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As filed with the Securities and Exchange Commission on October [ ], 1996
Registration No. 33-92982
Registration No. 811-9054
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 2 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
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Amendment No. 2 X
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(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)
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b), or
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[x] 75 days after filing pursuant to paragraph (a)(2), or
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
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Pursuant to the provisions of Rule 24f-2(a) under the Investment Company Act of
1940, Registrant hereby elects to register an indefinite number of securities
under the Securities Act of 1933. The Registrant will file a Rule 24f-2 Notice
within six months after the close of its current fiscal year.
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CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
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N-1A ITEM NO. LOCATION
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PART A FOR WINTHROP TAX EXEMPT MONEY FUND AND WINTHROP U.S.
GOVERNMENT MONEY FUND
Item 1. Cover Page........................................ Cover Page
Item 2. Synopsis.......................................... Summary of Money Fund Ex-
penses
Item 3. Condensed Financial Information................... Not Applicable
Item 4. General Description of Registrant................. Cover Page; Investment Objec-
tives and Policies; General In-
formation
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 Share-
holder Services; Daily 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 FOR WINTHROP TAX EXEMPT MONEY FUND AND WINTHROP U.S.
GOVERNMENT MONEY FUND
Item 10. Cover Page........................................ Cover Page
Item 11. Table of Contents................................. Cover Page
Item 12. General Information and History................... Cover Page
Item 13. Investment Objectives and Policies................ Investment Policies and Restric-
tions; Portfolio Transactions
Item 14. Management of the Fund ........................... Management
Item 15. Control Persons and Principal Holders of Securities Not Applicable
Item 16. Investment Advisory and Other Services............ Management; General Information
Item 17. Brokerage Allocation and Other Practices.......... Portfolio Transactions
Item 18. Capital Stock and Other Securities................ General Information; Purchases,
Redemption and Shareholder
Services
Item 19. Purchase, Redemption and Pricing of Securities Being Purchases, Redemptions and
Offered........................................... Shareholder Services; Net Asset
Value
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N-1A ITEM NO. LOCATION
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Item 20. Tax Status........................................ Investment Policies and Restric-
tions; Daily Dividends, Distribu-
tions and Taxes
Item 21. Underwriters...................................... Not Applicable
Item 22. Calculation of Performance Data................... Investment Performance Informa-
tion
Item 23. Financial Statements.............................. [Statement of Assets and Liabili-
ties and Report of Independent
Accountants]
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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.
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Subject to Completion -- Dated October [ ], 1996
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 'Opportunity Funds'), is currently comprised of four
series: the Winthrop Tax Exempt Money Fund (the 'Tax Exempt Fund') and the
Winthrop U.S. Government Money Fund (the 'Government Fund' and together with the
Tax Exempt Fund, the 'Money Funds'), and the Winthrop Developing Markets Fund
and the Winthrop International Equity Fund (the 'Equity Funds'), which are
offered in a separate prospectus. Each of the Money Funds is open-end and
diversified. The Money Funds are 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 TAX EXEMPT MONEY FUND -- Seeks maximum current income, consistent with
liquidity and safety of principal, that is exempt from Federal income taxes by
investing principally in a diversified portfolio of municipal securities.
WINTHROP U.S. GOVERNMENT MONEY FUND -- Seeks maximum current income, consistent
with liquidity and safety of principal, by investing in a portfolio of U.S.
Government securities.
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 the Tax Exempt
Fund and Government Fund.
PURCHASE INFORMATION
Shares of the Money Funds may be purchased directly from the Money Funds by
using the Share Purchase Application found in this Prospectus, through the
Funds' Distributor, Donaldson, Lufkin & Jenrette Securities Corporation, or by
contacting your securities dealer.
The minimum initial investment in Regular shares of each Money 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 Regular
shares' 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]. With respect to
the Institutional shares, an investor's minimum initial investment in such
shares is $100,000 and the minimum for subsequent investments is $1,000, which
amounts may be allocated among either of the Money Funds. The Money Funds or
their investment adviser may waive the minimum investments for Institutional
shares at their discretion. Further information can be obtained from the Money
Funds at the address and telephone number shown above. See 'Purchases,
Redemptions and Shareholder Services.'
Shares of each Money Fund may be purchased at a price equal to the net asset
value of the Money Fund which is expected to be $1.00 per share. See 'Net Asset
Value.'
ADDITIONAL INFORMATION
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Money Funds. A 'Statement of Additional
Information' dated , 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
('SEC') and is incorporated herein by reference. For a free copy, write or call
the Money Funds at the address or telephone number shown above. In addition, the
SEC maintains an Internet Web site (http://www.sec.gov) that contains the
Statement of Additional Information, material incorporated by reference and
other information regarding the Money Funds.
An investment in the Winthrop Opportunity Funds is (i) neither insured nor
guaranteed by the U.S. Government; (ii) not a deposit or obligation of, or
guaranteed or endorsed by, any bank; and (iii) not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
agency. There can be no assurance that the Money Funds will be able to maintain
a stable net asset value of $1.00 per share.
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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.
PROSPECTUS DATED , 1996
Investors are advised to read this Prospectus and to retain it for future
reference.
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SUMMARY OF MONEY FUND EXPENSES
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TAX EXEMPT GOVERNMENT
FUND FUND
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SHAREHOLDER TRANSACTION EXPENSES REGULAR INSTITUTIONAL REGULAR INSTITUTIONAL
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Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)............................................................. 0% 0% 0% 0%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage
of offering price)................................................. 0% 0% 0% 0%
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)................................ 0% 0% 0% 0%
Redemption Fees (as a percentage of amount redeemed)................. 0% 0% 0% 0%
Exchange Fee......................................................... 0% 0% 0% 0%
ANNUAL MONEY FUND OPERATING EXPENSES (estimated as a percentage of
average daily net assets)
Management Fees*................................................ .40% .40% .40% .40%
12b-1 Fees**.................................................... .25% 0% .25% 0%
Other Expenses, after expense reimbursement..................... .25%`D' .10%`D' .25%`D' .10%`D'
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Total Fund Operating Expenses................................... .90%`D' .50%`D' .90%`D' .50%`D'
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* Management Fees with respect to the Money Funds are reduced to .35% on net
assets in excess of $1 billion.
** The Money Funds have entered into a Distribution Agreement and a Rule 12b-1
Plan pursuant to which each Money Fund pays, with respect to Regular
shares, a distribution fee each month at an annual rate of up to .25 of 1%
of the average daily net assets of the Regular 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. See 'Expenses of the Money Funds -- Distribution
Agreement.'
`D' As of the date of this Prospectus, the Money Funds have not commenced
operations. Accordingly, these percentages are estimates. 'Other Expenses'
includes fees paid to the Money 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 Money Fund's average net assets, but a fixed dollar
cost. The percentages for other fixed cost expenses are the maximum allowed
to be charged to the Money Funds as total operating expenses are capped at
the percentages stated above. Commencing at the inception of each Money
Fund and through [ , 1996], the Adviser (as later defined) may voluntarily
reduce its management fees by the amount that Total Fund Operating Expenses
exceed .90% and .50% of the average daily net assets of the Regular and
Institutional shares, respectively, of each Money Fund. After [ , 1996],
the Adviser may, in its sole discretion, determine to discontinue this
practice with respect to either Money Fund.
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EXAMPLES 1 YEAR 3 YEARS
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TAX EXEMPT FUND
REGULAR
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return
(cumulatively through the end of each time period) and (2) redemption at the end of each time
period................................................................................................ $9 $29
INSTITUTIONAL
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return
(cumulatively through the end of each time period) and (2) redemption at the end of each time
period................................................................................................ $5 $16
GOVERNMENT FUND
REGULAR
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return
(cumulatively through the end of each time period) and (2) redemption at the end of each time
period................................................................................................ $9 $29
INSTITUTIONAL
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return
(cumulatively through the end of each time period) and (2) redemption at the end of each time
period................................................................................................ $5 $16
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of each Money Fund bear directly
or indirectly. See also 'Expenses of the Money Funds' and 'Purchases,
Redemptions and Shareholder Services.' The example should not be considered a
representation of future expenses and actual expenses may be greater or lesser
than those shown.
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INTRODUCTION
Winthrop Opportunity Funds is a Delaware business trust whose shares are
offered in four separate portfolios: the Winthrop Tax Exempt Money Fund (the
'Tax Exempt Fund') and the Winthrop U.S. Government Money Fund (the 'Government
Fund' and together with the Tax Exempt Fund, the 'Money Funds'), and the
Winthrop Developing Markets Fund and the Winthrop International Equity Fund (the
'Equity Funds'), which are offered in a separate prospectus. Because Winthrop
Opportunity Funds offers multiple funds, it is known as a 'series fund.'
Winthrop Opportunity Funds may in the future establish additional series with
different investment objectives and policies and offer additional classes of
shares.
Each portfolio of the Winthrop Opportunity Funds 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.') A shareholder may utilize the Money Funds' exchange privilege
to transfer such shareholder's assets to the Equity Funds or for shares 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 '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 Regular shares of the
Money Funds (.25 of 1% annually) for Class A shares of the Focus Funds (.30 of
1% annually) or Class B shares of the Equity Funds or Focus Funds (1% annually).
(See 'Purchases, Redemptions and Shareholder Services.') In addition, a
shareholder may be subject to sales charges upon exchanging shares of the Money
Funds for shares of the Equity Funds or Focus Funds. (See 'Additional
Shareholder Services -- Exchange Privilege'). Shareholders of all classes of the
Money Funds are entitled to their pro rata share of any dividends and
distributions arising from that Money Fund's assets except that with respect to
each Money Fund, Regular and Institutional shareholders bear different
distribution expenses (See 'Daily Dividends, Distributions and Taxes'). Upon
redeeming shares of a Money Fund, the shareholder will receive the
next-determined net asset value of that Fund represented by the redeemed shares
which is expected to remain constant at $1.00 per share. (See 'Purchases,
Redemptions and Shareholder Services.')
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The investment objectives and policies of each Money Fund are set forth
below. There can be, of course, no assurance that either Money Fund will achieve
its respective investment objective.
The investment objectives of each Money Fund are fundamental policies of
that Money Fund and may not be changed without the approval of that Money 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 Money Fund are not fundamental policies and may be
changed by the Board of Trustees without a shareholder vote. A more detailed
explanation of the Money Funds' policies and the securities and instruments they
may buy or use is contained in the Money Funds' Statement of Additional
Information, which is available upon request.
THE WINTHROP TAX EXEMPT MONEY FUND
The Tax Exempt Fund's investment objectives are to seek maximum current
income, consistent with liquidity and safety of principal, that is exempt from
income taxation to the extent described below. As a matter of fundamental
policy, the Tax Exempt Fund pursues its objectives by investing in high quality
municipal securities having remaining maturities of one year or less, which
maturities may extend to 397 days, and at least 80% of the Tax Exempt Fund's
total assets will be invested in such securities (as opposed to the
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taxable investments described below). However, the Tax Exempt Fund reserves the
right to lower the percentage to 65% if economic or political conditions
warrant. To increase the Tax Exempt Fund's ability to reach its investment
objectives, the dollar weighted average maturity of its portfolio securities is
always 90 days or less. In general, securities with longer maturities are more
vulnerable to price changes, although they may provide higher yields. It is
possible that a major change in interest rates or a default on the Tax Exempt
Fund's investments could cause their share prices to change. There can be no
assurance, as is true with all investment companies, that the Tax Exempt Fund's
investment objectives will be achieved.
Normally, substantially all the Tax Exempt Fund's income will be tax-exempt
as described below. Such income may be subject to state or local income taxes.
The municipal securities in which the Tax Exempt Fund invests include
municipal notes and short-term municipal bonds. Municipal notes are generally
used to provide for short-term capital needs and generally have maturities of
one year or less. Examples include tax anticipation and revenue anticipation
notes, which are generally issued in anticipation of various seasonal revenues,
bond anticipation notes, and tax-exempt commercial paper. Short-term municipal
bonds may include general obligation bonds, which are secured by the issuer's
pledge of its faith, credit and taxing power for payment of principal and
interest, and revenue bonds, which are generally paid from the revenues of a
particular facility or a specific excise or other source.
The Tax Exempt Fund may invest in variable rate obligations whose interest
rates are adjusted either at predesignated periodic intervals or whenever there
is a change in the market rate to which the security's interest rate is tied.
