<PAGE>
<PAGE>
WINTHROP MONEYFUNDS
(800) 225-8011
TRUSTEES
G. MOFFETT COCHRAN ROBERT E. FISCHER
WILMOT H. KIDD, III MARTIN JAFFE
JOHN W. WALLER, III
OFFICERS
G. MOFFETT COCHRAN, Chairman and President
JAMES A. ENGLE, Vice President
MARTIN JAFFE, Vice President, Secretary and Treasurer
BRIAN A. KAMMERER, Vice President
INVESTMENT ADVISER
DLJ INVESTMENT MANAGEMENT CORP.
277 Park Avenue, New York, NY 10172
CUSTODIAN
CITIBANK, N.A.
111 Wall Street, New York, NY 10043
TRANSFER AGENT
FPS SERVICES, INC.
P.O. Box 61503 (3200 Horizon Drive)
King of Prussia, PA 19406
DISTRIBUTOR
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
277 Park Avenue, New York, NY 10172
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue, New York, NY 10019
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue, New York, NY 10022
This report is submitted for the general information of the stockholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which should be read
carefully before investing.
WMF-2 12/97
WINTHROP MUTUAL FUNDS [LOGO]
WINTHROP MUNICIPAL MONEY FUND
WINTHROP U.S. GOVERNMENT MONEY FUND
OCTOBER 31, 1997
ANNUAL REPORT
<PAGE>
<PAGE>
WINTHROP MONEY FUNDS -- STATEMENT OF INVESTMENTS October 31, 1997
- --------------------------------------------------------------------------------
WINTHROP MUNICIPAL MONEY FUND
<TABLE>
<CAPTION>
MUNICIPAL PRINCIPAL
OBLIGATIONS -- 98.1% AMOUNT VALUE
---------- -----------
<S> <C> <C>
ALABAMA -- 2.6%
The Port City Medical Clinic
Board of Mobile, AL Ser.
1992-A CP (LOC: Rabobank)
3.650%, 11/14/97............. $1,000,000 $ 1,000,000
-----------
ALASKA -- 2.6%
City of Valdez, Alaska Marine
Terminal CP (ARCO Project)
3.650%, 12/10/97............. 1,000,000 1,000,000
-----------
CALIFORNIA -- 2.6%
Los Angeles County, CA TRANS
Ser. A (LOC: Bayerische
Landesbank) 4.250%,
06/30/98..................... 1,000,000 1,004,131
-----------
COLORADO -- 3.9%
City & County of Denver, CO
Airport System CP (LOC:
Bayerische Landesbank)
3.700%, 12/12/97............. 1,500,000 1,500,000
-----------
FLORIDA -- 5.2%
Florida Local Government
Assistance CP (LOC: First
Union National Bank of
Florida) 3.800%, 11/13/97.... 1,000,000 1,000,000
University of North Florida
Foundation, Inc. Revenue
(LOC: First Union National
Bank of North Carolina) VRDN
3.700%'D'.................... 1,000,000 1,000,000
-----------
2,000,000
-----------
GEORGIA -- 2.6%
Municipal Gas Authority of
Georgia Revenue Ser. C (LOC:
Wachovia Bank, Bank of
America, Morgan Guaranty
Trust Co., Bayerische
Landesbank) VRDN
3.700%'D'DD'................. 1,000,000 1,000,000
-----------
KANSAS -- 1.5%
Butler County, KS SWDR (Texaco
Refining & Marketing) Ser. B
(LOC: Texaco, Inc.) VRDN
4.300%'D'DD'................. 600,000 600,000
-----------
KENTUCKY -- 5.3%
Kentucky State Property &
Buildings Commission Revenue
(Toyota Project No. 40)
(Prerefunded: 11/01/97)*
8.750%, 11/01/07............. 700,000 714,000
Pendelton County, KY CP (LOC:
Bank of Australia) 3.800%,
02/13/98..................... 1,350,000 1,350,000
-----------
2,064,000
-----------
LOUISIANA -- 10.1%
Lake Charles Harbor & Terminal
Distribution Port Revenue
(LOC: National Westminster
Bank) VRDN 3.750%'D'......... 1,000,000 1,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
Louisiana State Offshore
Terminal Authority Deepwater
Port Revenue (Loop, Inc.)
