As filed with the Securities and Exchange Commission on July 31, 2000
Registration No. 33-03706
Registration No. 811-04604
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 25 |X|
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 26 |X|
(Check appropriate box or boxes)
DLJ 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:
Earl D. Weiner
Sullivan & Cromwell
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)
|X| Immediately upon filing pursuant to paragraph (b)
|_| on February 28, 2000 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>
DLJ Mutual Funds
Prospectus
August 1, 2000
Leadership through Experience
DLJ Core Equity Fund
DLJ Growth and Income Fund
DLJ Small Company Value Fund
DLJ Strategic Growth Fund
DLJ Technology Fund
DLJ Developing Markets Fund
DLJ International Equity Fund
DLJ Fixed Income Fund
DLJ Municipal Trust Fund
DLJ High Income Fund
DLJ Municipal Money Fund
DLJ U.S. Government Money Fund
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.
CONTENTS
4 DLJ Mutual Funds' Risk Return Summary
14 Summary of DLJ Fund Expenses
15 Annual Fund Operating Expenses
17 Purchase Information
18 DLJ Mutual Funds' Investment Objectives and Policies
29 Additional Information on Investment Policies and Risks
32 Fund Management
34 How to Buy and Sell Shares
37 Other Shareholder Information
41 Additional Shareholder Services
43 Distribution Charges
44 Dividend and Distribution Information
50 Taxes
51 Financial Highlights
56 For More Information
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 Mutual Funds is
contained in "DLJ Mutual 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.
<PAGE>
DLJ MUTUAL FUNDS' RISK RETURN SUMMARY
DLJ DOMESTIC EQUITY FUNDS
The DLJ Core Equity Fund
The DLJ Core Equity Fund's (previously named the DLJ Winthrop Growth Fund)
investment objective is long-term capital appreciation. The Fund seeks to
achieve its objective by investing in companies that offer long-term capital
appreciation. The Fund invests in common stock, securities convertible into
common stock and other equity securities of well-known and established
companies. The Fund takes a long-term view of each stock it buys, holding each
company until its long-term growth potential no longer meets the Fund's
requirements. Generally, the Fund attempts to identify companies with growth
rates that will exceed that of the S&P 500 Index. The Core Equity 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. In the opinion of the Adviser, this
strategy enables the Fund to properly diversify its portfolio within the most
important and central realm ("core") of the U.S. equity universe. 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 Core Equity Fund is subject to
risk and you could lose money. While investments are selected that the Adviser
believes will experience long-term appreciation, their value could decline. The
Fund is subject to risks that affect equity securities markets in general, such
as general economic conditions and adverse changes (generally increases) in
interest rates. These and other factors could adversely affect your investment.
The following chart and table illustrate the risk and 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.
Calendar Year Total Returns
1999 28%
1998 28%
1997 28%
1996 20%
1995 24%
1994 -4%
1993 14%
1992 2%
1991 28%
1990 -7%
The annual returns referenced in the bar chart are for the calendar
years ended December 31 and do not include sales charges. If sales
charges were included, the annual returns would be lower than those
shown.
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 total return for the quarter ended 6/30/00 was -0.86%.
<PAGE>
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Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
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Core Equity Fund
Class A 20.57% 24.14% 14.54%
Core Equity Fund
Class B 22.93% N/A N/A
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S&P 500* 21.04% 28.55% 18.21%
================================================================================
The Average Annual Total Returns for the Fund reflect the maximum applicable
sales charges currently in effect. The Fund commenced offering Class C and Class
D shares on February 28, 2000 and May 13, 1999, respectively. Prior to the date
of this prospectus, the Fund had not yet offered Class R shares. Therefore, the
Fund does not yet have a full calendar year of performance information for these
classes.
*The S & P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices. The returns for the
S&P 500 do not include any sales charges, fees or other expenses.
The DLJ Growth and Income Fund
The DLJ Growth and Income Fund's investment objective is long-term capital
appreciation and continuity of income. The Fund seeks to achieve its 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 may be 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
percentage of the Fund's assets that must be invested in any particular type of
security.
Like any investment, an investment in the DLJ Growth and Income Fund is subject
to risk and you could lose money. While the Fund seeks investments that will
appreciate in value and/or provide income, the Adviser could select securities
that will decline in value and provide no income.
The Fund is also subject to risks that affect equity securities markets in
general, such as general economic conditions and adverse changes (generally
increases) in interest rates. These and other factors could adversely affect
your investment.
The following chart and table illustrate the risk and 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.
Calendar Year Total Returns
1999 10%
1998 19%
1997 33%
1996 22%
1995 30%
1994 -2%
1993 16%
1992 6%
1991 24%
1990 -3%
<PAGE>
The annual returns referenced in the bar chart are for the calendar
years ended December 31 and do not include sales charges. If sales
charges were included, the annual returns would be lower than those
shown.
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 total return for the quarter ended 6/30/00 was -0.73%.
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Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
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Growth and Income Fund Class A 4.06% 20.94% 14.01%
Growth and Income Fund Class B 5.64% N/A N/A
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S&P 500* 21.04% 28.55% 18.21%
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The Average Annual Total Returns for the Fund reflect the maximum applicable
sales charges currently in effect. The Fund commenced offering Class C and Class
D shares on February 28, 2000 and April 30, 1999, respectively. Prior to the
date of this prospectus, the Fund had not yet offered Class R shares. Therefore,
the Fund does not yet have a full calendar year of performance information for
these classes.
*The S&P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a widely
recognized, unmanaged index of common stock prices. The returns for the S&P 500
do not include any sales charges, fees or other expenses.
The DLJ Small Company Value Fund
The DLJ Small Company Value Fund's investment objective is a high level of
growth of capital. The Fund seeks to achieve its objective by investing in
common stock and other equity securities of "small cap" companies that appear to
be undervalued. Companies with market capitalizations of $2 billion or less at
the time of purchase are considered to be "small cap" companies.
This Fund's investment objective causes it to be riskier than other funds and
you could lose money. While the Fund seeks investments that provide a high level
of growth of capital, they may decline in value. You should not invest in this
Fund if your principal objective is assured income or capital preservation.
Investments in smaller companies often involve greater risks than investments in
larger, more established companies. Smaller companies may have less management
experience, fewer financial resources, and limited product diversification, all
of which may increase risks.
The frequency and trading volume for securities of smaller companies are
substantially less than for larger companies. This can result in greater and
more abrupt price fluctuations and can cause small cap stocks to be less liquid
than securities of larger companies. The Fund is also subject to risks that
affect equity
<PAGE>
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 risk and 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.
Calendar Year Total Returns
1999 1%
1998 -5%
1997 26%
1996 15%
1995 20%
1994 -1%
1993 22%
1992 18%
1991 51%
1990 -13%
The annual returns referenced in the bar chart are for the calendar
years ended December 31 and do not include sales charges. If sales
charges were included, the annual returns would be lower than those
shown.
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 total return for the quarter ended 6/30/00 was 0.62%.
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Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
================================================================================
Small Company Value Fund
Class A -4.35% 9.65% 11.48%
Small Company Value Fund
Class B -3.29% N/A N/A
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Russell 2000* 21.26% 16.69% 13.40%
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The Average Annual Total Returns for the Fund reflect the maximum applicable
sales charges currently in effect. The Fund commenced offering Class C shares on
February 28, 2000. Prior to the date of this prospectus, the Fund had not yet
commenced offering Class R shares. Therefore, the Fund does not yet have a full
calendar year of performance information for these classes.
*The Russell 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
3000 Index is composed of 3,000 of the largest U.S. companies by market
capitalization. The returns for the Russell 2000 Index do not include any sales
charges, fees or other expenses.
<PAGE>
THE DLJ STRATEGIC GROWTH FUND
The DLJ STRATEGIC GROWTH FUND's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing in equity
securities of a limited number of large, carefully selected companies that the
Adviser believes will achieve superior growth. The Fund intends to hold
securities of approximately 50-60 companies, which may fluctuate depending on
the Adviser's view of market conditions. The Fund seeks to achieve superior
performance as compared to other U.S. domestic growth funds
Like any investment, an investment in the Strategic Growth Fund is subject to
risk, and you could lose money. While the Adviser believes that the investments
it selects will experience long-term appreciation, their value could decline.
Growth companies are typically characterized by higher price-to-earnings and
price-to-book ratios, lower dividend yields, greater volatility, and higher
historical and predicted earnings. 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. Because the Fund
normally invests in a smaller number of securities than many other equity funds,
an investment in this Fund has the risk that a change in the value of a single
security may have a more significant effect either positive or negative on the
Fund's net asset value. These and other factors could adversely affect your
investment.
The DLJ Strategic Growth Fund commenced operations in November, 1999 and
therefore as of the date of this prospectus does not have a full calendar year
of performance information.
THE DLJ TECHNOLOGY FUND
The DLJ TECHNOLOGY FUND's investment objective is growth of capital. The Fund
seeks to achieve this objective by investing in a broad number of industries
that comprise the U.S. domestic technology sector. The Fund seeks to create a
blend of stocks in companies that include the computer hardware, computer
software, electronics, semiconductor, semiconductor capital equipment,
telecommunication equipment, telecommunication services, and internet
industries.
Like any investment, an investment in the Technology Fund is subject to risk and
you could lose money. While the Fund seeks investments that will appreciate in
value, DLJ Asset Management Group ("DLJAM" or the "Adviser") could select
securities that will decline in value and provide no income. Technology stocks,
especially those of smaller, less-seasoned companies tend to be more volatile
than the overall stock market. When stock prices fall, you should expect the
value of your investment to fall as well, possibly to a greater extent than the
decline in equity markets generally. The fact that the Fund concentrates in a
single sector increases risk and volatility as compared to more diverse funds.
This is because factors that affect that sector are likely to directly affect
the Fund's performance, both negatively and positively. Even if the overall
direction of equity prices is upward, if technology stocks are headed lower,
Fund performance could be adversely affected. For example, technology companies
could be hurt by such factors as market saturation, price competition, and the
advent of competing technologies. 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 DLJ Technology Fund was started in November, 1999 and therefore as of the
date of this prospectus does not have a full calendar year of performance
information.
DLJ INTERNATIONAL FUNDS
The DLJ Developing Markets Fund
The DLJ Developing Markets Fund's investment objective is to provide long-term
growth of capital by investing primarily 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
<PAGE>
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 within those countries, 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 mutual 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 investments in 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 risk and 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.
Calendar Year Total Returns
1999 69%
1998 -22%
1997 -6%
1996 4%
The annual returns referenced in the bar chart are for the calendar
years ended December 31 and do not include sales charges. If sales
charges were included, the annual returns would be lower than those
shown.
During the 4 year period shown in the bar chart for Class A shares, the
highest return for a quarter was 27.74% (quarter ending 12/31/99) and
the lowest return for a quarter -21.96% (quarter ending 6/30/98). 1996
was the first full calendar year of operations.
The total return for the quarter ended 6/30/00 was -10.43%.
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Average Annual Total Returns
(for the periods ending From Inception
December 31, 1999) Past Year on 9/8/95
================================================================================
Developing Markets Fund
Class A 59.11% 4.16%
Developing Markets Fund
Class B 63.45% 4.78%
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MSCI Emerging Markets Free
Index* 66.41% 3.09%
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The Average Annual Total Returns for the Fund reflect the maximum applicable
sales charges currently in effect.
<PAGE>
The Fund commenced offering Class C shares on February 28, 2000. Prior to the
date of this prospectus, the Fund had not yet commenced offering Class R shares.
Therefore, the Fund does not yet have a full calendar year of performance
information for these classes.
*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 DLJ International Equity Fund
The DLJ International Equity Fund's investment objective is long-term growth of
capital by investing in equity securities from established non-U.S. markets. The
Fund seeks to achieve this objective by primarily investing in a diversified
portfolio of investments that primarily 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 such countries. The
Adviser employs a comprehensive top-down approach to invest in industries in
each country that are, in the opinion of the Adviser, 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 (generally
increases) and foreign exchange rates. These and other factors could adversely
affect your investment.
The following chart and table illustrate the risk and 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(R)
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.
Calendar Year Total Returns
1999 28%
1998 18%
1997 7%
1996 6%
The annual returns, referenced in the bar chart are for the calendar
years ended December 31 and do not include sales charges. If sales
charges were included, the annual returns would be lower than those
shown.
During the 4 year period shown in the bar chart for Class A shares, the
highest return for a quarter was 19.76% (quarter ending 12/31/99) and
the lowest return for a quarter was -15.46% (quarter ending 9/30/98).
1996 was the first full calendar year of operations.
The total return for the quarter ended 6/30/00 was -5.77 %.
<PAGE>
==========================================================================
Average Annual Total Returns
(for the periods ending From inception
December 31, 1999) Past Year 9/8/95
==========================================================================
International Equity Fund
Class A 20.57% 12.10%
International Equity Fund
Class B 22.97% 12.81%
==========================================================================
MSCI -EAFE* 27.30% 14.02%
==========================================================================
The Average Annual Returns for the Fund reflect the maximum applicable sales
charges.
The Fund commenced offering Class C and Class D shares on February 28, 2000 and
May 13, 1999, respectively. Prior to the date of this prospectus, the Fund had
not yet offered Class R shares. Therefore, the Fund does not yet have a full
calendar year of performance information for these classes.
*The MSCI-EAFE(R) is an unmanaged index composed of a sample of companies
representative of the market structure of European and Pacific Basin Countries.
The index is the property of Morgan Stanley & Co. Incorporated. The returns for
the Index do not include any sales charges, fees or other expenses.
DLJ FIXED INCOME FUNDS
The DLJ Fixed Income Fund
The DLJ Fixed Income Fund's investment objective is to provide as high a level
of total return as is consistent with capital preservation by investing
principally in debt securities, including, without limitation, convertible and
non-convertible debt securities of foreign and domestic companies, including
both well-known and established and new and lesser-known companies. 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. 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 debt securities.
These and other factors could adversely affect your investment.
The following chart and table illustrate the risk and 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 Bond 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.
<PAGE>
Calendar Year Total Returns
1999 -1%
1998 8%
1997 8%
1996 3%
1995 15%
1994 -4%
1993 10%
1992 7%
1991 14%
1990 9%
The annual returns referenced in the bar chart are for the calendar
years ended December 31 and do not include sales charges. If sales
charges were included, the annual returns would be lower than those
shown.
During the 10 year period shown in the bar chart for Class A shares,
the highest return for a quarter was 5.09% (quarter ending 12/31/91)
and the lowest return for a quarter was -2.88% (quarter ending
3/31/94).
The total return for the quarter ended 6/30/00 was 1.26%.
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
================================================================================
Fixed Income Fund Class A -5.38% 5.16% 6.24%
================================================================================
Fixed Income Fund Class B -5.35% N/A N/A
================================================================================
Lehman Index** 0.39% 7.10% 7.26%
================================================================================
The Average Annual Total Returns for the Fund reflect the maximum applicable
sales charges currently in effect. The Fund commenced offering Class C and Class
D shares on February 28, 2000 and April 30, 1999, respectively. Prior to the
date of this prospectus, the Fund had not yet offered Class R shares. Therefore,
the Fund does not yet have a full calendar year of performance information for
these classes.
*The Lehman Brothers Government/Corporate Intermediate Bond 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 sales charges, fees or expenses in its
calculation.
The DLJ Municipal Trust Fund
The DLJ Municipal Trust Fund's investment objective is to provide as high a
level of total return as is consistent with capital preservation by investing
principally in high-grade tax-exempt municipal securities. 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, the 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.
<PAGE>
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 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 and other factors could adversely
affect your investment.
The following chart and table illustrate the risk and 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 Lehman
Brothers Seven Year Municipal Bond 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.
Calendar Year Total Returns
1999 -1%
1998 5%
1997 8%
1996 4%
1995 12%
1994 -3%
The annual returns referenced in the bar chart are for the calendar
years ended December 31 and do not include sales charges. If sales
charges were included, the annual returns would be lower than those
shown.
During the 6 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 calendar year of operations.
The total return for the quarter ended 6/30/00 was 1.29%.
================================================================================
Average Annual Total Returns
(for the periods ending From inception
December 31, 1999) Past Year Past 5 years on 7/28/93
================================================================================
Municipal Trust Fund Class A -6.10% 4.32% 3.22%
Municipal Trust Fund Class B -5.89% N/A N/A
================================================================================
LBSYMBI* -0.14% 6.35% 5.12%**
================================================================================
The Average Annual Total Returns for the Fund reflect the maximum applicable
sales charges currently in effect. The Fund commenced offering Class C shares on
February 28, 2000. Prior to the date of this prospectus the Fund had not yet
commenced offering Class R shares. Therefore, the Fund does not yet have a full
calendar year of performance information for these classes.
<PAGE>
* The Lehman Brothers Seven Year Municipal Bond Index ("LBSYMBI") is comprised
of municipal securities having an average approximate maturity of seven years
and does not include sales charges, fees or expenses in its calculation.
**For comparative purposes the value of the index on 7/31/93 is used for the
beginning value on 7/28/93.
THE DLJ High Income Fund
The DLJ 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 mutual 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 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.
Because this Fund began operations on March 8, 1999 as of the date of this
prospectus, it does not have a full calendar year of performance information.
The DLJ Municipal Money Fund
The DLJ Municipal Money Fund's investment objective is maximum current income,
consistent with liquidity and safety of principal, that is exempt from Federal
income taxation to the extent described herein. The Fund seeks to achieve this
objective by investing in a diversified portfolio of municipal securities. 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.
The Fund seeks to preserve the value of your investment at $1.00 per share,
however, it is possible to lose money by investing in the Fund.
Because this Fund began operations in February, 1997, the first full calendar
year of performance was 1998. The Fund's past performance is not necessarily an
indication of how it will perform in the future.
Calendar Year Total Returns
1999 2%
1998 3%
During the 2 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 .53% (quarter ending 3/31/99). The annual returns are for
the calendar years ended December 31.
The total return for the quarter ended 6/30/00 was 0.87%.
<PAGE>
=============================================================================
Average Annual Total
Returns
(for the periods
ending December 31,
1999) Past Year From Inception on 2/24/97
=============================================================================
Municipal Money Fund 2.44 % 2.67%
=============================================================================
Seven Day Yield as of December 31, 1999 was 3.64%
The DLJ U.S. Government Money Fund
The DLJ U.S. Government Money Fund's investment objective is maximum current
income, consistent with liquidity and safety of principal. The Fund seeks to
achieve its objective by investing in a portfolio of U.S. Government securities,
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. The Fund seeks to preserve the value of your investment at $1.00 per
share, however, it is possible to lose money by investing in the Fund. The 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 first full calendar
year of performance was 1998. The Fund's past performance is not necessarily an
indication of how it will perform in the future.
Calendar Year Total Returns
1999 4%
1998 5%
During the 2 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 1.00% (quarter ending 3/31/99). The annual returns are
for the calendar years ended December 31.
The total return for the quarter ended 6/30/00 was 1.32 %.
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year From Inception on 2/24/97
================================================================================
U.S. Government Money Fund 4.34% 4.60%
================================================================================
Seven Day Yield as of December 31, 1999 was 4.54%
<PAGE>
SUMMARY OF DLJ 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 Funds.
--------------------------------------------------------------------------------
Equity Funds*
--------------------------------------------------------------------------------
SHAREHOLDER FEES: Class A Class B Class C Class D Class R
(These fees are paid (1) (2)
directly from your
investment.)
---------------------------
Maximum sales charge 5.75% None None None
(load) imposed on
purchases (as a
percentage of offering
price)
---------------------------
Maximum sales charge None None None None
(load) imposed on
reinvested dividends (as
a percentage of offering
price)
---------------------------
Maximum deferred sales None 4% (3) 1% (4) None
charge (as a percentage
of original purchase
price or redemption
proceeds, as applicable)
---------------------------
Redemption Fees None None None None
---------------------------
Exchange Fee None None None None
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Fixed Income Funds** Money Funds***
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER FEES: Class A (1) Class B (2) Class C Class D Class R
(These fees are paid
directly from your
investment.)
--------------------------- -------------
Maximum sales charge 4.75% None None None None None
(load) imposed on
purchases (as a
percentage of offering
price)
--------------------------- -------------
Maximum sales charge None None None None None None
(load) imposed on
reinvested dividends (as
a percentage of offering
price)
--------------------------- -------------
Maximum deferred sales None 4% (3) 1% (4) None None None
charge (as a percentage
of original purchase
price or redemption
proceeds, as applicable)
--------------------------- -------------
Redemption Fees None None None None None None
--------------------------- -------------
Exchange Fee None None None None None None
--------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* Includes the Core Equity Fund, the Growth and Income Fund, the Small Company
Value Fund, the Strategic Growth Fund, the Technology Fund, the Developing
Markets Fund and the International Equity Fund.
** Includes the Fixed Income Fund, the Municipal Trust Fund and the High Income
Fund.
*** Includes the Municipal Money Fund and U.S. Government Money 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 beginning on page 17. See "Other Shareholder Information".
(3) 4% during the first year decreasing 1% annually to 0% after the fourth year.
(4) 1% during the first year.