Such adjustments minimize changes in the market value of the obligation and,
accordingly, enhance the ability of the Tax Exempt Fund to maintain a stable net
asset value. Variable rate securities purchased may include participation
interests in industrial development bonds which may be backed by letters of
credit from banking or other financial institutions. The letters of credit of
any single of such institutions in respect of all variable rate obligations will
not cover more than 5% of the Tax Exempt Fund's total assets in accordance with
Rule 2a-7 of the Investment Company Act of 1940.
The Tax Exempt Fund may invest without limitation in tax-exempt municipal
securities subject to the alternative minimum tax (the 'AMT'). Under current
Federal income tax law, (1) interest on tax-exempt municipal securities issued
after August 7, 1986 which are 'specified private activity bonds,' and the
proportionate share of any exempt-interest dividends paid by a regulated
investment company which receives interest from such specified private activity
bonds, will be treated as an item of tax preference for purposes of the AMT
imposed on individuals and corporations, though for regular Federal income tax
purposes such interest will remain fully tax-exempt, and (2) interest on all
tax-exempt obligations will be included in 'adjusted current earnings' of
corporations for AMT purposes. Such bonds have provided, and may continue to
provide, somewhat higher yields than other comparable municipal securities.
While the Tax Exempt Fund may invest without limitation in securities subject to
AMT, the AMT affects only a small percentage of all tax paying investors. (See
'Daily Dividends, Other Distributions and Taxes.')
All of the Tax Exempt Fund's municipal securities at the time of purchase
are rated within the two highest quality ratings of Moody's Investors Service,
Inc. (Aaa and Aa, MIG 1 and MIG 2 or VMIG1 and VMIG2) or Standard & Poor's
Corporation (AAA and AA or SP-1 and SP-2), or judged by the Adviser (as defined
under 'Management') to be of comparable quality.
To maintain portfolio diversification and reduce investment risk, the Tax
Exempt Fund may not: (1) borrow money except from banks on a temporary basis or
via entering into reverse repurchase agreements to be used exclusively to
facilitate the orderly maturation and sale of portfolio securities during any
periods of abnormally heavy redemption requests, if they should occur; such
borrowings may not be used to purchase investments; or (2) pledge, hypothecate
or in any manner transfer, as security for indebtedness, its assets except to
secure such borrowings.
The Tax Exempt Fund may also invest in stand-by commitments,
delayed-delivery and when-issued securities, which may involve certain expenses
and risks. The Tax Exempt Fund's custodian will maintain a segregated account
containing liquid securities having value
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equal to, or greater than, such securities. The price of such securities,
which is generally expressed in yield terms, is fixed at the time the commitment
to purchase is made, but delivery and payment for such securities takes place at
a later time. Normally the settlement date occurs from within ten days to one
month after the purchase of the issue. The value of such securities may
fluctuate prior to their settlement, thereby creating an unrealized gain or
loss to the Tax Exempt Fund. Such securities are examples of what the Securities
and Exchange Commission (the 'SEC') considers 'illiquid securities' because
their settlement date occurs more than seven days after their purchase. The SEC
limits money market funds to hold only up to 10% of their total assets for
securities which settle more than seven days after purchase.
The Tax Exempt Fund may also invest in municipal leases, which are leases
or installment purchases used by state and local governments as a means to
acquire property, equipment or facilities without involving debt issuance
limitations. It is possible that more than 5% of the Tax Exempt Fund's net
assets will be invested in municipal leases which have been determined to be
liquid securities by the Tax Exempt Fund's adviser.
The taxable investments in which the Tax Exempt Fund may invest include
obligations of the U.S. Government and its agencies, high quality certificates
of deposit and bankers' acceptances, prime commercial paper, and repurchase
agreements.
To seek to reduce investment risk, the Tax Exempt Fund may not invest more
than 5% of its total assets in the securities of any one issuer except the U.S.
Government in accordance with Rule 2a-7 of the Investment Company Act of 1940.
The Tax Exempt Fund earns income at current money market rates and its
yield will vary from day to day and generally reflects current short-term
interest rates and other market conditions. It is important to note that neither
the Tax Exempt Fund nor its yields are insured or guaranteed by the U.S.
Government.
THE WINTHROP U.S. GOVERNMENT MONEY FUND
The Winthrop U.S. Government Money Fund (the 'Government Fund') investment
objectives are to seek maximum current income, consistent with liquidity and
safety of principal. As a matter of fundamental policy, the Government Fund
pursues its objectives by maintaining a portfolio of high quality money market
securities, including the types described in the succeeding paragraph, which at
the time of investment generally have remaining maturities of one year or less,
although maturities may extend to 397 days. The dollar weighted average maturity
of the Government Fund's portfolio securities will vary, but will always be 90
days or less. In general, securities with longer maturities are more vulnerable
to price changes, although they may provide higher yields. It is possible that a
major change in interest rates or a default on the Government Fund's investments
could cause their share prices to change. There can be no assurance, as is true
with all investment companies, that the Government Fund's objectives will be
achieved.
The securities in which the Government Fund invests are: (1) marketable
obligations of, or guaranteed by, the United States Government, its agencies or
instrumentalities (collectively, the 'U.S. Government'), including issues of the
United States Treasury, such as bills, certificates of indebtedness, notes and
bonds, and issues of agencies and instrumentalities established under the
authority of an act of Congress, including variable rate obligations such as
floating rate notes; and (2) repurchase agreements that are collateralized in
full each day by the types of securities listed above. These agreements are
entered into with 'primary dealers' (as designated by the Federal Reserve Bank
of New York) in U.S. Government securities or Citibank, N.A., the Money Fund's
custodian, and would create a loss to the Government Fund if, in the event of a
dealer default, the proceeds from the sale of the collateral were less than the
repurchase price. In addition, if the seller of repurchase agreements becomes
insolvent, the Government Fund's right to dispose of the securities might be
restricted. The Government Fund may commit up to 10% of its net assets to the
purchase of illiquid securities, which includes when-issued U.S. Government
securities, whose value may fluctuate prior to their
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settlement, thereby creating an unrealized gain or loss to the Government Fund.
The Government Fund earns income at current money market rates and its
yield will vary from day to day and generally reflects current short-term
interest rates and other market conditions. It is important to note that neither
the Government Fund nor its yield is insured or guaranteed by the U.S.
Government.
To maintain portfolio diversification and reduce investment risk, the
Government Fund may not: (1) borrow money except from banks on a temporary basis
or via entering into reverse repurchase agreements to be used exclusively to
facilitate the orderly maturation and sale of portfolio securities during any
periods of abnormally heavy redemption requests, if they should occur; such
borrowings may not be used to purchase investments; or (2) pledge, hypothecate
or in any manner transfer, as security for indebtedness, its assets except to
secure such borrowings.
In addition to the above referenced securities, the Money Funds reserve
the right as a defensive measure to hold temporarily other types of securities
which are permitted by Rule 2a-7 of the Investment Company Act of 1940. See
'Investment Objectives' in the Statement of Additional Information for a more
complete description of the Money Funds' objectives, strategies, instruments
to be used in connection therewith and risks associated therewith.
MANAGEMENT
The Money 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.
DLJ Investment 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 Money Funds, subject
to the general supervision and control of the Trustees of the Funds.
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 member of a large French insurance group. AXA is indirectly
controlled by a group of five French mutual insurance companies.
The Adviser does not act as an investment adviser to any other investment
companies.
[ ] an employee of the Adviser, is the portfolio manager of
each Money Fund. [ ] has been an asset manager responsible for
[ ] for a [ ] since [ ].
Under its Advisory Agreement with the Money Funds, the Adviser or its
affiliates (i) provide investment advisory services and order placement
facilities for each of the Money Funds and pays all compensation of Trustees of
the Money Funds who are affiliated persons of the Adviser and (ii) furnish the
Money Funds' management supervision and assistance and office facilities in
addition to administrative and other nonadvisory services for which it may be
reimbursed. The Money Funds pay a fee of .40% of the average daily net assets of
each Money Fund to the Adviser which is reduced to .35% of each Money Fund's
average daily net assets in excess of $1 billion. The advisory fees to be paid
by the Money Funds are similar to those paid by other money market mutual funds.
As of the date of this Prospectus, the Money Funds have not commenced operations
and, accordingly, have not paid the Adviser a fee.
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EXPENSES OF THE MONEY FUNDS
GENERAL
In addition to the payments to the Adviser under the investment advisory
agreement described above, the Money Funds pay the other expenses incurred in
the Money 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 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; costs of maintenance of
existence; and interest charges, taxes, brokerage fees, and commissions.
The investment advisory agreement provides that the Adviser will reimburse
the Money Funds up to the amount of its advisory fee for the expenses of any
Money 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 Money
Fund are qualified for sale.
DISTRIBUTION AGREEMENT
Rule 12b-1 adopted by the SEC under the Investment Company Act of 1940
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 Money Funds could be deemed to be
distribution expenses within the meaning of such rule. Thus, pursuant to Rule
12b-1, the Money Funds' Trustees, including a majority of its disinterested
Trustees, have adopted separate 12b-1 Plans for the expenses to be incurred in
distributing each Money Funds' Regular shares (the 'Rule 12b-1 Plans') and the
Money 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 Money Fund, the maximum amount payable by the Money
Funds under the Rule 12b-1 Plan for distributing Regular shares is .40 of 1% of
the average daily net assets of the Regular shares during the year. The current
amount payable by the Money Funds under the Rule 12b-1 Plans to the Distributor
is .25% of 1% of the average daily net assets of Regular shares during the year.
Pursuant to the Agreements, the Trustees can raise the distribution fees up to
the maximum amount by a majority vote if the Trustees, in their opinion feel
that the raise is in the best interest of the Money Funds and their
Shareholders. The Agreement but not the Rule 12b-1 Plan terminate in the event
of assignment of the Agreement.
An ongoing maintenance fee may be paid to broker-dealers on sales of both
Money Funds' shares. Pursuant to the Rule 12b-1 Plans, the Distributor is then
reimbursed for such payments with amounts paid from the assets of such Money
Fund. The payments to the broker-dealer, although a Money Fund expense which is
paid by all shareholders, will only directly benefit investors who purchase
their shares through a broker-dealer rather than directly from the Money Funds.
Broker-dealers who sell shares of the Money Funds may provide services to their
customers that are not available to investors who purchase their shares directly
from the Money Funds. The payments to the broker-dealers will continue to be
paid for as long as the related assets remain in the Money Funds.
Amounts paid under the Rule 12b-1 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 Money 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
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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 Money Funds' shareholders. In addition to the maintenance fee which
may be 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 Money Fund. On some occasions, such compensation will be
conditioned on the sale of a specified minimum dollar amount of the shares of
the Money 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 Money Funds' Trustees specifically authorize such
payment.
As of the date of this Prospectus, the Money Funds have not commenced
operations and, accordingly, have not made payments under the Rule 12b-1 Plans
or the Agreement.
PURCHASES, REDEMPTIONS AND SHAREHOLDER SERVICES
PURCHASES
Shares of each of the Money Funds will be offered on a continuous basis
directly by the Money Funds and by the Distributor, acting as agent for the
Money 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.] (See 'Net Asset Value.') The investor should
send a completed Share Purchase Application (found in this Prospectus) and
enclose a check in the amount of the initial investment to the Transfer Agent,
FPS Services, Inc., 3200 Horizon Dr., P.O. Box 61503, King of Prussia, PA
19406-0903, Attn: Winthrop Opportunity Funds. The account will be established
once the application and check are received in good order. To open a new
account by wire, first call Winthrop Opportunity Funds at 1-800-225-8011 to
obtain an account number. A representative will instruct you to send a
completed, signed application to the Transfer Agent. Accounts cannot be
opened without a completed, signed application and a fund account number.
Contact your bank to arrange a wire transfer to:
[Winthrop Opportunity Funds
c/o Citibank, N.A.
111 Wall Street
New York, New York 10043
ABA Number [ ]
DDA Account [ ]]
Your wire instructions must also include:
-- the name of the fund in which the money is to be invested,
-- the account number of the fund, and
-- the name(s) of the account holder(s).
Investors may also open accounts via their securities dealer.
