shares. The
investor may also use these combinations under a Letter of Intent.
This allows the investor to make purchases over a 13-month period and
qualify the entire purchase for a reduction in initial sales charges
on Class A shares. A combined purchase of $1,000,000 or more may
trigger the payment of a dealer's commission and the applicability of
a Limited CDSC. (See "Contingent Deferred Sales Charge on Converted
Shares--DLJ Winthrop Focus Funds.")
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.
- --------------------------------------------------------------------------------
40
<PAGE>
CLASS B SHARES
Years After Purchase CDSC percentage
1st 4%
2nd 3%
3rd 2%
4th 1%
After 4th year None
You may choose to purchase Class B shares at the Fund's net asset
value although such shares may be subject to a CDSC when you redeem
your investment. The CDSC does not apply to investments held for more
than four years.
When the CDSC is imposed, the amount of the CDSC will depend on the
number of years that you have held the shares according to the table
on this page. 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.
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;
(2) redemptions as a result of shareholder death or disability (as
defined in the Internal Revenue Code of 1986, as amended);
(3) redemptions made pursuant to a DLJ Winthrop 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 12% 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.
Class A Limited CDSC. A Limited Contingent Deferred Sales Charge
("Limited CDSC") will be imposed by the
- --------------------------------------------------------------------------------
41
<PAGE>
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:
o the net asset value at the time of purchase of the Class A
shares being redeemed; or
o 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 DEFERRED SALES CHARGE ON CONVERTED SHARES--DLJ WINTHROP FOCUS FUNDS
Class A shares issued upon conversion of shares of a DLJ Winthrop
Focus Fund purchased prior to February 28, 1996 ("Converted Shares")
will be subject to the same CDSC 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. Holders of converted shares that were not subject to a
CDSC will also be exempt from any CDSC on Class A shares issued upon
conversion. (See the Statement of Additional Information for a
complete list of exempt shareholders and transactions).
CLASS D SHARES
Class D shares are offered only to employees of DLJ and its
subsidiaries who are eligible to participate in the DLJ 401(k)
Retirement Saving Plan for Employees. Class D shares are not subject
to any sales charges or distribution fees. These employees should
contact the DLJ 401(k) Hotline at 1-877-401k-DLJ 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 of a
Fund for shares of the same class in any other DLJ Winthrop Fund.
Shareholders whose initial investment was directly into a Money Fund
may exchange such shares for either Class A or Class B of the other
DLJ Winthrop Opportunity Funds or the DLJ Winthrop Focus Funds. Shares
of each Money Fund purchased pursuant to the DLJ Winthrop Funds'
exchange privilege will be eligible for exchange
- --------------------------------------------------------------------------------
42
<PAGE>
into the DLJ Winthrop Opportunity Funds or DLJ Winthrop Focus Funds
provided that the exchange is directed into the same class of shares
upon which the initial investment was made. Shareholders whose initial
investment was invested directly into a Money Fund will, upon an
exchange request, automatically be exchanged into Class A shares of
the requested 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
Winthrop 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 Winthrop 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 Winthrop
Funds' Systematic Withdrawal Plan up to 1% monthly or 3% quarterly of
an account (excluding dividend reinvestment) not to exceed 12% 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
- --------------------------------------------------------------------------------
43
<PAGE>
privileges at any time without notice to you. Checkwriting privileges
are not available for accounts subject to a CDSC.
Retirement Plans. DLJ Winthrop 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
last page of this Prospectus.
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<TABLE>
<CAPTION>
% OF AVERAGE
FUND NET ASSETS FEES PAID
- ---- ------------- ---------
<S> <C> <C>
Growth Fund Class A 0.30% $281,391
Growth Fund Class B 1.00% $147,898
Growth and Income Fund Class A 0.30% $486,265
Growth and Income Fund Class B 1.00% $281,218
Small Company Fund Class A 0.30% $833,911
Small Company Fund Class B 1.00% $232,018
Fixed Income Fund Class A 0.30% $154,153
Fixed Income Fund Class B 1.00% $ 41,451
Municipal Trust Fund Class A 0.30% $118,085
Municipal Trust Fund Class B 1.00% $ 9,871
High Income Fund Class A 0.25% *
High Income Fund Class B 1.00% *
International Equity Fund Class A 0.25% $118,183
International Equity Fund Class B 1.00% $ 70,023
Developing Markets Fund Class A 0.25% $ 55,599
Developing Markets Fund Class B 1.00% $ 39,946
U.S. Government Money Fund 0.25% $106,965
Municipal Money Fund 0.25% $154,168
</TABLE>
* Prior to the date of this prospectus, the High Income Fund had not
commenced operations.
- --------------------------------------------------------------------------------
DISTRIBUTION CHARGES
Each Fund has adopted 12b-1 Plans pursuant to the rules of the 1940
Act. 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. The Funds do not pay any of the expenses for
distributing Class D shares.
- --------------------------------------------------------------------------------
Distribution and Service Fees: [GRAPHIC]
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 or entities for providing distribution assistance, as well as
financial intermediaries for providing administrative and accounting services
for their account holders.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
44
<PAGE>
- -------------------------------------------------------------------------------
DIVIDEND AND DISTRIBUTION
INFORMATION
The Taxpayer Relief [GRAPHIC]
Act of 1997:
The Taxpayer Relief Act of 1997 made certain changes to capital gains tax
rates. Under this law, certian taxpayers will pay a lower tax rate when it
comes to capital gains.
The Fund will provide information relating to the portion of any Fund
distribution that is eligible for the reduced capital gains tax rate.
- -------------------------------------------------------------------------------
Dividends are declared daily and paid monthly to shareholders of the
Money Funds, Fixed Income Fund, Municipal Trust Fund and the High
Income Fund from net investment income. Dividends are paid to
shareholders of the Growth and Income Fund quarterly and to
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. 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.
For your convenience, dividends and capital gains are automatically
reinvested in your Fund. If you ask us to pay the distributions in
cash, the Fund will send you a check instead of purchasing more shares
of your Fund. You will receive a 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 ordinary income. Long-term capital gain
distributions are taxed as capital gains. 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 will mail you a form indicating the federal tax status of your
dividend and capital gain distributions. For individuals, long-term
capital gains are generally subject to a maximum tax rate of 20%. If
you hold shares in a tax-deferred retirement account, your
distributions will be taxed when you receive a distribution from your
tax-deferred account.
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 their 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 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
withhold 30% or 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.
- --------------------------------------------------------------------------------
45
<PAGE>
(This page intentionally left blank.)
- --------------------------------------------------------------------------------
46
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand your
Fund's financial performance for the past 5 years (or, if shorter, the
period of the Fund's operations). Certain information reflects
financial results for a single Fund share. The total returns in the
table represent the rate than an investor would have earned (or lost)
on an investment in the indicated Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
Ernst & Young LLP, the Funds' independent auditors, whose unqualified
reports, along with the Funds' financial statements, are included in
the Statements of Additional Information, which are 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. 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 Focus Funds' sole class
of shares outstanding during such prior fiscal years.
- --------------------------------------------------------------------------------
47
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Net Realized Total Dividends Distributions
Value Investment and Unrealized from from Net from
Beginning of Income/ Gains/(Losses) Investment Investment Capital
Period (Loss) on Securities Operations Income Gains
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GROWTH FUND CLASS A
Year Ended October 31, 1998 $14.56 ($0.003)* $2.882 $2.879 ($0.017) ($0.902)
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 14.41 (0.115)* 2.857 2.742 -- (0.902)
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 $20.09 $0.202* $3.509 $3.711 ($0.170) ($1.031)
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 20.06 0.045* 3.500 3.545 (0.024) (1.031)
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 $23.34 $0.066* ($2.548) ($2.482) ($0.063) ($1.255)
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 -- (0.606)
Year Ended October 31, 1994 16.11 0.105 0.603 0.708 (0.026) (1.142)
CLASS B
Year Ended October 31, 1998 23.12 (0.089)* (2.546) (2.635) -- (1.255)
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 $10.16 $0.531 $0.300 $0.831 ($0.531) --
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)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ 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.
* Based on average shares outstanding.
- --------------------------------------------------------------------------------
48
<PAGE>
<TABLE>
<CAPTION>
Ratio of
Ratio of Net Investment
Net Asset Net Assets Expenses Income (Loss) Portfolio
Total Value Total End of Period to Average to Average Turnover
Distributions End of Period Return+ (000 omitted) Net Assets(2) Net Assets(2) Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND CLASS A
Year Ended October 31, 1998 ($0.919) $16.52 21.00% $ 97,078 1.29% (0.02%) 21.0%
Year Ended October 31, 1997 (1.223) 14.56 26.48 82,926 1.36 0.21 41.1
Year Ended October 31, 1996 (0.820) 12.69 20.32 68,096 1.48 0.47 60.6
Year Ended October 31, 1995 (0.697) 11.35 12.21 55,946 1.63 0.35 101.7
Year Ended October 31, 1994 (0.599) 10.82 4.15 52,455 1.65 0.06 28.2
CLASS B
Year Ended October 31, 1998 (0.902) 16.25 20.20 17,438 1.99 (0.72) 21.0
Year Ended October 31, 1997 (1.206) 14.41 25.66 10,378 2.06 (0.51) 41.1
Year Ended October 31, 1996++ -- 12.63 6.40 3,177 2.17(1) (0.34)(1) 60.6
- ------------------------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME FUND CLASS A
Year Ended October 31, 1998 ($1.201) $22.60 19.14% $163,936 1.13% 0.92% 32.7%
Year Ended October 31, 1997 (1.889) 20.09 30.53 145,586 1.22 1.15 19.8
Year Ended October 31, 1996 (0.591) 17.18 22.60 113,803 1.36 1.68 44.0
Year Ended October 31, 1995 (0.833) 14.57 16.10 87,975 1.58 1.94 31.8
Year Ended October 31, 1994 (0.642) 13.38 4.58 67,020 1.64 1.88 25.9
CLASS B
Year Ended October 31, 1998 (1.055) 22.55 18.29 33,325 1.83 0.22 32.7
Year Ended October 31, 1997 (1.746) 20.06 29.59 19,664 1.92 0.39 19.8
Year Ended October 31, 1996++ (0.145) 17.15 7.67 6,545 1.99(1) 1.06(1) 44.0
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL COMPANY VALUE FUND CLASS A
Year Ended October 31, 1998 ($1.318) $19.54 (11.20)% $237,873 1.29% 0.30% 41.5%
Year Ended October 31, 1997 (0.804) 23.34 32.48 283,001 1.35 0.37 21.1
Year Ended October 31, 1996 (0.446) 18.41 13.80 227,716 1.47 0.48 35.1
Year Ended October 31, 1995 (0.696) 16.61 11.10 202,730 1.64 0.23 25.1
Year Ended October 31, 1994 (1.168) 15.65 4.67 144,624 1.70 (0.04) 31.6
CLASS B
Year Ended October 31, 1998 (1.255) 19.23 (11.98) 22,284 1.99 (0.40) 41.5
Year Ended October 31, 1997 (0.775) 23.12 31.55 18,395 2.05 (0.32) 21.1
Year Ended October 31, 1996++ -- 18.34 5.28 6,305 2.15(1) (0.34)(1) 35.1
- ------------------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND CLASS A
Year Ended October 31, 1998 ($0.531) $10.46 8.46% 47,834 1.00% 5.24% 114.0%
Year Ended October 31, 1997 (0.575) 10.16 6.84 54,755 1.00 5.74 119.3
Year Ended October 31, 1996 (0.577) 10.07 4.34 56,388 1.00 5.72 90.2
Year Ended October 31, 1995 (0.588) 10.22 12.23 53,885 1.00 5.90 66.1
Year Ended October 31, 1994 (0.810) 9.66 (4.37) 39,150 0.93 5.58 55.9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized
(2) See footnote (2) on page 51.