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
applicable 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. Other
expenses for all Class R shares of the Funds; the Class A, B and C shares for
the Strategic Growth Fund and Technology Fund: and the Class D shares for the
Technology Fund are estimated based on the operating results of the respective
Fund's other classes of shares. For each Fund that has Waived Fees below, the
After 1 Year Examples and the first year in each of the other Examples reflect
the Waived Fees. For the Strategic Growth Fund and the Technology Fund, the
Waived Fees are also reflected in the 3,5 and 10 Year Examples through the
period ended October 31, 2002. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
-------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund
Service Fees Operating
Core Equity Fund Management Fee (a) Other Expenses Expenses
--------------
Class A .62% .25% .24% 1.11%
----
Class B .62% 1.00% .24% 1.86%
----
Class C .62% 1.00% .24% 1.86%
----
Class D .62% .00% .24% .86%
----
Class R .62% .25% .24% 1.11%
----
<PAGE>
--------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund
Growth and Income Service Fees Operating
Fund Management Fee (a) Other Expenses Expenses
--------------
Class A .57% .25% .22% 1.04%
----
Class B .57% 1.00% .22% 1.79%
----
Class C .57% 1.00% .22% 1.79%
----
Class D .57% .00% .22% .79%
----
Class R .57% .25% .22% 1.04%
----
--------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund
Small Company Service Fees Operating
Value Fund Management Fee (a) Other Expenses Expenses
--------------
Class A .81% .25% .30% 1.36%
----
Class B .81% 1.00% .30% 2.11%
----
Class C .81% 1.00% .30% 2.11%
----
Class R .81% .25% .30% 1.36%
----
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
Strategic Growth Service Fees Operating Waived Fees Expenses Less
Fund Management Fee (a) Other Expenses Expenses (d) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
Class A .75% .25% 1.95% 2.95% (1.76%) 1.19%
-----
Class B .75% 1.00% 1.95% 3.70% (1.76%) 1.94%
-----
Class C .75% 1.00% 1.95% 3.70% (1.76%) 1.94%
-----
Class R .75% .25% 1.95% 2.95% (1.76%) 1.19%
-----
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
Service Fees Operating Waived Fees Expenses Less
Technology Fund Management Fee (a) Other Expenses Expenses (e) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
Class A .88% .25% 1.02% 2.15% (.76%) 1.39%
-----
Class B .88% 1.00% 1.02% 2.90% (.76%) 2.14%
-----
Class C .88% 1.00% 1.02% 2.90% (.76%) 2.14%
-----
Class D .88% .00% 1.02% 1.90% (.76%) 1.14%
-----
Class R .88% .25% 1.02% 2.15% (.76%) 1.39%
-----
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
Developing Markets Service Fees Operating Waived Fees Expenses Less
Fund Management Fee (a) Other Expenses Expenses (c) (f) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
Class A 1.25% .25% 1.21% 2.71% (.56%) 2.15%
-----
Class B 1.25% 1.00% 1.21% 3.46% (.56%) 2.90%
-----
Class C 1.25% 1.00% 1.21% 3.46% (.56%) 2.90%
-----
Class R 1.25% .25% 1.21% 2.71% (.56%) 2.15%
-----
</TABLE>
--------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund
International Service Fees Operating
Equity Fund Management Fee (a) Other Expenses Expenses (c)
--------------
Class A 1.25% .25% .54% 2.04%
----
Class B 1.25% 1.00% .54% 2.79%
----
Class C 1.25% 1.00% .54% 2.79%
----
Class D 1.25% .00% .54% 1.79%
----
Class R 1.25% .25% .54% 2.04%
----
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
Service Fees Operating Waived Fees Expenses Less
Fixed Income Fund Management Fee (a) Other Expenses Expenses (g) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
Class A .58% .25% .25% 1.08% (.13%) .95%
----
Class B .58% 1.00% .25% 1.83% (.13%) 1.70%
----
Class C .58% 1.00% .25% 1.83% (.13%) 1.70%
----
Class D .58% .00% .25% .83% (.13%) .70%
----
Class R .58% .25% .25% 1.08% (.13%) .95%
----
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
Municipal Trust Service Fees Operating Waived Fees Expenses Less
Fund Management Fee (a) Other Expenses Expenses (h) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
Class A .63% .25% .56% 1.44% (.49%) .95%
----
Class B .63% 1.00% .56% 2.19% (.49%) 1.70%
----
Class C .63% 1.00% .56% 2.19% (.49%) 1.70%
----
Class R .63% .25% .56% 1.44% (.49%) .95%
----
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
Service Fees Operating Waived Fees Expenses Less
High Income Fund Management Fee (a) Other Expenses Expenses (i) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
Class A .70% .25% 2.38% 3.33% (2.23%) 1.10%
-----
Class B .70% 1.00% 2.38% 4.08% (2.23%) 1.85%
-----
Class C .70% 1.00% 2.38% 4.08% (2.23%) 1.85%
-----
Class D .70% 0.00% 2.38% 3.08% (2.23%) .85%
-----
Class R .70% .25% 2.38% 3.33% 2.23% 1.10%
-----
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
Municipal Money Service Fees Operating Waived Fees Expenses Less
Fund Management Fee (a)(b) Other Expenses Expenses (j) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
.40% .25% .38% 1.03% (.13%) .90%
----
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Distribution Total Annual
(12b-1) and Fund Total
U.S. Government Service Fees Operating Waived Fees Expenses Less
Fund Management Fee (a)(b) Other Expenses Expenses (k) Waived Fees
--------------
<S> <C> <C> <C> <C> <C> <C>
.40% .25% .38% 1.03% (.13%) .90%
----
</TABLE>
Examples
--------------------------------------------------------------------------------
Core Equity Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $682 $908 $1,151 $1,849
---- ---- ---- ------
Class B* $589 $785 $1,006 $1.997
---- ---- ---- ------
Class B** $189 $585 $1,006 $1,997
---- ---- ---- ------
Class C* $289 $585 $1,006 $2,180
---- ---- ---- ------
Class C** $189 $585 $1,006 $2,180
---- ---- ---- ------
Class D $88 $274 $477 $1,061
---- ---- ---- ------
Class R $113 $353 $612 $1,352
---- ---- ---- ------
--------------------------------------------------------------------------------
Growth and Income
Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $675 $887 $1,116 $1,773
---- ---- ---- ------
Class B* $582 $763 $970 $1,921
---- ---- ---- ------
Class B** $182 $563 $970 $1,921
---- ---- ---- ------
Class C* $282 $563 $970 $2,105
---- ---- ---- ------
Class C** $182 $563 $970 $2,105
---- ---- ---- ------
Class D $81 $252 $439 $978
---- ---- ---- ------
Class R $106 $331 $574 $1,271
---- ---- ---- ------
--------------------------------------------------------------------------------
Small Company
Value Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $706 $981 $1,277 $2,116
---- ---- ---- ------
Class B* $614 $861 $1,134 $2,263
---- ---- ---- ------
Class B** $214 $661 $1,134 $2,263
---- ---- ---- ------
Class C* $314 $661 $1,134 $2,441
---- ---- ---- ------
Class C** $214 $661 $1,134 $2,441
---- ---- ---- ------
Class R $138 $431 $745 $1,635
---- ---- ---- ------
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Strategic Growth
Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $689 $929 $1,540 $3,183
---- ---- ------ ------
Class B* $597 $809 $1,430 $3,404
---- ---- ------ ------
Class B** $197 $609 $1,430 $3,404
---- ---- ------ ------
Class C* $297 $609 $1,430 $3,576
---- ---- ------ ------
Class C** $197 $609 $1,430 $3,576
---- ---- ------ ------
Class R $121 $375 $1,024 $2,767
---- ---- ------ ------
--------------------------------------------------------------------------------
Technology Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $708 $990 $1,453 $2,733
---- ---- ------ ------
Class B* $617 $870 $1,315 $2,867
---- ---- ------ ------
Class B** $217 $670 $1,315 $2,867
---- ---- ------ ------
Class C* $317 $670 $1,315 $3,048
---- ---- ------ ------
Class C** $217 $670 $1,315 $3,048
---- ---- ------ ------
Class D $116 $362 $801 $2,024
---- ---- ---- ------
Class R $142 $440 $932 $2,290
---- ---- ---- ------
--------------------------------------------------------------------------------
Developing Markets
Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $781 $1,318 $1,880 $3,403
---- ------ ------ ------
Class B* $693 $1,210 $1,750 $3,533
---- ------ ------ ------
Class B** $293 $1,010 $1,750 $3,533
---- ------ ------ ------
Class C* $393 $1,010 $1,750 $3,702
---- ------ ------ ------
Class C** $293 $1,010 $1,750 $3,702
---- ------ ------ ------
Class R $218 $788 $1,385 $3,001
---- ---- ------ ------
--------------------------------------------------------------------------------
International
Equity Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $770 $1,175 $1,595 $2,758
---- ------ ------ ------
Class B* $682 $1,083 $1, 474 $2,940
---- ------ ------- ------
Class B** $282 $865 $1, 474 $2,940
---- ---- ------- ------
Class C* $382 $865 $1, 474 $3,119
---- ---- ------- ------
Class C** $282 $865 $1, 474 $3,119
---- ---- ------- ------
Class D $182 $563 $970 $2,105
---- ---- ---- ------
Class R $207 $636 $1,082 $2,316
---- ---- ------ ------
--------------------------------------------------------------------------------
Fixed Income Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $567 $790 $1,030 $1,718
---- ---- ------ ------
Class B* $573 $763 $978 $1,940
---- ---- ---- ------
Class B** $173 $563 $978 $1,940
---- ---- ---- ------
Class C* $273 $563 $978 $2,137
---- ---- ---- ------
Class C** $173 $563 $978 $2,137
---- ---- ---- ------
Class D $72 $252 $448 $1,013
--- ---- ---- ------
Class R $97 $331 $583 $1,305
--- ---- ---- ------
--------------------------------------------------------------------------------
Municipal Trust
Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $567 $863 $1,180 $2,077
---- ---- ------ ------
Class B* $573 $838 $1,130 $2,295
---- ---- ------ ------
Class B** $173 $638 $1,130 $2,295
---- ---- ------ ------
Class C* $273 $638 $1,130 $2,485
---- ---- ------ ------
Class C** $173 $638 $1,130 $2,485
---- ---- ------ ------
Class R $97 $407 $740 $1,682
--- ---- ---- ------
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
High Income Fund 1 Year 3 Years 5 Years 10 Years
------
Class A $582 $1,252 $1,945 $3,780
---- ------ ------ ------
Class B* $588 $1,237 $1,903 $3,975
---- ------ ------ ------
Class B** $188 $1,037 $1,903 $3,975
---- ------ ------ ------
Class C* $288 $1,037 $1,903 $4,136
---- ------ ------ ------
Class C** $188 $1,037 $1,903 $4,136
---- ------ ------ ------
Class D $87 $741 $1,420 $3,236
--- ---- ------ ------
Class R $112 $816 $1,543 $3,470
---- ---- ------ ------
--------------------------------------------------------------------------------
Municipal Money
Fund 1 Year 3 Years 5 Years 10 Years
------
$92 $315 $556 $1,248
----
--------------------------------------------------------------------------------
U.S. Government
Fund 1 Year 3 Years 5 Years 10 Years
------
$92 $315 $556 $1,248
----
--------------------------------------------------------------------------------
* Assumes reinvestment of all dividends and redemption at end of period.
** Assumes reinvestment of all dividends and no redemption at end of period.
+ 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.
++ Shares purchased directly into a Money Fund will not be subject to a CDSC
and therefore expenses paid will remain unaffected by redemption.
(a) The Fund has adopted a Rule 12b-1 plan for the indicated classes of shares
that allows the Fund to pay distribution fees for the sale and
distribution of those classes of shares out of the assets applicable to
those classes. Because these fees are paid out over time, they will
increase the cost of your investment and may cost you more than paying
other types of sales charges. A portion of the 12b-1 fee represents an
asset-based sales charge.
(b) The maximum allowable amount payable for distributing these 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.
(c) The expense ratios for each class of shares of the Developing Markets Fund
and the International Equity Fund are higher than those paid by most other
investment companies, but DLJ Asset Management Group, Inc. (as Adviser)
and AXA Investment Managers GS Ltd. (as subadviser) believe the fees are
comparable to those paid by investment companies of similar investment
orientation.
(d) The Adviser has undertaken, in writing to limit Total Expenses of the
Strategic Growth Fund to 1.19% for the Fund's Class A and Class R shares
and 1.94% for the Fund's Class B and Class C shares. This arrangement will
remain in place at least until October 31, 2002.
(e) The Adviser has undertaken, in writing, to limit Total Expenses of the
Technology Fund to 1.14% per year for the Fund' Class D shares, 1.39% per
year for the Fund's Class A and Class R shares, and 2.14% for the Fund's
Class B and Class C shares. This arrangement will remain in place at least
until October 31, 2002.
(f) The Adviser has undertaken, in writing, to limit Total Expenses of the
Developing Markets Fund to 2.15% per year for the Fund's Class A and Class
R shares and 2.90% for the Fund's Class B and Class C shares. This
arrangement will remain in place at least until October 31, 2000.
<PAGE>
(g) The Adviser has undertaken, in writing, to limit Total Expenses of the
Fixed Income Fund to .70% for the Fund's Class D shares, and .95% for the
Fund's Class A shares and Class R shares and 1.70% for the Fund's Class B
and Class C shares. This arrangement will remain in place at least until
October 31, 2000.
(h) The Adviser has undertaken, in writing, to limit Total Expenses of the
Municipal Trust Fund to .95% per year for the Fund's Class A shares and
Class R shares and 1.70% for the Fund's Class B and Class C shares. This
arrangement will remain in place at least until October 31, 2000.
(i) The Adviser has undertaken, in writing, to limit Total Expenses, of the
High Income Fund to .85% per year for the Fund's Class D shares, and 1.10%
for the Fund's Class A shares and Class R shares, and 1.85% for the Fund's
Class B and Class C shares. This arrangement will remain in place at least
until October 31, 2000.
(j) 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, 2000.
(k) 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, 2000.
PURCHASE INFORMATION
Shares of the DLJ Municipal Money Fund and the DLJ U.S. Government Money Fund
(the "Money Funds") or Class A, Class B or Class C 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 $1,000. 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 Funds. Further information can be obtained from DLJ Funds at the address and
telephone number shown on the back cover of this Prospectus. See "How to Buy and
Sell Shares" and "Other Shareholder Services."
The Funds, except the Money Funds, offer Class A, Class B, Class C and Class R
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.
Class C shares may be purchased at the net asset value per share, but are
subject to a 1% CDSC if redeemed within the first year of purchase. Class R
shares are available for purchase by eligible institutions on behalf of their
clients (generally individuals who do not purchase shares directly). Class R
shares may be purchased at a price equal to the net asset value per share.
Institutions may charge direct fees in connection with transactions related to
Class R shares. The Core Equity Fund, Growth and Income Fund, Technology Fund,
International Equity Fund, Fixed Income Fund and High Income 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 for Employees. 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."
<PAGE>
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 Core Equity Fund, the DLJ Growth and Income Fund, the DLJ Small Company
Value Fund and the DLJ Municipal Trust Fund are each a series of the DLJ Focus
Funds. The DLJ International Equity Fund, the DLJ Developing Markets Fund, the
DLJ High Income Fund, the DLJ Municipal Money Fund and the DLJ U.S. Government
Money Fund are each a series of the DLJ Opportunity Funds. The DLJ Strategic
Growth Fund and the DLJ Technology Fund are each a series of the DLJ Select
Funds.
The DLJ Opportunity Funds, DLJ Focus Funds, and DLJ Select Funds are different
legal entities and are separately offering their Funds through this Prospectus.
Based on the advise 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.
[side bar]
Net Asset Value:
Net asset value per share (or "NAV") is determined separately for each class by
taking the total assets of each class of a Fund and subtracting its total
liabilities and then dividing the difference by the total number of shares
outstanding in each class.
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. However, there
is a risk that we will sell a security for a price that is higher or lower than
amortized cost. Such an event could have an effect on our ability to maintain an
NAV of $1.00 per share.
In calculating the NAV of the DLJ Funds, except the Money Funds, each Fund's
investments are valued at their current market value determined on the basis of
market quotations or, if such quotations are not readily available, such other
method as the Trustees of the applicable Fund believe in good faith would
accurately reflect their fair value.
[end side bar]
The investment objectives and policies of each Fund are set forth below. There
can be, of course, no assurance that any Fund 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.
<PAGE>
DLJ FUNDS' INVESTMENT OBJECTIVES AND POLICIES
DLJ Core Equity Fund
Goal: The investment objective of the DLJ Core Equity Fund is long-term capital
appreciation. Investments are made based on their potential for long-term
capital appreciation. The Core Equity Fund may make an investment to earn income
when, in the opinion of the Adviser, such an investment will not compromise the
Core Equity Fund's investment objective.
Strategy: The Core Equity 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 Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC") 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 Core Equity 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 Core Equity Fund and the Growth and
Income Fund" on page 19.
Investments: Under normal circumstances, the Core Equity 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 Core Equity 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
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."
[side bar]
Risks for the Core Equity Fund, and the Growth and Income Fund:
Like any investment, an investment in the Core Equity 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.
<PAGE>
The Core Equity 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 Core Equity Fund and the 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 Core Equity 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".
[end side bar]
DLJ Growth and Income Fund
Goal: The investment objective of the DLJ 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."
<PAGE>
DLJ Small Company Value Fund
Goal: The investment objective of the DLJ Small Company Value Fund is a high
level of growth of capital. The Small Company Value Fund is not intended for
investors whose principal objective is assured income or preservation of
capital.
Strategy: The Small Company Value Fund invests primarily in common stock and may
also invest in securities convertible into common stock, preferred stock, other
equity securities, bonds or other debt securities as described below. Under
normal market conditions, at least 65% of the Fund's assets are invested in
equity securities of small market capitalization companies. Small cap companies,
for purposes of this Fund, are considered to be companies with market
capitalizations of $2 billion or less at the time of purchase. If the market
capitalization of a small cap company in which the Fund has invested increases
to a level above $2 billion, the investment adviser will continue to hold the
securities of that company until the investment adviser determines that the
company no longer has growth potential.
Investments: The Small Company Value Fund pursues its investment objective by
employing a value-oriented investment approach. This means that the Adviser
seeks securities that appear to be underpriced. The Adviser looks for stocks
issued by companies with proven management, consistent earnings, sound finances
and strong potential for market growth. By investing in such companies, the
Small Company Value Fund tries to enhance its potential for appreciation and
limit the risk of decline in the value of its portfolio. The Small Company Value
Fund focuses on the fundamentals of each small-cap company instead of trying to
anticipate what changes might occur in the stock market, the economy, or the
political environment. This approach differs from that used by many other funds
investing in small-cap company stocks. Those other funds often buy stocks of
companies they believe will have above-average earnings growth, based on
anticipated future developments. In contrast, the Small Company Value Fund's
securities are generally selected with the belief that they are currently
undervalued based on existing conditions and that their earning power or
franchise value does not appear to be reflected in their current stock price. To
further reduce risk, the Small Company Value Fund diversifies its holdings among
many companies and industries. The Adviser also considers whether a company has
an established presence in its industry, a product or market niche and whether
management owns a significant stake in the company.
The Small Company Value Fund may also invest in special situation companies. A
special situation company is a company whose value may increase within a
reasonable period of time solely by reason of a development particularly or
uniquely applicable to that company. The securities of these companies may be
affected by particular developments unrelated to business conditions generally.
These investments may fluctuate without relation to general market trends. In
general, the principal risk associated with investing in special situation
companies is the potential decline in the value of these securities likely to
occur if the anticipated development fails to take place. Examples of special
situation companies are companies that are being reorganized or merged, have
unusual new products, enjoy particular tax advantages, or acquire new
management.
The Small Company Value 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 may also 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.
<PAGE>
However, the Fund does not invest in restricted securities.
[sidebar]
Risks for the Small 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 are substantially less than those of 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.
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 in 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".
[end sidebar]
DLJ STRATEGIC GROWTH FUND
Goal: The investment objective of the Strategic Growth Fund is long-term growth
of capital. Investments are made based on their potential for superior growth.
<PAGE>
Strategy: The Fund seeks to achieve this objective by investing in equity
securities of a limited number of large, carefully selected companies that the
Adviser believes will achieve superior growth. Unlike most equity funds, the
Fund focuses on a relatively small number of intensely researched companies. The
Fund seeks to achieve superior performance as compared to other U.S. domestic
growth funds.
The Adviser applies extensive research that has been conducted primarily by
research analysts employed by DLJSC on the growth prospects of stocks that are
considered for the Fund's portfolio. Unlike many equity funds, the Strategic
Growth Fund seeks to limit the number of Fund holdings to companies that offer
the highest potential for capital appreciation. The Fund intends to hold
securities of approximately 50-60 companies, which may fluctuate depending on
the Adviser's view of market conditions. Growth companies tend to be
concentrated in the technology, health care, consumer, financial,
telecommunications and commercial services sectors. By emphasizing DLJSC
research in the portfolio stock selection, this Fund will try to deliver
superior performance as compared to the U.S. domestic growth fund peer universe.
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 "Additional Information on Investment Policies and
Risks."
Investments: Under normal circumstances, the Strategic Growth Fund invests at
least 85% of its total assets in equity securities in U.S. companies that the
Adviser believes have above-average long-term capital appreciation potential.
The Adviser expects the average market capitalization of companies in the
portfolio to be in the range of companies that are included in the Standard &
Poor's 500 Index. 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 15% of its net assets in illiquid securities;
o invest up to 5% of its total assets in warrants;
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; and
o invest in investment-grade fixed income securities, including bonds,
debentures, notes and money market instruments such as commercial paper
and bankers acceptances and other financial instruments.
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 TECHNOLOGY FUND
Goal: The DLJ Technology Fund's investment objective is growth of capital.
Strategy: The Technology Fund seeks to achieve this objective by investing in a
broad number of industries that comprise the U.S. domestic technology sector.
The Fund seeks to create a blend of stocks in companies that include the
computer hardware, computer software, electronics, semiconductor, semiconductor
capital equipment, telecommunication equipment, telecommunication services and
internet industries. Stock selection reflects a growth approach and is based on
fundamental research that assesses a company's prospects for above-average
earnings. The research applied by the Adviser is conducted primarily by research
analysts employed by DLJSC. In addition, the Adviser also obtains research from
other investment firms.
Investments: The Technology Fund invests in common stock, preferred stock and
securities convertible into common stock. The Fund will normally invest 80% of
its assets in securities of companies principally engaged in offering or
developing products, processes or services that will provide technological
advances and improvements. The types of companies include computer hardware,
computer software, electronics, semiconductor, telecommunication equipment,
telecommunication services and internet industries. The Fund may invest in
listed and unlisted securities, well-known and established companies and in new
and unseasoned companies. The Fund will not invest more than 25% of its total
assets in any one industry. The Fund may also:
<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;
o invest up to 10% of its assets in non-U.S. securities;
o invest up to 15% of its net assets in illiquid securities; and
o invest in investment-grade fixed income securities, including bonds,
debentures, notes and money market instruments such as commercial paper
and bankers-acceptances and other financial instruments.
[side bar]
Risks for the Technology Fund and the Strategic Growth Fund:
Like any investment, an investment in the Technology Fund or Strategic Growth
Fund is subject to risk and you could lose money. While the Funds seek
investments that will appreciate in value, the value of the securities could
decline and provide no income. The Funds are subject to market 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 Funds are also subject to investment risk, which is the
possibility that the returns from a specific type of stock will perform worse
than the overall stock market or other market sectors. Other general risks
include the following:
The Technology Fund invests in technology companies. The fact that the Fund
concentrates in a single sector increases risk and volatility as compared to a
fund with a more diversified portfolio. This is because factors that affect that
sector are likely to directly affect the Fund's performance, both negatively and
positively. Even if the overall direction of equity prices is upward, if
technology stocks are headed lower, Fund performance could be adversely
affected. Certain factors or market conditions that affect technology companies
could have an impact on the Fund's net asset value and performance. For example,
companies in the rapidly changing technology sector often face unusually high
price volatility, both in terms of gains and losses. Products or services that
at first appear promising may not prove commercially successful or may become
obsolete quickly. Earnings disappointments could also result in sharp price
declines. In addition, stocks of small, less seasoned companies, tend to be more
volatile than the overall market.
The Strategic Growth Fund will limit the number of companies in its portfolio.
As a result, changes in the value of one security are more likely to have a
greater effect on the Fund's net asset value than other U.S. domestic growth
funds with more diversified portfolios.
In addition, each Fund may from time to time take temporary defensive positions
that are inconsistent with a Fund's investment strategies in attempting to
respond to adverse market conditions. If a Fund takes a temporary defensive
position, the Fund may not achieve its investment objective.
THE DLJ INTERNATIONAL FUNDS
DLJ Developing Markets Fund
Goal: The investment objective of the DLJ Developing Markets Fund is long-term
growth of capital by investing primarily in common stocks and other equity
securities of companies from 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, depositary receipts
<PAGE>
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.
The Fund may purchase a limited amount of restricted or otherwise illiquid
securities. The Fund may enter into forward foreign currency exchange contracts
to attempt to protect the value of its assets against future changes in the
level of currency exchange rates. The Fund may purchase and sell financial
futures contracts and options thereon which are traded on a commodities exchange
or board of trade for certain hedging, return enhancement and risk management
purposes. The Fund may purchase and sell financial futures contracts and related
options, without limitation, for bona fide hedging purposes. Subject to the
foregoing, the value of all financial futures contracts sold will not exceed the
total market value of the Fund's portfolio. These futures contracts and related
options will be on financial indices and foreign currencies or groups of foreign
currencies.
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, Malaysia,
Mexico, Morocco, 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.
[side bar]
Risks for the Developing Markets Fund:
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.
[end side bar]
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Information on Investment Policies and
Risks."
<PAGE>
DLJ International Equity Fund
Goal: The investment objective of the DLJ 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 and industries in such
countries that the Adviser believes are reasonably valued. Typically these
companies offer reliable earnings and high quality management.
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, 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. These futures contracts and related options will be on
financial indices and foreign currencies or groups of foreign currencies.
[side bar]
ADRs:
ADRs are depositary receipts typically issued by a U.S. bank or trust company
which evidence ownership of 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 underlying securities issued by either a
non-U.S. or a U.S. corporation.
[end side bar]
[side bar]
Risks for the International 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.
<PAGE>
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.
[end side bar]
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 DLJ FIXED INCOME FUNDS
DLJ Fixed Income Fund
Goal: The investment objective of the DLJ Fixed Income Fund is to provide as
high a level of total return as is consistent with capital preservation by
investing principally in debt securities, including, without limitation,
convertible and nonconvertible debt securities of domestic and foreign
companies, including both well-known and established and new and lesser-known
companies. Total return means the sum of net investment income (if any) and
realized and unrealized gains less losses. Capital preservation means minimizing
the risk of capital loss in a period of falling prices (rising interest rates)
for debt securities.
Strategy: The Fund invests in and holds debt securities that the Adviser
believes will maximize total return at a level consistent with capital
preservation. The average maturity of the Fund's portfolio is adjusted based on
the 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. As a matter of
fundamental policy, the Fund will invest at least 80% of the value of its total
assets in debt securities. In normal circumstances, the Fixed Income Fund
invests at least 65% of the value of its total assets in fixed income
securities. However, 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
<PAGE>
U.S. Treasury securities, with member banks of the Federal Reserve System or
primary dealers in U.S. Government Securities. The Fixed Income Fund may invest
up to 10% of its assets in restricted securities and in instruments having no
ready market value.
[side bar]
Risks for the Fixed Income Fund and Municipal 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 its 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 tax status of a particular security, political and legislative
changes and the rights of their holders. These factors could adversely affect
your investment.
[end of side bar]
[side bar]
High Quality Ratings:
High Quality Ratings are Aaa, Aa, A or MIG-1 by Moody's, or AAA, AA, A or SP-1
by S&P.
[end of side bar]
DLJ Municipal Trust Fund
Goal: The investment objective of the DLJ Municipal Trust Fund is to provide as
high a level of total return as is consistent with capital preservation by
investing principally in high-grade tax-exempt municipal securities. This
investment objective, unlike 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 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 22.
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
<PAGE>
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 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 High Income Fund
Goal: The DLJ High Income Fund's primary investment objective is to provide a
high level of current income and a secondary objective is 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 S & P 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 and 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 Adviser 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,
<PAGE>
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.
[side bar]
Risks for the High Income Fund:
While the Fund seeks investments that will satisfy it's investment objectives,
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 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 greater 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 for these securities
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.
[end side bar]
THE DLJ MONEY FUNDS
DLJ Municipal Money Fund
Goal: The DLJ 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
<PAGE>
right to lower the percentage of investments in municipal securities if economic
or political conditions warrant. To increase the Fund's ability to reach its
investment objectives, the dollar-weighted average maturity of its portfolio
securities is always 90 days or less. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a default
on the Municipal Money Fund's investments could cause its net asset value per
share to deviate from $1.00.
Investments: Normally, substantially all the Municipal Money Fund's income will
be exempt from Federal income taxation. Such income may be subject to state or
local and/or Federal AMT income taxes. The Fund invests in municipal notes and
short-term municipal bonds, which may have fixed, variable or floating rates of
interest. Municipal securities with variable rates may include participation
interests in industrial development bonds which may be backed by letters of
credit from banking or other financial institutions. The letters of credit of
any single institution in respect of all variable rate obligations will not
cover more than the allowable percentage of the Municipal Money Fund's total
assets in accordance with Rule 2a-7 under the Investment Company Act of 1940, as
amended ("1940 Act"). For a more complete discussion of Municipal Securities,
see "Additional 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 if unrated,
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.
[side bar]
Cash Equivalents:
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.
[end side bar]
[sidebar]
Risks for the Municipal 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 Fund's total assets allowed under Rule 2a-7 of
the 1940 Act.
The Municipal Money Fund earns income at current money market rates and its
yield 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.
[end sidebar]
<PAGE>
DLJ U.S. Government Money Fund
Goal: The DLJ 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.
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.
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.
[side bar]
Risks for the U.S. Government 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.
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.
[end side bar]
[side bar]
To maintain portfolio diversification and reduce investment risk, the Money
Funds do not:
(1) borrow money, except from banks on a temporary basis or through 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
<PAGE>
(2) pledge, hypothecate or in any manner transfer, as security for indebtedness,
its assets, except to secure permitted borrowings.
[end sidebar]
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Information on Investment Policies and
Risks."
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 security at a price below
its market value.
Mortgage-Backed Securities. Except for the Municipal Trust Fund, the DLJ Mutual
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 ways 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
<PAGE>
revolving credit agreements, rather than mortgage loans or interests in mortgage
loans. Asset-backed securities present certain risks that are not present in
mortgage-backed securities; primarily, these securities do not have the benefit
of the same security interest in the related collateral. There is the
possibility that recoveries of repossessed collateral may not, in some cases, be
available to support payments on these securities. For example, in the event
that the collateral underlying an asset-backed security must be disposed of, it
may be difficult to convert that collateral into a stream of payments to be paid
to the holders of the security.
Municipal Securities. "Municipal securities" are either bonds or notes.
Municipal bonds, which are longer-term debt obligations meeting long-term
capital needs, are either "general obligation" bonds or "revenue" bonds. Payment
of principal and interest on general obligation bonds is secured by the issuing
municipality's pledge of its full faith 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 in the case of the Municipal Money Fund enhances the ability of
such Fund to maintain a stable $1.00 net asset value. See "'Net Asset Value" on
page 17.
Investment-Grade Debt Securities. All of the DLJ Mutual 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, such as S&P or Moody's.
Investment-grade debt securities may also include debt securities believed by
the Adviser (on the basis of criteria believed by the Adviser to be comparable
to that applied by such rating agencies) to be of comparable quality to debt
securities so rated by the rating agencies.