The initial minimum investment in the Regular Shares of each Money Fund is
$250 and $25 for subsequent investments in a Money Fund. (For example, an
investor wishing to make an initial investment in shares of both Money Funds
would be required to invest at least $250 in each Money Fund.) Full and
fractional shares will be credited to an investor's account in the amount of the
investment. Each Money Fund reserves
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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 Money 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 the Institutional
shares, an investor's minimum investment in such shares is $100,000 and the
minimum for subsequent investments is $1,000, which amounts may be allocated
among each of the Money Funds. The Money Funds or the Adviser may waive the
minimum investments for Institutional shares at their discretion.
Existing shareholders wishing to purchase additional shares of a Money Fund
may use an investment stub found at the bottom of the Money Fund's Shareholder
Statement form or, if one is not available, they may send a check payable to
such Money Fund (with Fund Account information referenced) directly to the
Transfer Agent, FPS Services, Inc., 3200 Horizon Dr., P.O. Box 61503, King of
Prussia, PA 19406-0903, Attn: Winthrop Opportunity Funds. Existing shareholders
may also purchase additional shares via wire by sending the Fund Account
information to the Transfer Agent and following the wire instructions above.
Securities dealers may offer an automatic sweep for the Money Funds in the
operation of cash accounts for its customers. Contact your securities dealer to
determine if a sweep is available and what the sweep parameters are.
Further information and assistance is available by contacting the Money
Funds at the address or telephone number listed on the cover page of this
Prospectus.
REDEMPTIONS
Shares of the Money Funds may be redeemed at a redemption price equal to
the net asset value per share, as next computed [as of the close of the regular
trading session of the NYSE, currently 4:00 p.m., New York City time, following
the receipt in proper form by the Money Fund of shares tendered for redemption.]
(See 'Net Asset Value.')
The value of a shareholder's shares on redemption though expected to remain
at $1.00 per share may be more or less than the cost of such shares to the
shareholder, depending upon the value of a Money Fund's portfolio securities at
the time of such redemption or repurchase. (See 'Daily Dividends, Distributions
and Taxes' for a discussion of the tax consequences of a redemption.)
Shares do not earn dividends on the day a redemption is effected. If you
wish to have Federal funds wired the same day as your telephone redemption
request, make sure that your request will be received by the Money Funds prior
to 12:00 Noon.
To redeem shares, the registered owner or owners should forward a letter to
the Money 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.') If a shareholder's
securities dealer offers an automatic sweep service, the sweep will
automatically transfer from the Money Fund account sufficient cash to cover any
debt balance that may occur in your cash account.
If the total value of the shares being redeemed exceeds $50,000 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
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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 Money Fund may request in writing that a shareholder whose account in a
Money Fund has an aggregate balance less than $250 in a Regular account or
$5,000 in an Institutional account increase his account to at least that
amount within 60 days. If the shareholder fails to do so, such Money Fund
reserves the right to close such account and send the proceeds to the
shareholder. A Money Fund will not redeem involuntarily any shareholder account
based solely on the market movement of such Money 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 Money Fund of its portfolio securities is not
reasonably practicable, or as a result of which it is not reasonably practicable
for a Money 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, redemption will be made by payment in cash or by check. For
information concerning circumstances in which redemptions may be effected
through the delivery of in kind portfolio securities, see the Statement of
Additional Information.
ADDITIONAL SHAREHOLDER SERVICES
Exchange Privilege. Regular shares of each Money Fund can be exchanged for
Regular Shares of the other Money Fund or for shares of either class of the
Equity Funds or the Focus Funds. In addition, Institutional shares of one Money
Fund can be exchanged for Institutional shares of the other Money Fund.
Exchanges may be made by mail or telephone (see 'Additional Shareholder
Services -- Telephone Redemption and Exchange Privilege'). Unless otherwise
indicated in the initial Share Purchase Application or the [Winthrop Exchange
Form], Regular shareholders whose initial investment was directly into a Money
Fund will, upon an exchange request, automatically be exchanged into Class A
shares of the requested Equity Funds or Focus Funds. The exchange privilege for
the Equity Funds and the Focus Funds is available only in states in which shares
of the relevant Equity Fund or Focus Fund may be legally sold. Prospectuses for
each of the Equity Funds and the Focus Funds may be obtained from the address or
telephone number listed on the cover page of this Prospectus. An exchange is
effected on the basis of each Money Fund's relative net asset value per share
next computed following receipt of an order for such exchange from the
shareholder.
The Money 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 any of the Money Funds, Equity Funds or Focus Funds. However, shares of
the Money Funds established through an exchange will be charged at the time of
redemption. The period of time during which a shareholder owns shares in any of
the Equity Funds or Focus 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 Money Fund 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 Regular shares
of the Money Funds (.25 of 1% annually) for Class A shares of the Focus Funds
(.30 of 1% annually) or Class B shares of the Equity Funds or Focus Funds (1%
annually).
There is no sales load or deferred sales charge associated with the
purchase and sale of shares of the Money Funds. However, a shareholder may be
subject to sales charges upon exchanging shares of the Money Funds for shares of
the Equity Funds and Focus Funds. Currently, Class A shares of the Equity Funds
and
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Focus Funds have an initial sales loads of 5.75% and 4.75%, respectively, while
Class B shares of the Equity Funds and Focus Funds are subject to a contingent
deferred sales charge which declines from 4% during the first year of investment
to zero after four years. A Prospectus describing the sales charges associated
with either the Equity Funds or Focus Funds can be obtained from the address or
phone number at the beginning of this Prospectus.
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 Money 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 applicable
fund into which exchanges are made. Annual fund operating expenses for such
other fund may be higher than the funds exchanged from.
Automatic Monthly Investment Plan. A Regular shareholder may elect on the
Share Purchase Application to make additional investments in a Money Fund
automatically, by authorizing the Money 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 Money 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 Money 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 into the other Money Fund or into the Equity Funds or Focus
Funds provided that an existing account in such other fund is maintained by the
shareholder.
Systematic Withdrawal Plan. Any Regular shareholder who owns or purchases
shares of a Money Fund having a current net asset value of at least $10,000 may
establish a systematic withdrawal plan under which the shareholder or a third
party will receive payment by check in a stated amount of not less than $50 on a
monthly, quarterly, semi-annual or annual basis. A contingent deferred sales
charge which may otherwise be imposed on a withdrawal redemption (via an
exchange from the Equity Funds or Focus Funds) will be waived in connection with
redemptions made pursuant to Winthrop's systematic withdrawal plan up to 1%
monthly or 3% quarterly of an account's total purchase payments (excluding
dividend reinvestment) not to exceed 10% of total purchase payments over any
12-month rolling period.
[Checkwriting Privileges. Regular shareholders may redeem shares by writing
checks against their account balance for at least [$100]. Investments in the
Money Funds will continue to earn dividends until a shareholder's check is
presented to the Money Funds for payment. Checks will be returned by the Money
Funds' transfer agent if there are insufficient shares to meet the withdrawal
amount. Shareholders should not attempt to close an account by check because the
exact balance at the time the check clears will not be known when the check is
written.]
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 Money Funds by the shareholder or the shareholder's investment dealer of
record. A shareholder may also exchange assets via telephone from such Regular
shareholder's account to the Class A or Class B shares of the Equity Funds and
Focus Funds or from such Institutional shareholder's account to the
Institutional shares of the other Money Fund. Each Money Fund will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. Such procedures include the requirement that redemption or exchange
orders must include the account name and the account number as
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registered with the Opportunity Funds. The minimum amount for a wire transfer
is $1,000. Proceeds of telephone redemptions may also be sent by automated
clearing house funds to a shareholder's designated bank account. Neither the
Money Funds, the Adviser, the Equity Funds, the Focus 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 Money Funds' Transfer Agent
at the address listed in the back of this Prospectus.
Timing of Redemptions and Exchanges. If a redemption or exchange order for
a Money Fund is received on a Money Fund Business Day prior [to the close of the
regular session of the NYSE, which is generally 4:00 p.m. New York City time,]
the proceeds will be transferred as soon as possible, normally on the next Money
Fund Business Day, and shares of each Money Fund will be priced that Money Fund
Business Day. If the redemption or exchange order is received after the close of
the regular session of the New York Stock Exchange, shares of each Money Fund
will be priced the next Money Fund Business Day and the proceeds will be
transferred the next Money Fund Business Day after pricing. A shareholder also
may request that proceeds be sent by check to a designated bank. Exchanges are
made without any charge by the Money Funds.
Purchases by check may not be redeemed by a Money Fund until after a
reasonable time necessary to verify that the purchase check has been paid
(approximately ten Money 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 Money Fund Business
Days after the purchase by wire. Bank acknowledgment of payment initialed by the
shareholder may shorten delays.
Additional information concerning these Additional Shareholder Services may
be obtained by contacting the Money Funds at the address or telephone number
listed on the cover page of this Prospectus.
NET ASSET VALUE
The net asset value per share for purchases and redemptions of shares of
each Money 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
Money Funds' Agreement and Declaration of Trust and By-Laws, net asset value for
each Money 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. The Net Asset Value is
expected to be maintained at a constant at $1.00 per share although this price
is not guaranteed. For purposes of this computation, the securities in each
Money Fund's portfolio are valued at amortized cost, which minimizes the effect
of changes in a security's market value and helps maintain a stable $1.00 per
share price. All expenses, including the fees payable to the Adviser, are
accrued daily.
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 Money Fund's shares unless the
Adviser, 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 Money Fund's shares may be significantly affected by such
trading on days when a shareholder has no access to such Money Fund.
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DAILY DIVIDENDS, DISTRIBUTIONS AND TAXES
All net income of the Money Funds is determined each business day [at 4:00
p.m. (New York time)] and is paid immediately thereafter pro rata to
shareholders of record via automatic investment in additional full and
fractional shares in each shareholder's account. As such additional shares are
entitled to dividends on following days, a compounding growth of income occurs.
Net income consists of all accrued interest income on Money Fund assets
less the Money Fund's expenses applicable to that dividend period. There is no
fixed net income rate and there can be no assurance that a Money Fund will
distribute any net income. The amount of any distribution paid by each Money
Fund depends upon the realization by the Money Fund of income from that Money
Fund's investments. All distributions will be made to shareholders of a Money
Fund solely from assets of that Money Fund.
Distributions by the Money Funds may also be subject to certain state and
local taxes. Each year, shortly after December 31, the Money Funds will send you
tax information stating amount and type of all its distributions for the year
just ended.
Each Money 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 Money 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 Money Funds selected. Persons desiring information concerning
these plans should write or telephone the Money Funds or the Money Funds'
Transfer Agent. While the Money 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 Money 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')
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 Money 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 of the Money 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 Money Funds may be suitable for self-directed IRA accounts
and prototype retirement plans such as those developed by Donaldson, Lufkin &
Jenrette Securities Corporation, the parent of the Adviser and the Money Funds'
Distributor.
GENERAL INFORMATION
CAPITALIZATION
The Opportunity Funds were organized as a Delaware business trust under the
laws of Delaware on May 31, 1995. The Opportunity Funds have an unlimited number
of authorized shares of beneficial interest, 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 four series,
one for each of the Money Funds and Equity Funds. Shares of each Money Fund are
divided into Regular and Institutional shares and are normally entitled to one
vote (with proportional voting for fractional shares) for all purposes.
Generally, shares of both Money Funds vote as a single series on matters that
affect all Money Funds in substantially the same manner. As to matters affecting
each Money Fund separately, such as approval of the investment advisory
agreement, shares of each Money Fund would vote as separate series. With respect
to each Money Fund, each class is identical in all respects except that (i) each
class bears different distribution services fees, (ii) each class maintains a
different minimum initial and subsequent investment, and (iii) each class has a
different exchange privilege. The Money 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 Money 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 Money Fund are freely transferable, are entitled to dividends
as determined by the Trustees and, in liquidation of a Money Fund are entitled
to receive the net assets of that Money Fund. Shareholders have no preemptive
rights.
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of the
Adviser, serves as the Money Funds' Distributor.
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT
Citibank, N.A. acts as Custodian for the securities and cash of the Money
Funds, but plays no part in deciding on the purchase or sale of portfolio
securities. FPS Services, Inc., 3200 Horizon Dr., P.O. Box 61503, King of
Prussia, PA 19406-0903 acts as dividend disbursing agent, registrar and transfer
agent.
