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As filed with the Securities and Exchange Commission on January 28, 1997
Registration No. 33-92982
Registration No. 811-9054
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 5 X
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 X
(Check appropriate box or boxes)
WINTHROP OPPORTUNITY FUNDS
(Exact name of registrant as specified in charter)
277 Park Avenue
New York, New York 10172
(Address of Principal Executive Offices)
(212) 892-4000
(Registrant's Telephone Number, Including Area Code)
Brian A. Kammerer
277 Park Avenue
New York, New York 10172
(Name and Address of Agent for Service)
Copy to:
Philip H. Harris, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
It is proposed that this filing will become effective (check
appropriate box)
[X ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b), or
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2), or
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
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)
PART A for the Winthrop Municipal Money Fund and
Winthrop U.S. Government Money Fund
Items 1-9 are incorporated by reference to Amendment No. 4 of Form N-1A
Registration Statement No. 33-92982
PART B for the Winthrop Municipal Money Fund and
Winthrop U.S. Government Money Fund
Items 10-23 are incorporated by reference to Amendment No. 4 of Form N-1A
Registration Statement No. 33-92982
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CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
<S> <C>
PART A for the Winthrop Developing Markets Fund and the
Winthrop International Equity Fund
Item 1. Cover Page . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . Summary of Equity Fund
Expenses
Item 3. Condensed Financial Information . Financial Highlights
Item 4. General Description of Registrant Cover Page;
</TABLE>
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<TABLE>
<S> <C>
Investment
Objectives, Policies
and Risk
Considerations;
General Information
Item 5. Management of the Fund . . . . . Management; General
Information
Item 5A. Management's Discussion of Fund
Performance . . . . . . . . . . . Annual Report
Item 6. Capital Stock and Other
Securities . . . . . . . . . . . Introduction; General
Information;
Purchases,
Redemption and
Shareholder
Services; Dividends,
Distributions and
Taxes
Item 7. Purchase of Securities Being
Offered . . . . . . . . . . . . . Purchases, Redemptions and
Shareholder
Services; Net Asset
Value; Expenses of
the Equity Funds
Item 8. Redemption or Repurchase . . . . Purchases,
Redemptions and
Shareholder Services
Item 9. Pending Legal Proceedings . . . . Not Applicable
PART B for the Winthrop Developing Markets Fund and the
Winthrop International Equity Fund
Item 10. Cover Page . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . Cover Page
Item 12. General Information and History . General Information
Item 13. Investment Objectives and
Policies . . . . . . . . . . . . Investment Policies and
Restrictions; Portfolio
Transactions; Portfolio
Turnover
Item 14. Management of the Fund . . . . . Management
Item 15. Control Persons and Principal
Holders of Securities . . . . . . Shares of Beneficial Interest
Item 16. Investment Advisory and Other
Services . . . . . . . . . . . . Management; General
Information
</TABLE>
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<TABLE>
<S> <C>
Item 17. Brokerage Allocation . . . . . . 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 Offered . . . Purchases,
Redemptions, and
Shareholder
Services; Net Asset
Value
Item 20. Tax Status . . . . . . . . . . . Investment Policies
and Restrictions;
Dividends,
Distributions and
Taxes
Item 21. Underwriters . . . . . . . . . . Expenses of the Equity Funds
Item 22. Calculation of Performance Data . Investment
Performance
Information
Item 23. Financial Statements . . . . . . Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this
Registration Statement.
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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 Developing Markets Fund (the 'Developing Markets Fund') and
the Winthrop International Equity Fund (the 'International Equity Fund', and
together with the Developing Markets Fund, the 'Equity Funds'), and the Winthrop
Municipal Money Fund (the 'Municipal Fund') and the Winthrop U.S. Government
Money Fund (the 'Government Fund' and together with the Municipal Fund, the
'Money Funds'), which are offered in a separate prospectus. Each of the Equity
Funds is open-end and diversified. The Equity Funds are designed to afford
investors the opportunity to choose between the separately managed Equity Funds
described below which have differing investment objectives and policies.
A DIVERSIFIED SELECTION OF INVESTMENT ALTERNATIVES
WINTHROP DEVELOPING MARKETS FUND -- Seeks long-term growth of capital by
investing primarily in common stocks and other equity securities from developing
countries.
WINTHROP INTERNATIONAL EQUITY FUND -- Seeks long-term growth of capital by
investing primarily in common stocks and other equity securities from
established markets outside the United States.
There can, of course, be no assurance that the Equity 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 Developing Markets Fund and the International Equity Fund.
PURCHASE INFORMATION
Shares of the Equity Funds may be purchased directly from the Equity Funds by
using the Share Purchase Application found in this Prospectus, through the
Equity Funds' Distributor, Donaldson, Lufkin & Jenrette Securities Corporation
or by contacting your securities dealer.
The minimum initial investment in each Equity 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 Equity Funds' minimum initial
investment and minimum subsequent investment requirements: (i) 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) savings incentive match plans for
employees (SIMPLE). Further information can be obtained from the Equity Funds at
the address and telephone number shown above. See 'Purchases, Redemptions and
Shareholder Services.'
Shares of each Equity Fund may be purchased at a price equal to the net asset
value of the Equity Fund (i) plus, in the case of Class A shares of each Equity
Fund, an initial sales charge imposed at the time of purchase or (ii) in the
case of Class B shares, subject to a contingent deferred sales charge upon
redemption which declines from 4% during the first year of purchase to zero
after four years. See 'Expenses of the Equity Funds.'
See 'Purchases, Redemptions and Shareholder Services.'
ADDITIONAL INFORMATION
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Equity Funds. A 'Statement of Additional
Information' dated January 24, 1997, 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 Equity 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 Equity Funds.
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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.
THESE ARE SPECULATIVE SECURITIES.
AN INVESTMENT IN THE FUNDS
INVOLVE SIGNIFICANT RISKS.
PROSPECTUS DATED
January 24, 1997
Investors are advised to read this Prospectus
and to retain it for future reference.
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SUMMARY OF EQUITY FUND EXPENSES
<TABLE>
<CAPTION>
DEVELOPING INTERNATIONAL
MARKETS FUND EQUITY FUND
-------------------------- --------------------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS A CLASS B
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Maximum Sales Load Imposed on Purchases (as a
percentage of offering price)........................ 5.75% 0% 5.75% 0%
Maximum Sales Load Imposed on Reinvested Dividends (as
a percentage of offering price)...................... 0% 0% 0% 0%
Deferred Sales Load (as a percentage of original
purchase price or redemption proceeds, as applicable)
Year since Purchase Payment was made
First............................................. 0% 4% 0% 4%
Second............................................ 0% 3% 0% 3%
Third............................................. 0% 2% 0% 2%
Fourth............................................ 0% 1% 0% 1%
Fifth and thereafter.............................. 0% 0% 0% 0%
Redemption Fees (as a percentage of amount redeemed)... 0% 0% 0% 0%
Exchange Fee........................................... 0% 0% 0% 0%
ANNUAL FUND OPERATING EXPENSES (as a percentage of
average daily net assets)
Management Fees*.................................. 1.25% 1.25% 1.25% 1.25%
12b-1 Fees**...................................... .25% 1.00% .25% 1.00%
Other Expenses`D'................................. .65% .65% .65% .65%
Total Fund Operating Expenses`D'.................. 2.15% 2.90% 2.15% 2.90%
</TABLE>
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The expense ratios for each Class of shares of the Developing Markets Fund and
the International Equity Fund are higher than those paid by most other
investment companies, but Wood, Struthers & Winthrop Management Corp. (the
'Adviser') and AXA Asset Management Partenaires (the 'Subadviser') believe the
fees are comparable to those paid by investment companies of similar investment
orientation.
* Management Fees with respect to the Developing Markets Fund and International
Equity Fund are reduced to 1.15% on net assets in excess of $100,000,000 and
to 1.00% on net assets in excess of $200,000,000.
** The Equity Funds have entered into a Distribution Agreement and a Rule 12b-1
Plan pursuant to which each Equity Fund pays, with respect to Class A shares,
a distribution fee each month at an annual rate of up to .25 of 1% of the
average daily net assets of the Class A shares, and, with respect to the
Class B shares, a distribution fee each month at an annual rate of up to 1%
of the average daily net assets of the Class B shares. Amounts paid under the
Distribution Agreement are used in their entirety to reimburse the Equity
Funds' distributor for actual expenses incurred. Long-term shareholders may,
over time, pay more in 12b-1 Fees than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. With respect to the Class B shares, .75 of 1% of the 12b-1 Fees
represents an asset-based sales charge and .25 of 1% of the 12b-1 Fees
represents a service fee. See 'Expenses of the Equity Funds -- Distribution
Agreement.'
`D' Beginning on the date of each Equity Fund's commencement of operations
through April 30, 1997, the Adviser and Subadviser have agreed to
voluntarily reduce their management fees by the amount that Total Fund
Operating Expenses exceed 2.15% and 2.90% of the average daily net assets
of the Class A and Class B shares, respectively, of each Equity Fund. Such
reductions are borne equally between the Adviser and Subadviser. During the
fiscal year ended October 31, 1996, Total Fund Operating Expenses and Other
Expenses, as so adjusted, reflect a voluntary reduction of the management
fee amounting to .54% for Class A and Class B shares of the Developing
Markets Fund and .27% for Class A and Class B Shares of the International
Equity Fund. Absent such reimbursement, Other Expenses and Total Fund
Operating Expenses for the Developing Markets Fund would have been 1.19%
and 2.69% for Class A shares and 1.19% and 3.44% for Class B shares,
respectively, and for the International Equity Fund .92% and 2.42% for
Class A shares and .92% and 3.17% for Class B shares,
respectively. After April 30, 1997, the Adviser and Subadviser may, in
their sole discretion, determine to discontinue this practice with respect
to either Equity Fund.
2
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<TABLE>
<CAPTION>
EXAMPLES 1 YEAR 3 YEARS 5 YEARS
- ---------------------------------------------------------------------------------- -------- --------- ---------
<S> <C> <C> <C>
DEVELOPING MARKETS FUND
CLASS A
You would pay the following expenses on a $1,000 investment including the maximum
5.75% initial sales charge and assuming (1) 5% annual return and (2) redemption at
the end of each time period....................................................... $ 78 $ 121 $ 166
CLASS B
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period................... $ 69 $ 110 $ 153
You would pay the following expenses on the same investment, assuming no
redemptions....................................................................... $ 29 $ 90 $ 153
INTERNATIONAL EQUITY FUND
CLASS A
You would pay the following expenses on a $1,000 investment including the maximum
5.75% initial sales charge and assuming (1) 5% annual return and (2) redemption at
the end of each time period....................................................... $ 78 $ 121 $ 166
CLASS B
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period................... $ 69 $ 110 $ 153
You would pay the following expenses on the same investment, assuming no
redemptions....................................................................... $ 29 $ 90 $ 153
<CAPTION>
EXAMPLES 10 YEARS`D'
- ---------------------------------------------------------------------------------- ----------------
<S> <C>
DEVELOPING MARKETS FUND
CLASS A
You would pay the following expenses on a $1,000 investment including the maximum
5.75% initial sales charge and assuming (1) 5% annual return and (2) redemption at
the end of each time period....................................................... $ 291
CLASS B
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period................... $ 304
You would pay the following expenses on the same investment, assuming no
redemptions....................................................................... $ 304
INTERNATIONAL EQUITY FUND
CLASS A
You would pay the following expenses on a $1,000 investment including the maximum
5.75% initial sales charge and assuming (1) 5% annual return and (2) redemption at
the end of each time period....................................................... $ 291
CLASS B
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period................... $ 304
You would pay the following expenses on the same investment, assuming no
redemptions....................................................................... $ 304
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of each Equity Fund bear directly
or indirectly. See also 'Expenses of the Equity Funds' and 'Purchases,
Redemptions' and 'Shareholder Services.' The examples should not be considered a
representation of past or future expenses and actual expenses may be greater or
lesser than those shown.
'Other Expenses' includes fees paid to the Equity 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 Equity Fund's average net
assets, but a fixed dollar cost.
- ------------
`D'Assuming Class B Shares will be automatically converted to Class A
Shares after eight years. See 'Purchases, Redemptions and Shareholder
Services -- Automatic Conversion of Class B Shares'
3
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FINANCIAL HIGHLIGHTS
The information in the following table has been audited by Ernst & Young LLP,
the Equity Funds' independent auditors.
Selected data for a share of capital stock outstanding for each period
indicated below:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
---------------------------------------------------------
CLASS A CLASS B
--------------------------- ---------------------------
FROM FROM
SEPTEMBER 8, FOR THE SEPTEMBER 8, FOR THE
1995* YEAR 1995* YEAR
THROUGH ENDED THROUGH ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1996 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period............... $ 10.00 $ 9.58 $10.00 $ 9.57
------------ ------------ ------ ------
Net investment income
(loss)(1)............... 0.00 (0.04) (0.02) (0.13)
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions............ (0.42) 0.84 (0.41) 0.85
------------ ------------ ------ ------
Net increase (decrease) in
net asset value from
operations.............. (0.42) 0.80 (0.43) 0.72
------------ ------------ ------ ------
Net asset value, end of
period.................. $ 9.58 $ 10.38 $ 9.57 $10.29
------------ ------------ ------ ------
------------ ------------ ------ ------
Total Return(2)........... (4.20)% 8.35% (4.30)% 7.52%
Ratio of expenses to
average net assets`D'... 2.15%(3) 2.15% 2.90%(3) 2.90%
Ratio of net investment
income (loss) to average
net assets`D'........... (0.02)%(3) (0.39)% (1.77)%(3) (1.25)%
Portfolio turnover rate... 0% 94.12% 0% 94.12%
Average commission rate
paid(4)................. -- $ 0.041 -- $0.041
Net assets, end of period
(000 omitted)........... $ 28,819 $ 42,170 $1,803 $4,955
<CAPTION>
DEVELOPING MARKETS FUND
------------------------------------------------------
CLASS A CLASS B
------------------------ ---------------------------
FROM
SEPTEMBER 8, FROM
1995* FOR THE SEPTEMBER 8, FOR THE
THROUGH YEAR 1995* YEAR
OCTOBER ENDED THROUGH ENDED
31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1996 1995 1996
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period...............$ 10.00 $ 9.53 $10.00 $ 9.52
---------- ------------ ------ ------
Net investment income
(loss)(1)............... 0.00 (0.01) (0.01) (0.08)
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions............ (0.47) 0.44 (0.47) 0.42
---------- ------------ ------ ------
Net increase (decrease) in
net asset value from
operations.............. (0.48) 0.43 (0.48) 0.34
---------- ------------ ------ ------
Net asset value, end of
period..................$ 9.53 $ 9.96 $ 9.52 $ 9.86
---------- ------------ ------ ------
---------- ------------ ------ ------
Total Return(2)........... (4.70)% 4.51% (4.80)% 3.57%
Ratio of expenses to
average net assets`D'... 2.15%(3) 2.15% 2.90%(3) 2.90%
Ratio of net investment
income (loss) to average
net assets`D'........... (0.32)%(3) (0.14)% (1.00)%(3) (0.83)%
Portfolio turnover rate... 0 % 26.76% 0% 26.76%
Average commission rate
paid(4)................. -- $ 0.028 -- $0.028
Net assets, end of period
(000 omitted)...........$ 14,622 $ 36,918 $1,004 $3,641
</TABLE>
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* Commencement of operations.
(1) Based on average shares outstanding
(2) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period. Initial sales charge or contingent deferred
sales charge is not reflected in the calculation of total return. Total
return calculated for a period of less than one year is not annualized.
(3) Annualized.
(4) For fiscal years beginning after September 1, 1995, the Equity Funds are
required to disclose its average commission rate paid per share for
purchases and sales of investment securities.
`D' Net of voluntary reduction of management fees by Adviser and Subadviser
amounting to .60% (annualized) of average daily net assets of both Class A
and Class B shares of the International Equity Fund and Developing Markets
Fund for the period from September 8, 1995 through October 31, 1995 and
.27% of average daily net assets of Class A and Class B shares of the
International Equity Fund and .54% of average daily net assets of Class A
and Class B shares of the Developing Markets Fund for the year ended
October 31, 1996.
4
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INTRODUCTION
Winthrop Opportunity Funds is a Delaware business trust whose shares are
offered in four separate portfolios, the Winthrop Developing Markets Fund (the
'Developing Markets Fund') and the Winthrop International Equity Fund (the
'International Equity Fund', and together with the Developing Markets Fund, the
'Equity Funds'), and the Winthrop Municipal Money Fund (the 'Municipal Fund')
and the Winthrop U.S. Government Money Fund (the 'Government Fund' and together
with the Municipal Fund, the 'Money 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' below.) A shareholder may utilize the Equity Funds' exchange
privilege to transfer such shareholder's assets to the same class of another
Equity Fund, either of the Money Funds or for shares of the same class of the
Winthrop Growth Fund, Winthrop Fixed Income Fund, Winthrop Aggressive Growth
Fund, Winthrop Growth and Income Fund or the Winthrop Municipal Trust Fund
(collectively, the 'Focus Funds') in accordance with the shareholder's changing
perceptions of the relative investment potential of each investment alternative.
A shareholder will pay a higher 12b-1 Fee when exchanging Class A shares of the
Equity Funds (.25 of 1% annually) for Class A shares of the Focus Funds (.30 of
1% annually). (See 'Purchases, Redemptions and Shareholder Services.')
Shareholders of all classes of an Equity Fund are entitled to their pro rata
share of any dividends and distributions arising from that Equity Fund's assets
except that with respect to each Equity Fund, each class bears different
distribution expenses (See 'Dividends, Distributions and Taxes.') Upon redeeming
shares of an Equity Fund, the shareholder will receive the next-determined net
asset value of that Equity Fund represented by the redeemed shares less the
applicable contingent deferred sales charge, if any. (See 'Purchases,
Redemptions and Shareholder Services.')
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The investment objectives and policies of each Equity Fund are set forth
below. There can be, of course, no assurance that either Equity Fund will
achieve its respective investment objective.
The investment objectives of each Equity Fund are fundamental policies of
that Equity Fund and may not be changed without the approval of that Equity
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 Equity Fund are not fundamental
policies and may be changed by the Board of Trustees without a shareholder vote.
A more detailed explanation of the Equity Funds' policies and the securities and
instruments they may buy or use is contained in the Equity Funds' Statement of
Additional Information, which is available upon request.
The Winthrop Developing Markets Fund The investment objective of the
Developing Markets Fund is to seek long-term growth of capital by investing
primarily in common stocks and other equity securities from developing
countries. The foregoing investment objective is a fundamental policy of the
Developing Markets Fund and cannot be changed without shareholder approval.
Under normal market conditions, the Developing Markets Fund intends to invest at
least 65% of its total assets in the equity securities of developing countries.
The Developing Markets Fund considers developing countries to be all
countries that are designated as
5
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developing or emerging countries by the International Bank for Reconstruction
and Development (the World Bank) or the International Finance Corporation, as
well as countries that are classified by the United Nations or otherwise
regarded by their authorities as developing. Currently, the countries not
included in this category are Ireland, Spain, New Zealand, Australia, the
United Kingdom, Italy, the Netherlands, Belgium, Austria, France, Canada,
Germany, Denmark, the United States, Sweden, Finland, Norway, Japan and
Switzerland. As used in this Prospectus, a company in a developing country
is an entity: (i) for which the principal securities trading market is in a
developing country, as defined above or (ii) organized under the laws of and
with a principal office in a developing country.