Debt securities rated Baa or higher by Moody's or BBB or higher by S&P are
investment-grade securities. Securities rated BBB are regarded by S&P as having
an adequate capacity to pay interest and repay principal; while such securities
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely, in the opinion of S&P, to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
Securities rated Baa by Moody's are considered to be medium-grade obligations.
These securities are neither highly protected nor poorly secured. The rating
organization determines that interest payments and principal security appear to
be adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. For a more
complete description of Moody's and S&P's ratings, see the Appendix to the
Statement of Additional Information of each of the DLJ Funds. The
investment-grade limitations referenced for each Fund are applicable at the time
of initial investment and a Fund may determine to retain securities of issuers
which have had their credit characteristics downgraded.
<PAGE>
Repurchase Agreements. The DLJ Mutual 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
counterparty 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 counterparty becomes the subject of bankruptcy
proceedings, the Fund might be delayed in selling the collateral.
Non-U.S. Securities. All of the DLJ Mutual 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 monetary 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, the Strategic Growth Fund, the Technology Fund 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, these Funds would bear their ratable share of that
investment company's expenses, including its advisory and administrative fees.
At the same time shareholders of these Funds 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 Core Equity Fund, the Growth and Income Fund, the Strategic Growth
Fund and the Technology 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
<PAGE>
individual securities or stock indices as a means of achieving additional return
or of hedging the value of its portfolio. The International Funds, the Strategic
Growth Fund and the Technology Fund 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. The
International Funds, the Strategic Growth Fund and the Technology 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 in accordance with regulations of the
CFTC. These futures contracts and related options will be on financial indices
and foreign currencies or groups of foreign currencies.
The Strategic Growth Fund's and the Technology Fund's successful use of options
and financial futures depends on the ability of the Adviser, or in the case of
the International Funds, the Subadviser, to predict the direction of the market
and is subject to various additional risks. The investment techniques and skills
required to use options and futures successfully are different from those
required to select international securities for investment. The ability of each
of these Funds to close out an option or futures position depends on a liquid
secondary market. There is no assurance that liquid secondary markets will exist
for any particular option or futures contract at any particular time. The
inability to close options and futures positions also could have an adverse
impact on each of these Fund's ability to effectively hedge its portfolio. There
is also the risk of loss by these Funds of margin deposits or collateral in the
event of bankruptcy of a broker with whom these Funds have an open position in
an option, a futures contract or related option.
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.
FUND MANAGEMENT
DLJ Asset Management Group, Inc. (formerly known as Wood, Struthers & Winthrop
Management Corp.), a Delaware corporation with principal offices at 277 Park
Avenue, New York, New York 10172 ("DLJAM" or the "Adviser"), serves as the
investment adviser for each of the DLJ Funds. AXA Investment Managers GS Ltd, a
UK registered company with principal offices at 60 Gracechurch Street, London
EC3V 0HR, England serves as sub-investment adviser for the International Funds
and is a wholly-owned subsidiary of AXA Investment Managers, an investment
management subsidiary of AXA. Effective October 1, 1999, due to an internal
restructuring within the AXA Investment Managers Group of Companies, AXA
Investment Managers GS Ltd assumed the sub-investment advisory responsibilities
formerly undertaken by AXA Asset Management Partenaires, a French wholly-owned
subsidiary of AXA Investment Managers. Investment personnel and policies remain
unchanged.
DLJAM is a subsidiary 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, Inc. is
an independently operated, indirect subsidiary of AXA Financial, Inc., a holding
company controlled by AXA, a member of a large French insurance group. AXA is
indirectly controlled by a group of four French mutual insurance companies.
The fees paid for the fiscal year ended October 31, 1999 were as follows:
<PAGE>
Fund* % of Average Net Assets
--------------------------------------------------------------------------------
Core Equity Fund .67%
--------------------------------------------------------------------------------
Growth and Income Fund .58%
--------------------------------------------------------------------------------
Small Company Value Fund .79%
--------------------------------------------------------------------------------
Strategic Growth Fund .75%
--------------------------------------------------------------------------------
Technology Fund .88%
--------------------------------------------------------------------------------
Developing Markets Fund 1.25%
--------------------------------------------------------------------------------
International Equity Fund 1.25%
--------------------------------------------------------------------------------
Fixed Income Fund .625%
--------------------------------------------------------------------------------
Municipal Trust Fund .625%
--------------------------------------------------------------------------------
High Income Fund .70%
--------------------------------------------------------------------------------
Municipal Money Fund .40%
--------------------------------------------------------------------------------
U.S. Government Money Fund .40%
--------------------------------------------------------------------------------
* The Strategic Growth Fund and the Technology Fund commenced operations on
November 18, 1999. Accordingly, the percentages shown represent the maximum fees
payable pursuant to the advisory agreement.
The following individuals are responsible for management of the DLJ Mutual
Funds.
Cathy A. Jameson is the portfolio manager of the Fixed Income Fund, a position
she has held since the Fund was started in 1986. Ms. Jameson is a Vice President
of the DLJ Focus Funds. She is also a Managing Director of DLJAM and has been an
employee of DLJAM since 1979.
Roger W. Vogel serves as the primary portfolio manager of the Small Company
Value Fund and as of February, 2000, the Growth and Income Fund. He has acted as
the co-portfolio manager of the Core Equity Fund, the Growth and Income Fund,
and the Small Company Value Fund since July 1993. Mr. Vogel is a Vice President
of the DLJ Focus Funds, and a Managing Director of DLJAM. Prior to becoming
associated with the Funds, Mr. Vogel was a Vice President and portfolio manager
with Chemical Banking Corp.
Marybeth B. Leithead is the portfolio manager of the Municipal Trust Fund, a
position she has held since the commencement of its operations on July 28, 1993.
Ms. Leithead is also a Vice President of the DLJ Focus Funds and a Senior Vice
President of DLJAM. She has been an employee of DLJAM 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 Adviser. Prior
to joining DLJAM, Ms. Leithead was an employee of Citicorp Securities Markets
Inc.
Hugh M. Neuburger is the primary portfolio manager of the Core Equity Fund,
Strategic Growth Fund and Technology Fund. He has also served as the
co-portfolio manager of the Core Equity 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 DLJAM and has been an employee of DLJAM
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.
William D. Butler, the co-portfolio manager of the Technology Fund, joined DLJAM
as an Equity Research Analyst in 1998 after spending 3 years as a Senior
Consultant at BARRA Inc. advising institutional money managers on equity risk
management, performance attribution and portfolio
<PAGE>
construction. Prior to 1995, Mr. Butler was an Associate Director with Mabon
Securities involved in Institutional Fixed Income Sales and Trading. Mr. Butler
is a Vice-President of DLJAM.
Michael A. Snyder is the portfolio manager of the High Income Fund. Mr. Snyder
was appointed Vice President of the DLJ Opportunity Funds and Managing Director
of DLJAM in October 1998. Prior to becoming associated with the DLJ Funds and
joining DLJAM, 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. Mr. de Guigne was a portfolio manager for State Street Bank in Paris from
1991 through 1996.
HOW TO BUY AND SELL SHARES
Opening an Account:
Decide whether your first payment will be delivered by check or wire. Initial
payment must be at least $1,000.
By check using U.S. mail:
Complete an application and send it along with a check made payable to the DLJ
Mutual Funds to:
DLJ Mutual Funds
PFPC, Inc.
P.O. Box 61503
King of Prussia, PA 19406-3101
By check using U.S. overnight delivery.
Complete an application and send it along with a check made payable to the DLJ
Mutual Funds to:
DLJ Mutual Funds
PFPC, Inc.
211 S. Gulph Road
King of Prussia, PA 19406-3101
By wire:
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, PFPC, Inc ("Transfer Agent"). Your account cannot be opened
without a completed, signed application and a Fund account number.
Contact your bank to arrange a wire transfer to:
Boston Safe Deposit & Trust
ABA #:011001234
Credit: (Insert Name of Your Fund)
ACCT#: 006068
FBO (Shareholder name and account number)
<PAGE>
Your wire instructions must also include: the name of the Fund, your account
number and the name(s) of the account holders.
An account at the Fund 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 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 purchase shares of the DLJ Mutual Funds through their
securities dealer. For shares purchased through a securities dealer or by
clients of an eligible institution: call your broker or service representative
for instructions in opening an account. Investors may be charged separate fees
if they effect transactions through a securities dealer or eligible institution.
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. Other information regarding purchasing shares is contained in
each Fund's Statement of Additional Information.
Shareholder accounts established on behalf of the following types of plans will
be exempt from the Fund's minimum and additional investment amounts: 401(k)
Plans, 403(b) Plans, 457 Plans, SEP Plans, and SIMPLE Plans. An account
established for the Funds' Class D shares will also be exempt from the Funds'
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 Mutual 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.
Selling Shares of the Money Funds
or Class A, Class B or Class C shares of the Other DLJ Mutual Funds
Will you be requesting a redemption of your holdings in the DLJ Mutual Funds
through the Funds' Telephone Redemption Privilege?
Yes.
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 savings association.)
Remember, the DLJ Mutual Funds require a minimum account size of $250.
No.
<PAGE>
For shares held at the Fund, write to the Fund at:
DLJ Mutual Funds
PFPC, 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 or Class C shares or purchased Class A shares without paying an initial sales
charge, any applicable CDSC will be applied to the net asset value and deducted
from your redemption. The value of your shares may be more or less than your
investment depending on the net asset value of your Fund on the day you redeem.
The DLJ Mutual 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.
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.
By Mail:
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 Mutual Funds
PFPC, Inc.
P.O. Box 61503
King of Prussia, PA. 19406-3101
By Wire:
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:
Boston Safe Deposit & Trust
ABA #: 011001234
Credit: (Insert Name of Your Fund)
ACCT#: 006068
FBO (Shareholder name and account number)
<PAGE>
Purchase should reference your name, account number, and name of Fund.
Automatic Investment Program:
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.
Provide your bank with funds and with the following information:
Boston Safe Deposit & Trust
ABA #:011001234
Credit: (Insert Name of Your Fund)
ACCT#: 006068
FBO (Shareholder name and account number)
Shares of the Money Funds or Class A, Class B or Class C shares of the other DLJ
Mutual Funds may be purchased directly by using the Share Purchase Application
found in the 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 $1,000. The minimum for
additional investments is $25. The minimum initial and minimum additional
investment may be waived for retirement accounts. There is a maximum purchase
limitation in the Funds' Class B shares of $250,000 and $1,000,000 in the Funds'
Class C shares. Each of the Funds, except the Money Funds, offers Class A, Class
B and Class C 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 C shares may
be purchased for net asset value, but may be subject to a 1% CDSC if redeemed in
the first year. Class R shares are available for purchase by eligible
institutions on behalf of their clients. 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.
OTHER SHAREHOLDER INFORMATION
Classes of Shares and Sales Charges
The DLJ Mutual Funds, except the Money Funds, offer Class A shares, Class B
shares and Class C shares to the general public. Class R shares are offered to
eligible institutions on behalf of their clients. 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 for Employees. Class D
shares are only offered by the Core Equity Fund, the Growth and Income Fund, the
Technology 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.
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, Class B, Class C and Class R shares have
exclusive voting rights with respect to that class's 12b-1 Plan.
<PAGE>
Class A Shares
[side bar]
Offering Price:
The offering price for Class A shares (with a sales charge) is NAV plus the
applicable sales charge (unless you are entitled to a waiver).
[end side bar]
The offering price for Class A shares of the Funds is the net asset value plus
the applicable sales charge from the schedule below.
INITIAL SALES CHARGE-CLASS A
DLJ Fixed Income Funds (1)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Commission to
Dealer/Agent as a % of
Amount Purchased As a % of Amount Invested As a % of Offering Price Offering Price
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 4.99% 4.75% 4.25%
-------------------------------------------------------------------------------------------------------------
$50,000 to less than
$100,000 4.71% 4.50% 4.00%
-------------------------------------------------------------------------------------------------------------
$100,000 to less than
$250,000 3.63% 3.50% 3.25%
-------------------------------------------------------------------------------------------------------------
$250,000 to less than
$500,000 2.56% 2.50% 2.25%
-------------------------------------------------------------------------------------------------------------
$500,000 to less than
$1,000,000 2.04% 2.00% 1.75%
-------------------------------------------------------------------------------------------------------------
$1,000,000 or more 0 0 1.00%*
-------------------------------------------------------------------------------------------------------------
</TABLE>
DLJ Equity Funds (2)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Commission to
Dealer/Agent as a % of
Amount Purchased As a % of Amount Invested As a % of Offering Price Offering Price
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000. 6.10% 5.75% 5.00%
-------------------------------------------------------------------------------------------------------------
$50,000 to less than
$100,000 4.99% 4.75% 4.00%
-------------------------------------------------------------------------------------------------------------
$100,000 to less than
$250,000. 3.90% 3.75% 3.00%
-------------------------------------------------------------------------------------------------------------
$250,000 to less than
$500,000. 2.56% 2.50% 2.00%
-------------------------------------------------------------------------------------------------------------
$500,000 to less than
$1,000,000 2.04% 2.00% 1.75%
-------------------------------------------------------------------------------------------------------------
$1,000,000 or more 0 0 1.00%*
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The DLJ Fixed Income Funds include the Fixed Income Fund, the Municipal
Trust Fund and the High Income Fund.
(2) The DLJ Equity Funds include the Core Equity Fund, the Growth and Income
Fund, the Small Company Value Fund, the Strategic Growth Fund, the
Technology Fund, the Developing Markets Fund and the International Equity
Fund.
<PAGE>
*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 and including $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 Adviser;
(2) officers, Trustees and retired Trustees of the Funds, directors or trustees
of other investment companies managed by the Adviser, officers, directors and
full-time employees of the Adviser and of its wholly-owned subsidiaries or
parent entities ("Related Entities"); or the spouse, siblings, children, parents
or grandparents 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) shareholders who received shares in the DLJ Mutual Funds as a result of the
merger of Neuwirth Fund, Inc., Pine Street Fund, Inc. or deVegh Mutual Fund,
Inc., and who have maintained their investment in such shares;
(7) shares purchased for 401(k) Plans, 403(b) Plans and 457 Plans; and employee
benefit plans sponsored by an employer; non-U.S. nationalized pension plans; and
(8) 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 $1,000 and submitting a Letter
of Intent to the Funds' Distributor or Transfer Agent, you may purchase shares
of a DLJ Mutual 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
<PAGE>
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 Mutual 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 Mutual 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 "Other Shareholder Information - Class A Limited CDSC."
Reinstatement Privilege. The Reinstatement Privilege permits shareholders to
reinvest the proceeds provided by a redemption of a Fund's Class A shares within
120 days from the date of redemption without an initial sales charge. It is the
investor's responsibility to notify the Transfer Agent prior to his or her
purchase in order to exercise the Reinstatement Privilege. In addition, a CDSC
paid to the Distributor will be eligible for reimbursement at the current net
asset value of the applicable Fund if a shareholder reinstates his Fund account
holdings within 120 days from the date of redemption.
Class B Shares
You may 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 or shares received
pursuant to dividend reinvestment.
Where 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.
[sidebar]
Year after Purchase CDSC Percentage
1st 4%
2nd 3%
3rd 2%
4th 1%
After 4th year None
[end sidebar]
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);
<PAGE>
(3) redemptions made pursuant to a DLJ Mutual 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; or
o Section 457 Plans; and
(5) A total or partial redemption related to certain distributions from
retirement plans or accounts at age 70 1/2, which are permitted without penalty
pursuant to the Internal Revenue Code.
Redemptions effected by the Funds pursuant to their right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the CDSC. In addition, Class B shares held for eight years after
purchase will be automatically converted into Class A shares and accordingly
will no longer be subject to the CDSC.
Class A Limited CDSC. A Limited Contingent Deferred Sales Charge ("Limited
CDSC") will be imposed by the Funds upon certain redemptions of Class A shares
(or shares into which such Class A shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission described above (i.e.,
purchases of $1,000,000 or more).
The Limited CDSC will be paid to the Distributor and will be equal to the lesser
of 1% of:
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. The Limited CDSC on Class A shares will be waived on redemptions made
pursuant to a DLJ Mutual Fund's systematic withdrawal plan under the same
circumstances as outlined in item (3) above related to the waiver of the CDSC on
Class B shares.
Class C Shares
You may choose to purchase Class C shares at the Fund's net asset value,
although such shares will be subject to a 1% CDSC if you redeem your shares
within 1 year. If you exchange your shares for Class C shares of another DLJ
Mutual Fund, the 1% CDSC also will apply to those Class C shares. The 1 year
period for the CDSC begins with the date of your original purchase, not the date
of the exchange for the other Class C shares. The 1% CDSC on Class C shares will
be waived under the circumstances that would result in a waiver of the CDSC on
Class B shares.
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 Savings Plan for Employees.
Class D shares are not subject to any sales
<PAGE>
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.
Class R Shares
Class R shares are offered only to eligible institutions who purchase shares on
behalf of their clients and are not available to individual investors directly.
Class R shares are not subject to any initial or contingent deferred sales
charge, but there is a distribution fee of .25% of average daily net assets.
Institutions may charge direct fees in connection with transactions related to
Class R shares.
ADDITIONAL SHAREHOLDER SERVICES
Exchange Privilege. You may exchange shares of a Fund for shares offered under
the same class of another DLJ Mutual Fund. Shareholders whose initial investment
was directly into a Money Fund may exchange such shares for either Class A,
Class B, Class C or Class R of another DLJ Mutual Fund. Shares of each Money
Fund purchased pursuant to the DLJ Mutual Funds' exchange privilege will be
eligible for exchange into another DLJ Mutual Fund 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). 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.
The following privileges are provided by the Transfer Agent and do not apply to
Class D or Class R shares:
Automatic Monthly Investment Plan. You may elect on the Application to make
additional investments in a Fund automatically by authorizing DLJ to withdraw
funds from your bank or other cash account and purchase additional shares with
those funds. You select the date (either the 10th, 15th or 20th of each month)
and amount (subject to a minimum of $25). The plan may be terminated at any time
without penalty by you or the Fund.
Automatic Exchange Plan. You may authorize the DLJ Mutual Funds in advance to
exchange a set dollar amount of shares in one Fund for shares of the same class
of another Fund or for shares of the Money Funds on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum
exchange amount under the Automatic Exchange Plan is $50. These exchanges are
subject to the terms of the Exchange Privilege described above.
Dividend Direction Option. A shareholder may elect on the Application to have
his or her dividends paid to another individual or directed for reinvestment
within the same class of another Fund provided that an existing account in such
other Fund is maintained by the shareholder.
Systematic Withdrawal Plan. Any shareholder who owns or purchases shares of a
Fund having a current net asset value of at least $10,000 may establish a
Systematic Withdrawal Plan under which the shareholder or a third party will
receive payment by check in a stated amount of not less than $50 on a monthly,
quarterly, semi-annual or annual basis. A CDSC which may otherwise be imposed on
a redemption will be waived in connection with redemptions made pursuant to DLJ
Funds' Systematic Withdrawal Plan up to 1% monthly or 3% quarterly of an account
(excluding dividend reinvestment) not to exceed 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
<PAGE>
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, Boston Safe Deposit & Trust., as agent for the Transfer Agent in
processing redemptions via the checkwriting privilege, reserves the right to
terminate checkwriting privileges at any time without notice to you.
Checkwriting privileges are not available for accounts subject to a CDSC.
Retirement Plans. DLJ Mutual Funds offer 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.
THE FUNDS DO NOT PERMIT MARKET-TIMING. DO NOT INVEST IN THESE FUNDS IF YOU ARE A
MARKET-TIMER. DLJ RESERVES THE RIGHT TO IMPOSE SHORT-TERM REDEMPTION FEES TO
DISCOURAGE MARKET-TIMING IN THE FUNDS.
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. Effective as of the date of this prospectus, the
limitation on annual distribution and service fees for Class A shares of the
Core Equity Fund, Growth and Income Fund, Small Company Value Fund, Fixed Income
Fund and Municipal Trust Fund has been reduced from 0.30% to 0.25%. The Funds do
not pay any of the expenses for distributing Class D shares.
[side bar]
Distribution and Service Fees:
Distribution and service fees are used to pay the Distributor 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.
<PAGE>
In addition to commissions and maintenance fees paid to broker/dealers the
Distributor may from time to time pay additional compensation to broker/dealers
in connection with the sale of shares. Such additional amounts may be utilized
to provide additional compensation to registered representatives of such
broker/dealers who sell shares of the Fund. On some occasions such compensation
will be conditioned on the sale of a specified minimum dollar amount of the
shares of the Funds during a specified period of time. Such incentives may take
the form of payment for meals, entertainment, or attendance at educational
seminars and associated expenses such as travel and lodging. Such broker/dealers
may elect to receive cash incentives of equivalent amounts in lieu of such
payments.
[end side bar]
DIVIDEND AND DISTRIBUTION INFORMATION
Dividends are declared daily and paid monthly to shareholders of the Money
Funds, the Fixed Income Fund, the Municipal Trust Fund and the High Income Fund
from net investment income. Dividends are paid to shareholders of the Growth and
Income Fund quarterly, if net investment income has been earned, and to
shareholders of the Core Equity Fund, the Small Company Value Fund, the
Strategic Growth Fund, the Technology 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
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 long-term 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.
<PAGE>
As a shareholder, you must provide your Fund with a correct taxpayer
identification number (generally your Social Security number) and certify that
you are not subject to backup withholding. If you fail to do so, the IRS can
require your Fund to withhold 31% of your taxable distributions and redemptions.
Federal law also requires your Fund to withhold 30% 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.
[side bar]
The Taxpayer Relief Act of 1997:
The Taxpayer Relief Act of 1997 made certain changes to capital gains tax rates.
Under this law, certain 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.
[end side bar]
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 that an investor
would have earned (or lost) on an investment in the indicated Fund (assuming
reinvestment of all dividends and distributions). This information, except where
indicated as unaudited, 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
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.
<TABLE>
<CAPTION>
Net Asset Net Realized Dividends
Value Net and Unrealized Total from from Net Distributions
Beginning Investment Gains/(Losses) Investment Investment from Capital
of Period Income/(Loss) on Securities Operations Income Gains
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CORE EQUITY FUND
CLASS A
Six Months Ended
April 30, 2000(a) $21.27 $(0.02) * $ 2.77 $ 2.75 $ - $(1.61)
Year Ended
October 31, 1999 16.52 (0.03)* 5.04 5.01 - (0.26)
Year Ended
October 31, 1998 14.56 (0.00)* # 2.88 2.88 (0.02) (0.90)
Year Ended
October 31, 1997 12.69 0.03 3.07 3.10 (0.05) (1.18)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Realized Dividends
Value Net and Unrealized Total from from Net Distributions
Beginning Investment Gains/(Losses) Investment Investment from Capital
of Period Income/(Loss) on Securities Operations Income Gains
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended
October 31, 1996 11.35 0.05 2.11 2.16 (0.04) (0.78)
Year Ended
October 31, 1995 10.82 0.04 1.19 1.23 (0.01) (0.69)
Class B
Six Months Ended
April 30, 2000(a) $20.75 (0.09) * 2.70 2.61 - (1.61)
Year Ended
October 31, 1999 16.25 (0.17)* 4.93 4.76 - (0.26)
Year Ended
October 31, 1998 14.41 (0.12)* 2.86 2.74 - (0.90)
Year Ended
October 31, 1997 12.63 (0.03) 3.02 2.99 (0.03) (1.18)
Year Ended
October 31, 1996+ 11.88 (0.01) 0.76 0.75 - -
CLASS C
Period Ended
April 30, 2000 20.01 (0.03) * 1.77 1.74 - -
CLASS D
Six Months Ended
April 30, 2000(a) 21.27 - * - - - (1.61)
Year Ended
October 31,
1999++ 20.29 0.01* 0.97 0.98 - -
-------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME FUND
CLASS A
Six Months Ended
April 30, 2000(a) $23.49 $ 0.07 * $ 0.66 $ 0.73 $(0.06) $(0.69)
Year Ended
October 31, 1999 22.60 0.12* 2.87 2.99 (0.09) (2.01)
Year Ended
October 31, 1998 20.09 0.20* 3.51 3.71 (0.17) (1.03)
Year Ended
October 31, 1997 17.18 0.21 4.59 4.80 (0.21) (1.68)
Year Ended
October 31, 1996 14.57 0.27 2.93 3.20 (0.24) (0.35)
Year Ended
October 31, 1995 13.38 0.26 1.77 2.03 (0.27) (0.57)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Realized Dividends
Value Net and Unrealized Total from from Net Distributions
Beginning Investment Gains/(Losses) Investment Investment from Capital
of Period Income/(Loss) on Securities Operations Income Gains
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Six Months Ended
April 30, 2000(a) 23.37 (0.01) * 0.65 0.64 - (0.69)
Year Ended
October 31, 1999 22.55 (0.04)* 2.88 2.84 (0.01) (2.01)
Year Ended
October 31, 1998 20.06 0.04* 3.50 3.54 (0.02) (1.03)
Year Ended
October 31, 1997 17.15 0.08 4.58 4.66 (0.07) (1.68)
Year Ended
October 31, 1996+ 16.05 0.14 1.11 1.25 (0.15) -
CLASS C
Period Ended
April 30,
2000(a)++++ 20.87 (0.03) * 2.46 2.43 - -
CLASS D
Six Months Ended
April 30, 2000(a) 23.50 0.10* 0.66 0.76 (0.08) (0.69)
Year Ended
October 31,
1999+++ 23.73 0.10* (0.26) (0.16) (0.07) -
-------------------------------------------------------------------------------------------------------------
SMALL COMPANY VALUE FUND
CLASS A
Six Months Ended
April 30, 2000(a) $20.52 $ 0.02 * $ 2.02 $ 2.04 ($0.04) ($2.05)
Year Ended
October 31, 1999 19.54 0.06* 1.01 1.07 (0.07) (0.02)
Year Ended
October 31, 1998 23.34 0.07* (2.55) (2.48) (0.06) (1.26)
Year Ended
October 31, 1997 18.41 0.07 5.66 5.73 (0.08) (0.72)
Year Ended
October 31, 1996 16.61 0.09 2.16 2.25 (0.04) (0.41)
Year Ended
October 31, 1995 15.65 0.04 1.62 1.66 - (0.70)
CLASS B
Six Months Ended
April 30, 2000(a) 20.13 (0.04) * 1.97 1.93 - (2.05)
Year Ended
October 31,
1999 19.23 (0.14)* 1.06 0.92 - (0.02)
Year Ended
October 31, 1998 23.12 (0.09)* (2.55) (2.64) - (1.25)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Realized Dividends
Value Net and Unrealized Total from from Net Distributions
Beginning Investment Gains/(Losses) Investment Investment from Capital
of Period Income/(Loss) on Securities Operations Income Gains
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended
October 31, 1997 18.34 (0.02) 5.57 5.55 (0.05) (0.72)
Year Ended
October 31, 1996+ 17.41 (0.02) 0.95 0.93 - -
CLASS C
Period Ended
April 30, 2000
(a) ++++ 17.96 - #* 2.04 2.04 - -
-------------------------------------------------------------------------------------------------------------
STRATEGIC GROWTH FUND
CLASS R
Period Ended
April 30, 2000
(a) +++++ $10.00 $ (0.02) * $ 1.30 $ 1.28 $ - $ -
-------------------------------------------------------------------------------------------------------------
TECHNOLOGY FUND
CLASS R
Period Ended
April 30, 2000
(a) +++++ $10.00 $ (0.06) * $ 3.90 $ 3.84 $ - $ -
-------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND
CLASS A
Six Months Ended
April 30, 2000(a) $9.83 $0.26 $ (0.19) $ 0.07 $(0.26) $ -
Year Ended
October 31, 1999 10.46 0.50 (0.53) (0.03) (0.50) (0.10)
Year Ended
October 31, 1998 10.16 0.53 0.30 0.83 (0.53) -
Year Ended
October 31, 1997 10.07 0.58 0.09 0.67 (0.58) -
Year Ended
October 31. 1996 10.22 0.58 (0.15) 0.43 (0.58) -
Year Ended
October 31, 1995 9.66 0.59 0.56 1.15 (0.59) -
CLASS B
Six Months Ended
April 30, 2000(a) 9.83 0.22 (0.19) 0.03 (0.22) -
Year Ended
October 31, 1999 10.46 0.43 (0.53) (0.10) (0.43) (0.10)
Year Ended
October 31, 1998 10.16 0.46 0.30 0.76 (0.46) -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Realized Dividends
Value Net and Unrealized Total from from Net Distributions
Beginning Investment Gains/(Losses) Investment Investment from Capital
of Period Income/(Loss) on Securities Operations Income Gains
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Year Ended
October 31, 1997 10.07 0.50 0.09 0.59 (0.50) -
Year Ended
October 31,1996+ 10.22 0.34 (0.15) 0.19 (0.34) -
Class C
Period Ended
April 30, 2000
(a) ++++ 9.69 0.06 (0.06) - (0.06) -
CLASS D
Six Months Ended
April 30, 2000(a) 9.83 0.27 (0.19) 0.08 (0.27) -
Year Ended
October 31,
1999+++ 10.09 0.26 (0.26) 0.00 (0.26) -
-------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Unaudited
+ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
++ For the period May 13,1999 (commencement of offering Class D shares) to
October 31, 1999.
