<PAGE>
As filed with the securities and Exchange Commission on July 24, 1997
Registration No. 33-92982
Registration No. 811-9054
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---
Pre-Effective Amendment No.
---
Post-Effective Amendment No. 6 X
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and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 ---
Amendment No. 6 X
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(Check appropriate box or boxes)
WINTHROP OPPORTUNITY FUNDS
(Exact name of registrant as specified in charter)
277 Park Avenue
New York, New York 10172
(Address of Principal Executive Offices)
(212)892-4000
(Registrant's Telephone Number, Including Area Code)
Brian A. Kammerer
One Pershing Plaza
10th Floor
Jersey City, New Jersey 07399
(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.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 495)
<TABLE>
<CAPTION>
N-1A Item No. Location
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Part A for Winthrop Municipal Money Fund and
Winthrop U.S. Government Money Fund
<S> <C> <C>
Item 1. Cover Page............................................ Cover Page
Item 2. Synopsis.............................................. Summary of Winthrop Expenses
Item 3. Condensed Financial Information....................... Financial Highlights
Item 4. General Description of Registrant..................... Cover Page; Investment Objectives
and Policies; Additional Information
Item 5. Management of the Fund................................ Management; Additional Information
Item 5A. Management's Discussion of Fund Performance........... Not Applicable
Item 6. Capital Stock and Other Securities...................... Introduction; Additional
Information; Purchases, Redemptions
and Shareholder Services; Daily
Dividends, Distributions and Taxes
Item 7. Purchase of Securities Being Offered.................. Purchases, Redemptions and
Shareholder Services; Net Asset
Value; Expenses of Winthrop
Item 8. Redemption or Repurchase ............................. Purchases, Redemptions and Shareholder Services
Item 9. Pending Legal Proceedings............................. Not Applicable
<CAPTION>
Part B for Winthrop Municipal Money Fund and Winthrop
U.S. Government Money Fund
<S> <C> <C>
Item 10. Coverage.............................................. Cover Page
Item 11. Table of Contents..................................... Cover Page
Item 12. General Information and History....................... General Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-1A Item No. Location
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<S> <C> <C>
Item 13. Investment Objectives and Policies.................... Investment Policies and
Restrictions; Portfolio Transactions
Item 14. Management of the Fund................................ Management
Item 15. Control Persons and Principal Holders of
Securities............................................ Shares of Beneficial Interest
Item 16. Investment Advisory and Other Services................ Management; General Information
Item 17. Brokerage Allocation and Other Practices.............. Portfolio Transactions
Item 18. Capital Stock and Other Securities.................... General Information; Purchases,
Redemptions and Shareholder Services
Item 19. Purchase, Redemptions and Pricing of Securities Being Purchases, Redemptions and
Offered............................................... Shareholder Services; Net Asset Value
Item 20. Tax Status............................................ Investment Policies and
Restrictions; Dividends,
Distributions and Taxes
Item 21. Underwriters.......................................... Expenses of the Money Funds
Item 22. Calculation of Performance Data....................... Investment Performance Information
Item 23. Financial Statements.................................. Not Applicable
<CAPTION>
Part A for the Winthrop Developing Markets Fund and the
Winthrop International Equity Fund
<S> <C> <C>
Item 1. Cover Page............................................ Cover Page
Item 2. Synopsis.............................................. Summary of Winthrop Expenses
Item 3. Condensed Financial Information....................... Financial Highlights
Item 4. General Description of Registrant..................... Cover Page; Investment Objectives
and Policies; Additional Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-1A Item No. Location
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<S> <C> <C>
Item 5. Management of the Fund................................. Management; Additional Information
Item 5A. Management's Discussion of Fund
Performance............................................ Annual Report
Item 6. Capital Stock and Other Securities..................... Introduction; Additional
Information; Purchases, Redemptions
and Shareholder Services; Daily
Dividends, Distributions and Taxes
Item 7. Purchase of Securities Being Offered.................. Purchases, Redemptions and
Shareholder Services; Net Asset
Value; Expenses of Winthrop
Item 8. Redemption or Repurchase.............................. Purchases, Redemptions and
Shareholder Services
Item 9. Pending Legal Proceedings............................. Not Applicable
<CAPTION>
Part B for the Winthrop Developing Markets Fund and the Winthrop International
Equity Fund
<S> <C> <C>
Item 10. Cover Page............................................ Cover Page
Item 11. Table of Contents..................................... Cover Page
Item 12. General Information and History....................... General Information
Item 13. Investment Objectives and Policies.................... Investment Policies and
Restrictions; Portfolio
Transactions; Portfolio Turnover
Item 14. Management of the Fund................................ Management
Item 15. Control Persons and Principal Holders of
Securities............................................ Shares of Beneficial Interest
Item 16. Investment Advisory and Other Services................ Management; General Information
Item 17. Brokerage Allocation and Other Practices.............. Portfolio Transactions
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-1A Item No. Location
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<S> <C> <C>
Item 18. Capital Stock and Other Securities.................... General Information; Purchases,
Redemptions and Shareholder Services
Item 19. Purchase, Redemptions and Pricing of Securities Being Purchases, Redemptions and
Offered............................................... Shareholder Services; Net Asset Value
Item 20. Tax Status............................................ Investment Policies and
Restrictions; Dividends,
Distributions and Taxes
Item 21. Underwriters.......................................... Expenses of the International 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.