As an operating policy, the Developing Markets Fund currently intends to
invest primarily in countries represented within the Morgan Stanley Capital
International ('MSCI') Emerging Market Indices. Those countries currently
include Argentina, Brazil, Chile, Colombia, Mexico, Peru, Venezuela, India,
Indonesia, Korea, Malaysia, Philippines, South Africa, Thailand, Sri Lanka,
Greece, Israel, Jordan, Pakistan, Poland, Portugal, Taiwan and Turkey. The
Adviser and Subadviser do not currently intend to invest more than 25% of the
Developing Markets Fund's total assets (at the time of investment) in developing
countries not represented within the MSCI Emerging Market Indices.
The Developing Markets Fund seeks to identify those countries and
industries where economic and political factors are likely to produce
above-average growth rates. The Developing Markets Fund then seeks to invest in
those companies in such countries and industries that are best positioned and
managed to take advantage of these economic and political factors. The assets of
the Developing Markets Fund ordinarily will be invested in the securities of
issuers in at least three different developing countries.
Characteristics of developing countries that may affect investment in their
markets include certain national policies that may restrict investment by
foreigners and the absence of developed legal structures governing private and
foreign investments and private property. The typically small size of the
markets for securities issued by issuers located in developing countries and the
possibility of a low or nonexistent volume of trading in those securities may
also result in a lack of liquidity and in substantial price volatility of those
securities. Shareholders should be aware that investing in developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less stability
than those of developed countries.
The Winthrop International Equity Fund The investment objective of the
International Equity Fund is to seek long-term growth of capital by investing
primarily in common stocks and other equity securities from established markets
outside the United States. The foregoing investment objective is a fundamental
policy of the International Equity Fund and cannot be changed without
shareholder approval. Under normal market conditions, the International Equity
Fund intends to invest at least 65% of its total assets in equity securities of
issuers from at least three different countries outside the United States. The
International Equity Fund considers it consistent with this objective to acquire
securities of companies incorporated in the United States and having their
principal activities and interests outside of the United States.
In pursuing its investment objective, the International Equity Fund intends
to diversify its equity investments primarily among countries represented within
the EAFE Index, also known as the Morgan Stanley Capital International Europe,
Australia, Far East index, an unmanaged index of over 1,000 foreign stock
prices. Those countries currently include Germany, the Netherlands, Belgium,
Austria, France, Italy, Spain, the United Kingdom, Switzerland, Japan,
Hong-Kong, Australia, New Zealand, Malaysia, Singapore and the Scandinavian
countries. The Adviser and Subadviser do not currently intend to invest more
than 10% of the International Equity Fund's total assets (at the time of
investment) in countries outside the United States not represented within the
EAFE Index.
Equity Securities 'Equity Securities,' as used in this Prospectus, refers
to common stock, preferred stock (including convertible preferred), bonds
convertible into common or preferred stock, rights and warrants, equity
interests in trusts and depositary receipts for equity securities.
6
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<PAGE>
Convertible Securities Each Equity Fund may invest up to 25% of its assets
in convertible securities. The Adviser and Subadviser currently do not intend to
invest over 5% of each Equity Fund's assets in convertible securities rated
below investment grade by Standard and Poor's Ratings Group ('S&P') and Moody's
Investor Service ('Moody's'), or convertible securities not rated by S&P or
Moody's unless believed by the Adviser or Subadviser to be of comparable quality
to instruments rated investment grade by S&P or Moody's. The Equity Funds will
not invest in convertible securities rated below B by S&P or Moody's, or unrated
convertible securities of comparable quality. See the Appendix to the Statement
of Additional Information for the risks associated with investing in convertible
securities with such ratings. A convertible security is a bond or preferred
stock which may be converted at a stated price within a specified period of time
into a certain quantity of the common or preferred stock of the same or a
different issuer. Convertible securities have characteristics of both bonds and
equity securities.
As a fixed-income security, a convertible security tends to increase in
market value when interest rates decline and tends to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the underlying stock. The price of a
convertible security tends to increase as the market value of the underlying
stock rises, whereas it tends to decrease as the market value of the underlying
stock declines.
Warrants Each Equity Fund may invest up to 5% of its net assets in
warrants. A warrant gives the holder thereof the right to buy equity securities
at a specific price for a specified period of time. Warrants tend to be more
volatile than the underlying security, and if at a warrant's expiration date the
security is trading at a price below the price set in the warrant, the warrant
will expire worthless. Conversely, if at the expiration date the underlying
security is trading at a price higher than the price set in the warrant, then
the Equity Fund holding the warrant can acquire the stock at a price below its
market value.
Depositary Receipts The Equity Funds may purchase sponsored or unsponsored
ADRs, EDRs and GDRs (collectively, 'Depositary Receipts'). ADRs are Depositary
Receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. EDRs and
GDRs are Depositary Receipts typically issued by foreign banks or trust
companies, although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either a foreign or a
United States corporation.
Additional Investment Strategies of the Equity Funds The Equity Funds
reserve the right as a defensive measure to hold temporarily other types of
securities without limit, including commercial paper, bankers' acceptances,
short-term debt securities (corporate and government) or government and high
quality money market securities of United States and non-United States issuers,
repurchase agreements, time deposits or cash (foreign currencies or United
States dollars), in such proportions as, in the opinion of the Adviser or
Subadviser, prevailing market, economic or political conditions warrant. Each
Equity Fund may also temporarily hold cash and invest in high quality foreign or
domestic money market instruments, up to 35% of its assets, pending investment
of proceeds from new sales of Equity Fund shares or to meet ordinary daily cash
needs.
The Equity Funds may also engage in a variety of transactions including the
use of options, forward foreign currency exchange contracts and futures
contracts and options thereon. Each Equity Fund's ability to use these
strategies may be limited by market conditions, regulatory limits and tax
considerations. There can be no assurance that any of these strategies will
achieve their objectives.
Option Transactions The Equity Funds may purchase and sell put and call
options. The Equity Funds may purchase and sell such options on securities,
currencies, and financial indices that are traded on U.S. or foreign securities
exchanges or in the over-the-counter market. Options traded in the
over-the-counter market are considered illiquid investments. An Equity Fund's
successful transaction with options depends on the ability of the Adviser or
Subadviser to predict the direction of the market and is subject to certain
additional risks, including generally greater volatility of
7
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<PAGE>
options as compared to common stocks and the risk that an option will expire
without value.
Forward Foreign Currency Exchange Contracts The Equity Funds may enter into
forward foreign currency exchange contracts to protect the value of its assets
against future changes in the level of currency exchange rates.
Financial Futures Contracts and Options Thereon The Equity Funds may
purchase and sell financial futures contracts and options thereon which are
traded on a commodities exchange or board of trade for certain hedging, return
enhancement and risk management purposes in accordance with the regulations of
the Commodity Futures Trading Commission.
The Equity Funds may purchase and sell financial futures contracts and
related options, without limitation, for bona fide hedging purposes. Subject to
the foregoing, the value of all financial futures contracts sold will not exceed
the total market value of each Equity Fund's portfolio.
Risks of Options, Currency Exchange Contracts and Financial Futures
Strategies Participation in the options or futures markets and in currency
exchange transactions involves investment risks and transaction costs to which
the Equity Funds would not be subject absent the use of these strategies. If the
Adviser's or Subadviser's predictions of movements in the direction of the
securities, foreign currency and interest rate markets are inaccurate, the
adverse consequences to the Equity Funds may leave the Equity Funds in a worse
position than if such strategies were not used. The loss from entering into
futures contracts is potentially unlimited. Risks inherent in the use of
options, foreign currency and futures contracts and options on futures contracts
include (1) dependence on the Adviser's or Subadviser's ability to predict
correctly movements in the direction of interest rates, securities prices and
currency markets; (2) imperfect correlation between the price of options and
futures contracts and options thereon and movements in the prices of the
securities or currencies being hedged; (3) skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to defer closing out certain hedged positions to avoid
adverse tax consequences; and (6) the possible inability of an Equity Fund to
purchase or sell a portfolio security at a time that otherwise would be
favorable for it to do so, or the possible need for an Equity Fund to sell a
portfolio security at a disadvantageous time, due to the need for such Equity
Fund to maintain 'cover' or to segregate securities in connection with hedging
transactions. See 'Dividends, Distributions and Taxes' in the Statement of
Additional Information.
Because the markets for certain options and futures contracts in which the
Equity Funds will invest (including markets located in foreign countries) are
relatively new and still developing and may be subject to regulatory restraints,
each Equity Fund's ability to engage in transactions using such investments may
be limited.
Nonconvertible Fixed Income Securities Each Equity Fund may invest up to
35% of its total assets in investment grade fixed income securities. Investment
grade obligations are those obligations rated BBB or better by S&P or Baa or
better by Moody's in the case of long-term obligations and equivalently rated
obligations in the case of short-term obligations, or instruments not rated by
S&P or Moody's believed by the Adviser or Subadviser to be of comparable quality
to instruments rated investment grade by S&P or Moody's. Securities rated BBB by
S&P are regarded by S&P as having an adequate capacity to pay interest and repay
principal; whereas such securities normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely, in the opinion of S&P, to lead to a weakened capacity to pay interest
and repay principal for debt in this category than in higher rated categories.
Securities rated Baa by Moody's are considered by Moody's to be medium grade
obligations; they are neither highly protected nor poorly secured; interest
payments and principal security appear to be adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time; in the opinion of Moody's, they lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
8
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<PAGE>
Illiquid Investments Each Equity Fund may invest up to 15% of its net
assets in illiquid investments. In accordance with procedures adopted by the
Trustees, the Adviser and Subadviser determine the liquidity of an Equity Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid investments may
involve time-consuming negotiation and legal expenses, and it may be difficult
or impossible for an Equity Fund to sell them promptly at an acceptable price.
Borrowing Each Equity Fund may borrow up to one-third of the value of its
total assets from banks to increase its holdings of portfolio securities or for
other purposes. Under the Investment Company Act of 1940, as amended (the '1940
Act'), each Equity Fund is required to maintain continuous asset coverage of
300% with respect to such borrowings. Leveraging by means of borrowing may
exaggerate the effect of any increase or decrease in the value of portfolio
securities on an Equity Fund's net asset value, and money borrowed will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds. The
Adviser and Subadviser do not currently intend to engage in borrowing
transactions.
Other Risk Factors Each Equity Fund's net asset value will fluctuate,
reflecting changes in the market value of its portfolio positions.
There are certain risks involved in investing in foreign securities which
are the usual risks inherent in U.S. investments. These risks include those
resulting from fluctuations in currency exchange rates, revaluation of
currencies, future adverse political and economic developments and the possible
imposition of currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information concerning issuers and
the lack of uniform accounting, auditing and financial reporting standards or of
other regulatory practices and requirements comparable to those applicable to
domestic companies. Additionally, foreign securities may be adversely affected
by fluctuations in value of one or more currencies relative to the U.S. dollar.
Moreover, securities of many foreign companies may be less liquid and their
prices more volatile than those of securities of comparable U.S. companies. In
addition, with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other assets of a foreign issuer, including the
withholding of dividends. Foreign securities may be subject to foreign
government taxes that would reduce the net yield on such securities. To the
extent an Equity Fund invests in securities denominated or quoted in currencies
other than the U.S. dollar, changes in foreign currency exchange rates will
affect the value of portfolio securities and the appreciation or depreciation of
investments. Investment in foreign securities may also result in higher expenses
due to the cost of converting foreign currency into U.S. dollars, the payment of
fixed brokerage commissions on foreign exchanges, which generally are higher
than commissions on U.S. exchanges, and the expense of maintaining securities
with foreign custodians.
See 'Investment Objectives' in the Statement of Additional Information for
a more complete description of the Equity Funds' objectives, strategies,
instruments to be used in connection therewith and risks associated therewith.
MANAGEMENT
The Equity Funds' Board of Trustees (who, with its officers, are described
in the Statement of Additional Information) has overall responsibility for the
management of the Equity Funds.
Wood, Struthers & Winthrop Management Corp. (the 'Adviser'), a Delaware
corporation with principal offices at 277 Park Avenue, New York, New York 10172,
has been retained under an investment advisory
9
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<PAGE>
agreement to provide investment advice and to supervise the management and
investment programs of the Equity Funds, subject to the general supervision and
control of the Trustees of the Equity Funds. Pursuant to a Subadvisory Agreement
among the Equity Funds, the Adviser and AXA Asset Management Partenaires (the
'Subadviser'), a societe anonyme organized under the laws of France with
principal offices at 40, rue du Colisee, 75008 Paris, France, the Subadviser
furnishes investment advisory services in connection with the management of the
Equity Funds. The Adviser continues to have responsibility for all investment
advisory services pursuant to the investment advisory agreement and supervises
the Subadviser's performance of such services. The Equity Funds are a party to
the Subadvisory Agreement solely for purposes of indemnification and
termination.
The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette
Securities Corporation, which is a member of the New York Stock Exchange and a
wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, Inc. ('DLJ'), a major
international supplier of financial services. DLJ is an independently operated,
indirect subsidiary of The Equitable Companies Incorporated, a holding company
controlled by AXA, a member of a large French insurance group. AXA is indirectly
controlled by a group of five French mutual insurance companies.
The Adviser acts as investment adviser to the following investment
companies with aggregate assets of approximately $523 million:
<TABLE>
<CAPTION>
ASSETS AS OF
10/31/96
-------------
<S> <C>
Winthrop Aggressive Growth
Fund....................... $ 234,021,181
Winthrop Growth & Income
Fund....................... $ 120,348,116
Winthrop Growth Fund......... $ 71,272,801
Winthrop Fixed Income Fund... $ 58,017,352
Winthrop Municipal Trust
Fund....................... $ 39,282,583
-------------
$ 522,942,033
</TABLE>
The Subadviser is an indirect wholly-owned subsidiary of AXA.
The Subadviser does not currently act as an investment adviser to any other
investment companies.
Jean-Patrick Dubrun, an employee of the Subadviser, is the portfolio
manager of the International Equity Fund. Mr. Dubrun has been an asset manager
responsible for international equities for a subsidiary of AXA since 1987.
Robert de Guigne, an employee of the Subadviser, is the portfolio manager of the
Developing Markets Fund. Mr. de Guigne has been an asset manager responsible for
emerging market equities for a subsidiary of AXA since April 1996. Previously,
Mr. de Guigne was a portfolio manager for State Street Bank in Paris.
Under its Advisory Agreement with the Equity Funds, the Adviser provides
investment advisory services and order placement facilities for each of the
Equity Funds and pays all compensation of Trustees of the Equity Funds who are
affiliated persons of the Adviser. The Adviser or its affiliates also furnish
the Equity Funds management supervision and assistance and office facilities in
addition to administrative and other nonadvisory services for which it may be
reimbursed. The Equity Funds pay a fee to the Adviser at the following annual
percentage rates of the average daily net assets of each Equity Fund: 1.25% of
the first $100,000,000, 1.15% of the next $100,000,000 and 1.00% of net assets
in excess of $200,000,000. The advisory fees to be paid by the Equity Funds are
higher than those paid by most other mutual funds.
Under the Subadvisory Agreement, the Adviser pays the Subadviser for its
services, out of the Adviser's own resources, at the following annual percentage
rates of the average daily net assets of each Equity Fund: .625% of each Equity
Fund's first $100,000,000, .575% of the next $100,000,000 and .500% of the
balance.
Through April 30, 1997, the Adviser and Subadviser have agreed to
voluntarily reduce their management fees by the amount that Total Operating
Expenses exceed 2.15% and 2.90% of the average daily net assets of the Class A
and Class B shares, respectively, of each Equity Fund. Any such reduction will
be borne equally between the Adviser and Subadviser. After April 30, 1997, the
Adviser and Subadviser may, in their sole discretion, determine to discontinue
this practice with respect to either Equity Fund.
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<PAGE>
EXPENSES OF THE EQUITY FUNDS
GENERAL
In addition to the payments to the Adviser under the investment advisory
agreement described above, the Equity Funds pay the other expenses incurred in
the Equity 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 or Subadviser; costs of
maintenance of existence; and interest charges, taxes, brokerage fees, and
commissions.
The investment advisory agreement provides that the Adviser will reimburse
the Equity Funds up to the amount of its advisory fee for the expenses of any
Equity 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
Equity Fund are qualified for sale.
DISTRIBUTION AGREEMENT
Rule 12b-1 adopted by the SEC under the 1940 Act permits an investment
company directly or indirectly to pay expenses associated with the distribution
of its shares. Under SEC regulations, some of the payments described below to be
made by the Equity Funds could be deemed to be distribution expenses within the
meaning of such rule. Thus, pursuant to Rule 12b-1, the Equity Funds' Trustees,
including a majority of its disinterested Trustees, have adopted separate 12b-1
Plans for the expenses to be incurred in distributing each Fund's Class A shares
(the 'Rule 12b-1 Class A Plans') and Class B shares (the 'Rule 12b-1 Class B
Plans' and collectively, the 'Rule 12b-1 Plans'), and the Equity Funds have
entered into a Distribution Agreement (the 'Agreement') with Donaldson, Lufkin &
Jenrette Securities Corporation, the Equity 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 Equity Fund, the maximum amount payable under the Rule
12b-1 Class A Plans for distributing Class A shares is .25 of 1% of the average
daily net assets of the Class A shares during the year. Under the Rule 12b-1
Class B Plans, the maximum amount payable by an Equity Fund for distributing
Class B shares is 1% of the average daily net assets of the Class B shares
during the year consisting of (i) an asset-based sales charge of up to .75 of 1%
of the average daily net assets of the Class B shares and (ii) a service fee of
up to .25 of 1% of the average daily net assets of the Class B shares. The
Agreement but not the Rule 12b-1 Plans terminate in the event of assignment of
the Agreement.
With respect to sales of an Equity Fund's Class B shares through a
broker-dealer, the Distributor pays the broker-dealer a concession at the time
of sale. In addition, an ongoing maintenance fee may be paid to broker-dealers
on sales of both Class A shares and Class B shares. Pursuant to the Rule 12b-1
Plans, the Distributor is then reimbursed for such payments with amounts paid
from the assets of such Equity Fund. The payments to the broker-dealer, although
an Equity Fund expense which is paid by all shareholders, will only directly
benefit investors who purchase their shares through a broker-dealer rather than
from the Equity Funds. Broker-dealers who sell shares of the Equity Funds may
provide services to their customers that are not available to investors who
purchase their shares directly from the Equity Funds. Investors who purchase
their shares directly from the Equity Funds will pay a pro rata share of the
Equity 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 Equity Funds.
Amounts paid under the Rule 12b-1 Plans and the Agreement are used in their
entirety to reimburse the
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Distributor for actual expenses incurred to (i) promote the sale of shares of
each Equity Fund by, for example, paying for the preparation, printing and
distribution of prospectuses, sales brochures and other promotional materials
sent to prospective shareholders, by directly or indirectly purchasing radio,
television, newspaper and other advertising or by compensating the Distributor's
employees or employees of the Distributor's affiliates for their distribution
assistance, (ii) make payments to the Distributor to compensate broker-dealers
or other persons for providing distribution assistance and (iii) make payments
to compensate financial intermediaries for providing administrative and
accounting services with respect to the Equity Funds' shareholders. In addition
to the concession and maintenance fee paid to dealers or agents, the Distributor
will from time to time pay additional compensation to dealers or agents in
connection with the sale of shares. Such additional amounts may be utilized, in
whole or in part, in some cases together with other revenues of such dealers or
agents, to provide additional compensation to registered representatives of such
dealers or agents who sell shares of an Equity Fund. On some occasions, such
compensation will be conditioned on the sale of a specified minimum dollar
amount of the shares of the Equity 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 Equity Funds'
Trustees specifically authorize such payment. For the year ended October 31,
1996, the amounts eligible for payment in subsequent years were $125,483 and
$166,103 for the Developing Markets Fund and the International Equity Fund,
respectively, which represents .31% and .35% of the Fund's October 31, 1996 net
assets, respectively. For the fiscal year ended October 31, 1996, distribution
costs incurred for the Developing Markets Fund were $77,456 and $25,620 for
Class A and Class B shares, respectively, and $96,395 and $37,341 for Class A
and Class B shares, respectively, of the International Equity Fund.