+++ For the period April 30, 1999 (commencement of offering Class D shares) to
October 31, 1999.
++++ For the period February 28, 2000 (commencement of offering Class C shares)
to April 30, 2000.
+++++ For the period November 18, 1999 (commencement of operations) to October
31, 1999.
* Based on average shares outstanding.
** 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. An initial sales charge or contingent deferred
sales charge is not reflected in the calculation of total return. Total
return calculated for a period of less than one year is not annualized.
# Rounds to less than $0.01.
## Rounds to less than $1,000.
@ Rounds to less than 0.01%.
<TABLE>
<CAPTION>
Ratio of Ratio of Net
Net Asset Net Assets End Expenses to Investment Income Portfolio
Total Value End Total of Period (000 Average Net (Loss) to Average Turnover
Distributions of Period Return ** omitted) Assets (2) Net Assets (2) Rate
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(1.61) $22.41 13.73% $158,422 1.16%(1) (0.20)%(1) 11.6%
(0.26) 21.27 30.77 135,677 1.23 (0.16) 34.7
(0.92) 16.52 21.00 97,078 1.29 (0.02) 21.0
(1.23) 14.56 26.48 82,926 1.36 0.21 41.1
(0.82) 12.69 20.32 68,096 1.48 0.47 60.6
(0.70) 11.35 12.21 55,946 1.63 0.35 101.7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratio of Ratio of Net
Net Asset Net Assets End Expenses to Investment Income Portfolio
Total Value End Total of Period (000 Average Net (Loss) to Average Turnover
Distributions of Period Return ** omitted) Assets (2) Net Assets (2) Rate
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(1.61) 21.75 13.37 43,456 1.86(1) (0.90)(1) 11.6
(0.26) 20.75 29.73 32,783 1.93 (0.86) 34.7
(0.90) 16.25 20.20 17,438 1.99 (0.72) 21.0
(1.21) 14.41 25.66 10,378 2.06 (0.51) 41.1
-- 12.63 6.40 3,177 2.17(1) (0.34)(1) 60.6
-- 21.75 7.57 -- 1.86(1) (0.92)(1) 11.6
(1.61) 22.45 13.93 20,538 0.86(1) 0.10(1) 11.6
-- 21.27 4.83 4,839 1.17(1) 0.07(1) 34.7
$(0.75) $23.47 3.09% $166,701 1.09%(1) 0.61%(1) 32.2%
(2.10) 23.49 14.37 174,213 1.11 0.52 24.5
(1.20) 22.60 19.14 163,936 1.13 0.92 32.7
(1.89) 20.09 30.53 145,586 1.22 1.15 19.8
(0.59) 17.18 22.60 113,803 1.36 1.68 44.0
(0.84) 14.57 16.10 87,975 1.58 1.94 31.8
(0.69) 23.32 2.72 41,368 1.79(1) (0.09)(1) 32.2
(2.02) 23.37 13.66 41,144 1.81 (0.18) 24.5
(1.05) 22.55 18.29 33,325 1.83 0.22 32.7
(1.75) 20.06 29.59 19,664 1.92 0.39 19.8
(0.15) 17.15 7.67 6,545 1.99(1) 1.06(l) 44.0
-- 23.30 9.91 51 1.79(1) (0.23)(1) 32.2
(0.77) 23.49 3.24 44,668 0.79(1) 0.91(1) 32.2
(0.07) 23.50 (0.67) 48,152 0.97(1) 0.99(1) 24.5
$(2.09) $20.47 10.51% $179,741 1.41%(1) 0.24%(1) 25.7%
(0.09) 20.52 5.47 188,192 1.37 0.33 29.6
(1.32) 19.54 (11.20) 237,873 1.29 0.30 41.5
(0.80) 23.34 32.48 283,001 1.35 0.37 21.1
(0.45) 18.41 13.80 227,716 1.47 0.48 35.1
(0.70) 16.61 11.10 202,730 1.64 0.23 25.1
(2.05) 20.01 10.13 17,285 2.11 (0.46)(1) 25.7
(0.02) 20.13 4.75 19,257 2.07 (0.71) 29.6
(1.25) 19.23 (11.98) 22,284 1.99 (0.40) 41.5
(0.77) 23.12 31.55 18,395 2.05 (0.32) 21.1
-- 18.34 5.28 6,305 2.15(1) (0.34)(1) 35.1
-- 20.00 10.19 - ## 2.11(1) 0.00(1)@ 25.7
$ -- $11.28 12.80% $7,204 1.19%(1) (0.36)%(1) 14.0%
$ -- $13.84 38.40% $29,286 1.39%(1) (0.95)%(1) 12.0%
($0.26) $9.64 0.70% $37,011 1.00%(1) 5.33%(1) 40.3%
(0.60) 9.83 (0.26) 43,060 1.00 4.91 84.3
(0.53) 10.46 8.46 47,834 1.00 5.24 114.0
(0.58) 10.16 6.84 54,755 1.00 5.74 119.3
(0.58) 10.07 4.34 56,388 1.00 5.72 90.2
(0.59) 10.22 12.23 53,885 1.00 5.90 66.1
(0.22) 9.64 0.35 3,370 1.70(1) 4.63(1) 40.3
(0.53) 9.83 (0.97) 4,471 1.70 4.21 84.3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Ratio of Ratio of Net
Net Asset Net Assets End Expenses to Investment Income Portfolio
Total Value End Total of Period (000 Average Net (Loss) to Average Turnover
Distributions of Period Return ** omitted) Assets (2) Net Assets (2) Rate
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(0.46) 10.46 7.71 5,849 1.70 4.50 114.0
(0.50) 10.16 6.10 3,375 1.70 4.99 119.3
(0.34) 10.07 2.23 1,629 1.70(1) 5.03(1) 90.2
(0.06) 9.63 0.01 -(8) 1.70(1) 4.58(1) 40.3
(0.27) 9.64 0.85 96,513 0.70(1) 5.63(1) 40.3
(0.26) 9.83 0.04 116,424 0.70(1) 6.30(1) 84.3
</TABLE>
(1) Annualized
(2) See footnote (3) on page 51.
<PAGE>
<TABLE>
<CAPTION>
Net
Net Realized
Asset and Distrib-
Value Net Unrealized Total Dividends utions Tax
Beginning Investment Gains/ Contribution from from Net from Return
of Income/ (Losses) on from Investment Investment Capital of
Period (Loss) Securities Sub-Advisor Operations Income Gains Capital
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL TRUST FUND
CLASS A
Six Months Ended
April 30, 2000(a) $10.05 $0.16 $(0.08) $ - $ 0.08 $(0.16) $(0.08) $ -
Year Ended October
31, 1999 10.53 0.38 (0.48) - (0.10) (0.38) - -
Year Ended October
31, 1988 10.29 0.38 0.24 - 0.62 (0.38) - -
Year Ended October
31, 1997 10.01 0.45 0.28 - 0.73 (0.45) - -
Year Ended October
31, 1996 10.06 0.43 (0.05) - 0.38 (0.43) - -
Year Ended October
31, 1995 9.51 0.39 0.55 - 0.94 (0.39) - -
CLASS B
Six Months Ended
April 30, 2000(a) 10.05 0.16 (0.08) - 0.08 (0.16) (0.08) -
Year Ended October
31, 1999 10.53 0.31 (0.48) - (0.17) (0.31) - -
Year Ended October
31, 1998 10.29 0.32 0.24 - 0.56 (0.32) - -
Year Ended October
31, 1997 10.01 0.37 0.28 - 0.65 (0.37) - -
Year Ended October
31, 1996+ 10.12 0.25 (0.11) - 0.14 (0.25) - -
CLASS C
Period Ended April
30, 2000(a) +++++ 9.88 0.05 (0.01) - 0.04 (0.05) - -
-------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
CLASS A
Six Months Ended
April 30, 2000(a) $14.00 $(0.04)** $ 1.13 $ - $ 1.09 $ - $(1.78) $ -
Year Ended October
31, 1999 12.20 (0.06)** 2.56 - 2.50 - (0.70) -
Year Ended October
31, 1998 11.42 (0.06)** 0.99 - 0.93 (0.06) (0.09) -
Year Ended October
31, 1997 10.38 (0.07)** 1.11 - 1.04 - - -
Year Ended October
31, 1996 9.58 (0.04)** 0.84 - 0.80 - - -
Year Ended October
31, 1995* 10.00 **## (0.42) (0.42) - - -
CLASS B
Six Months Ended
April 30, 2000(a) 13.63 (0.09)** 1.10 - 1.01 - (1.78) -
Year Ended October
31, 1999 11.98 (0.15)** 2.50 - 2.35 - (0.70) -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net
Net Realized
Asset and Distrib-
Value Net Unrealized Total Dividends utions Tax
Beginning Investment Gains/ Contribution from from Net from Return
of Income/ (Losses) on from Investment Investment Capital of
Period (Loss) Securities Sub-Advisor Operations Income Gains Capital
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended October
31, 1998 11.24 (0.15)** 0.98 - 0.83 - (0.09) -
Year Ended October
31, 1997 10.29 (0.15)** 1.10 - 0.95 - - -
Year Ended October
31, 1996 9.57 (0.13)** 0.85 - 0.72 - - -
Year Ended October
31, 1995* 10.00 (0.02)** (0.41) - (0.43) - - -
CLASS C
Period Ended April
30, 2000(a)+++++ 13.35 (0.11)** (0.38) - (0.49) - - -
CLASS D
Six Months Ended
April 30, 2000(a) 14.02 (0.02) 1.13 - 1.11 - (1.78) -
Year Ended October
31, 1999+++ 12.69 (0.14)** 1.47 - 1.33 - - -
-------------------------------------------------------------------------------------------------------------------
DEVELOPING MARKETS FUND
CLASS A
Six Months Ended
April 30, 2000(a) $9.95 $ (0.03)** $ 1.18 $ - $ 1.15 $ - $ - $ -
Year Ended October
31, 1999 7.14 0.03** 2.58 0.23 2.84 (0.01) - (0.02)
Year Ended October
31, 1998 9.52 0.02** (2.40) - (2.38) - - -
Year Ended October
31, 1997 9.96 (0.02)** (0.40) - (0.42) - (0.02) -
Year Ended October
31, 1996 9.53 (0.01)** 0.44 - 0.43 - - -
Year Ended October
31, 1995* 10.00 - (0.47) - (0.47) - - -
CLASS B
Six Months Ended
April 30, 2000(a) 9.66 (0.07)** 1.15 - 1.08 - - -
Year Ended
October 31, 1999 6.96 (0.03)** 2.50 0.23 2.70 - - -
Year Ended October
31, 1998 9.36 (0.04)** (2.36) - (2.40) - - -
Year Ended October
31, 1997 9.86 (0.19)** (0.29) - (0.48) - (0.02) -
Year Ended October
31, 1996 9.52 (0.08)** 0.42 - 0.34 - - -
Year Ended October
31, 1995* 10.00 (0.01)** (0.47) (0.48) - -
CLASS C
Period Ended April
30, 2000(a)+++++ 12.35 - **## (1.60) - (1.60) - - -
-------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY FUND
Six Months Ended
April 30, 2000(a) $1.00 $0.014 $- $- $0.014 ($0.014) $- $-
Year Ended
October 31, 1999 1.00 0.023 - - 0.023 (0.023) - -
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) - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net
Net Realized
Asset and Distrib-
Value Net Unrealized Total Dividends utions Tax
Beginning Investment Gains/ Contribution from from Net from Return
of Income/ (Losses) on from Investment Investment Capital of
Period (Loss) Securities Sub-Advisor Operations Income Gains Capital
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT MONEY FUND
Six Months Ended
April 30, 2000(a) $1.00 $0.024 $- $- $0.024 $(0.024) $- $-
Year Ended October
31, 1999 1.00 0.042 - - 0.042 (0.042) - -
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) - -
-------------------------------------------------------------------------------------------------------------------
HIGH INCOME FUND
CLASS A
Six Months Ended
April 30, 2000(a) $9.66 $0.44 $ (0.25) $ - $ 0.19 $(0.44) $(0.07) $-
Year Ended October
31, 1999++ 10.00 0.56 (0.34) - 0.22 (0.56) - -
CLASS B
Six Months Ended
April 30, 2000(a) 9.66 0.41 (0.25) - 0.16 (0.41) (0.07) -
Year Ended October
31, 1999++ 10.00 0.50 (0.34) - 0.16 (0.50) - -
CLASS C
Period Ended April
30, 2000(a)+++++ 9.57 0.14 (0.23) - (0.09) (0.14) - -
CLASS D
Six Months Ended
April 30, 2000(a) 9.65 0.45 (0.24) - 0.21 (0.45) (0.07) -
Year Ended October
31, 1999++++ 10.23 0.41 (0.58) - (0.16) (0.41) - -
</TABLE>
(a) Unaudited
* 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.
# Rounds to less than $1,000.
## Rounds to less than $0.01.
@ Rounds to less than 0.01%.
+ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
++ Commencement of operations for the High Income Fund was March 8, 1999.
+++ For the period May 17,1999 (commencement of offering Class D shares) to
October 31, 1999.
<PAGE>
++++ For the period May 13, 1999 (commencement of offering Class D shares) to
October 31,1999.
+++++ For the period February 28, 2000 (commencement of offering Class C shares)
to April 30, 2000.
<TABLE>
<CAPTION>
Net Assets Ratio of Ratio of Net
End of Expenses Investment
Net Asset Period to Average Income (Loss) Portfolio
Total Value End Total (000 Net Assets to Average Net Turnover
Distributions of Period Return(2) omitted) (3) Assets (3) Rate
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$(0.24) $9.89 1.08% $24,477 1.00%(1) 3.88%(1) 12.4%
(0.38) 10.05 (1.02) 29,912 1.00 3.65 76.5
(0.38) 10.53 6.28 44,306 1.00 3.78 51.5
(0.45) 10.29 7.37 35,878 0.70 4.38 84.3
(0.43) 10.01 3.83 38,794 0.80 4.26 79.3
(0.39) 10.06 10.06 39,059 1.00 3.97 49.3
(0.24) 9.89 0.73 956 1.70(1) 3.18(1) 12.4
(0.31) 10.05 (1.71) 1,044 1.70 2.94 76.5
(0.32) 10.53 5.54 1,430 1.70 3.04 51.5
(0.37) 10.29 6.62 546 1.40 3.66 84.3
(0.25) 10.01 1.42 489 1.23(1) 3.81(1) 79.3
(0.05) 9.87 0.42 -# 1.70(1) 2.28(1) 12.4
$(1.78) $13.31 8.39% $55,154 2.10%(1) (0.57)%(1) 35.3%
(0.70) 14.00 21.76 48,181 2.15 (0.44) 82.0
(0.15) 12.20 8.20 44,286 2.15 (0.49) 69.7
-- 11.42 10.02 44,316 2.15 (0.59) 73.9
-- 10.38 8.35 42,170 2.15 (0.39) 94.1
-- 9.58 (0.04) 28,819 2.15(1) (0.02)(1) --
(1.78) 12.86 7.99 5,934 2.79(1) (1.32)(1) 35.3
(0.70) 13.63 20.86 5,527 2.90 (1.18) 82.0
(0.09) 11.98 7.43 6,133 2.90 (1.24) 69.7
-- 11.24 9.23 6,821 2.90 (1.32) 73.9
-- 10.29 7.52 4,955 2.90 (1.25) 94.1
-- 9.57 (4.30) 1,803 2.90(1) (1.77)(1) --
-- 12.86 (3.16) -# 2.79(1) (13.5)(1) 35.3
(1.78) 13.35 8.54 4,816 1.79(1) (0.32)(1) 35.3
-- 14.02 10.48 1,586 1.90(1) (1.14)(1) 82.0
$ -- $11.10 11.56% $17,571 2.15%(1) (0.43)%(1) 46.3%
(0.03) 9.95 39.82 16,023 2.15 0.32 36.9
-- 7.14 (25.00) 16,355 2.15 0.22 43.6
(0.02) 9.52 (4.18) 29,402 2.15 (0.17) 52.8
-- 9.96 4.51 36,918 2.15 (0.14) 26.8
-- 9.53 (4.70) 14,622 2.15(1) 0.32(1) --
-- 10.74 11.18 3,169 2.90(1) (1.18)(1) 46.3
-- 9.66 38.79 2.685 2.90 (0.36) 36.9
-- 6.96 (25.64) 2,509 2.90 (0.50) 43.6
(0.02) 9.36 (4.83) 4,941 2.90 (1.74) 52.8
-- 9.86 3.57 3,641 2.90 (0.83) 26.8
-- 9.52 (4.80) 1,004 2.90(1) (1.00)(1) --
-- 10.75 (11.23) -# 2.90(1) 0.00(1)@ 46.3
-------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Net Assets Ratio of Ratio of Net
End of Expenses Investment
Net Asset Period to Average Income (Loss) Portfolio
Total Value End Total (000 Net Assets to Average Net Turnover
Distributions of Period Return(2) omitted) (3) Assets (3) Rate
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$(0.014) $1.00 2.88%(1) $52,018 0.90%(1) 2.85%(1) N/A
(0.023) 1.00 2.37 44,347 0.90 2.33 N/A
(0.027) 1.00 2.72 57,778 0.90 2.68 N/A
(0.020) 1.00 2.90(1) 38,681 0.90(1) 2.87 N/A
$(0.024) $1.00 4.97%(1) $59,005 0.90%(1) 4.91%(1) N/A
(0.042) 1.00 4.26 59,877 0.90 4.19 N/A
(0.047) 1.00 4.79 $56,697 0.90 4.68 N/A
(0.032) 1.00 4.68(1) 35,174 0.90(1) 4.65(1) N/A
$(0.51) $9.34 1.92% $10,918 1.10%(1) 9.24%(1) 36.1%
(0.56) 9.66 2.19 10,488 1.10 8.61 188.4
(0.48) 9.34 1.54 1,611 1.85(1) 7.83(1) 36.1
(0.50) 9.66 1.60 1,447 1.85(1) 7.83(1) 188.4
(0.14) 9.34 (0.91) -# 1.85(1) 9.26(1) 36.1
(0.52) 9.34 2.15 1,423 0.85(1) 9.49(1) 36.1
(0.41) 9.65 (1.63) 926 0.85(1) 9.36(1) 188.4
-------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized
(2) 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. An initial sales charge or contingent deferred
sales charge is not reflected in the calculation of total return. Total
return calculated for a period of less than one year is not annualized
except for the Money Funds. Total return for the year ended October 31,
1999 excluding the effect of the contribution from the sub adviser for
realized and unrealized securities losses was 36.59% and 35.49% for the
Developing Markets Fund Class A and B shares, respectively.
(3) Net of voluntary assumption by the investment adviser of expenses,
expressed as a percentage of average net assets, as follows Strategic
Growth Fund Class R shares, 1.76% (annualized) for the period 11/18/ 99,
through 4/30/00; Technology Fund Class R shares, .76%(annualized) for the
period 11/ 19/99, through 4/30/00; Fixed Income Fund Class A shares, .13%
(annualized) for the six months ended 4/30/00, . 14%, .30%, .30%, .34%,
and .51%, for the years ended 10/31/99, 98, 97, 96, and 95 respectively;
Fixed Income Fund Class B shares, .13% (annualized) for the six months
ended 4/30/00, .14%, .30%, and .30% for the years ended 10/31/99, 98 and
97, and .34% (annualized) for the period 2/28/96 through 10/31/96; Fixed
Income Class C shares, .13% (annualized) for the period 2/28/00 through
4/30/00, Fixed Income Class D shares,, .13% (annualized) for the six
months ended 4/30/00,.14% (annualized) for the period 4/30/99 through
10/31/99; Municipal Trust Fund Class A shares, .49% (annualized) for the
six months ended 4/30/00, .42 %, .41%, .74%, .64%, and .58%, (annualized)
for the years ended 10/31/99, 98, 97, 96, and 95, respectively; Municipal
Trust Fund Class B shares, .49% (annualized) for the six months ended
4/30/00, .42 %, .41 % and .74% for the years ended 10/31/99, 98 and 97,
and .64% (annualized) for the period 2/28/96 through 10/31/96, Municipal
Trust Fund Class C share, .49% (annualized) for the period 2/28/00 through
4/30/00; Developing Markets Fund Class A and Class B shares, .56%
(annualized) for the six months ended 4/30/00, .76%, .61%, .34%, .54% and
.60% (annualized) for the years ended 10/31/99, 98, 97, 96 and 95,
respectively, Developing Markets Fund Class C shares, .56% (annualized)
for the period 2/28/00 through 4/30/00; International Equity Fund Class A
and Class B shares, .04%,.10%, .18%, .27% and .60% for the years ended
10/31/99, 98, 97, 96 and 95, respectively; International Equity Fund Class
D shares, .04% (annualized) for the period 5/17/99 through 10/31/99;
Municipal Money Fund, .13% (annualized) for the six months ended 4/30/00;
.14%, .15% and .40% (annualized) for the years ended 10/31/99, 98 and 97,
respectively; U.S. Government Money Fund, .13% (annualized) for the six
months ended 4/30/00; .19%, .25% and .45% (annualized) for the years ended
10/31/99, 98, and 97, respectively; High Income Fund Class A and Class B
shares,2.23% (annualized) for the six months ended 4/30/00, and 1.43%
(annualized) for the period 3/8/99 through 10/31/99and High Income Fund
Class C shares, 2.23% (annualized) for the period 2/28/00 through 4/30/00;
and High Income Fund Class D shares, 2.23% (annualized) for the six months
ended 4/30/00 and 1.43% (annualized) for the period 5/13/99 through
10/31/99.
<PAGE>
BACK COVER
FOR MORE INFORMATION
General Information and Other Available Information
The Funds send out a semi-annual report and an annual report to all
shareholders. These reports include a list of your Fund's investments and
financial statements. The annual report contains a statement from the Fund's
Adviser discussing market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
The Funds have Statements of Additional Information that contain additional
information on all aspects of the Funds and are incorporated by reference into
this Prospectus. The Statements of Additional Information have been filed with
the Securities and Exchange Commission and are available for review at the SEC's
Public Reference Room in Washington, DC (1-202-942-8090) 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 electronic request at the following e-mail address:
[email protected], or by writing:
Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-0102
Payment of a duplicating fee may be required.
Shareholders may obtain any of these documents free of charge and may obtain
other information about the Funds by visiting the Funds' website
(www.dljfunds.com), calling 800-225-8011 or by writing:
DLJ Mutual Funds
PFPC, Inc.
P.O. Box 61503
King of Prussia, PA. 19406-0903
DLJ MUTUAL FUNDS
SEC file numbers: DLJ Focus Funds 811-04604
DLJ Core Equity Fund
DLJ Growth and Income Fund
DLJ Small Company Value Fund
DLJ Fixed Income Fund
DLJ Municipal Trust Fund
DLJ Opportunity Funds 811-9054
DLJ Developing Markets Fund
DLJ International Equity Fund
DLJ High Income Fund
DLJ Municipal Money Fund
DLJ U.S. Government Money Fund
DLJ Select Funds 811-09531
DLJ Strategic Growth Fund
DLJ Technology Fund
<PAGE>
DLJ Focus Funds
--------------------------------------------------------------------------------
277 PARK AVENUE, NEW YORK, NEW YORK 10172
Toll Free (800) 225-8011
--------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
dated August 1, 2000
The DLJ Focus Funds (the "DLJ Focus Funds") is a "series fund"
comprised of the following diversified, open-end investment management
companies, commonly known as "mutual funds": DLJ Core Equity Fund, DLJ Growth
and Income Fund, DLJ Small Company Value Fund, DLJ Fixed Income Fund and DLJ
Municipal Trust Fund (individually, a "Fund" and collectively, the "Focus Funds"
or the "Funds"). The DLJ Focus Funds is empowered to expand the series by
establishing additional Funds with investment objectives and policies that
differ from those of the current Funds. The DLJ Focus Funds also may offer
additional classes of shares.