INFORMATION FOR SHAREHOLDERS
Any shareholder inquiry regarding the Money Funds or the status of the
shareholder's account can be
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made to the Money Funds or to FPS 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 any applicable sales charge or
contingent deferred sales charge, if any. Annual audited and semi-annual
unaudited financial statements, which include a list of investments held by the
Money Funds, will be sent to shareholders.
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WINTHROP OPPORTUNITY FUNDS
SHARE PURCHASE APPLICATION
<TABLE>
<S> <C>
WINTHROP OPPORTUNITY FUNDS FOR ASSISTANCE IN FILLING OUT THIS APPLICATION CALL:
C/O FPS SERVICES, INC., (800) 225-8011
3200 HORIZON DR.,
P.O. BOX 61503,
KING OF PRUSSIA, PA 19406-0903
</TABLE>
(1) TYPE OF ACCOUNT DATE __________________, 199_____
[ ] New Account [ ] Existing Account #______________________________
(2) INVESTMENT SELECTION -- Please indicate the dollar amount you wish to invest
in each Money 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, Regular shares will be purchased.
<TABLE>
<C> <S> <C> <C>
WINTHROP FUND NAME AMOUNT CLASS OF SHARES (FUND NUMBER)
------------------ ------ -----------------------------
Tax Exempt Money Fund $______________ [ ] Regular ([ ])
[ ] Institutional ([ ])
U.S. Government Money Fund $______________ [ ] Regular ([ ])
[ ] Institutional ([ ])
Total $______________
Regular shares Initial Investment Minimum per Institutional Shares are
Money Fund; $250; Subsequent Investment Minimum not available for purchases
$25. Minimums are waived for SEP, [SARSEP], of less than $100,000.
401K, 403B and 457 plans.
</TABLE>
<TABLE>
<C> <S>
(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.
</TABLE>
<TABLE>
<C> <S>
(4) TELEPHONE TRANSACTIONS
TELEPHONE EXCHANGE PRIVILEGE -- I understand that unless I have
checked the box below, this privilege will automatically apply.
[ ] I do not elect the telephone exchange privilege.
(NOTE: Telephone exchanges may only be processed between accounts
that have identical registrations)
TELEPHONE REDEMPTION PRIVILEGE -- I hereby authorize the Money
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 automated clearing house 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.)
______________________________________________ __________________
Signature Date
SIGNATURE -- Required by federal tax law to avoid 31% backup
(5) 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 Money Funds, the Equity Funds, the Adviser, the Focus
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 Money Funds reasonably believe to be genuine, and that
neither the Money 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
Money Funds at any time. I understand and agree that the Money
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
(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 No._____________
Representative's Phone No. (____) _______ Authorized Signature___________
------------
FOR DIVIDEND INSTRUCTIONS AND OTHER ACCOUNT OPTIONS, PLEASE COMPLETE THE REVERSE
SIDE OF THIS PURCHASE APPLICATION.
</TABLE>
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WINTHROP OPPORTUNITY FUNDS
SHARE PURCHASE APPLICATION
(7) DIVIDEND OPTIONS
[TO COME]
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(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 Money 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
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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.)
</TABLE>
<TABLE>
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(9) [ ] SYSTEMATIC CASH WITHDRAWAL PLAN -- (Minimum initial purchase
$10,000). The undersigned requests that the Money Funds, or any
transfer agent of the Money Funds, as their agent make
withdrawals beginning the 25th day (approximately of ________, 19__).
</TABLE>
<TABLE>
<CAPTION>
MONEY FUND NAME AMOUNT
--------------- ------
<S> <C>
________________ ___________________ [ ] monthly [ ] quarterly [ ] semi-annually [ ] annually
________________ ___________________ [ ] monthly [ ] quarterly [ ] semi-annually [ ] annually
</TABLE>
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<C> <S>
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 Money Fund account the applicable wire fee.
[ ] by check to the Special Payee referenced below:
Name of Payee____________________ Account or Policy #________________
(if applicable)
Address______________________________________________________________
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(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) 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
(12) CHECKWRITING PRIVILEGES --
[TO COME]
</TABLE>
<PAGE>
<PAGE>
ADVISER
DLJ Investment
Management Corp.
277 Park Avenue, New York, New York 10172
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
FPS Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
COUNSEL
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue, New York, New York 10022
TABLE OF CONTENTS
Summary of Money Fund Expenses 2
Introduction 4
Investment Objectives, Policies and Risk
Considerations 4
Management 7
Expenses of the Money Funds 8
Purchases, Redemptions and Shareholder Services 9
Net Asset Value 13
Daily Dividends, Distributions and Taxes 14
Retirement Plans 14
General Information 15
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
13216E 10/96
[LOGO]
Winthrop
Opportunity
Funds
- ---------------
Prospectus
October , 1996
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
277 PARK AVENUE, NEW YORK, NEW YORK 10172
TOLL FREE (800) 225-8011
STATEMENT OF ADDITIONAL INFORMATION
_______________ , 1996
This Statement of Additional Information relates to the Winthrop Tax Exempt
Money Fund (the "Tax Exempt Fund") and the Winthrop U.S. Government Money Fund
(the "Government Fund" and together with the Tax Exempt Fund, the "Money
Funds"), each of which is a series of the Winthrop Opportunity Funds, and is not
a prospectus and should be read in conjunction with the Funds' current
Prospectus dated ____________, 1996, as supplemented from time to time, which is
incorporated herein by reference. A copy of the Prospectus may be obtained by
contacting the Money Funds at the address or telephone number listed above.
TABLE OF CONTENTS
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PAGE
<S> <C>
Investment Policies and Restrictions................................................ [ ]
Management.......................................................................... [ ]
Expenses of the Money Funds........................................................ [ ]
Purchases, Redemptions, Exchanges and
Systematic Withdrawal Plan.................................................. [ ]
Net Asset Value..................................................................... [ ]
Daily Dividends, Distributions and Taxes............................................ [ ]
Portfolio Transactions.............................................................. [ ]
Investment Performance Information.................................................. [ ]
General Information................................................................. [ ]
Appendix A -- Securities Ratings.................................................... [ ]
Appendix B -- Description of Municipal Securities................................... [ ]
</TABLE>
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INVESTMENT POLICIES AND RESTRICTIONS
The following investment policies and restrictions supplement
should be read in conjunction with the information set forth under the heading
"Investment Objectives, Policies and Risk Considerations" in the Money Funds'
Prospectus. Except as noted in the Prospectus, the Money Funds' investment
policies are not fundamental and may be changed by the Trustees of the Money
Funds without shareholder approval; however, shareholders will be notified prior
to a significant change in such policies. The Money Funds' investment
restrictions which are fundamental and may not be changed without shareholder
approval are indicated under "Fundamental Investment Restrictions" in this
Statement of Additional Information.
It is the policy of the Tax Exempt Fund to seek maximum current
income, consistent with liquidity and safety of principal, that is exempt from
Federal income taxes by investing principally in a diversified portfolio of
municipal securities; it is the policy of the Government Fund to seek maximum
current income, consistent with liquidity and safety of principal, by investing
in a portfolio of U.S. Government securities. It is the policy of both Money
Funds to declare the net investment income associated with their investments as
a daily dividend to maintain the net asset value of the Funds at $1.00. (See
"Net Asset Value" and "Daily Dividends, Distributions and Taxes"). In addition,
one or both of the Money Funds, as indicated in the Prospectus, may invest the
securities described below.
SECURITIES
U.S. Government Obligations. The Money Funds may purchase
marketable obligations of, or guaranteed by, the United States Government, its
agencies or instrumentalities. These include issues of the United States
Treasury, such as bills, certificates of indebtedness, notes and bonds, and
issues of agencies and instrumentalities established under the authority of an
act of Congress, including variable rate obligations such as floating rate
notes. The latter issues include, but are not limited to, obligations of the
Bank for Cooperatives, Federal Financing Bank, Federal Home Loan Bank, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association and Tennessee Valley Authority. Some of these securities are
supported by the full faith and credit of the United States Treasury, others are
supported by the right of the issuer to borrow from the Treasury, and still
others are supported only by the credit of the agency or instrumentality.
Repurchase Agreements. The Money 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 the Money Funds to
keep all of their assets at work while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. The Money Funds require
continual maintenance of collateral with the Money Funds' 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 Money Funds might
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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 Money Funds might be delayed in selling the
collateral. Pursuant to Rule 2a-7 of the Investment Company Act of 1940, as
amended (the "Act") (as described later), a repurchase agreement is deemed to be
an acquisition of the underlying securities provided that the obligation of the
seller to repurchase the securities from the Money Funds is collateralized fully
(as defined in such Rule). Accordingly, the vendor of a fully collateralized
repurchase agreement is deemed to be the issuer of the underlying securities.
Reverse Repurchase Agreements. The Money Funds may also enter
into reverse repurchase agreements. Under a reverse repurchase agreement, the
Money Funds would sell securities and agree to repurchase them at a mutually
agreed upon date and price. At the time the Money Funds enter into a reverse
repurchase agreement, they would establish and maintain with an approved
custodian a segregated account containing liquid 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 the Money Funds for such securities. In
the event the buyer of securities under a reverse repurchase agreement filed for
bankruptcy or became insolvent, such buyer or receiver would receive an
extension of time to determine whether to enforce the Money Funds' obligations
to repurchase the securities and the Money Funds' 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 Money Funds or the Securities and Exchange
Commission to the extent liquid debt securities are segregated in an amount at
least equal to the amount of the liability.
When-Issued and Delayed-Delivery Securities. The Money 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 ten days to a month, or more, after the date of the commitment. While
the Money Funds will only enter into a forward commitment with the intention of
actually acquiring the security, the Money Funds 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 the Money Funds
prior to the settlement date. The Money Funds will segregate with their
custodian cash or liquid debt securities in an aggregate amount at least equal
to the amount of their respective outstanding forward commitments.
2
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Standby Commitments. The Tax Exempt Fund may purchase municipal
securities together with the right to resell them to the seller at an
agreed-upon price or yield within specified periods prior to their maturity
dates. Such a right to resell is commonly known as a "standby commitment," and
the aggregate price which the Tax Exempt Fund pays for securities with a standby
commitment may be higher than the price which otherwise would be paid. The
primary purpose of this practice is to permit the Tax Exempt Fund to be as fully
invested as practicable in municipal securities while preserving the necessary
flexibility and liquidity to meet unanticipated redemptions. In this regard, the
Tax Exempt Fund acquires standby commitments solely to facilitate liquidity and
does not exercise its rights thereunder for trading purposes. Since the value of
a standby commitment is dependent on the ability of the standby commitment
writer to meet its obligation to repurchase, the Tax Exempt Fund's policy is to
enter into standby commitment transactions only with municipal securities
dealers which are determined to present minimal credit risks.
The acquisition of a standby commitment does not affect the
valuation or maturity of the underlying municipal securities which continue to
be valued in accordance with the amortized cost method. Standby commitments
acquired by the Tax Exempt Fund are valued at zero in determining net asset
value. Where a Tax Exempt Fund pays directly or indirectly for a standby
commitment, its cost is reflected as unrealized depreciation for the period
during which the commitment is held. Standby commitments do not affect the
average weighted maturity of the Tax Exempt Fund's portfolio of securities.
Municipal Securities. The term "municipal securities," as used in
the Prospectus and this Statement of Additional Information, means obligations
issued by or on behalf of states, territories, and possessions of the United
States or their political subdivisions, agencies and instrumentalities, the
interest from which is exempt (subject to the alternative minimum tax - as later
described) from Federal income taxes. The municipal securities in which the Tax
Exempt Fund invests are limited to those obligations which at the time of
purchase are:
1. Backed by the full faith and credit of the United States; or
2. Municipal notes rated MIG-1 or MIG-2 and VMIG-1 or VMIG-2, by
Moody's Investors Service, Inc. ("Moody's") or SP-1 or SP-2 by
Standard and Poor's Corporation ("S&P"), or, if not rated, are of
equivalent investment quality as determined by the Tax Exempt
Fund's adviser; or
3. Municipal bonds rated Aa or higher by Moody's, AA- or higher by
S&P or, if not rated, are of equivalent investment quality as
determined by the Tax Exempt Funds' adviser; or
4. Other types of municipal securities, provided that such
obligations are rated Prime-1 by Moody's, A-1 or higher by S&P
or, if not rated, are of equivalent investment quality as
determined by the Tax Exempt Fund's adviser.