PURCHASES, REDEMPTIONS AND SHAREHOLDER SERVICES
PURCHASES
Shares of each of the Equity Funds will be offered on a continuous basis
directly by the Equity Funds and by the Distributor, acting as agent for the
Equity Funds, at the respective net asset value per share determined as of the
close of the regular trading session of the New York Stock Exchange (the
'NYSE'), currently 4:00 p.m., New York City time, following receipt of a
purchase order in proper form plus, in the case of Class A shares of each Equity
Fund, an initial sales charge imposed at the time of purchase or subject to a
contingent deferred sales charge upon redemption in the case of Class B shares
of each Equity Fund and certain redemptions of Class A shares. The investor
should send a completed Share Purchase Application (found in this Prospectus)
and enclose a check in the amount of the initial investment to the Transfer
Agent, FPS Services, Inc., P.O. Box 61503, King of Prussia, PA 19406-0903, Attn:
Winthrop Mutual Funds. (For overnight courier deliveries, replace P.O. Box 61503
on the address label with 3200 Horizon Drive.) The account will be established
once the application and check are received in good order. Checks should be made
payable to 'Winthrop Mutual Funds.' Third party checks will not be accepted by
the Equity Funds or the Transfer Agent. To open a new account by wire, first
call Winthrop Opportunity Funds at 1-800-225-8011 (option #2) to obtain an
account number. A representative will instruct you to send a completed, signed
application to the Transfer Agent. Accounts cannot be opened without
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a completed, signed application and a fund account number. Contact your bank to
arrange a wire transfer to:
United Missouri Bank KC NA
ABA #10-10-00695
For: FPS Services, Inc.
A/C #98-7037-0719
Attn: Winthrop Mutual Funds
Your wire instructions must also include:
-- the name of the fund in which the money is to be invested,
-- your account number at the fund, and
-- the name(s) of the account holder(s).
Investors may also open accounts via their securities dealer.
The initial minimum investment in each Equity Fund is $250 and $25 for
subsequent investments in an Equity Fund. (For example, an investor wishing to
make an initial investment in shares of both Equity Funds would be required to
invest at least $250 in each Equity Fund.) Full and fractional shares will be
credited to an investor's account in the amount of the investment. Each Equity
Fund reserves the right to reject any initial or subsequent investment in its
sole discretion. Shareholder accounts established on behalf of the following
types of plans will be exempt from the Equity 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) savings incentive match
plans for employees (SIMPLE). With respect to Class B shares, an investor's
maximum investment in each Equity Fund is $250,000.
Existing shareholders wishing to purchase additional shares of an Equity
Fund may use an investment stub found at the bottom of the Equity Funds'
Shareholder Statement form or, if one is not available, they may send a check
payable to such Equity Fund (with Equity Fund Account information referenced)
directly to the Transfer Agent, FPS Services, Inc., P.O. Box 61503, King of
Prussia, PA 19406-0903, Attn: Winthrop Opportunity Funds. (For overnight courier
deliveries, replace P.O. Box 61503 on the address label with 3200 Horizon
Drive.)
Further information and assistance is available by contacting the Equity
Funds at the address or telephone number listed on the cover page of this
Prospectus.
REDEMPTIONS
Shares of the Equity Funds may be redeemed at a redemption price equal to
the net asset value per share, as next computed following the receipt in proper
form by the Equity Funds of shares tendered for redemption, less any applicable
contingent deferred sales charge in the case of Class B shares and certain
redemptions of Class A shares.
The value of a shareholder's shares on redemption may be more or less than
the cost of such shares to the shareholder, depending upon the value of an
Equity Fund's portfolio securities at the time of such redemption or repurchase.
(See 'Dividends, Distributions and Taxes' for a discussion of the tax
consequences of a redemption.)
To redeem shares, the registered owner or owners should forward a letter to
the Equity 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 the total value of the shares being redeemed exceeds $50,000 (before
deducting any applicable contingent deferred sales charge) or a redemption
request directs proceeds to a party other than the registered account owner(s),
the signature or signatures on the letter or the endorsement must be guaranteed
by an 'eligible guarantor institution' as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include banks,
brokers, dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations. A
broker-dealer guaranteeing signatures must be a member of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible
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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.
An Equity Fund may request in writing that a shareholder whose account in
an Equity Fund has an aggregate balance less than $250 increase his account to
at least that amount within 60 days. If the shareholder fails to do so, such
Equity Fund reserves the right to close such account and send the proceeds to
the shareholder. IRAs and other qualified retirement accounts are not subject to
mandatory redemption. An Equity Fund will not redeem involuntarily any
shareholder account with an aggregate balance of less than $250 based solely on
the market movement of such Equity 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, 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 an Equity Fund of its portfolio securities is not reasonably
practicable, or as a result of which it is not reasonably practicable for an
Equity Fund to determine the value of its net assets, or for such other period
as the SEC may by order permit for the protection of shareholders. Generally,
payment for redemptions will be made in cash or by check or wire.
For information concerning circumstances in which redemptions may be
effected through the delivery of in kind portfolio securities, see the Statement
of Additional Information.
INITIAL SALES CHARGE
Class A shares of each Equity Fund are offered at net asset value next
determined plus a sales charge, as follows:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
--------------------------------------
COMMISSION TO
DEALER/AGENT
AS A % OF AS A % OF AS A % OF
NET AMOUNT OFFERING OFFERING
AMOUNT PURCHASED INVESTED PRICE PRICE
- -------------------- ---------- --------- -------------
<S> <C> <C> <C>
Less than $50,000... 6.10% 5.75% 5.00%
$50,000 to less than
$100,000.......... 4.71 4.50 3.75
$100,000 to less
than $250,000..... 3.63 3.50 2.80
$250,000 to less
than $500,000..... 2.56 2.50 2.00
$500,000 to less
than $1,000,000... 2.04 2.00 1.60
$1,000,000 or
more.............. 0 0 0
</TABLE>
On purchases of $1,000,000 or more, there is no initial sales charge; the
Distributor may pay the dealer a fee of up to 1% as follows: 1% on purchases up
to $2 million, plus .80% on the next $1 million up to $3 million, .50% on the
next $47 million up to $50 million, .25% on purchases over $50 million.
SALES AT NET ASSET VALUE
The initial sales charge will be waived for the following shareholders or
transactions:
(1) investment advisory clients of the Adviser;
(2) officers and Trustees of the Equity Funds, directors or trustees
of other investment companies managed by the Adviser, officers, directors
and full-time employees of the Adviser and of its wholly-owned subsidiaries
or parent entities ('Related Entities'); or the spouse, siblings, children
or grandparents (collectively, 'relatives') of any such person, or any
trust or individual retirement account or self-employed retirement plan for
the benefit of any such person or relative; or the estate of any such
person or relative, if such sales are made for investment purposes (such
shares may not be resold except to the Equity Funds);
(3) certain employee benefit plans for employees of the Adviser and
Related Entities;
(4) an agent or broker of a dealer that has a sales agreement with the
Distributor, for their own
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account or an account of a relative of any such person, or any trust or
individual retirement account or self-employed retirement plan for the
benefit of any such person or relative; or the estate of any such person or
relative, if such sales are made for investment purposes (such shares may
not be resold except to the Equity Funds). To qualify, the Distributor or
Transfer Agent must be notified at the time of purchase;
(5) shares purchased by registered investment advisors on behalf of
fee-based accounts or by broker-dealers that have a sales agreement with
the Equity Funds and which shares have been purchased on behalf of wrap fee
client accounts and for which such registered investment advisors or
broker-dealers perform advisory, custodial, recordkeeping or other
services; and
(6) shares purchased for the following types of retirement plan
accounts: (i) retirement plans qualified under section 401(k) of the Code;
(ii) plans described in section 403(b) of the Code and (iii) deferred
compensation plans described in section 457 of the Code.
REDUCED SALES CHARGES
A reduction of sales charge rates in the tables above may be obtained for
participants in any of the following discount programs. These programs allow an
investor to receive a reduced offering price based upon the assets held or
pledged by the investor. The term 'investor' refers to (i) an individual, (ii)
an individual and spouse purchasing shares of the fund for their own account or
for the trust or custodial accounts of their minor children, or (iii) a
fiduciary purchasing for any one trust, estate or fiduciary account, including
employee benefit plans of a single employer.
LETTER OF INTENT
By initially investing $250 and submitting a Letter of Intent (the
'Letter') to the Equity Funds' Distributor or Transfer Agent, an investor may
purchase shares of the portfolio over a 13-month period at the reduced sales
charge applying to the aggregate amount of the intended purchases stated in the
Letter. The Letter may apply to purchases made up to 90 days before the date of
the Letter. However, the reduced sales charge would not apply to such purchases.
It is the investor's responsibility to notify the Transfer Agent at the time the
Letter is submitted that there are prior purchases that may apply.
5% of the total amount to be invested pursuant to the Letter will be held
in escrow by the Transfer Agent until the Letter is completed within the
13-month period. The 13-month period begins on the date of the earliest
purchase. If the intended investment is not completed, the Transfer Agent will
redeem an appropriate number of the escrowed shares in order to realize the
difference between the sales charge on the shares purchased at the reduced rate
and the sales charge applicable to the total shares purchased.
RIGHT OF ACCUMULATION
For investors who already have an account with the Equity Funds, reduced
sales charges based upon the Equity Funds' sales charge schedule are applicable
to subsequent purchases. The sales charge on each additional purchase is
determined by adding the current market value of the shares the investor
currently owns to the amount being invested. The Right of Accumulation is
illustrated by the following example: if a previous purchase currently valued in
the amount of $50,000 had been made subject to a sales charge and the shares are
still held, a current purchase of $50,000 will qualify for a 3.50% sales charge
(i.e. the sales charge on a $100,000 purchase). The reduced sales charge is
applicable only to current purchases. It is the investor's responsibility to
notify the Transfer Agent at the time of subsequent purchases that the account
is eligible for the Right of Accumulation.
To be entitled to a reduced sales charge based upon shares already owned,
the investor must notify the Distributor or the Transfer Agent at the time of
the purchase that he wishes to take advantage of such entitlement, and give the
numbers of his accounts, and those accounts held in the name of his spouse or
for minor children, the age of any such child and the specific relationship of
each such person to the investor.
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CONCURRENT PURCHASES
To qualify for a reduced sales charge, the investor may combine concurrent
purchases of shares purchased within the Equity Funds or shares of the Money
Funds or Focus Funds. For example, if the investor concurrently invests $25,000
in one of such funds and $25,000 in another, the sales charge would be reduced
to reflect a $50,000 purchase. In order to exercise the Concurrent Purchases
privilege the investor must notify the Distributor or Transfer Agent.
COMBINED PURCHASE PRIVILEGE
By combining the investor's holdings of shares within the Equity Funds or
with shares held in the Money Funds or Focus Funds, the investor can reduce the
initial sales charges on any additional purchases of Class A shares. The
investor may also use these combinations under a Letter of Intent. This allows
the investor to make purchases over a 13-month period and qualify the entire
purchase for a reduction in initial sales charges on Class A shares. A combined
purchase of $1,000,000 or more may trigger the payment of a dealer's commission
and the applicability of a Limited CDSC, as defined below.
REINSTATEMENT PRIVILEGE
The Reinstatement Privilege permits shareholders to reinvest the proceeds
of each Equity Fund's Class A shares redeemed, within 120 days from the
redemption, without an initial sales charge. It is the investor's responsibility
to notify the Transfer Agent in order to exercise the Reinstatement Privilege.
CONTINGENT DEFERRED SALES CHARGE
A shareholder can purchase Class B shares at net asset value without an
initial sales charge. However a shareholder may pay a Contingent Deferred Sales
Charge ('CDSC') if such shareholder redeems within four years after purchase.
The CDSC will be assessed on an amount equal to the lesser of the then current
net asset value or the original purchase price of the Class B shares being
redeemed. Accordingly, no Class B CDSC will be imposed on amounts representing
increases in net asset value above the initial purchase price of the shares
identified for redemption. In determining the Class B CDSC, Class B shares are
redeemed in the following order: (i) those acquired pursuant to reinvestment of
dividends or distributions, (ii) those held for over four years, and (iii) those
held longest during the four-year period.
Where the charge is imposed, the amount of the charge will depend on the
number of years since the shareholder made the purchase according to the table
below.
<TABLE>
<CAPTION>
YEAR SINCE PERCENTAGE
PURCHASE CONTINGENT
PAYMENT DEFERRED
WAS MADE SALES CHARGE
- --------------------------------- ------------
<S> <C>
First............................ 4%
Second........................... 3%
Third............................ 2%
Fourth........................... 1%
Fifth and thereafter............. 0%
</TABLE>
The amount of any contingent deferred sales charge will be paid by the
shareholder to and retained by the Distributor and will not offset the amounts
which may be paid to the Distributor under the Agreement. For federal income tax
purposes, the amount of the CDSC will reduce the gain or increase the loss, as
the case may be, on the amount recognized on the redemption of shares.
The contingent deferred sales charge will be waived for the following
shareholders or transactions:
(1) shares received pursuant to the exchange privilege which are
currently exempt from a contingent deferred sales charge;
(2) redemptions as a result of shareholder death or disability (as
defined in the Internal Revenue Code of 1986, as amended) (the 'Code');
(3) redemptions made pursuant to a Fund's systematic withdrawal plan
up to 1% monthly or 3% quarterly of the account's total market value
(excluding dividend reinvestments) not to exceed 10% of total market value
over any 12 month rolling period (systematic withdrawals elected on a
semi-annual or annual basis are not eligible for the waiver); and
(4) liquidations, distributions or loans from the following types of
retirement plan accounts: (i) retirement plans qualified under section
401(k) of the Code; (ii) plans described in section 403(b) of
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the Code and (iii) deferred compensation plans described in section 457 of
the Code.
Redemptions effected by the Equity Funds pursuant to their right to
liquidate a shareholder's account with a current net asset value of less than
$250 will not be subject to the contingent deferred sales charge.
CONTINGENT DEFERRED SALES CHARGE
FOR CLASS A SHARES
For purchases of Class A shares, a Limited Contingent Deferred Sales Charge
('Limited CDSC') will be imposed by the Equity Funds upon certain redemptions of
Class A shares (or shares into which such Class A shares are exchanged) made
within 12 months of purchase, if such purchases were made at net asset value and
triggered the payment by the Distributor of the dealer's commission described
above (i.e. purchases of $1,000,000 or more).
The Limited CDSC will be paid to the Distributor and will be equal to the
lesser of 1% of (i) the net asset value at the time of purchase of the Class A
shares being redeemed or (ii) the net asset value of such Class A shares at the
time of redemption. For purposes of this formula, the 'net asset value at the
time of purchase' will be the net asset value at purchase of the Class A shares
even if those shares are later exchanged and, in the event of an exchange of
Class A shares, the 'net asset value of such shares at the time of redemption'
will be the net asset value of the shares into which the Class A shares have
been exchanged.
Redemptions of such Class A shares held for more than 12 months will not be
subjected to the Limited CDSC and an exchange of such Class A shares will not
trigger the imposition of the Limited CDSC at the time of such exchange. The
period a shareholder owns shares into which Class A shares are exchanged will
count towards satisfying the 12-month holding period. The Equity Funds will
assess the Limited CDSC if such 12-month period is not satisfied irrespective of
whether the redemption triggering its payment is of the Class A shares of the
Equity Funds or shares into which the Class A shares have been exchanged.
In determining whether a Limited CDSC is payable, it will be assumed that
shares not subject to the Limited CDSC are the first redeemed followed by other
shares held for the longest period of time. The Limited CDSC will not be imposed
upon shares representing reinvested dividends or upon amounts representing share
appreciation. All investments made during a calendar month, regardless of when
during the month the investment occurred, will age one month on the last day of
that month and each subsequent month.
The Limited CDSC will be waived for the shareholders and transactions
described above in 'Contingent Deferred Sales Charge' and 'Sales at Net Asset
Value.'
AUTOMATIC CONVERSION OF CLASS B SHARES
Class B shares held for eight years after purchase will be automatically
converted into Class A shares. The Equity Funds will effect conversions of Class
B shares into Class A shares only four times in any calendar year, on the last
business day of the second full week of March, June, September and December
(each, a 'Conversion Date'). If the eighth anniversary after a purchase of Class
B shares falls on a Conversion Date, an investor's Class B shares will be
converted on that date. If the eighth anniversary occurs between Conversion
Dates, an investor's Class B shares will be converted on the next Conversion
Date after such anniversary. Consequently, if a shareholder's eighth anniversary
falls on the day after a Conversion Date, that shareholder will have to hold
Class B shares for as long as an additional three months after the eighth
anniversary after purchase before the shares will automatically convert into
Class A shares.
All such automatic conversions of Class B shares will constitute a tax-free
exchange for federal income tax purposes.
ADDITIONAL SHAREHOLDER SERVICES
Exchange Privilege Shares of one class of an Equity Fund can be exchanged
for the same class of another Equity Fund, shares of each of the Money Funds or
shares of the same class of the Focus Funds. Exchanges may be made by mail or
telephone (see 'Telephone Redemption and Exchange Privilege'). The Class B
Shares are subject to a contingent deferred sales
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charge which declines from 4% during the first year of investment to zero after
four years. The exchange privilege for the Money Funds and the Focus Funds are
available only in states in which shares of the relevant Money Fund or Focus
Fund may be legally sold. Prospectuses for each of the Focus Funds or the Money
Funds may be obtained by calling the telephone number listed on the cover page
of this Prospectus. An exchange is effected on the basis of each fund's relative
net asset value per share next computed following receipt of an order for such
exchange from the shareholder.
As of the period prior to March 18, 1997, shares of the Equity Funds were
eligible for exchange into shares of the Alliance Government Reserves or
Alliance Municipal Trust (collectively, the 'Alliance Money Market Funds'). The
Alliance Money Market Funds are no-load money market funds which retain Alliance
Capital Management Company, Inc. as investment adviser. After March 18, 1997,
the Alliance Money Market Funds will no longer be eligible for exchange pursuant
to the Equity Fund's exchange privilege. Alliance Money Market Fund shares,
however, maintained within an account previously established under the Equity
Fund's exchange privilege may be exchanged into a Money Fund or back into an
Equity Fund or Focus Fund, provided that the exchange is directed to the same
class of shares previously held when the initial exchange was made.
The Equity Funds impose no separate charge for exchanges. A shareholder
will not be assessed any contingent deferred sales charge at the time of an
exchange between the Equity Funds, Focus Funds or Money Funds. Any applicable
contingent deferred sales charge will be assessed when the shareholder redeems
shares of an Equity Fund, Focus Fund or Money Fund. The period of time during
which a shareholder owns shares in any of the Equity Funds, Money Funds or Focus
Funds will be used to determine the applicable contingent deferred sales charge.
A shareholder will pay a higher 12b-1 Fee when exchanging Class A shares of the
Equity Funds (.25 of 1% annually) for Class A shares of the Focus Funds (.30 of
1% annually).
