<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1996
REGISTRATION NO. 33-92982
REGISTRATION NO. 811-9054
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933 [x]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 1 [x]
AND/OR
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO. 2 [x]
(CHECK APPROPRIATE BOX OR BOXES)
WINTHROP OPPORTUNITY 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
277 PARK AVENUE
NEW YORK, NEW YORK 10172
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
PHILIP H. HARRIS, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
------------------------
It is proposed that this filing will become effective (check appropriate
box):
[x] Immediately upon filing pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
------------------------
PURSUANT TO THE PROVISIONS OF RULE 24f-2(a) UNDER THE INVESTMENT COMPANY
ACT OF 1940, REGISTRANT HAS PREVIOUSLY FILED A DECLARATION OF REGISTRATION OF AN
INDEFINITE NUMBER OF SECURITIES UNDER THE SECURITIES ACT OF 1933. REGISTRANT'S
24f-2 NOTICE FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995 WAS FILED ON NOVEMBER
15, 1995.
________________________________________________________________________________
<PAGE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
ITEM NO. LOCATION
- -------- -----------------------------------------------
<S> <C> <C>
PART A
Item 1. Cover Page................................................ Cover Page
Item 2. Synopsis.................................................. Summary of Fund Expenses
Item 3. Condensed Financial Information........................... Financial Highlights
Item 4. General Description of Registrant......................... Cover Page; Investment Objectives, Policies and
Risk Considerations; General Information
Item 5. Management of the Fund.................................... Management; General Information
Item 5A. Management's Discussion of Fund Performance............... Not Applicable
Item 6. Capital Stock and Other Securities........................ Introduction; General Information; Purchases,
Redemption and Shareholder Services;
Dividends, Distributions and Taxes
Item 7. Purchase of Securities Being Offered...................... Purchases, Redemptions and Shareholder
Services; Net Asset Value; Expenses of the
Funds
Item 8. Redemption or Repurchase.................................. Purchases, Redemptions and Shareholder Services
Item 9. Pending Legal Proceedings................................. Not Applicable
PART B
Item 10. Cover Page................................................ Cover Page
Item 11. Table of Contents......................................... Cover Page
Item 12. General Information and History........................... General Information
Item 13. Investment Objectives and Policies........................ Investment Policies and Restrictions; Portfolio
Transactions; Portfolio Turnover
Item 14. Management of the Fund.................................... Management
Item 15. Control Persons and Principal Holders of Securities....... Shares of Beneficial Interest
Item 16. Investment Advisory and Other Services.................... Management; General Information
Item 17. Brokerage Allocation...................................... Portfolio Transactions
Item 18. Capital Stock and Other Securities........................ General Information
Item 19. Purchase, Redemption and Pricing of Securities Being
Offered................................................. Purchases, Redemptions, Exchanges and
Systematic Withdrawal Plan; Net Asset Value
Item 20. Tax Status................................................ Investment Policies and Restrictions;
Dividends, Distributions and Taxes
Item 21. Underwriters.............................................. Prospectus -- Expenses of the Fund
Item 22. Calculation of Performance Data........................... Investment Performance Information
Item 23. Financial Statements...................................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
277 Park Avenue, New York, NY 10172.
Toll Free (800) 225-8011.
Winthrop Opportunity Funds, a Delaware business trust registered as a management
investment company (the 'Winthrop Opportunity Funds'), is currently comprised of
two series; the Winthrop Developing Markets Fund and the Winthrop International
Equity Fund (the 'Funds'). Each of the Funds is open-end and diversified.
Winthrop Opportunity Funds is designed to afford investors the opportunity to
choose between the separately managed Funds described below which have differing
investment objectives and policies.
A DIVERSIFIED SELECTION OF INVESTMENT ALTERNATIVES
WINTHROP DEVELOPING MARKETS FUND -- Seeks long-term growth of capital by
investing primarily in common stocks and other equity securities from developing
countries.
WINTHROP INTERNATIONAL EQUITY FUND -- Seeks long-term growth of capital by
investing primarily in common stocks and other equity securities from
established markets outside the United States.
There can, of course, be no assurance that the Funds will achieve their
respective investment objectives.
See 'Investment Objectives, Policies and Risk Considerations' for a more
detailed description of the investment objectives and policies of each of the
Funds.
PURCHASE INFORMATION
Shares of the Funds may be purchased directly from the Funds by using the Share
Purchase Application found in this Prospectus, or through the Funds'
Distributor, Donaldson, Lufkin & Jenrette Securities Corporation.
The minimum initial investment in each Fund is $250 and the minimum for
subsequent investments is $25. Shareholder accounts established on behalf of the
following types of plans will be exempt from the Funds' minimum initial
investment and minimum subsequent investment requirements: (1) retirement plans
qualified under section 401(k) of the Internal Revenue Code of 1986, as amended
(the 'Code'); (ii) plans described in section 403(b) of the Code; (iii) deferred
compensation plans described in section 457 of the Code; (iv) simplified
employee pension (SEP) plans; and (v) salary reduction simplified employee
pension (SARSEP) plans. Further information can be obtained from the Funds at
the address and telephone number shown above. See 'Purchases, Redemptions and
Shareholder Services.'
Shares of each Fund may be purchased at a price equal to the net asset value of
the Fund (i) plus, in the case of Class A shares of each Fund, an initial sales
charge imposed at the time of purchase or (ii) in the case of Class B shares,
subject to a contingent deferred sales charge upon redemption which declines
from 4% during the first year of purchase to zero after four years. See
'Expenses of the Funds.'
See 'Purchases, Redemptions and Shareholder Services.'
ADDITIONAL INFORMATION
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Funds. A 'Statement of Additional
Information' dated February 28, 1996, which provides a further discussion of
certain topics in this Prospectus and other matters which may be of interest to
some investors, has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. For a free copy, write or call the Funds at
the address or telephone number shown above.
------------------
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THESE ARE SPECULATIVE SECURITIES.
AN INVESTMENT IN THE FUNDS
INVOLVE SIGNIFICANT RISKS.
PROSPECTUS DATED
FEBRUARY 28, 1996
Investors are advised to read this Prospectus
and to retain it for future reference.
<PAGE>
<PAGE>
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
DEVELOPING INTERNATIONAL
MARKETS FUND EQUITY FUND
-------------------------- --------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)........................ 5.75% 0% 5.75% 0%
Maximum Sales Load Imposed on Reinvested Dividends (as
a percentage of offering price)...................... 0% 0% 0% 0%
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)
Year since Purchase Payment was made
First............................................. 0% 4% 0% 4%
Second............................................ 0% 3% 0% 3%
Third............................................. 0% 2% 0% 2%
Fourth............................................ 0% 1% 0% 1%
Fifth and thereafter.............................. 0% 0% 0% 0%
Redemption Fees (as a percentage of amount redeemed)... 0% 0% 0% 0%
Exchange Fee........................................... 0% 0% 0% 0%
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average daily net assets)
Management Fees*.................................. 1.25% 1.25% 1.25% 1.25%
12b-1 Fees**...................................... .25% 1.00% .25% 1.00%
Other Expenses`D'................................. .65% .65% .65% .65%
Total Fund Operating Expenses`D'.................. 2.15% 2.90% 2.15% 2.90%
</TABLE>
- ------------
The expense ratios for each Class of shares of the Winthrop Developing Markets
Fund (the 'Developing Markets Fund') and Winthrop International Equity Fund (the
'International Equity Fund') are higher than those paid by most other investment
companies, but Wood, Struthers & Winthrop Management Corp. (the 'Adviser') and
AXA Asset Management Partenaires (the 'Subadviser') believe the fees are
comparable to those paid by investment companies of similar investment
orientation.
* Management Fees with respect to the Developing Markets Fund and International
Equity Fund are reduced to 1.15% on net assets in excess of $100,000,000 and
to 1.00% on net assets in excess of $200,000,000 for each Fund.
** The Funds have entered into a Distribution Agreement and a Rule 12b-1 Plan
pursuant to which each Fund pays, with respect to Class A shares, a
distribution fee each month at an annual rate of up to .25 of 1% of the
average daily net assets of the Class A shares, and, with respect to the
Class B shares, a distribution fee each month at an annual rate of up to 1%
of the average daily net assets of the Class B shares. Amounts paid under the
Distribution Agreement are used in their entirety to reimburse the Funds'
distributor for actual expenses incurred. Long-term shareholders may, over
time, pay more in 12b-1 Fees than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. With respect to the Class B shares, .75 of 1% of the 12b-1 Fees
represents an asset-based sales charge and .25 of 1% of the 12b-1 Fees
represents a service fee. See 'Expenses of the Funds -- Distribution
Agreement.'
`D' The Funds commenced operations September 8, 1995. Accordingly, these annual
percentages are estimates. Actual expenses may be more or less than the
percentages shown. Beginning on the date of each Fund's commencement of
operations through October 31, 1995, the Adviser and Subadviser voluntarily
reduced their management fees by the amount that Total Fund Operating
Expenses exceeded 2.15% and 2.90% of the average daily net assets of the
Class A and Class B shares, respectively, of each Fund. Such reductions
were borne equally between the Adviser and Subadviser. Total Fund Operating
Expenses and Other Expenses, as so adjusted, reflect a voluntary reduction
of the management fee amounting to .60% for Class A and Class B shares of
the Developing Markets Fund and International Equity Fund. Absent such
reimbursement, Other Expenses and Total Fund Operating Expenses for the
Developing Markets Fund and International Equity Fund would have been 1.25%
and 2.75% for Class A shares and 1.25% and 3.50% for Class B shares,
respectively. After October 31, 1996, the Adviser and Subadviser may,
in their sole discretion, determine to discontinue this practice with
respect to either Fund.
2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXAMPLES 1 YEAR 3 YEARS
- ------------------------------------------------------------------------------------------------------ -------- ---------
<S> <C> <C>
DEVELOPING MARKETS FUND
CLASS A
You would pay the following expenses on a $1,000 investment including the maximum 5.75% initial sales
charge and assuming (1) 5% annual return and (2) redemption at the end of each time period............ $ 78 $ 121
CLASS B
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period............................................................. $ 69 $ 110
You would pay the following expenses on the same investment, assuming no redemptions.................. $ 29 $ 90
INTERNATIONAL EQUITY FUND
CLASS A
You would pay the following expenses on a $1,000 investment including the maximum 5.75% initial sales
charge and assuming (1) 5% annual return and (2) redemption at the end of each time period............ $ 78 $ 121
CLASS B
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period............................................................. $ 69 $ 110
You would pay the following expenses on the same investment, assuming no redemptions.................. $ 29 $ 90
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of each Fund bear directly or
indirectly. See also 'Expenses and Purchases, Redemptions' and 'Shareholder
Services.' The Example should not be considered a representation of past or
future expenses and actual expenses may be greater or lesser than those shown.
'Other Expenses' includes fees paid to the Funds' independent auditor,
legal counsel and Trustees as well as expenses associated with registration
fees, reports to shareholders and other miscellaneous expenses. Such fees are
not based on a percentage of each Fund's average net assets, but a fixed dollar
cost.
3
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
The information in the following table has been audited, except where
indicated, by Ernst & Young LLP, the Funds' independent auditors.
Selected data for a share of capital stock outstanding for each period
indicated below:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
---------------------------------------------------------
CLASS A CLASS B
--------------------------- ---------------------------
FROM FROM
SEPTEMBER 8, FOR THE SEPTEMBER 8, FOR THE
1995* TWO MONTHS 1995* TWO MONTHS
THROUGH ENDED THROUGH ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
1995 1995** 1995 1995**
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period............... $ 10.00 $ 9.58 $10.00 $ 9.57
Net investment income
(loss)(1)............... .00 (.03) (.02) (.04)
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions............ (.42) .57 (.41) .57
------------ ------------ ------ ------
Net decrease in net asset
value from operations... (.42) .54 (.43) .53
------------ ------------ ------ ------
Net asset value, end of
period.................. $ 9.58 $ 10.12 $ 9.57 $10.10
------------ ------------ ------ ------
------------ ------------ ------ ------
Total Return(2)........... (4.20)% 5.63% (4.30)% 5.54%
Ratio of expenses to
average net
assets(3)`D'............ 2.15% 2.15% 2.90% 2.90%
Ratio of net investment
income (loss) to average
net assets(3)........... (.02)% (1.62)% (1.77)% (2.35)%
Portfolio turnover rate... 0% 17.2% 0% 17.2%
Net assets, end of period
(000 omitted)........... $ 28,819 $ 32,716 $1,803 $2,409
<CAPTION>
DEVELOPING MARKETS FUND
------------------------------------------------------
CLASS A CLASS B
------------------------ ---------------------------
FROM FROM
SEPTEMBER 8, FOR THE SEPTEMBER 8, FOR THE
1995* TWO MONTHS 1995* TWO MONTHS
THROUGH ENDED THROUGH ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
1995 1995** 1995 1995**
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period...............$ 10.00 $ 9.53 $10.00 $ 9.52
Net investment income
(loss)(1)............... .00 .00 (.01) (.02)
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions............ (.47) .25 (.47) .25
---------- ------------ ------ ------
Net decrease in net asset
value from operations... (.47) .25 (.48) .23
---------- ------------ ------ ------
Net asset value, end of
period..................$ 9.53 $ 9.78 $ 9.52 $ 9.75
---------- ------------ ------ ------
---------- ------------ ------ ------
Total Return(2)........... (4.70)% 2.62% (4.80)% 2.41%
Ratio of expenses to
average net
assets(3)`D'............ 2.15% 2.15% 2.90% 2.90%
Ratio of net investment
income (loss) to average
net assets(3)........... (.32)% (.27)% (1.00)% (1.45)%
Portfolio turnover rate... 0% 1.7% 0% 1.7%
Net assets, end of period
(000 omitted)...........$ 14,622 $ 18,825 $1,004 $1,294
</TABLE>
- ------------
* Commencement of operations.
** Unaudited
(1) Based on average shares outstanding
(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. 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.
(3) Annualized.
`D' Net of voluntary reduction of management fees by Adviser and Subadviser
amounting to .60% (annualized) of average daily net assets of both Class A
and Class B shares of the International Equity Fund and Developing Markets
Fund for the period from September 8, 1995 through October 31, 1995 and
.56% (annualized) of average daily net assets of Class A and Class B shares
of the International Equity Fund and .60% (annualized) of average daily net
assets of Class A and Class B shares of the Developing Markets Fund for the
two months ended December 31, 1995.
4
<PAGE>
<PAGE>
INTRODUCTION
Winthrop Opportunity Funds is a Delaware business trust whose shares are
offered in two separate portfolios, collectively referred to as the 'Funds.'
Because Winthrop Opportunity Funds offers multiple funds, it is known as a
'series fund.' Winthrop Opportunity Funds may in the future establish additional
Funds with different investment objectives and policies and offer additional
classes of shares.
Each Fund is a separate pool of assets constituting, in effect, a separate
Fund with its own investment objective and policies. (See 'Investment
Objectives, Policies and Risk Considerations' below.) A shareholder may utilize
the Funds' exchange privilege to transfer such shareholder's assets to the same
class of another Fund in Winthrop Opportunity Funds or for shares of Alliance
Government Reserves or Alliance Municipal Trust. In addition, shares of a Fund
can be exchanged for shares of the same class of the Winthrop Growth Fund,
Winthrop Fixed Income Fund, Winthrop Aggressive Growth Fund, Winthrop Growth and
Income Fund or the Winthrop Municipal Trust Fund (collectively, the 'Winthrop
Focus Funds') in accordance with the shareholder's changing perceptions of the
relative investment potential of each investment alternative. A shareholder will
pay a higher 12b-1 Fee when exchanging Class A shares of the Funds (.25 of 1%
annually) for Class A shares of the Winthrop Focus Funds (.30 of 1% annually).
(See 'Purchases, Redemptions and Shareholder Services.') Shareholders of all
classes of a Fund are entitled to their pro rata share of any dividends and
distributions arising from that Fund's assets except that with respect to each
Fund, each Class bears different distribution expenses (See 'Dividends,
Distributions and Taxes.') Upon redeeming shares of a Fund, the shareholder will
receive the next-determined net asset value of that Fund represented by the
redeemed shares less the applicable contingent deferred sales charge, if any.
(See 'Purchases, Redemptions and Shareholder Services.')
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The investment objectives and policies of each Fund are set forth below.
There can be, of course, no assurance that either Fund will achieve its
respective investment objective.
The investment objectives of each Fund are fundamental policies of that
Fund and may not be changed without the approval of that Fund's shareholders.
Except as set forth in 'Investment Policies and Restrictions' in the Statement
of Additional Information, or as otherwise indicated below, the investment
policies of each Fund are not fundamental policies and may be changed by the
Board of Trustees without a shareholder vote. A more detailed explanation of the
Funds' policies and the securities and instruments they may buy or use is
contained in the Funds' Statement of Additional Information, which is available
upon request.
Developing Markets Fund The investment objective of the Fund is to seek
long-term growth of capital by investing primarily in common stocks and other
equity securities from developing countries. The foregoing investment objective
is a fundamental policy of the Fund and cannot be changed without shareholder
approval. Under normal market conditions, the Fund intends to invest at least
65% of its total assets in developing country equity securities.
The Fund considers developing countries to be all countries that are
considered to be developing or emerging countries by the International Bank for
Reconstruction and Development (the World Bank) or the International Finance
Corporation, as well as countries that are classified by the United Nations or
otherwise regarded by their authorities as developing. Currently, the countries
not included in this category are Ireland, Spain, New Zealand, Australia, the
United Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada,
Germany, Denmark, the United States, Sweden, Finland, Norway, Japan and
Switzerland. As used in this Prospectus, a company in a developing
5
<PAGE>
<PAGE>
country is an entity: (i) for which the principal securities trading market is
in a developing country, as defined above or (ii) organized under the laws of
and with a principal office in a developing country.
As an operating policy, the Fund currently intends to invest primarily in
countries represented within the Morgan Stanley Capital International ('MSCI')
Emerging Market Indices. Those countries currently include Argentina, Brazil,
Chile, Colombia, Mexico, Peru, Venezuela, India, Indonesia, Korea, Malaysia,
Philippines, South Africa, Thailand, Sri Lanka, Greece, Israel, Jordan, Portugal
and Turkey. The Adviser and Subadviser do not currently intend to invest more
than 25% of the Fund's total assets (at the time of investment) in developing
countries not represented within the MSCI Emerging Market Indices.
The Fund seeks to identify those countries and industries where economic
and political factors are likely to produce above-average growth rates. The Fund
then seeks to invest in those companies in such countries and industries that
are best positioned and managed to take advantage of these economic and
political factors. The assets of the Fund ordinarily will be invested in the
securities of issuers in at least three different developing countries.
Characteristics of developing countries that may affect investment in their
markets include certain national policies that may restrict investment by
foreigners and the absence of developed legal structures governing private and
foreign investments and private property. The typically small size of the
markets for securities issued by issuers located in developing countries and the
possibility of a low or nonexistent volume of trading in those securities may
also result in a lack of liquidity and in substantial price volatility of those
securities. Shareholders should be aware that investing in developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less stability
than those of developed countries.
International Equity Fund The investment objective of the Fund is to seek
long-term growth of capital by investing primarily in common stocks and other
equity securities from established markets outside the United States. The
foregoing investment objective is a fundamental policy of the Fund and cannot be
changed without shareholder approval. Under normal market conditions, the Fund
intends to invest at least 65% of its total assets in equity securities of
issuers from at least three different countries outside the United States. The
Fund considers it consistent with this objective to acquire securities of
companies incorporated in the United States and having their principal
activities and interests outside of the United States.
In pursuing its investment objective, the Fund intends to diversify its
equity investments primarily among countries represented within the EAFE Index,
also known as the Morgan Stanley Capital International Europe, Australia, Far
East index, an unmanaged index of over 1,000 foreign stock prices. Those
countries currently include Germany, Netherlands, Belgium, Austria, France,
Italy, Spain, United Kingdom, Switzerland, Japan, Hong-Kong, Australia, New
Zealand, Malaysia, Singapore and the Scandinavian countries. The Adviser and
Subadviser do not currently intend to invest more than 10% of the Fund's total
assets (at the time of investment) in countries outside the United States not
represented within the EAFE Index.
Equity Securities 'Equity Securities,' as used in this Prospectus, refers
to common stock, preferred stock (including convertible preferred), bonds
convertible into common or preferred stock, rights and warrants, equity
interests in trusts and depositary receipts for equity securities.
Convertible Securities Each Fund may invest up to 25% of its assets in
convertible securities. The Adviser and Subadviser currently do not intend to
invest over 5% of each Fund's assets in convertible securities rated below
investment grade by Standard and Poor's Ratings Group ('S&P') and Moody's
Investor Service ('Moody's'), or convertible securities not rated by S&P or
Moody's unless believed by the Adviser or Subadviser to be of comparable quality
to instruments rated investment grade by S&P or Moody's. The Funds will not
invest in convertible securities rated below B by S&P or Moody's, or unrated
convertible securities of comparable quality. See the Appendix to the Statement
of Additional Information for the risks associated with investing in convertible
securities with such ratings. A
6
<PAGE>
<PAGE>
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.
As a fixed-income security, a convertible security tends to increase in
market value when interest rates decline and tends to decrease in 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 Each Fund may invest up to 5% of its net assets in warrants. A
warrant gives the holder thereof the right to buy equity securities at a
specific price for 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, then the Fund
holding the warrant can acquire the stock at a price below its market value.
Depositary Receipts The Funds may purchase sponsored or unsponsored ADRs,
EDRs and GDRs (collectively, 'Depositary Receipts'). ADRs are Depositary
Receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs and
GDRs are Depositary Receipts typically issued by foreign banks or trust
companies, although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either a foreign or a
United States corporation.
Additional Investment Strategies of the Funds The Funds reserve the right
as a defensive measure to hold temporarily other types of securities without
limit, including commercial paper, bankers' acceptances, short-term debt
securities (corporate and government) or government and high quality money
market securities of United States and non-United States issuers, repurchase
agreements, time deposits or cash (foreign currencies or United States dollars),
in such proportions as, in the opinion of the Adviser or Subadviser, prevailing
market, economic or political conditions warrant. Each Fund may also temporarily
hold cash and invest in high quality foreign or domestic money market
instruments, up to 35% of its assets, pending investment of proceeds from new
sales of Fund shares or to meet ordinary daily cash needs.
The Funds may also engage in a variety of transactions including the use of
options, forward foreign currency exchange contracts and futures contracts and
options thereon. Each Fund's ability to use these strategies may be limited by
market conditions, regulatory limits and tax considerations. There can be no
assurance that any of these strategies will achieve their objectives.
Option Transactions The Funds may purchase and sell put and call options.