- --------------------------------------------------------------------------------
49
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Net Realized Total Dividends Distributions
Value Investment and Unrealized from from Net from
Beginning of Income/ Gains/(Losses) Investment Investment Capital
Period (Loss) on Securities Operations Income Gains
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B
<S> <C> <C> <C> <C> <C> <C>
Year Ended October 31, 1998 $10.16 $0.456 $0.300 $0.756 $(0.456) --
Year Ended October 31, 1997 10.17 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, 1989 $10.29 $0.383 $0.240 $0.623 ($0.383) --
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 10.29 0.318 0.240 0.558 (0.318) --
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 FUND CLASS A
Year Ended October 31, 1998 $11.42 ($0.060)** $0.990 $0.930 ($0.060) ($0.090)
Year Ended October 31, 1997 10.38 (0.070)** 1.110 1.040 -- --
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 11.24 (0.150)** 0.980 0.830 -- (0.090)
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 $ 9.52 0.020** ($2.400) ($2.380) -- --
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 9.36 (0.040)** (2.360) (2.400) -- --
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 $ 1.00 $0.027 -- $0.027 ($0.027) --
Year Ended October 31, 1997+ 1.00 0.020 -- 0.020 (0.020) --
U.S. GOVERNMENT MONEY FUND
Year Ended October 31, 1998 $1.00 $0.047 -- $0.047 ($0.047) --
Year Ended October 31, 1997+ 1.00 0.032 -- 0.032 (0.032) --
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commencement of operations for the International Equity Fund and the
Developing Markets Fund was September 8, 1995.
** Based on average shares outstanding.
+ 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.
- --------------------------------------------------------------------------------
50
<PAGE>
<TABLE>
<CAPTION>
Ratio of Ratio of Net
Net Assets Expenses Investment Income Portfolio
Total Net Asset Value Total End of Period to Average (Loss) to Average Turnover
Distributions End of Period Return++ (000 omitted) Net Assets(2) Net Assets(2) Rate
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS B
<S> <C> <C> <C> <C> <C> <C> <C>
Year Ended October 31, 1998 ($0.456) $10.46 7.71% $ 5,849 1.70% 4.50% 114.0%
Year Ended October 31, 1997 (0.504) 10.16 6.10 3,375 1.70 4.99 119.3
Year Ended October 31, 1996+++ (0.339) 10.07 2.23 1,629 1.70(1) 5.03(1) 90.2
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL TRUST FUND CLASS A
Year Ended October 31, 1998 ($0.383) $10.53 6.28% $44,306 1.00% 3.78% 51.5%
Year Ended October 31, 1997 (0.445) 10.29 7.37 35,878 0.70 4.38 84.3
Year Ended October 31, 1996 (0.425) 10.01 3.83 38,794 0.80 4.26 79.3
Year Ended October 31, 1995 (0.389) 10.06 10.06 39,059 1.00 3.97 49.3
Year Ended October 31, 1994 (0.365) 9.51 (2.27) 34,470 0.83 3.71 42.5
CLASS B
Year Ended October 31, 1998 (0.318) 10.53 5.54 1,430 1.70 3.04 51.5
Year Ended October 31, 1997 (0.370) 10.29 6.62 546 1.40 3.66 84.3
Year Ended October 31, 1996+++ (0.248) 10.01 1.42 489 1.23(1) 3.81(1) 79.3
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND CLASS A
Year Ended October 31, 1998 ($0.150) $12.20 8.20% $44,286 2.15% (0.49)% 69.7%
Year Ended October 31, 1997 -- 11.42 10.02 44,316 2.15 (0.59) 73.9
Year Ended October 31, 1996 -- 10.38 8.35 42,170 2.15 (0.39) 94.1
Year Ended October 31, 1995* -- 9.58 (4.20) 28,819 2.15(1) (0.02)(1) --
CLASS B
Year Ended October 31, 1998 (0.090) 11.98 7.43 6,133 2.90 (1.24) 69.7
Year Ended October 31, 1997 -- 11.24 9.23 6,821 2.90 (1.32) 73.9
Year Ended October 31, 1996 -- 10.29 7.52 4,955 2.90 (1.25) 94.1
Year Ended October 31, 1995* -- 9.57 (4.30) 1,803 2.90(1) (1.77)(1) --
- ------------------------------------------------------------------------------------------------------------------------------------
DEVELOPING MARKETS FUND CLASS A
Year Ended October 31, 1998 -- $ 7.14 (25.00)% $16,355 2.15% 0.22% 43.6%
Year Ended October 31, 1997 (0.020) 9.52 (4.18) 29,402 2.15 (0.17) 52.8
Year Ended October 31, 1996 -- 9.96 4.51 36,918 2.15 (0.14) 26.8
Year Ended October 31, 1995* -- 9.53 (4.70) 14,622 2.15(1) 0.32(1) --
CLASS B
Year Ended October 31, 1998 -- 6.96 (25.64) 2,509 2.90 (0.50) 43.6
Year Ended October 31, 1997 (0.020) 9.36 (4.83) 4,941 2.90 (1.74) 52.8
Year Ended October 31, 1996 -- 9.86 3.57 3,641 2.90 (0.83) 26.8
Year Ended October 31, 1995* -- 9.52 (4.80) 1,004 2.90(1) (1.00)(1) --
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY FUND
Year Ended October 31, 1998 ($0.027) 1.00 2.72% $57,778 0.90% 2.68% N/A
Year Ended October 31, 1997+ (0.020) 1.00 2.90(1) 38,681 0.90(1) 2.87 N/A
U.S. GOVERNMENT MONEY FUND
Year Ended October 31, 1998 ($0.047) 1.00 4.79 $56,697 0.90 4.68 N/A
Year Ended October 31, 1997+ (0.032) 1.00 4.68(1) 35,174 0.90(1) 4.65(1) N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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, 0.30%, .30%, .34%, .51%, and .67%, for the years
ended 10/31/98, 97, 96, 95, and 94, respectively; Fixed Income Fund Class
B shares, 0.30%, 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, 0.41%, .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, 0.41% and 0.74% 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, 0.61%, .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, 0.10%, .18%, .27%
and .60% for the years ended 10/31/98, 97, 96 and 95, respectively;
Municipal Money Fund, 0.15%, and .40% (annualized) for the years ended
10/31/98 and 97; and U.S. Government Money Fund, 0.25% and .45%
(annualized) for the years ended 10/31/98 and 97.
- --------------------------------------------------------------------------------
51
<PAGE>
FOR MORE INFORMATION
GENERAL INFORMATION AND OTHER AVAILABLE INFORMATION
The Funds will 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 Funds' Adviser discussing market conditions and investment
strategies that significantly affected each 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 or by
writing:
DLJ Winthrop Funds
First Data Investor Services Group
P.O. Box 61503
King of Prussia, PA 19406-0903
DLJ WINTHROP FUNDS
SEC file numbers: Focus Funds 811-04604
Opportunity Funds 811-9054
<PAGE>
DLJ Winthrop Focus Funds
- --------------------------------------------------------------------------------
277 PARK AVENUE, NEW YORK, NEW YORK 10172
Toll Free (800) 225-8011
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
dated February 23, 1999
The DLJ Winthrop Focus Funds (the "DLJ Winthrop Focus Funds")
is a "series fund" comprised of the following diversified, open-end investment
management companies, commonly known as "mutual funds": DLJ Winthrop Growth
Fund, DLJ Winthrop Growth and Income Fund, DLJ Winthrop Small Company Value
Fund, DLJ Winthrop Fixed Income Fund and DLJ Winthrop Municipal Trust Fund
(individually, a "Fund" and collectively, the "Focus Funds" or the "Funds"). The
DLJ Winthrop 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 Winthrop 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 Winthrop Focus Funds'
current Prospectus dated February 27, 1999 (the "Prospectus"), as supplemented
from time to time, which is incorporated herein by refer ence. A copy of the
Prospectus may be obtained by contacting the DLJ Winthrop Focus Funds at the
address or telephone number listed above.
<PAGE>
TABLE OF CONTENTS
PAGE
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
Appendix I -- Description of Securities Ratings............................A-1
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FUND HISTORY
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The DLJ Winthrop 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 January 19, 1999, the name was changed from "Winthrop Focus
Funds" to "DLJ Winthrop 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 Winthrop Growth Fund, DLJ Winthrop Growth and Income Fund, DLJ
Winthrop Small Company Value Fund, DLJ Winthrop Fixed Income Fund and DLJ
Winthrop Municipal Trust Fund, respectively.
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DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
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(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, the Funds' investment policies are not
fundamental and may be changed by the Trustees of the DLJ Winthrop 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 Winthrop Focus
Funds' investment adviser is Wood, Struthers & Winthrop Management Corp. (the
"Adviser").
I. DLJ Winthrop Growth Fund, DLJ Winthrop Small Company Value Fund and
DLJ Winthrop Growth and Income Fund
The investment objective of the DLJ Winthrop 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
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capital appreciation. There can be no assurance that the DLJ Winthrop Growth
Fund's investment objective will be achieved.