(LOC: Union Bank of
Switzerland) VRDN 4.150%'D'.. $ 800,000 $ 800,000
Plaquemines Parish, LA
Environmental Revenue
(British Petroleum
Exploration & Oil, Inc.)
(LOC: British Petroleum) VRDN
4.250%'D'DD'................. 1,100,000 1,100,000
St. Charles Parish, LA PCR
(Shell Oil Co. Project) Ser.
A (LOC: Shell Oil Co.) VRDN
4.250%'D'DD'................. 1,000,000 1,000,000
-----------
3,900,000
-----------
MARYLAND -- 2.6%
Baltimore County, MD PCR CP
(LOC: Baltimore Gas &
Electric Co.) 3.750%,
11/26/97..................... 1,000,000 1,000,000
-----------
MASSACHUSETTS -- 2.6%
Massachusetts Water Resource CP
(LOC: Morgan Guaranty Trust
Co.) 3.500%, 11/04/97........ 1,000,000 1,000,000
-----------
MICHIGAN -- 10.6%
Detroit, MI Water Supply System
(LIQ: FGIC) VRDN 3.600%'D'... 800,000 800,000
Michigan State Building
Authority (LOC: Canadian
Imperial Bank of Commerce)
3.750%, 03/02/98............. 1,000,000 1,000,000
Michigan State HDA (Pine Ridge)
(LOC: Wachovia Bank) VRDN
3.550%'D'.................... 1,300,000 1,300,000
Michigan State HDA (Harbortown,
Ltd.) (LOC: Bankers Trust
Co.) VRDN 3.775%'D'.......... 1,000,000 1,000,000
-----------
4,100,000
-----------
MINNESOTA -- 2.4%
Minnesota State GO 4.500%,
05/01/98..................... 940,000 943,460
-----------
NEBRASKA -- 3.1%
Nebraska Higher Education Loan
Program (LOC: SLMA) VRDN
3.750%'D'.................... 1,200,000 1,200,000
-----------
NEW YORK -- 4.2%
New York, NY City HDC Mortgage
Revenue (East 17th Street
Properties) (LOC: Chase
Manhattan Bank) VRDN
4.200%'D'.................... 600,000 600,000
New York State HFA (State
University Construction)
(Prerefunded: 11/01/97)*
7.600%, 11/01/99............. 1,000,000 1,020,000
-----------
1,620,000
-----------
</TABLE>
See notes to financial statements.
<PAGE>
<PAGE>
WINTHROP MONEY FUNDS -- STATEMENT OF INVESTMENTS October 31, 1997 (continued)
- --------------------------------------------------------------------------------
WINTHROP MUNICIPAL MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
OHIO -- 2.6%
<S> <C> <C>
Toledo-Lucas County, OH Port
Authority CP (LOC: Bank of
Nova Scotia) 3.650%,
11/07/97..................... $1,000,000 $ 1,000,000
-----------
PENNSYLVANIA -- 11.3%
Allegheny County, PA IDA PCR CP
(LOC: Commerzbank) 3.600%,
12/10/97..................... 400,000 400,000
Delaware County, PA GO 4.700%,
11/15/97..................... 1,465,000 1,465,527
Philadelphia, PA School
District TRANS (LOC:
Commerzbank) 4.500%,
06/30/98..................... 1,500,000 1,505,238
Schuylkill County, PA IDA
(Northeastern Power Co.) Ser.