3
<PAGE>
<PAGE>
See Appendix A for a description of municipal ratings and
Appendix B for a description of municipal securities.
Alternative Minimum Tax. The Tax Exempt Fund may invest without
limitation in tax-exempt municipal securities subject to the alternative minimum
tax (the "AMT"). Under current Federal income tax law, (1) interest on
tax-exempt municipal securities issued after August 7, 1986 which are "specified
private activity bonds," and the proportionate share of any exempt-interest
dividend paid by a regulated investment company which receives interest from
such specified private activity bonds, will be treated as an item of tax
preference for purposes of the AMT imposed on individuals and corporations,
though for regular Federal income tax purposes such interest will remain fully
tax-exempt, and (2) interest on all tax-exempt obligations will be included in
"adjusted current earnings" for corporation for AMT purposes. Such private
activity bonds ("AMT-Subject Bonds") have provided, and may continue to provide,
somewhat higher yields than other comparable municipal securities.
Investors should consider that, in most instances, no state,
municipality or other governmental unit with taxing power will be obligated with
respect to AMT-Subject Bonds. AMT-Subject Bonds are in most cases revenue bonds
and do not generally have the pledge of the credit or the taxing power, if any,
of the issuer of such bonds. AMT-Subject Bonds are generally limited obligations
of the issuer supported by payments from private business entities and not by
the full faith and credit of a state or any governmental subdivision. Typically
the obligation of the issuer of an AMT-Subject Bond is to make payments to bond
holders only out of, and to the extent of, payments made by the private business
entity for whose benefit the AMT-Subject Bonds were issued. Payment of the
principal and interest on such revenue bonds depends solely on the ability of
the user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment. It is not possible to provide specific detail on each
of these obligations in which Tax Exempt Fund assets may be invested.
While the Tax Exempt Fund may invest without limitation in
securities subject to AMT, the AMT affects only a small percentage of all
taxpaying investors.
Taxable Securities for the Tax Exempt Fund. The Tax Exempt Fund
is, and expects to be, largely invested in municipal securities, but may elect
to invest up to 20% of its total assets in taxable money market securities when
such action is deemed to be in the best interests of shareholders. Such taxable
money market securities also are limited to remaining maturities of 397 days or
less at the time of the Tax Exempt Fund's investment, and the Tax Exempt Fund's
municipal and taxable securities are maintained at a dollar-weighted average of
90 days or less.
Variable Rate Obligations. The interest rate payable on certain
municipal securities in which the Tax Exempt Fund may invest, called "variable
rate" obligations, is not fixed and may fluctuate based upon changes in market
rates. The interest rate payable on a variable rate municipal security is
adjusted either at pre-designated periodic intervals or
4
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<PAGE>
whenever there is a change in the market rate to which the security's interest
rate is tied. Other features may include the right of the Tax Exempt Fund to
demand prepayment of the principal amount of the obligation prior to its stated
maturity and the right of the issuer to prepay the principal amount prior to
maturity. The main benefit of a variable rate municipal security is that the
interest rate adjustment minimizes changes in the market value of the
obligation. As a result, the purchase of variable rate municipal securities
enhances the ability of the Tax Exempt Fund to maintain a stable net asset value
per share and to sell an obligation prior to maturity at a price approximating
the full principal amount. The payment of principal and interest by issuers of
certain municipal securities purchased by the Tax Exempt Fund may be guaranteed
by letters of credit or other credit facilities offered by banking or other
financial institutions. Such guarantees will be considered in determining
whether a municipal security meets the Tax Exempt Fund's investment quality
requirements.
Variable rate obligations purchased by the Tax Exempt Fund may
include participation interests in variable rate industrial development bonds.
Purchase of a participation interest gives the Tax Exempt Fund an undivided
interest in certain such bonds. The Tax Exempt Fund can exercise the right, on
not more than 30 days' notice, to sell such an instrument back to the financial
institution from which it purchased the instrument and, if applicable, draw on
the letter of credit for all or any part of the principal amount of the Tax
Exempt Fund's participation interest in the instrument, plus accrued interest,
but will do so only (i) as required to provide liquidity to the Tax Exempt Fund,
(ii) to maintain a high quality investment portfolio, or (iii) upon a default
under the terms of the demand instrument. Financial institutions retain portions
of the interest paid on such variable rate industrial development bonds as their
fees for servicing such instruments and the issuance of related letters of
credit and repurchase commitments. No single financial institution will issue
its letters of credit with respect to variable rate obligations or participation
interests therein covering more than 5% of the total assets of the Tax Exempt
Fund. The Tax Exempt Fund will not purchase participation interests in variable
rate industrial development bonds unless it receives an opinion of counsel or a
ruling of the Internal Revenue Service that interest earned by the Tax Exempt
Fund from the bonds in which it holds participation interests is exempt from
Federal income taxes. The Tax Exempt Fund's adviser will monitor the pricing,
quality and liquidity of variable rate demand obligations and participation
interests therein held by the Tax Exempt Fund on the basis of published
financial information, rating agency reports and other research services to
which the adviser may subscribe.
Municipal Leases and Participations Therein. These are
obligations in the form of a lease or installment purchase which is issued by
state and local governments to acquire equipment and facilities. Income form
such obligations is exempt from local and state taxes in the state of issuance.
"Participations" in such leases are undivided interests in a portion of the
total obligation. Municipal leases frequently have special risks not normally
associated with general obligation or revenue bonds. The constitutions and
statutes of all states contain requirements that the state or a municipality
must meet to incur debt. These often include voter referenda, interest rate
limits and public sale requirements. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually
5
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to the governmental issuer) have evolved as a means for governmental issuers to
acquire property and equipment without meeting the constitutional and statutory
requirements for the issuance of debt. The debt-issuance limitations are deemed
to be inapplicable because of the inclusion in many leases or contracts of
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis.
In addition to the "non-appropriation" risk, municipal leases
have additional risk aspects because they represent a relatively new type of
financing that has not yet developed in many cases the depth of marketability
and liquidity associated with conventional bonds; moreover, although the
obligations will be secured by the leased equipment, the disposition of the
equipment in the event of non-appropriation or foreclosure might, in some cases,
prove difficult. In addition, in certain instances the tax-exempt status of the
obligations will not be subject to the legal opinion of a nationally recognized
"bond counsel," as is customarily required in larger issues of municipal
obligations. However, in all cases the Tax Exempt Fund will require that a
municipal lease purchased by the Tax Exempt Fund be covered by a legal opinion
(typically from the issuer's counsel) to the effect that, as of the effective
date of such lease, the lease is the valid and binding obligation of the
governmental issuer.
Municipal leases and participations will be purchased pursuant to
analysis and review procedures which the Tax Exempt Fund's adviser believes will
minimize risks to shareholders. It is possible that more than 5% of the Fund's
net assets will be invested in municipal leases which have been determined by
the Tax Exempt Fund's adviser to be liquid securities. When evaluating the
liquidity of a municipal lease, the investment adviser considers all relevant
factors including frequency of trading, availability of quotations, the number
of dealers and their willingness to make markets, the nature of trading activity
and the assurance that liquidity will be maintained. With respect to unrated
municipal leases, credit quality is also evaluated.
General. Net income to shareholders is aided both by the Money
Funds' ability to make investments in large denominations and by its
efficiencies of scale. Also, the Money Funds may seek to improve its income by
selling certain portfolio securities prior to maturity in order to take
advantage of yield disparities that occur in money markets. The market value of
the Money Funds' investments tends to decrease during periods of rising interest
rates and to increase during intervals of falling rates.
RULE 2A-7 UNDER THE INVESTMENT COMPANY ACT OF 1940
The Money Funds will comply with Rule 2a-7 under the Act, as
amended from time to time, including the diversity, quality and maturity
limitations imposed by the Rule.
Currently, pursuant to Rule 2a-7, the Money Funds may invest only
in "eligible securities," as that term is defined in the Rule. Generally, an
eligible security is a security that
6
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(i) is denominated in U.S. Dollars and has a remaining maturity of 397 days or
less; (ii) is rated, or is issued by an issuer with short-term debt outstanding
that is rated, in one of the two highest rating categories by two nationally
recognized statistical rating organizations ("Rating Organizations") or, if only
one has issued a rating, by that Rating Organization; and (iii) has been
determined by the Money Funds' adviser to present minimal credit risks. A
security that originally had a maturity of greater than 397 days is an eligible
security if its remaining maturity at the time of purchase is 397 calendar days
or less and the issuer has outstanding short-term debt that would be an eligible
security. Unrated securities may also be eligible securities if the Money Funds'
adviser determines that they are of comparable quality to a rated eligible
security pursuant to guidelines approved by the Trustees. A description of the
ratings of some Rating Organizations appears in Appendix A attached hereto.
Under Rule 2a-7, the Money Funds may not invest more than five
percent of its assets in the securities of any one issuer other than the United
States Government, its agencies and instrumentalities. In addition, the Money
Funds may not invest in a security that has received, or is deemed comparable in
quality to a security that has received, the second highest rating by the
requisite number of Rating Organizations (a "second tier security") if
immediately after the acquisition thereof the Money Funds would have invested
more than (A) the greater of one percent of its total assets or one million
dollars in securities issued by that issuer which are second tier securities, or
(B) five percent of its total assets in second tier securities.
Securities with a settlement of more than seven days from the
date of purchase, as calculated pursuant to Rule 2a-7, are considered by the
Securities and Exchange Commission to be illiquid securities in an open-end
investment company. The Money Funds are restricted to invest no more than 10%
of their assets in illiquid securities.
OTHER GENERAL INFORMATION ABOUT THE TAX EXEMPT FUND
Yields on municipal securities are dependent on a variety of
factors, including the general condition of the money market and of the
municipal bond and municipal note market, the size of a particular offer, the
maturity of the obligation and the rating of the issue. Municipal securities
with longer maturities tend to produce higher yields and are generally subject
to greater price movements than obligations with shorter maturities. (An
increase in interest rates will generally reduce the market value of portfolio
investments, and a decline in interest rates will generally increase the value
of portfolio investments.) The achievement of the Tax Exempt Fund's investment
objectives is dependent in part on the continuing ability of the issuers of
municipal securities in which the Tax Exempt Fund invests to meet their
obligations for the payment of principal and interest when due. Municipal
securities historically have not been subject to registration with the
Securities and Exchange Commission, although there have been proposals which
would require registration in the future. The Tax Exempt Fund may seek to
improve income by selling certain securities prior to maturity in order to take
advantage of yield disparities that occur in securities markets.
7
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Obligations of issuers of municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Bankruptcy Code. In addition, the obligations
of such issuers may become subject to laws enacted in the future by Congress,
state legislatures, or referenda extending the time for payment of principal
and/or interest, or imposing other constraints upon enforcement of such
obligations or upon the ability of municipalities to levy taxes. There is also
the possibility that, as a result of litigation or other conditions, the ability
of any issuer to pay, when due, the principal of, and interest on, its municipal
securities may be materially affected.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The following fundamental investment restrictions are applicable
to each of the Money Funds and may not be changed with respect to a Money Fund
without the approval of a majority of the shareholders of that Money Fund, which
means the affirmative vote of the holders of (a) 67% or more of the shares of
that Money Fund represented at a meeting at which more than 50% of the
outstanding shares of the Money Fund are represented or (b) more than 50% of the
outstanding shares of that Money Fund, whichever is less. Except as set forth in
the Prospectus, all other investment policies or practices are considered by
each Money 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 fundamental restrictions provide that each Money
Fund may not:
(1) Invest 25% or more of the value of its total assets in
any one industry, other than the United States Government, or any
of its agencies or instrumentali-ties, 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;
(2) Issue senior securities, except as permitted under the
Investment Company Act of 1940;
(3) Make loans of money or property to any person, except
through loans of portfolio securities, the purchase of fixed
income securities consistent with the Money Funds' investment
objective and policies or the acquisition of securities subject
to repurchase agreements;
(4) Underwrite the securities of other issuers, except to
the extent that in connection with the disposition of portfolio
securities the Money Funds may be deemed to be an underwriter;
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(5) Purchase real estate or interests therein unless
acquired as a result of ownership from investing in securities or
other instruments (but this shall not prevent the Money Funds
from investing in securities or other interests backed by real
estate or securities of companies engaged in the real estate
business);
(6) Purchase or sell commodities or commodities contracts
except for purposes, and only to the extent, permitted by
applicable law without the Money Funds becoming subject to
registration with the Commodity and Futures Trading Commission as
a commodity pool;
(7) 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 Money Fund's total
assets and the Money Fund's aggregate short sales of a particular
class of securities does not exceed 25% of then outstanding
securities of that class; and
(8) Borrow money, except that the Money Funds may (i)
borrow money for temporary or emergency purposes (not for
leveraging or investment) and (ii) engage in reverse repurchase
agreements for any purpose; provided that (i) and (ii) in
combination do not exceed 33 1/3% of the Money Fund's total
assets (including the amount borrowed) less liabilities (other
than borrowings). Any borrowings that come to exceed this amount
will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3%
limitation.