The investment objective of the DLJ Winthrop 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 Winthrop Growth
and Income Fund's investment objective will be achieved.
The investment objective of the DLJ Winthrop 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
Winthrop Small Company Fund's investment objective will be achieved.
The DLJ Winthrop 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 Winthrop Small Company Value Fund than in a fund that invests in
larger, more established companies. The DLJ Winthrop Small Company
Value Fund seeks securities that appear to be underpriced and are issued by
companies with proven
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management, consistent earnings, sound finances and strong potential for market
growth. By investing in such companies, the Small Company Value Fund tries to
enhance the potential for appreciation and limit the risk of decline in the
value of its portfolio. The DLJ Winthrop 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 Winthrop 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 Winthrop 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.
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Warrants
The DLJ Winthrop Growth Fund and the DLJ Winthrop 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 Winthrop Growth Fund and the DLJ Winthrop Growth and
Income Fund may invest up to 10% of the value of their respective total assets
in foreign securities and the DLJ Winthrop 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
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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 Winthrop Growth Fund and DLJ Winthrop 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 Winthrop 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 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
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for debt in this category than in higher rated categories. Securities rated Baa
by Moody's are consid ered 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 Winthrop Growth Fund and the DLJ Winthrop 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 Winthrop 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 Winthrop Growth Fund, the DLJ Winthrop
Growth and Income Fund or the DLJ Winthrop 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
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is less than the premium received from the writing of the option and will
realize a loss if the cost of such transaction is more than the premium
received. The DLJ Winthrop Growth Fund and DLJ Winthrop Growth and Income Fund
will only purchase call options in closing purchase transactions. As indicated
above, the DLJ Winthrop 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 Winthrop 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 Winthrop 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 Winthrop 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 Winthrop Growth Fund nor the DLJ Winthrop
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
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Fund's total assets. The DLJ Winthrop 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 Winthrop Growth Fund, the DLJ Winthrop Growth and Income
Fund or the DLJ Winthrop 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 Winthrop 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 Winthrop 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 Winthrop 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 Winthrop 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 Winthrop 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
Winthrop 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 Winthrop Small Company Value Fund's
total assets. Certain provisions of the federal tax laws may limit the extent to
which the DLJ Winthrop 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 Winthrop 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
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and debt securities for investment. The correlation between movements in the
price of the option or future and the price of the securities index futures and
options declines, as the composition of the Fund's portfolio diverges from the
composition of the index underlying such index futures and options. In 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 Winthrop 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
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to use these strategies which are different from those needed to select
portfolio securities; (4) the possible absence of a liquid secondary market for
any particular instrument at any time; (5) the possible need to defer closing
out certain hedged positions to avoid adverse tax consequences; and (6) the
possible inability of a Fund to purchase or sell a portfolio security at a time
that otherwise would be favorable for it to do so, or the possible need for a
fund to sell a portfolio security at a disadvantageous time, due to the need for
such Fund to maintain "cover" or to segregate securities in connection with
hedging transactions. Small Company Stocks
At least 65% of the DLJ Winthrop 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 Winthrop 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
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to be accorded market recognition within a foreseeable period of time at an
appreciated value solely by reason of a development particularly or uniquely
applicable to that company. The principal risk associated with investment in
special situation companies is that if the anticipated development does not
occur, the investment is likely not to appreciate or may decline. Examples of
special situations are companies being reorganized or merged, having unusual new
products, enjoying particular tax advantages, or acquiring new management. The
DLJ Winthrop 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 Winthrop 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
Winthrop 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 Winthrop 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
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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. IOs and POs
Although the DLJ Winthrop Small Company Value Fund has no
present intention to so invest, the DLJ Winthrop 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 Winthrop Growth Fund and DLJ Winthrop
Growth and Income Fund
The following additional policies have been adopted by the DLJ
Winthrop Growth Fund and the DLJ Winthrop 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.
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II. DLJ Winthrop Fixed Income Fund
The investment objective of the DLJ Winthrop Fixed Income Fund
is to provide as high a level of total return as is consistent with capital
preservation by investing principally in debt securities, including, without
limitation, convertible and nonconvertible debt securities of foreign and
domestic companies, including both well-known and established and new and
lesser-known companies. Total return means the sum of 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.
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The DLJ Winthrop 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 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 Winthrop Fixed Income
Fund's outstanding voting securities (as defined in this SAI), the DLJ Winthrop
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
Winthrop Fixed Income Fund will invest at least 65% of the value of its total
assets in fixed income securities. However, the DLJ Winthrop 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 Winthrop 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 Winthrop 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
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exercise is in the best interest of the DLJ Winthrop Fixed Income Fund and its
shareholders. In such event, the DLJ Winthrop Fixed Income Fund will sell the
common stock resulting from such conversion as soon as practical. The DLJ
Winthrop 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 Winthrop Fixed Income Fund
acquire more than 10% of the voting securities of any one issuer. The relative
size of the DLJ Winthrop 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 Winthrop Fixed Income Fund may use a variety of
techniques in seeking to attain its investment objective. In making investment
decisions, for example, the DLJ Winthrop 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 Winthrop 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 Winthrop 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.,
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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 Winthrop Fixed Income
Fund's portfolio may be subject to call by the issuer prior to maturity, in
which case the DLJ Winthrop Fixed Income Fund may be forced to sell such
securities at prices below market value. The DLJ Winthrop Fixed Income Fund may
seek protection against calls at prices below market value. Such protection may
be sought by (i) purchasing securities with high call prices relative to their
market prices, (ii) purchasing securities with sinking fund features which are
selling at a premium where the period before inception of the sinking fund
payments is relatively long, (iii) selling a security whose market price has
risen above its call price and purchasing another security of comparable quality
whose market price is below its call price and (iv) substituting for a security
with a refunding date a comparable security with a more distant refunding date.
Depending on market conditions, debt securities may be purchased at a discount
or premium from face value, producing a yield of more or less than the coupon
rate. The market value of the DLJ Winthrop 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 Winthrop
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.
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III. DLJ Winthrop Municipal Trust Fund
The investment objective of the DLJ Winthrop 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 Winthrop 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.")
The DLJ Winthrop 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 Winthrop 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 Winthrop Municipal Trust Fund's investment strategies will be
successful.
Under normal circumstances, it is the DLJ Winthrop 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 Winthrop
Municipal Trust Fund reserves the right to hold cash and
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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 Winthrop 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."
Non-rated municipal securities will also be considered for
investment by the DLJ Winthrop 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 Winthrop Municipal Trust Fund to a degree comparable to that of rated
securities which are consistent with the DLJ Winthrop 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 Winthrop 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
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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. 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 Winthrop 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.
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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 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,
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but with different ratings may have the same yield. The Adviser appraises
independently the fundamental quality of the securities included in the Fund's
portfolio.
Yields on municipal securities are dependent on a variety of
factors, including the general conditions of the municipal securities market,
the size of a particular offering, the maturity of the obligation and the rating
of the issue. Municipal securities with longer maturities tend to produce higher
yields and are generally subject to greater price movements than obligations
with shorter maturities. An increase in interest rates generally will reduce the
market value of portfolio investments, and a decline in interest rates generally
will increase the value of portfolio investments. The achievement of the Fund's
investment objectives depends in part on the continuing ability of the issuers
of municipal securities in which the Fund invests to meet their obligations for
the payment of principal and interest when due. Municipal securities
historically have not been subject to registration with the Securities and
Exchange Commission, although from time to time there have been proposals which
would require registration in the future.
After purchase by the DLJ Winthrop 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 Winthrop Municipal Trust Fund. Neither
event requires the sale of such security by the DLJ Winthrop Municipal Trust
Fund, but the Adviser will consider such event in its determination of whether
the DLJ Winthrop 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.
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Obligations of issuers of municipal securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the Federal Bankruptcy Code. In addition, the
obligations of such issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of
such obligations or upon the ability of municipalities to levy taxes. There is
also the possibility that, as a result of litigation or other conditions, the
ability of any issuer to pay, when due, the principal or the interest on its
municipal bonds may be materially affected.
From time to time, proposals have been introduced before
Congress for the purpose of restricting or eliminating the federal income tax
exemption for interest on municipal securities. It can be expected that similar
proposals may be introduced in the future. If such a proposal were enacted, the
availability of municipal securities for investment by the Fund and the value of
the Fund's 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 Winthrop 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,
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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 Winthrop Growth
Fund, the DLJ Winthrop Fixed Income Fund nor the DLJ Winthrop 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 vendor becomes the subject of bankruptcy proceedings, a
Fund might be delayed in selling the collateral. Reverse Repurchase Agreements
The DLJ Winthrop Growth Fund, DLJ Winthrop Small Company Value
Fund, DLJ Winthrop Fixed Income Fund and DLJ Winthrop 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
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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 Winthrop Growth Fund, DLJ Winthrop Small Company Value
Fund, DLJ Winthrop Fixed Income Fund and DLJ Winthrop Municipal Trust Fund each
may seek to receive or increase income by lending their respective portfolio
securities. Under present regulatory policies, such loans may be made to member
firms 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
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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 Winthrop Growth Fund, the DLJ Winthrop Growth and
Income Fund, the DLJ Winthrop Fixed Income Fund and the DLJ Winthrop 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 Winthrop 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 re
quired, 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 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 Winthrop Focus Funds in good faith deem appropriate to reflect their fair
value.
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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 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
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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 Winthrop 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.
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 Winthrop 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
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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
Winthrop 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.
(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 SAI,
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.
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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 Winthrop
Fixed Income Fund, the DLJ Winthrop Municipal Trust Fund, the
DLJ Winthrop Small Company Value Fund or the DLJ Winthrop
Growth and Income Fund in respect of investments in U.S.
Government Securities or, for the DLJ Winthrop Fixed Income
Fund, the DLJ Winthrop Municipal Trust Fund and the DLJ
Winthrop 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;
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4. Make loans of its assets to any person, except for (i) the
purchase of publicly distributed debt securities, (ii) the
purchase of non-publicly distributed securities subject to
paragraph 7, (iii) the lending of portfolio securities, and
(iv) the entering of repurchase agreements;
5. Borrow money except for (i) the short-term credits from banks
referred to in paragraph 3 above and (ii) borrowings from
banks for temporary or emergency purposes, including the
meeting of redemption requests which might require the
disposition of securities. Borrowing in the aggregate may not
exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5% of the value of the Fund's total
assets (including all amounts borrowed) less liabilities (not
including all amounts borrowed) at the time the borrowing is
made.