B (LOC: Credit Local de
France) VRDN 4.350%'D'....... 1,000,000 1,000,000
-----------
4,370,765
-----------
PUERTO RICO -- 1.5%
Government Development Bank of
Puerto Rico CP 3.700%,
02/06/98..................... 600,000 600,000
-----------
SOUTH CAROLINA -- 2.6%
Berkeley County, SC IDR (LOC:
Nucor Corp.) VRDN
3.750%'D'.................... 1,000,000 1,000,000
-----------
TEXAS -- 10.6%
Brazos River Authority PCR
(Texas Utilities Electric
Co.) (Insured: AMBAC) VRDN
4.250%'D'.................... 500,000 500,000
Gulf Coast Waste Disposal
Authority of Texas PCR CP
(LOC: Exxon) 3.750%,
12/16/97'D'.................. 1,000,000 1,000,000
Gulf Coast Waste Disposal
Authority of Texas PCR & SWDR
(Amoco Oil Co. Project) (LOC:
Amoco Corp.) VRDN
4.250%'D''DD'................. 1,400,000 1,400,000
Texas State TRANS Ser. A
4.750%, 08/31/98............. 1,000,000 1,007,354
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
Trinity River Authority, TX PCR
(Texas Utilities Electric
Co.) (Insured: AMBAC) VRDN
4.250%'D''DD'................. $ 200,000 $ 200,000
-----------
4,107,354
-----------
UTAH -- 1.3%
Salt Lake City, UT Airport
Revenue Ser. A (LOC: Union
Bank of Switzerland) VRDN
3.700%'D'.................... 500,000 500,000
-----------
WASHINGTON -- 6.3%
Pike Place Market Preservation
& Development Authority
(Prerefunded: 11/01/97)*
8.750%, 11/01/17............. 1,000,000 1,020,000
Washington State Public Power
Supply System (Nuclear
Project No. 1) Ser. C 4.500%,
07/01/98..................... 515,000 516,771
Washington State Public Power
Supply System (Nuclear
Project No. 3) Ser. 1993-3A2
(LOC: Bank of America) VRDN
3.700%'D'.................... 900,000 900,000
-----------
2,436,771
-----------
TOTAL MUNICIPAL OBLIGATIONS
(amortized cost $37,946,481)............. 37,946,481
-----------
<CAPTION>
REGISTERED INVESTMENT COMPANIES -- 1.2%
(amortized cost $470,049)
SHARES
----------
<S> <C> <C>
Federated Tax-Free Obligations
Fund......................... 470,049 470,049
-----------
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS -- 99.3%
(amortized cost $38,416,530)............. 38,416,530
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 0.7%................. 264,825
-----------
NET ASSETS -- 100.0%......................... $38,681,355
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
ABBREVIATIONS USED IN THE PORTFOLIO
<TABLE>
<S> <C> <C>
AMBAC American Municipal Bond Assurance Corporation
CP Commercial Paper
FGIC Financial Guaranty Insurance Corporation
GO General Obligation
HDA Housing Development Authority
HDC Housing Development Corporation
HFA Housing Finance Authority
IDA Industrial Development Authority
IDR Industrial Development Revenue Bond
LIQ Liquidity Agreement
LOC Letter of Credit
PCR Pollution Control Revenue Bond
SLMA Student Loan Marketing Association
SWDR Solid Waste Disposal Revenue
TRANS Tax and Revenue Anticipation Notes
VRDN Variable Rate Demand Note
</TABLE>
See notes to financial statements.
'DD' Subject to Alternative Minimum Tax.
'D' Securities payable on demand. Rate shown is rate in effect at October 31,
1997. This rate is subject to change and is based on bank prime rates or an
index of market interest rates.
* Securities which are prerefunded are collateralized by U.S. Government
securities which are held in escrow and are used to pay principal and interest
on the municipal issue and to retire the securities in full at the earliest
refunding date.
See notes to financial statements.
<PAGE>
<PAGE>
WINTHROP MONEY FUNDS -- STATEMENT OF INVESTMENTS October 31, 1997
- --------------------------------------------------------------------------------
WINTHROP U.S. GOVERNMENT MONEY FUND
<TABLE>
<CAPTION>
U.S. GOVERNMENT
OBLIGATIONS -- 3.1% PRINCIPAL
(amortized cost $1,073,620) AMOUNT VALUE
---------- -----------
<S> <C> <C>
U.S. Treasury Bills
5.680%, 04/02/98............... $1,100,000 $ 1,073,620
-----------
U.S. GOVERNMENT
AGENCIES -- 43.2%
Federal Farm Credit Bank Discount
Notes
5.390%, 01/27/98............... 1,245,000 1,228,783
Federal Home Loan Bank Discount
Notes
5.725%, 02/05/98............... 2,000,000 2,000,000
5.385%, 02/11/98............... 1,135,000 1,117,683
5.670%, 03/10/98............... 500,000 499,702
5.713%, 03/13/98............... 1,000,000 999,335
5.320%, 04/01/98............... 500,000 488,843
6.020%, 04/15/98............... 1,000,000 1,001,525
Federal Home Loan Mortgage Corp.