The exchange privilege is intended to provide shareholders with a
convenient way to switch their investments when their objectives or perceived
market conditions suggest a change. The 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 Equity Funds,
Money Funds or Focus Funds. Shareholders who engage in such frequent transaction
may be prohibited from or restricted in placing future exchange orders.
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
a gain or loss.
Exchanges of shares are subject to the other requirements of the Fund into
which exchanges are made. Annual fund operating expenses for such Fund may be
higher and a sales charge differential may apply.
Automatic Monthly Investment Plan A shareholder may elect on the Share
Purchase Application to make additional investments in an Equity Fund
automatically, by authorizing the Equity 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 to the Equity 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 Equity Funds.
Automatic Exchange Plan. Shareholders may authorize Winthrop to exchange an
amount established in advance automatically for shares of the other Equity Fund
or shares of the Money Funds or Focus Funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum exchange into
another Winthrop Fund under the Automatic Exchange Plan is $50. These exchanges
are subject to the terms of the Exchange Privilege described above (see
'Additional Shareholder Services -- Exchange Privilege').
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Dividend Direction Option A shareholder may elect on the Share Purchase
Application to have his or her dividends paid to another individual or directed
for reinvestment within the same class of the other Equity Fund or either Focus
Fund, or into the Money Funds, provided that an existing account in such other
fund is maintained by the shareholder.
Systematic Withdrawal Plan Any shareholder who owns or purchases shares of
an Equity 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 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. Systematic withdrawals elected on a
semi-annual or annual basis are not eligible for the waiver. See 'Purchases,
Redemptions and Shareholder Services.'
Telephone Redemption and Exchange Privilege A shareholder is eligible to
withdraw up to $50,000 per day from such shareholder's account, via telephone
orders (toll free) (800) 225-8011 given to the Equity Funds by the shareholder
or the shareholder's investment dealer of record. A shareholder may also
transfer assets via telephone from such shareholder's account to the same class
of another Equity Fund, shares of the Money Funds or shares of the same class of
the Focus Funds. Each Equity Fund will employ reasonable procedures to confirm
that instructions communicated by telephone are genuine. Such procedures include
the requirement that redemption or transfer orders must include the account name
and the account number as registered with the 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 Equity Funds, the Adviser, the Subadviser, the Focus Funds,
the Money 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 Equity Funds' Transfer Agent at the address listed in the back of this
Prospectus.
Timing of Redemptions and Exchanges If a redemption or transfer order for
an Equity Fund is received on an Equity Fund Business Day prior to the close of
the regular session of the New York Stock Exchange, which is generally 4:00 p.m.
New York City time, the proceeds will be transferred as soon as possible,
normally on the next Equity Fund Business Day, and shares of each Equity Fund
will be priced that Equity Fund Business Day. If the redemption or transfer
order is received after the close of the regular session of the New York Stock
Exchange, shares of each Equity Fund will be priced the next Equity Fund
Business Day and the proceeds will be transferred the next Equity Fund Business
Day after pricing. A shareholder also may request that proceeds be sent by check
to a designated bank. Transfers are made without any charge by the Equity Funds.
Purchases by check may not be redeemed by an Equity Fund until after a
reasonable time necessary to verify that the purchase check has been paid
(approximately ten Equity 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 Equity Fund
Business Days after the purchase by wire. Bank acknowledgment of payment
initialled by the shareholder may shorten delays.
Additional information concerning these Additional Shareholder Services may
be obtained by contacting the Equity Funds' Transfer Agent at the telephone
number listed on the cover page of this Prospectus.
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NET ASSET VALUE
The net asset value per share for purchases and redemptions of shares of
each Equity 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 Equity
Funds' Agreement and Declaration of Trust and By-Laws, net asset value for each
Equity Fund is determined separately for each class by dividing the value of
each class's net assets allocable to such class, less its liabilities, by the
total number of each class's shares then outstanding. For net asset value
determination purposes, the value of a foreign security is determined as of the
close of trading on the foreign exchange on which it is traded and that value is
then converted into U.S. dollars at the foreign exchange rate in effect as of
the close of trading (4:00 p.m.) London time, on the day the value of the
foreign security is determined. As a result, to the extent an Equity Fund holds
securities quoted or denominated in a foreign currency, fluctuations in the
value of such currencies in relation to the U.S. dollar will affect the net
asset value of such Equity Fund's shares even though there has not been any
change in the value of such securities as quoted in the foreign currency. For
purposes of this computation, the securities in each Equity Fund's portfolio
are, except as described below, valued at their current market value determined
on the basis of market quotations or, if such quotations are not readily
available, such other method as the Trustees believe would accurately reflect
their fair value.
Foreign securities trading may not take place on all days on which the NYSE
is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Accordingly, the determination of the net asset
value of an Equity Fund's shares may not take place contemporaneously with the
determination of the prices of investments held by such Equity Fund. Events
affecting the values of investments that occur between the time their prices are
determined and 4:00 P.M. on each day that the NYSE is open will not be reflected
in the net asset value of an Equity Fund's shares unless the Adviser or
Subadviser, under the supervision of such Equity Fund's Board of Trustees,
determines that the particular event would materially affect net asset value. As
a result, the net asset value of an Equity Fund's shares may be significantly
affected by such trading on days when a shareholder has no access to such Equity
Fund.
Short-term securities which mature in more than 60 days are valued based on
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost, if their original maturity was 60 days or less, or
by amortizing their value on the 61st day prior to maturity, if their original
term to maturity exceeded 60 days where it has been determined in good faith
under procedures approved by the Board of Trustees that amortized cost equals
fair value. All other assets are valued at fair value as determined in good
faith under such valuation procedures approved by the Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Equity Funds intend to distribute to shareholders of the Equity Funds
on an annual basis, substantially all of the net investment income, if any, for
each respective Equity Fund for such period.
Capital gains (short-term and long-term), if any, realized by each of the
Equity Funds during their fiscal year will be distributed to the respective
shareholders shortly after the end of such fiscal year.
Each income dividend and capital gains distribution, if any, declared by
the Equity Funds on the outstanding shares of any Equity Fund will, at the
election of each shareholder, be paid in cash or reinvested in additional full
and fractional shares of that Equity Fund. Such distributions, to the extent
they would otherwise be taxable, will be taxable to shareholders regardless of
whether paid in cash or reinvested in additional shares. An election to receive
dividends
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and distributions in cash or shares is made at the time of the initial
investment and may be changed by notice received by the Equity Funds from a
shareholder or the shareholder's investment dealer of record at least 30 days
prior to the record date for a particular dividend or distribution on shares of
each Equity Fund. There is no charge in connection with the reinvestment of
dividends and capital gains distributions.
There is no fixed dividend rate and there can be no assurance that an
Equity Fund will pay any dividends or realize any gains. The amount of any
dividend or distribution paid by each Equity Fund depends upon the realization
by the Equity Fund of income and capital gains from that Fund's investments. All
dividends and distributions will be made to shareholders of an Equity Fund
solely from assets of that Equity Fund.
Payment (either in cash or in portfolio securities) received by a
shareholder upon redemption of his shares, assuming the shares constitute
capital assets in his hands, will result in long-term or short-term capital
gains (or losses) depending upon the shareholder's holding period and basis in
respect of shares redeemed. Any loss realized by a shareholder on the sale of
Equity Fund shares held for six months or less will be treated for federal
income tax purposes as a long-term capital loss to the extent of any
distributions of long-term capital gains received by the shareholder with
respect to such shares. Note that any loss realized on the sale of shares will
be disallowed to the extent the shares disposed of are replaced within a period
of 61 days beginning 30 days before the disposition of such shares. In such
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
Distributions may be subject to certain state and local taxes. If
distributions had been declared in the year just ended, the Equity Funds will
send you tax information (by January 31) stating amount and type of all
distributions.
Each Equity Fund intends to continue 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 Equity 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 Winthrop Funds selected. Persons desiring information concerning
these plans should write or telephone the Equity Funds or the Equity Funds'
Transfer Agent. While the Equity 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 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 Equity 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.
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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.
SAVINGS INCENTIVE MATCH PLAN FOR EMPLOYEES ('SIMPLE') -- SIMPLE IRA AND SIMPLE
401(K)
Offers employers with 100 or fewer eligible employees the ability to
establish a retirement plan that permits employee contributions. An employer may
also elect to make additional contributions to these Plans. It is anticipated
that these forms of retirement plans will be available for investment in the
Equity Funds shortly after the date of this Prospectus. Please telephone the
Equity Funds' shareholder servicing representatives at (800) 225-8011 for more
information.
EMPLOYER-SPONSORED RETIREMENT PLANS
The Adviser has a prototype retirement plan available which provides for
investment of plan assets in shares of any one or more of the Opportunity or
Focus Funds. The prototype retirement plan may be used by sole proprietors and
partnerships as well as corporations to establish a tax qualified profit sharing
plan or money purchase pension plan (or both) of their own.
Under the prototype retirement plan, an employer may make annual
tax-deductible contributions for allocation to the accounts of the plan
participants to the maximum extent permitted by the federal tax law for the type
of plan implemented. The Adviser has received favorable opinion letters from the
IRS that the prototype retirement plan is acceptable by qualified employers.
SELF-DIRECTED RETIREMENT PLANS
Shares of the Equity Funds may be suitable for self-directed IRA accounts
and prototype retirement plans such as those developed by Donaldson, Lufkin &
Jenrette Securities Corporation, an affiliate of the Adviser and Subadviser and
the Equity 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 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, two series in
each of the Equity Funds and Money Funds. Shares of each Equity Fund are divided
into Class A and Class B shares of each Equity Fund and are normally entitled to
one vote (with proportional voting for fractional shares) for all purposes.
Generally, shares of both Equity Funds vote as a single series on matters that
affect all Equity Funds in substantially the same manner. As to matters
affecting each Equity Fund separately, such as approval of the investment
advisory agreement, shares of each Equity Fund would vote as separate series.
With respect to each Equity Fund, each class is identical in all respects except
that (i) each class bears different distribution services fees, (ii) each class
has exclusive voting rights with respect to its Rule 12b-1 Plan and (iii) each
class has a different exchange privilege. The Equity 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 Equity 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 an Equity Fund are freely transferable, are entitled to dividends
as determined by the Trustees
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and, in liquidation of an Equity Fund are entitled to receive the net assets of
that Equity Fund. Since Class B shares of each Equity Fund are subject to
greater distribution services fees than Class A shares of the Equity Fund, the
liquidation proceeds to shareholders of Class B shares are likely to be less
than the proceeds to Class A shareholders. Shareholders have no preemptive
rights.
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of the
Adviser and Subadviser, serves as the Equity Funds' Distributor.
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT
Citibank, N.A. acts as Custodian for the securities and cash of the Equity
Funds, but plays no part in deciding on the purchase or sale of portfolio
securities. FPS Services, Inc. acts as dividend disbursing agent, registrar and
transfer agent.
INFORMATION FOR SHAREHOLDERS
Any shareholder inquiry regarding the Equity Funds or the status of the
shareholder's account can be made to the Equity Funds by mail or by telephone at
the address or telephone number listed in front of this Prospectus or to FPS
Services, Inc. at the address on the cover of this Prospectus.
Following any purchase or redemption, a shareholder will receive a
statement confirming the transaction. Annual audited and semi-annual unaudited
financial statements, which include a list of investments held by the Equity
Funds, will be sent to shareholders.
23
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WINTHROP OPPORTUNITY FUNDS
SHARE PURCHASE APPLICATION
<TABLE>
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WINTHROP OPPORTUNITY FUNDS FOR ASSISTANCE IN FILLING OUT THIS APPLICATION CALL:
C/O FPS SERVICES, INC. (800) 225-8011 (OPTION #2)
P.O. BOX 61503
(3200 HORIZON DR.)
KING OF PRUSSIA, PA 19406-0903
(1) TYPE OF ACCOUNT DATE __________________, 199_______
[ ] New Account [ ] Existing Account #________________________________
(2) INVESTMENT SELECTION -- Please indicate the dollar amount you wish to invest
in each Fund and make checks payable to Winthrop Mutual Funds. Please select
the class of shares you wish to purchase. If no class of shares is selected,
Class A shares will be purchased.
WINTHROP FUND NAME AMOUNT CLASS OF SHARES (FUND NUMBER)
------------------ ------ -----------------------------
Developing Markets Fund $__________ [ ] Class A (540)
International Equity Fund (front-end sales charge)
Total [ ] Class B (640)
$___________ (contingent deferred sales charge)
[ ] Class A (541)
(front-end sales charge)
$___________ [ ] Class B (641)
(contingent deferred sales charge)
Initial Investment Minimum per Fund $250; Subsequent Class B Shares are not available for purchases of
Investment Minimum $25. Minimums are waived for SEP, $250,000 or more.
SIMPLE, 401K, 403B and 457 plans.
(3) SHARE REGISTRATION
[ ] Individual______________________________________ __________________________________________
Name *Joint Owner, if any
[ ] Gift to Minor______________________________as custodian for_________________________________
Name of Custodian Name of minor
under the ________________Uniform Gift to Minors Act. (Reference social security # of minor in space
State provided below)
[ ] Other________________________________________________________________________________________
(Name of corporation, organization, trusts, etc.)
Address___________________________________________________________________________________________
Street
___________________________________________________________________________________________
City State Zip Code
Phone Number (_____) ____________________Social Security or Taxpayer ID #**_______________________
* In the event of co-owners, a joint tenancy with right of survivorship will be assumed unless otherwise
indicated.
** Required to open an account.
(4) CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER -- Required by
federal tax law to avoid 31% backup withholding: By signing, I
certify under penalties of perjury that the social security or
taxpayer identification number entered above is correct and that I
have not been notified by the IRS that I am subject to backup
withholding unless I have checked the box below.
[ ] I am subject to backup withholding.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED
TO AVOID BACKUP WITHHOLDING.
________________________________ __________________________________
Signature Date
(If an institution, please include documentation establishing
authorized signatories).
(5) SHAREHOLDER AUTHORIZATION (MUST BE SIGNED BY APPLICANT)
TELEPHONE EXCHANGE PRIVILEGE -- I understand that unless I have
checked the box below, this privilege will automatically apply.
(NOTE: Telephone exchanges may only be processed between accounts
that have identical registrations)
[ ] I do not elect the telephone exchange privilege.
TELEPHONE REDEMPTION PRIVILEGE -- I hereby authorize the Funds or
its transfer agent to effect the redemption of Fund shares for my
account according to my telephone instructions or telephone
instructions from my Broker/Agent as follows:
[ ] Mail Redemption proceeds to the name and address in which my
Fund Account is registered.
[ ] Deposit via ACH to the commercial bank referenced in Section
10.
[ ] Wire Redemption proceeds to the Bank referenced in Section 10
and charge my Fund account the applicable wire fee.
(NOTE: The maximum telephone redemption amount is $50,000.
Telephone redemption checks will only be mailed to the name and
address of record; and the address must have no change within the
last 30 days).
By selecting any of the above telephone privileges, I agree that
neither the Winthrop Opportunity Funds, the Adviser, the
Subadviser, the Winthrop 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 Funds reasonably believe to
be genuine, and that neither the Funds nor any such party will be
responsible for the authenticity of such telephone instructions. I
understand that any or all of these privileges may be discontinued
by me or the Funds at any time. I understand and agree that the
Funds reserve the right to refuse any telephone instructions and
that my investment dealer or agent reserves the right to refuse to
issue any telephone instructions I may request.
I am of legal age and capacity and have received and read the
Prospectus and agree to its terms.
The person(s), if any, signing on behalf of the investor (i.e.
corporation, organization, trust, etc.) represent and warrant that
they are authorized to sign this application and purchase, redeem,
or exchange shares on behalf of such investor.
________________________________ __________________________________
Signature Date
________________________________ __________________________________
Signature Date
(6) FOR DEALER USE ONLY -- We guarantee the signature(s) set forth in Section 5, as
well as the legal capacity of the shareholder.
Dealer Name____________________________________ Dealer No.________________________________
Branch Office Name_____________________________ Branch Office No._________________________
Branch Office Address______________________________________________________________________
Representative's Name__________________________ Representative's No.______________________
Representative's Phone No. (_____) ___________ Authorized Signature_______________________
------------
FOR DIVIDEND INSTRUCTIONS AND OTHER ACCOUNT OPTIONS, PLEASE
COMPLETE THE REVERSE SIDE OF THIS PURCHASE APPLICATION.
</TABLE>
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WINTHROP OPPORTUNITY FUNDS
SHARE PURCHASE APPLICATION
<TABLE>
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(7) DIVIDEND OPTIONS
DIVIDEND INSTRUCTIONS -- If no instructions are given, all
distributions will be reinvested.
INCOME DIVIDENDS: (select one)
[ ] Reinvest dividends [ ] Pay dividends in cash [ ] Use Dividend Direction Option
CAPITAL GAINS DISTRIBUTION: (select one)
[ ] Reinvest capital gains [ ] Pay capital gains in cash [ ] Use Dividend Direction Option
[ ] DIVIDEND DIRECTION OPTION -- I/we hereby authorize and request that
my/our distributions be either (a) paid to the person and/or address
designated below or (b) reinvested into my/our account which we
currently maintain in another Winthrop Fund:
a) Name _________________________________________ b) Winthrop Fund ________________________
Account or Policy #___________________________ Existing Acct. No. ______________________
(if applicable)
Address________________________________________ Existing Share Class: [ ] A or [ ] B (check one)*
City, State, Zip_______________________________ * Dividends directed between Funds must be within the
same share class.
(NOTE: Dividend checks that are returned 'not forwardable' will be reinvested in
additional shares of the Fund at the current net asset value on the date the check is
received.)
(8) [ ] AUTOMATIC MONTHLY INVESTMENT PLAN* -- I/we hereby authorize you
to draw on my/our bank account an amount of $ ($25 minimum)
for an investment in the Funds beginning on the 10th, 15th or 20th
(circle one) day and continuing on that same day each month.
_____________________________________ ____________________________________
Fund Name(s) Bank Account Number
____________________________________________________________________________
Branch Name and Address of Bank
The Fund requires signatures of bank account owners exactly as they appear on bank records:
______________________________ ________ ________________________ _________
Individual Account Owner Date Joint Account Owner Date
*(ATTACH VOIDED CHECK -- Include a blank check from the bank account from which your investment will be made. Write
'VOID' across the face of the check, and attach it to this form.)
(9) AUTOMATIC EXCHANGE PLAN OR SYSTEMATIC CASH WITHDRAWAL PLAN -- ($50 minimum). I/we hereby request that Winthrop or
any transfer agent of Winthrop (as their agent) make regular exchanges and/or withdrawals beginning the 5th, 10th,
15th or 25th (circle one) day of ________ 19__.
(MONTH)
CHECK THE BOX(ES) BELOW INDICATING THE PLAN YOU WOULD LIKE TO PARTICIPATE IN:
[ ] AUTOMATIC EXCHANGE PLAN
FROM* TO*
Class** Frequency
Fund Name Fund Name (Circle One) Amount (Circle One)'D'
--------- --------- ------------ ------ ---------------
_________________________ ____________________________________ A or B __________________ M Q S A
_________________________ ____________________________________ A or B __________________ M Q S A
_________________________ ____________________________________ A or B __________________ M Q S A
_________________________ ____________________________________ A or B __________________ M Q S A
* Your automatic exchange selection must be between Winthrop Funds within the same share class unless your exchange
is to be directed to a Winthrop Money Fund in which case class designation will not be required.
`D' Monthly, Quarterly, Semi-Annual, or Annual processing.