Outstanding borrowings in excess of 5% of the value of the
Fund's total assets will be repaid before any subsequent
investments are made. This restriction and asset limitation
on borrowing shall not prohibit the Funds from entering into
reverse repurchase agreements;
6. Mortgage, pledge or hypothecate any of its assets, except as
may be necessary in connection with permissible borrowings
mentioned in paragraph 5 and except, with respect to the DLJ
Winthrop Small Company Value Fund and the DLJ Winthrop Growth
and Income Fund, in connection with hedging transactions,
short sales (against the box), when issued and forward
commitment transactions and similar investment strategies;
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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 Winthrop 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 Winthrop
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 Winthrop
Small Company Value Fund will not invest in restricted
securities. Securities freely saleable among qualified
institutional investors under special rules adopted by the
Securities and Exchange Commission ("Rule 144A Securities")
are not considered to be subject to legal restrictions on
transfer and may be considered liquid if they satisfy
liquidity standards established by the Board of Trustees. The
continued liquidity of such securities is not as well assured
as that of publicly 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 Winthrop Focus Funds in good faith deem appropriate to
reflect their value;
9. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop
Fixed Income Fund, the DLJ Winthrop Municipal Trust Fund and
the DLJ Winthrop
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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 Winthrop Growth Fund, the DLJ Winthrop
Fixed Income Fund, the DLJ Winthrop Municipal Trust Fund and
the DLJ Winthrop 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 Winthrop Growth Fund, the DLJ Winthrop
Fixed Income Fund, the DLJ Winthrop Municipal Trust Fund and
the DLJ Winthrop 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;
12. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop
Fixed Income Fund, the DLJ Winthrop Municipal Trust Fund and
the DLJ Winthrop Growth and Income Fund, participate on a
joint or joint and several basis in any securities trading
account;
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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 Winthrop
Small Company Value Fund and the DLJ Winthrop 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 Winthrop Small
Company Value Fund and the DLJ Winthrop Growth and Income
Fund, other than mortgage-backed securities and similar
instruments), or commodities or commodity contracts except,
with respect to the DLJ Winthrop Small Company Value Fund, for
hedging purposes;
15. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop
Fixed Income Fund, the DLJ Winthrop Municipal Trust Fund and
the DLJ Winthrop 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 when such
purchase, though not in the open market, is part of a plan of
merger, acquisition or transfer of assets, or
-40-
<PAGE>
consolidation and except, with respect to the DLJ Winthrop
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 Winthrop 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 Winthrop Fixed Income Fund and may not be changed
with respect to the DLJ Winthrop Fixed Income Fund without the approval of the
shareholders of the DLJ Winthrop Fixed Income Fund (as described above).
The DLJ Winthrop 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 Winthrop 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 Winthrop 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
-41-
<PAGE>
banks of the Federal Reserve System or primary dealers in U.S. Government
Securities, without limit for temporary defensive purposes.
The DLJ Winthrop 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
None.
-42-
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
(a) Trustees
The DLJ Winthrop 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 Winthrop Focus Funds who conduct and supervise the daily business
operations of the Funds.
The Trustees and principal officers of the DLJ Winthrop 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 Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------- -------------------------------------------
Winthrop Focus 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 the
and President 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>
-43-
<PAGE>
<TABLE>
<CAPTION>
Name, Address and Age (1) Position(s) Held with DLJ Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------- -------------------------------------------
Winthrop Focus 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 Alli
ance 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 Officer
Secretary 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 1389 King George Farm Road, Sutton,
VT 05867-9623.
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>
-44-
<PAGE>
<TABLE>
<CAPTION>
Name, Address and Age (1) Position(s) Held with DLJ Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------- -------------------------------------------
Winthrop Focus 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.
</TABLE>
- ------------------
(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 Winthrop Focus Funds as defined by the Investment Company Act
of 1940.
Messrs. Host, Krogh, and Mathers are members of the Audit
Committee, whose function is to oversee and monitor the integrity of the Funds'
financial reporting processes. 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 Winthrop
Focus Funds as defined by the Investment Company Act of 1940 are members of the
Nominating Committee whose function is to select persons for election as
Trustees whenever a vacancy shall exist. Messrs. Host, Bast and Sheehan are
members of the Valuation Committee whose function is to value the secu rities of
each Fund in emergency situations.
-45-
<PAGE>
The following table sets forth the aggregate compensation paid
by the DLJ Winthrop 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 Winthrop Focus Funds during its most
recent fiscal year.
<TABLE>
<CAPTION>
Compensation Table
Pension or TotaltCompensation
Retirement Benefits from DLJ Winthrop
Aggregate Accrued As Part of Focus Funds and
Compensation DLJ Winthrop Focus Annual Fund Complex Paid
From DLJ Winthrop Funds Benefits Upon to 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>
-46-
<PAGE>
The Trustees of DLJ Winthrop Focus Funds who are officers or
employees of the Adviser or any of its affiliates receive no remuneration from
DLJ Winthrop 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 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, Sheehan, and West are former Directors
of the Neuwirth Fund, Inc. Messrs. Engle, Little, Mathers, 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 Winthrop Small Company Value Fund and the
DLJ Winthrop Growth and Income Fund, respectively, two portfolios of the DLJ
Winthrop Focus Funds, on July 10, 1992.
(b) Control Persons
None.
(c) Principal Holders
To the best of the Fund's knowledge as of February 2, 1999, no
shareholder owned 5% or more of the outstanding Class A or Class B shares of the
DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company Value Fund, or the DLJ
Winthrop 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 February 2, 1999, 105,003 shares
(1.47%) of the DLJ Winthrop Growth Fund, 153,321 shares (1.63%) of the DLJ
Winthrop Growth and Income Fund, 1,519,103 shares (12.04%) of the DLJ Winthrop
Small Company Value Fund, 348,141 shares (7.59%) of the DLJ Winthrop Fixed
Income Fund, and 534,262 shares (12.71%) of the DLJ Winthrop 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 February 2, 1999:
-47-
<PAGE>
<TABLE>
<CAPTION>
Name and Address % of Class Nature of Ownership
<S> <C> <C>
DLJ Winthrop Fixed Income Class B Rush Family Limited Partnership Beneficial
12 Cloister Pky. 8.46%
Amarillo, TX 79121-1716
DLJ Winthrop Municipal Record*
Trust Class A Wood Struthers & Winthrop 6.11%
Attn: JF Bleakley Jr.
277 Park Ave, 24th Floor
New York, NY 10172
Donaldson Lufkin Jenrette Record*
Securities Corporation Inc. 13.64%
P.O. Box 2052 5.38%
Jersey City, NJ 07303
DLJ Winthrop Municipal Robert C. Grant Beneficial
Trust Class B 99 J Arrowood Road 12.
Manalapan, NJ 07726 58%
Donaldson Lufkin Jenrette Record*
Securities Corporation Inc. 33.86%
P.O. Box 2052 16.98%
Jersey City, NJ 07303 7.55%
</TABLE>
- -----------------
* Such Recordholder disclaims beneficial ownership.
(d) Management Ownership
As of February 2, 1999, the Trustees and officers of DLJ
Winthrop Focus Funds as a group owned beneficially less than 1.0% of all Funds.
-48-
<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 Winthrop 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 February 1, 1999, 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
-49-
<PAGE>
United States, the United Kingdom, Canada and 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
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<PAGE>
acquisition of control over ECI. In anticipation of the assignment of the First
Advisory Agreement, on February 12, 1992, the Trustees approved the Investment
Advisory Agreement and on June 15, 1992, a majority of the outstanding voting
securities of Winthrop approved the Investment Advisory Agreement. The
Investment Advisory Agreement was approved with respect to the DLJ Winthrop
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 Winthrop 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 Winthrop 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
-51-
<PAGE>
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 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 Winthrop Growth Fund paid the Adviser fees of $791,152, $636,464 and
$476,341 respectively; the DLJ Winthrop Small Company Value Fund paid the
Adviser fees of $2,257,326, $1,993,178 and $1,774,607 respectively; the DLJ
Winthrop Fixed Income Fund paid the Adviser fees of $347,059, $354,902 and
$360,520 respectively; the DLJ Winthrop Growth and Income Fund paid the Adviser
fees of $1,138,550, $915,897 and $714,397 respectively; and the DLJ Winthrop
Municipal Trust Fund paid the Adviser fees of $252,180, $234,803 and $242,321
respectively. During the fiscal years ended October 31, 1998, 1997 and 1996, the
Adviser reimbursed the DLJ Winthrop Fixed Income Fund $164,206, $164,718 and
$198,923 respectively, and the DLJ Winthrop Municipal Trust Fund $165,742,
$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
Winthrop Focus Funds shareholders pursuant to which the broker-dealers may
perform shareholder servicing functions,
-52-
<PAGE>
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 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 Winthrop 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
-53-
<PAGE>
12b-1 Plans, cast in person at a meeting called for the purpose of voting on
such approval. The Distribution Agreement and 12b-1 Plans were initially
approved by the Trustees, including a majority of the disinterested Trustees, on
October 19, 1995. The Class A 12b-1 Plans were approved by shareholders at a
special meeting on February 7, 1996. The Class B 12b-1 Plans were approved by
the sole Class B shareholder of each Fund on February 27, 1996. The 12b-1 Plans
were last approved by the Board of Trustees on October 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
-54-
<PAGE>
majority vote of the outstanding shares of each class of shares of each Fund,
voting separately, or by the Adviser. Any agreement related to the 12b-1 Plans
may be terminated at any time, without payment of any penalty, by a majority
vote of the independent Trustees or by majority vote of the outstanding shares
of each class of shares of each Fund, voting separately, and will terminate
automatically in the event of assignment.