This Statement of Additional Information (the "SAI") is not a
prospectus and should be read in conjunction with the DLJ Focus Funds' current
Prospectus dated August 1, 2000 (the "Prospectus"), as supplemented from time to
time, which is incorporated herein by reference. A copy of the Prospectus may be
obtained by contacting the DLJ Focus Funds at the address or telephone number
listed above.
<PAGE>
TABLE OF CONTENTS
PAGE
Fund History..................................................................3
Description Of The Funds And Their Investments And Risks......................4
Management Of The Funds......................................................45
Investment Advisory And Other Services.......................................51
Brokerage Allocation And Other Practices.....................................62
Capital Stock And Organization...............................................67
Purchases, Redemptions, Exchanges And Pricing Of Fund Shares.................70
Shareholder Investment Account...............................................82
Net Asset Value..............................................................85
Taxes, Dividends, And Distributions..........................................88
Performance Information......................................................96
General Information.........................................................100
Financial Statements........................................................101
Appendix I - Description Of Security Ratings................................A-1
-2-
<PAGE>
--------------------------------------------------------------------------------
FUND HISTORY
--------------------------------------------------------------------------------
The DLJ Focus Funds were organized under the laws of the
Commonwealth of Massachusetts on November 26, 1985 as a "business trust" under
the name "Winthrop Focus Funds."
On January 19, 1999, the name was changed from "Winthrop Focus
Funds" to "DLJ Winthrop Focus Funds" and subsequently on July 31, 2000 to "DLJ
Focus Funds."
In addition, on the latter date the names of Growth Fund, Growth and
Income Fund, Small Company Value Fund, Fixed Income Fund and Municipal Trust
Fund Series were changed to DLJ Core Equity Fund, DLJ Growth and Income Fund,
DLJ Small Company Value Fund, DLJ Fixed Income Fund and DLJ Municipal Trust
Fund, respectively.
-3-
<PAGE>
--------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
--------------------------------------------------------------------------------
(a) Classification
Each of the Funds is a diversified open-end management investment
company.
(b) Investment Strategies and Risks
The following investment policies and restrictions supplement, and
should be read in conjunction with, the information set forth under the heading
"DLJ Focus Funds' 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 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
"Investment Restrictions" in this SAI. DLJ Focus Funds' investment adviser is
DLJ Asset Management Group, Inc. (formerly known as Wood, Struthers & Winthrop
Management Corp.) (the "Adviser")
I. DLJ Core Equity Fund, DLJ Small Company Value Fund and
DLJ Growth and Income Fund
The investment objective of the DLJ Core Equity 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.,
-4-
<PAGE>
preferred stock, interests in master limited partnerships) of well-known and
established companies (generally, companies in operation for more than three
years) which, in the opinion of the Adviser, have the potential for long-term
capital appreciation. There can be no assurance that the DLJ Core Equity Fund's
investment objective will be achieved.
The investment objective of the DLJ Growth and Income Fund is
long-term capital appreciation and continuity of income. It seeks to achieve
this objective by investing principally in dividend-paying common stock and
diversifying its investments among different industries and different companies.
Accordingly, the Growth and Income Fund invests in securities on the basis of
the Adviser's evaluation of their investment merit and their potential for
appreciation in value and/or income. The selection of securities on the basis of
their capital appreciation or income potential cannot ensure against possible
loss in value. There can be no assurance that the DLJ Growth and Income Fund's
investment objective will be achieved.
The investment objective of the DLJ Small Company Value Fund is a
high level of growth of capital. It seeks to achieve this objective by investing
principally in common stock and securities convertible into common stock, but it
may, when deemed appropriate by the Adviser, invest part of its assets in
preferred stock, other equity securities, bonds or other debt securities as
described below. There can be no assurance that the DLJ Small Company Value
Fund's investment objective will be achieved.
The DLJ Small Company Value Fund will pursue its investment
objective by employing a value-oriented investment approach. The Adviser's
research efforts may also play a greater role in selecting securities for the
DLJ Small Company Value Fund than in a fund that invests in larger, more
established companies. The DLJ Small
-5-
<PAGE>
Company Value Fund seeks securities that appear to be underpriced and are issued
by companies with proven management, consistent earnings, sound finances and
strong potential for market growth. By investing in such companies, the Small
Company Value Fund tries to enhance the potential for appreciation and limit the
risk of decline in the value of its portfolio. The DLJ Small Company Value Fund
focuses on the fundamentals of each small-cap company instead of trying to
anticipate what changes might occur in the stock market, the economy, or the
political environment. This approach differs from that used by many other funds
investing in small-cap company stocks. Those funds often buy stocks of companies
they believe will have above-average earnings growth, based on anticipated
future developments. In contrast, the DLJ Small Company Value Fund's securities
are generally selected with the belief that they are currently undervalued based
on existing conditions, and that their earning power or franchise value does not
appear to be reflected in their current stock price. In addition, to further
reduce risk, the DLJ Small Company Value Fund diversifies its holdings among
many companies and industries. Other factors considered in the selection of
securities include whether a company has an established presence in its
industry, a product or market niche or whether management owns a significant
stake in the company's operation.
For a further description of the Funds' investment objectives and
policies, see "DLJ Focus Funds' Investment Objective and Policies" in the
Prospectus.
Warrants
The DLJ Core Equity Fund and the DLJ Small Company Value Fund each
may invest up to 5% of their respective total assets in warrants. Warrants may
be considered more speculative than certain other types of investments in that
they do not
-6-
<PAGE>
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 Core Equity Fund and the DLJ Growth and Income Fund may
invest up to10% of the value of their respective total assets in securities of
issuers doing business primarily outside the U.S. or domiciled outside the U.S.
("foreign securities") and the DLJ Small Company Value Fund may invest up to 20%
of the value of its total assets in foreign securities. Investment in foreign
securities involves certain risks not ordinarily associated with investments in
securities of domestic issuers. These risks include fluctuations in foreign
exchange rates, future political and economic developments, and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions. In addition, with respect to certain countries, there is the
possibility of expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments which could adversely affect
investments in those countries.
There may be less publicly available information about a foreign
company than about a U.S. company, and foreign companies may not be subject to
accounting, auditing and financial reporting standards and requirements
comparable to or as uniform as those to which U.S. companies are subject.
Non-U.S. securities markets, while experiencing increases in the volume of
securities traded, generally have substantially
-7-
<PAGE>
less volume than U.S. markets, and securities of many foreign companies are less
liquid and their prices more volatile than securities of comparable U.S.
companies. Transaction costs associated with 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 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 Core Equity Fund and DLJ Small Company Value Fund may invest
up to35% of the value of their respective total assets in investment-grade
fixed-income securities, while the DLJ Growth and Income Fund may invest in
investment-grade fixed-income securities without limitation. Investment-grade
obligations are those obligations rated BBB or better by Standard and Poor's
Ratings Group ("S&P") or Baa or better by Moody's Investors Service, Inc.
("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
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circumstances are more likely, in the opinion of S&P, to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
higher rated categories. Securities rated Baa by Moody's are considered by
Moody's to be medium-grade obligations; they are neither highly protected nor
poorly secured; interest payments and principal security appear to be adequate
for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; in the opinion of
Moody's, they lack outstanding investment characteristics and in fact have
speculative characteristics as well. Fixed-income securities in which the Funds
may invest include asset and mortgage backed securities. Prepayments of
principal may be made at any time on the obligations underlying asset and
mortgage backed securities and are passed on to the holders of the asset 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 Core Equity Fund and the DLJ Growth and Income Fund may
write covered calls on securities or securities indices for purposes of hedging
against a decline in the value of the irrespective portfolio securities. The DLJ
Small Company Value Fund may write covered calls, purchase calls and write
covered put options on securities and securities indices both for hedging and
return enhancement purposes.
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A call option on a security gives the purchaser of the option, upon
payment of a premium to the writer of the option, the right to purchase from the
writer of the option a specified number of shares of a specified security on or
before a fixed date, at a predetermined price. A call option on a securities
index represents the holder's right to obtain from the writer in cash a fixed
multiple of the amount by which the exercise price is less than the value of the
underlying securities index on the exercise date. So long as a Fund remains
obligated as a writer of a covered call option, it will forego the opportunity
to profit from increases in the market price of the underlying security or index
above the exercise price of the option. A Fund will not write a call option on a
security unless at all times during the option period the Fund owns either (i)
the optioned securities, or securities convertible into or carrying rights to
acquire the optioned securities at no additional cost, or (ii) an offsetting
call option on the same securities at the same or a lower strike 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 Core Equity Fund, the DLJ Growth and Income Fund
or the DLJS mall 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 with respect to such option 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
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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 transaction 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 will realize a profit from a closing purchase transaction for an option it
has written if the cost of such transaction is less than the premium received
from the writing of the option and will realize a loss if the cost of such
transaction is more than the premium received. The DLJ Core Equity Fund and DLJ
Growth and Income Fund will only purchase call options in closing purchase
transactions. As indicated above, the DLJ Small Company Value Fund may write or
purchase a put option on securities or securities indices. A put option is a
contract that gives the holder of the option the right, in return for a premium,
to sell to the writer of the option the underlying security at a specified
price. The seller of the put, on the other hand, has the obligation to buy the
underlying security at the exercise price. The DLJ Small Company Value Fund will
only write "covered" put options (i.e., so long as the Fund is obligated under
the put, it will have on deposit cash or other liquid unencumbered assets,
marked-to-market daily, or a combination of both, 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 market price at the time
of writing the put.
If the DLJ Small Company Value Fund purchases an option, it runs the
risk that the option will expire "out of the money", resulting in a loss equal
to the amount
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of the premium paid plus any transaction costs. Thus, in some periods the DLJ
Small Company Value Fund may receive a lower total return in connection with its
options transactions than it would have received from the underlying securities
had options not been purchased.
Neither the DLJ Core Equity Fund nor the DLJ Growth and Income Fund
may write a covered 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 underlying securities)
or the amount deposited in a segregated account would exceed 5% of such Fund's
total assets. The DLJ Small Company Value Fund may not purchase options if, as a
result, the aggregate cost of all outstanding options exceeds 10% of its total
assets.
Because exercises of index options are settled in cash, a call
writer such as the DLJ Core Equity Fund, the DLJ Growth and Income Fund or the
DLJ Small Company Value Fund cannot determine the amount of its settlement
obligation in advance and, unlike call writing on specific stocks, cannot
provide in advance for, or cover, its potential obligations by acquiring and
holding a particular security.
Price movements in a Fund's portfolio probably will not correlate
precisely with movements in the level of an index underlying an option and,
therefore, a Fund bears the risk that the price of the securities held by such
Fund may not increase as much as the index on which a Fund has written a covered
call option. In such event, a Fund would bear a loss on the covered call option
that it has written that is not completely offset by movements in the price of
such Fund's portfolio. It is also possible that the index underlying a covered
call may rise when the Fund's portfolio does not rise.
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If this occurred, a Fund would incur a loss on the call that would not be 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 the time such Fund has a call exercised
against it, at a price which is fixed as of the closing level of the index on
the date of exercise, and the time such Fund is able to sell stocks in its
portfolio. As with stock options, the Fund will not learn that an index option
has been exercised until the day following the exercise date but, unlike a call
on stock where a Fund would be able to deliver the underlying securities in
settlement, such Fund may have to sell part of its investment portfolio in order
to make settlement in cash, and the price of such investments might decline
before they can be sold. This timing risk makes certain strategies involving
more than one option substantially 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
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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.
Financial Futures and Options Thereon
The DLJ Small Company Value Fund may also seek to increase its
return or to hedge all or a portion of its portfolio investments through the use
of financial instruments currently or hereafter available, such as financial
futures contracts and options thereon.
On the futures markets, the Adviser may, with respect to the DLJ
Small Company Value Fund, adopt an overall strategy in response to expected
market movements. Such a strategy would involve the purchase or sale of
securities index futures contracts and related options traded on regulated
exchanges, to the extent permitted by the Commodity Futures Trading Commission
("CFTC"), for bona fide
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hedging purposes or for other appropriate risk management purposes permitted
under regulations promulgated by the CFTC. A securities index futures contract
is an agreement to take or make delivery of an amount of cash equal to the
difference between the value of the index at the beginning and at the end of the
contract period. The DLJ Small Company Value Fund may enter into securities
index futures contracts in anticipation of or during a market decline to attempt
to offset the decrease in the market value of securities in its portfolio that
might otherwise result.
An option on a futures contract gives the purchaser the right, but
not the obligation, to assume a position in a futures contract (a long position
if the option is a call and a short position if the option is a put) at a
specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the holder and writer of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin account
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.
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The DLJ Small Company Value Fund may only invest in futures
contracts and related options to the extent that the Fund would not be required
to register with the CFTC. The DLJ Small Company Value Fund will not engage in
financial futures or related options transactions for speculative purposes but
only in an effort to hedge portfolio risks as described above. In accordance
with the foregoing, under current regulations the DLJ Small Company Value Fund
may not purchase or sell futures contracts if, immediately thereafter, the sum
of the amount of initial margin deposits on the Fund's open futures positions
and premiums on open positions thereon would exceed 5% of the market value of
the DLJ Small Company Value Fund's total assets. Certain provisions of the
federal tax laws may limit the extent to which the DLJ Small Company Value Fund
may engage in options and financial futures transactions. Such transactions may
also affect the amount, character and timing of income, gain or loss recognized
by the Fund for federal tax purposes.
The DLJ Small Company Value Fund's successful use of options and
financial futures depends on the ability of the Adviser to predict the direction
of the market and is subject to various additional risks. The investment
techniques and skills required to develop and implement a successful options and
futures strategy are different from those required to select equity and debt
securities for investment. The correlation between movements in the price of an
option or future and the price of securities index futures and options may
decline if the composition of the Fund's port-folio 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
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markets will exist for any particular option or futures contract at any
particular time. A Fund's losses on futures transactions could be unlimited.
New and innovative financial instruments continue to be developed
and the DLJ Small Company Value Fund may invest in any such instrument as may be
developed to the extent that the utilization of such instrument is consistent
with its investment objective and policies and the regulatory requirements
applicable to the Fund.
Risks of Options, Currency Exchange Contracts and Financial Futures Strategies
Participation in the options or futures markets and in currency
exchange transactions involves investment risks and transaction costs to which a
Fund would not be subject absent the use of these strategies. If the Adviser's
predictions of movements in the direction of the securities, foreign currency
and interest rate markets are inaccurate, the adverse consequences to a Fund may
leave the Fund in a worse position than if such strategies were not used. The
loss from entering into futures contracts is potentially unlimited. Risks
inherent in the use of options, foreign currency and futures contracts and
options on futures contracts include (1) dependence on the investment manager's
ability to predict correctly movements in the direction of interest rates,
securities prices and currency markets; (2) imperfect correlation between the
price of options and futures contracts and options thereon and movements in the
prices of securities or currencies being hedged; (3) skills needed 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
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be favorable for it to do so, or the possible need for a Fund to sell a
portfolio security at a disadvantageous time, due to the need for such Fund to
maintain "cover" or to segregate securities in connection with hedging
transactions.
Small Company Stocks
At least 65% of the DLJ Small Company Value Fund's total assets
normally will be invested in equity securities of small market capitalization
companies, which for the purposes of this Fund, are those companies with a
market capitalization of $2 billion or less at the time of the Fund's
investment. While small-cap company stocks generally pay low or no dividends,
they are considered to offer greater potential for appreciation than securities
of companies with larger market capitalizations. Small-cap company stocks
generally also have higher risk and volatility, because most are not as broadly
traded as stocks of companies with larger capitalizations and their prices thus
may fluctuate more widely and abruptly. Small-cap company securities generally
are also less researched.
Special Situation Companies
The DLJ Small Company Value Fund may also invest in securities of
companies in special situations, that is, in securities the values of which may
be affected by particular developments unrelated to business conditions
generally, and which may fluctuate without relation to general market trends. In
general, a special situation company is a company whose securities could
reasonably be expected to be accorded market recognition within a foreseeable
period of time at an appreciated value solely by reason of a development
particularly or uniquely applicable to that company. The principal risk
associated with an investment in special situation companies is that if the
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anticipated development does not occur, the investment is likely not to
appreciate or may decline. Examples of special situation companies are companies
being reorganized or merged, having unusual new products, enjoying particular
tax advantages, or acquiring new management. The DLJ Small Company Value Fund
will not, however, invest more than 10% of its assets (at the time of purchase)
in equity securities of companies (including predecessors) that have less than
three years of operations.
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Short-Term Portfolio Transactions
The DLJ Small Company Value Fund may engage in short-term portfolio
transactions in an attempt to generate capital gains when deemed appropriate by
the Adviser under the circumstances, taking into consideration the market
analysis factors of any particular security and the technical conditions of the
securities markets in general. In accordance with the investment policy of
engaging in short-term portfolio transactions, the DLJ Small Company Value Fund
has no restrictions with respect to portfolio turnover and the rate of portfolio
turnover is not considered a prohibitive factor by the Adviser when considering
short-term portfolio transactions. As a result of this policy, it is possible
that the DLJ Small Company Value Fund's annual portfolio turnover rate may
exceed 100%, although the Adviser anticipates that such rate will not exceed
100%. Because it is difficult to predict accurately portfolio turnover rates,
actual turnover may be higher or lower. The portfolio turnover rate is computed
by dividing the lesser of the amount of the securities purchased or the
securities sold by the average monthly value of securities owned during the
year, excluding securities whose maturities at the time of acquisition were one
year or less. A high degree of portfolio turnover results in increased
transaction costs.
IOs and POs
Although the DLJ Small Company Value Fund has no present intention
to so invest, the DLJ Small Company Value Fund may invest in securities
representing interests in a pool of mortgages or other assets the cash flow of
which has been separated into its interest and principal components, commonly
known as "IOs" (interest only) and "POs" (principal only). IOs and POs issued by
parties other than agencies or
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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 Core Equity Fund and DLJ
Growth and Income Fund
The following additional policies have been adopted by the DLJ Core
Equity Fund and the DLJ Growth and Income Fund and may be changed by the
Trustees without shareholder approval:
1. The Funds will not make or maintain a short position (other than short
sales against the box) or write, purchase or sell puts, calls, straddles,
spreads or combinations thereof, provided, however, that the Funds may
write covered call options and purchase call options in closing purchase
transactions.
2. The Funds will not invest in oil, gas or other mineral exploration or
development programs, but this shall not prohibit the Funds from investing
in securities of companies engaged in oil, gas or mineral activities or
investigations.
II. II. DLJ Fixed Income Fund
The investment objective of the DLJ Fixed Income Fund is to provide
as high a level of total return as is consistent with capital preservation by
investing principally in debt securities, 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.
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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+ or A-1 by
S&P.
The DLJ Fixed Income Fund may also invest not more than 25% (in the
aggregate)of its total assets at the time of investment in (i) debt securities
rated Baa or MIG-2 by Moody's or BBB or SP-2 by S&P, to the extent that such
investments would, in the opinion of the Adviser, be consistent with the DLJ
Fixed Income Fund's investment objective. See "Additional Information on
Investment Policies and Risks" in the Prospectus for a description of securities
rated BBB by S&P and Baa by Moody's and of asset and mortgage-backed securities.
As a matter of fundamental policy, which cannot be changed without
approval by the vote of a majority of the DLJ Fixed Income Fund's outstanding
voting
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securities (as defined in this SAI), the DLJ Fixed Income Fund will invest at
least 80% of the value of its total assets at the time of investment in debt
securities. In normal circumstances, the DLJ Fixed Income Fund will invest at
least 65% of the value of its total assets at the time of investment in
fixed-income securities. However, the DLJ Fixed Income Fund reserves the right
to hold cash and short-term fixed-income securities and to enter into repurchase
agreements as necessary for temporary defensive or emergency purposes as
determined by the Adviser without regard for the above limitations.
The DLJ Fixed Income Fund may also invest in restricted securities
and in instruments having no ready market if such purchases at the time thereof
would not cause more than 10% of the value of its net assets to be invested in
not readily marketable assets.
The DLJ Fixed Income Fund generally does not intend to acquire
common stocks or equity securities exchangeable for common stock or rights or
warrants to subscribe for or purchase common stock, except that, with respect to
convertible debt securities, the Fund may acquire common stock through the
exercise of conversion rights in situations where it believes such exercise is
in the best interest of the DLJ Fixed Income Fund and its shareholders. In such
event, the DLJ Fixed Income Fund will sell the common stock resulting from such
conversion as soon as practicable. The DLJ Fixed Income Fund may acquire debt
securities, including convertible and non-convertible debt securities which may
have voting rights, but in no case will the DLJ Fixed Income Fund acquire more
than 10% of the voting securities of any one issuer. The relative size of the
DLJ Fixed Income Fund's investments in any grade or type of security will vary
from time to time. Critical factors which are considered in the selection of
securities or other
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investment alter-natives include trends in the determinates of interest rates,
corporate profits and management capabilities and practices.
The DLJ Fixed Income Fund may use a variety of techniques in seeking
to attain its investment objective. In making investment decisions, for example,
the DLJ Fixed Income Fund seeks to balance favorable factors, such as high
yields to maturity and high current rates of income, against unfavorable
factors, such as increased risk which accompanies longer maturities.
The DLJ Fixed Income Fund may use trading to attain its investment
objectives and policies. Trading may be used in anticipation of market
developments or to take advantage of yield disparities between major sectors of
the investment-grade market. For example, the DLJ Fixed Income Fund may employ
trading in order to (i) shorten the average maturity of the portfolio in
anticipation of higher interest rates, (ii) lengthen the average maturity of the
portfolio in anticipation of lower interest rates, (iii) change the average
coupon of the portfolio when yield disparities occur between debt securities
selling at differing levels of premium or discount, (iv) sell one type of debt
security (e.g., industrial bonds) and buy another type of debt security (e.g.,
Federal agency bonds or notes) when disparities arise in the relative value of
each, and (v) sell one class of fixed-income securities (e.g., preferred stocks)
and buy another class (e.g., publicly offered utility bonds) when disparities
arise in the relative values of each.
Debt securities acquired for the DLJ Fixed Income Fund's portfolio
may be subject to call by the issuer prior to maturity, in which case the DLJ
Fixed Income Fund may be forced to sell such securities at prices below market
value. The DLJ Fixed Income Fund may seek protection against calls at prices
below market value. Such
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protection may be sought by (i) purchasing securities with high call prices
relative to their market prices, (ii) purchasing securities with sinking fund
features which are selling at a premium where the period before inception of the
sinking fund payments is relatively long, (iii) selling a security whose market
price has risen above its call price and purchasing another security of
comparable quality whose market price is below its call price and (iv)
substituting for a security with a refunding date a comparable security with a
more distant refunding date. Depending on market conditions, debt securities may
be purchased at a discount or premium from face value, producing a yield of more
or less than the coupon rate. The market value of the DLJ Fixed Income Fund's
assets will reflect yields generally available on debt securities of similar
quality. When such yields (i.e., interest rates) decline, the market value of
the DLJ Fixed Income Fund's assets already invested can be expected to rise.
Similarly, when such yields increase, the market value of the Fund's assets
already invested can be expected to decline.
III. DLJ Municipal Trust Fund
The investment objective of the DLJ Municipal Trust Fund is to
provide as high a level of total return as is consistent with capital
preservation by investing principally in high grade tax-exempt municipal
securities. This investment objective, unlike that of most other municipal bond
funds, is not to provide current income which is exempt from federal and/or
state income tax. Total return means the sum of net investment income (if any)
and realized and unrealized gains less losses. The DLJ Municipal Trust Fund
intends to distribute annually its net capital gains. Any such
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distributions will be taxable to a shareholder as capital gain. See "Taxes,
Dividends, and Distributions."
The DLJ Municipal Trust Fund attempts to provide high total return
by actively managing the maturities of the bonds in the portfolio in response to
the Adviser's anticipation of the movement of interest rates and its assessment
of the relative yields. The Fund will shorten the portfolio's maturities when
the Adviser believes that interest rates will rise and lengthen maturities when
the Adviser believes that rates will fall. To a lesser extent, the DLJ Municipal
Trust Fund will also attempt to enhance total return by selecting municipal
securities which the Adviser believes are undervalued. The success of these
strategies depends upon the Adviser's ability to accurately forecast changes in
interest rates and to properly assess the value of municipal securities. The
investor should be aware that there can be no assurances that the DLJ Municipal
Trust Fund's investment strategies will be successful.
Under normal circumstances, it is the DLJ Municipal Trust Fund's
policy to invest at least 80% of the value of its net assets at the time of
investment in tax-exempt municipal securities. However, the DLJ Municipal Trust
Fund reserves the right to hold cash and short-term fixed-income securities and
to enter into repurchase agreements as necessary for temporary defensive or
emergency purposes as determined by the Adviser without regard for the above
limitation.
The DLJ Municipal Trust Fund seeks to achieve its objective by
investing primarily in a diversified portfolio of high grade, intermediate term
municipal securities. Municipal securities fall into two principal classes:
bonds and notes, both of which may have fixed, variable or floating rates of
interest. The investment policies of the Municipal
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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. The Municipal Trust Fund may also invest not more than 25% (in the
aggregate) of its total assets at the time of investment in (i) municipal
securities rated Baa or MIG-2 by Moody's or BBB or SP-2 by S&P and (ii)
commercial paper rated Prime-2 by Moody's or A-2 by S&P, to the extent that such
investments would, in the opinion of the Adviser, be consistent with the
Municipal Trust Fund's investment objective.
Non-rated municipal securities will also be considered for
investment by the DLJ Municipal Trust Fund when the Adviser believes that the
financial condition of the issuers of such obligations and the protection
afforded by the terms of the obligations themselves limit the risk to the DLJ
Municipal Trust Fund to a degree comparable to that of rated securities which
are consistent with the DLJ Municipal Trust Fund's objective and policies.
Municipal securities include municipal bonds as well as short-term
(i.e., maturing in under one year to as much as three years) municipal notes,
demand notes and tax-exempt commercial paper. In the event the DLJ Municipal
Trust Fund invests in demand notes, the Adviser will continually monitor the
ability of the obligor under such notes to meet its obligations. Typically,
municipal bonds are issued to obtain funds used to construct a wide range of
public facilities, such as schools, hospitals, housing, mass transportation
systems, airports, highways and bridges. The funds may also be used for general
operating expenses, refunding of outstanding obligations and loans to other
public institutions and facilities.