MANAGEMENT
The Trustees and principal officers of the Money 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 Section 2(a)(19) of
the Act.
*G. Moffett Cochran, 46, Chairman of the Board of Trustees and
President of the Money Funds is President and Chairman of the Adviser. He has
been associated with affiliates of the Adviser since 1992. Prior to his
association with the Money Funds and the Adviser, Mr. Cochran was a Senior Vice
President with Bessemer Trust Companies.
Robert E. Fisher, 66, Trustee of the Money Funds, has been Member
at the law firm Lowenthal, Landau, Fischer & Bring, P.C., since prior to 1991.
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Martin Jaffe, 50, Trustee, Vice President, Secretary and
Treasurer of the Money Funds, is the Chief Operating Officer of the Adviser. He
has been associated with affiliates of the Adviser since prior to 1991.
Wilmot H. Kidd, III, 54, Trustee of the Money Funds, has been
President of Central Securities Corporation, since prior to 1991.
John W. Waller, III, 45, Trustee of the Money Funds, has been
chairman of Waller Capital Corporation, an investment banking firm, since prior
to 1991.
James A. Engle, 38, Vice President of the Money Funds, has been
associated with affiliates of the Adviser since prior to 1991.
Brian A. Kammerer, 38, Assistant Treasurer of the Money Funds,
has been associated with affiliates of the Adviser since prior to 1991.
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The following table sets forth certain information regarding compensation of the
Money Funds' Trustees and officers. No executive officer or person affiliated
with the Money Funds received compensation from the Funds for the calendar year
ended December 31, 1995 in excess of $60,000.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement From Trust
Aggregate Benefits Accrued Estimated Annual and Fund
Compensation As Part of Trust Benefits Upon Complex Paid
Name and Position From Trust1 Expenses Retirement to Trustees2
<S> <C> <C> <C> <C>
G. Moffett Cochran $[ ] None None $[ ][ ]
Trustee
Robert E. Fisher $[ ] None None $[ ][ ]
Trustee
Martin Jaffe $[ ] None None $[ ][ ]
Trustee
Wilmot H. Kidd, III $[ ] None None $[ ][ ]
Trustee
John W. Waller, III $[ ] None None $[ ][ ]
Trustee
</TABLE>
The Trustees of the Money Funds who are officers or employees of
the Money Funds' adviser or any of its affiliates receive no remuneration from
the Money Funds. Each of the Trustees who are not affiliated with the Adviser
will be paid a $[ ] 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 $[ ] fee for each Audit
Committee meeting attended.
- --------
1 The Money Funds anticipate paying each independent Trustee
approximately $[ ] in each calendar year.
2 Represents the total compensation paid to such persons during the
calendar year ending December 31, 1995. The parenthetical number
represents the number of investment companies (including the
Money Funds), from which such person acts as a Trustee, that are
considered part of the same fund complex as the Money Funds.
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ADVISER
DLJ Investment 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 as the Money Funds'
investment adviser (see "Management" in the Prospectus). The Adviser was
established in [ ], and has grown to serve a select group of individual and
institutional investors.
The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ Securities" or the "Distributor"), the
distributor of the Funds' shares, which is a wholly-owned subsidiary of
Donaldson, Lufkin & Jenrette, Inc., which is in turn an independently operated,
indirect subsidiary of The Equitable Companies, Incorporated ("ECI"), a holding
company controlled by AXA, a French insurance holding company. The Adviser along
with its affiliates are an integral part of the DLJ Securities family, and as
one of the oldest money management firms in the country, they maintain a
tradition of personalized service and performance. 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 September 10, 1996, AXA owns [ ] 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, on September 10, 1996, 35.6% of the issued ordinary shares (representing
48.6% of the voting power) of AXA were directly or indirectly owned by Finaxa, a
French holding company ("Finaxa"). Such percentage of interest includes the
interest of Colisee Vendome, a wholly-owned subsidiary of Finaxa, which owned
5.3% of the issued ordinary shares (representing 4.3% of the voting power) of
AXA and the interest of les Ateliers de construction du Nord de la France- ANF
("ANF"), a 95.4% owned subsidiary of Finaxa, which owned 0.3% of the issued
ordinary shares (representing 0.4% of the voting power) of AXA. As of September
10, 1996, 61.3% of the issued ordinary shares (representing 73.5% of the voting
power) of Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle, owned 34.8% of
the issued ordinary shares (representing 40.6% of the voting power) and 23.7% of
the issued ordinary shares (representing 15.0% of the voting power) of Finaxa
were owned by Banque Paribas, a French bank ("Paribas"). Including the ordinary
shares owned by Finaxa and its subsidiaries on September 10, 1996, the Mutuelles
AXA directly and indirectly owned 41.3% of the issued ordinary shares of AXA
(representing 56.3% of the voting power). Acting as a group, the Mutuelles AXA
will continue to control AXA and Finaxa.
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The Investment Advisory Agreement dated October [ ], 1996, (the
"Investment Advisory Agreement") was approved by the Board of Trustees of the
Winthrop Opportunity Funds on October 22, 1996 and by the then shareholders and
the Adviser, on October [ ], 1996 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 Money 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. Under the Investment Advisory Agreement, the Adviser is paid a
management fee equal to .40 of 1% of the average daily net assets of the Money
Funds which are reduced to .35% of the average daily net assets in excess of $1
billion. As of the date of this Statement of Additional Information, the Money
Funds have not commenced operations and, accordingly, have not paid the Adviser
a fee.
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 Money Funds.
EXPENSES OF THE FUNDS
GENERAL
In addition to the payments to the Adviser under the Investment
Advisory Agreement, each Money 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; 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 Money Funds by the Adviser under the Investment
Advisory Agreement, the Money Funds may employ their own personnel. For such
services, they also may utilize personnel employed by the Adviser or their
affiliates. In such event, the services shall be provided to the Money Funds at
cost and the payments therefor must be specifically approved in advance by the
Money Funds' Trustees, including a majority of its disinterested Trustees.
DISTRIBUTION AGREEMENT
Pursuant to Rule 12b-1 adopted by the Securities and Exchange
Commission under the Act, the Money Funds have adopted a Distribution Agreement
(the "Distribution Agreement") and a Rule 12b-1 Plan for the Regular shares of
each Money Fund (the "12b-1
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Plans") to permit such Money 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 Money Funds reports the amounts expended under the Distribution
Agreement and the purposes for which such expenditures were made to the Trustees
of the Money Funds on a quarterly basis. Also, the 12b-1 Plans provide that the
selection and nomination of disinterested Trustees (as defined in the 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 Money 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 Money Fund's Trustees on October 22, 1996 and by
the then shareholders on October [ ], 1996. 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 Money 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. Each Money 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 Money 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 Money Fund on not more than 60 days notice to any other
party to the agreement, and any agreement, but not the 12b-1 Plans, will
terminate automatically in the event of assignment.
An ongoing maintenance fee may be paid to broker-dealers on sales
of Regular Shares. Pursuant to the Money Funds' Rule 12b-1 Plans, if such fee is
paid, the Distributor is then reimbursed for such payments with amounts paid
from the assets of such Money Fund. The payments to the broker-dealer, although
a Money Fund expense which is paid by all shareholders, will only directly
benefit investors who purchase their Regular Shares through a broker-dealer
rather than from the Money Funds. Broker-dealers who sell Regular Shares of the
Money Funds may provide services to their customers that are not available to
investors who purchase their Regular Shares directly from the Money Funds.
Investors who purchase their Regular Shares directly from a Money Fund will pay
a pro rata share of such Money 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 Money Funds.
Pursuant to the provisions of the 12b-1 Plans and the
Distribution Agreement, the maximum amount payable by the Money Funds under the
Rule 12b-1 Plan for distributing Regular shares is .40 of 1% of the average
daily net assets of Regular shares during the year. Currently, each Money Fund
pays a distribution services fee each month to the Distributor, with
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respect to the Regular shares of each Money Fund, at an annual rate of up to .25
of 1% of the aggregate average daily net assets attributable to Regular shares
of each Money Fund.
PURCHASES, REDEMPTIONS AND EXCHANGES
The following information supplements that set forth in the Money
Funds' Prospectus under the heading "Purchases, Redemptions and Shareholder
Services".
PURCHASES
Shares of the Money Funds are offered at the respective net asset
value per share next determined following receipt of a purchase order in proper
form by the Money Funds, the Money Funds' transfer agent, FPS Services, Inc.
(the "Transfer Agent"), or by the Distributor. The Money 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 (the "NYSE")] (see "Net
Asset Value").
Orders for the purchase of shares of a Money Fund become
effective at the next transaction time after Federal funds or bank wire monies
become available to the Transfer Agent 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. 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. As a convenience to
the investor and to avoid unnecessary expense to the Money Funds, share
certificates representing shares of the Money 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 Money 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 Money Funds).
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REDEMPTIONS
Shares of the Money Funds may be redeemed at a redemption price
equal to the net asset value per share, as next completed as of the regular
trading session of the NYSE following the receipt in proper form by the Money
Fund of the shares tendered for redemption.
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 an appropriate situation exists which would
make such a practice detrimental to the best interest of the Money 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.
To redeem shares, the registered owner or owners should forward a
letter to the Money 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 as described in the
Prospectus. If the shares are represented by share certificates, investors
should forward the appropriate share certificates, endorsed in blank or with
blank stock powers attached, to the Money 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 Money 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 Money 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
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.
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EXCHANGES
Regular shares of each Money Fund can be exchanged for (i)
Regular shares of the other Money Fund, (ii) shares of either class of Winthrop
Developing Markets Fund or the Winthrop International Market Fund, both series
of the Winthrop Opportunity Funds (collectively the "Equity Funds"), or (iii)
shares of either class of the Winthrop Growth Fund, Winthrop Fixed Income Fund,
Winthrop Aggressive Growth Fund, Winthrop Growth and Income Fund and Winthrop
Municipal Trust Fund (collectively, the "Focus Funds"). In addition,
Institutional shares of a Money Fund can be exchanged for Institutional shares
of the other Money Fund. Shareholders may exchange shares by mail. Shareholders
or the shareholders' investment dealer of record may exchange shares by
telephone.
In the case of the Equity Funds or the Focus Funds, 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 Regular shares in a Money
Fund for at least seven days may exchange all or part of those shares for shares
of the Equity Funds or the Focus Funds, and no partial exchange may be made if,
as a result, the Regular shareholders' interest in a Money Fund would be reduced
to less than $250. The minimum initial exchange into the Equity Funds or Focus
Funds is $250.
All exchanges are subject to the minimum investment requirements
and any other applicable terms set forth in the Prospectus for the relevant fund
or class 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
the Equity Funds or Focus Funds will have all of the rights and privileges of a
shareholder of the relevant Equity Fund or Focus Fund except, in the case of the
Focus Funds, the systematic withdrawal privilege (as described in the
Prospectus).
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 Winthrop
Opportunity 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 and
distribution fees for such fund may
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be higher and a sales charge differential may apply. See "Additional Shareholder
Services Exchange Privilege" in the Prospectus for a description of these
expense differences.