The 12b-1 Plans require that the Board of Trustees shall
review at least quarterly a written report of the payments made pursuant to each
Plan and the purpose for which such payments were made. For the year ended
October 31, 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 Winthrop Growth Fund $281,391 $147,898
DLJ Winthrop Fixed Income Fund $154,153 $41,451
DLJ Winthrop Small Company $833,911 $232,018
Value Fund
DLJ Winthrop Growth and Income $486,265 $281,218
Fund
DLJ Winthrop Municipal Trust Fund $118,085 $9,871
</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 Winthrop Growth Fund $10,977 $30,023
DLJ Winthrop Fixed Income Fund $10,573 $19,487
DLJ Winthrop Small Company $31,315 $90,062
Value Fund
DLJ Winthrop Growth and Income $26,727 $66,284
Fund
DLJ Winthrop Municipal Trust $3,934 ($4,123)
Fund
</TABLE>
-55-
<PAGE>
During the year ended October 31, 1998, the Distributor expended
$604,376 in respect of the DLJ Winthrop Growth Fund in distributing such Fund's
shares. Of such amount, it is estimated that $22,362 was spent on advertising;
$20,766 was spent on printing and mailing of prospectuses to other than current
shareholders; $10,977 was spent on compensation to underwriters; $340,826 was
spent on compensation to broker-dealers; $149,452 was spent on compensation to
sales personnel; and $59,993 was spent on other distributing and consulting
costs.
During the year ended October 31, 1998, the Distributor expended
$291,381 in respect of the DLJ Winthrop Fixed Income Fund in distributing such
Fund's shares. Of such amount, it is estimated that $12,287 was spent on
advertising; $11,440 was spent on printing and mailing of prospectuses to other
than current shareholders; $10,573 was spent on compensation to underwriters;
$146,500 was spent on compensation to broker-dealers; $81,963 was spent on
compensation to sales personnel; and $28,618 was spent on other distributing and
consulting costs.
During the year ended October 31, 1998, the Distributor
expended $1,575,966 in respect of the DLJ Winthrop Small Company Value Fund in
distributing such Fund's shares. Of such amount, it is estimated that $70,503
was spent on advertising; $62,091 was spent on printing and mailing of
prospectuses to other than current shareholders; $31,315 was spent on
compensation to underwriters; $783,615 was spent on compensation to
broker-dealers; $453,599 was
-56-
<PAGE>
spent on compensation to sales personnel; and $174,843 was spent on other
distributing and consulting costs.
During the year ended October 31, 1998, the Distributor expended
$1,210262 in respect of the DLJ Winthrop Growth and Income Fund in distributing
such Fund's shares. Of such amount, it is estimated that $39,736 was spent on
advertising; $37,712 was spent on printing and mailing of prospectuses to other
than current shareholders; $26,727 was spent on compensation to underwriters;
$737,344 was spent on compensation to broker-dealers; $303,722 was spent on
compensation to sales personnel; and $65,021 was spent on other distributing and
consulting costs.
During the year ended October 31, 1998, the Distributor expended
$170,714 in respect of the DLJ Winthrop Municipal Trust Fund in distributing
such Fund's shares. Of such amount, it is estimated that $8,153 was spent on
advertising; $7,527 was spent on printing and mailing of prospectuses to other
than current shareholders; $3,934 was spent on compensation to underwriters;
$77,542 was spent on compensation to broker-dealers; $52,705 was spent on
compensation to sales personnel; and $20,853 was spent on other distributing and
consulting costs.
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
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<PAGE>
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 Winthrop Focus Funds.
First Data Investor Services Group, Inc., 211 S. Gulph Road,
King of Prussia, PA 19406- 3101, serves as Transfer Agent to the DLJ Winthrop
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.
Ernst & Young LLP, 787 Seventh Avenue, New York, NY 10019,
serves as the independent auditor of the DLJ Winthrop Focus Funds.
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- --------------------------------------------------------------------------------
BROKERAGE ALLOCATION AND OTHER PRACTICES
- --------------------------------------------------------------------------------
Subject to the general supervision of the Board of Trustees of
DLJ Winthrop Focus Funds, the Adviser is responsible for the investment
decisions and the placing of the orders for portfolio transactions for DLJ
Winthrop Focus Funds. Portfolio transactions for the DLJ Winthrop Municipal
Trust Fund and the DLJ Winthrop Fixed Income Fund occur primarily with issuers,
underwriters or major dealers acting as principals, while transactions for the
DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company Value Fund and the DLJ
Winthrop Growth and Income Fund are normally effected by brokers.
DLJ Winthrop 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 Winthrop
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 Winthrop Focus Funds. If DLJ Winthrop 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 Winthrop Focus Funds may
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utilize such broker or dealer although the transaction costs of another broker
or dealer are lower. The supplemental information received from a broker or
dealer is in addition to the services required to be performed by the Adviser
under the Investment Advisory Agreement, and the expenses of the Adviser will
not necessarily be reduced as a result of the receipt of such information.
During the fiscal year ended October 31, 1998, commissions of
$31,220, $83,637 and $101,131 related to transactions of $20,058,655,
$49,005,369 and $29,562,386 were paid to brokers that provided research or other
services to the DLJ Winthrop Growth Fund, the DLJ Winthrop Growth and Income
Fund and the DLJ Winthrop 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 Winthrop 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 Winthrop Growth Fund, the DLJ Winthrop Small Company
Value Fund and the DLJ Winthrop 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 Winthrop Municipal Trust Fund and the DLJ Winthrop
Fixed Income Fund are executed in the over-the-counter market.
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<PAGE>
Where transactions are executed in the over-the-counter market, DLJ Winthrop
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 Winthrop Focus Funds will attempt to negotiate best
execution.
DLJ Winthrop Focus Funds may from time to time place orders
for the purchase or sale of securities (including listed call options) with DLJ
Securities, DLJ Winthrop 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 Winthrop 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 com pared 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 Winthrop 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
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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 Winthrop Focus Funds provided that Winthrop enters into a
written agreement, as required by such rules, with that firm authorizing it to
retain compensation for such services. The Trustees of DLJ Winthrop Focus Funds
have granted authorization conforming to the requirements of Section 11(a) to
the Adviser to effect transactions in portfolio securities of DLJ Winthrop Focus
Funds through its affiliates, DLJ Securities and Autranet, Inc.
The tables below show certain information regarding the payment of
commissions by the DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company
Value Fund and the DLJ Winthrop 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 Winthrop Growth Fund............ $ 63,125 $ 97,707 $ 87,799
Total dollar amount paid to Autranet, Inc....................................... $ 0 $ 1,722 $ 427
Percentage of total brokerage commissions paid to Autranet, Inc................. 0% 1.8% .5%
Total dollar amount paid to Donaldson, Lufkin & Jenrette Securities
Corporation..................................................................... $ 11,200 $ 2,105 $ 49,673
Percentage of total brokerage commissions paid to Donaldson, Lufkin &
Jenrette Securities Corporation................................................. 17.7% 2.2% 56.6%
Percentage of aggregate dollar amount of transactions involving the payment
of commissions to Donaldson, Lufkin & Jenrette Securities Corporation........... 11.9% 2.1% 64.4%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Fiscal Years ended October 31,
--------------------------------------
1998 1997 1996
------ ------ -----
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Winthrop Small $ 468,261 $ 228,166 $ 323,577
Company Value Fund..............................................................
Total dollar amount paid to Autranet, Inc....................................... $ 59,082 $ 18,403 $ 45,948
Percentage of total brokerage commissions paid to Autranet, Inc................. 12.6% 8.1% 14.2%
</TABLE>
<TABLE>
<CAPTION>
Fiscal Years ended October 31,
--------------------------------------
1998 1997 1996
------ ------ -----
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Winthrop Growth and $ 141,358 $ 111,814 $ 110,073
Income Fund.....................................................................
Total dollar amount paid to Autranet, Inc....................................... $ 29,410 $ 17,752 $ 26,317
Percentage of total brokerage commissions paid to Autranet, Inc................. 20.8% 15.9% 23.9%
</TABLE>
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- --------------------------------------------------------------------------------
CAPITAL STOCK
AND ORGANIZATION
- --------------------------------------------------------------------------------
Each Fund of the DLJ Winthrop Focus Funds is authorized to
issue an unlimited number of shares of beneficial interest per share divided
into two classes, designated Class A and Class B. The DLJ Winthrop Growth Fund,
DLJ Winthrop Growth and Income Fund and DLJ Winthrop 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 401(k) Retirement Savings
Plan for Employees of Donaldson Lufkin & Jenrette Inc. In accordance with the
DLJ Winthrop 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
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determine. Currently, the Fund is offering two classes of shares, designated
Class A and Class B, for each of the DLJ Winthrop Focus Funds and, in addition,
Class D shares for the DLJ Winthrop Growth Fund, DLJ Winthrop Growth and Income
Fund and DLJ Winthrop 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 Winthrop Focus Funds shall
not be subject to any personal liability for the acts or obligations of DLJ
Winthrop Focus Funds and that every written obligation, contract, instrument or
undertaking made by DLJ Winthrop Focus Funds shall contain a provision to that
effect. Upon payment of any liability, the share holder will be entitled to
reimbursement from the general assets of the appropriate Fund. The Trustees
intend to conduct the operation of DLJ Winthrop 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 Winthrop Focus Funds.
The Amended and Restated Agreement and Declaration of Trust
further provide that no Trustee, officer, employee or agent of DLJ Winthrop
Focus Funds is liable to DLJ Winthrop 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 Winthrop Focus Funds, except as such
liability may arise from his or its own bad faith, willful misfeasance, gross
negligence or reckless
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<PAGE>
disregard of his or its duties. It also provides that all third parties shall
look solely to the property of DLJ Winthrop Focus Funds or the property of the
appropriate Fund for satisfaction of claims arising in connection with the
affairs of DLJ Winthrop 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 the indemnification of Trustees,
officers, employees or agents of DLJ Winthrop Focus Funds against all liability
in connection with the affairs of DLJ Winthrop Focus Funds .
All shares of DLJ Winthrop 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.
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- --------------------------------------------------------------------------------
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" and "Other Shareholder Information." (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 Winthrop
Growth Fund, the DLJ Winthrop Growth and Income Fund, and the DLJ Winthrop Fixed
Income Fund are offered to employees of Donaldson, Lufkin & Jenrette Inc. and
its subsidiaries that are eligible to participate in the 401(k) Retirement
Savings 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 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 401(k) Retirement Savings 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 Winthrop Mutual Funds
Your wire instructions must also include:
--the name of the Fund in which the money is
to be invested,
--your account number at the Fund, and
--the name(s) of the account holder(s)
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
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that their banks may impose a charge for this service. Money transmitted by a
check drawn on a member of the Federal Reserve System is converted to Federal
Funds in one business day following receipt. Checks drawn on banks which are not
members of the Federal Reserve System may take longer. All payments (including
checks from individual investors) must be in United States dollars.