Discount Notes
5.410%, 11/12/97............... 3,000,000 2,995,041
7.820%, 01/27/98............... 1,000,000 1,004,930
Federal National Mortgage
Association Discount Notes
5.400%, 11/24/97............... 2,915,000 2,904,943
5.320%, 06/22/98............... 1,000,000 965,568
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(amortized cost $15,206,353)............... 15,206,353
-----------
REPURCHASE AGREEMENTS -- 53.7%
Chase Securities, Inc. 5.550%,
dated 10/29/97 due 11/05/97 in
the amount of $1,401,511 (fully
collateralized by $1,400,000
Government National Mortgage
Association 6.250%, 07/20/27,
value $1,431,291).............. 1,400,000 1,400,000
Credit Suisse First Boston Corp.
5.500%, dated 10/29/97 due
11/12/97 in the amount of
$1,202,567 (fully
collateralized by $1,200,000
Federal Home Loan Mortgage
Corporation 7.000%, 11/01/26,
value $1,259,474).............. 1,200,000 1,200,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
Goldman, Sachs & Co. 5.530%,
dated 10/29/97 due 11/05/97 in
the amount of $1,401,505 (fully
collateralized by $1,400,000
Federal Home Loan Mortgage
Corporation 9.000%, 09/01/22,
value $1,428,000).............. $1,400,000 $ 1,400,000
JP Morgan 5.650%, dated 10/31/97
due 11/03/97 in the amount of
$6,257,945 (fully
collateralized by $6,255,000
U.S. Treasury Bills 0.000%,
01/22/98, value $6,380,407).... 6,255,000 6,255,000
Morgan Stanley 5.590%, dated
10/29/97 due 11/05/97 in the
amount of $7,257,880 (fully
collateralized by $7,250,000
Federal National Mortgage
Association 6.779% - 8.000%,
11/01/22 - 08/01/33 value
$7,426,175).................... 7,250,000 7,250,000
Salomon Brothers 5.530%, dated
10/30/97 due 11/05/97 in the
amount of $1,401,290 (fully
collateralized by $1,400,000
Federal National Mortgage
Association 5.500% - 10.000%,
06/01/98 - 11/01/27, value
$1,443,451).................... 1,400,000 1,400,000
-----------
TOTAL REPURCHASE AGREEMENTS
(amortized cost $18,905,000)............... 18,905,000
-----------
TOTAL INVESTMENTS -- 100.0%
(amortized cost $35,184,973)............... 35,184,973
-----------
LIABILITIES NET OF CASH
AND OTHER ASSETS -- (0.0%)................. (10,899)
-----------
NET ASSETS -- 100.0%......................... $35,174,074
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
<PAGE>
WINTHROP MONEY FUNDS -- STATEMENT OF ASSETS AND LIABILITIES October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL U.S. GOVERNMENT
MONEY FUND MONEY FUND
----------- ---------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $38,416,530 and $35,184,973, respectively)
(including repurchase agreements of $18,905,000 for the U.S. Government Money
Fund)............................................................................ $38,416,530 $35,184,973
Cash................................................................................ -- 126
Receivable for capital stock sold................................................... 4,549 4,898
Interest receivable................................................................. 337,122 69,158
Deferred organization costs (Note A)................................................ 61,003 61,003
----------- ---------------
Total assets........................................................................ 38,819,204 35,320,158
----------- ---------------
LIABILITIES:
Payable to investment advisor....................................................... 48,075 42,427
Payable to distributor.............................................................. 7,515 7,217
Dividend payable.................................................................... 45,096 69,353
Accrued expenses and other liabilities.............................................. 37,163 27,087
----------- ---------------
Total liabilities................................................................... 137,849 146,084
----------- ---------------
NET ASSETS............................................................................ $38,681,355 $35,174,074
----------- ---------------
----------- ---------------
NET ASSETS CONSIST OF:
Capital paid-in..................................................................... $38,681,355 $35,174,084
Accumulated net realized loss on investments........................................ -- (10)
----------- ---------------
$38,681,355 $35,174,074
----------- ---------------
----------- ---------------
Shares outstanding.................................................................. 38,681,355 35,174,084
----------- ---------------
----------- ---------------
Net asset value and redemption value per share...................................... $1.00 $1.00
</TABLE>
STATEMENT OF OPERATIONS for the Period February 24, 1997* through October 31,
1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL U.S. GOVERNMENT
MONEY FUND MONEY FUND
---------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................................. $755,617 $ 949,140