NET ASSET VALUE
Shares of the Money Funds will be priced at the net asset value
per share as computed each Money Fund Business Day in accordance with the
Agreement and Declaration of Trust and By-Laws. For this purpose, a Money Fund
Business Day is any day on which the NYSE 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 Money Fund is
determined [as of the close of the regular session on the NYSE, which is
generally at 4:00 p.m., New York City time, on each day that trading is
conducted on the NYSE.] The net asset value per share is calculated by taking
the sum of the value of each Money 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 purposes of this computation, the securities in each Money
Fund's portfolio are valued at their amortized cost, which does not take into
account unrealized securities gains or losses as measured by market valuations.
The amortized cost method involves valuing an instrument at its cost and
thereafter applying a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. During periods of declining interest rates, the daily
yield on shares of the Money Fund may be higher than that of a fund with
identical investments utilizing a method of valuation based upon market prices
for its portfolio instruments; the converse would apply in a period of rising
interest rates.
The valuation at amortized cost is in accordance with the
provisions of Rule 2a-7 under the Act. Pursuant to such rule, the Money Funds
maintain a dollar-weighted average portfolio maturity of 90 days or less and
invests only in securities of high quality. The Money Funds also purchase
instruments which, at the time of investment, have remaining maturities of no
more than one year which maturities may extend to 397 days. The Money Funds
maintain procedures designed to stabilize, to the extent reasonably possible,
the price per share as computed for the purpose of sales and redemptions at
$1.00. Such procedures include review of the Money Funds' portfolio holdings by
the Adviser at such intervals as the Adviser deems appropriate to determine
whether and to what extent the net asset value of the Money Funds calculated by
using available market quotations or market equivalents deviates from net asset
value based on amortized cost. If such deviation exceeds 1/2 of 1%, the Adviser
will promptly consider what action, if any, should be initiated. In the event
the Adviser determines that such a deviation may result in material dilution or
other unfair results to new investors or existing shareholders, they will
consider corrective action which might include (1) selling instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity, (2) withholding dividends of net income on shares, or (3) establishing
a net asset value per share
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using available market quotations or equivalents. There can be no assurance,
however, that the Money Funds' net asset value per share will remain constant at
$1.00.
DAILY DIVIDENDS, DISTRIBUTIONS AND TAXES
Daily Dividend. The net income of the Money Funds is determined
as of the close of business of a Money Fund Business Day. Net income consists of
all accrued interest income on the Money Funds' portfolio assets less the Money
Funds' actual and accrued expenses applicable to that dividend period. Realized
gains and losses are reflected in net asset value and are not included in net
income.
Because the net investment income of each Money Fund is declared
as a dividend each time the net investment income of the Fund is determined and
is expressed by an increase in the number of shares held at a $1.00 price, the
net asset value per share of each Money Fund (i.e., the value of the net assets
of the Fund divided by the number of shares of the Money Fund outstanding) is
expected to remain at $1.00 per share immediately after each such determination
and dividend declaration, unless (i) there are unusual or extended fluctuations
in short-term interest rates or other factors, such as unfavorable changes in
the creditworthiness of issuers affecting the value of securities in the Money
Fund's portfolio, or (ii) net income is a negative amount. Normally, each Money
Fund will have a positive net investment income at the time of each
determination thereof. Net investment income may be negative if an unexpected
liability must be accrued or a loss realized. If the net investment income of a
Money Fund determined at any time is a negative amount, the net asset value per
share will be reduced below $1.00 unless one or more of the following steps are
taken: the Adviser has the authority (i) to reduce the number of shares in each
shareholder's account, (ii) to offset each shareholder's pro rata portion of
negative net investment income from the shareholder's accrued dividend account
or from future dividends, or (iii) to combine these methods in order to seek to
maintain the net asset value per share at $1.00. Each Money Fund may endeavor to
restore the net asset value per share to $1.00 by not declaring dividends from
net investment income on subsequent days until restoration, with the result that
the net asset value per share will increase to the extent of positive net
investment income which is not declared as a dividend.
Should the Money Funds incur or anticipate any unusual or
unexpected significant expense or loss which would affect disproportionately the
Money Funds' income for a particular period, the Adviser would at that time
consider whether to adhere to the dividend policy described above or to revise
it in the light of the then prevailing circumstances in order to ameliorate to
the extent possible the disproportionate effect of such expense, loss or
depreciation on then existing shareholders. Such expenses or losses may
nevertheless result in a shareholder's receiving no dividends for the period
during which the shares are held and in receiving upon redemption a price per
share lower than that which was paid.
The Money Funds do not anticipate realizing any long-term capital
gains. Distributions of realized capital gains, if any, would be paid in
November or December. The
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Money Funds expect to follow the practice of distributing any net realized
capital gains to shareholders at least annually. However, if any realized
capital gains are retained by the Money Funds for reinvestment and federal
income taxes are paid thereon by the Money Funds, the Money Funds will elect to
treat such capital gains as having been distributed to shareholders; as a
result, shareholders would be able to claim their share of the taxes paid by the
Money Funds on such gains as a credit against their individual federal income
tax liability.
There is no fixed dividend rate and there can be no assurance
that a Money Funds will pay any dividends or realize any gains. The amount of
any dividend or distribution paid by each Money Fund depends upon the
realization by the Money Fund of income and capital gains from that Money Fund's
investments. All dividends and distributions will be made to shareholders of a
Money Fund solely from assets of that Money Fund.
Taxation of Distributions. [UPDATE] For shareholders' Federal
income tax purposes, all distributions by the Money Funds out of interest income
and net realized short-term capital gains are treated as ordinary income and
distributions of long-term capital gains, if any, are treated as long-term
capital gains irrespective of the length of time the shareholder held shares in
the Money Funds. Since the Money Funds derive nearly all of their gross income
in the form of interest income, and not dividends from domestic corporations, it
is expected that for corporate shareholders, none of the Money Funds'
distributions will be eligible for the dividends-received deduction under
current law.
For shareholders' Federal income tax purposes, distributions to
shareholders out of tax-exempt interest income earned by the Tax Exempt Fund
generally are not subject to Federal income tax. However, distributions derived
from interest which is exempt from regular federal income tax may subject
corporate shareholders to or increase their liability under the AMT. A portion
of such distributions may constitute a tax preference item for individual
shareholders and may subject them to or increase their liability under the AMT.
Shareholders of the Money Funds may be subject to state and local
taxes on distributions received from the Money Funds and on redemptions of the
Money Funds' shares. Under the laws of certain states, distributions of
investment company taxable income are taxable to shareholders as dividends, even
though a portion of such distributions may be derived from interest on U.S.
Government obligations which, if received directly by such shareholders, would
be exempt from state income tax.
Shareholders will be advised annually as to the federal (and
state, for the Tax Exempt Fund) tax status of dividends and capital gains
distributions, if any, made by each Money Fund for the preceding year.
Tax Qualification of the Money Funds. [UPDATE] Each Money
Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986 (the "Code"), 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 Money
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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 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 Money
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)]. In addition, each Money 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 Money Fund.
To the extent possible, each Money Fund intends to make such distributions as
may be necessary to avoid this excise tax.
Subchapter M of the Code also permits the character of tax-exempt
interest distributed by a regulated investment company to flow-through as
tax-exempt interest to its shareholders, provided that at least 50% of the value
of its assets at the end of each quarter of the taxable year is invested in
state, municipal and other obligations the interest on which is exempt under
Section 103(a) of the Code. The Tax Exempt Fund intends to satisfy this 50%
requirement in order to permit distributions of tax-exempt interest to be
treated as such for federal income tax purposes in the hands of their
shareholders. Distributions to shareholders of tax-exempt interest earned by the
Tax Exempt Fund for the taxable year are therefore not subject to regular
federal income tax, although they may be subject to the individual and corporate
alternative minimum taxes described above. Discount from certain stripped
tax-exempt obligations or their coupons, however, may be taxable.
The Revenue Reconciliation Act of 1993 requires that any market
discount recognized on a tax-exempt bond is taxable as ordinary income. This
rule applies only for disposals of bonds purchased after April 30, 1993. A
market discount bond is a bond acquired in the secondary market at a price below
its redemption value. Under prior law, the treatment of market discount as
ordinary income did not apply to tax-exempt obligations. Instead, realized
market discount on tax-exempt obligations was treated as capital gain. Under the
new law, gain on the disposition of a tax-exempt obligation or any other market
discount bond that is acquired for a price less than its principal amount will
be treated as ordinary income (instead of capital gain) to the extent of accrued
market discount. This rule is effective only for bonds purchased after April 30,
1993.
Since the Money Funds are not treated as a single entity for
federal income tax purposes, the performance of one Money Fund will have no
effect on the income tax liability of shareholders of another Money Fund.
21
<PAGE>
<PAGE>
Dividend or capital gains distributions with respect to shares of
any Money 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.
Taxation of Investor's Indebtedness. [UPDATE] Interest on
indebtedness incurred by shareholders to purchase or carry shares of the Money
Funds is not deductible for Federal income tax purposes. Under rules of the
Internal Revenue Service for determining when borrowed funds are used for
purchasing or carrying particular assets, shares may be considered to have been
purchased or carried with borrowed funds even though those funds are not
directly linked to the shares. Further, persons who are "substantial users" (or
related persons) of facilities financed by private activity bonds (within the
meaning of Section 147(a) of the Code) should consult their tax advisers before
purchasing shares of the Tax Exempt Fund. The Tax Exempt Fund has not undertaken
any investigation as to the users of the facilities financed by bonds in its
portfolio.
Tax Withholding. Each Money 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 Money Funds with a correct taxpayer identification number, who
under-reports dividend or interest income or who fails to certify to the Money
Funds that he or she is not subject to such withholding. An individual's tax
identification number is his or her social security number.
Tax Legislation. Tax legislation in recent years has included
several provisions that may affect the supply of, and the demand for, tax-exempt
bonds, as well as the tax-exempt nature of interest paid thereon. It is not
possible to predict with certainty the effect of these recent tax law changes
upon the tax-exempt bond market, including the availability of obligations
appropriate for investment, nor is it possible to predict any additional
restrictions that may be enacted in the future. The Tax Exempt Fund will monitor
developments in this area and consider whether changes in its objectives or
policies are desirable.
General. The foregoing discussion of U.S. federal income tax law
relates solely to the application of that law to U.S. persons, i.e., U.S.
citizens and residents and U.S. corporations, partnerships, trusts and estates.
Each shareholder who is not a U.S. person should consider the U.S. and foreign
tax consequences of ownership of shares of the Money Funds, including the
possibility that such a shareholder may be subject to a U.S. withholding tax at
a rate of 30% (or at a lower rate under an applicable income tax treaty) on
amounts constituting ordinary income received by the shareholder, where such
amounts are treated as income from U.S. sources under the Code.
Shareholders should consult their tax advisers about the
application of the provisions of tax law described in this combined Statement of
Additional Information in light of their particular tax situations.
22
<PAGE>
<PAGE>
The foregoing discussion is a general summary of certain current
federal income tax laws regarding the Money Funds. The discussion does not
purport to deal with all of the federal income tax consequences applicable to
the Money 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 Money Funds.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees of
the Money Funds, the Adviser is responsible for the investment decisions and the
placing of the orders for portfolio transactions for the Money Funds. Portfolio
transactions for the Money Funds are normally effected by brokers.
The Money Funds have no obligation to enter into transactions in
portfolio securities with any broker, dealer, issuer, underwriter or other
entity. In general, the securities the Money Funds will purchase securities are
in over-the-counter markets in which purchases and sales are affected directly
with a dealer acting as principal. The dealers impose a mark-up on their cost
which is usually not disclosed to the Money Funds. Therefore, the Money Funds
will generally make purchases based exclusively on best price, although
execution may be a factor in certain circumstances. In placing orders, it is the
policy of the Money Funds to obtain the best price and execution for its
transactions.
INVESTMENT PERFORMANCE INFORMATION
The Money Funds may furnish data about its investment performance
in advertisements, sales literature and reports to shareholders. From time to
time evaluations of performance are made by independent sources that may be used
in advertisements concerning each Money 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.
23
<PAGE>
<PAGE>
These performance figures may be calculated in the following
manner:
YIELD
Yield is the net annualized yield based on a specified 7 calendar
days calculated at simple interest rates. Yield is calculated by determining the
net change; exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, and dividing the difference by the value of the account at the beginning
of the base period to obtain the base period return. The yield is annualized by
multiplying the base period return by 365/7. The yield figure is stated to the
nearest hundredth of one percent. No yield is currently available because the
Money Funds have not commenced operations.