<PAGE>
WINTHROP OPPORTUNITY FUNDS
277 Park Avenue, New York, NY 10172.
Toll Free (800) 225-8011.
Winthrop Opportunity Funds, a Delaware business trust registered as a
management investment company (the 'Opportunity Funds'), is currently
comprised of four series: 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'), and the Winthrop
Developing Markets Fund and the Winthrop International Equity Fund (the
'International Funds'), which are offered in a separate prospectus. Each of
the Money Funds is open-end and diversified. The Money Funds are designed to
afford investors the opportunity to choose between the separately managed
funds described below which have differing investment objectives and policies.
A DIVERSIFIED SELECTION OF INVESTMENT ALTERNATIVES
Winthrop Municipal Money Fund -- Seeks maximum current income, consistent with
liquidity and safety of principal, that is exempt from Federal income taxes by
investing principally in a diversified portfolio of municipal securities.
Winthrop U.S. Government Money Fund -- Seeks maximum current income,
consistent with liquidity and safety of principal, by investing in a portfolio
of U.S. Government securities.
There can, of course, be no assurance that the Money 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
Municipal Fund and Government Fund.
PURCHASE INFORMATION
Shares of the Money Funds may be purchased directly from the Money Funds by
using the Share Purchase Application found in this Prospectus, through the
Funds' Distributor, Donaldson, Lufkin & Jenrette Securities Corporation, or by
contacting your securities dealer.
The minimum initial investment in shares of each Money Fund is $250 and the
minimum for subsequent investments is $25. Shareholder accounts established on
behalf of the following types of plans will be exempt from the 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 Money Funds at the address and telephone number shown above. See
'Purchases, Redemptions and Shareholder Services.'
Shares of each Money Fund may be purchased at a price equal to the net asset
value of the Money Fund which is expected to be $1.00 per share. See 'Net
Asset Value.'
ADDITIONAL INFORMATION
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Money Funds. A 'Statement of Additional
Information' dated July 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 Money Funds at the address or telephone number shown above. In
addition, the SEC maintains an Internet Web site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference and other information regarding the Money Funds.
An investment in the Winthrop Opportunity Funds is (i) neither insured nor
guaranteed by the U.S. Government; (ii) not a deposit or obligation of, or
guaranteed or endorsed by, any bank; and (iii) not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board or any other
agency. There can be no assurance that the Money Funds will be able to
maintain a stable net asset value of $1.00 per share.
--------------
THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
PROSPECTUS DATED JULY 24, 1997
Investors are advised to read this Prospectus
and to retain it for future reference.
<PAGE>
SUMMARY OF MONEY FUND EXPENSES
<TABLE>
<CAPTION>
Municipal Government
Shareholder Transaction Expenses Fund Fund
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<S> <C> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price)..................................................................... 0% 0%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price)............................................................ 0% 0%
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)........................................ 0% 0%
Redemption Fees (as a percentage of amount redeemed)........................ 0% 0%
Exchange Fee................................................................ 0% 0%
Annual Fund Operating Expenses (estimated as a percentage of average daily
net assets)
Management Fees*......................................................... .40% .40%
12b-1 Fees**............................................................. .25% .25%
Other Expenses, after expense reimbursement.............................. .25%+ .25%+
--- ---
Total Fund Operating Expenses............................................ .90%+ .90%+
=== ===
</TABLE>
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* Management Fees with respect to the Money Funds are reduced to .35% on net
assets in excess of $1 billion.
** The Money Funds have entered into a Distribution Agreement and a Rule 12b-1
Plan pursuant to which each Money Fund pays a distribution fee each month
at an annual rate of up to .25 of 1% of the average daily net assets of
each Money Fund. Amounts paid under the Distribution Agreement are used in
their entirety to reimburse the Money Funds' distributor for actual
expenses incurred. Long-term shareholders may, over time, pay more in 12b-1
Fees than the economic equivalent of the maximum front-end sales charges
permitted by the National Association of Securities Dealers, Inc. See
'Expenses of the Money Funds -- Distribution Agreement.'