The Funds may purchase and sell such options on securities, currencies, and
financial indices that are traded on U.S. or foreign securities exchanges or in
the over-the-counter market. Options traded in the over-the-counter market are
considered illiquid investments. A Fund's successful transaction with options
depends on the ability of the Adviser or Subadviser to predict the direction of
the market and is subject to certain additional risks, including generally
greater volatility of options as compared to common stocks and the risk that an
option will expire without value.
Forward Foreign Currency Exchange Contracts The Funds 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.
Financial Futures Contracts and Options Thereon The Funds 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 the regulations of the Commodity
Futures Trading Commission.
7
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<PAGE>
The Funds 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 each Fund's portfolio.
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
the Funds would not be subject absent the use of these strategies. If the
Adviser's or Subadviser's predictions of movements in the direction of the
securities, foreign currency and interest rate markets are inaccurate, the
adverse consequences to the Funds may leave the Funds 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 Adviser's or Subadviser's ability to predict correctly movements in the
direction of interest rates, securities prices and currency markets; (2)
imperfect correlation between the price of options and futures contracts and
options thereon and movements in the prices of the securities or currencies
being hedged; (3) skills needed to use these strategies are different from those
needed to select portfolio securities; (4) the possible absence of a liquid
secondary market for any particular instrument at any time; (5) the possible
need to defer closing out certain hedged positions to avoid adverse tax
consequences; and (6) the possible inability of a Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable for it to do so,
or the possible need for a Fund to sell a portfolio security at a
disadvantageous time, due to the need for such Fund to maintain 'cover' or to
segregate securities in connection with hedging transactions. See 'Dividends,
Distributions and Taxes' in the Statement of Additional Information.
Because the markets for certain options and futures contracts in which the
Funds will invest (including markets located in foreign countries) are
relatively new and still developing and may be subject to regulatory restraints,
each Fund's ability to engage in transactions using such investments may be
limited.
Nonconvertible Fixed Income Securities Each Fund may invest up to 35% of
its total assets in investment grade fixed income securities. Investment grade
obligations are those obligations rated BBB or better by S&P or Baa or better by
Moody's in the case of long-term obligations and equivalently rated obligations
in the case of short-term obligations, or instruments not rated by S&P or
Moody's unless believed by the Adviser or Subadviser to be of comparable quality
to instruments rated investment grade by S&P or Moody's. Securities rated BBB by
S&P are regarded by S&P as having an adequate capacity to pay interest and repay
principal; whereas such securities normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely, in the opinion of S&P, to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated categories.
Securities rated Baa by Moody's are considered by Moody's to be medium grade
obligations; they are neither highly protected nor poorly secured; interest
payments and principal security appear to be adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time; in the opinion of Moody's, they lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Illiquid Investments Each Fund may invest up to 15% of its net assets in
illiquid investments. Under the supervision of the Trustees, the Adviser and
Subadviser determine the liquidity of a Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for a Fund
to sell them promptly at an acceptable price.
Borrowing Each Fund may borrow up to one-third of the value of its total
assets from banks to increase its holdings of portfolio securities. Under the
Investment Company Act of 1940, as amended (the '1940 Act'), each Fund is
required to maintain continuous asset coverage of 300% with respect to such
borrowings. Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of
8
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<PAGE>
portfolio securities on a Fund's net asset value, and money borrowed will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds. The
Adviser and Subadviser do not currently intend to engage in borrowing
transactions.
Other Risk Factors Each Fund's net asset value will fluctuate, reflecting
changes in the market value of its portfolio positions.
There are certain risks involved in investing in foreign securities which
are in addition to the usual risks inherent in U.S. investments. These risks
include those resulting from fluctuations in currency exchange rates,
revaluation of currencies, future adverse political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions, reduced availability of public information
concerning issuers and the lack of uniform accounting, auditing and financial
reporting standards or of other regulatory practices and requirements comparable
to those applicable to domestic companies. Additionally, foreign securities may
be adversely affected by fluctuations in value of one or more currencies
relative to the U.S. dollar. Moreover, securities of many foreign companies may
be less liquid and their prices more volatile than those of securities of
comparable U.S. companies. In addition, with respect to certain foreign
countries, there is the possibility of expropriation, nationalization,
confiscatory taxation and limitations on the use or removal of funds or other
assets of a foreign issuer, including the withholding of dividends. Foreign
securities may be subject to foreign government taxes that would reduce the net
yield on such securities. To the extent a Fund invests in securities denominated
or quoted in currencies other than the U.S. dollar, changes in foreign currency
exchange rates will affect the value of portfolio securities and the
appreciation or depreciation of investments. Investment in foreign securities
may also result in higher expenses due to the cost of converting foreign
currency into U.S. dollars, the payment of fixed brokerage commissions on
foreign exchanges, which generally are higher than commissions on U.S.
exchanges, and the expense of maintaining securities with foreign custodians.
See 'Investment Objectives' in the Statement of Additional Information for
a more complete description of the Funds' objectives, strategies, instruments to
be used in connection therewith and risks associated therewith.
MANAGEMENT
The Funds' Board of Trustees (who, with its officers, are described in the
Statement of Additional Information) has overall responsibility for the
management of the Funds.
Wood, Struthers & Winthrop Management Corp. (the 'Adviser'), a Delaware
corporation with principal offices at 277 Park Avenue, New York, New York 10172,
has been retained under an investment advisory agreement to provide investment
advice and to supervise the management and investment programs of the Funds,
subject to the general supervision and control of the Trustees of the Funds.
Pursuant to a Subadvisory Agreement among the Funds, the Adviser and AXA Asset
Management Partenaires (the 'Subadviser'), a societe anonyme organized under the
laws of France with principal offices at 40, rue du Colisee, 75008 Paris,
France, the Subadviser furnishes investment advisory services in connection with
the management of the Funds. The Adviser continues to have responsibility for
all investment advisory services pursuant to the investment advisory agreement
and supervises the Subadviser's performance of such services. The Fund is a
party to the Subadvisory Agreement solely for purposes of indemnification and
termination.
The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette
Securities Corporation, which is a member of the New York Stock Exchange and a
wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, Inc. ('DLJ'), a major
international supplier of financial services. DLJ is an independently operated,
indirect subsidiary of The Equitable Companies Incorporated, a holding company
controlled by AXA, a
9
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member of a large French insurance group. AXA is indirectly controlled by a
group of five French mutual insurance companies.
The Adviser acts as investment adviser to the following investment
companies with aggregate assets of approximately $467 million:
<TABLE>
<CAPTION>
ASSETS AS OF
12/31/95
------------
<S> <C>
Winthrop Aggressive Growth
Fund......................... $214,187,000
Winthrop Growth & Income
Fund......................... $ 96,599,000
Winthrop Growth Fund........... $ 58,207,000
Winthrop Fixed Income Fund..... $ 58,034,000
Winthrop Municipal Trust
Fund......................... $ 40,171,000
------------
$467,198,000
</TABLE>
The Subadviser is an indirect wholly-owned subsidiary of AXA.
The Subadviser does not currently act as an investment adviser to any other
investment companies.
Jean-Patrick Dubrun, an employee of the Subadviser, is the portfolio
manager of each Fund. Mr. Dubrun has been an asset manager responsible for
international equities for a subsidiary of AXA since 1987.
Under its Advisory Agreement with the Funds, the Adviser provides
investment advisory services and order placement facilities for each of the
Funds and pays all compensation of Trustees of the Funds who are affiliated
persons of the Adviser. The Adviser or its affiliates also furnish the Funds
management supervision and assistance and office facilities in addition to
administrative and other nonadvisory services for which it may be reimbursed.
The Funds pay a fee to the Adviser at the following annual percentage rates of
the average daily net assets of each Fund: 1.25% of the first $100,000,000,
1.15% of the next $100,000,000 and 1.00% of net assets in excess of
$200,000,000. The advisory fees to be paid by the Funds are higher than those
paid by most other mutual funds.
Under the Subadvisory Agreement, the Adviser pays the Subadviser for its
services, out of the Adviser's own resources, at the following annual percentage
rates of the average daily net assets of each Fund: .625% of each Fund's first
$100,000,000, .575% of the next $100,000,000 and .500% of the balance.
Through October 31, 1996, the Adviser and Subadviser may voluntarily reduce
their management fees by the amount that Total Operating Expenses exceed 2.15%
and 2.90% of the average daily net assets of the Class A and Class B shares,
respectively, of each Fund. Any such reduction will be borne equally between the
Adviser and Subadviser. After October 31, 1996, the Adviser and Subadviser may,
in their sole discretion, determine to discontinue this practice with respect to
either Fund.
EXPENSES OF THE FUNDS
GENERAL
In addition to the payments to the Adviser under the investment advisory
agreement described above, the Funds pay the other expenses incurred in the
Funds' organization and operations, including the costs of printing prospectuses
and other reports to existing shareholders; all expenses and fees related to
registration and filing with the Securities and Exchange Commission ('SEC') and
with state regulatory authorities; custody, transfer and dividend disbursing
expenses; legal and auditing costs; clerical, accounting, and other office
costs; fees and expenses of Trustees who are not affiliated with the Adviser or
Subadviser; costs of maintenance of existence; and interest charges, taxes,
brokerage fees, and commissions.
The investment advisory agreement provides that the Adviser will reimburse
the Funds up to the amount of its advisory fee for the expenses of any Fund
(exclusive of interest, taxes, brokerage, expenditures pursuant to the
distribution services agreement described below, and extraordinary expenses, all
to the extent permitted by applicable state law and regulations) which in any
year exceed the limits prescribed by any state in which shares of such Fund are
qualified for sale.
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DISTRIBUTION AGREEMENT
Rule 12b-1 adopted by the SEC under the 1940 Act permits an investment
company directly or indirectly to pay expenses associated with the distribution
of its shares. Under SEC regulations, some of the payments described below to be
made by the Funds could be deemed to be distribution expenses within the meaning
of such rule. Thus, pursuant to Rule 12b-1, the Funds' Trustees, including a
majority of its disinterested Trustees, have adopted separate 12b-1 Plans for
the expenses to be incurred in distributing each Fund's Class A shares (the
'Rule 12b-1 Class A Plans') and Class B shares (the 'Rule 12b-1 Class B Plans'
and collectively, the 'Rule 12b-1 Plans'), and the Funds have entered into a
Distribution Agreement (the 'Agreement') with Donaldson, Lufkin & Jenrette
Securities Corporation, the Funds' distributor (the 'Distributor'). The
Distributor may enter into service agreements with other entities. The
Distributor is located at 277 Park Avenue, New York, New York 10172.
With respect to each Fund, the maximum amount payable by a Fund under the
Rule 12b-1 Class A Plans for distributing Class A shares is .25 of 1% of the
average daily net assets of the Class A shares during the year. Under the Rule
12b-1 Class B Plans, the maximum amount payable by a Fund for distributing Class
B shares is 1% of the average daily net assets of the Class B shares during the
year consisting of (i) an asset-based sales charge of up to .75 of 1% of the
average daily net assets of the Class B shares and (ii) a service fee of up to
.25 of 1% of the average daily net assets of the Class B shares. The Agreement
but not the Rule 12b-1 Plans terminate in the event of assignment of the
Agreement.
With respect to sales of a Fund's Class B shares through a broker-dealer,
the Distributor pays the broker-dealer a concession at the time of sale. In
addition, an ongoing maintenance fee may be paid to broker-dealers on sales of
both Class A shares and Class B shares. Pursuant to the Rule 12b-1 Plans, the
Distributor is then reimbursed for such payments with amounts paid from the
assets of such Fund. The payments to the broker-dealer, although a Fund expense
which is paid by all shareholders, will only directly benefit investors who
purchase their shares through a broker-dealer rather than from the Funds.
Broker-dealers who sell shares of the Funds may provide services to their
customers that are not available to investors who purchase their shares directly
from the Funds. Investors who purchase their shares directly from the Funds will
pay a pro rata share of the Fund's expenses of encouraging broker-dealers to
provide such services but not receive any of the direct benefits of such
services. The payments to the broker-dealers will continue to be paid for as
long as the related assets remain in the Funds.
Amounts paid under the Plans and the Agreement are used in their entirety
to reimburse the Distributor for actual expenses incurred to (i) promote the
sale of shares of each Fund by, for example, paying for the preparation,
printing and distribution of prospectuses, sales brochures and other promotional
materials sent to prospective shareholders, by directly or indirectly purchasing
radio, television, newspaper and other advertising or by compensating the
Distributor's employees or employees of the Distributor's affiliates for their
distribution assistance, (ii) make payments to the Distributor to compensate
broker-dealers or other persons for providing distribution assistance and (iii)
make payments to compensate financial intermediaries for providing
administrative and accounting services with respect to the Funds' shareholders.
In addition to the concession and maintenance fee paid to dealers or agents, the
Distributor will from time to time pay additional compensation to dealers or
agents in connection with the sale of shares. Such additional amounts may be
utilized, in whole or in part, in some cases together with other revenues of
such dealers or agents, to provide additional compensation to registered
representatives of such dealers or agents who sell shares of a Fund. On some
occasions, such compensation will be conditioned on the sale of a specified
minimum dollar amount of the shares of the Funds during a specific period of
time. Such incentives may take the form of payment for meals, entertainment, or
attendance at educational seminars and associated expenses such as travel and
lodging. Such dealer or agent may elect to receive cash incentives of equivalent
amounts in lieu of such payments. The Rule 12b-1 Plans permit payments to be
made in subsequent years for expenses incurred in prior years if the Funds'
Trustees specifically authorize
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such payment. For the fiscal year ended October 31, 1995, distribution costs
incurred for the Developing Markets Fund were $4,718 and $581 for Class A and
Class B shares, respectively, and $9,809 and $1,013 for Class A and Class B
shares, respectively, of the International Equity Fund.
PURCHASES, REDEMPTIONS AND SHAREHOLDER SERVICES
PURCHASES
Shares of each of the Funds will be offered on a continuous basis directly
by the Funds and by the Distributor, acting as agent for the Funds, at the
respective net asset value per share determined as of the close of the regular
trading session of the New York Stock Exchange (the 'NYSE'), currently 4:00
p.m., New York City time, following receipt of a purchase order in proper form
plus, in the case of Class A shares of each Fund, an initial sales charge
imposed at the time of purchase or subject to a contingent deferred sales charge
upon redemption in the case of Class B shares of each Fund and certain
redemptions of Class A shares. The investor should send a completed Share
Purchase Application (found in this Prospectus) and enclose a check in the
amount of the initial investment to the Transfer Agent, Fund/Plan Services,
Inc., P.O. Box 874, Conshohocken, PA 19428, Attn: Winthrop Mutual Funds.
The initial minimum investment in each Fund is $250 and $25 for subsequent
investments in a Fund. (For example, an investor wishing to make an initial
investment in shares of both Funds would be required to invest at least $250 in
each Fund.) Full and fractional shares will be credited to an investor's account
in the amount of the investment. Each Fund reserves the right to reject any
Share Purchase Application in its sole discretion. Shareholder accounts
established on behalf of the following types of plans will be exempt from the
Fund's minimum initial investment and minimum subsequent investment
requirements: (i) retirement plans qualified under section 401(k) of the Code;
(ii) plans described in section 403(b) of the Code; (iii) deferred compensation
plans described in section 457 of the Code; (iv) simplified employee pension
(SEP) plans; and (v) salary reduction simplified employee pension (SARSEP)
plans. With respect to Class B shares, an investor's maximum investment in such
shares is $250,000.
Existing shareholders wishing to purchase additional shares of a Fund may
use an investment stub found at the bottom of the Funds' Shareholder Statement
form or, if one is not available, they may send a check payable to such Fund
(with Fund Account information referenced) directly to the Transfer Agent,
Fund/Plan Services, Inc., P.O. Box 874, Conshohocken, PA 19428, Attn: Winthrop
Mutual Funds.
Further information and assistance is available by contacting the Funds at
the address or telephone number listed on the cover page of this Prospectus.
REDEMPTIONS
Shares of the Funds may be redeemed at a redemption price equal to the net
asset value per share, as next computed following the receipt in proper form by
the Funds of shares tendered for redemption, less any applicable contingent
deferred sales charge in the case of Class B shares and certain redemptions of
Class A shares.
The value of a shareholder's shares on redemption may be more or less than
the cost of such shares to the shareholder, depending upon the value of a Fund's
portfolio securities at the time of such redemption or repurchase. (See
'Dividends, Distributions and Taxes' for a discussion of the tax consequences of
a redemption.)
To redeem shares for which no share certificates have been issued, the
registered owner or owners should forward a letter to the Funds containing a
request for redemption of such shares at the next determined net asset value per
share. Alternatively, the shareholder may elect the right to redeem shares by
telephone. (See 'Additional Shareholder Services -- Telephone Redemption and
Exchange Privilege.')
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If the total value of the shares being redeemed exceeds $50,000 (before
deducting any applicable contingent deferred sales charge) or a redemption
request directs proceeds to a party other than the registered account owner(s),
the signature or signatures on the letter or the endorsement must be guaranteed
by an 'eligible guarantor institution' as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include banks,
brokers, dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations. A
broker-dealer guaranteeing signatures must be a member of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. Additional documents may be required for redemption of corporate,
partnership or fiduciary accounts.
The requirement for a guaranteed signature is for the protection of the
shareholder in that it is intended to prevent an unauthorized person from
redeeming his shares and obtaining the redemption proceeds.
A Fund may request in writing that a shareholder whose account in a Fund
has an aggregate balance less than $250 increase his account to at least that
amount within 60 days. If the shareholder fails to do so, such Fund reserves the
right to close such account and send the proceeds to the shareholder. IRAs and
other qualified retirement accounts are not subject to mandatory redemption. A
Fund will not redeem involuntarily any shareholder account with an aggregate
balance of less than $250 based solely on the market movement of such Fund's
shares.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after shares are tendered in
proper form for redemption, except for any period during which the NYSE is
closed (other than customary weekend and holiday closings) or during which
trading on the exchange is deemed to be restricted under rules of the SEC, or
for any period during which an emergency (as determined by the SEC) exists as a
result of which disposal by a Fund of its portfolio securities is not reasonably
practicable, or as a result of which it is not reasonably practicable for a Fund
to determine the value of its net assets, or for such other period as the SEC
may by order permit for the protection of shareholders. Generally, payment for
redemptions will be made in cash by check or wire.
For information concerning circumstances in which redemptions may be
effected through the delivery of in kind portfolio securities, see the Statement
of Additional Information.
INITIAL SALES CHARGE
Class A shares of each Fund are offered at net asset value next determined
plus a sales charge, as follows:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
--------------------------------------
COMMISSION TO
DEALER/AGENT
AS A % OF AS A % OF AS A % OF
NET AMOUNT OFFERING OFFERING
AMOUNT PURCHASED INVESTED PRICE PRICE
- -------------------- ---------- --------- -------------
<S> <C> <C> <C>
Less than $50,000... 6.10% 5.75% 5.00%
$50,000 to less than
$100,000.......... 4.71 4.50 3.75
$100,000 to less
than $250,000..... 3.63 3.50 2.80
$250,000 to less
than $500,000..... 2.56 2.50 2.00
$500,000 to less
than $1,000,000... 2.04 2.00 1.60
$1,000,000 or
more.............. 0 0 0
</TABLE>
On purchases of $1,000,000 or more, there is no initial sales charge; the
Distributor may pay the dealer a fee of up to 1% as follows: 1% on purchases up
to $2 million, plus .80% on the next $1 million up to $3 million, .50% on the
next $47 million up to $50 million, .25% on purchases over $50 million.
SALES AT NET ASSET VALUE
The initial sales charge will be waived for the following shareholders or
transactions:
(1) investment advisory clients of the Adviser;
(2) officers and Trustees of the Funds, directors or trustees of other
investment companies managed by the Adviser, officers, directors and
full-time employees of the Adviser and of its wholly-owned subsidiaries or
parent entities ('Related Entities'); or the spouse, siblings, children or
grandparents (collectively, 'relatives') of any such person, or any trust
or individual retirement account or self-employed retirement plan for the
benefit of any such person or relative;
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or the estate of any such person or relative, if such sales are made for
investment purposes (such shares may not be resold except to the Funds);
(3) certain employee benefit plans for employees of the Adviser and
Related Entities;
(4) an agent or broker of a dealer that has a sales agreement with the
Distributor, for their own account or an account of a relative of any such
person, or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the
estate of any such person or relative, if such sales are made for
investment purposes (such shares may not be resold except to the Funds). To
qualify, the Distributor or Transfer Agent must be notified at the time of
purchase; and
(5) shares purchased by registered investment advisors on behalf of
fee-based accounts or by broker-dealers that have a sales agreement with
the Funds and which shares have been purchased on behalf of wrap fee client
accounts and for which such registered investment advisors or broker-
dealers perform advisory, custodial, recordkeeping or other services.
REDUCED SALES CHARGES
A reduction of sales charge rates in the tables above may be obtained for
participants in any of the following discount programs. These programs allow an
investor to receive a reduced offering price based upon the assets held or
pledged by the investor. The term 'investor' refers to (i) an individual, (ii)
an individual and spouse purchasing shares of the fund for their own account or
for the trust or custodial accounts of their minor children, or (iii) a
fiduciary purchasing for any one trust, estate or fiduciary account, including
employee benefit plans of a single employer.
LETTER OF INTENT
By initially investing $250 and submitting a Letter of Intent to the Funds'
Distributor or Transfer Agent, an investor may purchase shares of the portfolio
over a 13-month period at the reduced sales charge applying to the aggregate
amount of the intended purchases stated in the Letter. The Letter may apply to
purchases made up to 90 days before the date of the Letter. However, the reduced
sales charge would not apply to such purchases. It is the investor's
responsibility to notify the Transfer Agent at the time the Letter is submitted
that there are prior purchases that may apply.
5% of the amount of the Letter will be held in escrow by the Transfer Agent
until the Letter is completed within the 13-month period. The 13-month period
begins on the date of the earliest purchase. If the intended investment is not
completed, the Transfer Agent will redeem an appropriate number of the escrowed
shares in order to realize the difference between the sales charge on the shares
purchased at the reduced rate and the sales charge applicable to the total
shares purchased.
RIGHT OF ACCUMULATION
For investors who already have an account with the Funds, reduced sales
charges based upon the Funds' sales charge schedule are applicable to subsequent
purchases. The sales charge on each additional purchase is determined by adding
the current market value of the shares the investor currently owns to the amount
being invested. The Right of Accumulation is illustrated by the following
example: if a previous purchase currently valued in the amount of $50,000 had
been made subject to a sales charge and the shares are still held, a current
purchase of $50,000 will qualify for a 3.50% sales charge (i.e. the sales charge
on a $100,000 purchase). The reduced sales charge is applicable only to current
purchases. It is the investor's responsibility to notify the Transfer Agent at
the time of subsequent purchases that the account is eligible for the Right of
Accumulation.