Please Note: Winthrop's Automatic Exchange Plan may be directed to multiple funds within the Winthrop Focus Funds or
Winthrop Opportunity Funds. Automatic Exchanges will only be available for participating accounts with identical
registrations.
[ ]SYSTEMATIC CASH WITHDRAWAL PLAN -- (Minimum initial purchase
$10,000).
FUND NAME AMOUNT
--------- ------
_____________________ _____________________ [ ] monthly [ ] quarterly [ ] semi-annually [ ] annually
_____________________ _____________________ [ ] monthly [ ] quarterly [ ] semi-annually [ ] annually
Payments under this plan should be sent:
[ ] by check to the name and address in which my/our fund account
is registered.
[ ] by automated clearing house 'ACH' deposits to my Bank and
account referenced in Section 10.
[ ] by wire to the Bank and account referenced in Section 10 and
charge my Money Fund account the applicable wire fee.
[ ] by check to the Special Payee referenced below:
Name of Payee__________________________ Account or Policy #____________________
(if applicable)
Address_________________________________________________________________________
(NOTE: Systematic withdrawals elected on a semi-annual or annual basis are not
eligible for Winthrop's CDSC waiver.)
(10) BANK ACCOUNT INFORMATION* (To be completed if applicable under
Sections 5 or 9).
----------------------------------------- -------------------------------------
Name of Bank Branch (if applicable)
----------------------------------------- -------------------------------------
Name in which Bank Account is Established Bank Account Number
*(ATTACH VOIDED CHECK -- Include a blank check from your bank
account. Write 'VOID' across the face of the check, and attach it
to this form).
(11) REDUCED SALES CHARGES (Class A only) -- If you or your spouse or
minor children own shares in other Winthrop Funds, you may be
eligible for a reduced sales charge. If applicable, please complete
the sections below and indicate the accounts to be considered.
RIGHT OF ACCUMULATION OR CONCURRENT PURCHASES
[ ] I qualify for Right of Accumulation or Concurrent Purchase
privileges with the account(s) listed below.
_______________ ________________________ ___________________ _____________________
Fund Name Account Number Fund Name Account Number
_______________ ________________________ ___________________ _____________________
Fund Name Account Number Fund Name Account Number
(NOTE: When qualifying for the Concurrent Purchase privilege, Account Number reference is not
required for new accounts).
LETTER OF INTENT
[ ] I agree to the terms of the Letter of Intent set forth in the Prospectus (including the
escrowing of shares.) Although I am not obligated to do so, it is my intention to invest over a
thirteen-month period in shares of one or more Winthrop Funds in an aggregate amount at least
equal to:
[ ] $50,000 [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
If the full amount indicated is not purchased within 13 months, I understand an additional sales
charge must be paid from my accounts.
(12) CONSOLIDATED ACCOUNT STATEMENTS -- If you prefer to receive one
quarterly combined statement instead of individual account
statements please reference the Winthrop Fund name (include share
class) and account numbers that you would like consolidated.
___________________________________ ________________________________________
Fund Name/Account Number Fund Name/Account Number
____________________________________ ________________________________________
Fund Name/Account Number Fund Name/Account Number
</TABLE>
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WINTHROP OPPORTUNITY FUNDS
(800) 225-8011
ADVISER
Wood Struthers & Winthrop Management Corp.
277 Park Avenue, New York, New York 10172
SUBADVISER
AXA Asset Management Partenaires
40 rue du Colisee, 75008 Paris, France
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue, New York, New York 10172
INDEPENDENT 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.
P.O. Box 61503
(3200 Horizon Drive)
King of Prussia, PA 19406-0903
COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue, New York, New York 10022
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Equity Fund Expenses 2
Financial Highlights 4
Introduction 5
Investment Objectives, Policies and Risk
Considerations 5
Management 9
Expenses of the Equity Funds 11
Purchases, Redemptions and Shareholder
Services 12
Net Asset Value 20
Dividends, Distributions and Taxes 20
Retirement Plans 21
General Information 22
</TABLE>
This Prospectus does not constitute an offering in any
state in which such offering may not lawfully be made.
[LOGO]
WOF-1
WINTHROP
OPPORTUNITY
FUNDS
---------------------------
WINTHROP DEVELOPING
MARKETS FUND
WINTHROP INTERNATIONAL
EQUITY FUND
PROSPECTUS
JANUARY 24, 1997
<PAGE>
<PAGE>
WINTHROP OPPORTUNITY FUNDS
277 PARK AVENUE, NEW YORK, NEW YORK 10172
TOLL FREE (800) 255-8011
STATEMENT OF ADDITIONAL INFORMATION
January 24, 1997
This Statement of Additional Information relates to the Winthrop Developing
Markets Fund (the 'Developing Markets Fund') and the Winthrop International
Equity Fund (the 'International Equity Fund' and together with the Developing
Markets Fund, the 'Equity Funds'), each of which is a series of the Winthrop
Opportunity Funds (the 'Opportunity Funds'). The Statement of Additional
Information is not a prospectus and should be read in conjunction with the
Equity Funds' current Prospectus dated January 24, 1997, as supplemented from
time to time, which is incorporated herein by reference. A copy of the
Prospectus may be obtained by contacting the Equity Funds at the address or
telephone number listed above.
TABLE OF CONTENTS
<TABLE>
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PAGE
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Investment Policies and Restrictions............................................................................. 1
Management....................................................................................................... 7
Expenses of the Equity Funds..................................................................................... 9
Purchases, Redemptions, Exchanges and Systematic Withdrawal Plan................................................. 11
Net Asset Value.................................................................................................. 13
Dividends, Distributions and Taxes............................................................................... 14
Portfolio Transactions........................................................................................... 17
Portfolio Turnover............................................................................................... 19
Investment Performance Information............................................................................... 19
Shares of Beneficial Interest.................................................................................... 20
General Information.............................................................................................. 21
Appendix -- Securities Ratings................................................................................... A-1
</TABLE>
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INVESTMENT POLICIES AND RESTRICTIONS
The following investment policies and restrictions supplement and should be
read in conjunction with the information set forth under the heading 'Investment
Objectives, Policies and Risk Considerations' in the Equity Funds' Prospectus.
Except as noted in the Prospectus, each Equity Fund's investment policies are
not fundamental and may be changed by the Trustees of the Funds without
shareholder approval; however, shareholders will be notified prior to a
significant change in such policies. Each Equity Fund's fundamental investment
restrictions may not be changed without shareholder approval as defined in
'Fundamental Investment Restrictions' in this Statement of Additional
Information.
It is the policy of the Developing Markets Fund to seek long-term growth of
capital by investing primarily in common stocks and other equity securities from
developing countries; it is the policy of the International Equity Fund to seek
long-term growth of capital by investing primarily in common stocks and other
equity securities from established markets outside the United States. In
addition, each Equity Fund may invest in any of the securities described below.
Depositary Receipts. The Equity Funds may purchase sponsored or unsponsored
ADRs, EDRs and GDRs (collectively, 'Depositary Receipts'). ADRs are American
Depositary Receipts typically issued by a U.S. bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs and GDRs are Depositary Receipts typically issued by foreign banks or trust
companies, although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either a foreign or a
United States corporation. Generally, Depositary Receipts in registered form are
designed for use in the U.S. securities market and Depositary Receipts in bearer
form are designed for use in securities markets outside the United States.
Depositary Receipts may not necessarily be denominated in the same currency as
the underlying securities into which they may be converted. Depositary Receipts
may be issued pursuant to sponsored or unsponsored programs. In sponsored
programs, an issuer has made arrangements to have its securities traded in the
form of Depositary Receipts. In unsponsored programs, the issuer may not be
directly involved in the creation of the program. Although regulatory
requirements with respect to sponsored and unsponsored programs are generally
similar, in some cases it may be easier to obtain financial information from an
issuer that has participated in the creation of a sponsored program.
Accordingly, there may be less information available regarding issuers of
securities underlying unsponsored programs and there may not be a correlation
between such information and the market value of the Depositary Receipts. For
purposes of each Equity Fund's investment policies, an Equity Fund's investments
in Depositary Receipts will be deemed to be investments in the underlying
securities.
Convertible Securities. A convertible security is a bond or preferred stock
which may be converted at a stated price within a specified period of time into
a certain quantity of the common stock of the same or different issuer.
Convertible securities are senior to common stocks in a corporation's capital
structure, but are usually subordinated to similar nonconvertible securities.
While providing a fixed income stream (generally higher in yield than the income
stream from common stocks but lower than that afforded by a similar
nonconvertible fixed income security), a convertible security also affords an
investor the opportunity, through its conversion feature, to participate in the
capital appreciation dependent upon a market price advance in the underlying
common stock. Each Equity Fund may invest up to 25% of its assets in foreign
convertible securities. Wood, Struthers & Winthrop Management Corp. (the
'Adviser') and AXA Asset Management Partenaires (the 'Subadviser') currently do
not intend to invest over 5% of each Equity Fund's assets in convertible
securities rated below investment grade.
The market value of a convertible security is at least the higher of its
'investment value' (i.e., its value as a fixed-income security) or its
'conversion value' (i.e., its value when converted into its underlying common
stock). As a fixed-income security, a convertible security tends to increase in
market value when interest rates decline and tends to decrease in value when
interest rates rise. However, the price of a convertible security is also
influenced by the market
1
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value of the underlying security. The price of a convertible security tends to
increase as the market value of the underlying stock rises, whereas it tends to
decrease as the market value of the underlying stock declines. While no
securities investment is without some risk, investments in convertible
securities generally entail less risk than investments in the common stock of
the same issuer.
Nonconvertible Fixed Income Securities. Each Equity Fund may invest up to
35% of its total assets in investment grade fixed income securities. Investment
grade obligations are those obligations rated BBB or better by Standard and
Poor's Ratings Group ('S&P') or Baa or better by Moody's Investor Service
('Moody's') in the case of long-term obligations and equivalently rated
obligations in the case of short-term obligations, or unrated instruments
believed by the Adviser or Subadviser to be of comparable quality to such rated
instruments. Securities rated BBB by S&P are regarded by S&P as having an
adequate capacity to pay interest and repay principal; whereas such securities
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely, in the opinion of S&P, to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories. Securities rated Baa by Moody's are considered
by Moody's to be medium grade obligations; they are neither highly protected nor
poorly secured; interest payments and principal security appear to be adequate
for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time; in the opinion of
Moody's, they lack outstanding investment characteristics and in fact have
speculative characteristics as well. Fixed income securities in which the Equity
Funds may invest include asset and mortgage backed securities. Prepayments of
principal may be made at any time on the obligations underlying asset and
mortgage backed securities and are passed on to the holders of the assets and
mortgage backed securities. As a result, if an Equity Fund purchases such a
security at a premium, faster than expected prepayments will reduce and slower
than expected prepayments will increase yield to maturity. Conversely, if an
Equity Fund purchases these securities at a discount, faster than expected
prepayments will increase, while slower than expected prepayments will reduce,
yield to maturity. For a more complete description of Moody's and S&P's ratings,
see the Appendix to this Statement of Additional Information. The foregoing
investment grade limitation applies only at the time of initial investment and
an Equity Fund may determine to retain in its portfolio securities the issuers
of which have had their credit characteristics downgraded.
Options. The Equity Funds may purchase and sell call and put options. A
call option gives the purchaser, in exchange for a premium paid, the right for a
specified period of time to purchase the securities or currency subject to the
option at a specified price (the exercise price or strike price). The writer, or
seller, of a call option, in return for the premium, has the obligation, upon
exercise of the option, to deliver, depending upon the terms of the option
contract, the underlying securities or a specified amount of cash to the
purchaser upon receipt of the exercise price. When an Equity Fund writes a call
option, that Equity Fund gives up the potential for gain on the underlying
securities or currency in excess of the exercise price of the option during the
period that the option is open.
A put option gives the purchaser, in return for a premium, the right, for a
specified period of time, to sell securities or currency subject to the option
to the writer of the put at the specified exercise price. The writer of the put
option, in return for the premium, has the obligation, upon exercise of the
option, to acquire the securities or currency underlying the option at the
exercise price. An Equity Fund that sells a put option might, therefore, be
obligated to purchase the underlying securities or currency for more than their
current market price.
If an Equity Fund desires to sell a particular security from its portfolio
on which it has written an option, the Equity Fund will seek to effect a closing
purchase transaction prior to or concurrently with the sale of the security. A
closing purchase transaction is a transaction in which an investor who is
obligated as a writer of an option terminates his obligation by purchasing an
option of the same series as the option previously written. (Such a purchase
does not result in the ownership of an option). An Equity Fund may enter into a
closing purchase transaction to realize a profit on a previously written option
or to enable the Equity Fund to write another option on the underlying security
with
2
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<PAGE>
either a different exercise price or expiration date or both. An Equity Fund
realizes a profit or loss from a closing purchase transaction if the cost of the
transaction is less or more, respectively, than the premium received from the
writing of the option.
The Equity Funds will write only fully 'covered' options. An option is
fully covered if at all times during the option period, the Fund writing the
option owns either (i) the underlying securities, or securities convertible into
or carrying rights to acquire the optioned securities at no additional cost, or
(ii) an offsetting call option on the same securities at the same or a lower
price.
An Equity Fund may not write a call option if, as a result thereof, the
aggregate of such Equity Fund's portfolio securities subject to outstanding call
options (valued at the lower of the option price or market value of such
securities) would exceed 10% of its total assets. The Equity Funds may also
purchase and sell financial futures contracts and options thereon for hedging
and risk management purposes and to enhance gains as permitted by the Commodity
Futures Trading Commission (the 'CFTC').
The Equity Funds may also purchase and sell securities index options.
Securities index options are similar to options on specific securities. However,
because options on securities indices do not involve the delivery of an
underlying security, the option represents the holder's right to obtain from the
writer in cash a fixed multiple of the amount by which the exercise price
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying securities index on the exercise date. When an
Equity Fund writes an option on a securities index, it will establish a
segregated account with its custodian in which it will deposit cash or high
quality short-term obligations or a combination of both with a value equal to or
greater than the market value of the option and will maintain the account while
the option is open.
Each Equity Fund's successful use of options and financial futures depends
on the ability of the Adviser and Subadviser to predict the direction of the
market and is subject to various additional risks. The investment techniques and
skills required to use options and futures successfully are different from those
required to select equity securities for investment. The ability of an Equity
Fund to close out an option or futures position depends on a liquid secondary
market. There is no assurance that liquid secondary markets will exist for any
particular option or futures contract at any particular time. The inability to
close options and futures positions also could have an adverse impact on each
Equity Fund's ability to effectively hedge its portfolio. There is also the risk
of loss by the Equity Funds of margin deposits or collateral in the event of
bankruptcy of a broker with whom the Equity Funds have an open position in an
option, a futures contract or related option.
To the extent that puts, calls, straddles and similar investment strategies
involve instruments regulated by the CFTC, each Equity Fund is limited to an
investment not in excess of 5% of its total assets, except that each Equity Fund
may purchase and sell such instruments, without limitation, for bona fide
hedging purposes.
Forward Foreign Currency Exchange Contracts. A forward contract on foreign
currency is an obligation to purchase or sell a specific currency at a future
date, which may be any fixed number of days agreed upon by the parties from the
date of the contract at a price set on the date of the contract.
The Equity Funds will generally enter into forward contracts only under two
circumstances. First, when an Equity Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may desire
to 'lock in' the U.S. dollar price of the security in relation to another
currency by entering into a forward contract to buy the amount of foreign
currency needed to settle the transaction. Second, when the Adviser or
Subadviser believes that the currency of a particular foreign country may suffer
or enjoy a substantial movement against another currency, it may enter into a
forward contract to sell or buy the former foreign currency (or another currency
which acts as a proxy for that currency) approximating the value of some or all
of the Equity Fund's portfolio securities denominated in such foreign currency.
This second investment practice is generally referred to as
3
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<PAGE>
'cross-hedging.' Although forward contracts will be used primarily to protect
the Equity Funds from adverse currency movements, they also involve the risk
that anticipated currency movements will not be accurately predicted.
Futures and Options Thereon. The Equity Funds may purchase and sell
financial futures contracts and options thereon which are traded on a
commodities exchange or board of trade for certain hedging, return enhancement
and risk management purposes in accordance with regulations of the CFTC. These
futures contracts and related options will be on financial indices and foreign
currencies or groups of foreign currencies. A financial futures contract is an
agreement to purchase or sell an agreed amount of securities or currencies at a
set price for delivery in the future.
Repurchase Agreements. The Equity 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 an Equity Fund to
keep all of its assets at work while retaining 'overnight' flexibility in
pursuit of investments of a longer-term nature. The Equity Funds require
continual maintenance of collateral with the Custodian in an amount equal to, or
in excess of, the market value of the securities which are the subject of a
repurchase agreement. In the event a vendor defaults on its repurchase
obligation, the Equity Fund might suffer a loss to the extent that the proceeds
from the sale of the collateral were less than the repurchase price. If the
vendor becomes the subject of bankruptcy proceedings, the Equity Fund might be
delayed in selling the collateral.
Reverse Repurchase Agreements. The Equity Funds may also enter into reverse
repurchase agreements. Under a reverse repurchase agreement an Equity Fund would
sell securities and agree to repurchase them at a mutually agreed upon date and
price. At the time an Equity Fund enters into a reverse repurchase agreement, it
would establish and maintain with an approved custodian a segregated account
containing liquid high-grade securities having a value not less than the
repurchase price. Reverse repurchase agreements involve the risk that the market
value of the securities subject to such agreement could decline below the
repurchase price to be paid by an Equity Fund for such securities. In the event
the buyer of securities under a reverse repurchase agreement filed for
bankruptcy or became insolvent, such buyer or receiver would receive an
extension of time to determine whether to enforce an Equity Fund's obligations
to repurchase the securities and an Equity Fund's use of the proceeds of the
reverse repurchase could effectively be restricted pending such decision.
Reverse repurchase agreements create leverage, a speculative factor, but are not
considered senior securities by the Equity Funds or the Securities and Exchange
Commission ('SEC') to the extent liquid high-grade debt securities are
segregated in an amount at least equal to the amount of the liability.
Illiquid Investments. Each Equity Fund may invest up to 15% of its assets
in illiquid investments. Under the supervision of the Trustees, the Adviser and
Subadviser determine the liquidity of an Equity Fund's investments. The absence
of a trading market can make it difficult to ascertain a market value for
illiquid investments. Disposing of illiquid investments may involve
time-consuming negotiation and legal expenses, and it may be difficult or
impossible for an Equity Fund to sell them promptly at an acceptable price. The
staff of the SEC currently takes the position that OTC options purchased by an
Equity Fund, and portfolio securities 'covering' the amount of that Equity
Fund's obligation pursuant to an OTC option sold by it (the cost of the
sell-back plus the in-the-money amount, if any) are illiquid, and are subject to
such Equity Fund's limitations on investments in illiquid securities.
Securities Lending. The Equity Funds may seek to receive or increase income
by lending their respective portfolio securities. Under present regulatory
policies, such loans may be made to member firms of the New York Stock Exchange
and are required to be secured continuously by collateral held by the Custodian
consisting of cash, cash equivalents or U.S. Government Securities maintained in
an amount at least equal to the market value of the securities loaned.
Accordingly, the Equity Funds will continuously secure the lending of portfolio
securities by collateral held by the Custodian consisting of cash, cash
equivalents or U.S. Government Securities maintained in an amount at least equal
to the market value of the securities loaned. The Equity Funds have the right to
call such a loan and obtain the securities loaned at any time on five days
notice. Cash collateral may be invested in fixed income
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securities rated at least A or better by S&P or Moody's. As is the case with any
extension of credit, loans of portfolio securities involve special risks in the
event that the borrower should be unable to repay the loan, including delays or
inability to recover the loaned securities or foreclose against the collateral.