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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 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
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within 1 to 7 days' notice. The payment of principal and interest by the issuer
of these obligations will ordinarily be guaranteed by letters of credit offered
by banks. The interest rate on a demand note may be based upon a known lending
rate, such as a bank's prime rate, and may be adjusted when such rate changes,
or the interest rate on a demand note may be a market rate that is adjusted at
specified intervals.
Other short-term obligations constituting municipal notes include
tax anticipation notes, revenue anticipation notes and bond anticipation notes,
and tax-exempt commercial paper.
Tax anticipation notes are issued to finance working capital needs
of municipalities. Generally, they are issued in anticipation of various
seasonal tax revenues, such as income, sales, use and business taxes. Revenue
anticipation notes are issued in expectation of receipt of other types of
revenues, such as federal revenues available under the Federal Revenue Sharing
Programs. Bond 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
-29-
<PAGE>
S&P represent their respective opinions of the quality of the municipal
securities rated by them. It should be emphasized that such ratings are general
and are not absolute standards of quality. Consequently, municipal securities
with the same maturity, coupon and rating may have different yields, while the
municipal securities of the same maturity and coupon, but with different ratings
may have the same yield. The Adviser appraises independently the fundamental
quality of the securities included in the Fund's portfolio.
Yields on municipal securities are dependent on a variety of
factors, including the general conditions of the municipal securities market,
the size of a particular offering, the maturity of the obligation and the rating
of the issue. Municipal securities with longer maturities tend to produce higher
yields and are generally subject to greater price movements than obligations
with shorter maturities. An increase in interest rates generally will reduce the
market value of portfolio investments, and a decline in interest rates generally
will increase the value of portfolio investments. The achievement of the Fund's
investment objectives depends in part on the continuing ability of the issuers
of municipal securities in which the Fund invests to meet their obligations for
the payment of principal and interest when due. Municipal securities
historically have not been subject to registration with the Securities and
Exchange Commission, although from time to time there have been proposals which
would require registration in the future.
After purchase by the DLJ Municipal Trust Fund, a municipal security
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the DLJ Municipal Trust Fund. Neither event requires the sale of
such security by the DLJ Municipal Trust Fund, but the Adviser will consider
such event in its
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<PAGE>
determination of whether the DLJ Municipal Trust Fund should continue to hold
the security. To the extent that the ratings given by Moody's or S&P may change
as a result of changes in such organizations or their rating systems, the
Adviser will attempt to use such changed ratings in a manner consistent with the
Fund's quality criteria as described in the Prospectus.
Obligations of issuers of municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code. In addition, the
obligations of such issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of
such obligations or upon the ability of municipalities to levy taxes. There is
also the possibility that, as a result of litigation or other conditions, the
ability of any issuer to pay, when due, the principal or the interest on its
municipal bonds may be materially affected.
From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income tax exemption
for interest on municipal securities. It can be expected that similar proposals
may be introduced in the future. If such a proposal were 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.
-31-
<PAGE>
IV. Additional General Investment Policies
The following general investment policies supplement those set forth
above for each Fund.
Short Sales ("Against the Box")
Except for the DLJ Municipal Trust Fund, a Fund may effect short
sales "against the box." While a short sale is a sale of a security the Fund
does not own, it is "against the box" if at all times during which a short
position is open, the Fund owns an equal amount of the securities, or, by virtue
of the ownership of securities, has the right, without further consideration, to
obtain an equal amount of the securities sold short. No more than 10% of each
Fund's net assets (taken at the then current market value) will be held as
collateral for its short sales at any time. Neither the DLJ Core Equity Fund,
the DLJ Fixed Income Fund nor the DLJ Growth and Income Fund have an intention
of entering into short sales against the box in the foreseeable future.
Repurchase Agreements
A Fund may enter into repurchase agreements with respect to
marketable obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities ("U.S. Government Securities"). While the maturities of the
underlying securities may exceed one year, the term of there purchase 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.
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<PAGE>
Reverse Repurchase Agreements
The DLJ Core Equity Fund, DLJ Small Company Value Fund, DLJ Fixed
Income Fund and DLJ Municipal Trust Fund each may enter into reverse repurchase
agreements. Under a reverse repurchase agreement, a Fund would sell securities
and agree to repurchase them at a mutually agreed upon date and price. At the
time a Fund enters into a reverse repurchase agreement, it would establish and
maintain with an approved custodian a segregated account containing liquid
high-grade debt securities having a value not less than the repurchase price.
Reverse repurchase agreements involve the risk that the market value of the
securities subject to such agreement could decline below the repurchase price to
be paid by a Fund for such securities. In the event the buyer of securities
under a reverse repurchase agreement filed for bankruptcy or became insolvent,
such buyer (or receiver for such buyer) 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 Core Equity Fund, DLJ Small Company Value Fund, DLJ Fixed
Income Fund and DLJ Municipal Trust Fund each may seek to receive or increase
income by lending their respective portfolio securities. Under present
regulatory policies, such loans may be made to member firms of the New York
Stock Exchange and are
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<PAGE>
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. 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 is unable to repay the loan, including delays or inability to
recover the loaned securities or foreclose against the collateral. The aggregate
value of securities loaned by a Fund may not exceed 25% of the value of its
total assets at the time such loan is made.
Restricted Securities
The DLJ Core Equity Fund, the DLJ Growth and Income Fund, the DLJ
Fixed Income Fund and the DLJ Municipal Trust Fund may invest in restricted
securities and all of the Funds may invest in other assets having no ready
market if such purchases at the time thereof would not cause more than 10% (or
15% in the case of the DLJ Municipal Trust Fund) of the value of a Fund's net
assets to be invested in assets which are not readily marketable. Restricted
securities may be sold only in privately negotiated transactions, in a public
offering with respect to which a registration statement is in effect under the
Securities Act of 1933 or pursuant to Rule 144 promulgated under such Act. Where
registration is available or required, the Fund may be obligated to pay all or
part of the registration expense, and a considerable period of time may elapse
between the time of the decision to sell and the time that 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
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<PAGE>
prevailed when it decided to sell. Securities salable without restriction among
qualified institutional investors pursuant to rules promulgated under the
Securities Act of 1933 (e.g., Rule 144A) are not considered to be subject to
legal restrictions on transfer and may be considered liquid if they satisfy
liquidity standards established by the Board of Trustees. The continued
liquidity of such securities is less certain than that of publicly traded
securities, and accordingly the Board of Trustees will monitor their liquidity.
Restricted securities will be valued in such manner as the Trustees of DLJ Focus
Funds in good faith deem appropriate to reflect their fair value.
The staff of the SEC has taken the position that purchased over the
counter ("OTC") options and the assets used as cover for written OTC options are
illiquid securities. However, a Fund may treat the securities it uses as cover
for written OTC options on U.S. Government Securities as liquid, provided the
Fund satisfies the following condition: A Fund may sell OTC options on U.S.
Government Securities only to qualified dealers who agree that the Fund may
repurchase options it writes for a maximum price to be calculated by a
predetermined formula. In such cases, OTC options would be considered liquid
only to the extent that the maximum repurchase price exceeds the intrinsic value
of the option.
When Issued, Delayed Delivery Securities and Forward Commitments
The Funds may, to the extent consistent with their other investment
policies and restrictions, enter into forward commitments for the purchase or
sale of securities, including on a "when issued" or "delayed delivery" basis in
excess of customary settlement periods for the type of security involved. In
some cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as
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<PAGE>
approval and consummation of a merger, corporate reorganization or debt
restructuring, i.e., a when, as and if issued security. When such transactions
are negotiated, the price is fixed at the time of the commitment, with payment
and delivery taking place in the future, generally a month or more after the
date of the commitment. While the Funds will only enter into a forward
commitment with the intention of actually acquiring the security, the Funds may
sell the security before the settlement date if it is deemed advisable.
Securities purchased under a forward commitment are subject to
market fluctuations, and no interest (or dividends) accrues to a Fund prior to
the settlement date. The Funds will segregate with the Custodian cash or other
liquid, unencumbered assets, in an aggregate amount at least equal to the amount
of their respective outstanding forward commitments.
Stand-By Commitments
The DLJ Municipal Trust Fund may invest in stand-by commitments
which may involve certain additional expenses. The Custodian will maintain a
segregated account containing liquid securities having value equal to, or
greater than, such securities. The price of such securities, which is generally
expressed in yield terms, is fixed at the time the commitment to purchase is
made, but delivery and payment for such securities takes place at a later time.
Normally the settlement date occurs within ten days to one month after the
purchase of the issue. The value of such securities may fluctuate prior to their
settlement, thereby creating an unrealized gain or loss to the Fund. Such
securities are examples of what the SEC considers "illiquid securities" because
the settlement date occurs more than seven days after the purchase.
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<PAGE>
State Undertakings
The Funds also have entered into agreements with certain States
which (a) limit investment in warrants to not more than 5% of the value of each
Fund's net assets (only 2% of the value of each Fund's net assets may be
invested in warrants not listed on the New York or American Stock Exchange), (b)
generally prohibit any investment in oil, gas and other mineral leases, and (c)
prohibit purchases or sales of real property (including limited partnership
interests, but excluding readily marketable interests in real estate investment
trusts or readily marketable securities of companies which invest in real
estate).
The DLJ Small Company Value Fund has entered into additional
agreements with certain States which (a) limit to not more than 5% of its total
assets investments in not readily marketable securities, (b) prohibit investment
in commodities and commodity futures contracts, and (c) limit investment in
options, financial futures and stock index futures to 5% of the value of its net
assets. The DLJ Municipal Trust Fund entered into additional agreements with
certain States which(a) prohibit the purchase of securities of companies which
have been in operation for less than three years, (b) limit to no more than 10%
of its total assets its investments in equity securities and to no more than 5%
of its total assets its investment in equity securities which are not readily
marketable, and (c) limit to no more than 5% of its total assets its aggregate
investment in puts, calls, straddles, spreads, and any combinations thereof.
The Funds intend to withdraw such undertakings at the earliest
practicable date. Such withdrawals are not expected to have a material effect on
the portfolio of the affected Fund.
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<PAGE>
(c) Investment Restrictions
The following restrictions are fundamental policies. Fundamental
policies are those which cannot be changed without the approval of the holders
of a majority of the Fund's outstanding voting securities. A "majority of the
Fund's outstanding voting securities," when used in this 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 elsewhere in this SAI.
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
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<PAGE>
are each considered to be separate industries, and provided further,
that there is no limitation for the DLJ Fixed Income Fund, the DLJ
Municipal Trust Fund, the DLJ Small Company Value Fund or the DLJ
Growth and Income Fund in respect of investments in U.S. Government
Securities or, for the DLJ Fixed Income Fund, the DLJ Municipal
Trust Fund and the DLJ Small Company Value Fund, in municipal bonds
(including industrial development bonds). A Fund may be deemed to be
concentrated to the extent that it invests more than 25% of its
total assets in taxable municipal securities issued by a single
issuer;
3. Purchase securities on margin, but a Fund may obtain such short-term
credits from banks as may be necessary for the clearance of
purchases and sales of securities;
4. Make loans of its assets to any person, except for (i) the purchase
of publicly distributed debt securities, (ii) the purchase of
non-publicly distributed securities subject to paragraph 7, (iii)
the lending of portfolio securities, and (iv) the entering of
repurchase agreements;
5. Borrow money except for (i) the short-term credits from banks
referred to in paragraph 3 above and (ii) borrowings from banks for
temporary or emergency purposes, including the meeting of redemption
requests which might require the disposition of securities.
Borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5% of the
value of the Fund's total assets
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<PAGE>
(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 Small Company Value
Fund and the DLJ Growth and Income Fund, in connection with hedging
transactions, short sales (against the box), when issued and forward
commitment transactions and similar investment strategies;
7. Act as an underwriter of securities of other issuers, except that a
Fund may acquire restricted or not readily marketable securities
under circumstances where, if such securities were sold, the Funds
or the Advisor might be deemed to be an underwriter for purposes of
the Securities Act of 1933 and except, with respect to the DLJ Small
Company Value Fund, to the extent that in connection with the
disposition of portfolio securities such Fund may be deemed to be an
underwriter;
8. Invest more than 10%, or 15% in the case of the DLJ Municipal Trust
Fund, of the value of its net assets in the aggregate in restricted
securities or other instruments not having a ready market, including
repurchase
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<PAGE>
agreements not terminable within seven days; provided that the DLJ
Small Company Value Fund will not invest in restricted securities.
Securities freely saleable among qualified institutional investors
under special rules adopted by the Securities and Exchange
Commission ("Rule 144A Securities") are not considered to be subject
to legal restrictions on transfer and may be considered liquid if
they satisfy liquidity standards established by the Board of
Trustees. The continued liquidity of such securities is not as well
assured as that of publicly traded securities, and accordingly, the
Board of Trustees will monitor their liquidity. Restricted
securities will be valued in such manner as the Trustees of DLJ
Focus Funds in good faith deem appropriate to reflect their value;
9. With respect to the DLJ Core Equity Fund, the DLJ Fixed Income Fund,
the DLJ Municipal Trust Fund and the DLJ Growth and Income Fund,
invest in the securities of any issuer which has a record of less
than three years of continuous operation (including the operation of
any predecessor) if such purchase at the time thereof would cause
more than 10% of the value of the total assets of the Fund to be
invested in the securities of such issuer or issuers;
10. With respect to the DLJ Core Equity Fund, the DLJ Fixed Income Fund,
the DLJ Municipal Trust Fund and the DLJ Growth and Income Fund,
purchase or retain the securities of any issuer if, to the knowledge
of DLJ Focus Fund's management, those officers and Trustees of the
DLJ Focus
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<PAGE>
Fund 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 Core Equity Fund, the DLJ Fixed Income Fund,
the DLJ Municipal Trust Fund and the DLJ Growth and Income Fund,
invest more than 5% of the value of its total assets at the time an
investment is made in the non-convertible preferred stock of issuers
whose non-convertible preferred stock is not readily marketable,
subject to the limitation in paragraph 8;
12. With respect to the DLJ Core Equity Fund, the DLJ Fixed Income Fund,
the DLJ Municipal Trust Fund and the DLJ Growth and Income Fund,
participate on a joint or joint and several basis in any securities
trading account;
13. Issue any senior security within the meaning of the Investment
Company Act of 1940 (except to the extent that when-issued
securities transactions, forward commitments, stand-by commitments
or reverse repurchase agreements may be considered senior securities
and except, with respect to the DLJ Small Company Value Fund and the
DLJ Growth and Income Fund, that the hedging transactions in which
such Funds may engage and similar investment strategies are not
treated as senior securities);
14. Invest in real estate (other than money market securities secured by
real estate or interests therein or money market securities issued
by companies
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<PAGE>
which invest in real estate or interests therein and, with respect
to the DLJ Small Company Value Fund and the DLJ Growth and Income
Fund, other than mortgage-backed securities and similar
instruments), or commodities or commodity contracts except, with
respect to the DLJ Small Company Value Fund, for hedging purposes;
15. With respect to the DLJ Core Equity Fund, the DLJ Fixed Income Fund,
the DLJ Municipal Trust Fund and the DLJ Growth and Income Fund,
invest in the securities of other investment companies or investment
trusts except by purchase in the open market where no commission or
profit to a sponsor or dealer results from such purchase other than
the customary broker's commission, or except when such purchase,
though not in the open market, is part of a plan of merger,
acquisition or transfer of assets, or consolidation and except, with
respect to the DLJ Growth and Income Fund, for purchases of
securities of money market funds;
16. Invest in companies for the purpose of exercising control or
management;
or
17. With respect to the DLJ Municipal Trust Fund, make short sales of
securities.
The Funds do not consider the segregation of assets in connection
with any of their investment practices to be a mortgage, pledge or hypothecation
of such assets.
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<PAGE>
The following fundamental investment restrictions are applicable
only to the DLJ Fixed Income Fund and may not be changed with respect to the DLJ
Fixed Income Fund without the approval of the shareholders of the DLJ Fixed
Income Fund (as described above).
The DLJ Fixed Income Fund may not:
1. Write, purchase or sell puts, calls, straddles or spreads, or
combinations thereof;
or
2. Invest in oil, gas or other mineral exploration or development
programs.
(d) Temporary Defensive Position
The DLJ Core Equity Fund reserves the right, when the Adviser
determines it appropriate, to invest in investment-grade short-term fixed-income
securities and other investment-grade debt securities, enter into repurchase
agreements and hold cash for temporary defensive purposes.
The DLJ Fixed Income Fund may enter into repurchase agreements,
terminable within7 days or less, with respect to issues of the U.S. Treasury,
with member banks of the Federal Reserve System or primary dealers in U.S.
Government Securities, without limit for temporary defensive purposes.
The DLJ Municipal Trust Fund reserves the right to hold cash and
short-term fixed-income securities and to enter into repurchase agreements as
necessary for temporary defensive or emergency purposes, without limit, as
determined by the Adviser.
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--------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------------
(a) Trustees
The DLJ Focus Funds has Trustees who, in addition to overseeing the
actions of the Funds' Adviser and Distributor, decide upon matters of general
policy. The Trustees also review the actions of the officers of the DLJ Focus
Funds who conduct and supervise the daily business operations of the Funds.
The Trustees and principal officers of the DLJ Focus Funds, their
ages and their primary occupations during the past five years are set forth
below.
Position(s) Held Principal Occupation(s)
Name, Address and Age(1) with DLJ Focus Funds During Past 5 Years
------------------------ -------------------- -------------------
*G. MOFFETT COCHRAN (49) Chairman of the President and Chief
Board of Trustees Executive Officer of the
and President Adviser with which he has
been associated
since1992. Prior to his
association with DLJ Focus
Funds and the Adviser, Mr.
Cochran was a Senior Vice
President with Bessemer
Trust Companies.
RICHARD J. HANLON (34) Vice President Senior Vice President of
the Adviser, with which he
has been associated since
1994. Prior to his
becoming associated with
DLJ Focus Funds and the
Adviser, Mr. Hanlon was a
portfolio manager at
Manufacturers
Hanover/Chemical Bank.
STIG HOST (73) Trustee Chairman of the Board of
Kriti Exploration, Inc.,
Kriti Properties and
Development Corp. and
International Marine
Sales, Inc., a Trustee of
Alliance International
Fund, Alliance Global
Environmental Fund,
Alliance New Europe Fund,
Alliance All-Asia
Investment Fund and
Alliance Developing
Markets Fund and a
Director of Florida Fuels,
Inc. His address is 103
Oneida Drive, Greenwich,
CT 06830.
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<PAGE>
MARTIN JAFFE (53) Vice President, Managing Director and
Trustee, Chief Operating Officer of
Treasurer and the Adviser, with which he
Secretary has been associated since
prior to 1993.
CATHY A. JAMESON (46) Vice President Managing Director of the
Adviser with which she has
been associated since
prior to 1993.
BRIAN A. KAMMERER (42) Vice President Senior Vice President of
the Adviser, with which he
has been associated since
prior to 1993.
PETER F. KROGH (63) 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 (37) Vice President Senior Vice President of
the Adviser, with which
she has been associated
since 1993.
HUGH M. NEUBURGER (56) Vice President Managing Director of the
Adviser, with which he has
been associated since
March, 1995. Prior to his
association with DLJ Focus
Funds and the Adviser, Mr.
Neuburger was the
President of Hugh M.
Neuburger, Inc., a
consulting firm.
JOHN J. SHEEHAN (69) Trustee Consultant to Financial
Data Processing with which
he has been associated
since prior to 1990. His
address is 4 Bennington
Place, Newton, PA18940.
ROGER W. VOGEL (43) Vice President Managing Director of the
Adviser, positions he has
held since July, 1993.
Prior to his becoming
associated with DLJ Focus
Funds and the Adviser, Mr.
Vogel was a Vice President
with Chemical Banking Corp.
ROBERT E. FISCHER (69) Trustee Trustee of the DLJ Select
Funds, has been Member at
the law firm Wolf, Block,
Schorr and Solis-Cohen LLP
(or its predecessor firm)
since prior to 1994.
WILMOT H. KIDD, III (57) Trustee Trustee of the DLJ Select
Funds, has been President
of Central Securities
Corporation since prior to
1994.
--------------------------------------------------------------------------------
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<PAGE>
----------
(1) Unless otherwise specified, the address of each of such persons is 277
Park Avenue, New York, New York 10172.
* Those Trustees whose names are preceded by an asterisk are "interested
persons" of DLJ Focus Funds as defined by the Investment Company Act of
1940.
Messrs. Host and Krogh are members of the Audit Committee, whose
function is to oversee and monitor the integrity of the Funds' financial
reporting processes. Messrs. Bast and Cochran are members of the Dividend
Committee whose function is to declare dividends on behalf of the Trustees. All
of the Trustees who are not "interested persons" of DLJ Focus Funds as defined
by the Investment Company Act of 1940 are members of the Nominating Committee
whose function is to select persons for election as Trustees whenever a vacancy
shall exist. Messrs. Host and Sheehan are members of the Valuation Committee
whose function is to value the securities of each Fund in emergency situations.
The following table sets forth the aggregate compensation paid by
the DLJ Focus Funds to the Trustees who are not affiliated with the Adviser for
the fiscal year ended October 31,1999 and the aggregate compensation paid to
such Trustees for service on the Funds' Boards and that of all other investment
companies that are part of the same fund complex. Below are listed the Trustees
who have served the DLJ Focus Funds during its most recent fiscal year.
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<PAGE>
Compensation Table
<TABLE>
<CAPTION>
Pension or Total Compensation
Retirement from DLJ Focus
Benefits Accrued Funds and Fund
Aggregate As Part of DLJ Estimated Annual Complex Paid to
Compensation From Focus Funds Benefits Upon Trustees in
Name and Position DLJ Focus Funds(1) Expenses Retirement Current Fiscal Year
----------------- ------------------ ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Robert L. Bast* $ 10,000 None None $ 10,000
(Trustee)
Stig Host 11,000 None None 11,000
(Trustee)
Peter F. Krogh 11,000 None None 11,000
(Trustee)
Dennis G. Little* 8,000 None None 8,000
(Trustee)
William H. Mathers* 11,000 None None 11,000
(Trustee)
John J. Sheehan 10,000 None None 10,000
(Trustee)
William C. Simpson** 10,000 None None 10,000
(Trustee)
Stephen K. West* 6,000 None None 6,000
(Trustee)
Robert E. Fischer None None None None
(Trustee)
Wilmot H. Kidd, III None None None None
(Trustee)
</TABLE>
* Retired, April 27, 2000.
** Deceased, April, 2000.
(1) The Focus Funds anticipate paying each independent Trustee approximately
$11,500 in each calendar year.
The Trustees of DLJ Focus Funds who are officers or employees of the
Adviser or any of its affiliates receive no remuneration from DLJ Focus Funds.
Effective May 16, 2000, each of the Trustees who is not affiliated with the
Adviser will be paid a $2,500 fee for each board meeting attended, a $250 fee
for each Audit Committee meeting attended, a $500 fee for each special meeting
attended and an annual retainer of $2,000. For the year ended October 31, 1999,
such remuneration totaled $77,000.
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 Small
-48-
<PAGE>
Company Value Fund and the DLJ Growth and Income Fund, respectively, two
portfolios of the DLJ Focus Funds, on July 10, 1992.
(b) Control Persons
None.
(c) Principal Holders
To the best of the Fund's knowledge as of July 3, 2000, no
shareholder owned 5% or more of the outstanding Class A, Class B or Class D
shares of the DLJ Core Equity Fund, the DLJ Small Company Value Fund, or the DLJ
Growth and Income Fund. The Adviser manages accounts over which it has
discretionary power to vote or dispose of securities held in such accounts and
which accounts hold in the aggregate, as of July 3, 2000, 192,500 shares 1.87%
of the DLJ Core Equity Fund, 187,451 shares 1.77% of the DLJ Growth and Income
Fund, 1,303,363 shares 13.85% of the DLJ Small Company Value Fund, 459,980
shares 3.30% of the DLJ Fixed Income Fund, and 674,085 shares 26.00% of the DLJ
Municipal Trust Fund.
Set forth below is certain information as to persons who owned 5% or
more of a Fund's outstanding shares as of July 3, 2000:
Name and Address % of Class Nature of Ownership
DLJ Municipal Bankers Trust Company FBO 10.46% Record*
Trust Class A 2448094242 P.O. Box 9005
New York, NY 10008
-----------------
* Such Recordholder disclaims beneficial ownership.
-49-
<PAGE>
(d) Management Ownership
As of July 3, 2000, the Trustees and officers of DLJ Focus Funds as
a group owned beneficially less than 1.0% of all Funds.
-50-
<PAGE>
--------------------------------------------------------------------------------
INVESTMENT ADVISORY AND OTHER SERVICES
--------------------------------------------------------------------------------
(a) Investment Adviser
DLJ Asset Management Group, Inc. (formerly known as Wood, Struthers
& Winthrop Management Corp.), a Delaware corporation with principal offices at
277 Park Avenue, New York, New York 10172, has been retained under an Investment
Advisory Agreement as DLJ Focus Funds' investment adviser (see "Fund Management"
in the Prospectus). The Adviser succeeds Wood, Struthers & Winthrop Management
Corp. which was established in1871 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 AXA Financial, Inc. ("AXA Financial"), a holding company
controlled by AXA ("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 March 1, 2000, AXA owned 58.4% of the outstanding shares of
the common stock of AXA Financial. 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
-51-
<PAGE>
and reinsurance. The insurance operations are diverse geographically with
activities principally in Western Europe, North America and the Asia/Pacific
region. 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 March 1, 2000, 19.9%
of the issued ordinary shares (representing 31.5% 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 Colis,e
Vendome, a wholly-owned subsidiary of Finaxa, which owned 2.7% of the issued
ordinary shares (representing 4.25% of the voting power) of AXA and the interest
of les Ateliers deconstruction du Nord de la France-ANF ("ANF"), a 95.4% owned
subsidiary of Finaxa, which owned 0.4% of the issued ordinary shares
(representing 0.6% of the voting power) of AXA. As of March 1, 2000, 60.7% of
the issued ordinary shares (representing 70.7% of the voting power)of Finaxa
were owned by four French mutual insurance companies (the "Mutuelles AXA") and
22.3% of the issued ordinary shares (representing 13.3% of the voting power) of
Finaxa were owned by BNP-Paribas, a French bank ("BNP-Paribas"). Including the
ordinary shares owned by Finaxa and its subsidiaries on March 1, 2000, the
Mutuelles AXA directly and indirectly owned 23.2% of the issued ordinary shares
of AXA (representing 36.7% of the voting power). The Mutuelles AXA are parties
to agreements pursuant to which they have stated their intention to collectively
exercise majority control over Finaxa. The address of Donaldson, Lufkin &
Jenrette, Inc. is 277 Park Avenue, New York, New York 10172. The address of AXA
Financial is 787 Seventh Avenue, New York, New York 10019.