To be entitled to a reduced sales charge based upon shares already owned,
the investor must notify the Distributor or the Transfer Agent at the time of
the purchase that he wishes to take advantage of such entitlement, and give the
numbers of his accounts, and those accounts held in the name of his spouse or
for minor children, the age of any such child and the specific relationship of
each such person to the investor.
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CONCURRENT PURCHASES
To qualify for a reduced sales charge, the investor may combine concurrent
purchases of shares purchased within the Winthrop Opportunity Funds or shares of
the Winthrop Focus Funds. 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.
COMBINED PURCHASE PRIVILEGE
By combining the investor's holdings of shares within the Winthrop
Opportunity Funds or with shares held in the Winthrop Focus Funds, 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, as defined below.
REINSTATEMENT PRIVILEGE
The Reinstatement Privilege permits shareholders to reinvest the proceeds
of each Fund's Class A shares redeemed, within 120 days from the redemption,
without an initial sales charge. It is the investor's responsibility to notify
the Transfer Agent in order to exercise the Reinstatement Privilege.
CONTINGENT DEFERRED SALES CHARGE
A shareholder can purchase Class B shares at net asset value without an
initial sales charge. However a shareholder may pay a Contingent Deferred Sales
Charge ('CDSC') if such shareholder redeems within four years after purchase.
The CDSC will be assessed on an amount equal to the lesser of the then current
net asset value or the original purchase price of the Class B shares being
redeemed. Accordingly, no Class B CDSC will be imposed on amounts representing
increases in net asset value above the initial purchase price of the shares
identified for redemption. In determining the Class B CDSC, Class B shares are
redeemed in the following order: (i) those acquired pursuant to reinvestment of
dividends or distributions, (ii) those held for over four years, and (iii) those
held longest during the four-year period.
Where the charge is imposed, the amount of the charge will depend on the
number of years since the shareholder made the purchase according to the table
below.
<TABLE>
<CAPTION>
YEAR SINCE PERCENTAGE
PURCHASE CONTINGENT
PAYMENT DEFERRED
WAS MADE SALES CHARGE
- --------------------------------- ------------
<S> <C>
First............................ 4%
Second........................... 3%
Third............................ 2%
Fourth........................... 1%
Fifth and thereafter............. 0%
</TABLE>
The amount of any contingent deferred sales charge will be paid by the
shareholder to and retained by the Distributor and will not offset the amounts
which may be paid to the Distributor under the Agreement. For federal income tax
purposes, the amount of the CDSC will reduce the gain or increase the loss, as
the case may be, on the amount recognized on the redemption of shares.
The contingent deferred sales charge will be waived for the following
shareholders or transactions:
(1) shares received pursuant to the exchange privilege which are
currently exempt from a contingent deferred sales charge;
(2) redemptions as a result of shareholder death or disability (as
defined in the Internal Revenue Code of 1986, as amended) (the 'Code');
(3) redemptions made pursuant to a Fund's systematic withdrawal plan
up to 1% monthly or 3% quarterly of the account's total market value
(excluding dividend reinvestments) not to exceed 10% of total market value
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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(4) liquidations, distributions or loans from the following types of
retirement plan accounts: (i) retirement plans qualified under section
401(k) of the Code; (ii) plans described in section 403(b) of the Code and
(iii) deferred compensation plans described in section 457 of the Code.
Redemptions effected by the Funds pursuant to their right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the contingent deferred sales charge.
CONTINGENT DEFERRED SALES CHARGE
FOR CLASS A SHARES
For purchases of Class A shares, a Limited Contingent Deferred Sales Charge
('Limited CDSC') will be imposed by the Funds upon certain redemptions of Class
A shares (or shares into which such Class A shares are exchanged) made within 12
months of purchase, if such purchases were made at net asset value and triggered
the payment by the Distributor of the dealer's commission described above (i.e.
purchases of 1,000,000 or more).
The Limited CDSC will be paid to the Distributor and will be equal to the
lesser of 1% of (i) the net asset value at the time of purchase of the Class A
shares being redeemed or (ii) the net asset value of such Class A shares at the
time of redemption. For purposes of this formula, the 'net asset value at the
time of purchase' will be the net asset value at purchase of the Class A shares
even if those shares are later exchanged and, in the event of an exchange of
Class A shares, the 'net asset value of such shares at the time of redemption'
will be the net asset value of the shares into which the Class A shares have
been exchanged.
Redemptions of such Class A shares held for more than 12 months will not be
subjected to the Limited CDSC and an exchange of such Class A shares will not
trigger the imposition of the Limited CDSC at the time of such exchange. The
period a shareholder owns shares into which Class A shares are exchanged will
count towards satisfying the 12-month holding period except for the period of
time a shareholder's funds are held in the Alliance Money Market Funds. The
Funds will assess the Limited CDSC if such 12-month period is not satisfied
irrespective of whether the redemption triggering its payment is of the Class A
shares of the Funds or shares into which the Class A shares have been exchanged.
In determining whether a Limited CDSC is payable, it will be assumed that
shares not subject to the Limited CDSC are the first redeemed followed by other
shares held for the longest period of time. The Limited CDSC will not be imposed
upon shares representing reinvested dividends or upon amounts representing share
appreciation. All investments made during a calendar month, regardless of when
during the month the investment occurred, will age one month on the last day of
that month and each subsequent month.
The Limited CDSC will be waived for the shareholders and transactions
described above in 'Contingent Deferred Sales Charge' and 'Sales at Net Asset
Value.'
AUTOMATIC CONVERSION OF CLASS B SHARES
Class B shares held for eight years after purchase will be automatically
converted into Class A shares. The Fund will effect conversions of Class B
shares into Class A shares only four times in any calendar year, on the last
business day of the second full week of March, June, September and December
(each, a 'Conversion Date'). If the eighth anniversary after a purchase of Class
B shares falls on a Conversion Date, an investor's Class B shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth anniversary
falls on the day after a Conversion Date, that shareholder will have to hold
Class B shares for as long as an additional three months after the eighth
anniversary after purchase before the shares will automatically convert into
Class A shares.
All such automatic conversions of Class B shares will constitute a tax-free
exchange for federal income tax purposes.
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ADDITIONAL SHAREHOLDER SERVICES
Exchange Privilege Shares of one Class of a Fund can be converted to the
same class of another Fund in Winthrop Opportunity Funds or for shares of
Alliance Government Reserves or Alliance Municipal Trust (collectively, the
'Alliance Money Market Funds'). The Alliance Money Market Funds are no-load
money market funds which retain Alliance Capital Management Company, Inc. as
investment adviser. In addition, shares of each Fund may be exchanged for shares
of the same class of the Winthrop Focus Funds. Exchanges may be made by mail or
telephone (see 'Telephone Redemption and Exchange Privilege'). The Class B
Shares are subject to a contingent deferred sales charge which declines from 4%
during the first year of investment to zero after four years. The exchange
privilege for the Funds, the Winthrop Focus Funds and the Alliance Money Market
Funds is available only in states in which shares of the relevant Fund, Winthrop
Focus Fund or Alliance Money Market Fund may be legally sold. Prospectuses for
each of the Winthrop Focus Funds or the Alliance Money Market Funds may be
obtained from the Funds at the address or telephone number listed on the cover
page of this Prospectus. An exchange is effected on the basis of each Fund's
relative net asset value per share next computed following receipt of an order
for such exchange from the shareholder.
The Funds impose no separate charge for exchanges. A shareholder will not
be assessed any contingent deferred sales charge at the time of an exchange
between the Funds or between any of the Funds and a Winthrop Focus Fund or an
Alliance Money Market Fund. Any applicable contingent deferred sales charge will
be assessed when the shareholder redeems shares of a Fund, Winthrop Focus Fund
or Alliance Money Market Fund. The period of time during which a shareholder
owns shares in any of the Funds will be used to determine the applicable
contingent deferred sales charge. However, the period of time during which a
shareholder's funds are held in the Alliance Money Market Funds will not be
included in the holding period used to determine the applicable contingent
deferred sales charge. A shareholder will pay a higher 12b-1 Fee when exchanging
Class A shares of the Funds (.25 of 1% annually) for Class A shares of the
Winthrop Focus Funds (.30 of 1% annually).
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 Funds reserve the right to reject any
exchange request or otherwise modify, restrict or terminate the exchange
privilege at any time upon at least 60 days prior written notice.
Shareholders should be aware that an exchange is treated for federal income
tax purposes as a sale and purchase of shares which may result in realization of
gain or loss.
Exchanges of shares are subject to the other requirements of the Fund into
which exchanges are made. Annual fund operating expenses for such Fund may be
higher and a sales charge differential may apply. The Funds retain the right to
revoke the exchange privilege for retirement plan accounts that exchange their
shares for shares of the Alliance Money Market Funds.
Automatic Monthly Investment Plan A shareholder may elect on the Share
Purchase Application to make additional investments in a Fund automatically, by
authorizing the Funds to draw on the shareholder's account regularly by check.
A shareholder may change the date (either the 10th, 15th or 20th of each
month) or amount (subject to a minimum of $25) of the shareholder's monthly
investment at any time by letter or telephone call to the Funds at least three
business days before the change becomes effective. The plan may be terminated at
any time without penalty by the shareholder or the Funds.
Dividend Direction Option A shareholder may elect on the Share Purchase
Application to have his or her dividends paid to another individual or directed
for reinvestment within the same class of another series of the Funds or the
Winthrop Focus Funds provided that an existing account in such other Fund or
Winthrop Focus 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
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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. Such withdrawals may be subject to the
contingent deferred sales charge. See 'Purchases, Redemptions and Shareholder
Services.'
Telephone Redemption and Exchange Privilege A shareholder may elect on the
Share Purchase Application to withdraw up to $50,000 per day from such
shareholder's account, via telephone orders (toll free) (800) 225-8011 given to
the Funds by the shareholder or the shareholder's investment dealer of record. A
shareholder may also transfer assets via telephone from such shareholder's
account to the same class of another fund in Winthrop Opportunity Funds or
Winthrop Focus Funds or for shares of an Alliance Money Market Fund. Each Fund
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Such procedures include the requirement that redemption
or transfer orders must include the account name and the account number as
registered with the Funds. The minimum amount for a wire transfer is $1,000.
Proceeds of telephone redemptions may also be sent by automated clearing house
funds ('ACH') to a shareholder's designated bank account. Neither the Funds, the
Adviser, the Subadviser, the Winthrop Focus Funds, the Alliance Money Market
Funds nor any transfer agent for any of the foregoing will be responsible for
following instructions communicated by telephone that are reasonably believed to
be genuine and accordingly, investors bear the risk of loss. The Telephone
Exchange Privilege will be offered automatically unless a shareholder declines
such option on the Share Purchase Application or by writing to the Funds'
Transfer Agent at the address listed in the back of this Prospectus.
Timing of Redemptions and Exchanges If a redemption or transfer order for a
Fund is received on a Fund Business Day prior to the close of the regular
session of the New York Stock Exchange, which is generally 4:00 p.m. New York
City time, the proceeds will be transferred as soon as possible, normally on the
next Fund Business Day, and shares of each Fund will be priced that Fund
Business Day. If the redemption or transfer order is received after the close of
the regular session of the New York Stock Exchange, shares of each Fund will be
priced the next Fund Business Day and the proceeds will be transferred the next
Fund Business Day after pricing. A shareholder also may request that proceeds be
sent by check to a designated bank. Transfers are made without any charge by the
Funds.
Purchases by check may not be redeemed by a Fund until after a reasonable
time necessary to verify that the purchase check has been paid (approximately
ten Fund Business Days from receipt of the purchase check). When a purchase is
made by wire and subsequently redeemed, the proceeds from such redemption
normally will not be transmitted until two Fund Business Days after the purchase
by wire. Bank acknowledgment of payment initialled by the shareholder may
shorten delays.
Additional information concerning these Additional Shareholder Services may
be obtained by contacting the Funds at the address or telephone number listed on
the cover page of this Prospectus.
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NET ASSET VALUE
The net asset value per share for purchases and redemptions of shares of
each Fund is determined as of the close of the regular session of the NYSE,
which is generally 4:00 p.m. New York City time, on each day that trading is
conducted during such session on the NYSE. In accordance with the Funds'
Agreement and Declaration of Trust and By-Laws, net asset value for each Fund is
determined separately for each class by dividing the value of each class's net
assets allocable to such class, less its liabilities, by the total number of
each class's shares then outstanding. For net asset value determination
purposes, the value of a foreign security is determined as of the close of
trading on the foreign exchange on which it is traded and that value is then
converted into U.S. dollars at the foreign exchange rate in effect as of 4:00
p.m., London time, on the day the value of the foreign security is determined.
As a result, to the extent a Fund holds securities quoted or denominated in a
foreign currency, fluctuations in the value of such currencies in relation to
the U.S. dollar will affect the net asset value of such Fund's shares even
though there has not been any change in the value of such securities as quoted
in the foreign currency. For purposes of this computation, the securities in
each Fund's portfolio are, except as described below, valued at their current
market value determined on the basis of market quotations or, if such quotations
are not readily available, such other method as the Trustees believe would
accurately reflect their fair value.
Foreign securities trading may not take place on all days on which the NYSE
is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Accordingly, the determination of the net asset
value of a Fund's shares may not take place contemporaneously with the
determination of the prices of investments held by such Fund. Events affecting
the values of investments that occur between the time their prices are
determined and 4:00 P.M. on each day that the NYSE is open will not be reflected
in the net asset value of a Fund's shares unless the Adviser or Subadviser,
under the supervision of such Fund's Board of Trustees, determines that the
particular event would materially affect net asset value. As a result, the net
asset value of a Fund's shares may be significantly affected by such trading on
days when a shareholder has no access to such Fund.
Short-term securities which mature in more than 60 days are valued based on
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost, if their original maturity was 60 days or less, or
by amortizing their value on the 61st day prior to maturity, if their original
term to maturity exceeded 60 days where it has been determined in good faith
under procedures approved by the Board of Trustees that amortized cost equals
fair value. All other assets are valued at fair value as determined in good
faith under such valuation procedures approved by the Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds intend to distribute to shareholders of the Funds on an annual
basis, substantially all of the net investment income, if any, for each
respective Fund for such period.
Capital gains (short-term and long-term), if any, realized by each of the
Funds during their fiscal year will be distributed to the respective
shareholders shortly after the end of such fiscal year.
Each income dividend and capital gains distribution, if any, declared by
the Funds on the outstanding shares of any Fund will, at the election of each
shareholder, be paid in cash or reinvested in additional full and fractional
shares of that Fund. Such distributions, to the extent they would otherwise be
taxable, will be taxable to shareholders regardless of whether paid in cash or
reinvested in additional shares. An election to receive dividends and
distributions in cash or shares is made at the time of the initial investment
and may be changed by notice received by the Funds from a shareholder or the
shareholder's investment dealer of record at least 30 days prior to the record
date for a
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particular dividend or distribution on shares of each Fund. There is no charge
in connection with the reinvestment of dividends and capital gains
distributions.
There is no fixed dividend rate and there can be no assurance that a Fund
will pay any dividends or realize any gains. The amount of any dividend or
distribution paid by each Fund depends upon the realization by the Fund of
income and capital gains from that Fund's investments. All dividends and
distributions will be made to shareholders of a Fund solely from assets of that
Fund.
Payment (either in cash or in portfolio securities) received by a
shareholder upon redemption of his shares, assuming the shares constitute
capital assets in his hands, will result in long-term or short-term capital
gains (or losses) depending upon the shareholder's holding period and basis in
respect of shares redeemed. Any loss realized by a shareholder on the sale of
Fund shares held for six months or less will be treated for federal income tax
purposes as a long-term capital loss to the extent of any distributions of
long-term capital gains received by the shareholder with respect to such shares.
Note that any loss realized on the sale of shares will be disallowed to the
extent the shares disposed of are replaced within a period of 61 days beginning
30 days before the disposition of such shares. In such case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, so that it will not be liable for federal income taxes
to the extent that its net taxable income and net capital gains are distributed.
RETIREMENT PLANS
Each of the Funds may be a suitable investment vehicle for part or all of
the assets held in various tax-sheltered retirement plans, such as those listed
below. Semper Trust Company serves as custodian under the Individual Retirement
Account ('IRA') prototype and under the prototype retirement plan and charges an
annual account maintenance fee of $15 per participant, regardless of the number
of Funds selected. Persons desiring information concerning these plans should
write or telephone the Funds or the Funds' Transfer Agent. While the Funds
reserve 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.
INDIVIDUAL RETIREMENT ACCOUNTS
The Adviser has available a prototype form of IRA for investment in shares
of any one or more Funds. An individual with a non-working spouse may deduct a
contribution to an IRA of up to $2,250, provided that no more than $2,000 may be
contributed for either spouse. The deduction for a contribution to an IRA is
phased out if an unmarried individual has adjusted gross income in excess of
$25,000, a married couple filing jointly in excess of $40,000 or for any
adjusted gross income of a married taxpayer filing separately.
As with tax-deductible contributions, taxes on the income earned from
nondeductible IRA contributions will be deferred until distributed from the IRA.
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.
SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION PLAN ('SAR/SEP')
A SAR/SEP offers employers with 25 or fewer eligible employees the ability
to establish a SEP/IRA that permits salary deferral contributions. An employer
may also elect to make additional contributions to this Plan. This form of
retirement plan is also available for investment in the Funds.
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EMPLOYER-SPONSORED RETIREMENT PLANS
The Adviser has a prototype retirement plan available which provides for
investment of plan assets in shares of any one or more Funds. The prototype
retirement plan may be used by sole proprietors and partnerships as well as
corporations to establish a tax qualified profit sharing plan or money purchase
pension plan (or both) of their own.
Under the prototype retirement plan, an employer may make annual
tax-deductible contributions for allocation to the accounts of the plan
participants to the maximum extent permitted by the federal tax law for the type
of plan implemented. The Adviser has received favorable opinion letters from the
IRS that the prototype retirement plan is acceptable by qualified employers.
SELF-DIRECTED RETIREMENT PLANS
Shares of the 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 Subadviser and
the Funds' Distributor.
GENERAL INFORMATION
CAPITALIZATION
Winthrop Opportunity Funds was organized as a Delaware business trust under
the laws of Delaware on May 31, 1995. Winthrop Opportunity Funds has an
unlimited number of authorized shares of beneficial interest, no par value,
which may, without shareholder approval, be divided into an unlimited number of
series, and an unlimited number of classes. Such shares are currently divided
into two series, one for each Fund. Shares of each Fund are divided into Class A
and Class B shares of each Fund and are normally entitled to one vote (with
proportional voting for fractional shares) for all purposes. Generally, shares
of both Funds vote as a single series on matters that affect all Funds in
substantially the same manner. As to matters affecting each Fund separately,
such as approval of the investment advisory agreement, shares of each Fund would
vote as separate series. With respect to each Fund, each class is identical in
all respects except that (i) each class bears different distribution services
fees, (ii) each class has exclusive voting rights with respect to its Rule 12b-1
Plan and (iii) each class has a different exchange privilege. The Funds will not
have annual meetings of shareholders so long as at least two-thirds of the
Trustees then in office have been elected by the shareholders. Section 16(c) of
the 1940 Act provides certain rights to shareholders which the Funds will honor
regarding the calling of meetings of shareholders and other communications with
shareholders. Trustees may also call meetings of shareholders from time to time
as the Trustees deem necessary or desirable.
Shares of a Fund are freely transferable, are entitled to dividends as
determined by the Trustees and, in liquidation of a Fund are entitled to receive
the net assets of that Fund. Since Class B shares of each Fund are subject to
greater distribution services fees than Class A shares of the Fund, the
liquidation proceeds to shareholders of Class B shares are likely to be less
than the proceeds to Class A shareholders. Shareholders have no preemptive
rights.
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of the
Adviser and Subadviser, serves as the Funds' Distributor.
CUSTODIAN DIVIDEND DISBURSING AGENT AND TRANSFER AGENT
Citibank, N.A. acts as Custodian for the securities and cash of the Funds,
but plays no part in deciding on the purchase or sale of portfolio securities.
Fund/Plan Services, Inc. acts as dividend disbursing agent, registrar and
transfer agent.
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INFORMATION FOR SHAREHOLDERS
Any shareholder inquiry regarding the Funds or the status of the
shareholder's account can be made to the Funds or to Fund/Plan Services, Inc. by
mail or by telephone at the address or telephone number listed on the cover of
this Prospectus.
Following any purchase or redemption, a shareholder will receive a
statement confirming the transaction and setting forth the total number of
shares owned, their net asset value and contingent deferred sales charge, if
any. Annual audited and semi-annual unaudited financial statements, which
include a list of investments held by the Funds, will be sent to shareholders.
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ADVISER
Wood, Struthers & Winthrop Management Corp.
277 Park Avenue, New York, New York 10172
SUBADVISER
AXA Asset Management Partenaires
40, rue du Colisee, 75008 Paris, France
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue, New York, New York 10172
AUDITORS
Ernst & Young LLP
787 Seventh Avenue, New York, New York 10019
CUSTODIAN
Citibank, N.A.
111 Wall Street, New York, New York 10043
TRANSFER AGENT
Fund/Plan Services, Inc.
P.O. Box 874 (#2 Elm Street),
Conshohocken, PA 19428
COUNSEL
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue, New York, New York 10012
TABLE OF CONTENTS
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Summary of Fund Expenses 2
Financial Highlights 4
Introduction 5
Investment Objectives, Policies and Risk
Considerations 5
Management 9
Expenses of the Funds 10
Purchases, Redemptions and Shareholder Services 12
Net Asset Value 19
Dividends, Distributions and Taxes 19
Retirement Plans 20
General Information 21
</TABLE>
This Prospectus does not constitute an offering in any
state in which such offering may not lawfully be made.
WOOD, STRUTHERS & WINTHROP
Established 1871
[Logo]
INVESTMENT MANAGEMENT SUBSIDIARY OF
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
Prospectus
February 28, 1996
[Logo]
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WINTHROP OPPORTUNITY FUNDS
SHARE PURCHASE APPLICATION
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WINTHROP OPPORTUNITY FUNDS FOR ASSISTANCE IN FILLING OUT THIS APPLICATION CALL:
C/O FUND/PLAN SERVICES, INC. (800) 225-8011
P.O. BOX 874
CONSHOHOCKEN, PA 19428
</TABLE>
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(1) TYPE OF ACCOUNT DATE __________________, 199_______
[ ] New Account [ ] Existing Account #______________________________
(2) INVESTMENT SELECTION -- Please indicate the dollar amount you wish to invest in each Fund and make checks payable to
Winthrop Mutual Funds. Please select the class of shares you wish to purchase. If no class of shares is selected, Class A
shares will be purchased.