All shares purchased are confirmed to each shareholder and are
credited to such shareholder's account at 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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<PAGE>
(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 Winthrop 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. In addition, this CDSC will be waived for the following
shareholders or transactions: (1) investment advisory clients of the Advisers;
(2) officers, directors and full-time employees and Trustees of Winthrop,
the Advisers and Related Entities; or the relatives of any such person,
or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the
estate of any such person or relative, if such sales are made for
investment purposes (such shares may not be resold except to Winthrop);
(3) certain employee benefit plans for employees of the 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
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<PAGE>
investment purposes (such shares may not be resold except to the
Funds). To qualify, the Distributor or Transfer Agent must be notified
at the time of purchase;
(5) shares purchased by registered investment advisers or by broker-dealers
that have sales agreements with the Funds and which shares have been
purchased on behalf of wrap fee client accounts and for which such
registered investment advisers or broker-dealers charge a fixed fee and
perform advisory, custodial, record keeping or other services;
(6) shareholders of Neuwirth Fund, Inc., Pine Street Fund, Inc. and deVegh
Mutual Fund, Inc., which were diversified, no-load open-end management
investment companies to which WSWMC provided investment advisory
services;
(7) liquidations, distributions or loans from the following types of
retirement plans established on or after February 1, 1995: (i)
retirement plans qualified under section 401(k) of the Code; (ii) plans
described in section 403(b) of the Code; and (iii) deferred
compensation plans described in section 457 of the Code;
(8) redemptions as a result of shareholder death or disability (as defined
in the Code); and
(9) redemptions made pursuant to Winthrop's systematic withdrawal plan up
to 1% monthly or 3% quarterly of the account's total purchase payments
(excluding dividend reinvestment) not to exceed 10% of total purchase
payments over any 12 month rolling period (systematic withdrawals
elected on a semi-annual or annual basis are not eligible for the
waiver).
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Redemptions effected by Winthrop pursuant to its right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the CDSC.
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 identified for
redemption 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 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:
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<PAGE>
<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>
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.
(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 Winthrop Focus Funds. DLJ
Winthrop Focus Funds has filed a formal election with the Securities and
Exchange Commission pursuant to which DLJ Winthrop Focus Funds will only effect
a redemption in portfolio securities where the particular
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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
Winthrop 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 Winthrop 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 Winthrop Focus Funds
for re demption must be signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or, in the alternative, a
stock power signed in the same manner may be attached to the share certificate
or certificates, or, where tender is made by mail, separately mailed to DLJ
Winthrop 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,
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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 Winthrop Opportunity Funds, another investment company managed by the
Adviser and an affiliate of the Adviser, which is currently comprised of five
portfolios: the DLJ Winthrop Developing Markets Fund, the DLJ Winthrop
International Equity Fund and the DLJ Winthrop High Income Fund (the
"Opportunity Long-term Funds"), and the DLJ Winthrop Municipal Money Fund and
DLJ Winthrop U.S. Government Money Fund (the "DLJ Winthrop Opportunity Money
Funds"). Shares exchanged from a Fund must be exchanged for the same class of
shares of the DLJ Winthrop Opportunity Long-term Funds. Each DLJ Winthrop
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,
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the DLJ Winthrop High Income Fund and DLJ Winthrop 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 401(k) Retirement Savings
Plan for Employees of Donaldson Lufkin & Jenrette Inc. Each DLJ Winthrop
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 Winthrop
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,
Inc., 211 S. Gulph Road, King of Prussia, PA 19406- 3101, Attn.: DLJ Winthrop
Mutual Funds. Participants within the DLJ 401(k) Retirement Savings Plan should
contact the DLJ 401(k) Hotline at 1-877-401k-DLJ for information regarding the
exchange of Class D shares.
In the case of each of the DLJ Winthrop Opportunity Funds, the
exchange privilege is available only in those jurisdictions where shares of the
relevant Fund may be legally sold. Prospectuses for the DLJ Winthrop 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
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<PAGE>
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 Winthrop Opportunity Funds and no partial exchange may be
made if, as a result, the shareholders' interest in a Fund would be reduced to
less than $250. The minimum initial exchange into another Fund is $250.
All exchanges into the DLJ Winthrop Opportunity Funds are
subject to the minimum investment requirements and any other applicable terms
set forth in the Prospectus for the relevant DLJ Winthrop 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 Winthrop Focus Funds who has exchanged
shares for shares of the DLJ Winthrop Opportunity Funds will have all of the
rights and privileges of a shareholder of the relevant DLJ Winthrop Opportunity
Fund.
The exchange privilege is intended to provide shareholders with a convenient way
to switch their investments when their objectives or perceived market conditions
suggest a change. The exchange privilege is not meant to afford shareholders an
investment vehicle to play short-term swings in the stock market by engaging in
frequent transactions in and out of the Funds or the DLJ Winthrop Opportunity
Funds. Shareholders who engage in such frequent transactions may be prohibited
or restricted from placing future exchange orders.
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(e) Systematic Withdrawal Plan
Shares of a Fund owned by a 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 Winthrop 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 Winthrop 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
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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 . 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 be subject
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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 Winthrop 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 Winthrop 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 Winthrop Focus Funds' Distributor.
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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,
Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day and Good Friday.
The Funds calculate net asset value on each Fund Business Day,
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 converge immediately after the recording of
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dividends, if any, which will differ in amount by approximately the differential
of the accrual of 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 Winthrop 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
Winthrop 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.
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
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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 Winthrop 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 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 20% in respect of property held
for more than one year .
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 ("IRS") has
specific regulations
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governing the identification of shares to be redeemed by a shareholder that
wishes to redeem some, but not all, of its shares. For purposes of determining
whether this holding period requirement has been met, the day of acquisition and
any day after the first 45 days after the date on which such shares become
ex-dividend must be disregarded. In addition, the holding period is suspended
during periods in which the stock is subject to diminished risk of loss
including, for example, because the holder has acquired a put option or sold a
call option (other than certain covered call options where the exercise price is
not substantially below the selling price) or otherwise hedged his position.
Under 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.
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
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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 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
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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. Any loss realized on the sale of shares will be
disallowed to the extent the shares disposed of are replaced within a period of
61 days beginning 30 days before the disposition of such shares. In such case,
the basis of shares acquired will be adjusted to reflect the disallowed loss.
Some of the investment practices of the DLJ Winthrop Growth
Fund, DLJ Winthrop Small Company Value Fund and the DLJ Winthrop 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 provisions may also require the DLJ Winthrop Growth Fund, the
DLJ Winthrop
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Small Company Value Fund and the DLJ Winthrop 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 Winthrop Municipal Trust Fund are not subject to
federal income tax if, at the close of each quarter of the DLJ Winthrop
Municipal Trust Fund's taxable year, at least 50% of the value of the DLJ
Winthrop Municipal Trust Fund's total assets consist of tax-exempt obligations.
The DLJ Winthrop Municipal Trust Fund intends to meet this requirement. However,
under current tax law, some individuals and corporations may be subject to an
alternative minimum tax (the "AMT") with respect to their receipt of certain
distributions of tax-exempt interest income from the DLJ Winthrop
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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 Winthrop Municipal Trust Fund's investment income is
derived from interest rather than dividends, no portion of such distributions is
eligible for the dividends-received deduction available to corporations.
Long-term capital gains, if any, distributed by the DLJ Winthrop 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 Winthrop
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
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
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or her own professional tax adviser regarding federal, state and local tax
consequences of ownership of shares of the Funds.
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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 14.04%, 15.19% and 13.05%
for the DLJ Winthrop Growth Fund and 3.31%, 4.33% and 7.57% for the DLJ Winthrop
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
Winthrop Small Company Value Fund (which was previously named the Aggressive DLJ
Winthrop Growth Fund and which includes its predecessor, the Neuwirth Fund,
Inc.) and the DLJ Winthrop Growth and Income Fund (which includes its
predecessor, the Pine Street Fund, Inc.) was -16.31%, 7.97% and 12.19% for the
DLJ Winthrop Small Company Value Fund and 12.29%, 16.89% and 14.54% for the DLJ
Winthrop Growth and Income Fund, respectively. The average annual total return
of Class A shares for the
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one and five year periods ended October 31, 1998 for the DLJ Winthrop Municipal
Trust Fund was 1.23% and 3.95% respectively and 4.12% 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
was 16.20%, 3.71%, -15.50%, 14.29% and 1.54% and for the period February 28,
1996 (commencement of offering of Class B shares) through October 31, 1998 was
18.86%, 5.31%, 7.03%, 20.06% and 4.37%, for the DLJ Winthrop Growth Fund, the
DLJ Winthrop Fixed Income Fund, the DLJ Winthrop Small Company Value Fund, the
DLJ Winthrop Growth and Income Fund and the DLJ Winthrop 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 the Class A shares of the
DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company Value Fund and the DLJ
Winthrop Growth and Income Fund, the maximum initial sales charge of 5.75% was
deducted at the time of investment and, with respect to the Class A shares of
the DLJ Winthrop Fixed Income Fund and the DLJ Winthrop Municipal Trust Fund,
the maximum initial sales charge of 4.75% was deducted at the time of
investment. With respect to the Class B shares of each of the DLJ Winthrop Focus
Funds, it was assumed that 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%
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for each of the DLJ Winthrop Growth Fund, DLJ Winthrop Fixed Income Fund, DLJ
Winthrop Small Company Value Fund, the DLJ Winthrop Growth and Income and the
DLJ Winthrop 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 Winthrop Fixed Income Fund's and DLJ Winthrop
Municipal Trust Fund's 30-Day Yield Quotation
The 30-day yield for each of the DLJ Winthrop Fixed Income
Fund and the DLJ Winthrop Municipal Trust Fund for the year ended October 31,
1998 was with respect to Class A shares, 4.13% and 2.92%, respectively and, with
respect to Class B shares, 3.65% and 2.37%, respectively. The Fund's yield is
based on a 30-day period and is computed by dividing the net investment income
per share earned during the period by the maximum offering price per share on
the last day of the period, according to the following formula:
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.
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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.
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FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds for the fiscal
year ended October 31, 1998 and the report of the Funds' 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 the Fund'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.