The aggregate value of securities loaned by an Equity Fund may not exceed 25% of
the value of its net assets.
When Issued, Delayed Delivery Securities and Forward Commitments. The
Equity Funds may, to the extent consistent with their other investment policies
and restrictions, enter into forward commitments for the purchase or sale of
securities, including on a 'when issued' or 'delayed delivery' basis in excess
of customary settlement periods for the type of security involved. In some
cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of
the commitment, with payment and delivery taking place in the future, generally
a month or more after the date of the commitment. While an Equity Fund will only
enter into a forward commitment with the intention of actually acquiring the
security, such Equity Fund may sell the security before the settlement date if
it is deemed advisable.
Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to an Equity Fund prior to
the settlement date. Each Equity Fund will segregate with its Custodian cash or
liquid high-grade securities in an aggregate amount at least equal to the amount
of their respective outstanding forward commitments.
Privatization. The governments in some countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ('privatization'). The Adviser and Subadviser believe
that privatization may offer opportunities for significant capital appreciation,
and intend to invest assets of the Equity Funds in privatization in appropriate
circumstances. In certain countries, the ability of foreign entities such as the
Equity Funds to participate in privatization may be limited by local law and/or
the terms on which the Equity Funds may be permitted to participate may be less
advantageous than those afforded local investors. There can be no assurance that
certain governments will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.
Investment Companies. Certain markets are closed in whole or in part to
equity investments by foreigners. The Equity Funds may be able to invest in such
markets solely or primarily through governmentally authorized investment
vehicles or companies. Pursuant to the Investment Company Act of 1940, as
amended (the '1940 Act'), each Equity Fund generally may invest up to 10% of its
total assets in the aggregate in shares of other investment companies and up to
5% of its total assets in any one investment company as long as each investment
does not represent more than 3% of the outstanding voting stock of the acquired
investment company at the time of investment. Investment in other investment
companies may involve the payment of substantial premiums above the value of
such investment companies' portfolio securities, and is subject to limitations
under the 1940 Act and market availability. The Equity Funds do not intend to
invest in such investment companies unless, in the judgment of the Adviser and
Subadviser, the potential benefits of such investment justify the payment of any
applicable premium or sales charge. As a shareholder in an investment company,
an Equity Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time an
Equity Fund would continue to pay its own management fees and other expenses.
FUNDAMENTAL INVESTMENT RESTRICTIONS
The following fundamental investment restrictions are applicable to each of
the Equity Funds and may not be changed with respect to an Equity Fund without
the approval of a majority of the shareholders of that Equity Fund,
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which means the affirmative vote of the holders of (a) 67% or more of the shares
of that Equity Fund represented at a meeting at which more than 50% of the
outstanding shares of the Equity Fund are represented or (b) more than 50% of
the outstanding shares of that Equity Fund, whichever is less. Except as set
forth in the Prospectus, all other investment policies or practices are
considered by each Equity Fund not to be fundamental and accordingly may be
changed without shareholder approval. If a percentage restriction is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from a change in values or assets will not constitute a violation of such
restriction.
Briefly, these restrictions provide that an Equity Fund may not:
(1) purchase the securities of any one issuer, other than the United
States Government, or any of its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its total
assets would be invested in such issuer or the Equity Fund would own more
than 10% of the outstanding voting securities of such issuer, except that
up to 25% of the value of the Equity Fund's total assets may be invested
without regard to such 5% and 10% limitations;
(2) invest 25% or more of the value of its total assets in any one
industry, provided that, for purposes of this policy, consumer finance
companies, industrial finance companies and gas, electric, water and
telephone utility companies are each considered to be separate industries;
(3) issue senior securities (including borrowing money, including on
margin if margin securities are owned and enter into reverse repurchase
agreements) in excess of 33 1/3% of its total assets (including the amount
of senior securities issued but excluding any liabilities and indebtedness
not constituting senior securities) except that the Equity Fund may borrow
up to an additional 5% of its total assets for temporary purposes; or
pledge its assets other than to secure such issuances or in connection with
hedging transactions, short sales, when-issued and forward commitment
transactions and similar investment strategies. The Equity Fund's
obligations under swaps are not treated as senior securities;
(4) make loans of money or property to any person, except through
loans of portfolio securities, the purchase of fixed income securities
consistent with the Equity Fund's investment objective and policies or the
acquisition of securities subject to repurchase agreements;
(5) underwrite the securities of other issuers, except to the extent
that in connection with the disposition of portfolio securities the Equity
Fund may be deemed to be an underwriter:
(6) purchase real estate or interests therein;
(7) purchase or sell commodities or commodities contracts except for
purposes, and only to the extent, permitted by applicable law without the
Equity Fund becoming subject to registration with the CFTC as a commodity
pool;
(8) make any short sale of securities except in conformity with
applicable laws, rules and regulations and unless, giving effect to such
sale, the market value of all securities sold short does not exceed 25% of
the value of the Equity Fund's total assets and the Equity Fund's aggregate
short sales of a particular class of securities does not exceed 25% of the
then outstanding securities of that class; or
(9) invest in oil, gas or other mineral leases.
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MANAGEMENT
The Trustees and principal officers of the Equity 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 Equity Funds as defined by the 1940 Act.
*G. Moffett Cochran, 46, Chairman of the Board of Trustees and President of
the Opportunity Funds is President and Chief Executive Officer of the Adviser
with which he has been associated since 1992. Prior to his association with the
Equity Funds and the Adviser, Mr. Cochran was a Senior Vice President with
Bessemer Trust Companies.
Robert E. Fischer, 66, Trustee of the Opportunity Funds, has been Member at
the law firm Lowenthal, Landau, Fischer & Bring, P.C., since prior to 1991.
*Martin Jaffe, 50, Trustee, Vice President, Secretary and Treasurer of the
Opportunity Funds, is a Managing Director, Treasurer and Chief Operating Officer
of the Adviser, with which he has been associated since prior to 1991.
Wilmot H. Kidd, III, 55, Trustee of the Opportunity Funds, has been
President of Central Securities Corporation, since prior to 1991.
John W. Waller, III, 45, Trustee of the Opportunity Funds, has been
Chairman of Waller Capital Corporation, an investment banking firm, since prior
to 1991.
James A. Engle, 38, Vice President of the Opportunity Funds, is a Managing
Director and Chief Investment Officer of the Adviser with which he has been
associated since prior to 1991.
Richard L. Glessmann, 35, Vice President of the Opportunity Funds, has been
associated with the Adviser since 1995. Previously, he was a senior portfolio
manager at Wells Fargo Bank since prior to 1991.
Marybeth B. Leithead, 33, Vice President of the Opportunity Funds, has been
associated with the Adviser since prior to 1991.
Brian A. Kammerer, 39, Assistant Treasurer to the Opportunity Funds, is a
Vice President of the Adviser, with which he has been associated since prior to
1991.
The following table sets forth certain information regarding compensation of the
Equity Funds' Trustees and officers. Except as disclosed below, no executive
officer or person affiliated with the Equity Funds received compensation from
the Equity Funds for the calendar year ended December 31, 1996 in excess of
$60,000.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT FROM TRUST
COMPENSATION BENEFITS ACCRUED ESTIMATED ANNUAL AND FUND
FROM AS PART OF TRUST BENEFITS UPON COMPLEX PAID
NAME AND POSITION TRUST(1) EXPENSES RETIREMENT TO TRUSTEES(2)
----------------- ------------ ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
G. Moffett Cochran, Trustee........................ $ 0 None None $ 0(9)
Robert E. Fischer, Trustee......................... $ 10,000 None None $ 10,000(4)
Martin Jaffe, Trustee.............................. $ 0 None None $ 0(4)
Wilmot H. Kidd, III, Trustee....................... $ 10,000 None None $ 10,000(4)
John W. Waller, III, Trustee....................... $ 7,000 None None $ 7,000(4)
</TABLE>
- ------------
(1) The Opportunity Funds anticipate paying each independent Trustee
approximately $10,000 in each calendar year.
(footnotes continued on next page)
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(footnotes continued from previous page)
(2) Represents the total compensation paid to such persons during the year ended
December 31, 1996. The parenthetical number represents the number of
portfolios (including the Equity Funds) for which such person acts as
Trustee that are considered part of the same fund complex as the Equity
Funds.
------------------------
The Trustees of the Opportunity Funds who are officers or employees of the
Adviser or any of its affiliates receive no remuneration from the Opportunity
Funds. Each of the Trustees who are not affiliated with the Adviser will be paid
a $2,000 fee for each board meeting attended. Messrs. Cochran and Jaffe are
members of the Executive Committee. Messrs. Fisher, Kidd and Waller are members
of the Audit Committee and are paid a $1,000 fee for each Audit Committee
meeting attended.
ADVISER
The Adviser, a Delaware corporation with principal offices at 277 Park
Avenue, New York, New York 10172, has been retained under an Investment Advisory
Agreement as the Equity Funds' investment adviser (see 'Management' in the
Prospectus). The Adviser was established in 1871, as a private concern to manage
money for the Winthrop family of Boston. From these origins, the Adviser has
grown to serve a select group of individual and institutional investors.
The Adviser is (since 1977) a wholly-owned subsidiary of Donaldson, Lufkin
& Jenrette Securities Corporation ('DLJ Securities'), the distributor of the
Equity Fund's shares, which is a wholly-owned subsidiary of Donaldson, Lufkin &
Jenrette, Inc., which is in turn an independently operated, indirect subsidiary
of The Equitable Companies Incorporated ('ECI'), a holding company controlled by
AXA, a French insurance and financial services holding company. The Adviser is
an integral part of the DLJ Securities family, and as one of the oldest money
management firms in the country, it maintains a tradition of personalized
service and performance. The address of Donaldson, Lufkin & Jenrette, Inc. is
277 Park Avenue, New York, New York 10172. The address of ECI is 787 Seventh
Avenue, New York, New York 10019.
As of September 10, 1996, AXA owns 60.5 of the outstanding shares of the
common stock of ECI. AXA is the holding company for an international group of
insurance and related financial services companies. AXA's insurance operations
are comprised of activities in life insurance, property and casualty insurance
and reinsurance. The insurance operations are diverse geographically with
activities in France, the United States, the United Kingdom, Canada and other
countries, principally in Europe. AXA is also engaged in asset management,
investment banking and brokerage, real estate and other financial services
activities in the United States and Europe. Based on information provided by
AXA, as of 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 was approved by the Board of Trustees of
the Equity Funds on July 25, 1995 and by the then shareholders, the Adviser and
Subadviser, on August 23, 1995 and became effective on the same date. The
Investment Advisory Agreement is reviewed annually by the Board of Trustees and
was most recently reapproved on July 18, 1996. The Investment Advisory Agreement
continues in force for successive twelve month periods computed from the first
day of each fiscal year of each Equity 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 Equity Funds nor have any direct or
indirect financial interest in the Investment Advisory Agreement, cast in person
at a meeting called for the purpose of voting on such approval.
Pursuant to the terms of the Investment Advisory Agreement, the Adviser may
retain, at its own expense, a subadviser to assist in the performance of its
services to the Equity Funds.
SUBADVISER
The Subadviser has been retained under a subadvisory agreement by the
Adviser to assist in the performance of its services to the Equity Funds.
The Subadviser, a registered investment advisor, is a wholly-owned
subsidiary of AXA. The Subadviser has hired employees from AXA, a company with
a long history of providing financial services advice.
Certain other clients of the Adviser or Subadviser may have investment
objectives, policies and risk considerations similar to those of the Equity
Funds. The Adviser or Subadviser may, from time to time, make recommendations
which result in the purchase or sale of a particular security by their other
clients simultaneously with the Equity Funds. If transactions on behalf of more
than one client during the same period increase the demand for securities being
purchased or the supply of the securities being sold, there may be an adverse
effect on price. It is the policy of the Adviser and Subadviser to allocate
advisory recommendations and the placing of orders in a manner which is deemed
equitable by the Adviser and Subadviser to the accounts involved, including the
Equity Funds. When two or more of the clients of the Adviser and Subadviser
(including the Equity Funds) are purchasing the same security on a given day
from the same broker-dealer, such transactions may be averaged as to price.
EXPENSES OF THE EQUITY FUNDS
GENERAL
In addition to the payments to the Adviser under the investment advisory
agreement, each Equity 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 SEC and with state regulatory authorities; custody, transfer and
dividend disbursing expenses; legal and auditing costs; clerical, accounting and
other office costs; fees and expenses of Trustees who are not affiliated with
the Adviser or Subadviser; costs of maintenance of existence; and interest
charges, taxes, brokerage fees and commissions.
As to the obtaining of clerical and accounting services not required to be
provided to the Equity Funds by the Adviser under the investment advisory
agreement or Subadviser under the investment subadvisory agreement, the Equity
Funds may employ their own personnel. For such services, they also may utilize
personnel employed by the Adviser, the Subadviser or their affiliates. In such
event, the services shall be provided to the Equity Funds at cost and the
payments therefor must be specifically approved in advance by the Equity Funds'
Trustees, including a majority of its disinterested Trustees.
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DISTRIBUTION PLAN
Pursuant to Rule 12b-1 adopted by the SEC under the 1940 Act, the Equity
Funds have adopted a Distribution Agreement (the 'Distribution Agreement') and a
Rule 12b-1 Plan for each Class of shares of each Equity Fund (the '12b-1 Plans')
to permit such Equity 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 Equity Funds reports the amounts expended under the Distribution
Agreement and the purposes for which such expenditures were made to the Trustees
of the Equity Funds on a quarterly basis. Also, the 12b-1 Plans provide that the
selection and nomination of disinterested Trustees (as defined in the 1940 Act)
are committed to the discretion of the disinterested Trustees then in office.
The Distribution Agreement and 12b-1 Plans may be continued annually if approved
by a majority vote of the Trustees, including a majority of the Trustees who
neither are interested persons of the Equity 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 Equity Fund's Trustees on July 25, 1995 and by
the then shareholders on August 23. 1995. The Distribution Agreement was most
recently reviewed and reapproved on July 18, 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 Equity Funds nor have
any direct or indirect financial interest in the 12b-1 Plans or any related
agreement, cast in person at a meeting called for the purpose of voting on such
approval. In addition to such Trustee approval, the 12b-1 Plans may not be
amended in order to increase materially the costs which the Equity Funds may
bear pursuant to the 12b-1 Plans without the approval of a majority of the
outstanding shares of such Equity Funds. Each Equity 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 an Equity 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 an Equity Fund on not
more than 60 days notice to any other party to the agreement, and will terminate
automatically in the event of assignment.
With respect to sales of an Equity Fund's Class B shares through a
broker-dealer, the Distributor pays the broker-dealer a concession at the time
of sale. In addition, an ongoing maintenance fee may be paid to broker-dealers
on sales of both Class A shares and Class B shares. Pursuant to the Equity
Funds' Rule 12b-1 Plans, the Distributor is then reimbursed for such payments
with amounts paid from the assets of such Equity Fund. The payments to the
broker-dealer, although an Equity Fund expense which is paid by all
shareholders, will only directly benefit investors who purchase their shares
through a broker-dealer rather than from the Equity Funds. Broker-dealers who
sell shares of the Equity Funds may provide services to their customers that are
not available to investors who purchase their shares directly from the Equity
Funds. Investors who purchase their shares directly from an Equity Fund will pay
a pro rata share of such Equity 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 Equity Funds.
Pursuant to the provisions of the 12b-1 Plans and the Distribution
Agreement, each Equity Fund pays a distribution services fee each month to the
Distributor, with respect to the Class A shares of each Equity Fund at an
annual rate of up to .25 of 1%, and with respect to the Class B shares of each
Equity Fund the annual rate may be up to 1%, of the aggregate average daily net
assets attributable to Class A shares and Class B shares, respectively, of each
Equity Fund.
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PURCHASES, REDEMPTIONS, EXCHANGES AND
SYSTEMATIC WITHDRAWAL PLAN
The following information supplements that set forth in the Equity Funds'
Prospectus under the heading 'Purchases, Redemptions and Shareholder Services'.
PURCHASES
Shares of the Equity Funds are offered at the respective net asset value
per share next determined following receipt of a purchase order in proper form
by the Equity Funds, the Equity Funds' transfer agent, FPS Services, Inc. (the
'Transfer Agent'), or by the Distributor. The Equity Funds calculate net asset
value per share as of the close of the regular session of the New York Stock
Exchange, (the 'NYSE') which is generally 4:00 p.m. New York City time on each
day that trading is conducted on the New York Stock Exchange.
Orders for the purchase of shares of an Equity 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 Equity Funds in one business day following receipt. Checks
drawn on banks which are not members of the Federal Reserve System may take
longer. All payments (including checks from individual investors) must be in
United States dollars.
All shares purchased are confirmed to each shareholder and are credited to
such shareholder's account at net asset value and with respect to the Class A
shares, less any applicable initial sales charge. As a convenience to the
investor and to avoid unnecessary expense to the Equity Funds, share
certificates representing shares of the Equity 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 Equity 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 Equity Funds).
REDEMPTIONS
Shares of the Equity 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 Equity 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 economic conditions exist which would make such a practice
detrimental to the best interest of the Equity Funds. If payment for shares
redeemed is made wholly or partly in portfolio securities, brokerage costs may
be incurred by the investor in converting the securities to cash. See the
Prospectus for a description of the contingent deferred sales charge which may
be applicable to certain redemptions.
To redeem shares, the registered owner or owners should forward a letter to
the Transfer Agent 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 Transfer Agent with the request that the shares represented
thereby or a portion thereof be
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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 Transfer
Agent 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 Transfer Agent. The signature or signatures on the assignment form
must be guaranteed in the manner described below.
If the total value of the shares being redeemed exceeds $50,000 (before
deducting any applicable contingent deferred sales charge) or a redemption
request directs proceeds to a party other than the registered account owner(s),
the signature or signatures on the letter or the endorsement must be guaranteed
by an 'eligible guarantor institution' as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include banks,
brokers, dealers, credit unions, national securities exchanges, registered
securities associations, clearing agencies and savings associations. A
broker-dealer guaranteeing signatures must be a member of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. Additional documents may be required for redemption of corporate,
partnership or fiduciary accounts.
The requirement for a guaranteed signature is for the protection of the
shareholder in that it is intended to prevent an unauthorized person from
redeeming his shares and obtaining the redemption proceeds.
EXCHANGES
Shares of one class of an Equity Fund can be exchanged for shares of the
same class of another Equity Fund, Shares of the Winthrop Municipal Money Fund
and the Winthrop U.S. Government Money Fund (collectively, the 'Money Funds')
and shares of the same class of Winthrop Growth Fund, Winthrop Fixed Income
Fund, Winthrop Aggressive Growth Fund, Winthrop Growth and Income Fund and
Winthrop Municipal Trust Fund (the ' Focus Funds'). Shareholders may exchange
shares by mail. Shareholders or the shareholders' investment dealer of record
may exchange shares by telephone.
In the case of each Money Fund and Focus Fund, the exchange privilege is
available only in those jurisdictions where shares of such Fund may be legally
sold. In addition, the exchange privilege is available only when payment for the
shares to be redeemed has been made and the shares exchanged are held by the
Transfer Agent.