WINTHROP FUND NAME AMOUNT CLASS OF SHARES (FUND NUMBER)
------------------ ------ -----------------------------
Developing Markets Fund $_______________________ [ ] Class A (540)
(front-end sales charge)
[ ] Class B (640)
(contingent deferred sales charge)
International Equity Fund $_______________________ [ ] Class A (541)
(front-end sales charge)
Total $_______________________ [ ] Class B (641)
(contingent deferred sales charge)
Initial Investment Minimum per Fund $250; Subsequent Class B Shares are not available for
Investment Minimum $25. Minimums are waived for SEP, purchases of $250,000 or more.
SARSEP, 401K, 403B and 457 plans.
(3) SHARE REGISTRATION
[ ] Individual ________________________________________________ ________________________________________________________
Name *Joint Owner, if any
[ ] Gift to Minor______________________________________________ as custodian for _______________________________________
Name of Custodian Name of minor
under the ________________________________ Uniform Gift to Minors Act. (Reference social security # of minor in space
State provided below)
[ ] Other _______________________________________________________________________________________________________________
(Name of corporation, organization, trusts, etc.)
Address _________________________________________________________________________________________________________________
Street
_________________________________________________________________________________________________________________
City State Zip Code
Phone Number (_____) ________________________________ Social Security or Taxpayer ID #** ________________________________
* In the event of co-owners, a joint tenancy with right of survivorship will be assumed unless otherwise indicated.
** Required to open an account.
(4) TELEPHONE TRANSACTIONS
TELEPHONE EXCHANGE PRIVILEGE -- I understand that unless I have checked the box below, this privilege will automatically
apply.
(NOTE: Telephone exchanges may only be processed between accounts that have identical registrations)
[ ] I do not elect the telephone exchange privilege.
TELEPHONE REDEMPTION PRIVILEGE -- I hereby authorize the Funds or its transfer agent to effect the redemption of Fund
shares for my account according to my telephone instructions or telephone instructions from my Broker/Agent as follows:
[ ] Mail Redemption proceeds to the name and address in which my Fund Account is registered.
[ ] Deposit via ACH to the commercial bank referenced in Section 10.
[ ] Wire Redemption proceeds to the Bank referenced in Section 10 and charge my Fund account the applicable wire fee.
(NOTE: The maximum telephone redemption amount is $50,000. Telephone redemption checks will only be mailed to the name
and address of record; and the address must have no change within the last 30 days.)
(5) SIGNATURE -- Required by federal tax law to avoid 31% backup withholding: By signing, I certify under penalties of
perjury that the social security or taxpayer identification number entered above is correct and that I have not been
notified by the IRS that I am subject to backup withholding unless I have checked the box to the right. [ ] I am subject
to backup withholding.
By selecting any of the above telephone privileges, I agree that neither the Funds, the Adviser, the Subadviser, the
Winthrop Focus Funds, the Alliance Money Market Funds nor any transfer agent for any of the foregoing will be liable for
any loss, injury, damage or expense as a result of acting upon telephone instructions purporting to be on my behalf, that
the Funds reasonably believe to be genuine, and that neither the Funds nor any such party will be responsible for the
authenticity of such telephone instructions. I understand that any or all of these privileges may be discontinued by me
or the Funds at any time. I understand and agree that the Funds reserve the right to refuse any telephone instructions
and that my investment dealer or agent reserves the right to refuse to issue any telephone instructions I may request.
I am of legal age and capacity and have received and read the Prospectus and agree to its terms.
The person(s), if any, signing on behalf of the investor (i.e. corporation, organization, trust, etc.) represent and
warrant that they are authorized to sign this application and purchase, redeem, or exchange shares on behalf of such
investor.
__________________________________________________________________ ____________________________________________________
Signature Date
__________________________________________________________________ ____________________________________________________
Signature Date
(If an institution, please include documentation establishing authorized signatories).
(6) FOR DEALER USE ONLY -- We guarantee the signature(s) set forth in Section 5, as well as the legal capacity of the
shareholder.
Dealer Name _____________________________________________________________ Dealer No.____________________________________
Branch Office Name ______________________________________________________ Branch Office No._____________________________
Branch Office Address____________________________________________________________________________________________________
Representative's Name____________________________________________________ Representative's No._________________________
Representative's Phone No._________________________________ Authorized Signature ________________________________________
------------
FOR DIVIDEND INSTRUCTIONS AND OTHER ACCOUNT OPTIONS, PLEASE COMPLETE THE REVERSE SIDE OF THIS PURCHASE APPLICATION.
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WINTHROP OPPORTUNITY FUNDS
SHARE PURCHASE APPLICATION
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(7) DIVIDEND OPTIONS
DIVIDEND INSTRUCTIONS -- If no instructions are given, all distributions will be reinvested.
INCOME DIVIDENDS: (select one)
[ ] Reinvest dividends [ ] Pay dividends in cash [ ] Use Dividend Direction Option
CAPITAL GAINS DISTRIBUTION: (select one)
[ ] Reinvest capital gains [ ] Pay capital gains in cash [ ] Use Dividend Direction Option
[ ] DIVIDEND DIRECTION OPTION I/we hereby authorize and request that my/our distributions be either (a)
paid to the person and/or address designated below or (b) reinvested into my/our account which we
currently maintain in another Winthrop Fund:
a) Name ________________________________________________ b) Winthrop Fund ______________________________________________
Account or Policy #_____________________________________ Existing Acct. No.___________________________________________
(if applicable)
Address_________________________________________________
City, State, Zip________________________________________
(NOTE: Dividend checks that are returned 'not forwardable' will be reinvested in additional shares of the Fund at the
current net asset value on the date the check is received.)
(8) [ ] AUTOMATIC MONTHLY INVESTMENT PLAN* -- I/we hereby authorize you to draw on my/our bank account an amount of $_______
($25 minimum) for an investment in the Funds beginning on the 10th, 15th or 20th (circle one) day and continuing on
that same day each month.
__________________________________________________________ ____________________________________________________________
Fund Name(s) Bank Account Number
_________________________________________________________________________________________________________________________
Branch Name and Address of Bank
The Fund requires signatures of bank account owners exactly as they appear on bank records:
________________________________________________________ _______________ _________________________________ ___________
Individual Account Owner Date Joint Account Owner Date
*(ATTACH VOIDED CHECK -- Include a blank check from the bank account from which your investment will be made. Write
'VOID' across the face of the check, and attach it to this form.)
(9) [ ]SYSTEMATIC CASH WITHDRAWAL PLAN -- (Minimum initial purchase $10,000). The undersigned requests that the Funds, or any
transfer agent of the Funds, as their agent make withdrawals beginning the 25th day (approximately of ____________,
19___).
FUND NAME AMOUNT
--------- ------
_____________________________ ______________________________ [ ] monthly [ ] quarterly [ ] semi-annually [ ] annually
_____________________________ ______________________________ [ ] monthly [ ] quarterly [ ] semi-annually [ ] annually
Payments under this plan should be sent:
[ ] by check to the name and address in which my/our fund account is registered.
[ ] by automated clearing house 'ACH' deposits to my Bank and account referenced in Section 10.
[ ] by wire to the Bank and account referenced in Section 10 and charge my Fund account the applicable wire fee.
[ ] by check to the Special Payee referenced below:
Name of Payee ___________________________________________________ Account or Policy # __________________________________
(if applicable)
Address _________________________________________________________________________________________________________________
(10) BANK ACCOUNT INFORMATION* (To be completed if applicable under Sections 4 or 9).
___________________________________________________________ _________________________________________________________
Name of Bank Branch if applicable
___________________________________________________________ _________________________________________________________
Name in which Bank Account is Established Bank Account Number
*(ATTACH VOIDED CHECK -- Include a blank check from your bank account. Write 'VOID' across the face of the check, and
attach it to this form.)
(11) REDUCED SALES CHARGES (Class A only) -- If you, your spouse or minor children own shares in other Winthrop Funds, you may
be eligible for a reduced sales charge. If applicable, please complete the sections below and indicate the accounts to be
considered.
RIGHT OF ACCUMULATION OR CONCURRENT PURCHASES
[ ] I qualify for Right of Accumulation or Concurrent Purchase privileges with the account(s) listed below.
____________________________ _________________________________ _____________________________ _________________________
Fund Name Account Number Fund Name Account Number
____________________________ _________________________________ _____________________________ _________________________
Fund Name Account Number Fund Name Account Number
(NOTE: When qualifying for the Concurrent Purchase privilege, Account Number reference is not required for new accounts).
LETTER OF INTENT
[ ] I agree to the terms of the Letter of Intent set forth in the Prospectus (including the escrowing of shares.)
Although I am not obligated to do so, it is my intention to invest over a thirteen-month period in shares of one or
more Winthrop Funds in an aggregate amount at least equal to:
[ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
If the full amount indicated is not purchased within 13 months, I understand an additional sales charge must be paid from
my accounts.
(12) CONSOLIDATED ACCOUNT STATEMENTS -- If you prefer to receive one quarterly combined statement instead of individual
account statements please reference the Winthrop Fund name and account numbers that you would like consolidated.
________________________________________________________ ______________________________________________________________
Fund Name/Account Number Fund Name/Account Number
________________________________________________________ ______________________________________________________________
Fund Name/Account Number Fund Name/Account Number
</TABLE>
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
277 PARK AVENUE, NEW YORK, NEW YORK 10172
TOLL FREE (800) 255-8011
STATEMENT OF ADDITIONAL INFORMATION
February 28, 1996
This Statement of Additional Information relates to the Winthrop Developing
Markets Fund (the 'Developing Markets Fund') and the Winthrop International
Equity Fund (the 'International Equity Fund' and together with the Developing
Markets Fund, the 'Funds'), each of which is a series of the Winthrop
Opportunity Funds. The Statement of Additional Information is not a prospectus
and should be read in conjunction with the Funds' current Prospectus dated
February 28, 1996, as supplemented from time to time, which is incorporated
herein by reference. A copy of the Prospectus may be obtained by contacting the
Funds at the address or telephone number listed above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Investment Policies and Restrictions............................................................................. 1
Management....................................................................................................... 7
Expenses of the Funds............................................................................................ 9
Purchases, Redemptions, Exchanges and Systematic Withdrawal Plan................................................. 10
Net Asset Value.................................................................................................. 13
Dividends, Distributions and Taxes............................................................................... 14
Portfolio Transactions........................................................................................... 17
Portfolio Turnover............................................................................................... 19
Investment Performance Information............................................................................... 19
Shares of Beneficial Interest.................................................................................... 20
General Information.............................................................................................. 21
Appendix -- Securities Ratings................................................................................... A-1
Financial Statements............................................................................................. B-1
</TABLE>
<PAGE>
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The following investment policies and restrictions supplement and should be
read in conjunction with the information set forth under the heading 'Investment
Objectives, Policies and Risk Considerations' in the Funds' Prospectus. Except
as noted in the Prospectus, each Fund's investment policies are not fundamental
and may be changed by the Trustees of the Funds without shareholder approval;
however, shareholders will be notified prior to a significant change in such
policies. Each Fund's fundamental investment restrictions may not be changed
without shareholder approval as defined in 'Fundamental Investment Restrictions'
in this Statement of Additional Information.
It is the policy of the Developing Markets Fund to seek long-term growth of
capital by investing primarily in common stocks and other equity securities from
developing countries; it is the policy of the International Equity Fund to seek
long-term growth of capital by investing primarily in common stocks and other
equity securities from established markets outside the United States. In
addition, each Fund may invest in any of the securities described below.
Depositary Receipts. The Funds may purchase sponsored or unsponsored ADRs,
EDRs and GDRs (collectively, 'Depositary Receipts'). ADRs are American
Depositary Receipts typically issued by a U.S. bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs and GDRs are Depositary Receipts typically issued by foreign banks or trust
companies, although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either a foreign or a
United States corporation. Generally, Depositary Receipts in registered form are
designed for use in the U.S. securities market and Depositary Receipts in bearer
form are designed for use in securities markets outside the United States.
Depositary Receipts may not necessarily be denominated in the same currency as
the underlying securities into which they may be converted. Depositary Receipts
may be issued pursuant to sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities traded in the
form of Depositary Receipts. In unsponsored programs, the issuer may not be
directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information from an
issuer that has participated in the creation of a sponsored program.
Accordingly, there may be less information available regarding issuers of
securities underlying unsponsored programs and there may not be a correlation
between such information and the market value of the Depositary Receipts. For
purposes of each Fund's investment policies, a Fund's investments in Depositary
Receipts will be deemed to be investments in the underlying 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 stock of the same or different issuer.
Convertible securities are senior to common stocks in a corporation's capital
structure, but are usually subordinated to similar nonconvertible securities.
While providing a fixed income stream (generally higher in yield than the income
stream from common stocks but lower than that afforded by a similar
nonconvertible fixed income security), a convertible security also affords an
investor the opportunity, through its conversion feature, to participate in the
capital appreciation dependent upon a market price advance in the underlying
common stock. Each Fund may invest up to 25% of its assets in foreign
convertible securities. Wood, Struthers & Winthrop Management Corp. (the
'Adviser') and AXA Asset Management Partenaires (the 'Subadviser') currently do
not intend to invest over 5% of each Fund's assets in convertible securities
rated below investment grade.
The market value of a convertible security is at least the higher of its
'investment value' (i.e., its value as a fixed-income security) or its
'conversion value' (i.e., its value when converted into its underlying common
stock). As a fixed-income security, a convertible security tends to increase in
market value when interest rates decline and tends to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market
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value of the convertible security. 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. While no
securities investment is without some risk, investments in convertible
securities generally entail less risk than investments in the common stock of
the same issuer.
Nonconvertible Fixed Income Securities. Each Fund may invest up to 35% of
its total assets in investment grade fixed income securities. 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 Investor Service ('Moody's')
in the case of long-term obligations and equivalently rated obligations in the
case of short-term obligations, or unrated instruments believed by the Adviser
or Subadviser to be of comparable quality to such rated instruments. Securities
rated BBB by S&P are regarded by S&P as having an adequate capacity to pay
interest and repay principal; whereas such securities normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely, in the opinion of S&P, to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories. Securities rated Baa by Moody's are considered by Moody's to be
medium grade obligations; they are neither highly protected nor poorly secured;
interest payments and principal security appear to be adequate for the present
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time; in the opinion of Moody's, they lack
outstanding investment characteristics and in fact have speculative
characteristics as well. Fixed income securities in which the Funds may invest
include asset and mortgage backed securities. Prepayments of principal may be
made at any time on the obligations underlying asset and mortgage backed
securities and are passed on to the holders of the assets and mortgage backed
securities. As a result, if a Fund purchases such a security at a premium,
faster than expected prepayments will reduce and slower than expected
prepayments will increase yield to maturity. Conversely, if a Fund purchases
these securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity. For a
more complete description of Moody's and S&P's ratings, see the Appendix to this
Statement of Additional Information. The foregoing investment grade limitation
applies only at the time of initial investment and a Fund may determine to
retain in its portfolio securities the issuers of which have had their credit
characteristics downgraded.
Options. The Funds may purchase and sell call and put options. A call
option gives the purchaser, in exchange for a premium paid, the right for a
specified period of time to purchase the securities or currency subject to the
option at a specified price (the exercise price or strike price). The writer, or
seller, of a call option, in return for the premium, has the obligation, upon
exercise of the option, to deliver, depending upon the terms of the option
contract, the underlying securities or a specified amount of cash to the
purchaser upon receipt of the exercise price. When a Fund writes a call option,
that Fund gives up the potential for gain on the underlying securities or
currency in excess of the exercise price of the option during the period that
the option is open.
A put option gives the purchaser, in return for a premium, the right, for a
specified period of time, to sell securities or currency subject to the option
to the writer of the put at the specified exercise price. The writer of the put
option, in return for the premium, has the obligation, upon exercise of the
option, to acquire the securities or currency underlying the option at the
exercise price. A Fund that sells a put option might, therefore, be obligated to
purchase the underlying securities or currency for more than their current
market price.
If a Fund desires to sell a particular security from its portfolio on which
it has written an option, the Fund will seek to effect a closing purchase
transaction prior to or concurrently with the sale of the security. A closing
purchase transaction is a transaction in which an investor who is obligated as a
writer of an option terminates his obligation by purchasing an option of the
same series as the option previously written. (Such a purchase does not result
in the ownership of an option). A Fund may enter into a closing purchase
transaction to realize a profit on a previously written option or to enable the
Fund to write another option on the underlying security with either a different
exercise
2
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<PAGE>
price or expiration date or both. A Fund realizes a profit or loss from a
closing purchase transaction if the cost of the transaction is less or more,
respectively, than the premium received from the writing of the option.
The Funds will write only fully 'covered' options. An option is fully
covered if at all times during the option period, the Fund writing the option
owns either (i) the underlying securities, or securities convertible into or
carrying rights to acquire the optioned securities at no additional cost, or
(ii) an offsetting call option on the same securities at the same or a lower
price.
A Fund may not write a call option if, as a result thereof, the aggregate
of such Fund's portfolio securities subject to outstanding call options (valued
at the lower of the option price or market value of such securities) would
exceed 10% of its total assets. The Funds may also purchase and sell financial
futures contracts and options thereon for hedging and risk management purposes
and to enhance gains as permitted by the Commodity Futures Trading Commission
(the 'CFTC').
The Funds may also purchase and sell securities index options. Securities
index options are similar to options on specific securities. However, because
options on securities indices do not involve the delivery of an underlying
security, the option represents the holder's right to obtain from the writer in
cash a fixed multiple of the amount by which the exercise price exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the
underlying securities index on the exercise date. When a Fund writes an option
on a securities index, it will establish a segregated account with its custodian
in which it will deposit cash or high quality short-term obligations 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.
Each Fund's successful use of options and financial futures depends on the
ability of the Adviser and 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 equity securities for investment. The ability of a Fund to
close out an option or futures position depends on a liquid secondary market.
There is no assurance that liquid secondary markets will exist for any
particular option or futures contract at any particular time. The inability to
close options and futures positions also could have an adverse impact on each
Fund's ability to effectively hedge its portfolio. There is also the risk of
loss by the Funds of margin deposits or collateral in the event of bankruptcy of
a broker with whom the Funds have an open position in an option, a futures
contract or related option.
To the extent that puts, calls, straddles and similar investment strategies
involve instruments regulated by the CFTC, each Fund is limited to an investment
not in excess of 5% of its total assets, except that each Fund may purchase and
sell such instruments, without limitation, for bona fide hedging purposes.
Forward Foreign Currency Exchange Contracts. A forward contract on foreign
currency is an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days agreed upon by the parties from the
date of the contract at a price set on the date of the contract.
The Funds will generally enter into forward contracts only under two
circumstances. First, when a Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to 'lock in'
the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed to
settle the transaction. Second, when the Adviser or Subadviser believes that the
currency of a particular foreign country may suffer or enjoy a substantial
movement against another currency, it may enter into a forward contract to sell
or buy the former foreign currency (or another currency which acts as a proxy
for that currency) approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. This second
investment practice is generally referred to as 'cross-hedging.' Although
forward contracts will
3
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be used primarily to protect the Funds from adverse currency movements, they
also involve the risk that anticipated currency movements will not be accurately
predicted.
Futures and Options Thereon. The Funds 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. A financial futures contract is an agreement to purchase or
sell an agreed amount of securities or currencies at a set price for delivery in
the future.
Repurchase Agreements. The Funds may enter into 'repurchase agreements,'
with member banks of the Federal Reserve System, 'primary dealers' (as
designated by the Federal Reserve Bank of New York) in such securities or with
any domestic or foreign broker/dealer which is recognized as a reporting
government securities dealer. 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 Funds require continual maintenance of
collateral with the Custodian in an amount equal to, or in excess of, the market
value of the securities which are the subject of a repurchase agreement. In the
event a vendor defaults on its repurchase obligation, the Fund might suffer a
loss to the extent that the proceeds from the sale of the collateral were less
than the repurchase price. If the vendor becomes the subject of bankruptcy
proceedings, the Fund might be delayed in selling the collateral.
Reverse Repurchase Agreements. The Funds may also 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 securities having a value not less than the
repurchase price. Reverse repurchase agreements involve the risk that the market
value of the securities subject to such agreement could decline below the
repurchase price to be paid by a Fund for such securities. In the event the
buyer of securities under a reverse repurchase agreement filed for bankruptcy or
became insolvent, such buyer or receiver would receive an extension of time to
determine whether to enforce a Fund's obligations to repurchase the securities
and a 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 high-grade debt
securities are segregated in an amount at least equal to the amount of the
liability.
Illiquid Investments. Each Fund may invest up to 15% of its assets in
illiquid investments. Under the supervision of the Trustees, the Adviser and
Subadviser determine the liquidity of a Fund's investments. The absence of a
trading market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for a Fund
to sell them promptly at an acceptable price. The staff of the SEC currently
takes the position that OTC options purchased by a Fund, and portfolio
securities 'covering' the amount of that Fund's obligation pursuant to an OTC
option sold by it (the cost of the sell-back plus the in-the-money amount, if
any) are illiquid, and are subject to such Fund's limitations on investments in
illiquid securities.
Securities Lending. The Funds may seek to receive or increase income by
lending their respective portfolio securities. Under present regulatory
policies, such loans may be made to member firms of the New York Stock Exchange
and are required to be secured continuously by collateral held by the Custodian
consisting of cash, cash equivalents or U.S. Government Securities maintained in
an amount at least equal to the market value of the securities loaned.
Accordingly, the Funds will continuously secure the lending of portfolio
securities by collateral held by the Custodian consisting of cash, cash
equivalents or U.S. Government Securities maintained in an amount at least equal
to the market value of the securities loaned. The Funds have the right to call
such a loan and obtain the securities loaned at any time on five days' notice.
Cash collateral may be invested in fixed income securities rated at least A or
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better by S&P or Moody's. As is the case with any extension of credit, loans of
portfolio securities involve special risks in the event that the borrower should
be unable to repay the loan, including delays or inability to recover the loaned
securities or foreclose against the collateral. The aggregate value of
securities loaned by a Fund may not exceed 25% of the value of its net assets.
When Issued, Delayed Delivery Securities and Forward Commitments. The Funds
may, to the extent consistent with their other investment policies and
restrictions, enter into forward commitments for the purchase or sale of
securities, including on a 'when issued' or 'delayed delivery' basis in excess
of customary settlement periods for the type of security involved. In some
cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of
the commitment, with payment and delivery taking place in the future, generally
a month or more after the date of the commitment. While a Fund will only enter
into a forward commitment with the intention of actually acquiring the security,
such Fund may sell the security before the settlement date if it is deemed
advisable.
Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to a Fund prior to the
settlement date. Each Fund will segregate with its Custodian cash or liquid
high-grade debt securities in an aggregate amount at least equal to the amount
of their respective outstanding forward commitments.