---------- ---------------
EXPENSES:
Investment advisory fees (Note B).................................................... 80,171 68,375
Distribution fees (Note B)........................................................... 50,107 42,735
Registration fees.................................................................... 27,300 26,000
Transfer agent fees.................................................................. 26,900 27,500
Custodian fees....................................................................... 28,271 27,471
Auditing fees........................................................................ 9,000 7,000
Printing fees........................................................................ 7,000 5,400
Trustees' fees (Note B).............................................................. 6,000 4,000
Legal fees........................................................................... 8,900 7,000
Miscellaneous........................................................................ 7,366 5,191
Amortization of organization costs (Note A).......................................... 9,678 9,678
---------- ---------------
Total expenses.................................................................... 260,693 230,350
Less expenses reimbursed by investment advisor (Note B)........................... (80,308) (76,506)
---------- ---------------
Net expenses...................................................................... 180,385 153,844
---------- ---------------
NET INVESTMENT INCOME.................................................................. 575,232 795,296
---------- ---------------
NET REALIZED LOSS ON INVESTMENTS....................................................... -- (10)
---------- ---------------
INCREASE IN NET ASSETS FROM OPERATIONS................................................. $575,232 $ 795,286
---------- ---------------
---------- ---------------
</TABLE>
*Commencement of operations
See notes to financial statements.
<PAGE>
<PAGE>
WINTHROP MONEY FUNDS -- STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MUNICIPAL U.S. GOVERNMENT
MONEY FUND MONEY FUND
------------ ---------------
PERIOD ENDED PERIOD ENDED
10/31/97* 10/31/97*
------------ ---------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................... $ 575,232 $ 795,296
Net realized loss on investments.................................................... -- (10)
------------ ---------------
Increase in net assets from operations.............................................. 575,232 795,286
------------ ---------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income................................................................... (575,232 ) (795,296)
------------ ---------------
CAPITAL STOCK TRANSACTIONS -- (NET) Note C............................................ 38,681,355 35,174,084
------------ ---------------
Total increase in net assets........................................................ 38,681,355 35,174,074
NET ASSETS:
Beginning of period................................................................. -- --
------------ ---------------
End of period....................................................................... $38,681,355 $35,174,074
------------ ---------------
------------ ---------------
</TABLE>
*Commencement of operations was February 24, 1997.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS October 31, 1997
- --------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES: Winthrop Money Funds ('Fund' or
'Funds') consists of two portfolios (the 'Portfolios'), the Winthrop Municipal
Money Fund and the Winthrop U.S. Government Money Fund (together the 'Money
Funds'), each a separate diversified series of the Winthrop Opportunity Funds
(the 'Trust'). In addition, the Trust consists of the Winthrop International
Equity Fund and the Winthrop Developing Markets Fund. The Trust was organized as
a Delaware business trust under the laws of Delaware on May 31, 1995 and is
registered under the Investment Company Act of 1940 (the 'Act'), as amended, as
an open-end management investment company. The Money Funds commenced operations
on February 24, 1997.
The Municipal 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. The investment
objective of the U.S. Government Money Fund is maximum current income,
consistent with liquidity and safety of principal, by investing in a portfolio
of U.S. Government securities.
Each Portfolio is considered to be a separate entity for financial reporting and
tax purposes. It is the Funds' policy to maintain a continuous net asset value
of $1.00 per share for each Portfolio. The Fund has adopted certain investment,
portfolio valuation and dividend and distribution policies to enable it to do
so. There is no assurance, however, that each Portfolio will be able to maintain
a stable net asset value of $1.00 per share.