Only those shareholders who have had shares in an Equity Fund for at least
seven days may exchange all or part of those shares for shares of the other
Equity Fund, the Money Funds or Focus Funds, and no partial exchange may be made
if, as a result, the shareholders' interest in an Equity Fund would be reduced
to less than $250. The minimum initial exchange into another Equity Fund is
$250.
All exchanges into either of the Money Funds or any of the Focus Funds are
subject to the minimum investment requirements and any other applicable terms
set forth in the Prospectus for the relevant Money Fund or Focus Fund whose
shares are being acquired. If for these or other reasons the exchange cannot be
effected, the shareholder will be so notified.
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 Equity Funds, the
Money Funds and the Focus Funds. Shareholders who engage in such frequent
transactions may be prohibited from or restricted in placing future exchange
orders.
Exchanges of shares are subject to the other requirements of the fund into
which exchanges are made. Annual fund operating expenses for such fund may be
higher and a sales charge differential may apply.
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SYSTEMATIC WITHDRAWAL PLANS
Shares of an Equity Fund owned by a participant in the Equity Funds'
systematic withdrawal plan will be redeemed as necessary to meet withdrawal
payments. A contingent deferred sales charge which would otherwise be imposed
will be waived in connection with redemptions made pursuant to the Equity Funds'
systematic withdrawal plan up to 1% monthly or 3% quarterly of an account's
total market value not to exceed 10% of total market value over any 12 month
rolling period. Systematic withdrawals elected on a semi-annual or annual basis
are not eligible for the waiver. See the Prospectus for a description of the
contingent deferred sales charge. The systematic withdrawal plan may be
terminated at any time by the shareholder or the Equity Funds.
Redemption of shares for withdrawal purposes may reduce or even liquidate
an account. While an occasional lump sum investment may be made by a shareholder
who is maintaining a systematic withdrawal plan, such investment should normally
be an amount equivalent to three times the annual withdrawal or $5,000 whichever
is less.
NET ASSET VALUE
Shares of each Equity Fund will be priced at the net asset value per share
as computed each Equity Fund Business Day in accordance with the Equity Funds'
Agreement and Declaration of Trust and By-Laws. For this purpose, an Equity 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 Equity 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
Equity Fund's investments and any cash or other assets, subtracting liabilities,
and dividing by the total number of shares outstanding. All expenses, including
the fees payable to the Adviser, are accrued daily. For net asset value
determination purposes, securities quoted in foreign currencies are translated
into U.S. dollars at the current exchange rates (determined at 4:00 p.m. London
time) or at such rates as the Trustees may determine. As a result, to the extent
an Equity Fund holds securities quoted or denominated in a foreign currency,
fluctuations in the value of such currencies in relation to the U.S. dollar will
affect the net asset value of such Equity Fund's shares even though there has
not been any change in the value of such securities as quoted in the foreign
currency. For purposes of this computation, the securities in each Equity Fund's
portfolio are, except as described below, valued at their current market value
determined on the basis of market quotations or, if such quotations are not
readily available, such other method as the Trustees believe would accurately
reflect their fair value.
Foreign securities trading may not take place on all days on which the NYSE
is open. Further, trading takes place in various foreign markets on days on
which the NYSE is not open. Accordingly, the determination of the net asset
value of an Equity Fund's shares may not take place contemporaneously with the
determination of the prices of investments held by such Equity Fund. Events
affecting the values of investments that occur between the time their prices are
determined and the close of regular trading on the NYSE on each day that the
NYSE is open will not be reflected in the net asset value of an Equity Fund's
shares unless the Adviser or Subadviser, under the supervision of such Equity
Fund's Board of Trustees, determine that the particular event would materially
affect net asset value. As a result, the net asset value of an Equity Fund's
shares may be significantly affected by such trading on days when a shareholder
has no access to such Equity Fund.
For purposes of the computation of net asset value, each of the Equity
Funds values securities held in its respective portfolios as follows: readily
marketable portfolio securities listed on an exchange are valued, except as
indicated below, at the last sale price at the close of the exchange on the
business day as of which such value is being determined. If there has been no
sale on such day, the securities are valued at the mean of the closing bid and
asked
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prices on such day. If no bid or asked prices are quoted on such day, then the
security is valued by such method as the Trustees of the Equity Funds shall
determine in good faith to reflect its fair value.
Readily marketable securities, including certain options, not listed on an
exchange but admitted to trading on the National Association of Securities
Dealers Automatic Quotations, Inc. ('NASDAQ') National List (the 'List') are
valued in like manner. Portfolio securities traded on more than one exchange are
valued at the last sale price on the business day as of which such value is
being determined at the close of the exchange representing the principal market
for such securities.
Readily marketable securities, including certain options traded only in the
over-the-counter market and listed securities whose primary market is believed
by the Adviser or Subadviser to be over-the-counter (excluding those admitted to
trading on the List) are valued at the mean of the current bid and asked prices
as reported by such sources as the Trustees of the Equity Funds deem appropriate
to reflect their fair market value. However, fixed-income securities (except
short-term securities) may be valued on the basis of prices provided by a
pricing service when such prices are believed by the Adviser or Subadviser to
reflect the fair market value of such securities. The prices provided by a
pricing service are determined without regard to bid or last sale prices but
take into account institutional size trading in similar groups of securities and
any developments related to specific securities. Portfolio securities underlying
listed call options will be valued at their market price and reflected in net
assets accordingly. Premiums received on call options written by an Equity Fund
will be included in the liability section of the Statement of Assets and
Liabilities as a deferred credit and subsequently adjusted (marked-to-market) to
the current market value of the option written. Investments for which market
quotations are not readily available are valued at fair value as determined in
good faith by the Trustees of the Equity Funds.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Equity Funds intend to distribute to shareholders of the Equity Funds
on an annual basis, substantially all of such respective periods' net investment
income, if any, for each respective Equity Fund.
Capital gains (short-term and long-term), if any, realized by each of the
Equity Funds during their fiscal year will be distributed to the respective
shareholders shortly after the end of such fiscal year.
Each income dividend and capital gains distribution, if any, declared by
the Equity Funds on the outstanding shares of any Equity Fund will, at the
election of each shareholder, be paid in cash or reinvested in additional full
and fractional shares of that Equity Fund at the net asset value as of the close
of business on the payment date. Such distributions, to the extent they would
otherwise be taxable, will be taxable to shareholders regardless of whether paid
in cash or reinvested in additional shares. An election to receive dividends and
distributions in cash or shares is made at the time of the initial investment
and may be changed by notice received by the Equity Funds from a shareholder at
least 30 days prior to the record date for a particular dividend or distribution
on shares of each Equity Fund. There is no charge in connection with the
reinvestment of dividends and capital gains distributions.
There is no fixed dividend rate and there can be no assurance that an
Equity Fund will pay any dividends or realize any gains. The amount of any
dividend or distribution paid by each Equity Fund depends upon the realization
by the Equity Fund of income and capital gains from that Equity Fund's
investments. All dividends and distributions will be made to shareholders of an
Equity Fund solely from assets of that Equity Fund.
Payment (either in cash or in portfolio securities) received by a
shareholder upon redemption of his shares, assuming the shares constitute
capital assets in his hands, will result in long-term or short-term capital
gains (or losses) depending upon the shareholder's holding period and basis in
respect of shares redeemed. Any loss realized by a shareholder on the sale of
Equity Fund shares held for six months or less will be treated for federal
income tax purposes as a long-term capital loss to the extent of any
distributions of long-term capital gains received by the shareholder with
respect to such shares. Note that any loss realized on the sale of shares will
be disallowed to the
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extent the shares disposed of are replaced within a period of 61 days beginning
30 days before the disposition of such shares. In such case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss.
Each Equity Fund intends to continue to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended, so
that it will not be liable for federal income taxes to the extent that its net
taxable income and net capital gains are distributed. Accordingly, each Equity
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 Equity
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 Equity Fund's assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
U.S. Government securities). Foreign currency gains that are not 'directly
related' to the Equity Fund's principal business of investing in stock or
securities may be excluded by Treasury Regulations from income that counts
toward the 90% of gross income requirement described above and may continue to
be included in income that counted for the purposes of the 30% of gross income
requirements described above. The Treasury Department has not yet issued any
such regulations. For federal income tax purposes, dividends of net ordinary
income and distributions of any net short-term capital gains in excess of any
net long-term capital losses are treated as ordinary income of the shareholders,
and distributions of net long-term capital gains in excess of any net short-term
capital losses are taxable to shareholders as long-term capital gains
irrespective of the length of time the shareholder has held shares of the Equity
Fund.
Since the Equity Funds are not treated as a single entity for federal
income tax purposes, the performance of one Equity Fund will have no effect on
the income tax liability of shareholders of another Equity Fund.
A dividend or capital gains distribution with respect to shares of any
Equity Fund held by a tax-deferred or qualified retirement plan, such as an IRA,
Keogh Plan or corporate pension or profit sharing plan, will not be taxable to
the plan. Distributions from such plans will be taxable to individual
participants under applicable tax rules without regard to the character of the
income earned by the qualified plan.
As a regulated investment company, each Equity Fund will not be subject to
federal income tax on income and gains distributed to shareholders if it
distributes at least 90% of its investment company taxable income to
shareholders each year but will be subject to tax on its income and gains to the
extent that it does not distribute to its shareholders an amount equal to such
income and gains. In addition, each Equity 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 Equity Fund.
To the extent possible, each Equity Fund intends to make such distributions as
may be necessary to avoid this excise tax.
For federal income tax purposes, dividends that are declared by an Equity
Fund in October, November or December as of a record date in such month and
actually paid in January of the following year will be treated as if they were
paid on December 31 of the year in which they were declared. Therefore such
dividends will generally be taxable to a shareholder in the year declared rather
than the year paid.
Shareholders will be advised annually as to the federal tax status of
dividends and capital gains distributions made by each Equity Fund for the
preceding year.
Some of the investment practices of each Equity Fund are subject to special
provisions that, among other things, may defer the use of certain losses of such
Equity Funds and affect the holding period of the securities held by the Equity
Funds and the character of the gains or losses realized. These provisions may
also require the Equity Fund to
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mark-to-market some of the positions in their respective portfolios (i.e., treat
them as if they were closed out), which may cause such Equity Funds to recognize
income without receiving cash with which to make distributions in amounts
necessary to satisfy the distribution requirements for qualification as a
regulated investment company and for avoiding income and excise taxes. Each
Equity Fund will monitor its transactions and may make certain tax elections in
order to mitigate the effect of these rules and prevent disqualification of the
Equity Fund as a regulated investment company.
The Equity Funds may make investments denominated in a foreign currency.
Gains or losses attributable to dispositions of foreign currency or to foreign
currency contracts, or to fluctuations in exchange rates between the time an
Equity Fund accrues income or receivables or expenses or other liabilities
denominated in a foreign currency and the time the Equity Fund actually collects
such income or pays such liabilities, are generally treated as ordinary income
or ordinary loss. Similarly, gains or losses on the disposition of debt
securities held by an Equity Fund, if any, denominated in foreign currency, to
the extent attributable to fluctuations in exchange rates between the
acquisition and disposition dates, also are generally treated as ordinary income
or loss. These gains and losses increase or decrease the amount of the Equity
Fund's net investment income available for distribution.
If an Equity Fund owns shares in certain foreign investment entities,
referred to as passive foreign investment companies ('PFICs'), such Equity Fund
may be subject to federal income tax, and additional charges in the nature of
interest, on a portion of any 'excess distribution' from such company or gain
from the disposition of such shares, even if the entire distribution or gain is
distributed by the Equity Fund to its shareholders. If an Equity Fund were able
and elected to treat a PFIC as a 'qualified electing fund,' in lieu of the
treatment described above, such Equity Fund would be required each year to
include in income, the Equity Fund's pro rata share of the ordinary earnings and
net capital gains of the company, whether or not actually received by the Equity
Fund. Proposed Treasury Regulations would allow certain regulated investment
companies to elect to mark to market their stock in certain PFICs at the end of
each taxable year, whereby the Equity Fund would include in its taxable income
each year any unrealized gain on such PFIC investments. In order to distribute
the income includible in the Equity Fund's income under either election,
maintain its qualification as a regulated investment company, and avoid income
or excise taxes, such Equity Fund may be required to liquidate portfolio
securities that it might otherwise have continued to hold. There can be no
assurance that these regulations will be finalized as proposed or as to the
effective date of any such final regulations.
If, as is expected, more than 50 percent of the value of the each Equity
Fund's total assets at the close of its taxable year consists of stock or
securities of foreign corporations, it will be eligible to file an election with
the Internal Revenue Service to 'pass through' to its shareholders the amount of
foreign income taxes (including withholding taxes) paid by such Equity Fund.
Pursuant to this election a shareholder will: (1) include in gross income (in
addition to the taxable dividends actually received) the shareholder's pro rata
share of the foreign income taxes paid by such Equity Fund; (2) treat the
shareholder's pro rata share of the foreign income taxes paid by such Equity
Fund as paid by the shareholder; and (3) subject to certain limitations, either
deduct the pro rata share of such foreign income taxes in computing the
shareholder's taxable income or use it as a foreign tax credit against federal
income taxes. Each shareholder will be notified within 60 days after the close
of an Equity Fund's taxable year whether the foreign income taxes paid by an
Equity Fund will 'pass through' for that year and, if so, such notification will
designate the shareholder's portion of the foreign income taxes paid to each
country and the portion of dividends that represents income derived from sources
derived within each country.
Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's federal income tax (before the credit)
attributable to the shareholder's total foreign source taxable income. For this
purpose, the portion of dividends and distributions paid by each Equity Fund
from its foreign source income will be treated as foreign source income. Each
Equity Fund's gains and losses from the sale of securities, and certain currency
gains and losses, will generally be treated as derived from United States
sources. The limitation on the foreign tax credit is applied separately to
foreign source 'passive income,' such as dividend income. Because of these
limitations, a
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shareholder may be unable to claim a credit for the full amount of the
shareholder's proportionate share of foreign income taxes paid by such Equity
Fund. In addition, no deduction for foreign income taxes may be claimed by a
shareholder who does not itemize deductions. Shareholders are advised to consult
their own tax advisers on the application of the foreign tax credit rules to
their own particular circumstances.
Each Equity Fund's ability to dispose of portfolio securities may be
limited by the requirement of qualification as a regulated investment company
that less than 30% of an Equity Fund's gross income be derived from the
disposition of securities held for less than three months.
Each Equity 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 Equity Funds with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to certify to the Equity Funds that he or she is not subject to such
withholding. An individual's tax identification number is his or her social
security number.
The foregoing discussion is a general summary of certain current federal
income tax laws regarding the Equity Funds. The discussion does not purport to
deal with all of the federal income tax consequences applicable to the Equity
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 Equity Funds.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees of the Equity
Funds, the Adviser and Subadviser are responsible for the investment decisions
and the placing of the orders for portfolio transactions for the Equity Funds.
Portfolio transactions for the Equity Funds are normally effected by brokers.
The Equity Funds have no obligation to enter into transactions in portfolio
securities with any broker, dealer, issuer, underwriter or other entity. In
placing orders, it is the policy of the Equity Funds to obtain the best price
and execution for its transactions. Where best price and execution may be
obtained from more than one broker or dealer, the Adviser or Subadviser may, in
its discretion, purchase and sell securities through brokers and dealers who
provide research, statistical and other information to the Adviser or
Subadviser. Such services may be used by the Adviser or Subadviser for all of
their investment advisory accounts, and accordingly, not all such services may
be used by the Adviser or Subadviser in connection with the Equity Funds. If an
Equity Fund determines in good faith that the amount of transaction costs
charged by a broker or dealer is reasonable in relation to the value of the
brokerage and research and statistical services provided by the executing broker
or dealer, the Equity Fund may utilize such broker or dealer although the
transaction costs of another broker or dealer are lower. The supplemental
information received from a broker or dealer is in addition to the services
required to be performed by the Adviser under the Investment Advisory Agreement
or Subadviser under the Investment Subadvisory Agreement, and the expenses of
the Adviser or Subadviser will not necessarily be reduced as a result of the
receipt of such information.
Neither the Equity Funds, the Adviser nor the Subadviser have entered into
agreements or understandings with any broker or dealer regarding the placement
of securities transactions. Because of research or information to the Adviser or
Subadviser for use in rendering investment advice to the Equity Funds, such
information may be supplied at no cost to the Adviser or Subadviser and,
therefore, may have the effect of reducing the expenses of the Adviser or
Subadviser in rendering advice to the Equity Funds. While it is impossible to
place an actual dollar value on such investment information, its receipt by the
Adviser and Subadviser probably does not reduce the overall expenses of the
Adviser or Subadviser to any material extent.
The investment information provided to the Adviser and Subadviser is of the
types described in Section 28(e)(3) of the Securities Exchange Act of 1934 and
is designed to augment the Adviser's and Subadviser's own internal
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research and investment strategy capabilities. Research and statistical services
furnished by brokers through which the Equity Funds effect securities
transactions are used by the Adviser and Subadviser in carrying out its
investment management responsibilities with respect to all its client accounts
but not all such services may be utilized by the Adviser and Subadviser in
connection with the Equity Funds.
The Equity Funds may deal in some instances in equity securities which are
not listed on an exchange but are traded in the over-the-counter market. Where
transactions are executed in the over-the-counter market, the Equity Funds seek
to deal with the primary market-makers; but when necessary in order to obtain
the best price and execution, it utilizes the services of others. In all cases,
the Equity Funds will attempt to negotiate best execution.
The Equity Funds may from time to time place orders for the purchase or
sale of securities (including listed call options) with DLJ Securities, the
Equity Funds' Distributor or other affiliates in accordance with the provisions
of Section 11(a) of the Securities Exchange Act of 1934 referred to below. With
respect to orders placed with DLJ Securities for execution on a national
securities exchange, commissions received must conform to Section 17(e)(2)(A) of
the 1940 Act and Rule 17e-1 thereunder, which permit an affiliated person of a
registered investment company (such as the Equity Funds), or any affiliated
person of such person, to receive a brokerage commission from such registered
investment company provided that such commission is reasonable and fair compared
to the commissions received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time.
Pursuant to Section 11(a) of the Securities Exchange Act of 1934, DLJ
Securities and its affiliates are restricted as to the nature and extent of the
brokerage services they may perform for the Equity Funds. The SEC has adopted
rules under Section 11(a) which permit an investment adviser to a registered
investment company, or the adviser's affiliates, to receive compensation for
effecting, on a national securities exchange, transactions in portfolio
securities of such investment company, including causing such transactions to be
transmitted, executed, cleared and settled and arranging for unaffiliated
brokers to execute such transactions.
To the extent permitted by such rule, DLJ Securities and its affiliates may
receive compensation relating to transactions in portfolio securities of the
Equity Funds provided that each Equity Fund enter into a written agreement, as
required by such rules, with that firm authorizing it to retain compensation for
such services. The Trustees of the Equity Funds have granted authorization
conforming to the requirements of Section 11(a) to the Adviser and Subadviser to
effect transactions in portfolio securities of the Equity Funds through their
affiliates, DLJ Securities and Autranet, Inc.
For the year ended October 31, 1996, brokerage commissions paid by the
Developing Markets Fund and International Equity Fund were $263,491 and
$363,085, respectively. DLJ Securities and Autranet, Inc., affiliates of the
Advisor and Sub-Advisor, did not receive any amounts of such brokerage
commissions.
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PORTFOLIO TURNOVER
Each Equity Fund's average annual portfolio turnover rate is the ratio of
the lesser of sales or purchases to the monthly average value of such securities
owned during the year, excluding from both the numerator and the denominator all
securities with maturities at the time of acquisition of one year or less. For
the year ended October 31, 1996, the portfolio turnover rates for the Developing
Markets Fund and the International Equity Fund were 26.76% and 94.12%,
respectively. A higher rate involves greater transaction costs to an Equity Fund
and may result in the realization of net capital gains, which would be taxable
to shareholders when distributed.