-52-
<PAGE>
The Investment Advisory Agreement became effective on July 22, 1992.
The Investment Advisory Agreement replaced an earlier, substantially identical
agreement (the "First Advisory Agreement") that terminated because of its
technical assignment as a result of AXA's acquisition of control over AXA
Financial. 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 DLJ Focus
Funds approved the Investment Advisory Agreement. The Investment Advisory
Agreement was approved with respect to the DLJ Municipal Trust Fund by the
Trustees on June 16, 1993 and by the then sole shareholder and the Adviser, on
July 26, 1993 and became effective with respect to the DLJ Municipal Trust Fund
on the same date. The Investment Advisory Agreement continues in force for
successive twelve month periods computed from the first day of each fiscal year
of DLJ Focus Funds 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, 2000 at a meeting of the Trustees on October 28,
1999.
Under the Investment Advisory Agreement, DLJ Focus Funds has agreed
to change its name to one that does not suggest an affiliation with the Adviser
in the event that the Adviser ceases to act as the DLJ Focus Funds' investment
adviser. Pursuant to the terms of the Investment Advisory Agreement, the Adviser
may retain, at
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<PAGE>
its own expense, a sub-adviser to assist in the performance of its services to
DLJ Focus Funds, although such an arrangement is not currently contemplated.
Certain other clients of the Adviser may have investment objectives
and policies similar to those of the DLJ Focus Funds. The Adviser may, from time
to time, make recommendations which result in the purchase or sale of a
particular security by its other clients simultaneously with the DLJ 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 DLJ Focus Funds. When two or more of the clients of the Adviser
(including the DLJ 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, 1999, 1998 and 1997 the DLJ
Core Equity Fund paid the Adviser fees of $984,475, $791,152 and $636,464
respectively; the DLJ Small Company Value Fund paid the Adviser fees of
$1,826,662, $2,257,326 and $1,993,178 respectively; the DLJ Fixed Income Fund
paid the Adviser fees of $641,978, $347,059 and $354,902 respectively; the DLJ
Growth and Income Fund paid the Adviser fees of $1,377,123, $1,138,550 and
$915,897 respectively; and the DLJ Municipal Trust Fund paid the Adviser fees of
$247,109, $252,180 and $234,803 respectively. During the fiscal years ended
October 31, 1999, 1998 and 1997, the Adviser reimbursed the DLJ Fixed Income
Fund $157,981, $164,206 and $164,718 respectively, and the DLJ
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<PAGE>
Municipal Trust Fund $163,442, $165,742 and $269,050 respectively, for operating
expenses.
The Fund intends to enter into arrangements with certain
broker-dealers (including affiliates of the Distributor) whose customers are DLJ
Focus Funds shareholders pursuant to which the broker-dealers may perform
shareholder servicing functions, such as opening new shareholder accounts,
processing purchase and redemption transactions, and responding to certain
inquiries regarding a Fund's performance and the status of shareholder accounts.
A Fund may pay for the electronic communications equipment maintained at the
broker-dealers' offices that permits access to the Fund's computer files and, in
addition, may reimburse the broker-dealers at cost for personnel expenses
involved in providing the services.
(b) Principal Underwriter, Distributor and Rule 12b-1 Plans
The address of the Distributor is 277 Park Avenue, New York, New
York 10172.
Pursuant to Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940, DLJ Focus Funds has adopted
a Distribution Agreement (the "Distribution Agreement") and 12b-1 Plans for
Class A shares, Class B shares, Class C shares and Class R shares of each Fund
to permit DLJ Focus Funds 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 DLJ Focus Funds reports the amounts expended
under the
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<PAGE>
Distribution Agreement and the purposes for which such expenditures were made to
the Trustees of DLJ Focus Funds on a quarterly basis. Also, the 12b-1 Plans
provide that the selection and nomination of disinterested Trustees (as defined
in the Investment Company 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 DLJ
Focus Funds nor have any direct or indirect financial interest in the
Distribution Agreement, the 12b-1 Plans or in any other agreement related to the
12b-1 Plans, cast in person at a meeting called for the purpose of voting on
such approval.
The Distribution Agreement and 12b-1 Plans for the Class A shares
and Class B shares 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 28, 1999. 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. The Distribution Agreement and 12b-1
Plans for the Class C shares were initially approved by the Trustees, including
a majority of the disinterested Trustees, on January 27, 2000. The Class C 12b-1
Plans were approved by the sole Class C shareholder of each Fund on February 25,
2000. The Class R 12b-1 Plans were initially approved by the Trustees, including
a majority of the disinterested Trustees, on May 16, 2000. The Class
-56-
<PAGE>
R 12b-1 Plans were approved by the sole Class R shareholder of each Fund on July
31, 2000.
As approved, the Class A Plans currently provide that a service fee
of .25 of 1% per year 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. The Class C 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 C shares of the Fund may be paid as compensation to the Distributor
for its services. The Class R Plans provide that a service fee of .25 of 1% per
year of the average daily net assets of the Class R 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 DLJ Focus Funds nor have any direct or indirect financial
interest in the 12b-1 Plans or any related agreement, cast in person at a
meeting called for the purpose of voting on such approval. In addition to such
Trustee approval, the 12b-1 Plans may not be amended in order to increase
materially the costs which the Funds may bear pursuant to the 12b-1 Plans
without the approval of a majority of the outstanding shares of each class of
shares of each Fund, voting separately. The 12b-1 Plans may be terminated
without penalty at any time by a majority vote of the disinterested Trustees, by
a majority vote of
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<PAGE>
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,
1999, distribution fees paid or payable with respect to Class A shares and Class
B shares for each fund were as follows:
Fund Class A Shares Class B Shares
---------------------------------------------------------------------------
DLJ Core Equity Fund $362,168 $252,991
DLJ Fixed Income Fund 133,853 54,120
DLJ Small Company Value Fund 632,837 213,205
DLJ Growth and Income Fund 522,846 389,799
DLJ Municipal Trust Fund 114,538 13,582
During the year ended October 31, 1999, 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:
Fund Initial Sales Charges CDSC
---------------------------------------------------------------------------
DLJ Core Equity Fund 32,325 51,829
DLJ Fixed Income Fund 1,925 18,054
DLJ Small Company Value Fund 7,914 109,113
DLJ Growth and Income Fund 24,733 81,404
DLJ Municipal Trust Fund 575 9,847
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<PAGE>
During the year ended October 31, 1999, the Distributor expended
$1,135,379 in respect of the DLJ Core Equity Fund in distributing such Fund's
shares. Of such amount, it is estimated that $93,485 was spent on advertising;
$22,488 was spent on printing and mailing of prospectuses to other than current
shareholders; $0 was spent on compensation to underwriters; $567,937 was spent
on compensation to broker-dealers; $377,000 was spent on compensation to sales
personnel; and $74,469 was spent on other distributing and consulting costs.
During the year ended October 31, 1999, the Distributor expended
$318,087 in respect of the DLJ Fixed Income Fund in distributing such Fund's
shares. Of such amount, it is estimated that $35,835 was spent on advertising;
$7,735 was spent on printing and mailing of prospectuses to other than current
shareholders; $0 was spent on compensation to underwriters; $102,702 was spent
on compensation to broker-dealers; $144,986 was spent on compensation to sales
personnel; and $26,829 was spent on other distributing and consulting costs.
During the year ended October 31, 1999, the Distributor expended
$1,400,244 in respect of the DLJ Small Company Value Fund in distributing such
Fund's shares. Of such amount, it is estimated that $167,861 was spent on
advertising; $40,854 was spent on printing and mailing of prospectuses to other
than current shareholders; $0 was spent on compensation to underwriters;
$372,538 was spent on compensation to broker-dealers; $686,272 was spent on
compensation to sales personnel; and $132,719 was spent on other distributing
and consulting costs.
During the year ended October 31, 1999, the Distributor expended
$1,435,140 in respect of the DLJ Growth and Income Fund in distributing such
Fund's
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<PAGE>
shares. Of such amount, it is estimated that $144,840 was spent on advertising;
$34,758 was spent on printing and mailing of prospectuses to other than current
shareholders; $0 was spent on compensation to underwriters; $555,848 was spent
on compensation to broker-dealers; $587,273 was spent on compensation to sales
personnel; and $112,421 was spent on other distributing and consulting costs.
During the year ended October 31, 1999, the Distributor expended
$229,573 in respect of the DLJ Municipal Trust Fund in distributing such Fund's
shares. Of such amount, it is estimated that $28,530 was spent on advertising;
$6,533 was spent on printing and mailing of prospectuses to other than current
shareholders; $0 was spent on compensation to underwriters; $49,696 was spent on
compensation to broker-dealers; $122,391 was spent on compensation to sales
personnel; and $22,423 was spent on other distributing and consulting costs.
The Distribution Agreement also provides that the Distributor will
serve as distributor for the Class D shares without compensation from the Funds.
The Distributor commenced distribution of Class R shares as of
August 1, 2000.
(c) Other Service Providers
Citibank, N.A. serves as Custodian for the Funds' portfolio
securities and cash and in that capacity maintains certain records pursuant to
an agreement with the DLJ Focus Funds.
PFPC, Inc., 211 S. Gulph Road, King of Prussia, PA 19406-3101,
serves as Transfer Agent to the DLJ Focus Funds and provides customary transfer
agency
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<PAGE>
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 Focus Funds.
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<PAGE>
--------------------------------------------------------------------------------
BROKERAGE ALLOCATION AND OTHER PRACTICES
--------------------------------------------------------------------------------
Subject to the general supervision of the Board of Trustees of DLJ
Focus Funds, the Adviser is responsible for the investment decisions and the
placing of the orders for portfolio transactions for DLJ Focus Funds. Portfolio
transactions for the DLJ Municipal Trust Fund and the DLJ Fixed Income Fund
occur primarily with issuers, underwriters or major dealers acting as
principals, while transactions for the DLJ Core Equity Fund, the DLJ Small
Company Value Fund and the DLJ Growth and Income Fund are normally effected by
brokers.
DLJ Focus Funds has no obligation to enter into transactions in
portfolio securities with any broker, dealer, issuer, underwriter or other
entity. In placing orders, it is the policy of DLJ Focus Funds to obtain the
best price and execution for its transactions. Where best price and execution
may be obtained from more than one broker or dealer, the Adviser may, in its
discretion, purchase and sell securities through brokers and dealers who provide
research, statistical and other information to the Adviser. Such services may be
used by the Adviser for all of its investment advisory accounts, and
accordingly, not all such services may be used by the Adviser in connection with
DLJ Focus Funds. If DLJ Focus Funds determines in good faith that the amount of
transaction costs charged by a broker or dealer is reasonable in relation to the
value of the brokerage and research and statistical services provided by the
executing broker or dealer, DLJ Focus Funds may utilize such broker or dealer
although the transaction costs of another broker or dealer are lower. The
supplemental information
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<PAGE>
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, 1999, commissions of
$76,049, $54,173 and $50,262 related to transactions of $41,949,685, $44,980,186
and $15,969,390 were paid to brokers that provided research or other services to
the DLJ Core Equity Fund, the DLJ Growth and Income Fund and the DLJ Small
Company Value Fund, respectively.
The investment information provided to the Adviser is of the types
described in Section 28(e)(3) of the Securities Exchange Act of 1934 and is
designed to augment the Adviser's own internal research and investment strategy
capabilities. Research and statistical services furnished by brokers through
which DLJ Focus Funds effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with respect to all its
client accounts but not all such services may be utilized by the Adviser in
connection with DLJ Focus Funds.
The DLJ Core Equity Fund, the DLJ Small Company Value Fund and the
DLJ Growth and Income Fund may deal in some instances in equity securities which
are not listed on a national securities exchange but are traded in the
over-the-counter market. In addition, most transactions for the DLJ Municipal
Trust Fund and the DLJ Fixed Income Fund are executed in the over-the-counter
market. Where transactions are executed in the over-the-counter market, DLJ
Focus Funds seeks to deal with the primary market-makers; but when necessary in
order to obtain the best price and execution, it
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<PAGE>
utilizes the services of others. In all cases, DLJ Focus Funds will attempt to
negotiate best execution.
DLJ Focus Funds may from time to time place orders for the purchase
or sale of securities (including listed call options) with DLJ Securities, the
Distributor, or other affiliates in accordance with the provisions of Section
11(a) of the Securities Exchange Act of 1934 referred to below. With respect to
orders placed with DLJ Securities for execution on a national securities
exchange, commissions received must conform to Section 17(e)(2)(A) of the
Investment Company Act of 1940 and Rule 17e-1 thereunder, which permit an
affiliated person of a registered investment company (such as DLJ Focus Funds),
or any affiliated person of such person, to receive a brokerage commission from
such registered investment company provided that such commission is reasonable
and fair compared to the commissions received by other brokers in connection
with comparable transactions involving similar securities during a comparable
period of time.
Pursuant to Section 11(a) of the Securities Exchange Act of 1934,
DLJ Securities and its affiliates are restricted as to the nature and extent of
the brokerage services they may perform for DLJ Focus Funds. The Securities and
Exchange Commission has adopted rules under Section 11(a)which permit an
investment adviser to a registered investment company, or the adviser's
affiliates, to receive compensation for effecting, on a national securities
exchange, transactions in portfolio securities of such investment company,
including causing such transactions to be transmitted, executed, cleared and
settled and arranging for unaffiliated brokers to execute such transactions.
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<PAGE>
To the extent permitted by such rule, DLJ Securities and its
affiliates may receive compensation relating to transactions in portfolio
securities of DLJ Focus Funds provided that DLJ Focus Funds 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 Focus Funds have
granted authorization conforming to the requirements of Section 11(a) to the
Adviser to effect transactions in portfolio securities of DLJ Focus Funds
through its affiliates, DLJ Securities and Autranet, Inc.
The tables below show certain information regarding the payment of
commissions by the DLJ Core Equity Fund, the DLJ Small Company Value Fund and
the DLJ Growth and Income Fund for the three years ending October 31, 1999.
<TABLE>
<CAPTION>
Fiscal Years ended October 31,
---------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Core Equity Fund .. $150,653 $63,125 $97,707
Total dollar amount paid to Autranet, Inc. ........................ $24,637 $0 $1,722
Percentage of total brokerage commissions paid to Autranet, Inc. .. 16.4% 0% 1.8%
Total dollar amount paid to Donaldson, Lufkin & Jenrette
Securities Corporation ............................................ $19,912 $11,200 $2,105
Percentage of total brokerage commissions paid to Donaldson,
Lufkin & Jenrette Securities Corporation .......................... 13.2% 17.7% 2.2%
Percentage of aggregate dollar amount of transactions involving
the payment of commissions to Donaldson, Lufkin & Jenrette
Securities Corporation ............................................ 10.6% 11.9% 2.1%
</TABLE>
<TABLE>
<CAPTION>
Fiscal Years ended October 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Small Company
Value Fund ........................................................ $338,342 $468,261 $228,166
Total dollar amount paid to Autranet, Inc. ........................ $24,070 $59,082 $18,403
Percentage of total brokerage commissions paid to Autranet, Inc. .. 6.2% 12.6% 8.1%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Fiscal Years ended October 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Growth and
Income Fund ....................................................... $120,954 $141,358 $111,814
Total dollar amount paid to Autranet, Inc. ........................ $25,758 $29,410 $17,752
Percentage of total brokerage commissions paid to Autranet, Inc. .. 21.3% 20.8% 15.9%
Total dollar amount paid to Donaldson, Lufkin & Jenrette
Securities Corporation ............................................ $1,050
Percentage of total broker commissions paid to Donaldson,
Lufkin & Jenrette Securities Corporation .......................... 0.6%
Percentage of aggregate dollar amount of transactions involving
the payment of commissions to Donaldson, Lufkin & Jenrette
Securities Corporation ............................................ 0.9%
</TABLE>
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<PAGE>
--------------------------------------------------------------------------------
CAPITAL STOCK
AND ORGANIZATION
--------------------------------------------------------------------------------
Each Fund of the DLJ Focus Funds is authorized to issue an unlimited
number of shares of beneficial interest per share divided into four classes,
designated Class A, Class B, Class C and Class R. In addition, DLJ Core Equity
Fund, DLJ Growth and Income Fund and DLJ Fixed Income Fund are also authorized
to issue an unlimited number of shares of beneficial interest per share,
designated Class D. Each class of shares represents an interest in the same
assets of a Fund and is identical in all respects except that (i) each class is
subject to different sales charges and distribution and/or service fees (except
for Class D shares, which are not subject to any sales charges and distribution
and/or service fees), which may affect performance, (ii) each class has
exclusive voting rights on any matter submitted to shareholders that relates
solely to its arrangement and has separate voting rights on any matter submitted
to shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv) only
Class B shares have a conversion feature, (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. and (vi) Class R shares
which are exclusively available to eligible institutions (including the Pershing
division of Donaldson, Lufkin & Jenrette Securities Corporation and certain of
its affiliates) on behalf of their clients (individuals who do not purchase
shares directly). Class R shares are sold primarily to financial service
providers acting on behalf of customers having an
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investment account(s) or relationship at such institution, or to customers who
have received and hold shares of the Fund distributed to them by virtue of such
an account or relationship. Institutions effecting transactions in Class R
Shares for the accounts of clients may charge such clients direct fees in
connection with such transactions. In accordance with the DLJ Focus Funds'
Amended and Restated Agreement and Declaration of Trust, the Trustees may
authorize the creation of additional series and classes within such series, with
such preferences, privileges, limitations and voting and dividend rights as the
Trustees may determine. Currently, the Fund is offering four classes of shares,
designated Class A, Class B, Class C and Class R for each of the DLJ Focus Funds
and, in addition, Class D shares for the DLJ Core Equity Fund, DLJ Growth and
Income Fund and DLJ Fixed Income Fund.
The Trust was formed on November 26, 1985 as a "business trust"
under the laws of The Commonwealth of Massachusetts. Under Massachusetts law,
shareholders of a business trust, unlike shareholders of a corporation, could be
held personally liable as partners for the obligations of the trust under
certain circumstances. The Amended and Restated Agreement and Declaration of
Trust, however, provides that shareholders of DLJ Focus Funds shall not be
subject to any personal liability for the acts or obligations of DLJ Focus Funds
and that every written obligation, contract, instrument or undertaking made by
DLJ Focus Funds shall contain a provision to that effect. Upon payment of any
liability, the shareholder will be entitled to reimbursement from the general
assets of the appropriate Fund. The Trustees intend to conduct the operation of
DLJ Focus Funds, with the advice of counsel, in such a way as to avoid, to the
extent possible, ultimate liability of the shareholders for liabilities of DLJ
Focus Funds.
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The Amended and Restated Agreement and Declaration of Trust further
provide that no Trustee, officer, employee or agent of DLJ Focus Funds is liable
to DLJ Focus Funds or to a shareholder, nor is any Trustee, officer, employee or
agent liable to any third persons in connection with the affairs of DLJ Focus
Funds, except such liability as may arise from his or its own bad faith, willful
misfeasance, gross negligence or reckless disregard of his or its duties. It
also provides that all third parties shall look solely to the property of DLJ
Focus Funds or the property of the appropriate Fund for satisfaction of claims
arising in connection with the affairs of DLJ Focus Funds or of the particular
Fund, respectively. With the exceptions stated, the Amended and Restated
Agreement and Declaration of Trust permits the Trustees to provide for the
indemnification of Trustees, officers, employees or agents of DLJ Focus Funds
against all liability in connection with the affairs of DLJ Focus Funds.
All shares of DLJ Focus Funds when duly issued will be fully paid
and non-assessable. The Trustees are authorized to re-classify and issue any
unissued shares to any number of additional series or classes without
shareholder approval. Accordingly, the Trustees in the future, for reasons such
as the desire to establish one or more additional Funds with different
investment objectives, policies or restrictions, may create additional series or
classes of shares. Any issuance of shares of such additional series or classes
would be governed by the Investment Company Act of 1940 and the laws of the
Commonwealth of Massachusetts.
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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 DLJ Focus Funds 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 or Class C shares of each Fund, subject to a
contingent deferred sales charge or "CDSC" upon redemption. Class R shares of
each Fund are offered without any sales charge (but are subject to a
distribution and/or servicing fee). Class D shares of the DLJ Core Equity Fund,
the DLJ Growth and Income Fund, and the DLJ Fixed Income Fund are offered to
employees of Donaldson, Lufkin & Jenrette Inc. and its subsidiaries that are
eligible to participate in the 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
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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, (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. and (vi) Class R shares which are exclusively
available to eligible institutions (including the Pershing division of
Donaldson, Lufkin & Jenrette Securities Corporation and certain of its
affiliates) on behalf of their clients (individuals who do not purchase shares
directly). Class R shares are sold primarily to financial service providers
acting on behalf of customers having an investment account(s) or relationship at
such institution, or to customers who have received and hold shares of the Fund
distributed to them by virtue of such an account or relationship. Institutions
effecting transactions in Class R Shares for the accounts of clients may charge
such clients direct fees in connection with such transactions.
To open a new account by wire, first call DLJ Funds at
1-800-225-8011 (option #2) to obtain an account number. A representative will
instruct you to send a completed, signed application to the Transfer Agent.
Accounts cannot be opened without a completed, signed application and a fund
account number. Contact your bank to arrange a wire transfer to:
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Boston Safe Deposit & Trust
ABA #011001234
For: PFPC, Inc.
A/C #006068
Attn: DLJ 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 shareholder's investment. Federal funds are
a bank's deposits in a Federal Reserve Bank. These funds can be transferred by
Federal Reserve wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately available
funds; similar immediate availability is accorded monies received at Citibank by
bank wire. Investors should note that their banks may impose a charge for this
service. Money transmitted by a check drawn on a 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 the
Funds and to facilitate the immediate redemption of shares, share certificates
are not issued except upon the written
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request of a shareholder and payment of a fee in the amount of $50 for such
share issuance. The Funds retain the right to waive such fee in their sole
discretion.
Brokerage firms and other intermediaries which have entered into the
appropriate selling or service agreement with the Funds' are authorized to
accept orders on the Funds' behalf. Shareholders maintaining Fund accounts
through brokerage firms and other intermediaries 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 intermediary 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.
A Fund may also issue its shares in return for securities or other
assets, subject to approval of the Board of Trustees.
(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.
Redemptions
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of Class C shares will be subject to a CDSC of 1% if such redemptions occur
within one year of purchase of the shares redeemed. Class A shares issued upon
conversion of shares of a DLJ Focus Fund purchased prior to August 1, 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 charged on
Converted Shares 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, the
CDSC for Class B shares, Class C shares, and Converted 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) liquidations, distributions or loans from the following types of
retirement plans: (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;
(3) redemptions as a result of shareholder death or disability (as defined in
the Code);
(4) redemptions made pursuant to the DLJ Focus Funds' systematic withdrawal
plan up to 1% monthly or 3% quarterly of the account's total purchase
payments (excluding dividend reinvestment) not to exceed 12% 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);
and
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(5) a total or partial redemption related to certain distributions from
retirement plans or accounts at age 70 1/2, which are permitted without
penalty pursuant to the Internal Revenue Code.
Redemptions effected by DLJ Focus Funds 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. In the case of Class B shares and Class C 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 from the first day of the month after
the initial purchase, excluding the time shares were held in a money market
fund, if the initial purchase was made in such money market fund.
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The following table sets forth the rates of the CDSC applicable to
redemptions of Class B shares:
Contingent Deferred
Sales Charge as a
Percentage of Dollars
Year Since Purchase Invested of Redemption
Payment Made Proceeds
------------------- ----------------------
First................. 4.0%
Second................ 3.0%
Third................. 2.0%
Fourth................ 1.0%
Fifth................. 0.0%
Sixth................. 0.0%
Seventh............... 0.0%
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 at the discretion of the Trustees and taken at
their value used in determining the redemption price), or partly in cash and
partly in portfolio securities. However, payments will be made wholly in cash
unless the Trustees believe that economic conditions exist which would make such
a practice detrimental to the best interest of DLJ Focus Funds. DLJ Focus Funds
has filed a formal election with the Securities and Exchange Commission pursuant
to which DLJ Focus Funds will only effect a redemption in portfolio securities
where the particular shareholder of record is redeeming more than $250,000 or 1%
of a Fund's total net assets, whichever is less,
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during any 90 day period. In the opinion of DLJ Focus Funds' management,
however, the amount of a redemption request would have to be significantly
greater than $250,000 or 1% of total net assets of a Fund before a redemption
wholly or partly in portfolio securities would be made. If payment for shares
redeemed is made wholly or partly in portfolio securities, brokerage costs may
be incurred by the investor in converting the securities to cash. See the
Prospectus for a description of the CDSC which may be applicable to certain
redemptions.
To redeem shares represented by share certificates, investors should
forward the appropriate share certificates, endorsed in blank or with blank
stock powers attached, to DLJ Focus Funds with the request that the shares
represented thereby or a specified portfolio thereof be redeemed at the next
determined net asset value per share. The share assignment form on the reverse
side of each share certificate surrendered to DLJ Focus Funds for redemption
must be signed by the registered owner or owners exactly as the registered name
appears on the face of the certificate or, in the alternative, a stock power
signed in the same manner may be attached to the share certificate or
certificates, or, where tender is made by mail, separately mailed to DLJ Focus
Funds. The signature or signatures on the assignment form must be guaranteed in
the manner described below.
If the total value of the shares being redeemed exceeds $50,000
(before deducting any applicable CDSC) 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
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include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
A broker-dealer guaranteeing signatures must be a member of a clearing
corporation or maintain net capital of at least $100,000. Credit unions must be
authorized to issue signature guarantees. Signature guarantees will be accepted
from any eligible guarantor institution which participates in a signature
guarantee program. Additional documents may be required for redemption of
corporate, partnership or fiduciary accounts.
The requirement for a guaranteed signature is for the protection of
the shareholder in that it is intended to prevent an unauthorized person from
redeeming his shares and obtaining the redemption proceeds.