Privatization. The governments in some countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ('privatization'). The Adviser and Subadviser believe
that privatization may offer opportunities for significant capital appreciation,
and intend to invest assets of the Funds in privatization in appropriate
circumstances. In certain countries, the ability of foreign entities such as the
Funds to participate in privatization may be limited by local law and/or the
terms on which the Funds may be permitted to participate may be less
advantageous than those afforded local investors. There can be no assurance that
certain governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
Investment Companies. Certain markets are closed in whole or in part to
equity investments by foreigners. The Funds may be able to invest in such
markets solely or primarily through governmentally authorized investment
vehicles or companies. Pursuant to the Investment Company Act of 1940, as
amended (the '1940 Act'), each Fund generally may invest up to 10% of its total
assets in the aggregate in shares of other investment companies and up to 5% of
its total assets in any one investment company as long as each investment does
not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment. Investment in other investment
companies may involve the payment of substantial premiums above the value of
such investment companies' portfolio securities, and is subject to limitations
under the 1940 Act and market availability. The Funds do not intend to invest in
such investment companies unless, in the judgment of Adviser and Subadviser, the
potential benefits of such investment justify the payment of any applicable
premium or sales charge. As a shareholder in an investment company, a Fund would
bear its ratable share of that investment company's expenses, including its
advisory and administration fees. At the same time a Fund would continue to pay
its own management fees and other expenses.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The following fundamental investment restrictions are applicable to each of
the Funds and may not be changed with respect to a Fund without the approval of
a majority of the shareholders of that Fund, which means the
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affirmative vote of the holders of (a) 67% or more of the shares of that Fund
represented at a meeting at which more than 50% of the outstanding shares of the
Fund are represented or (b) more than 50% of the outstanding shares of that
Fund, whichever is less. Except as set forth in the Prospectus, all other
investment policies or practices are considered by each Fund not to be
fundamental and accordingly may be changed without shareholder approval. If a
percentage restriction is adhered to at the time of investment, a later increase
or decrease in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
Briefly, these restrictions provide that 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 its total
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 maybe invested without regard to
such 5% and 10% limitations;
(2) invest 25% or more of the value of its total assets in any one
industry, provided that, for purposes of this policy, consumer finance
companies, industrial finance companies and gas, electric, water and
telephone utility companies are each considered to be separate industries;
(3) issue senior securities (including borrowing money, including on
margin if margin securities are owned and enter into reverse repurchase
agreements) in excess of 33 1/3% of its total assets (including the amount
of senior securities issued but excluding any liabilities and indebtedness
not constituting senior securities) except that the Fund may borrow up to
an additional 5% of its total assets for temporary purposes; or pledge its
assets other than to secure such issuances or in connection with hedging
transactions, short sales, when-issued and forward commitment transactions
and similar investment strategies. The Fund's obligations under swaps are
not treated as senior securities;
(4) make loans of money or property to any person, except through
loans of portfolio securities, the purchase of fixed income securities
consistent with the Fund's investment objective and policies or the
acquisition of securities subject to repurchase agreements;
(5) underwrite the securities of other issuers, except to the extent
that in connection with the disposition of portfolio securities the Fund
may be deemed to be an underwriter:
(6) purchase real estate or interests therein;
(7) purchase or sell commodities or commodities contracts except for
purposes, and only to the extent, permitted by applicable law without the
Fund becoming subject to registration with the CFTC as a commodity pool;
(8) make any short sale of securities except in conformity with
applicable laws, rules and regulations and unless, giving effect to such
sale, the market value of all securities sold short does not exceed 25% of
the value of the Fund's total assets and the Fund's aggregate short sales
of a particular class of securities does not exceed 25% of then outstanding
securities of that class; or
(9) invest in oil, gas or other mineral leases.
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MANAGEMENT
The Trustees and principal officers of the Funds, their ages and their
primary occupations during the past five years are set forth below. Unless
otherwise specified, the address of each such person is 277 Park Avenue, New
York, New York 10172. Those Trustees whose names are preceded by an asterisk are
'interested persons' of the Funds as defined by the Investment Company Act of
1940, as amended (the '1940 Act').
*G. Moffett Cochran, 45, Chairman of the Board of Trustees and President of
the Funds is President and Chief Executive Officer of the Adviser with which he
has been associated since 1992. Prior to his association with the Funds and the
Adviser, Mr. Cochran was a Senior Vice President with Bessemer Trust Companies.
Robert E. Fisher, 65, Trustee of the Funds, has been Partner at the law
firm Lowenthal, Landau, Fischer & Bring, P.C., since prior to 1990.
*Martin Jaffe, 49, Trustee, Vice President, Secretary and Treasurer of the
Funds, is a Managing Director, Treasurer and Chief Operating Officer of the
Adviser, with which he has been associated since prior to 1990.
Wilmot H. Kidd, III, 54, Trustee of the Funds, has been President of
Central Securities Corporation, since prior to 1990.
John W. Waller, III, 44, Trustee of the Funds, has been chairman of Waller
Capital Corporation, an investment banking firm, since prior to 1990.
James A. Engle, 37, Vice President of the Funds, is a Managing Director and
Chief Investment Officer of the Adviser with which he has been associated since
prior to 1990.
Charles E. Hughes, 53, Assistant Secretary to the Funds, is a Senior Vice
President of the Adviser, with which he has been associated since prior to 1990.
Brian A. Kammerer, 38, Assistant Treasurer to the Funds, is a Vice
President of the Adviser, with which he has been associated since prior to 1990.
The following table sets forth certain information regarding compensation
of the Funds' Trustees and officers. Except as disclosed below, no executive
officer or person affiliated with the Funds received compensation from the Funds
for the fiscal year ended October 31, 1995 in excess of $60,000.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
PENSION OR FROM TRUST
AGGREGATE RETIREMENT AND FUND
COMPENSATION BENEFITS ACCRUED ESTIMATED ANNUAL COMPLEX PAID
FROM AS PART OF TRUST BENEFITS UPON TO
NAME AND POSITION TRUST(1) EXPENSES RETIREMENT TRUSTEES(2)
- ----------------------------------------------------- ------------ ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
G. Moffett Cochran, Trustee.......................... $ 0 None None $ 0(7)
Robert E. Fisher, Trustee............................ $ 10,000 None None $ 10,000(2)
Martin Jaffe, Trustee................................ $ 0 None None $ 0(2)
Wilmot H. Kidd, III, Trustee......................... $ 10,000 None None $ 10,000(2)
John W. Waller, III, Trustee......................... $ 10,000 None None $ 10,000(2)
</TABLE>
- ------------
(1) The Funds have not completed their first full year of operations. The Funds
anticipate paying each independent Trustee approximately $10,000 in each
calendar year.
(footnotes continued on next page)
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(footnotes continued from previous page)
(2) Represents the total compensation estimated to be paid to such persons
during a full calendar year. The parenthetical number represents the number
of Boards of Directors or Trustees, as the case may be, in which each
Trustee serves of investment companies (including the Funds) that are
considered part of the same fund complex as the Funds, because, among other
things, they have a common investment adviser.
The Trustees of the Funds who are officers or employees of the Adviser or
any of its affiliates receive no remuneration from the Funds. Each of the
Trustees who are not affiliated with the Adviser will be paid a $2,000 fee for
each board meeting attended. Messrs. Cochran and Jaffe are members of the
Executive Committee. Messrs. Fisher, Kidd and Waller are members of the Audit
Committee and are paid a $1,000 fee for each Audit Committee meeting attended.
ADVISER
The Adviser, a Delaware corporation with principal offices at 277 Park
Avenue, New York, New York 10172, has been retained under an Investment Advisory
Agreement as the Funds' investment adviser (see 'Management' in the Prospectus).
The Adviser was established in 1871, as a private concern to manage money for
the Winthrop family of Boston. From these origins, the Adviser has grown to
serve a select group of individual and institutional investors.
The Adviser is (since 1977) a wholly-owned subsidiary of Donaldson, Lufkin
& Jenrette Securities Corporation ('DLJ Securities'), the distributor of the
Fund's shares, which is a wholly-owned subsidiary of Donaldson, Lufkin &
Jenrette, Inc., which is in turn an independently operated, indirect subsidiary
of The Equitable Companies Incorporated ('ECI'), a holding company controlled by
AXA, a French insurance holding company. The Adviser is an integral part of the
DLJ Securities family, and as one of the oldest money management firms in the
country, it maintains a tradition of personalized service and performance. The
address of Donaldson, Lufkin & Jenrette, Inc. is 277 Park Avenue, New York, New
York 10172. The address of ECI is 787 Seventh Avenue, New York, New York 10019.
As of April 30, 1995, AXA owns 60.5% of the outstanding shares of the
common stock of ECI. AXA is the holding company for an international group of
insurance and related financial services companies. AXA's insurance operations
are comprised of activities in life insurance, property and casualty insurance
and reinsurance. The insurance operations are diverse geographically with
activities in France, the United States, the United Kingdom, Canada and other
countries, principally in Europe. AXA is also engaged in asset management,
investment banking and brokerage, real estate and other financial services
activities in the United States and Europe. Based on information provided by
AXA, as of January 1, 1995, 42.3% of the issued shares (representing 54.7% of
the voting power) of AXA were owned by Midi Participations, a French corporation
that is a holding company. The voting shares of Midi Participations are in turn
owned 60% by Finaxa, a French corporation that is a holding company, and 40% by
subsidiaries of Assicurazioni Generali S.p.A., an Italian corporation
('Generali') (one of which, Belgica Insurance Holding S.A., a Belgian
corporation, owned 34.1%). As of January 1, 1995, 62.1% of the issued shares
(representing 75.7% of the voting power) of Finaxa were owned by five French
mutual insurance companies -- AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances Vie Mutuelle
and Uni Europe Assurance Mutuelle (the 'Mutuelles AXA') (one of which, AXA
Assurances I.A.R.D. Mutuelle, owned 31.8% of the issued shares, representing
39.0% of the voting power), and 26.5% of the issued shares (representing 16.6%
of the voting power) of Finaxa were owned by Banque Paribas, a French bank
('Paribas'). Including the shares owned by Midi Participations, as of January 1,
1995, the Mutuelles AXA directly or indirectly owned 51.3% of the issued shares
(representing 65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA which are not entitled to be
voted. Acting as a group, the Mutuelles AXA control AXA, Midi Participations and
Finaxa.
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The Investment Advisory Agreement was approved by the Board of Trustees of
the Funds on July 25, 1995 and by the then shareholders, the Adviser and
Subadviser, on August 23, 1995 and became effective 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 each Fund provided
that such continuation is specifically approved at least annually by a majority
vote of the Trustees who neither are interested persons of the Funds 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.
Pursuant to the terms of the Investment Advisory Agreement, the Adviser may
retain, at its own expense, a subadviser to assist in the performance of its
services to the Funds.
SUBADVISER
The Subadviser has been retained under a subadvisory agreement by the
Adviser to assist in the performance of its services to the Funds.
The Subadviser is a wholly-owned subsidiary of AXA.
Certain other clients of the Adviser or Subadviser may have investment
objectives, policies and risk considerations similar to those of the Funds. The
Adviser or Subadviser may, from time to time, make recommendations which result
in the purchase or sale of a particular security by their other clients
simultaneously with the 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 and Subadviser to allocate advisory recommendations
and the placing of orders in a manner which is deemed equitable by the Adviser
and Subadviser to the accounts involved, including the Funds. When two or more
of the clients of the Adviser and Subadviser (including the Funds) are
purchasing the same security on a given day from the same broker-dealer, such
transactions may be averaged as to price.
EXPENSES OF THE FUNDS
GENERAL
In addition to the payments to the Adviser under the investment advisory
agreement, each Fund pays the other expenses incurred in its organization and
operations, including the costs of printing prospectuses and other reports to
existing shareholders; all expenses and fees related to registration and filing
with the Securities and Exchange Commission and with state regulatory
authorities; custody, transfer and dividend disbursing expenses; legal and
auditing costs; clerical, accounting and other office costs; fees and expenses
of Trustees who are not affiliated with the Adviser or Subadviser; costs of
maintenance of existence; and interest charges, taxes, brokerage fees and
commissions.
As to the obtaining of clerical and accounting services not required to be
provided to the Funds by the Adviser under the investment advisory agreement or
Subadviser under the investment subadvisory agreement, the Funds may employ
their own personnel. For such services, they also may utilize personnel employed
by the Adviser, the Subadviser or their affiliates. In such event, the services
shall be provided to the Funds at cost and the payments therefor must be
specifically approved in advance by the Funds' Trustees, including a majority of
its disinterested Trustees.
DISTRIBUTION PLAN
Pursuant to Rule 12b-1 adopted by the Securities and Exchange Commission
under the 1940 Act, the Funds have adopted a Distribution Agreement (the
'Distribution Agreement') and a Rule 12b-1 Plan for each Class of shares of
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each Fund (the '12b-1 Plans') to permit such Fund directly or indirectly to pay
expenses associated with the distribution of shares.
Pursuant to the Distribution Agreement and the 12b-1 Plans, the Treasurer
of the Funds reports the amounts expended under the Distribution Agreement and
the purposes for which such expenditures were made to the Trustees of the Funds
on a quarterly basis. Also, the 12b-1 Plans provide that the selection and
nomination of disinterested Trustees (as defined in the 1940 Act) 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 the Funds nor have any direct or indirect financial
interest in the Distribution Agreement, the 12b-1 Plans or in any other
agreements related to the 12b-1 Plans, cast in person at a meeting called for
the purpose of voting on such approval. The Distribution Agreement was initially
approved by each Fund's Trustees on July 25, 1995 and by the then shareholders
on August 23. 1995. 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 the 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 such Funds. Each
Fund's 12b-1 Plan may be terminated without penalty at any time by a majority
vote of the disinterested Trustees, by a majority vote of the outstanding shares
of a Fund 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 a Fund
on not more than 60 days notice to any other party to the agreement, and will
terminate automatically in the event of assignment.
With respect to sales of a Fund's Class B shares through a broker-dealer,
the Distributor pays the broker-dealer a concession at the time of sale. In
addition, an ongoing maintenance fee may be paid to broker-dealers on sales of
both Class A shares and Class B shares. Pursuant to the Funds' Rule 12b-1 Plans,
the Distributor is then reimbursed for such payments with amounts paid from the
assets of such Fund. The payments to the broker-dealer, although a Fund expense
which is paid by all shareholders, will only directly benefit investors who
purchase their shares through a broker-dealer rather than from the Funds.
Broker-dealers who sell shares of the Funds may provide services to their
customers that are not available to investors who purchase their shares directly
from the Funds. Investors who purchase their shares directly from a Fund will
pay a pro rata share of such Fund's expenses of encouraging broker-dealers to
provide such services but not receive any of the direct benefits of such
services. The payments to the broker-dealers will continue to be paid for as
long as the related assets remain in the Funds.
Pursuant to the provisions of the 12b-1 Plans and the Distribution
Agreement, each Fund pays a distribution services fee each month to the
Distributor, with respect to the Class A shares of each Fund, at an annual rate
of up to .25 of 1%, and with respect to the Class B shares of each Fund the
annual rate may be up to 1% of the aggregate average daily net assets
attributable to Class A shares and Class B shares, respectively, of each Fund.
PURCHASES, REDEMPTIONS, EXCHANGES AND
SYSTEMATIC WITHDRAWAL PLAN
The following information supplements that set forth in the Funds'
Prospectus under the heading 'Purchases, Redemptions and Shareholder Services'.
PURCHASES
Shares of the Funds are offered at the respective net asset value per share
next determined following receipt of a purchase order in proper form by the
Funds, the Funds' transfer agent, Fund/Plan Services, Inc., or by the
Distributor.
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The Funds calculate net asset value per share as of the close of the regular
session of the New York Stock Exchange, which is generally 4:00 p.m. New York
City time on each day that trading is conducted on the New York Stock Exchange.
Orders for the purchase of shares of a Fund become effective at the next
transaction time after Federal funds or bank wire monies become available to
Citibank, N.A. ('Citibank') for a shareholder's investment. Federal funds are a
bank's deposits in a Federal Reserve Bank. These funds can be transferred by
Federal Reserve wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately available
funds; similar immediate availability is accorded monies received at Citibank by
bank wire. Investors should note that their banks may impose a charge for this
service. Money transmitted by a check drawn on a member of the Federal Reserve
System is converted to Federal Funds in one business day following receipt.
Checks drawn on banks which are not members of the Federal Reserve System may
take longer. All payments (including checks from individual investors) must be
in United States dollars.
All shares purchased are confirmed to each shareholder and are credited to
such shareholder's account at net asset value and with respect to the Class A
shares, less any applicable initial sales charge. As a convenience to the
investor and to avoid unnecessary expense to the Funds, share certificates
representing shares of the Fund purchased are not issued except upon the written
request of the 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. This facilitates later redemption and relieves the shareholder of
the responsibility and inconvenience of preventing the share certificates from
becoming lost or stolen. No certificates are issued for fractional shares
(although such shares remain in the shareholder's account on the books of the
Funds).
REDEMPTIONS
Payment of the redemption price may be made either in cash or in portfolio
securities (selected in the discretion of the Trustees and taken at their value
used in determining the redemption price), or partly in cash and partly in
portfolio securities. However, payments will be made wholly in cash unless the
Trustees believe that economic conditions exist which would make such a practice
detrimental to the best interest of the Funds. If payment for shares redeemed is
made wholly or partly in portfolio securities, brokerage costs may be incurred
by the investor in converting the securities to cash. See the Prospectus for a
description of the contingent deferred sales charge which may be applicable to
certain redemptions.
To redeem shares represented by share certificates, investors should
forward the appropriate share certificates, endorsed in blank or with blank
stock powers attached, to the Funds with the request that the shares represented
thereby or a portion 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 the 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 the Funds. The signature or signatures on the
assignment form must be guaranteed in the manner described below.
If the total value of the shares being redeemed exceeds $50,000 (before
deducting any applicable contingent deferred sales charge) or a redemption
request directs proceeds to a party other than the registered account owner(s),
the signature or signatures on the letter or the endorsement must be guaranteed
by an 'eligible guarantor institution' as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include banks,
brokers, dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations. A
broker-dealer guaranteeing signatures must be a member of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees
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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.
EXCHANGES
Shares of one Class of a Fund can be exchanged for shares of the same Class
of another Fund in Winthrop Opportunity Funds or for shares of Alliance
Government Reserves or Alliance Municipal Trust (collectively, the 'Alliance
Money Market Funds'). The Alliance Money Market Funds are no-load money market
funds which retain Alliance Capital Management Company, Inc. as investment
adviser. In addition, shares of each Fund may be exchanged for shares of the
same class of Winthrop Growth Fund, Winthrop Fixed Income Fund, Winthrop
Aggressive Growth Fund, Winthrop Growth and Income Fund and Winthrop Municipal
Trust Fund (the 'Winthrop Focus Funds'). Shareholders may exchange shares by
mail. Shareholders or the shareholders' investment dealer of record may exchange
shares by telephone.
In the case of each Alliance Money Market Fund and Winthrop Focus Fund, the
exchange privilege is available only in those jurisdictions where shares of such
Fund may be legally sold. 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.
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 the other Fund, the
Alliance Money Market Funds or Winthrop Focus Funds, and no partial exchange may
be made if, as a result, the shareholders' interest in a Fund would be reduced
to less than $250. The minimum initial exchange into another Fund is $250.
All exchanges into either of the Alliance Money Market Funds or any of the
Winthrop Focus Funds are subject to the minimum investment requirements and any
other applicable terms set forth in the Prospectus for the relevant Alliance
Money Market Fund or Winthrop Focus 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 a Fund who has exchanged shares for shares of either of
the Alliance Money Market Funds or any of the Winthrop Focus Funds will have all
of the rights and privileges of a shareholder of the relevant Alliance Money
Market Fund or Winthrop Focus Fund except, in the case of the Alliance Money
Market Fund, the check-writing privilege and the systematic withdrawal privilege
is not available. The Funds provide their shareholders with a systematic
withdrawal plan (see below).
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, the
Alliance Money Market Funds and the Winthrop Focus Funds. Shareholders who
engage in such frequent transactions may be prohibited from or restricted in
placing future exchange orders.
Exchanges of shares are subject to the other requirements of the fund into
which exchanges are made. Annual fund operating expenses for such fund may be
higher and a sales charge differential may apply.
SYSTEMATIC WITHDRAWAL PLANS
Shares of a Fund owned by a participant in the Funds' systematic withdrawal
plan will be redeemed as necessary to meet withdrawal payments. A contingent
deferred sales charge which would otherwise be imposed will be waived in
connection with redemptions made pursuant to the Funds' systematic withdrawal
plan up to 1% monthly or 3% quarterly of an account's total market value not to
exceed 10% of total market value over any 12 month rolling period.
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Systematic withdrawals elected on a semi-annual or annual basis are not eligible
for the waiver. See the Prospectus for a description of the contingent deferred
sales charge. The systematic withdrawal plan may be terminated at any time by
the shareholder or the 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.
NET ASSET VALUE
Shares of each Fund will be priced at the net asset value per share as
computed each Fund Business Day in accordance with the Funds' Agreement and
Declaration of Trust and By-Laws. For this purpose, a Fund Business Day is any
day on which the New York Stock Exchange is open for business, typically, Monday
through Friday exclusive of New Year's Day, Washington's Birthday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and Good Friday.
The net asset value of the shares of each Fund is determined as of the
close of the regular session on the New York Stock Exchange, which is generally
at 4:00 p.m., New York City time, on each day that trading is conducted on the
New York Stock Exchange. The net asset value per share is calculated by taking
the sum of the value of each 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. For
net asset value determination purposes, securities quoted in foreign currencies
are translated into U.S. dollars at the current exchange rates or at such rates
as the Trustees may determine. As a result, to the extent a Fund holds
securities quoted or denominated in a foreign currency, fluctuations in the
value of such currencies in relation to the U.S. dollar will affect the net
asset value of such Fund's shares even though there has not been any change in
the value of such securities as quoted in the foreign currency. For purposes of
this computation, the securities in each Fund's portfolio are, except as
described below, valued at their current market value determined on the basis of
market quotations or, if such quotations are not readily available, such other
method as the Trustees believe would accurately reflect their fair value.
Foreign securities trading may not take place on all days on which the NYSE
is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Accordingly, the determination of the net asset
value of a Fund's shares may not take place contemporaneously with the
determination of the prices of investments held by such Fund. Events affecting
the values of investments that occur between the time their prices are
determined and 4:00 P.M. on each day that the NYSE is open will not be reflected
in the net asset value of a Fund's shares unless the Adviser or Subadviser,
under the supervision of such Fund's Board of Trustees, determine that the
particular event would materially affect net asset value. As a result, the net
asset value of a Fund's shares may be significantly affected by such trading on
days when a shareholder has no access to such Fund.
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 an exchange are valued, except as indicated
below, at the last sale price at the close of the 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. If no bid or asked prices are quoted on such day, then the security
is valued by such method as the Trustees of the Funds shall determine in good
faith to reflect its fair value.