INVESTMENT PERFORMANCE INFORMATION
Each Equity Fund may furnish data about its investment performance in
advertisements, sales literature and reports to shareholders. 'Total return'
represents the change in value of $1,000 invested at the maximum public offering
price for a period assuming reinvestment of all dividends and distributions.
Quotations of yield will be based on the investment income per share earned
during a particular 30 day period, less expenses accrued during the period ('net
investment income') and will be computed by dividing net investment income by
the maximum offering price per share on the last day of the period, according to
the following formula:
YIELD = 2[(A-B + 1)'pp'6 - 1]
---
CD
where A = dividends and interest earned during the period, B = expenses accrued
for the period (net of any reimbursements), C = the average daily number of
shares outstanding during the period that were entitled to receive dividends,
and D = the maximum offering price per share on the last day of the period.
Quotations of average annual total return will reflect only the performance
of an investment in any Equity Fund during the particular time period shown.
Each Equity Fund's total return and current yield may vary from time to time
depending on market conditions, the compositions of its portfolio and operating
expenses. These factors and possible differences in the methods used in
calculating yield should be considered when comparing each Equity Fund's current
yield to yields published for other investment companies and other investment
vehicles. Average annual total return and yield should also be considered
relative to change in the value of each Equity Fund's shares and the risks
associated with each Equity Fund's investment objectives, policies and risk
considerations. At any time in the future, average annual total returns and
yield may be higher or lower than past total returns and yields and there can
be no assurance that any historical return or yield will continue.
From time to time evaluations of performance are made by independent
sources that may be used in advertisements concerning each Equity Fund. These
sources include Lipper Analytical Services, Weisenberger Investment Company
Service, Barron's, Business Week, Kiplinger's Personal Finance, Financial World,
Forbes, Fortune, Money, Personal Investor, Sylvia Porter's Personal Finance,
Bank Rate Monitor, Morningstar and The Wall Street Journal.
In connection with communicating its yield or average annual total return
to current or prospective shareholders, each Equity Fund may also compare these
figures to the performance of other mutual funds tracked by mutual fund rating
services or to other unmanaged indexes which may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.
Quotations of each Equity Fund's average annual total return will represent
the average annual compounded rate of return of a hypothetical investment in
each Equity Fund over periods of 1, 5, and 10 years (or up to the life of each
Equity Fund), and are calculated pursuant to the following formula:
P(1+T)'pp'n=ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the redeemable value at the end
of the period of a $1,000 payment made at the beginning of the period). All
average annual total return figures will reflect the deduction of Equity Fund
expenses (net of certain expenses reimbursed by the Adviser and Subadviser) on
an annual basis, and will assume that all dividends and distributions are
reinvested and
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will deduct the maximum sales charge, if any is imposed. The Equity Funds may
also quote total return that eliminates any applicable initial sales charge or
contingent deferred sales charge.
For the year ended October 31, 1996, the average annual total return for
the Class A and Class B shares of the Developing Markets Fund was +4.51% and
+3.57%, respectively, and +8.35% and +7.52% for Class A and Class B shares,
respectively, of the International Equity Fund. Assuming deduction of the
maximum sales charge, the average annual total return for the Class A and Class
B shares of the Developing Markets Fund was - 1.50% and - .43%, respectively,
and +2.12% and +3.52 for Class A and Class B shares, respectively, of the
International Equity Fund.
SHARES OF BENEFICIAL INTEREST
Set forth below is certain information as to persons who owned 5% or more
of a Fund's outstanding shares as of January 17, 1997.
<TABLE>
<CAPTION>
DEVELOPING MARKETS FUND NAME AND ADDRESS % OF CLASS NATURE OF OWNERSHIP
----------------------- --------------------------------- ---------- --------------------
<S> <C> <C> <C>
Class A........................................... Hamilton E. James 21.04 Beneficial(a)
Donaldson Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
DLJ Growth Fund 6.13 Record(a)
Bank of New York
One Wall Street
25th Floor
New York, NY 10286
Class B........................................... Donaldson Lufkin Jenrette 5.36 Record(a)
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette 5.15 Record(a)
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
INTERNATIONAL EQUITY FUND
Class A........................................... DLJ Growth Fund 8.15 Record(a)
Bank of New York
One Wall Street
25th Floor
New York, NY 10286
Hamilton E. James 7.87 Beneficial(a)
Donaldson Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
Robert Winthrop 5.89 Beneficial
c/o Wood Struthers & Winthrop
277 Park Avenue
New York, NY 10172
Class B........................................... None
</TABLE>
- ------------
(a) Such Recordholder disclaims beneficial ownership.
As of the date of this Statement of Additional Information the Trustees and
Officers of the Funds as a group owned less than 1% of the outstanding shares of
either Fund.
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GENERAL INFORMATION
ORGANIZATION AND CAPITALIZATION
The Trust was formed on May 31, 1995 as a 'business trust' under the laws
of the State of Delaware.
The Agreement and Declaration of Trust provides that no Trustee, officer,
employee or agent of the Equity Funds is liable to the Equity 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 Equity Funds or the property of
the appropriate Equity Fund for satisfaction of claims arising in connection
with the affairs of an Equity 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 Equity Funds against all
liability in connection with the affairs of the Equity Funds.
All shares of the Equity 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 Equity Funds with different investment
objectives, policies, risk considerations or restrictions, may create additional
series or classes of shares. Any issuance of shares of such additional series
would be governed by the 1940 Act and the laws of the State of Delaware.
21
<PAGE>
<PAGE>
COUNSEL AND INDEPENDENT AUDITORS
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New
York 10022, serves as legal counsel for the Equity Funds.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, have been
appointed as independent auditors for the Equity Funds.
ADDITIONAL INFORMATION
This Statement of Additional Information does not contain all the
information set forth in the Registration Statement filed by the Equity Funds
with the SEC under the Securities Act of 1933. Copies of the Registration
Statement may be obtained at a reasonable charge from the SEC or may be
examined, without charge, at the offices of the SEC in Washington, D.C.
FINANCIAL STATEMENTS
The audited financial statements of each Equity Fund for the fiscal year
ended October 31, 1996 and the report of the Funds' independent auditors in
connection therewith are included in the October 31, 1996 Annual Report to
Shareholders. The Annual Report is incorporated by reference into this Statement
of Additional Information. You can obtain a copy of the Equity Funds' Annual
Report by writing or calling the Equity Funds at the address or telephone
numbers set forth on the cover of this Statement of Additional Information.
22
<PAGE>
<PAGE>
APPENDIX
The following is a description of the ratings given by Moody's and S&P to
corporate bonds.
RATINGS OF CORPORATE BONDS
S&P:
Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong. Debt rated AA has a very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated BBB is regarded as having adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
Debt rated BB, B, CCC, CC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial or economic
conditions will likely impair capacity or willingness to pay interest and repay
principal. The B rating category is also used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.
Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating. The rating CC typically is applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating. The rating C
typically is applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued. The rating C1 is reserved for income bonds on which no interest
is being paid. Debt rated D is in payment default. The D rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period had not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.
MOODY'S:
Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized
A-1
<PAGE>
<PAGE>
are most unlikely to impair the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities. Bonds which
are rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well. Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. Bonds which are rated
B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
A-2
<PAGE>
<PAGE>
PART C
Other Information
Item 24 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements for the Winthrop Developing
Markets Fund and the Winthrop International Equity Fund
The following reports and financial statements are incorporated
in Part B of this Registration Statement by reference to the
Funds' Annual Report to Shareholders for the fiscal year ended
October 31, 1996:
Report of Independent Auditors dated December 13, 1996;
Statement of Investments as of October 31, 1996; Statement
of Assets and Liabilities as of October 31, 1996; Statement
of Operations for the year ended October 31, 1996; Statement
of Changes in Net Assets for the year ended October 31,
1996; Financial Highlights for the period from September 8,
1995 (commencement of operations) through October 31, 1995
and for the year ended October 31, 1996; Notes to Financial
Statements as of October 31, 1996.
Included in the Prospectus constituting Part A of this
Registration Statement:
Financial Highlights for the period from September 8, 1995
(commencement of operations) through October 31, 1995
(audited) and for the year ended October 31, 1996 (audited)
(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*
(5) (a) Form of Investment Advisory Agreement for the Winthrop
Developing Markets Fund and the Winthrop International
Equity Fund*
(b) Form of Sub-Advisory Agreement for the Winthrop
Developing Market Fund and the Winthrop International
Equity Fund*
(c) Form of Investment Advisory Agreement for the Winthrop
Municipal Money Fund and the Winthrop U.S. Government
Money Fund*
(6) Form of Distribution Agreement for the Winthrop Opportunity
Funds*
(7) Not Applicable
(8) Form of Custodial Services Agreement for the
Winthrop Opportunity Funds*
(9) (a) Form of Custody Administration and Agency Agreement for
the Winthrop Developing Markets Fund and the Winthrop
International Equity Fund*
<PAGE>
<PAGE>
(b) Form of Custody Administration and Agency Agreement for
the Winthrop Municipal 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 Municipal 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
Municipal Money Fund and the Winthrop U.S. Government
Money Fund*
(10) Legal Opinion*
(11) Consent of Independent Auditors*
(12) Not Applicable
(13) (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 Municipal Money Fund and
the Winthrop U.S. Government Money Fund*
(14) Form of Prototype Retirement Plans*
(15) (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 Municipal Money Fund
and the Winthrop U.S. Government Money Fund*
(16) Schedule of Performance Calculation
(17) (a) Financial Data Schedules**
(b) Powers of Attorney*
(18) Rule 18F-3 Plan*
----------------------------
* Previously filed.
** Included in the Prospectus.
Items No. 25-32 are incorporated by reference to Amendment No. 4 of Form N-1A
Registration Statement No. 33-92982
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration
<PAGE>
<PAGE>
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 28th
day of January, 1997.
Winthrop Opportunity Funds
/s/ G. Moffett Cochran
By:-------------------------
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 January 28, 1997
G. Moffett Cochran
/s/ Martin Jaffe
______________________ Trustee and Vice President, January 28, 1997
Martin Jaffe Secretary and Treasurer
/s/ Robert E. Fischer
______________________ Trustee January 28, 1997
Robert E. Fischer
/s/ Wilmot H. Kidd III
______________________ Trustee January 28, 1997
Wilmot H. Kidd III
/s/ John W. Waller III
______________________ Trustee January 28, 1997
John W. Waller III
</TABLE>
Index of Exhibits to Form N-1A
(16) Schedule of Performance Calculation
<PAGE>
<PAGE>
STATEMENT OF DIFFERENCES
------------------------
Characters normally expressed as superscript shall be preceded by... 'pp'
The dagger symbol shall be expressed as............................ `D'
<PAGE>
<PAGE>
EXHIBIT 16
Quotations of each Fund's average annual return for the year ended October
31, 1996 and the period from September 13, 1995 (commencement of investment
operations)`D' to October 31, 1996 are calculated pursuant to the following
formula:
P(1+T)'pp'n = ERV
<TABLE>
<CAPTION>
P = a hypothetical initial payment of $1,000
<S> <C>
T = average annual total return
n = number of periods
ERV = Ending redeemable value at October 31, 1996 of a hypothetical $1,000 payment made at the beginning of
the year
</TABLE>
AVERAGE ANNUAL RETURN FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
DEVELOPING MARKETS FUND FUND
----------------------- ---------------------
AVERAGE AVERAGE
ENDING ANNUAL ENDING ANNUAL
REDEEMABLE TOTAL REDEEMABLE TOTAL
VALUE RETURN* VALUE RETURN*
---------- --------- ---------- -------
<S> <C> <C> <C> <C>
Class A............................................... 985 - 1.50 % 1,021 2.12%
Class B............................................... 996 - .43 % 1,035 3.52%
</TABLE>
AVERAGE ANNUAL RETURN FOR THE PERIOD FROM SEPTEMBER 13, 1995 (COMMENCEMENT OF
INVESTMENT OPERATIONS)`D' TO OCTOBER 31, 1996
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
DEVELOPING MARKETS FUND FUND
----------------------- -----------------------
AVERAGE AVERAGE
ENDING ANNUAL ENDING ANNUAL
REDEEMABLE TOTAL REDEEMABLE TOTAL
VALUE RETURN* VALUE RETURN*
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Class A............................................... 939 - 5.44 % 978 - 1.91 %
Class B............................................... 956 - 3.86 % 999 - .09 %
</TABLE>
- ------------
* Each Fund's average annual return figures assume all dividends and
distributions by such Fund over the relevant time period were reinvested and
the maximum sales charge, if any, was imposed. It was then assumed that at
the end of these periods, the entire amount was redeemed and the appropriate
deferred sales load, if applicable, was deducted. The average annual return
was then calculated by calculating the rate required for the initial payment
to grow to the amount which would have been received upon redemption (i.e.,
the average annual rate of return).
`D' While the Equity Funds commenced operations on September 8, 1995, assets
were not available for investment until September 13, 1995.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted
from the Annual Report dated October 31, 1996, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 011
<NAME> INTERNATIONAL EQUITY FUND CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> OCT-31-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 41,223,418
<INVESTMENTS-AT-VALUE> 43,256,587
<RECEIVABLES> 5,869,910
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 356,064
<TOTAL-ASSETS> 49,482,561
<PAYABLE-FOR-SECURITIES> 993,045
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,364,818
<TOTAL-LIABILITIES> 2,357,863
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,908,826
<SHARES-COMMON-STOCK> 4,063,828
<SHARES-COMMON-PRIOR> 3,006,328<F1>
<ACCUMULATED-NII-CURRENT> (197,881)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (618,023)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,031,776
<NET-ASSETS> 47,124,698
<DIVIDEND-INCOME> 745,088
<INTEREST-INCOME> 91,560
<OTHER-INCOME> (94,807)
<EXPENSES-NET> 937,829
<NET-INVESTMENT-INCOME> (195,448)
<REALIZED-GAINS-CURRENT> 53,740
<APPREC-INCREASE-CURRENT> 2,622,139
<NET-CHANGE-FROM-OPS> 2,480,431
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,762,635<F1>
<NUMBER-OF-SHARES-REDEEMED> (707,635)<F1>
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 16,502,786
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.58<F1>
<PER-SHARE-NII> (.04)<F1>
<PER-SHARE-GAIN-APPREC> .84<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.38<F1>
<EXPENSE-RATIO> 2.15<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>
The amounts indicated are for the individual
class of shares as reported in the
October 31, 1996 Annual Report. All other
amounts are combined figures that represent
both classes.
</FN>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted
from the Annual Report dated October 31, 1996, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 012
<NAME> INTERNATIONAL EQUITY FUND CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> OCT-31-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 41,223,418
<INVESTMENTS-AT-VALUE> 43,256,587
<RECEIVABLES> 5,869,910
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 356,064
<TOTAL-ASSETS> 49,482,561
<PAYABLE-FOR-SECURITIES> 993,045
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,364,818
<TOTAL-LIABILITIES> 2,357,863
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 45,908,826
<SHARES-COMMON-STOCK> 481,338<F1>
<SHARES-COMMON-PRIOR> 185,880<F1>
<ACCUMULATED-NII-CURRENT> (197,881)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (618,023)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,031,776
<NET-ASSETS> 47,124,698
<DIVIDEND-INCOME> 745,088
<INTEREST-INCOME> 91,560
<OTHER-INCOME> (94,807)
<EXPENSES-NET> 937,829
<NET-INVESTMENT-INCOME> (195,448)
<REALIZED-GAINS-CURRENT> 53,740
<APPREC-INCREASE-CURRENT> 2,622,139
<NET-CHANGE-FROM-OPS> 2,480,431
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 318,343<F1>
<NUMBER-OF-SHARES-REDEEMED> (25,335)<F1>
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 16,502,786
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.57<F1>
<PER-SHARE-NII> (.13)<F1>
<PER-SHARE-GAIN-APPREC> .85<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.29<F1>
<EXPENSE-RATIO> 2.9<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>
The amounts indicated are for the individual
class of shares as reported in the
October 31, 1996 Annual Report. All other
amounts are combined figures that represent
both classes.
</FN>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted
from the Annual Report dated October 31, 1996, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 021
<NAME> DEVELOPING MARKETS FUND CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> OCT-31-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 40,271,837
<INVESTMENTS-AT-VALUE> 39,372,139
<RECEIVABLES> 115,245
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,254,441
<TOTAL-ASSETS> 40,741,825
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182,156
<TOTAL-LIABILITIES> 182,156
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,482,165
<SHARES-COMMON-STOCK> 3,708,339<F1>
<SHARES-COMMON-PRIOR> 1,531,521<F1>
<ACCUMULATED-NII-CURRENT> (58,233)
<OVERDISTRIBUTION-NII> 5,389
<ACCUMULATED-NET-GAINS> 43,455
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (907,718)
<NET-ASSETS> 40,559,669
<DIVIDEND-INCOME> 624,817
<INTEREST-INCOME> 109,908
<OTHER-INCOME> (57,931)
<EXPENSES-NET> 740,416
<NET-INVESTMENT-INCOME> (63,622)
<REALIZED-GAINS-CURRENT> 62,090
<APPREC-INCREASE-CURRENT> 229,102
<NET-CHANGE-FROM-OPS> 230,634
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,674,932<F1>
<NUMBER-OF-SHARES-REDEEMED> (500,614)<F1>
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,932,983
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.53<F1>
<PER-SHARE-NII> (.01)<F1>
<PER-SHARE-GAIN-APPREC> .44<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.96<F1>
<EXPENSE-RATIO> 2.15<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>
The amounts indicated are for the individual
class of shares as reported in the
October 31, 1996 Annual Report. All other
amounts are combined figures that represent
both classes.
</FN>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted
from the Annual Report dated October 31, 1996, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 022
<NAME> DEVELOPING MARKETS FUND CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> OCT-31-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 40,271,837
<INVESTMENTS-AT-VALUE> 39,372,139
<RECEIVABLES> 115,245
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,254,441
<TOTAL-ASSETS> 40,741,825
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 182,156
<TOTAL-LIABILITIES> 182,156
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,482,165
<SHARES-COMMON-STOCK> 369,261<F1>
<SHARES-COMMON-PRIOR> 102,943<F1>
<ACCUMULATED-NII-CURRENT> (58,233)
<OVERDISTRIBUTION-NII> 5,389
<ACCUMULATED-NET-GAINS> 43,455
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (907,718)
<NET-ASSETS> 40,559,669
<DIVIDEND-INCOME> 624,817
<INTEREST-INCOME> 109,908
<OTHER-INCOME> (57,931)
<EXPENSES-NET> 740,416
<NET-INVESTMENT-INCOME> (63,622)
<REALIZED-GAINS-CURRENT> 62,090
<APPREC-INCREASE-CURRENT> 229,102
<NET-CHANGE-FROM-OPS> 230,634
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 285,158<F1>
<NUMBER-OF-SHARES-REDEEMED> (21,340)<F1>
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,932,983
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 9.52<F1>
<PER-SHARE-NII> (.08)<F1>
<PER-SHARE-GAIN-APPREC> .42<F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.86<F1>
<EXPENSE-RATIO> 2.9<F1>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>
The amounts indicated are for the individual
class of shares as reported in the
October 31, 1996 Annual Report. All other
amounts are combined figures that represent
both classes.
</FN>
<PAGE>