The Funds account separately for the assets, liabilities and operations of each
Portfolio. Expenses directly attributable to each Portfolio are charged to that
Portfolio's operations; expenses which are applicable to all portfolios are
allocated among them on a pro rata basis. The Funds' financial statements are
prepared in accordance with generally accepted accounting principles which may
require the use of management estimates and assumptions. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Funds.
(1) SECURITY VALUATION: Securities are valued at amortized cost, which has
been determined by the Funds' Board of Trustees to represent the fair value of
the Funds' investments. This involves initially valuing a security at its
original cost and thereafter assuming a constant amortization to maturity of
any discount or premium.
(2) REPURCHASE AGREEMENTS: The Funds may enter into repurchase agreements with
financial institutions, deemed to be creditworthy by the Funds' Advisor,
subject to the seller's agreement to repurchase and the Funds' agreement to
resell such securities at a mutually agreed-upon price. Securities purchased
subject to repurchase agreements are deposited with the Funds' custodian or
custodians authorized in accordance with guidelines approved by the Funds'
Trustees. Pursuant to the terms of the repurchase agreement, such securities
must have an aggregate market value greater than or equal to the repurchase
price plus accrued interest at all times. If the value of the underlying
securities falls below the value of the repurchase price plus accrued
interest, the Funds will require the seller to deposit additional collateral
by the next business day. If the request for additional collateral is not met,
or the seller defaults on its repurchase obligation, the Funds maintain the
right to sell the underlying securities at market value and may claim any
resulting loss against the seller.
(3) FEDERAL INCOME TAXES: The Funds intend to be treated as 'regulated
investment companies' under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of their net taxable income. Accordingly, no
provisions for federal income taxes have been made in the accompanying
financial statements.
<PAGE>
<PAGE>
WINTHROP MONEY FUNDS -- NOTES TO FINANCIAL STATEMENTS October 31, 1997
(continued)
- --------------------------------------------------------------------------------
For federal income tax purposes, the cost of securities owned at October 31,
1997, was substantially the same as the cost of securities for financial
statement purposes.
(4) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Discounts and premiums on securities purchased are
amortized in accordance with income tax regulations which approximate
generally accepted accounting principles. Security gains and losses are
determined on the identified cost basis.
(5) DIVIDENDS AND DISTRIBUTIONS: It is the policy of the Funds to declare
dividends daily from net investment income. Such dividends are paid monthly.
Dividends from net realized capital gain, if any, are normally declared and
paid annually, but the Funds may make distributions on a more frequent basis
to comply with the distribution requirements of the Internal Revenue Code. To
the extent that net realized capital gain can be offset by capital loss
carryovers, it is the policy of the Funds not to distribute such gain.
(6) DEFERRED ORGANIZATION COSTS: The Funds will reimburse the Advisor for
costs incurred in connection with their organization. The costs are being
amortized on a straight-line basis over sixty months commencing February 24,
1997.
NOTE (B) ADVISORY AND DISTRIBUTION SERVICES AGREEMENT: DLJ Investment Management
Corp. (the 'Advisor') is a wholly-owned subsidiary of Donaldson, Lufkin &
Jenrette Securities Corporation, which is a wholly-owned subsidiary of
Donaldson, Lufkin and Jenrette, Inc. ('DLJ'). DLJ is an independently operated,
indirect subsidiary of The Equitable Companies, Incorporated, a holding company
controlled by AXA. Under its Advisory Agreement with the Funds, the Advisor will
provide investment advisory services and order placement facilities for the
Funds and pay all compensation of Trustees of the Funds who are affiliated
persons of the Advisor. The Advisor or its affiliates will also furnish the
Funds, without charge, management supervision and assistance and office
facilities. The Funds will pay the Advisor at the following annual percentage
rates of the average daily net assets of each Portfolio: .40 of 1% of each
Portfolio's first $1 billion and .35 of 1% of the balance. Such fees will be
accrued daily and paid monthly.
For the period February 24, 1997 through April 30, 1998, the Advisor has agreed
to voluntarily reduce its management fees and the Advisor or its affiliates have
agreed to reimburse operating expenses by the amount that total fund operating
expenses exceed 0.90% of the average daily net assets of each Fund. After April
30, 1998, the Advisor or its affiliates may, in their sole discretion, determine
to discontinue this practice with respect to either Fund. As a result of the
voluntary assumption of expenses, the Municipal Money Fund and U.S. Government
Money Fund were reimbursed $80,308 and $76,506, respectively, during the period
ended October 31, 1997.