Readily marketable securities, including certain options, not listed on an
exchange but admitted to trading on the National Association of Securities
Dealers Automatic Quotations, Inc. ('NASDAQ') National List (the 'List') are
valued in like manner. Portfolio securities traded on more than one 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 or Subadviser to be over-the-counter (excluding those admitted to
trading on the List) are valued at the mean of the current bid and asked prices
as reported by such sources as the Trustees of the Funds 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 or Subadviser 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. Portfolio securities underlying
listed call options will be valued at their market price and reflected in net
assets accordingly. Premiums received on call options written by a 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 the Funds.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds intend to distribute to shareholders of the Funds on an annual
basis, substantially all of such respective periods' net investment income, if
any, for each respective Fund.
Capital gains (short-term and long-term), if any, realized by each of the
Funds during their fiscal year will be distributed to the respective
shareholders shortly after the end of such fiscal year.
Each income dividend and capital gains distribution, if any, declared by
the Funds on the outstanding shares of any Fund will, at the election of each
shareholder, be paid in cash or reinvested in additional full and fractional
shares of that Fund at the net asset value as of the close of business on the
payment date. Such distributions, to the extent they would otherwise be taxable,
will be taxable to shareholders regardless of whether paid in cash or reinvested
in additional shares. An election to receive dividends and distributions in cash
or shares is made at the time of the initial investment and may be changed by
notice received by the Funds from a shareholder at least 30 days prior to the
record date for a particular dividend or distribution on shares of each Fund.
There is no charge in connection with the reinvestment of dividends and capital
gains distributions.
There is no fixed dividend rate and there can be no assurance that a Fund
will pay any dividends or realize any gains. The amount of any dividend or
distribution paid by each Fund depends upon the realization by the Fund of
income and capital gains from that Fund's investments. All dividends and
distributions will be made to shareholders of a Fund solely from assets of that
Fund.
Payment (either in cash or in portfolio securities) received by a
shareholder upon redemption of his shares, assuming the shares constitute
capital assets in his hands, will result in long-term or short-term capital
gains (or losses) depending upon the shareholder's holding period and basis in
respect of shares redeemed. Any loss realized by a shareholder on the sale of
Fund shares held for six months or less will be treated for federal income tax
purposes as a long-term capital loss to the extent of any distributions of
long-term capital gains received by the shareholder with respect to such shares.
Note that any loss realized on the sale of shares will be disallowed to the
extent the shares disposed of are replaced within a period of 61 days beginning
30 days before the disposition of such shares. In such case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended, so that it will
not be liable for federal income taxes to the extent that its net taxable income
and net capital gains are distributed. Accordingly, each Fund must, among other
things, (a) derive at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or other foreign currencies, or other income
(including but not limited to gains from
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futures and forward contracts) derived with respect to its business of investing
in stock, securities or currencies; (b) derive less than 30% of its gross income
from the sale or other disposition of stock, securities, futures or forward
contracts held less than three months; and (c) diversify its holdings so that,
at the end of each fiscal quarter, (i) at least 50% of the market value of the
Fund's assets is represented by cash, U.S. Government securities and other
securities, with such other securities limited, in respect of any one issuer, to
an amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities). Foreign currency gains that are not 'directly related'
to the Fund's principal business of investing in stock or securities may be
excluded by Treasury Regulations from income that counts toward the 90% of gross
income requirement described above and may continue to be included in income
that counted for the purposes of the 30% of gross income requirements described
above. The Treasury Department has not yet issued any such regulations. For
federal income tax purposes, dividends of net ordinary income and distributions
of any net short-term capital gains in excess of any net long-term capital
losses are treated as ordinary income of the shareholders, and distributions of
net long-term capital gains in excess of any net short-term capital losses are
taxable to shareholders as long-term capital gains irrespective of the length of
time the shareholder has held shares of the Fund.
Since the Funds are not treated as a single entity for federal income tax
purposes, the performance of one Fund will have no effect on the income tax
liability of shareholders of another Fund.
A dividend or capital gains distribution with respect to shares of any Fund
held by a tax-deferred or qualified retirement plan, such as an IRA, Keogh Plan
or corporate pension or profit sharing plan, will not be taxable to the plan.
Distributions from such plans will be taxable to individual participants under
applicable tax rules without regard to the character of the income earned by the
qualified plan.
As a regulated investment company, each Fund will not be subject to federal
income tax on income and gains distributed to shareholders if it distributes at
least 90% of its investment company taxable income to shareholders each year but
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, each Fund will be subject to a nondeductible 4% excise tax on the
excess, if any, of certain required distribution amounts over the amounts
actually distributed by that Fund. To the extent possible, each Fund intends to
make such distributions as may be necessary to avoid this excise tax.
For federal income tax purposes, dividends that are declared by a Fund in
October, November or December as of a record date in such month and actually
paid in January of the following year will be treated as if they were paid on
December 31 of the year in which they were declared. Therefore such dividends
will generally be taxable to a shareholder in the year declared rather than the
year paid.
Shareholders will be advised annually as to the federal tax status of
dividends and capital gains distributions made by each Fund for the preceding
year.
Some of the investment practices of each Fund are subject to special
provisions that, among other things, may defer the use of certain losses of such
Funds and affect the holding period of the securities held by the Funds and the
character of the gains or losses realized. These provisions may also require the
Fund to mark-to-market some of the positions in their respective portfolios
(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.
The Funds may make investments denominated in a foreign currency. Gains or
losses attributable to dispositions of foreign currency or to foreign currency
contracts, or to fluctuations in exchange rates between the time a Fund accrues
income or receivables or expenses or other liabilities denominated in a foreign
currency and the time the Fund
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actually collects such income or pays such liabilities, are generally treated as
ordinary income or ordinary loss. Similarly, gains or losses on the disposition
of debt securities held by a Fund, if any, denominated in foreign currency, to
the extent attributable to fluctuations in exchange rates between the
acquisition and disposition dates, also are generally treated as ordinary income
or loss. These gains and losses increase or decrease the amount of the Fund's
net investment income available for distribution.
If a Fund owns shares in certain foreign investment entities, referred to
as passive foreign investment companies ('PFICs'), such Fund may be subject to
federal income tax, and additional charges in the nature of interest, on a
portion of any 'excess distribution' from such company or gain from the
disposition of such shares, even if the entire distribution or gain is
distributed by the Fund to its shareholders. If a Fund were able and elected to
treat a PFIC as a 'qualified electing fund,' in lieu of the treatment described
above, such Fund would be required each year to include in income, the Fund's
pro rata share of the ordinary earnings and net capital gains of the company,
whether or not actually received by the Fund. Proposed Treasury Regulations
would allow certain regulated investment companies to elect to mark to market
their stock in certain PFICs at the end of each taxable year, whereby the Fund
would include in its taxable income each year any unrealized gain on such PFIC
investments. In order to distribute the income includible in the Fund's income
under either election, maintain its qualification as a regulated investment
company, and avoid income or excise taxes, such Fund may be required to
liquidate portfolio securities that it might otherwise have continued to hold.
There can be no assurance that these regulations will be finalized as proposed
or as to the effective date of any such final regulations.
If, as is expected, more than 50 percent of the value of the each Fund's
total assets at the close of its taxable year consists of stock or securities of
foreign corporations, it will be eligible to file an election with the Internal
Revenue Service to 'pass through' to its shareholders the amount of foreign
income taxes (including withholding taxes) paid by such Fund. Pursuant to this
election a shareholder will: (1) include in gross income (in addition to the
taxable dividends actually received) the shareholder's pro rata share of the
foreign income taxes paid by such Fund; (2) treat the shareholder's pro rata
share of the foreign income taxes paid by such Fund as paid by the shareholder;
and (3) subject to certain limitations, either deduct the pro rata share of such
foreign income taxes in computing the shareholder's taxable income or use it as
a foreign tax credit against federal income taxes. Each shareholder will be
notified within 60 days after the close of a Fund's taxable year whether the
foreign income taxes paid by a Fund will 'pass through' for that year and, if
so, such notification will designate the shareholder's portion of the foreign
income taxes paid to each country and the portion of dividends that represents
income derived from sources derived within each country.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's federal income tax (before the credit)
attributable to the shareholder's total foreign source taxable income. For this
purpose, the portion of dividends and distributions paid by each Fund from its
foreign source income will be treated as foreign source income. Each Fund's
gains and losses from the sale of securities, and certain currency gains and
losses, will generally be treated as derived from United States sources. The
limitation on the foreign tax credit is applied separately to foreign source
'passive income,' such as dividend income. Because of these limitations, a
shareholder may be unable to claim a credit for the full amount of the
shareholder's proportionate share of foreign income taxes paid by such Fund. In
addition, no deduction for foreign income taxes may be claimed by a shareholder
who does not itemize deductions. Shareholders are advised to consult their own
tax advisers on the application of the foreign tax credit rules to their own
particular circumstances.
Each Fund's ability to dispose of portfolio securities may be limited by
the requirement of qualification as a regulated investment company that less
than 30% of a Fund's gross income be derived from the disposition of securities
held for less than three months.
Each Fund is required to withhold and remit to the U.S. Treasury 31% of the
dividends or the proceeds of any redemptions or exchanges of shares with respect
to any shareholder who fails to furnish the Funds with a correct
16
<PAGE>
<PAGE>
taxpayer identification number, who under-reports dividend or interest income or
who fails to certify to the Funds that he or she is not subject to such
withholding. An individual's tax identification number is his or her social
security number.
The foregoing discussion is a general summary of certain current federal
income tax laws regarding the Funds. The discussion does not purport to deal
with all of the federal income tax consequences applicable to the Funds, or to
all categories of investors, some of whom may be subject to special rules. Each
prospective 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.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees of the Funds,
the Adviser and Subadviser are responsible for the investment decisions and the
placing of the orders for portfolio transactions for the Funds. Portfolio
transactions for the Funds are normally effected by brokers.
The Funds have 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 the 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 or Subadviser may, in its
discretion, purchase and sell securities through brokers and dealers who provide
research, statistical and other information to the Adviser or Subadviser. Such
services may be used by the Adviser or Subadviser for all of their investment
advisory accounts, and accordingly, not all such services may be used by the
Adviser or Subadviser in connection with the Funds. If a Fund 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, the Fund may
utilize such broker or dealer although the transaction costs of another broker
or dealer are lower. The supplemental information received from a broker or
dealer is in addition to the services required to be performed by the Adviser
under the Investment Advisory Agreement or Subadviser under the Investment
Subadvisory Agreement, and the expenses of the Adviser or Subadviser will not
necessarily be reduced as a result of the receipt of such information.
Neither the Funds, the Adviser nor the Subadviser have entered into
agreements or understandings with any broker or dealer regarding the placement
of securities transactions. Because of research or information to the Adviser or
Subadviser for use in rendering investment advice to the Funds, such information
may be supplied at no cost to the Adviser or Subadviser and, therefore, may have
the effect of reducing the expenses of the Adviser or Subadviser in rendering
advice to the Funds. While it is impossible to place an actual dollar value on
such investment information, its receipt by the Adviser and Subadviser probably
does not reduce the overall expenses of the Adviser or Subadviser to any
material extent.
The investment information provided to the Adviser and Subadviser 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 and Subadviser's own internal research and
investment strategy capabilities. Research and statistical services furnished by
brokers through which the Funds effect securities transactions are used by the
Adviser and Subadviser 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 and Subadviser in connection with the
Funds.
The Funds may deal in some instances in equity securities which are not
listed on an exchange but are traded in the over-the-counter market. Where
transactions are executed in the over-the-counter market, the Funds seek to deal
with the primary market-makers; but when necessary in order to obtain the best
price and execution, it utilizes the services of others. In all cases, the Funds
will attempt to negotiate best execution.
17
<PAGE>
<PAGE>
The Funds may from time to time place orders for the purchase or sale of
securities (including listed call options) with DLJ Securities, the Funds'
Distributor or other affiliates in accordance with the provisions of Section
11(a) of the Securities Exchange Act of 1934 referred to below. With respect to
orders placed with DLJ Securities for execution on a national securities
exchange, commissions received must conform to Section 17(e)(2)(A) of the
Investment Company Act of 1940 and Rule 17e-1 thereunder, which permit an
affiliated person of a registered investment company (such as the 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 the Funds. The Securities and Exchange
Commission has adopted rules under Section 11(a) which permit an investment
adviser to a registered investment company, or the adviser's affiliates, to
receive compensation for effecting, on a national securities exchange,
transactions in portfolio securities of such investment company, including
causing such transactions to be transmitted, executed, cleared and settled and
arranging for unaffiliated brokers to execute such transactions.
To the extent permitted by such rule, DLJ Securities and its affiliates may
receive compensation relating to transactions in portfolio securities of the
Funds provided that each Fund enter into a written agreement, as required by
such rules, with that firm authorizing it to retain compensation for such
services. The Trustees of the Funds have granted authorization conforming to the
requirements of Section 11(a) to the Adviser and Subadviser to effect
transactions in portfolio securities of the Funds through their affiliates, DLJ
Securities and Autranet, Inc.
For the period from September 8, 1995 (commencement of operations) to
October 31, 1995, the end of each Fund's fiscal year, brokerage commissions paid
by the Developing Markets Fund and International Equity Fund were $69,888 and
$112,747, respectively. DLJ Securities and Autranet, Inc. did not receive any
amounts of such brokerage commissions.
18
<PAGE>
<PAGE>
PORTFOLIO TURNOVER
Each Fund's average annual portfolio turnover rate is the ratio of the
lesser of sales or purchases to the monthly average value of such securities
owned during the year, excluding from both the numerator and the denominator all
securities with maturities at the time of acquisition of one year or less. For
the period from September 8, 1995 (commencement of operations) through October
31, 1995, the end of the Funds' fiscal year, the portfolio turnover rates for
the Developing Markets Fund and the International Equity Fund were 0%. The
Adviser and Subadviser anticipate that each Fund's average annual portfolio
turnover rate will be between 85% and 150%. A higher rate involves greater
transaction costs to a Fund and may result in the realization of net capital
gains, which would be taxable to shareholders when distributed.
INVESTMENT PERFORMANCE INFORMATION
Each Fund may furnish data about its investment performance in
advertisements, sales literature and reports to shareholders. 'Total return'
represents the change in value of $1,000 invested at the maximum public offering
price for a period assuming reinvestment of all dividends and distributions.
Quotations of yield will be based on the investment income per share earned
during a particular 30 day period, less expenses accrued during the period ('net
investment income') and will be computed by dividing net investment income by
the maximum offering price per share on the last day of the period, according to
the following formula:
YIELD = 2[(A-B + 1)'pp'6 - 1]
---
CD
where A = dividends and interest earned during the period, B = expenses accrued
for the period (net of any reimbursements), C = the average daily number of
shares outstanding during the period that were entitled to receive dividends,
and D = the maximum offering price per share on the last day of the period.
Quotations of total return will reflect only the performance of an
investment in any Fund during the particular time period shown. Each Fund's
total return and current yield may vary from time to time depending on market
conditions, the compositions of its portfolio and operating expenses. These
factors and possible differences in the methods used in calculating yield should
be considered when comparing each Fund's current yield to yields published for
other investment companies and other investment vehicles. Total return and yield
should also be considered relative to change in the value of each Fund's shares
and the risks associated with each Fund's investment objectives, policies and
risk considerations. At any time in the future, total returns and yield may be
higher or lower than past total returns and yields and there can be no assurance
that any historical return or yield will continue.
From time to time evaluations of performance are made by independent
sources that may be used in advertisements concerning each Fund. These sources
include Lipper Analytical Services, Weisenberger Investment Company Service,
Barron's, Business Week, Kiplinger's Personal Finance, Financial World, Forbes,
Fortune, Money, Personal Investor, Sylvia Porter's Personal Finance, Bank Rate
Monitor, Morningstar and The Wall Street Journal.
In connection with communicating its yield or total return to current or
prospective shareholders, each Fund may also compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.
Quotations of each Fund's total return will represent the average annual
compounded rate of return of a hypothetical investment in each Fund over periods
of 1, 5, and 10 years (or up to the life of each Fund), and are calculated
pursuant to the following formula:
T=The nth root of ERV[div]P-1
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the redeemable value at the end
of the period of a $1,000 payment made at the beginning of the period). All
total return figures will reflect the deduction of Fund expenses (net of certain
expenses reimbursed by the Adviser and Subadviser) on an annual basis, and will
assume that all dividends and distributions are reinvested and will deduct the
19
<PAGE>
<PAGE>
maximum sales charge, if any is imposed. The Funds may also quote total return
that eliminates any applicable initial sales charge or contingent deferred sales
charge.
For the period ended October 31, 1995, the cumulative total return for the
Class A and Class B shares of the Developing Markets Fund was - 4.70% and
- 4.80%, respectively, and - 4.20% and - 4.30% for Class A and Class B
shares, respectively, of the International Equity Fund. Assuming deduction of
the maximum sales charge, the cumulative total return for the Class A and Class
B shares of the Developing Markets Fund was - 10.18% and - 8.61%,
respectively, and - 9.66% and - 8.13% for Class A and Class B shares,
respectively, of the International Equity Fund.
SHARES OF BENEFICIAL INTEREST
Set forth below is certain information as to persons who owned 5% or more
of a Fund's outstanding shares as of February 12, 1996.
<TABLE>
<CAPTION>
DEVELOPING MARKETS FUND NAME AND ADDRESS % OF CLASS NATURE OF OWNERSHIP
----------------------- ---------------- ---------- --------------------
<S> <C> <C> <C>
Class A........................................... Hamilton E. James 11.59 Beneficial(a)
Donaldson Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
Donaldson Lufkin & Jenrette 11.03 Record(a)
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
DLJ Growth Fund 7.53 Record(a)
290-305
770 Broadway
New York, NY 10003
Class B........................................... Donaldson Lufkin Jenrette 11.98 Record(a)
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette 5.99 Record(a)
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Russell J. Lanowitz 5.87 Beneficial
9 Brandywine Fls
Wilmington, DE 19806
Paul Levine 5.95 Beneficial
17A Threepence Dr.
Melville, NY 11747
Donaldson Lufkin Jenrette 5.95 Record(a)
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Stanley Shleger 5.93 Beneficial
First Joanne Cohen Trust
UTD 09 3O 1995
111 Great Neck Rd
Great Neck, NY 11021
</TABLE>
20
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
INTERNATIONAL EQUITY FUND
-------------------------
Class A........................................... DLJ Growth Fund 8.48 Record(a)
29O-335
Chase Manhattan Bank
770 Broadway 10th Fl.
New York, NY 10003
Robert Winthrop 6.13 Beneficial
c/o WSW
140 Broadway 42nd Fl.
New York, NY 10005-1102
Class B........................................... Donaldson Lufkin Jenrette 7.12 Record(a)
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Harold L. Wilshinsky 7.05 Beneficial
170 E. 70 St. Apt. 15B
New York, NY 10021
Stanley Shleger 6.96 Beneficial
Trst Joanne Cohen Trust
UTD 09 3O 1995
111 Great Neck Rd.
Great Neck, NY 11021
</TABLE>
- ------------
(a) Such Recordholder disclaims beneficial ownership.
As of the date of this Statement of Additional Information the Trustees and
Officers of the Funds as a group owned less than 1% of the outstanding shares of
either Fund.
GENERAL INFORMATION
ORGANIZATION AND CAPITALIZATION
The Trust was formed on May 31, 1995 as a 'business trust' under the laws
of the state of Delaware.
The Agreement and Declaration of Trust provides that no Trustee, officer,
employee or agent of the Funds is liable to the Funds or to a shareholder, nor
is any Trustee, officer, employee or agent liable to any third persons in
connection with the affairs of the Funds, except as such liability may arise
from his or its own bad faith, willful misfeasance, gross negligence or reckless
disregard of his or her duties. It also provides that all third parties shall
look solely to the property of the Funds or the property of the appropriate Fund
for satisfaction of claims arising in connection with the affairs of a Fund.
With the exceptions stated, the Agreement and Declaration of Trust permits the
Trustees to provide for the indemnification of Trustees, officers, employees or
agents of the Funds against all liability in connection with the affairs of the
Funds.
All shares of the 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 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, risk considerations or restrictions, may create additional series or
classes of shares. Any issuance of shares of such additional series would be
governed by the 1940 Act and the laws of the State of Delaware.
21
<PAGE>
<PAGE>
COUNSEL AND AUDITORS
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022, serves as legal counsel for the Funds.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, have been
appointed as independent auditors for the Funds.
ADDITIONAL INFORMATION
This Statement of Additional Information does not contain all the
information set forth in the Registration Statement filed by the Funds with the
Securities and Exchange Commission under the Securities Act of 1933. Copies of
the Registration Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the offices of the Commission
in Washington, D.C.
FINANCIAL STATEMENTS
The audited financial statements of each Fund for the fiscal year ended
October 31, 1995 and the report of the Funds' independent auditors in connection
therewith are included in the October 31, 1995 Annual Report to Shareholders.
The Annual Report is incorporated by reference into this Statement of Additional
Information. You can obtain a copy of the Funds' Annual Report by writing or
calling the Funds at the address or telephone numbers set forth on the cover of
this Statement of Additional Information.
22
<PAGE>
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P to
corporate bonds.
RATINGS OF CORPORATE BONDS
S&P:
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong. Debt rated AA has a very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated BBB is regarded as having adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.
Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating. The rating CC typically is applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating. The rating C
typically is applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued. The rating C1 is reserved for income bonds on which no interest
is being paid. Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period had not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
MOODY'S:
Bonds which are Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized
A-1
<PAGE>
<PAGE>
are most unlikely to impair the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They 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 possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security 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. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest. Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings. Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
A-2
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
WINTHROP INTERNATIONAL EQUITY FUND
<S> <C> <C>
COMMON STOCKS -- 97.1% SHARES U.S. $ VALUE
------- ------------
DENMARK -- 1.4%
Tele Danmark A/S Ser B........................................................................ 3,300 $ 180,419
Unidanmark 6,400 317,569
------------
497,988
------------
FINLAND -- 0.9%
Nokia (AB) Ser 'A'............................................................................ 7,900 311,110
------------
FRANCE -- 11.0%
Accor......................................................................................... 650 84,264
Air Liquide................................................................................... 1,250 207,285
Alcatel Alsthom............................................................................... 910 78,559
Beghin Say.................................................................................... 470 80,726
Bic........................................................................................... 1,210 123,212
BNP........................................................................................... 2,400 108,404
Carrefour..................................................................................... 300 182,248
Cie Bancaire.................................................................................. 710 79,557
Club Mediterranee............................................................................. 470 37,576
Danone........................................................................................ 690 113,998
Dock de France................................................................................ 270 41,075
Ecco.......................................................................................... 250 37,879
Elf Aquitaine................................................................................. 1,400 103,284
Generales des Eaux............................................................................ 708 70,777
Havas......................................................................................... 1,600 127,101
Imetal........................................................................................ 670 80,144
LaFarge Coppee................................................................................ 1,700 109,670
Le Grand...................................................................................... 580 89,658
L'Oreal....................................................................................... 920 246,620
LVMH.......................................................................................... 1,580 329,530
Lyonnaise Des Eaux............................................................................ 700 67,487
Michelin...................................................................................... 1,330 53,112
Paribas....................................................................................... 1,000 54,901
Pernod Ricard................................................................................. 1,620 92,186
Poliet........................................................................................ 710 57,751
Primagaz...................................................................................... 1,100 88,169
Sagem......................................................................................... 110 61,853
Saint Gobain.................................................................................. 550 60,954
Schneider..................................................................................... 3,000 102,687
Sidel......................................................................................... 180 56,165
Societe Generale.............................................................................. 2,500 309,267
Societe Technip............................................................................... 1,280 88,202
Sodexho....................................................................................... 230 67,722
</TABLE>
B-1
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS -- (CONTINUED) SHARES U.S. $ VALUE
<S> <C> <C>
------- ------------
St Louis...................................................................................... 220 58,480
Total......................................................................................... 2,490 168,271
UAP -- Union Assur de Paris................................................................... 3,900 101,994
Valeo......................................................................................... 870 40,346
------------
3,861,111
------------
GERMANY -- 11.6%
Adidas AG..................................................................................... 5000 263,746
Bayer AG...................................................................................... 2,070 547,401
Bifinger Berger Bau AG........................................................................ 1,050 398,344
Deutsch Bank AG............................................................................... 9,000 427,395
Dresdner Bank AG.............................................................................. 16,000 428,142
Mannesman AG.................................................................................. 1,600 510,529
Schering AG................................................................................... 7,100 471,399
Siemens AG.................................................................................... 850 466,185
Veba AG....................................................................................... 13,200 561,643
------------
4,074,784
------------
HONG KONG -- 2.5%
Amoy Properties............................................................................... 300,000 298,743
China Light & Power........................................................................... 60,000 276,240
Hong Kong Shanghai Bank....................................................................... 20,000 302,623
------------
877,606
------------
ITALY -- 7.0%
Assicurazioni Generali........................................................................ 24,000 581,661
Brembo Spa.................................................................................... 22,700 263,702
ENI........................................................................................... 84,600 295,955
Instituto Mobilaire Italiano.................................................................. 72,000 453,832
Telecom Italia Mobile*........................................................................ 260,000 458,055
Telecom Italia Spa Ord........................................................................ 265,000 412,577
------------
2,465,784
------------
JAPAN -- 42.5%
Asahi Bank Ltd................................................................................ 40,000 504,120
Autobacs Seven Co. Ltd........................................................................ 4,000 332,719
Casio Computer................................................................................ 35,000 342,705
Daiichi Pharmaceutical........................................................................ 30,000 427,533
Daiwa Securities.............................................................................. 35,000 536,112
Furukawa Electric............................................................................. 80,000 391,663
Kawasaki Steel................................................................................ 110,000 383,907
Kokosai Denshin Denwa......................................................................... 5,000 436,258
</TABLE>
B-2
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS -- (CONTINUED) SHARES U.S. $ VALUE
<S> <C> <C>
------- ------------
Izumiya....................................................................................... 25,000 404,750
Marui......................................................................................... 25,000 521,086
Matsushita Electric........................................................................... 30,000 488,609
Mitsibushi Bank............................................................................... 20,000 471,159
Namco Ltd..................................................................................... 12,000 400,194
Nichii Co..................................................................................... 35,000 464,857
Nikko Securities.............................................................................. 40,000 515,754
Nippon Express................................................................................ 50,000 481,823
Nissan Motor.................................................................................. 60,000 461,270
NKK Corp...................................................................................... 160,000 431,217
Nomura Securities............................................................................. 20,000 436,258
Promise Co. Ltd............................................................................... 8,000 385,458
Sanwa Bank.................................................................................... 20,000 407,174
Secom Co Ltd.................................................................................. 5,000 348,037
Sega Enterprises.............................................................................. 8,000 442,075
Sony Music Entertainment...................................................................... 10,000 523,509
Sumitomo Heavy Industries..................................................................... 140,000 503,539
Sumitomo Osaka Cement......................................................................... 100,000 465,342
Sumitomo Trust and Bk......................................................................... 30,000 424,624
Taisei Corporation............................................................................ 60,000 400,776
Tokyo Electric Power.......................................................................... 15,000 401,357
Toray Industries.............................................................................. 50,000 329,617
Toshiba Corporation........................................................................... 60,000 470,577
Tosoh Corporation............................................................................. 100,000 481,823
Tostem Corporation............................................................................ 15,000 498,788
Toyo Trust Banking............................................................................ 45,000 397,867
------------
14,912,555
------------
NETHERLANDS -- 5.3%
Ahold (Kon) NV................................................................................ 4,020 164,261
Elsevier NV................................................................................... 22,430 299,440
Polygram NV NTLF.............................................................................. 4,700 249,807
Royal Dutch Petroleum......................................................................... 4,800 671,341
Unilever NV CVA............................................................................... 1,545 217,341
Ver Ned Uitgeversbedr......................................................................... 1,870 256,994
------------
1,859,183
------------
</TABLE>
B-3
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS -- (CONTINUED) SHARES U.S. $ VALUE
<S> <C> <C>
------- ------------
SINGAPORE -- 2.1%
DBS Land...................................................................................... 54,000 182,481
Fraser Neave Ltd.............................................................................. 14,000 178,155
Jurong Shipyard Ltd........................................................................... 24,000 184,942
Straits Steamship Land........................................................................ 58,000 195,999
------------
741,577
------------
SPAIN -- 3.4%
BBV Banco Bilbao Vizcaya...................................................................... 9,200 331,377
Empresa Nacional de Electricid................................................................ 4,300 243,489
Repsol SA..................................................................................... 9,500 311,254
Telefonica de Espana.......................................................................... 21,000 290,792
------------
1,176,912
------------
SWITZERLAND -- 3.8%
Credit Suisse Holding......................................................................... 3,400 349,426
Nestle SA..................................................................................... 280 310,516
Roche Holding AG.............................................................................. 40 317,226
Sandoz AG..................................................................................... 375 346,124
------------
1,323,292
------------
UNITED KINGDOM -- 5.7%
BAT Industries................................................................................ 18,000 158,593
BPB Industries................................................................................ 56,000 262,568
CRH ORD....................................................................................... 22,800 172,035
Grand Metropolitan............................................................................ 73,000 525,881
Reuters Holdings.............................................................................. 32,000 293,122
RTZ Corp...................................................................................... 20,000 290,638
Siebe......................................................................................... 25,000 308,182
------------
2,011,020
------------
TOTAL INVESTMENTS -- 97.1%
(cost $32,714,031).......................................................................... 34,112,919
------------
CASH AND OTHER ASSETS NET OF LIABILITIES -- 2.1%.............................................. 1,012,419
------------
NET ASSETS -- 100%............................................................................ $ 35,125,338
------------
</TABLE>
* Non-income producing
See notes to financial statements.
B-4
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS
DECEMBER 31, 1995 (UNAUDITED)
WINTHROP DEVELOPING MARKETS FUND
COMMON STOCKS -- 87.1%
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
ARGENTINA -- 4.9%
Astra Cia Argentina de Petroeo............................................................. 73,000 $ 135,077
Banco Frances.............................................................................. 9,000 79,666
Buenos Aries ADR........................................................................... 3,000 61,875
Perez Companc -- B......................................................................... 26,000 137,828
Siderca.................................................................................... 65,500 63,548
Telefonica de Argentina ADR................................................................ 12,000 327,000
YPF ADR.................................................................................... 8,300 179,488
------------
984,481
------------
BRAZIL -- 11.1%
Aracruz Celulose Preferred B............................................................... 77,800 121,675
Banco Bradesco Pref........................................................................ 21,100,000 184,536
Banco Itau PN.............................................................................. 450,000 125,476
Brahma PN.................................................................................. 350,000 144,084
Cemig PN................................................................................... 6,900,000 152,639
Ceval Alimentos Pref....................................................................... 10,000,000 114,209
Companhia Vale Rio......................................................................... 3,333 137,120
Electrobras ADR Pfd B...................................................................... 30,300 409,656
Lojas Americanas Pref...................................................................... 5,950,000 139,582
Petrobras PN............................................................................... 2,030,000 173,340
Telebras PN................................................................................ 8,000,000 385,225
Usiminas Sid Min Ger Pref.................................................................. 16,667 141,003
------------
2,228,545
------------
CHILE -- 4.0%
Banco Osorno y La Union ADR................................................................ 6,900 95,738
Chilgener Sa ADR........................................................................... 6,300 157,500
Compania de Telefono Chile ADR............................................................. 1,800 149,175
Emprsa Nacnl de Elctricidad................................................................ 6,800 154,700
Madeco..................................................................................... 2,900 78,300
Sociedad Quimica Ser B..................................................................... 3,500 164,500
------------
799,913
------------
CHINA -- 1.4%
China Yuchai Int'l Ltd..................................................................... 20,000 $ 162,500
Ek Chor China ADR.......................................................................... 10,500 122,063
------------
284,563
------------
</TABLE>
B-5
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
HONG KONG -- 8.4%
Bank of East Asia.......................................................................... 55,000 $ 197,384
Chengdu Telecom Cable...................................................................... 502,000 85,697
China Light & Power Co. Ltd................................................................ 30,000 138,120
Citic Pacific Ltd.......................................................................... 67,000 229,185
Great Eagle Holding Ltd.................................................................... 83,000 214,681
New World Development Co................................................................... 38,000 165,615
Qingling Motors Co. Ltd.................................................................... 552,000 160,623
Shangria -- la Asia Ltd.................................................................... 166,000 202,874
Shanghai Petrochemicals Ltd................................................................ 418,000 120,280
Television Broadcasts Ltd.................................................................. 50,000 178,147
------------
1,692,604
------------
INDIA -- 3.5%
Grasim Industries Ltd.*.................................................................... 6,700 172,114
Indian Hotels GDR*......................................................................... 7,000 135,660
Reliance Industries Ltd.*.................................................................. 13,000 182,000
Tata Engineering and Loco.................................................................. 16,000 210,000
------------
699,774
------------
INDONESIA -- 4.6%
Bank International Indonesia............................................................... 29000 96,072
Hero Supermarket........................................................................... 76,000 162,864
Indocement Tunggal Local................................................................... 24,000 80,557
PT Astra Int'l............................................................................. 120,000 249,281
PT Dagang Nasional......................................................................... 117,000 95,940
PT Gudang Garam Foreign.................................................................... 9,000 94,071
Mulia Industrindo.......................................................................... 55,000 155,145
------------
933,930
------------
KOREA -- 3.6%
Korea Equity Fund.......................................................................... 35,000 288,750
Korea Fund................................................................................. 20,000 440,000
------------
728,750
------------
</TABLE>
B-6
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
MALAYSIA -- 9.7%
Arab Malaysian Merchant.................................................................... 21,000 $ 239,858
Commerce Asset Holding..................................................................... 17,000 85,703
Edaran Otomobil NSNL....................................................................... 32,000 240,725
Hong Leong Properties Berhad............................................................... 220,000 228,751
IOI Corporation............................................................................ 100,000 98,070
Land and General........................................................................... 48,000 103,978
Resort World Berhad........................................................................ 50,000 267,822
Shungei Way................................................................................ 39,000 140,547
Technology Resources....................................................................... 55,000 162,466
Telecom Malaysia BHD Ord................................................................... 10,000 77,983
Tenaga Nasional Berhad..................................................................... 40,000 157,542
United Engineers Malaysia.................................................................. 13,000 82,946
YTL Corp................................................................................... 10,000 63,017
------------
1,949,409
------------
MEXICO -- 4.8%
Apasco..................................................................................... 44,000 180,735
Cifra...................................................................................... 200,000 206,614
Empresa ICA Soc............................................................................ 102,501
Empresa La Moderna ADR..................................................................... 12,000 186,000
Hylsamex BCP............................................................................... 25,000 89,225
Telefonos de Mexico ADR.................................................................... 6,000 191,250
------------
956,325
------------
PHILIPPINES -- 4.0%
Metro Pacific.............................................................................. 1,137,000 210,228
Metropolitan Bank And Trust Co............................................................. 4,120 80,104
Petron Corp................................................................................ 153,000 78,743
Philippine Long Distance Tel Co............................................................ 1,300 70,363
San Miguel Corp. B......................................................................... 22,000 75,064
SM Prime Holdings.......................................................................... 260,000 74,340
South East Asia Cement Holding*............................................................ 1,600,000 207,390
------------
796,233
------------
</TABLE>
B-7
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
POLAND -- 1.2%
Bank Slaski................................................................................ 1,500 $ 87,500
Debica A................................................................................... 1,128 17,058
Elektrim................................................................................... 20,800 70,602
Gorazoze................................................................................... 1,500 39,329
Zywiec..................................................................................... 440 30,407
------------
244,895
------------
PORTUGAL -- 1.8%
Banco Comercial Portuguese................................................................. 5,400 73,557
Banco Epirito Santo E Com.................................................................. 4,900 74,191
Cimpor Cimentos De Construcad.............................................................. 4,250 70,523
Corticiera Amorim Sociedade................................................................ 580 6,697
Engil Soc De Construcao.................................................................... 1,400 10,308
Jeronimo Martins SGPS...................................................................... 260 14,445
Portucel Industrial SA..................................................................... 5,675 34,378
Portugal Telecom........................................................................... 3,900 73,487
------------
357,586
------------
SOUTH AFRICA -- 6.4%
DeBeers Centenary.......................................................................... 5,175 156,857
Iscor...................................................................................... 135,900 122,271
Kinross Mines Ltd.......................................................................... 8,650 81,859
Liberty Life Assoc......................................................................... 5,750 180,594
Murray and Roberts......................................................................... 26,000 183,646
Pick N Pay Stores.......................................................................... 42,000 161,290
Rembrandt Group............................................................................ 12,000 118,499
Sasol NPV.................................................................................. 14,000 114,631
South African Brews........................................................................ 4,500 164,788
------------
1,284,436
------------
TAIWAN -- 1.9%
ROC Taiwan Fund............................................................................ 37,000 388,500
------------
</TABLE>
B-8
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
THAILAND -- 15.8%
Advanced Information Service............................................................... 14,200 $ 251,410
Bangkok Bamk Public Co Local............................................................... 31,000 265,812
Finance One Public Co...................................................................... 26,000 151,723
International Engineering Co............................................................... 55,000 294,752
Land and House Public Co................................................................... 17,000 244,297
Loxley Public Co Ltd Local................................................................. 8,700 165,775
Nava Finance and Security.................................................................. 87,000 262,478
Phatra Thanakit Public..................................................................... 36,000 264,383
PTT Exploration Production................................................................. 5,600 58,688
Shinawatra Comp. Comm. Pub. Loc............................................................ 6,000 147,674
Shinawatra Computer........................................................................ 5,000 138,940
Siam Cement Public Co...................................................................... 4,000 212,142
Siam Commercial Bank....................................................................... 13,000 127,984
Telecomasia Corporation.................................................................... 55,000 167,026
TPI Polene Co.............................................................................. 42,000 250,092
Union Asia Fin. Public Co.................................................................. 40,000 177,843
------------
3,181,019
------------
TOTAL COMMON STOCKS (cost $17,564,263)..................................................... 17,510,962
------------
WARRANTS -- 0.1%
Taiwan Weighted Index 8/96................................................................. 13,000 29,250
------------
TOTAL INVESTMENTS -- 87.2% (cost $17,590,913).............................................. 17,540,212
------------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 12.8%................................................................ 12,579,088
------------
NET ASSETS -- 100%......................................................................... $ 20,119,300
------------
------------
</TABLE>
- ------------
* Non-income producing
See notes to financial statements.
B-9
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL DEVELOPING
EQUITY MARKETS FUND
------------- ------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $32,714,031 and $17,590,913,
respectively)...................................................................... $ 34,112,919 $17,540,213
Cash, at value ($960,498 and 2,634,213, respectively)............................... 965,942 2,634,088
Receivable for investments sold long term........................................... 110,797 --
Receivable for capital stock sold................................................... 301,431 102,046
Dividends and interest receivable................................................... 43,220 28,052
Deferred organization cost.......................................................... 106,697 106,697
Due from manager.................................................................... 17,531 54,240
------------- ------------
Total Assets................................................................... 35,668,537 20,465,336
------------- ------------
LIABILITIES:
Payable for securities purchased.................................................... 202,285 85,307
Payable for capital stock purchased................................................. 151,800 97,500
Payable to investment advisor....................................................... 129,462 149,218
Accrued expenses and other liabilities.............................................. 41,088 14,011
Net unrealized depreciation on forward exchange currency contracts.................. (8,564) (0)
------------- ------------
Total Liabilities.............................................................. 533,199 346,036
------------- ------------
NET ASSETS .............................................................................. $ 35,125,338 $20,119,300
------------- ------------
------------- ------------
NET ASSETS CONSIST OF:
Capital paid-in..................................................................... $ 34,042,100 $19,561,025
Accumulated net investment loss..................................................... (92,605) (10,153)
Accumulated net realized loss on investments and foreign currency
transactions....................................................................... (32,606) (59,323)
Net unrealized appreciation of investments and foreign currency denominated assets
and liabilities.................................................................... 1,208,449 627,751
------------- ------------
NET ASSETS............................................................................... $ 35,125,338 $20,119,300
------------- ------------
------------- ------------
CLASS A SHARES:
Net assets.......................................................................... $ 32,715,799 $18,825,497
------------- ------------
Shares outstanding.................................................................. 3,231,446 1,924,484
------------- ------------
Net asset value and redemption value per share...................................... $10.12 $9.78
------------- ------------
------------- ------------
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price).................................................................... $10.74 $10.38
CLASS B SHARES:
Net assets.......................................................................... $ 2,409,539 $ 1,293,803
------------- ------------
Shares outstanding.................................................................. 238,477 132,694
------------- ------------
Net asset value and offering price per share........................................ $10.10 $9.75
</TABLE>
See notes to financial statements
B-10
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF OPERATIONS
FOR THE TWO MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL DEVELOPING
EQUITY MARKETS FUND
------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income....................................................................... $ 13,361 $ 29,307
Dividends income...................................................................... 16,344 25,807
------------- ------------
29,705 55,114
Less withholding tax on foreign source dividends...................................... (371) (1,119)
------------- ------------
Total investment income.......................................................... 29,334 53,995
------------- ------------
EXPENSES:
Investment advisory fee............................................................... $ 69,347 $ 36,471
Distribution fees -- Class A.......................................................... 12,982 6,821
Distribution fees -- Class B.......................................................... 3,550 1,891
Legal fees............................................................................ 10,000 5,000
Transfer agent fees................................................................... 11,000 10,000
Custodian fees........................................................................ 19,000 16,000
Auditing fees......................................................................... 7,000 3,500
Printing fees......................................................................... 7,500 4,000
Trustees' fees........................................................................ 3,000 2,000
Miscellaneous......................................................................... 6,000 4,000
Amortization of organization expenses................................................. 3,797 3,797
------------- ------------
153,176 93,480
Less fees waived/reimbursed by investment advisor and subadvisor...................... (31,237) (29,332)
------------- ------------
Net expenses.......................................................................... 121,939 64,148
------------- ------------
NET INVESTMENT INCOME/(LOSS)............................................................... (92,605) (10,153)
------------- ------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain/loss on investments................................................. (267,595) (48,103)
Net realized gain/(loss) on foreign currency translations............................. 234,989 (11,220)
Net change in unrealized appreciation/(depreciation) on investments................... 2,171,637 627,758
Net change in unrealized appreciation on translations of foreign currency denominated
assets and liabilities............................................................... (187,319) (7)
------------- ------------
Net realized/unrealized gain/(loss) on investments and foreign currency
transactions......................................................................... 1,951,712 568,428
------------- ------------
NET INCREASE/DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $ 1,859,107 $558,275
------------- ------------
------------- ------------
</TABLE>
See notes to financial statements
B-11
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY DEVELOPING MARKETS FUND
--------------------------- ---------------------------
TWO MONTHS TWO MONTHS
YEAR ENDED ENDED YEAR ENDED ENDED
OCTOBER 31, DECEMBER 31, OCTOBER 31, DECEMBER 31,
1995* 1995 1995* 1995
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income/(loss)......................... ($ 2,433) ($ 92,605) $ 5,389 ($ 10,153)
Net realized gain/(loss) on investments and foreign
currency transactions.............................. (671,763) (32,606) (18,635) (59,323)
Net change in unrealized appreciation (depreciation)
on investments and foreign currency denominated
assets and liabilities............................. (590,363) 1,984,318 (678,616) 627,751
----------- ------------ ----------- ------------
Net increase (decrease) in net assets resulting from
operations......................................... (1,264,559) 1,859,107 (691,862) 558,275
----------- ------------ ----------- ------------
CAPITAL STOCK TRANSACTIONS -- (NET)....................... 31,836,471 2,644,319 16,268,548 3,934,339
----------- ------------ ----------- ------------
Total increase (decrease) in net assets......... 30,571,912 4,503,426 15,576,686 4,492,584
NET ASSETS:
Beginning of period.................................. 50,000 30,621,912 50,000 15,626,686
----------- ------------ ----------- ------------
End of period (including undistributed net investment
income of $5,389 for the Developing Markets Fund at
October 31, 1995).................................. $30,621,912 $ 35,125,338 $15,626,686 $ 20,119,300
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
- ------------
* Commencement of operations was September 8, 1995
See notes to financial statements
B-12
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES
Winthrop Opportunity Funds (the 'Fund' or 'Funds') operates as a series
company currently consisting of two portfolios (the 'Portfolios'): Winthrop
International Equity Fund and Winthrop Developing Markets Fund. The Fund
constitutes a diversified, open-end investment company which is registered under
the Investment Company Act of 1940, as amended.
The Fund was organized as a Delaware business trust under the laws of
Delaware on May 31, 1995 had no operations other than the sale and issuance to
each of Wood, Struthers & Winthrop Management Corp. (the 'Advisor') and AXA
Asset Management Europe, an affiliate of AXA Asset Management Partenaires (the
'Subadvisor'), of 1,250 Class A shares and 1,250 Class B shares of beneficial
interest in each of the two Portfolios.
Each Portfolio offers two classes of shares, Class A shares are sold with a
front-end sales charge of up to 5.75%. Class B shares are sold with a contingent
deferred sales charge which declines from 4% to zero depending on the period of
time the shares are held. Both classes have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin
and Jenrette, Inc. which is an indirect subsidiary of the Equitable Life
Assurance Society of the United States, (the 'Equitable'). The following is a
summary of significant accounting policies consistently followed by Winthrop.