(d) Exchanges
Class A, Class B, Class C or Class R shares of a Fund may be
exchanged by mail or telephone for shares of the same class of another Fund or
for shares of the DLJ Opportunity Funds or DLJ Select Funds, each investment
companies managed by the Adviser and an affiliate of the Adviser. The DLJ
Opportunity Funds are currently comprised of five portfolios: the DLJ Developing
Markets Fund, and the DLJ International Equity Fund (the "Opportunity
International Funds") and together with the DLJ High Income Fund (the
"Opportunity Long-term Funds"), and the DLJ Municipal Money Fund and DLJ U.S.
Government Money Fund (the "DLJ Opportunity Money Funds"). The DLJ Select Funds
are currently comprised of two portfolios: The DLJ Growth Fund and DLJ
Technology Fund. Shares exchanged from a Fund must be exchanged for the same
class of shares of the DLJ Opportunity Long-term Funds or DLJ
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Select Funds. Each DLJ Opportunity Long-term Fund and DLJ Select Fund portfolio
offers four classes of shares: Class A shares, Class B shares, Class C shares
and Class R shares. Class A shares are sold with a front-end sales charge of up
to 5.75% for the Opportunity International Funds and DLJ Select Funds and up to
4.75% for the DLJ High Income Fund. In addition, Class A shares of the
Opportunity Long-term Funds and DLJ Select Funds are sold with a 12b-1 fee of
.25% annually. Class B shares 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. Class C shares are sold subject to a CDSC of 1% if such shares are
redeemed within one year of purchase, and a 12b-1 fee of 1% annually. Class R
shares are subject to a 12b-1 fee of 0.25% annually. In addition, the DLJ High
Income Fund, DLJ International Equity Fund and DLJ Technology 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 Opportunity Money Fund Portfolio
currently offers only one class of shares, and is subject to a 12 b-1 fee of
.25% annually.
Class A shares subject to a CDSC as described in the Prospectus and
Class B shares and Class C shares which are exchanged for shares of the DLJ
Opportunity Funds and DLJ Select 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, PFPC, Inc.,
211 S. Gulph Road, King of Prussia, PA
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19406-3101, Attn.: DLJ 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 Opportunity Funds, the exchange
privilege is available only in those jurisdictions where shares of the relevant
Fund may be legally sold. Prospectuses for the DLJ Opportunity Funds may be
obtained from DLJ at the address or telephone number listed on the cover page of
the Prospectus. An exchange is effected on the basis of each Fund's relative NAV
next computed following receipt of an order for such exchange from the
shareholder. In addition, the exchange privilege is available only when payment
for the shares to be redeemed has been made and the shares exchanged are held by
the Transfer Agent or Distributor.
Only those shareholders who have had shares in a Fund for at least
seven days may exchange all or part of those shares for shares of another Fund
or one of the DLJ Opportunity Fund sand 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 $1,000.
All exchanges into the DLJ Opportunity Funds are subject to the
minimum investment requirements and any other applicable terms set forth in the
Prospectus for the relevant DLJ Opportunity Fund whose shares are being
acquired. If for these or other reasons the exchange cannot be effected, the
shareholder will be so notified.
A shareholder of DLJ Focus Funds who has exchanged shares for shares
of the DLJ Opportunity Funds will have all of the rights and privileges of a
shareholder of the relevant DLJ Opportunity Fund or DLJ Select Funds.
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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
Opportunity Funds. Shareholders who engage in such frequent transactions may be
prohibited or restricted from placing future exchange orders.
(e) Systematic Withdrawal Plan
Shares of a Fund owned by a participant in DLJ Focus Funds'
systematic withdrawal plan will be redeemed as necessary to meet withdrawal
payments. A CDSC which would otherwise be imposed will be waived in connection
with redemptions made pursuant to DLJ Focus Funds' systematic withdrawal plan of
up to 1% monthly or 3% quarterly of an account (excluding dividend
reinvestments) not to exceed 12% over any 12 month rolling period; however, the
CDSC will not be waived for systematic withdrawals elected on a semi-annual or
annual basis. See "How to Buy and Sell Shares" in the Prospectus for a
description of the CDSC. A shareholder's systematic withdrawal plan may be
terminated at any time by the shareholder or DLJ Focus Funds.
Redemption of shares for withdrawal purposes may reduce or even
liquidate an account. While an occasional lump sum investment may be made by a
shareholder who is maintaining a systematic withdrawal plan, such investment
should normally be an amount equivalent to three times the annual withdrawal or
$5,000 whichever is less.
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SHAREHOLDER INVESTMENT ACCOUNT
--------------------------------------------------------------------------------
Each Fund may be a suitable investment vehicle for part or all of
the assets held in various tax-sheltered retirement plans, such as those listed
below. Semper Trust Company serves as custodian under these prototype retirement
plans and charges an annual account maintenance of $15 per participant,
regardless of the number of Funds selected. Persons desiring information
concerning these plans should write or telephone the Focus Funds' Transfer
Agent. 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
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may be subject to penalties or additional taxes on contributions to or
withdrawals from traditional IRAs under certain circumstances.
The Adviser has available a prototype form of the new Roth IRA.
Unlike traditional IRAs, contributions to a Roth IRA are not currently
deductible. However, amounts within a Roth IRA account will accumulate tax-free,
and qualified distributions from a Fund held within such an account will not be
included in a shareholder's taxable income. An individual may contribute a
maximum of $2,000 annually to a Roth IRA ($4,000 for joint returns). However,
such limit is calculated in the aggregate with contributions to traditional
IRAs. Roth IRAs are not available to individuals above certain income levels.
The Adviser also has available a prototype form of the new Education
IRA for investment in shares of any one or more DLJ Focus Funds. Like the Roth
IRA, contributions are not currently deductible. However, the investment
earnings accumulate tax-free, and qualifying distributions used for higher
education expenses are not taxable. An individual may contribute a maximum of
$500 per account annually. In addition, Educational IRA's are not available to
individuals above certain income levels.
(b) Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA is available for investment and may be established on a
group basis by an employer who wishes to sponsor a tax-sheltered retirement
program by making IRA contributions on behalf of all eligible employees.
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(c) Savings Incentive Match Plan for Employees ("SIMPLE") -- SIMPLE
IRA and SIMPLE 401(k)
SIMPLE plans offer employers with 100 or fewer eligible employees
who earned at least $5,000 from the employer in the preceding calendar year the
ability to establish a retirement plan that permits employee contributions. An
employer may also elect to make additional contributions to these Plans. Please
telephone DLJ Focus Funds' shareholder servicing representatives at (800)
225-8011 for more information.
(d) Employer-Sponsored Retirement Plans
The Adviser has a prototype retirement plan available which provides
for investment of plan assets in shares of any one or more of the Focus Funds.
The prototype retirement plan maybe used by sole proprietors and partnerships as
well as corporations to establish a tax qualified profit sharing plan or money
purchase pension plan (or both) of their own.
Under the prototype retirement plan, an employer may make annual
tax-deductible contributions for allocation to the accounts of the plan
participants to the maximum extent permitted by the federal tax law for the type
of plan implemented. The Adviser has received favorable opinion letters from the
IRS stating that the prototype retirement plan is acceptable by qualified
employers.
(e) Self-Directed Retirement Plans
Shares of the Focus Funds may be suitable for self-directed IRA
accounts and prototype retirement plans such as those developed by Donaldson,
Lufkin & Jenrette Securities Corporation, an affiliate of the Adviser and DLJ
Focus Funds' Distributor.
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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 and
Class C shares will generally be lower than the net asset value of Class A
shares as a result of the larger distribution and service fees imposed on Class
B and Class C shares. The net asset value of Class A shares and Class R shares
will generally be lower than the net asset value of Class D shares because Class
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D shares are not subject to any distribution or service fees. It is expected
that the net asset value of Class A shares, Class B shares, Class C shares,
Class D shares and Class R shares will tend to converge immediately after the
recording of dividends, if any, which will differ in amount by approximately the
differential of the accrual of distribution fees.
For purposes of the computation of net asset value, each of the
Funds value securities held in their respective portfolios as follows: readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price at the close of the
New York Stock Exchange on the business day as of which such value is being
determined. If there has been no sale on such day, the securities are valued at
the mean of the closing bid and asked prices on such day, unless it is
determined that such mean does not reasonably reflect true market value, in
which case such value shall be taken at such amount as shall be deemed
reasonable by Trustees of DLJ Focus Funds, but not less than said bid price nor
more than said asked price. If no bid or asked prices are quoted on such day,
then the security is valued by such method as the Trustees of DLJ Focus Funds
shall determine in good faith to reflect its fair value.
Readily marketable securities, including certain options, not listed
on the New York Stock Exchange but listed on other national securities exchanges
or admitted to trading on the Nasdaq National Market are valued in a like
manner. Portfolio securities traded on more than one national securities
exchange are valued at the last sale price on the business day as of which such
value is being determined at the close of the exchange representing the
principal market for such securities.
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Readily marketable securities, including certain options traded only
in the over-the-counter market, and listed securities whose primary market is
believed by the Adviser to be over-the-counter (excluding those admitted to
trading on The Nasdaq National Market) are valued at the mean of the current bid
and asked prices as reported by The Nasdaq National Market, or in the case of
securities not quoted on The Nasdaq National Market, the National Quotation
Bureau, Inc. or such other comparable source that the Trustees of the Fund deem
appropriate to reflect their fair market value. However, fixed-income securities
(except short-term securities) may be valued on the basis of prices provided by
a pricing service when such prices are believed by the Adviser to reflect the
fair market value of such securities. The prices provided by a pricing service
are determined without regard to bid or last sale prices but take into account
institutional size trading in similar groups of securities and any developments
related to specific securities. The money market securities in which each Fund
invests are traded primarily in the over-the-counter market and are valued at
the mean between most recent bid and asked prices as obtained from dealers that
make markets in such securities, except for securities having 60 days or less
remaining until maturity which are stated at amortized cost. Portfolio
securities underlying listed call options will be valued at their market prices
and reflected in net assets accordingly. Premiums received on call options
written by the Fund will be included in the liability section of the Statement
of Assets and Liabilities as a deferred credit and subsequently adjusted
(marked-to-market) to the current market value of the option written.
Investments for which market quotations are not readily available are valued at
fair value as determined in good faith by the Trustees of DLJ Focus Funds.
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TAXES, DIVIDENDS, AND DISTRIBUTIONS
--------------------------------------------------------------------------------
Each of the Funds has elected to qualify and intends to remain
qualified as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, a Fund will not be subject to federal income taxes if at least 90% of
its net investment income and net short-term capital gains less any available
capital loss carryforwards are distributed to shareholders within allowable time
limits. However, a Fund will be subject to tax on its income and gains to the
extent that it does not distribute to its shareholders an amount equal to such
income and gains. In addition, a Fund will be subject to a nondeductible 4%
excise tax to the extent that it does not make distributions to its shareholders
on a basis such that the distributions are taxed to shareholders in the same
year in which the related income or gain was realized by such Fund. To the
extent possible, each Fund intends to make such distributions as may be
necessary to avoid this excise tax.
Each Fund normally will distribute substantially all of its net
investment income and net capital gain, if any, to shareholders in the form of
dividends to be paid from time to time. Any dividends or distributions paid
shortly after the purchase of shares by an investor may have the effect of
reducing the per share value of the shares owned by the investor by the per
share amount of the dividends or distributions. Furthermore, such dividends and
distributions, although in effect a return of capital, are subject to income
taxes.
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In the event that total distributions (including distributed or
designated net capital gain) of a Fund for a taxable year exceed its investment
company taxable income and net capital gain, a portion of each distribution
generally will be treated as a tax return of capital. Distributions treated as a
return of capital reduce a shareholder's basis in its shares and could result in
a tax on capital gain either when a distribution is in excess of basis or, more
likely, when a shareholder redeems shares.
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
-89-
<PAGE>
separately applicable to each block of shares acquired, including each block of
shares received in payment of the Fund's dividends. The Internal Revenue Service
("IRS") has specific regulations governing the identification of shares to be
redeemed by a shareholder that wishes to redeem some, but not all, of its
shares. For purposes of determining whether this holding period requirement has
been met, the day of acquisition and any day after the first 45 days after the
date on which such shares become ex-dividend must be disregarded. In addition,
the holding period is suspended during periods in which the stock is subject to
diminished risk of loss including, for example, because the holder has acquired
a put option or sold a call option (other than certain covered call options
where the exercise price is not substantially below the selling price) or
otherwise hedged his position.
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
-90-
<PAGE>
percentage of the cost of such shares. Such reduction depends on the particular
facts and circumstances of each situation and accordingly shareholders are urged
to consult their tax advisers.
Under section 1059 of the Code, a corporation which receives an
"extraordinary dividend" and disposes of the stock with respect to which such
dividend was paid is required to reduce its basis in such stock (but not below
zero) by the amount of the dividend which was not taxed because of the
dividends-received deduction, with such basis reduction generally being treated
as having occurred immediately before the sale or disposition of such stock
unless such stock has not been held for at least two years prior to the date of
declaration, announcement or agreement about the extraordinary dividend. To the
extent such untaxed amount exceeds the shareholder's basis, such excess will be
taxed as gain upon sale or disposition of such stock. An extraordinary dividend
generally is any dividend that 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.
-91-
<PAGE>
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 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
-92-
<PAGE>
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 Core Equity Fund, DLJ
Small Company Value Fund and the DLJ Growth and Income Fund are subject to
special provisions that, among other things, may defer the use of certain losses
of such Funds and affect the holding periods of the securities held by the Funds
and the character of the gains or losses realized. These provisions may also
require the DLJ Core Equity Fund, the DLJ Small Company Value Fund and the DLJ
Growth and Income Fund to mark-to-market some of the positions in their
portfolio (i.e., treat them as if they were closed out), which may cause such
Funds to recognize income without receiving cash with which to make
distributions in amounts necessary to satisfy the distribution requirements for
qualification as a regulated investment company and for avoiding income and
excise taxes. Each Fund will monitor its transactions and may make certain tax
elections in order to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.
Dividend and interest income from non-U.S. equity and debt
securities may be subject to a withholding tax imposed by the country in which
the issuer is located. Each Fund expects to claim a deduction or foreign tax
credit with respect to any such withholding tax, to the extent allowable under
the Code, regulations thereunder, or an applicable treaty. Since a Fund's
investment policies would preclude it from investing more than 50% of the value
of the total assets of such 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.
-93-
<PAGE>
For shareholders' federal income tax purposes, distributions to
shareholders out of tax-exempt interest income (less expenses applicable
thereto) earned by the DLJ Municipal Trust Fund are not subject to federal
income tax if, at the close of each quarter of the DLJ Municipal Trust Fund's
taxable year, at least 50% of the value of the DLJ Municipal Trust Fund's total
assets consist of tax-exempt obligations. The DLJ Municipal Trust Fund intends
to meet this requirement. However, under current tax law, some individuals and
corporations may be subject to an alternative minimum tax (the "AMT") with
respect to their receipt of certain distributions of tax-exempt interest income
from the DLJ Municipal Trust Fund. Distributions of taxable interest income,
other investment income, and short-term capital gains are taxable to
shareholders as ordinary income. Since the DLJ Municipal Trust Fund's investment
income is derived from interest rather than dividends, no portion of such
distributions is eligible for the dividends-received deduction available to
corporations. Long-term capital gains, if any, distributed by the DLJ Municipal
Trust Fund to a shareholder are taxable to the shareholder as long-term capital
gain, regardless of the length of time the shareholder may have held the DLJ
Municipal Trust Fund shares.
Each Fund is required to withhold and remit to the U.S. Treasury 31%
of the dividends or proceeds of any redemptions or exchanges of shares with
respect to any shareholder who fails to furnish his or her Fund 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 his or her Fund that he or she is not subject to such withholding. An
individual's tax identification number is generally his or her social security
number.
-94-
<PAGE>
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 or her own
professional tax adviser regarding federal, state and local tax consequences of
ownership of shares of the Funds
-95-
<PAGE>
--------------------------------------------------------------------------------
PERFORMANCE INFORMATION
--------------------------------------------------------------------------------
Presented below is certain performance information with respect to
an investment in Class A, Class B and Class D 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 R shares were issued on August 1, 2000 and Class C shares were
issued as of February 28, 2000, no performance information is included for
either class of shares.
(a) Average Annual Total Return
The average annual total return of Class A shares for the one, five
and ten year periods ended April 30, 2000 was 14.21%, 23.18% and 15.50% for the
DLJ Core Equity Fund and -4.15%, 4.24% and 6.43% for the DLJ Fixed Income Fund,
respectively. The average annual total return of Class A shares for the one,
five and ten year periods ended April 30, 2000 for the DLJ Small Company Value
Fund (which was previously named the Winthrop Aggressive Growth Fund and which
includes its predecessor, the Neuwirth Fund, Inc.) and the DLJ Growth and Income
Fund (which includes its predecessor, the Pine Street Fund, Inc.) was 4.69%,
9.25% and 12.95% for the DLJ Small Company Value Fund and -3.68%, 18.81% and
14.58% for the DLJ Growth and Income Fund, respectively. The average annual
total return of Class A shares for the one and five year periods ended October
31, 1999 for the DLJ Municipal Trust Fund was -5.73% and
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<PAGE>
3.59% respectively and 3.20% for the period July 28, 1993 (commencement of
operations) through April 30, 2000.
The average annual total return for Class B shares for the one year
period ended April30, 2000 was 16.27%, -3.94%, 6.36%, -2.39% and -5.51% and for
the period February 28, 1999 (commencement of offering of Class B shares)
through April 30, 2000 was 22.91%, 3.64%, 8.52%, 17.04% and 2.97%, for the DLJ
Core Equity Fund, the DLJ Fixed Income Fund, the DLJ Small Company Value Fund,
the DLJ Growth and Income Fund and the DLJ Municipal Trust Fund, respectively.
The average annual total return for Class D shares for the one year
period ended April 30, 2000 was 2.54% and 0.89% for the DLJ Growth and Income
Fund, and the DLJ Fixed Income Fund, respectively, and for the period May 13,
1999 (commencement of offering Class D shares) through April 30, 2000 the total
return for Class D shares for the DLJ Core Equity Fund was 18.96%.
The Fund commenced offering Class C shares on February 28, 2000.
Also, prior to the date of the SAI the Fund had not commenced offering Class R
shares. Therefore, the Fund does not yet have a full calendar year of
performance indicated for these classes.
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 Core Equity Fund, the DLJ Small Company Value Fund and the DLJ 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
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<PAGE>
shares of the DLJ Fixed Income Fund and the DLJ 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 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. The average annual total return
was then calculated by using the annual rate required for the initial payment to
grow to the amount which would have been received upon redemption (i.e., the
average annual compounded rate of return). The results shown should not be
considered an indication of future performance from an investment in any Fund
today.
(b) Computation of the DLJ Fixed Income Fund's and DLJ Municipal
Trust Fund's 30-Day Yield Quotation
The 30-day yield for each of the DLJ Fixed Income Fund and the DLJ
Municipal Trust Fund for the period ended April 30, 2000 was with respect to
Class A shares, 5.87% and 3.90%, respectively ; with respect to Class B shares,
5.46% and 3.39%, respectively ; with respect to Class C shares, 5.21% and 3.14%,
respectively; and with respect to Class D shares, 6.45% for the DLJ Fixed Income
Fund. The Fund's yield is based on a 30-day period and is computed by dividing
the net investment income per share earned during the period by the maximum
offering price per share on the last day of the period, according to the
following formula:
YIELD = 2[(a-b/cd+1)6-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends.
d = the maximum offering price per share on the last day
of the period.
-98-
<PAGE>
--------------------------------------------------------------------------------
GENERAL INFORMATION
--------------------------------------------------------------------------------
(a) Counsel and Auditors
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004,
serves as legal counsel for the DLJ Focus Funds.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has
been appointed as independent auditors for the DLJ Focus Funds.
(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.
-99-
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The audited financial statements of the Funds for the fiscal year
ended October 31, 1999 and the report of the Funds' independent auditors in
connection therewith are included in the October 31, 1999 Annual Report to
Shareholders. The audited financial statements included in the Annual Report are
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.
The unaudited financial statements for the six months ended April
30, 2000 included in the Semi-Annual Report are incorporated by reference into
this Statement of Additional Information.
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<PAGE>
--------------------------------------------------------------------------------
Appendix I - Description of Security Ratings
--------------------------------------------------------------------------------
Bond Ratings
Municipal and Corporate Bonds. The four highest ratings of Moody's
Investors Service, Inc. ("Moody's") for municipal corporate bonds are Aaa, Aa, A
and Baa. Bonds rated Aaa are judged 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
A-1
<PAGE>
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
A-3
<PAGE>
or better, the issuer has access to at least two additional channels 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(12)
(iv) Certificate of Amendment*
(b) By-laws(3)
(c) Specimen Stock Certificates
(i) DLJ Core Equity 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 Core Equity Fund, DLJ Fixed Income Fund,
DLJ Small Company Value Fund and DLJ Growth
and Income Fund(5)
(ii) DLJ Municipal Trust Fund(8)
(e) Distribution Contracts
(i) Distribution Agreement dated as of February
25, 1996(9)
(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*
(ii) DLJ Small Company Value Fund - Class B
Plan(9)
(iii) DLJ Small Company Value Fund - Class C
Plan(12)
(iv) DLJ Small Company Value Fund - Class R Plan*
(v) DLJ Growth and Income Fund - Class A Plan*
(vi) DLJ Growth and Income Fund - Class B Plan(9)
(vii) DLJ Growth and Income Fund - Class C
Plan(12)
(viii) DLJ Growth and Income Fund - Class R Plan*
(ix) DLJ Core Equity Fund - Class A Plan*
<PAGE>
(x) DLJ Core Equity Fund - Class B Plan(9)
(xi) DLJ Core Equity Fund - Class C Plan*
(xii) DLJ Core Equity Fund - Class R Plan*
(xiii) DLJ Fixed Income Fund - Class A Plan*
(xiv) DLJ Fixed Income Fund - Class B Plan(9)
(xv) DLJ Fixed Income Fund - Class C Plan*
(xvi) DLJ Fixed Income Fund - Class R Plan*
(xvii) DLJ Municipal Trust Fund - Class A Plan*
(xviii) DLJ Municipal Trust Fund - Class B Plan(9)
(xix) DLJ Municipal Trust Fund - Class C Plan(12)
(xx) DLJ Municipal Trust Fund - Class R Plan*
(n) Financial Data Schedule(13)
(o) Amended Rule 18f-3 Plan*
(p) Code of Ethics*
------------
(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. 21 to
Registration Statement of DLJ Focus Funds on Form N-1A (File No. 33-3706)
filed on October 28, 1998.
(12) Incorporated herein by reference to Post-Effective Amendment No. 23 to
Registration Statement of DLJ Funds on Form N-1A (File No. 33-3706) filed
on February 28, 2000.
(13) Incorporated herein by reference to NSAR filed on June 29, 2000.
* 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 DLJ Asset Management
Group, Inc. (formerly Wood, Struthers & Winthrop Management Corp.) provides that
DLJ Asset Management Group, Inc. 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 DLJ Asset Management Group, Inc.
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 DLJ Asset Management Group, Inc. 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 Securities and Exchange Commission, such indemnification is against public
policy as expressed in the
<PAGE>
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 DLJ Asset
Management Group, Inc. 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 DLJ Asset Management Group, Inc. (formerly 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 CONNECTION
---- ----------- ----------
<S> <C> <C>
G. Moffett Cochran Chairman of the Board and President of DLJ Director of Palmer National Bank;
Focus Funds. President and Chairman
Martin Jaffe Managing Director, Chief Operating Officer President, International Association
and Treasurer Vice President, Secretary for Financial Planning, New York Chapter
and 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>
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:
<PAGE>
DLJ Opportunity Funds
(b) The following are the Directors and Officers of Donaldson,
Lufkin & Jenrette Securities Corporation, none of whom hold any post or office
with the Registrant. Donaldson, Lufkin and Jenrette Securities Corporation's
principal place of business is 277 Park Avenue, New York, New York 10272.
<TABLE>
<CAPTION>
OFFICE
------
<S> <C>
John S. Chalsty Director, Chairman of the Board and Chief Executive Officer
Joe L. Roby Director, President and Chief Operating Officer
Anthony F. Daddino Director, Executive Vice President and Chief Financial Officer
Hamilton E. James Director, Managing Director (Chairman - DLJ Banking Group)
Richard S. Pechter Director, Managing Director (Chairman - DLJ Financial Services Group)
Theodore P. Shen Director, Managing Director (Chairman - DLJ Capital Markets Group)
Robert J. Albano Senior Vice President and Director of Compliance and Regulatory Affairs
James L. Alexandre Senior Vice President (Managing Director - Institutional Equities Division)
Michael M. Bendik Senior Vice President and Chief Accounting Officer
Rhodes R. Bobbitt Senior Vice President (Investment Services Group)
Richard Browne Senior Vice President (Managing Director - Pershing Division)
Richard F. Brueckner Senior Vice President (Managing Director - Pershing Division)
Van Vechten Burger, Jr. Senior Vice President (Chairman - Pershing Division)
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)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OFFICE
------
<S> <C>
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)
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)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OFFICE
------
<S> <C>
Edward J. Resch Senior Vice President (Chief Financial Officer - Capital Markets Group)
Stuart M. Robbins Senior Vice President (Managing Director - Institutional Equities Division)
Peter O. Skoglund Senior Vice President (Investment Services Group)
</TABLE>
(c) Registrant has no principal underwriter who is not an
affiliated person of the Registrant.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
The majority of accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of DLJ Asset Management Group, Inc.
(formerly 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, 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 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 31st day of July, 2000.
DLJ 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 July 31, 2000
------------------------ Chairman of the Board
G. Moffet Cochran
/s/ Martin Jaffe Trustee, Vice President, July 31, 2000
------------------------ Secretary and Treasurer
Martin Jaffe
/s/ Stig Host* Trustee July 31, 2000
------------------------
Stig Host
/s/ Peter F. Krogh* Trustee July 31, 2000
------------------------
Peter F. Krogh
/s/ John J. Sheehan* Trustee July 31, 2000
------------------------
John J. Sheehan
<PAGE>
/s/ Trustee
------------------------
Robert E. Fischer
/s/ Trustee
------------------------
Wilmot H. Kidd, III
*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. 24 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. 24 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/ G. Moffett Cochran /s/ Peter F. Krogh
------------------------ -------------------
G. Moffett Cochran Peter F. Krogh
/s/ Stig Host
------------------------
Stig Host
/s/ John J. Sheehan
------------------------
John J. Sheehan
Dated as of June 1, 2000
<PAGE>
Exhibit Index
A complete list of exhibits is included in Part C, Item 23 of the Registration
Statement.