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Appendix I - Description of Security Ratings
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Bond Ratings
Municipal and Corporate Bonds. The four highest ratings of
Moody's Investors Service, Inc. ("Moody's") for municipal corporate bonds are
Aaa, Aa, A and Baa. Bonds rated Aaa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. Moody's states that Aa bonds are rated lower than the best
bonds because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat larger
than in Aaa securities. Bonds which are rated A are judged by Moody's to possess
many favorable investment attributes and are considered "upper medium grade
obligations". Factors giving security to principal and interest of A-rated bonds
are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Bonds rated Baa are
considered as medium-grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. The generic ratings Aa through Baa may be modified by
the addition of the numerals 1, 2 or 3. The modifier 1 indicates that the
security ranks in the
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higher end of the rating category; the modifier 2 indicates a mid-range rating;
and the modifier 3 indicates that the issue ranks in the lower end of such
rating category.
Moody's highest ratings for short-term municipal loans is
MIG-1. Moody's states that short-term municipal securities rated MIG-1 are of
the best quality, enjoying strong protection from established cash flows of
funds for their servicing and broad-based access to the market for refinancing,
or both. Loans bearing the MIG-2 designation are judged to be of high quality,
with margins of protection ample although not so large as in the MIG-1 group.
The four highest ratings of Standard & Poor's Ratings Group
("S&P") for municipal and corporate bonds are AAA, AA, A and BBB. Bonds rated
AAA have the highest rating assigned by S&P to a debt obligation and indicate an
extremely strong capacity to pay interest and repay principal. Bonds rated AA
also qualify as high-quality debt obligations and have a very strong capacity to
pay interest and repay principal and in the majority of instances differ from
AAA issues only in a small degree. Bonds rated A have a strong capacity to pay
interest and repay principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than bonds
in higher rated categories. The BBB rating, which is the lowest "investment
grade" security rating of S&P, indicates an adequate capacity to pay principal
and interest. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions of changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category. The ratings AA through BBB may be modified by
the addition of a plus (+) or minus (-) sign to show relative standing within
such rating categories.
A-2
<PAGE>
Notes rated SP-1 have a very strong capacity to pay principal
and interest. Those issues determined by S&P to possess overwhelming safety
characteristics are given an SP-1+ rating. Notes rated SP-2 have a satisfactory
capacity to pay principal and interest. Notes rated SP-3 have a speculative
capacity to pay principal and interest. The rating scale for notes is closely
related to long-term bond ratings; notes rated SP-1+ compare with bonds rated
AAA, AA+, AA and AA-; notes rated SP-1 compare with bonds rated A+, A and A-;
and notes rated SP-2 compare with bonds rated BBB+, BBB and BBB-. Other
Municipal Securities and Commercial Paper
"Prime-1" is the highest rating assigned by Moody's for other
short-term municipal securities and commercial paper, and "A-1+" and "A-1" are
the two highest ratings for commercial paper assigned by S&P (S&P does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2 and 3 to denote
relative strength within its highest classification of "Prime", while S&P uses
the numbers 1+, 1, 2 and 3 to denote relative strength within the highest
classification of "A". Issuers rated "Prime" by Moody's have the following
characteristics: their short-term debt obligations carry the smallest degree of
investment risk, margins or support for current indebtedness are large or stable
with cash flow and asset protection well assured, current liquidity provides
ample coverage of near-term liabilities and unused alternative financing
arrangements are generally available. While protective elements may change over
the intermediate or longer term, such changes are most likely to impair the
fundamentally strong position of short-term obligations. Commercial paper
issuers rated "A" by S&P have the following characteristics: liquidity ratios
are better than industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels
A-3
<PAGE>
of borrowing, the basic earnings and cash flow are in an upward trend.
Typically, the issuer is a strong company, is in a well-established industry and
has superior management.
A-4
<PAGE>
PART C
Other Information
Item 23. EXHIBITS
(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)
(iii) Expense Limitation Undertaking*
(e) Distribution Contracts
(i) Distribution Agreement dated as of February 25, 1996(9)
(f) Not Applicable
(g) Custodial Services Agreement(10)
(h) Form of Fidelity Bond(11)
(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)
(vi) DLJ Growth Fund - Class B Plan(9)
(vii) DLJ Fixed Income Fund - Class A Plan(9)
<PAGE>
(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(12)
(o) Ameded Rule 18f-3 Plan*
- ------------
(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. 33-3706) 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. 33-3706)
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. 33-3706)
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. 33-3706)
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. 33-3706)
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. 33-3706)
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. 33-3706)
filed on December 31, 1992.
(11) Incorporated herein by reference to Post-Effective Amendment No. 18 to
Registration Statement of DLJ Focus Funds on Form N-1A (File No. 33-3706)
filed on February 27, 1998.
(12) Incorporated herein by reference to the NSAR filed on December 30, 1998.
* Filed herewith.
<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.
OFFICE
------
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)
<PAGE>
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)
<PAGE>
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)
(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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this registration statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and the State of New York on the 22nd day of
February, 1999.
Winthrop Focus Funds
By: /s/ 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:
Signature Title Date
- --------- ----- ----
/s/ G. Moffet Cochran* President February 22, 1999
G. Moffet Cochran Chairman of the Board
/s/ Martin Jaffe Treasurer February 22, 1999
Martin Jaffe
/s/ Robert L. Bast* Trustee February 22, 1999
Robert L. Bast
/s/ James Engle* Trustee February 22, 1999
James Engle
/s/ John J. Halsey* Trustee February 22, 1999
John J. Halsey
<PAGE>
/s/ Stig Host* Trustee February 22, 1999
Stig Host
/s/ Peter F. Krogh* Trustee February 22, 1999
Peter F. Krogh
/s/ Dennis Little Trustee February 22, 1999
Dennis Little
/s/ William H. Mathers* Trustee February 22, 1999
William H. Mathers
/s/ James L. McCabe* Trustee February 22, 1999
James L. McCabe
/s/ John J. Sheehan Trustee February 22, 1999
John J. Sheehan
/s/ William C. Simpson* Trustee February 22, 1999
William C. Simpson
/s/ Stephen K. West* Trustee February 22, 1999
Stephen K. West
*By:
/s/ Martin Jaffe
Martin Jaffe
(Attorney-in-fact)
Pursuant to Power of Attorney
<PAGE>
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. 21 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. 21 to the Registration Statement on Form N-1A and any amendments
thereto, and/or other documents in connection therewith, and to appoint a
substitute or substitutes to act hereunder with the same power and authority as
said agents and attorneys-in-fact would have if personally acting. Each of the
undersigned hereby ratifies and confirms all that said agents and
attorneys-in-fact, or any substitute or substitutes, may do by virtue hereof.
This Power of Attorney may be signed in more than one counterpart, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
/s/ Robert L. Bast /s/ Stephen K. West
Robert L. Bast Stephen K. West
/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
<PAGE>
/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
Dated as of February 22, 1999
<PAGE>
Exhibit Index
A complete list of exhibits is included in Part C, Item 23 of the Registration
Statement.
<PAGE>
Exhibit 23(a)(iii)
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
WINTHROP FOCUS FUNDS
AND
CERTIFICATE OF THE SECRETARY
The undersigned Secretary of Winthrop Focus Funds, a Massachusetts
business trust (the "Trust") governed by a written Amended and Restated
Agreement and Declaration of Trust (the "Declaration of Trust") dated as of
February 22, 1996 that was duly executed and filed with the office of the
Secretary of the Commonwealth of Massachusetts on February 26, 1996, which was
amended by a Certificate of Amendment to the Amended and Restated Declaration of
Trust (the "Certificate of Amendment" and, together with the Declaration of
Trust, the "Amended and Restated Declaration of Trust") dated as of February 19,
1997 and filed with the office of the Secretary of the Commonwealth of
Massachusetts on February 20, 1997, DOES HEREBY CERTIFY THAT:
FIRST: On January 19, 1999, the Trustees of the Trust, pursuant to
Section 9.3 of the Amended and Restated Declaration of Trust, duly adopted an
amendment to Section 1.1 of the Amended and Restated Declaration of Trust
whereby the name of the Trust previously designated "Winthrop Focus Funds" was
redesignated "DLJ Winthrop Focus Funds."
SECOND: On January 19, 1999, the Trustees of the Trust, pursuant to
Section 9.3 of the Amended and Restated Declaration of Trust, duly adopted an
amendment to Section 6.2 of the Amended and Restated Declaration of Trust
whereby (i) the separate class of shares of beneficial interest previously
designated the "Growth Fund" was redesignated the "DLJ Winthrop Growth Fund";
(ii) the separate class of shares of beneficial interest previously designated
the "Growth and Income Fund" was redesignated the "DLJ Winthrop Growth and
Income Fund"; (iii) the separate class of shares of beneficial interest
previously designated the "Small Company Value Fund" was redesignated the "DLJ
Winthrop Small Company Value Fund"; (iv) the separate class of shares of
beneficial interest previously designated the "Fixed Income Fund" was
redesignated the "DLJ Winthrop Fixed Income Fund"; and (v) the separate class of
shares
<PAGE>
of beneficial interest previously designated the "Municipal Trust Fund" was
redesignated the "DLJ Winthrop Municipal Trust Fund."
<PAGE>
IN WITNESS WHEREOF the undersigned has executed this certificate on this
8th day of February 1999.
Signed: /s/ Martin Jaffe
------------------------
Title:
------------------------
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this 8th day of February, 1999 before me personally came Martin Jaffe
to me known, who being duly sworn by me, did depose and say that he is the
Secretary of Winthrop Focus Funds, a trust organized under the laws of the
Commonwealth of Massachusetts, the trust described in and which executed the
foregoing instrument; that he knows the seal of said trust; that the seal
affixed to said instrument is such trust seal; that it was so affixed by order
of the trustees of said trust, and that he signed his name thereto by order.
Signed: /s/ Linda M. Hartley
------------------------
Title: Notary Public
------------------------
<PAGE>
Exhibit 23(d)(iii)
EXPENSE LIMITATION UNDERTAKING
WOOD, STRUTHERS & WINTHROP MANAGEMENT CORP.