(1) SECURITY VALUATION
All securities for which current market quotations are readily available
are valued at the last sale price prior to the time of determination, or, if
there is no sales price on such date, and if bid and ask quotations are
available, at the mean between the last current bid and asked prices. Securities
that are traded over-the-counter, if bid and asked quotations are available, are
valued at the mean between the current bid and asked prices, or, if quotations
are not available, are valued as determined in good faith by the Board of
Trustees of the Fund. Short-term investments having a maturity of 60 days or
less are valued at amortized cost. Securities and assets for which current
market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Trustees of the Fund.
(2) FOREIGN CURRENCY TRANSLATIONS
Investment securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollars at the bid prices of such
currencies against the U.S. dollar as of the date of valuation. Purchases and
sales of portfolio securities, commitments under forward foreign currency
contracts, income receipts and expense accruals are translated at the prevailing
exchange rate on the date of each transaction.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
B-13
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
transactions, the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
(3) FEDERAL INCOME TAXES
The Funds intend to be treated as 'regulated investment companies' under
Sub-chapter M of the Internal Revenue Code and to distribute substantially all
of their net taxable income. Accordingly, no provisions for Federal income or
excise taxes have been made in the accompanying financial statements.
(4) INVESTMENT INCOME AND SECURITIES TRANSACTIONS
Dividend income is recorded on the ex-dividend date or as soon as the Fund
is informed of the dividend. Interest income is accrued daily. Security
transactions are accounted for on the date securities are purchased or sold.
Security gains and losses are determined on the identified cost basis.
(5) DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally accepted
accounting principles.
(6) DEFERRED ORGANIZATION COSTS
The Funds will reimburse the Advisor and Subadvisor for costs incurred in
connection with the Fund's organization. The costs are being amortized on a
straight-line basis over five years commencing with the Fund's operation.
NOTE (B) ADVISORY AND DISTRIBUTION SERVICES AGREEMENT
Under the terms of an Advisory Agreement with the Advisor, for the
investment management services furnished to each Portfolio, such portfolio will
pay the Advisor an advisory fee, on a graduated basis at an annual rate of 1.25%
of the first $100 million of average daily net assets, 1.15% of the next $100
million and 1% of average daily net assets over $200 million. Such fee will be
accrued daily and paid monthly. Under a Subadvisory Agreement between the
Advisory and Subadvisor, the Advisor pays the Subadvisor for its services, out
of the Advisor's own resources, at the following annual percentage rates of the
average daily net assets of each Portfolio: .625 of 1% of each Portfolio's first
$100 million, .575 of 1% of the next $100 million and .50 of 1% of the balance.
The Advisory Agreement provides that the Advisor will reimburse the Funds
for its expenses (exclusive of interest, taxes, brokerage, distribution services
fees and extraordinary expenses, all to the extent permitted by
B-14
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
applicable state securities law and regulations) which in any year exceed the
limits prescribed by any state in which shares of the Fund are qualified for
sale. The Fund believes that presently the most restrictive applicable expense
ratio limitation imposed on the Fund by any state is 2 1/2% of average net
assets of the first $30 million, 2% of average net assets of the next $70
million and 1 1/2% of average net assets in excess of $100 million.
Commencing at the inception of each Fund and through October 31, 1996, the
Adviser and Subadviser may voluntarily reduce their management fees by the
amount that total fund operating expenses exceed 2.15% and 2.90% of the average
daily net assets of the Class A and Class B shares, respectively, of each Fund.
Any such reduction will be borne equally between the Advisor and Subadvisor.
After October 31, 1996, the Advisor and Subadvisor may, in their sole
discretion, determine to discontinue this practice with respect to either Fund.
As a result of the voluntary waiver, for the period November 1, 1995 through
December 31, 1995, the Advisor and Subadvisor waived fees amounting to $31,237
and $29,332 for the International Equity Fund and Developing Markets Fund,
respectively.
The Fund has entered into a Distribution Services Agreement (the
'Agreement') pursuant to Rule 12b-1 under the Investment Company Act of 1940 for
Class A and Class B shares with Donaldson, Lufkin & Jenrette Securities
Corporation, the Fund's Distributor. Under the Agreement, each Portfolio will
pay a distribution services fee to the Distributor at an annual rate of up to
.25 of 1% of the average daily net assets attributable to Class A shares and 1%
of the average daily net assets attributable to Class B shares. The fees are
accrued daily and paid monthly. The Agreement provides that the Distributor will
use such payments in their entirety for distribution assistance and promotional
activities. The Agreement also provides that the Adviser may use its own
resources to finance the distribution of the Fund's shares.
Each Trustee who is not an affiliated person receives an attendance fee of
$2,000 per meeting. In addition, each unaffiliated Trustee who is a member of
the audit committee receives an attendance fee of $1,000 per meeting.
NOTE (C) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term
securities and forward currency exchange contracts) during the two month period
ended December 31, 1995, aggregated $9,775,048 and $5,404,267 for the
International Equity Fund; and $6,942,674 and $273,829 for the Developing
Markets Fund, respectively.
The Fund's may enter into forward exchange currency contracts in order to
hedge exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings. A forward exchange currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gain or
loss from foreign currency transactions.
Fluctuations in the value of forward exchange currency contracts are
recorded for financial reporting purposes as net change in unrealized
appreciation (depreciation) of foreign currency denominated assets and
liabilities.
Risks may arise from the potential inability of a counterparty to meet the
terms of a contract and from unanticipated movements in the value of a foreign
currency relative to the US. dollar. The contract amount in the following table
reflects the exposure the International Equity Fund had in that particular
currency contract.
B-15
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
At December 31, 1995, the International Equity Fund had outstanding forward
exchange currency contracts, as follows:
<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
FOREIGN CURRENCY SELL CONTRACTS (000) DATE VALUE (DEPRECIATION)
- ------------------------------------------------------ -------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks expiring 01/11/95...................... 1,616 $ 1,122,051 $1,129,442 $ (7,391)
French Francs expiring 01/11/95....................... 117,173 1,160,129 1,137,617 22,511
Japanese Yen expiring 01/11/95........................ 4,860 970,214 993,898 (23,684)
--------------
$ (8,564)
--------------
--------------
</TABLE>
At December 31, 1995, the cost of investments for federal income tax
purposes was the same as the cost for financial reporting purposes. At December
31, 1995, the components of net unrealized depreciation of investments were as
follows:
<TABLE>
<CAPTION>
INTERNATIONAL DEVELOPING
EQUITY FUND MARKETS FUND
------------- ------------
<S> <C> <C>
Gross appreciation (investments having an excess of value over cost)........... $ 2,042,842 $ 770,777
Gross depreciation (investments having an excess of cost over value)........... (643,954) (821,477)
------------- ------------
Net unrealized depreciation of investments..................................... $ 1,398,888 $ (50,700)
------------- ------------
------------- ------------
</TABLE>
B-16
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
NOTE (D) SHARES OF BENEFICIAL INTEREST
There is an unlimited number of shares of beneficial interest authorized,
divided into two classes, designated Class A and Class B Shares. Transactions in
shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 8, 1995*
THROUGH OCTOBER 31, 1995
----------------------------------------------
INTERNATIONAL DEVELOPING
EQUITY FUND MARKETS FUND
---------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Class A
Shares sold... 3,006,328 $30,025,797 1,531,521 $15,261,869
Shares
redeemed.... -- -- -- --
--------- ----------- --------- -----------
Net increase....... 3,006,328 $30,025,797 1,531,521 $15,261,869
--------- ----------- --------- -----------
Class B
Shares sold... 185,880 $ 1,810,674 102,943 $ 1,006,679
Shares
redeemed.... -- -- -- --
--------- ----------- --------- -----------
Net increase....... 185,880 $ 1,810,674 102,943 $ 1,006,679
--------- ----------- --------- -----------
--------- ----------- --------- -----------
<CAPTION>
FOR THE TWO MONTHS
ENDED DECEMBER 31, 1995
------------------------------------------
INTERNATIONAL DEVELOPING
EQUITY FUND MARKETS FUND
--------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Class A
Shares sold... 306,713 $3,001,793 400,463 $3,773,744
Shares
redeemed.... (84,095) (847,730) (10,000) (97,500)
---------- ---------- ------- ----------
Net increase....... 222,618 $2,154,063 390,463 $3,676,244
---------- ---------- ------- ----------
Class B
Shares sold... 50,097 $ 490,256 27,251 $ 258,095
Shares
redeemed.... -- -- -- --
---------- ---------- ------- ----------
Net increase....... 50,097 $ 490,256 27,251 $ 258,095
---------- ---------- ------- ----------
---------- ---------- ------- ----------
</TABLE>
* Commencement of Operations.
B-17
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
FINANCIAL HIGHLIGHTS
DECEMBER 31, 1995
Reference is made to page 4 of the Funds' prospectus.
B-18
<PAGE>
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following report and financial statements are incorporated in
Part B of this Registration Statement by reference to the Funds' Annual
Report to Shareholders for the fiscal year ended October 31, 1995:
Report of Independent Auditors dated December 8, 1995; Statement of
Investments as of October 31, 1995; Statement of Assets and Liabilities
as of October 31, 1995; Statement of Operations for the period from
September 8, 1995 (commencement of operations) through October 31,
1995; Statement of Changes in Net Assets for the period from September
8, 1995 through October 31, 1995; Financial Highlights for the period
from September 8, 1995 through October 31, 1995; Notes to Financial
Statements as of October 31, 1995
Included in the Prospectus constituting Part A of this Registration
Statement:
Financial Highlights for the period from September 8, 1995
(commencement of operations) through October 31, 1995 (audited) and
for the period from November 1, 1995 through December 31, 1995
(unaudited)
Included in the Statement of Additional Information constituting Part B
of this Registration Statement:
Statement of Investments as of December 31, 1995 (unaudited)
Statement of Assets and Liabilities as of December 31, 1995
(unaudited)
Statement of Operations for the period from November 1, 1995 through
December 31, 1995 (unaudited)
Statement of Changes in Net Assets for the period from September 8,
1995 through October 31, 1995 and for the period from November 1,
1995 through December 31, 1995 (unaudited)
Notes to Financial Statements as of December 31, 1995 (unaudited)
(b) Exhibits
<TABLE>
<C> <C> <S>
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Not Applicable
(4) (a) Form of Share Certificate of the Winthrop Developing Markets Fund Class A Shares*
(b) Form of Share Certificate of the Winthrop Developing Markets Fund Class B Shares*
(c) Form of Share Certificate of the Winthrop International Equity Fund Class A Shares*
(d) Form of Share Certificate of the Winthrop International Equity Fund Class B Shares*
(5) (a) Form of Investment Advisory Agreement*
(b) Form of Sub-Advisory Agreement*
(6) (a) Form of Distribution Agreement*
(b) Form of Selling Agreement*
(7) Not Applicable
(8) Form of Custodian Agreement*
(9) (a) Form of Administration Agreement*
(b) Form of Transfer Agency Agreement*
</TABLE>
C-1
<PAGE>
<PAGE>
<TABLE>
<C> <C> <S>
(10) Legal Opinion*
(11) Consent of Independent Auditors
(12) Not Applicable
(13) Subscription Agreement with Initial Shareholders*
(14) (a) Qualified Retirement Plan: Basic Plan Document*
(b) Qualified Retirement Plan: Flexible Standardized Profit Sharing Plan*
(c) Qualified Retirement Plan: Flexible Standardized Money Purchase Pension Plan*
(d) Qualified Retirement Plan: Simplified Standardized Money Purchase Pension Plan*
(e) Qualified Retirement Plan: Simplified Standardized Profit Sharing Plan*
(f) Simplified Employee Pension Plan and Salary Reduction Simplified Employee Pension Plan*
(15) (a) Rule 12b-1 Plan for Winthrop Developing Markets Fund Class A Shares*
(b) Rule 12b-1 Plan for Winthrop Developing Markets Fund Class B Shares*
(c) Rule 12b-1 Plan for Winthrop International Equity Fund Class A Shares*
(d) Rule 12b-1 Plan for Winthrop International Equity Fund Class B Shares*
(16) Schedule of Performance Calculation
(18) Rule 18F-3 Plan*
(27) (a) Financial Data Schedule for Developing Markets Fund Class A Shares
(b) Financial Data Schedule for Developing Markets Fund Class B Shares
(c) Financial Data Schedule for International Equity Fund Class A Shares
(d) Financial Data Schedule for International Equity Fund Class B Shares
</TABLE>
- ------------
* Previously filed as an exhibit to Amendment No. 1 to Registration Statement
No. 33-92982 on September 1, 1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of January 31, 1996, the approximate number of holders were:
<TABLE>
<CAPTION>
FUND CLASS NUMBER OF RECORD HOLDERS
- ---------------------------- ----- ------------------------
<S> <C> <C>
Developing Markets Fund A 289
Developing Markets Fund B 141
International Equity Fund A 317
International Equity Fund B 178
</TABLE>
ITEM 27. INDEMNIFICATION
Registrant's 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
C-2
<PAGE>
<PAGE>
matter as to which it has been determined that such person (i) did not act in
good faith in the reasonable belief that such person's action was in 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
such person's office.
The Investment Advisory Agreement between Registrant and Wood, Struthers &
Winthrop Management Corp. and the Investment Sub-Advisory Agreement among
Registrant, Axa Asset Management Partenaires and Wood, Struthers & Winthrop
Management Corp. each provides that Wood, Struthers & Winthrop Management Corp.
and Axa Asset Management Partenaires, respectively, will not be liable
thereunder for any mistake of judgment or in any event whatsoever except for
lack of good faith and that nothing therein shall be deemed to protect Wood,
Struthers & Winthrop Management Corp. and Axa Asset Management Partenaires
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 Investment Sub-Advisory Agreement among Registrant, Axa Asset
Management Partenaires and Wood, Struthers & Winthrop Management Corp. provides
that Axa Asset Management Partenaires will indemnify Wood, Struthers & Winthrop
Management Corp. and its directors, officers, employees, agents, associates and
controlling persons while acting in any capacity set forth in the Investment
Sub-Advisory Agreement except such activities arising by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard to the duties
involved in the conduct of such person's office.
The Investment Sub-Advisory Agreement among Registrant, Axa Asset
Management Partenaires and Wood, Struthers & Winthrop Management Corp. provides
that Wood, Struthers & Winthrop Management Corp. will indemnify Axa Asset
Management Partenaires and its directors, officers, employees, agents,
associates and controlling persons while acting in any capacity set forth in the
Investment Sub-Advisory Agreement except such activities arising by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard to the
duties involved in the conduct of such person's office.
The Distribution 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 Investment Advisory Agreement between
Registrant and Wood, Struthers & Winthrop Management Corp. and the Distribution
Agreement between Registrant and Donaldson, Lufkin & Jenrette Securities
Corporation. The Registrant's Agreement and Declaration of Trust, the Investment
Advisory Agreement and Distribution Agreement are attached hereto as Exhibits 5
and 6, in response to Item 24.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the 'Securities Act') may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer or
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate
C-3
<PAGE>
<PAGE>
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The Equitable Life Assurance Society of the United States (the parent of
Adviser's parent) carries for itself and its subsidiaries Directors and Officers
Liability Insurance. Coverage under this policy has been extended to directors
and officers of the investment companies managed by Wood, Struthers & Winthrop
Management Corp. Under this policy, outside trustees would be covered up to the
limits specified for any claim against them for acts committed in their
capacities as members of the Board.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The description of the Adviser and Subadviser under the caption
'Management' in the Prospectus and in the Statement of Additional Information
constituting Parts A and B, respectively, of this Registration Statement as well
as the Adviser's and Subadviser's respective current Forms ADV are incorporated
by reference herein.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Donaldson, Lufkin & Jenrette Securities Corporation, the Registrant's
Distributor (Underwriter) also acts as Distributor for the following investment
companies:
Winthrop Focus Funds: Winthrop Aggressive Growth Fund, Winthrop Fixed
Income Fund, Winthrop Growth and Income Fund, Winthrop Municipal Trust Fund
and Winthrop Growth Fund.
(b) For information required with respect to the directors and officers of
the Funds' Distributor, reference is made to the Form BD filed by the
Distributor under the Securities Exchange Act of 1934.
(c) Not Applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The majority of accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of Wood, Struthers & Winthrop
Management Corp., 277 Park Avenue, New York, New York 10172 (see 'Management' in
the Prospectus). Additional records are maintained at the offices of Citibank,
N.A., the Registrant's Custodian, 111 Wall Street, New York, New York 10043.
ITEM 31. MANAGEMENT SERVICES
Not Applicable
ITEM 32. UNDERTAKINGS
(a) Registrant has undertaken that if it does not hold annual meetings it
will abide by Section 16(c) of the 1940 Act which provides certain rights to
shareholders.
(b) Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of Registrant's latest Annual Report to
Shareholders upon request and without charge.
C-4
<PAGE>
<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 pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to 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 28th day of February, 1996.
WINTHROP OPPORTUNITY FUNDS
By: /s/ G. MOFFETT COCHRAN
.....................................
TITLE: G. MOFFETT COCHRAN,
NAME: TRUSTEE AND PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the date
indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ G. MOFFETT COCHRAN Trustee and President February 28, 1996
.........................................
(G. MOFFETT COCHRAN)
/s/ MARTIN JAFFE Trustee, Secretary and Treasurer February 28, 1996
.........................................
(MARTIN JAFFE)
/s/ ROBERT E. FISHER Trustee February 28, 1996
.........................................
(ROBERT E. FISHER)
/s/ WILMOT H. KIDD, III Trustee February 28, 1996
.........................................
(WILMOT H. KIDD, III)
/s/ JOHN W. WALLER, III Trustee February 28, 1996
.........................................
(JOHN W. WALLER, III)
</TABLE>
STATEMENT OF DIFFERENCES
------------------------
The division symbol shall be expressed as [div]
The dagger symbol shall be expressed as `D'
Mathematical powers normally expressed as superscript shall be preceded by 'pp'
<PAGE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ----------- ------
<S> <C> <C>
11 -- Consent of Independent Accountants.................................................................
16 -- Schedule of Performance Calculation................................................................
27(a) -- Financial Data Schedule for Developing Markets Fund Class A Shares.................................
(b) -- Financial Data Schedule for Developing Markets Fund Class B Shares.................................
(c) -- Financial Data Schedule for International Equity Fund Class A Shares...............................
(d) -- Financial Data Schedule for International Equity Fund Class B Shares...............................
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions 'Financial
Highlights' and 'General Information -- Counsel and Auditors' and to the use of
our report dated December 8, 1995, in this Registration Statement (Form N-1A No.
33-92982) of Winthrop Opportunity Funds.
ERNST & YOUNG LLP
New York, New York
February 23, 1996
<PAGE>
<PAGE>
EXHIBIT 16
Quotations of each Fund's cumulative total return for the period ended
October 31, 1995 is calculated pursuant to the following formula:
P(1+T)'pp'n = ERV
P = a hypothetical initial payment of $1,000
T = total return
n = number of periods
ERV = Ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the period
CUMULATIVE TOTAL RETURNS FOR THE PERIOD ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
DEVELOPING MARKETS FUND FUND
------------------------ ------------------------
ENDING CUMULATIVE ENDING CUMULATIVE
REDEEMABLE TOTAL REDEEMABLE TOTAL
VALUE RETURN* VALUE RETURN*
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Class A......................................... 898 -10.18 % 903 -9.66 %
Class B......................................... 914 -8.61 % 919 -8.13 %
</TABLE>
- ------------
* Each Fund's cumulative total return figures assume all dividends and
distributions by such Fund over the relevant time period were reinvested and
the maximum sales charge, if any, was imposed. It was then assumed that at
the end of these periods, the entire amount was redeemed and the appropriate
deferred sales load, if applicable, was deducted. The cumulative return was
then calculated by calculating the rate required for the initial payment to
grow to the amount which would have been received upon redemption (i.e., the
cumulative total rate of return).
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> DEVELOPING MARKETS CLASS A
<NUMBER> 1
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> OCT-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 17,591
<INVESTMENTS-AT-VALUE> 17,540
<RECEIVABLES> 130
<ASSETS-OTHER> 2,795
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,465
<PAYABLE-FOR-SECURITIES> 85
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 261
<TOTAL-LIABILITIES> 346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,561
<SHARES-COMMON-STOCK> 1,924
<SHARES-COMMON-PRIOR> 1,534
<ACCUMULATED-NII-CURRENT> (10)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (59)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 627
<NET-ASSETS> 20,119
<DIVIDEND-INCOME> 25
<INTEREST-INCOME> 29
<OTHER-INCOME> 0
<EXPENSES-NET> (64)
<NET-INVESTMENT-INCOME> (10)
<REALIZED-GAINS-CURRENT> (59)
<APPREC-INCREASE-CURRENT> 627
<NET-CHANGE-FROM-OPS> 558
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 400
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,493
<ACCUMULATED-NII-PRIOR> 5
<ACCUMULATED-GAINS-PRIOR> (19)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93
<AVERAGE-NET-ASSETS> 16,371
<PER-SHARE-NAV-BEGIN> 9.53
<PER-SHARE-NII> .00
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.78
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> DEVELOPING MARKETS CLASS B
<NUMBER> 2
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> OCT-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 17,591
<INVESTMENTS-AT-VALUE> 17,540
<RECEIVABLES> 130
<ASSETS-OTHER> 2,795
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,465
<PAYABLE-FOR-SECURITIES> 85
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 261
<TOTAL-LIABILITIES> 346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,561
<SHARES-COMMON-STOCK> 133
<SHARES-COMMON-PRIOR> 105
<ACCUMULATED-NII-CURRENT> (10)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (59)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 628
<NET-ASSETS> 20,119
<DIVIDEND-INCOME> 25
<INTEREST-INCOME> 29
<OTHER-INCOME> 0
<EXPENSES-NET> (64)
<NET-INVESTMENT-INCOME> (10)
<REALIZED-GAINS-CURRENT> (59)
<APPREC-INCREASE-CURRENT> 627
<NET-CHANGE-FROM-OPS> 558
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 27
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,493
<ACCUMULATED-NII-PRIOR> 5
<ACCUMULATED-GAINS-PRIOR> (17)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93
<AVERAGE-NET-ASSETS> 1,135
<PER-SHARE-NAV-BEGIN> 9.52
<PER-SHARE-NII> (0.2)
<PER-SHARE-GAIN-APPREC> .25
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.75
<EXPENSE-RATIO> 2.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> INTERNATIONAL EQUITY CLASS A
<NUMBER> 3
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> OCT-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 32,714
<INVESTMENTS-AT-VALUE> 34,113
<RECEIVABLES> 456
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<PAGE>
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<NAME> INTERNATIONAL EQUITY CLASS B
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