Pursuant to Rule 12b-1 under the Act, the Fund has entered into a Distribution
Services Agreement (the 'Agreement') with Donaldson, Lufkin & Jenrette
Securities Corporation, the Fund's Distributor, under which the Fund pays a
distribution services fee to the Distributor at an annual rate of up to .25 of
1% of its average daily net assets. Under the Agreement, each Fund is obligated
to pay distribution and/or service fees to the Distributor for its distribution
and service activities as reimbursement for specific expenses incurred. In
addition, the Agreement provides that the Advisor may use its own resources
including fees from investment companies (including the Fund) to finance the
distribution of the Fund's shares.
Each Trustee who is not an affiliated person receives an attendance fee of
$2,000 per meeting. In addition, each unaffiliated Trustee who is a member of
the audit committee receives an attendance fee of $1,000 per meeting.
NOTE (C) SHARES OF BENEFICIAL INTEREST: There is an unlimited number of shares
($0.001 par value authorized). Transactions in shares of beneficial interest
were as follows ($1.00 per share):
<TABLE>
<CAPTION>
MUNICIPAL U.S. GOVERNMENT
MONEY FUND MONEY FUND
----------------- -----------------
PERIOD ENDED PERIOD ENDED
OCTOBER 31, 1997* OCTOBER 31, 1997*
----------------- -----------------
<S> <C> <C>
Shares sold....................................................................... $ 152,516,396 $ 155,268,954
Shares issued through reinvestment of dividends................................... 522,240 689,953
----------------- -----------------
153,038,636 155,958,907
----------------- -----------------
Shares redeemed................................................................... (114,357,281) (120,784,823)
----------------- -----------------
Net increase...................................................................... $ 38,681,355 $ 35,174,084
----------------- -----------------
----------------- -----------------
</TABLE>
*Commencement of operations was February 24, 1997.
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of capital stock
outstanding throughout each period presented. This information has been derived
from information provided in the financial statements.
<TABLE>
<CAPTION>
MUNICIPAL U.S. GOVERNMENT
MONEY FUND MONEY FUND
----------------- -----------------
PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1997'D' 1997'D'
----------------- -----------------
<S> <C> <C>
Net asset value, beginning of period............................................. $ 1.00 $ 1.00
Net investment income............................................................ 0.020 0.031
Dividends from net investment income............................................. (0.020) (0.031)
-------- --------
Net asset value, end of period................................................... $ 1.00 $ 1.00
-------- --------
-------- --------
Total return'D'D'(1)............................................................. 2.90% 4.68%
Ratio of expenses to average net assets(1)(2).................................... 0.90% 0.90%
Ratio of net investment income to average net assets(1)(2)....................... 2.87% 4.65%
Net assets, end of period (000's omitted)........................................ $38,681 $35,174
</TABLE>
'D' Commencement of operations was February 24, 1997.
'D''D' Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period.
(1) Annualized
(2) Net of voluntary assumption by Advisor of expenses, expressed as a
percentage of average net assets for the period ended 10/31/97, as follows:
Municipal Money Fund, .40% (annualized) and U.S. Government Money Fund,
.45% (annualized).
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Shareholders and Board of Trustees
WINTHROP MUNICIPAL MONEY FUND and
WINTHROP U.S. GOVERNMENT MONEY FUND
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Winthrop Municipal Money Fund and
Winthrop U.S. Government Money Fund, (two of the Funds constituting Winthrop
Opportunity Funds) as of October 31, 1997, and the related statements of
operations and changes in net assets and financial highlights for the period
from February 24, 1997 (commencement of operations) to October 31, 1997. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1997 by correspondence with the custodian and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Winthrop Municipal Money Fund and Winthrop U.S. Government Money Fund at October
31, 1997, and the results of their operations, the changes in their net assets
and the financial highlights for the period from February 24, 1997 to October
31, 1997, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
December 10, 1997
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as ............................'D'
The double dagger symbol shall be expressed as ....................'DD'