277 Park Avenue
New York, New York 10172
February 22, 1999
WINTHROP FOCUS FUNDS
277 Park Avenue
New York, New York 10172
Dear Sirs:
Wood, Struthers & Winthrop Management Corp. herewith
undertakes that for the Expense Limitation Period, as defined below, we shall
cause the aggregate operating expenses paid or payable by each class of the
series (the "Series") of the Winthrop Focus Funds (the "Fund") referenced below
to be limited to the following percentage of each class's average daily net
assets over the Series current fiscal year (the "Limitation"):
Fixed Income Fund Class A 1.00% Municipal Trust Fund Class A 1.00%
Class B 1.70% Class B 1.70%
Class D .70%
To determine the amount of the Series' expenses in excess of the Limitation, the
amount of allowable fiscal-year-to-date expenses shall be computed daily by
prorating the Limitation based on the number of days within the Series's fiscal
year (365 days) (the "Prorated Limitation"). The Prorated Limitation shall be
multiplied by the prior day's net assets of the Series in order to produce the
allowable daily expenses to be recorded and accrued for the Series (the
"Allowable Expenses"). If the expenses incurred by the Series which will be
estimated and accrued daily, exceed the Allowable Expenses, we shall be
responsible for aggregating such excess expenses each month and will (i) reduce
our
<PAGE>
advisory fees for such month and/or (ii) reimburse the Series for such
month, accordingly.
For purposes of this undertaking, the Expense Limitation
Period shall mean the period commencing on the date hereof and terminating at
the close of the Series' fiscal year. The Expense Limitation Period and the
Undertaking given hereunder will automatically be extended for additional
one-year terms unless we provide you with at least 60 days' notice prior to the
end of any Expense Limitation Period, of our determination not to extend this
Undertaking beyond its then current term.
We understand and intend that you will rely on this
Undertaking in preparing and filing a Registration Statement for the Fund on
Form N-1A with the Securities and Exchange Commission, in accruing the Fund's
expenses for purposes of calculating its net asset value per share and for other
purposes and expressly permit you to do so.
Very truly yours,
WOOD, STRUTHERS & WINTHROP
MANAGEMENT CORP.
By: /s/ Martin Jaffe
----------------------
Name: Martin Jaffe
Title:
<PAGE>
Exhibit 23(j)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Investment Advisory and Other Services - Other Service Providers"
and "General Information - Counsel and Auditors" and to the use of our report
dated December 10, 1998 incorporated by reference on this Registration Statement
(Form N-1A No. 33-3706) of DLJ Winthrop Focus Funds.
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
New York, New York
February 18, 1999
<PAGE>
Exhibit 23(o)
DLJ WINTHROP FOCUS FUNDS
Plan for Multiple Classes of Shares
THIS PLAN, as it may be amended from time to time, sets forth
the separate arrangement and expense allocation of each class of shares of each
series of DLJ Winthrop Focus Funds, a Massachusetts business trust (the
"Trust"). The Plan has been adopted pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940, as amended (the "Act"), by a majority of the
Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust within the meaning of Section 2(a)(19) of the
Act ("Independent Trustees"). Any material amendment to this plan is subject to
the prior approval of the Trustees, including a majority of the Independent
Trustees.
1. General
A. Any series of the Trust (a "Series") may issue
more than one class of shares of beneficial
interest (each, a "Class"), provided that each
Class --
i. Shall have a different arrangement for shareholder
services or the distribution of securities or both,
and shall pay all of the expenses of that
arrangement, except for Class D shares of a Series,
which Class shall not have such an arrangement or pay
any of the expenses for such services;
ii. May pay a different share of other expenses,
not including advisory or custodial fees or
other expenses related to the management of
the Series' assets, if these expenses are
actually incurred in a different amount by
that Class, or if the Class receives services
of a different kind or to a different degree
than other Classes of the same Series ("Other
Class Expenses");
<PAGE>
iii. May pay a different advisory fee to the extent that
any difference in amount paid is the result of the
application of the same performance fee provisions in
the advisory contract of the Fund or Series to the
different investment performance of each Class;
iv. Shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its
arrangement, if any;
v. Shall have separate voting rights on any matter
submitted to shareholders in which the interests of
one Class differ from the interests of any other
Class; and
vi. Shall have in all other respects the same rights and
obligations as each other Class of the Series.
B. Other Class Expenses may include only (i) transfer
agency fees attributable to a specific Class;
(ii) printing and postage expenses related to
preparing and distributing materials such as
shareholder reports, prospectuses and proxies to
current shareholders of a specific Class;
(iii) blue sky registration fees incurred by a
Class; (iv) registration fees of the Securities
and Exchange Commission (the "Commission")
incurred by a Class; (v) the expenses of
administrative personnel and services as required
to support the shareholders of a specific Class;
(vi) litigation or other legal expenses relating
solely to one Class; and (vii) Trustees' fees
incurred as a result of issues relating to one
Class.
C. Income, realized and unrealized capital gains and losses, and
expenses of a Series not allocated to a particular Class shall
be allocated to each Class of that Series on the basis of the
net asset
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value of the Class in relation to the net asset value
of the Series.
D. On an ongoing basis, the Trustees, pursuant to
their fiduciary responsibilities under the Act and
otherwise, will monitor each Series for the
existence of any material conflicts among the
interests of its several Classes. The Trustees,
including a majority of the Independent Trustees,
shall take such action as is reasonably necessary
to eliminate any such conflicts that may develop.
Wood, Struthers & Winthrop Management Corp. (the
"Adviser") and Donaldson, Lufkin & Jenrette
Securities Corporation (the "Distributor") will be
responsible for reporting any potential or exist ing
conflicts to the Trustees. If a conflict arises,
the Adviser and the Distributor will be responsible
at their own cost for remedying such conflict by
appropriate steps up to and including the
establishment of a new registered management
investment company.
E. The Trust's plans adopted under Rule 12b-1 under
the Act (the "Rule 12b-1 Plan") provide that the
Trustees will receive quarterly and annual
statements complying with paragraph (b)(3)(ii) of
Rule 12b-1, as it may be amended from time to
time. In the statements, only distribution expen
ditures properly attributable to the sale of a
Class will be used to support the Rule 12b-1 fee
charged to shareholders of such Class. Expendi
tures not related to the sale of a specific Class
will not be presented to the Trustees to support
Rule 12b-1 fees charged to shareholders of such
Class. The statements, including the allocations
upon which they are based, will be subject to the
review and approval of the Independent Trustees in
the exercise of their fiduciary duties.
F. Dividends paid by a Series with respect to each
Class, to the extent any dividends are paid, will
be calculated in the same manner, at the same time
and on the same day and will be in the same
amount, except that fee payments made under the
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Rule 12b-1 Plan relating to the Classes will be
borne exclusively by each Class and except that
any Class Expenses may be borne by the applicable
Class.
G. For purposes of expressing an opinion on the
financial statements of the Fund, the methodology
and procedures for calculating the net asset value
and dividends/distributions of the Fund's several
classes and the proper allocation of income and
expenses among such classes will be examined
annually by the Fund's independent auditors who,
in performing such examination, shall consider the
factors set forth in the relevant auditing
standards adopted from time to time by the
American Institute of Certified Public
Accountants.
H. Each Series may be offered with an exchange privilege
providing that the securities of a class may be exchanged for
certain securities of another Series or another fund advised
by the Trust's investment adviser or whose securities are
distributed by the Trust's distributor or otherwise.
I. Each Series may be offered with a conversion feature
providing that the shares of one class (the
"Purchase Class") will be exchanged automatically
for shares of another class (the "Target Class")
after a specified period of time, provided that,
such conversion will be effected on the basis of
relative net asset values of the two classes without
the imposition of any sales load, fee or other
charge and that the expenses of the Target Class,
including payments authorized under a Rule 12b-1
plan, are not higher than the expenses of the
Purchase Class, including payments authorized under
a Rule 12b-1 plan; and, if the amount of expenses of
the Target Class, including payments under a Rule
12b-1 plan, are increased materially without
approval of the shareholders of the Purchase Class,
the Trust will establish a new Target Class for the
Purchase Class on the same
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terms as applied to the Target Class before the
increase.
J. Each Series may offer a conversion feature providing
that shares of a class in which an investor is no
longer eligible to participate may be converted to
shares of a class in which such investor is eligible
to participate provided that such investor is given
notice of the proposed conversion either at the time
of purchase or subsequently and the conversion is
effected on the basis of the relative net asset
values of the two classes without the imposition of
a sales load, fee or other charge.
2. Terms of the Classes
A. Each Series offers two classes of shares (each, a
"Class"), designated Class A and Class B, and the
DLJ Winthrop Growth Fund, the DLJ Winthrop Growth
and Income Fund, and the DLJ Winthrop Fixed Income
Fund will, upon approval of this Plan, offer a
third class of shares, designated Class D. Each
Series reserves the right to issue additional
classes.
B. Each Series' Class A shares are offered subject to a
front-end sales load of up to 4.75% of the offering
price; provided, however,that such front-end sales
charge may be waived in certain circumstances
described in the Prospectus. Each Series' Class A
Shares are subject to a management fee as described
in the Prospectus, and a Rule 12b-1 fee of .30 of 1%
per year of the average daily net assets of the
Class A shares of such Series consisting of (i) an
asset-based sales charge of .05 of 1% per year of
the average daily net assets of the Class A shares
of such Series and (ii) a service fee of .25 of 1%
per year of the average daily net assets of the
Class A shares of such Series.
C. Each Series' Class B shares are offered subject to
a contingent deferred sales charge of 4% if
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redeemed within 1 year after purchase, 3% if
redeemed more than 1 year but less than 2 years of
purchase, 2% if redeemed more than 2 years but less
than 3 years after purchase, and 1% if redeemed more
than 3 years but less than 4 years after purchase
and 0% if redeemed more than 4 years after purchase;
provided, however, that such contingent deferred
sales charge may be waived in certain circumstances
described in the Prospectus. Each Series' Class B
shares are subject to a management fee as described
in the Prospectus and a Rule 12b-1 fee at an annual
rate of 1.00% per year of the average daily net
assets of the Class B shares of such Series
consisting of (i) an asset-based sales charge of .75
of 1% per year of the average daily net assets of
the Class B shares of such Series and (ii) a service
fee of .25 of 1% per year of the average daily net
assets of the Class B shares of such Series.
D. Class D shares of the Series offering such shares
will not be subject to any sales charges,
distribution fees, or service fees.
E. Except for shares acquired through reinvestment of
dividends, each Series' Class B shares held for 8
years after purchase will be automatically converted
into Class A shares of such Series.
F. Shares of one Class of a Series can be converted to
another Class of the same Series or exchanged for
shares of the same class of DLJ Winthrop Government
Money Fund or DLJ Winthrop Municipal Money Fund or
for shares of the same class of other DLJ Winthrop
Opportunity Funds, where legally permissible and as
described in the Prospectus.
Approved January 19, 1999.
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