EFFECTIVE YIELD
Effective yield is the net annualized yield for a specified 7
calendar days assuming a reinvestment of the income or compounding. Effective
yield is calculated by the same method as yield except the effective yield
figure is compounded by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting 1 from the result, according to the following
formula:
Effective yield = [(Base Period Return + 1)^(365/7)] - 1.
No effective yield is currently available because the Money Funds
have not commenced operations.
TAX-EQUIVALENT YIELD
Tax-Equivalent Yield is the net annualized taxable yield needed
to produce a specified tax-exempt yield at a given tax rate based on a specified
7-day period assuming a reinvestment of all dividends paid during such period.
Tax-equivalent yield is calculated by dividing that portion of each Money Fund's
yield (as computed in the yield description above) which is tax-exempt by one
minus a stated income tax rate and adding the product to that portion, if any,
of the yield of the Money Fund that is not tax-exempt.
The following chart will illustrate the effects of tax-exempt
income versus taxable income.
24
<PAGE>
<PAGE>
Tax-Exempt Income vs. Taxable Income
Federal income tax rates in effect for the 1996 calendar year.
<TABLE>
<CAPTION>
To Equal Hypothetical Tax-Free Yields of 5%,
Federal 7% and 9%, a Taxable Investment Would Have
Tax Rates To Earn3
1996 Taxable Individual
Income Brackets Return 5% 7% 9%
--------------- ------ -- -- --
<S> <C> <C> <C> <C>
$0 - $24,000 15.0% 5.88 8.24 10.59
$24,001 - $58,150 28.0% 6.94 9.72 12.50
$58,151 - $121,300 31.0% 7.25 10.14 13.04
$121,301 - $263,750 36.0% 7.81 10.95 14.06
over $263,750 39.6% 8.28 11.59 14.90
Joint
Return
$0 - $40,000 15.0% 5.88 8.24 10.59
$40,001 - $96,900 28.0% 6.94 9.72 12.50
$96,901 - $147,700 31.0% 7.25 10.14 13.04
$147,701 - $263,750 36.0% 7.81 10.95 14.06
Over $263,750 39.6% 8.28 11.59 14.90
</TABLE>
Based on 1996 federal tax rates, a married couple filing a joint
return with two exemptions and taxable income of $40,000 would have to earn a
tax-equivalent yield of 6.94% in order to match a tax-free yield of 5%.
There is no guarantee that a fund will achieve a specific yield.
While most of the income distributed to the shareholders of each Money Fund will
be exempt from federal income taxes. Distributions may also be subject to state
and local taxes.
Quotations of total return will reflect only the performance of
an investment in any Money Fund during the particular time period shown. Each
Money Fund's total return and
- --------
3 These illustrations assume the Federal alternative minimum tax is
not applicable, that an individual is not a "head of household"
and claims one exemption and that taxpayers filing a joint return
claim two exemptions. Note also that these federal income tax
brackets and rates do not take into account the effects of (i) a
reduction in the deductibility of itemized deductions for
taxpayers whose federal adjusted gross income exceeds $117,950
($58,975 in the case of a married individual filing a separate
return), or of (ii) the gradual phaseout of the personal
exemption amount for taxpayers whose federal adjusted gross
income exceeds $88,495 (for single individuals) or $[ ] (for
married individuals filing jointly). The effective federal tax
rates and equivalent yields for such taxpayers would be higher
than those shown above.
25
<PAGE>
<PAGE>
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 Money 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 Money Fund's
shares and the risks associated with each Money Fund's investment objectives,
policies and risk considerations.
In connection with communicating its yield, effective yield or
tax-equivalent yield to current or prospective shareholders, each Money 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.
Any quotations of a fund's performance are based on historical
earnings and are not intended to indicate future performance. An investor's
shares when redeemed may be worth more or less than their original cost.
GENERAL INFORMATION
ORGANIZATION AND CAPITALIZATION
Winthrop Opportunity Funds 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 Opportunity 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 appropriate Opportunity
Fund for satisfaction of claims arising in connection with the affairs of an
Opportunity 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 Opportunity Funds against all liability in
connection with the affairs of the Opportunity Funds.
All shares of the Opportunity 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 Opportunity 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 Act and the laws of the State of
Delaware.
26
<PAGE>
<PAGE>
COUNSEL AND AUDITORS
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York,
New York 10022, serves as legal counsel for the Money Funds.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019,
have been appointed as independent auditors for the Money 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.
27
<PAGE>
<PAGE>
PART C
Other Information
Item 24 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Included in the Prospectus constituting Part A of this
Registration Statement.
Table of Fees and Expenses
Included in the Statement of Additional Information constituting
Part B of this Registration Statement:
Report of Independent Accountants*
Statement of Assets and Liabilities*
(b) Exhibits
(1) Form of Agreement and Declaration of Trust+
(2) Form of Bylaws+
(3) Not Applicable
(4) (a) Form of Stock Certificate of the Winthrop
Developing Markets Fund+
(b) Form of Stock Certificate of the Winthrop
International Equity Fund+
(c) Form of Stock Certificate of the Winthrop Tax
Exempt Money Fund*
(d) Form of Stock Certificate of the Winthrop U.S.
Government Money Fund*
(5) (a) Form of Investment Advisory Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(b) Form of Investment Advisory Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
(6) (a) Form of Distribution Agreement for the Winthrop
Developing Markets Fund and the Winthrop
International Equity Fund+
(b) Form of Distribution Agreement for the Winthrop Tax
Exempt Money Fund and the Winthrop U.S. Government
Money Fund*
(7) Not Applicable
(a) Form of Custodial Services Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(b) Form of Custodial Services Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
- --------
* To be filed by Amendment to this Registration Statement.
+ Previously filed.
C-1
<PAGE>
<PAGE>
(8) (a) Form of Custody Administration and Agency Agreement
for the Winthrop Developing Markets Fund and the
Winthrop International Equity Fund+
(b) Form of Custody Administration and Agency Agreement
for the Winthrop Tax Exempt Money Fund and the
Winthrop U.S. Government Money Fund
(c) Form of Transfer Agent Services Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(d) Form of Transfer Agent Services Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
(e) Form of Accounting Services Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(f) Form of Accounting Services Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
(9) Legal Opinion+
(10) Consent of Independent Auditors*
(11) Not Applicable
(12) (a) Form of Subscription Agreement with initial
shareholders for the Winthrop Developing Markets
Fund and the Winthrop International Equity Fund+
(b) Form of Subscription Agreement with the initial
shareholders for the Winthrop Tax Exempt Money Fund
and the Winthrop U.S. Government Money Fund*
(13) Form of Prototype Retirement Plans+
(14) (a) Rule 12b-1 Plans for the Winthrop Developing
Markets Fund and the Winthrop International Equity
Fund+
(b) Rule 12b-1 Plans for the Winthrop Tax Exempt Money
Fund and the Winthrop U.S. Government Money Fund*
(15) Not Applicable
(16) Powers of Attorney+
(17) Rule 18F-3 Plan+
Item 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
Not Applicable
Item 26 NUMBER OF HOLDERS OF SECURITIES
Not Applicable
- --------
* To be filed by Amendment to this Registration Statement.
+ Previously filed.
C-2
<PAGE>
<PAGE>
Item 27 INDEMNIFICATION
Registrant's Agreement and Declaration of Trust provides that the
Trust (for the appropriate Money or Equity 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
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such person may be or may have been threatened, while
in office or thereafter, by reason of being or having been such a person, except
with respect to any matter as to which it has been determined that such person
(i) did not act in good faith in the reasonable belief that 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 Agreements between Registrant and
DLJ Investment Management Corp. and Wood, Struthers & Winthrop Management Corp.
(the "Advisers") provides that Advisers 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 Advisers against any
liability to Registrant or its security holders to which they would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties thereunder, or by reason of reckless disregard of
its duties and obligations thereunder.
The Distribution 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
Agreements between Registrant and the Advisers and the Distribution Agreement
between Registration and Donaldson, Lufkin & Jenrette Securities Corporation.
The Registrant's Investment Advisory Agreements are attached hereto as exhibit 6
or have been previously filed, and the Agreement and Declaration of Trust and
the Distribution Agreement have been previously filed 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
C-3
<PAGE>
<PAGE>
or paid by a trustee, officer or the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Equitable Life Assurance Society of the United States (the
parent of Advisers' 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 the Advisers.
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 Advisers 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 Advisers'
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 the Winthrop Opportunity Funds
at 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
C-4
<PAGE>
<PAGE>
(a) Registrant will file a post-effective amendment containing
unaudited financial statements for the Winthrop Tax Exempt Money
Fund and the Winthrop U.S. Government Money Fund within four to
six months after effectiveness of Registrant's Registration
Statement.
(b) Not Applicable.
(c) Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of Registrant's later Annual
Report to Shareholders upon request and without charge.
C-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of New York and the State of New York on the 11th
day of October, 1996.
Winthrop Opportunity Funds
By: /s/ G. Moffett Cochran
-----------------------------
Name: G. Moffett Cochran
Title: President
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed below by the following persons in the capacities and
on the date included:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ G. Moffett Cochran
______________________ Trustee and President October 11, 1996
G. Moffett Cochran
/s/ Martin Jaffe
______________________ Trustee and Vice President, October 11, 1996
Martin Jaffe Secretary and Treasurer
/s/ Robert E. Fisher
______________________ Trustee October 11, 1996
Robert E. Fisher
/s/ Wilmot H. Kidd III
______________________ Trustee October 11, 1996
Wilmot H. Kidd III
/s/ John W. Waller III
______________________ Trustee October 11, 1996
John W. Waller III
</TABLE>
C-6
<PAGE>
<PAGE>
Schedule of Exhibits to Form N-1A
Exhibits
(1) Form of Agreement and Declaration of Trust*
(2) Form of Bylaws+
(3) Not Applicable
(4) (a) Form of Stock Certificate of the Winthrop
Developing Markets Fund+
(b) Form of Stock Certificate of the Winthrop
International Equity Fund+
(c) Form of Stock Certificate of the Winthrop Tax
Exempt Money Fund*
(d) Form of Stock Certificate of the Winthrop U.S.
Government Money Fund*
(5) (a) Form of Investment Advisory Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(b) Form of Investment Advisory Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
(6) (a) Form of Distribution Agreement for the Winthrop
Developing Markets Fund and the Winthrop
International Equity Fund+
(b) Form of Distribution Agreement for the Winthrop Tax
Exempt Money Fund and the Winthrop U.S. Government
Money Fund*
(7) Not Applicable
(a) Form of Custodial Services Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(b) Form of Custodial Services Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
(8) (a) Form of Custody Administration and Agency Agreement
for the Winthrop Developing Markets Fund and the
Winthrop International Equity Fund+
(b) Form of Custody Administration and Agency Agreement
for the Winthrop Tax Exempt Money Fund and the
Winthrop U.S. Government Money Fund*
(c) Form of Transfer Agent Services Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(d) Form of Transfer Agent Services Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
(e) Form of Accounting Services Agreement for the
Winthrop Developing Markets Fund and the Winthrop
International Equity Fund+
(f) Form of Accounting Services Agreement for the
Winthrop Tax Exempt Money Fund and the Winthrop
U.S. Government Money Fund*
(9) Legal Opinion+
(10) Consent of Independent Auditors*
- --------
* To be filed by Amendment to this Registration Statement.
+ Previously filed.
C-7
<PAGE>
<PAGE>
(11) Not Applicable
(12) (a) Form of Subscription Agreement with initial
shareholders for the Winthrop Developing Markets
Fund and the Winthrop International Equity Fund+
(b) Form of Subscription Agreement with the initial
shareholders for the Winthrop Tax Exempt Money Fund
and the Winthrop U.S. Government Money Fund*
(13) Form of Prototype Retirement Plans+
(14) (a) Rule 12b-1 Plans for the Winthrop Developing
Markets Fund and the Winthrop International Equity
Fund+
(b) Rule 12b-1 Plans for the Winthrop Tax Exempt Money
Fund and the Winthrop U.S. Government Money Fund*
(15) Not Applicable
(16) Powers of Attorney+
(17) Rule 18F-3 Plan+
- --------
* To be filed by Amendment to this Registration Statement.
+ Previously filed.
C-8
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as `D'.
<PAGE>