+ Commencing at the inception of each Money Fund and through October 31,
1997, the Adviser has agreed to reduce its management fees and the Adviser
or its affiliates have agreed to reimburse operating expenses by the
amount that Total Fund Operating Expenses exceed .90% of the average daily
net assets of each Money Fund. During the period from the Money Funds'
inception on February 24, 1997 through April 30, 1997, Total Fund
Operating Expenses and Other Expenses, as so adjusted reflect a voluntary
reduction amounting to .24% for the Municipal Money Fund and .22% for the
U.S. Government Money Fund. Absent such reimbursement, Other Expenses and
Total Fund Operating Expenses would have been .49% and 1.14%,
respectively, for the Municipal Money Fund and .47% and 1.12%,
respectively, for the U.S. Government Money Fund. After October 31, 1997,
the Adviser or its affiliates may, in their discretion, determine to
discontinue this practice with respect to either Money Fund.
<TABLE>
<CAPTION>
Examples 1 year 3 years
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<S> <C> <C>
Municipal Fund
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return (cumulatively through the end of each time period) and (2)
redemption at the end of each time period......................................... $9 $29
Government Fund
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return (cumulatively through the end of each time period) and (2)
redemption at the end of each time period......................................... $9 $29
</TABLE>
The purpose of this table is to assist investors in understanding the
various costs and expenses which shareholders of each Money Fund bear directly
or indirectly. See also 'Expenses of the Money Funds' and 'Purchases,
Redemptions and Shareholder Services.' The Examples should not be considered a
representation of future expenses and actual expenses may be greater or lesser
than those shown.
'Other Expenses' includes fees paid to the Money Funds' independent
auditor, legal counsel and Trustees as well as expenses associated with
registration fees, reports to shareholders and other miscellaneous expenses.
Such fees are not based on a percentage of each Money Fund's average net
assets, but a fixed dollar cost. The percentages for other fixed cost
expenses are the maximum allowed to be charged to the Money Funds as total
operating expenses are capped at the percentages stated above.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The table below sets forth financial data for a share of capital stock
outstanding throughout each period presented. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
Municipal U.S. Government
Money Fund Money Fund
--------------- ---------------
Period Ended Period Ended
April 30, April 30,
1997+(3) 1997+(3)
--------------- ---------------
<S> <C> <C>
Net Asset Value, Beginning of Period.............................. $ 1.00 $ 1.00
Net Investment Income............................................. 0.005 0.008
Dividends from Net Investment Income.............................. (0.005) (0.008)
------- -------
Net Asset Value, End of Period.................................... $ 1.00 $ 1.00
------- -------
------- -------
Total Return++.................................................... 0.05% 0.08%
Ratio of Expenses to Average Net Assets(1)(2)..................... 0.90% 0.90%
Ratio of Net Investment Income to Average Net Assets(1)(2)........ 2.74% 4.51%
Net Assets, End of Period (000's omitted)......................... $ 21,824 $ 21,610
</TABLE>
- ---------
+ Commencement of operations was February 24, 1997.
++ 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. Total return calculated for a
period of less than one year is not annualized.
(1) Annualized.
(2) Net of voluntary assumption by the Adviser of expenses, expressed as a
percentage of average net assets for the period ended April 30, 1997, as
follows: Municipal Money Fund, .24% (annualized) and U.S. Government Money
Fund, .22% (annualized).
(3) Unaudited.
3
<PAGE>
INTRODUCTION
Winthrop Opportunity Funds is a Delaware business trust whose shares are
offered in four separate portfolios: 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'), and the
Winthrop Developing Markets Fund and the Winthrop International Equity Fund
(the 'International Funds'), which are offered in a separate prospectus.
Because Winthrop Opportunity Funds offers multiple funds, it is known as a
'series fund.' Winthrop Opportunity Funds may in the future establish
additional series with different investment objectives and policies and offer
additional classes of shares.
Each portfolio of the Winthrop Opportunity Funds is a separate pool of
assets constituting, in effect, a separate fund with its own investment
objective and policies. (See 'Investment Objectives, Policies and Risk
Considerations.') A shareholder may utilize the Money Funds' exchange
privilege to transfer such shareholder's assets to the International Funds or
for shares of the Winthrop Growth Fund, Winthrop Fixed Income Fund, Winthrop
Small Company Value 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 shares of the Money Funds (.25 of 1% annually) for Class A shares
of the Focus Funds (.30 of 1% annually) or Class B shares of the International
Funds or Focus Funds (1% annually). (See 'Purchases, Redemptions and
Shareholder Services.') In addition, a shareholder may be subject to sales
charges upon exchanging shares of the Money Funds for shares of the
International Funds or Focus Funds. (See 'Additional Shareholder
Services -- Exchange Privilege.') Shareholders of the Money Funds are entitled
to their pro rata share of any dividends and distributions arising from that
Money Fund's assets (See 'Daily Dividends, Distributions and Taxes.') Upon
redeeming shares of a Money Fund, the shareholder will receive the
next-determined net asset value of that Fund represented by the redeemed
shares which is expected to remain constant at $1.00 per share. (See
'Purchases, Redemptions and Shareholder Services.')
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS
The investment objectives and policies of each Money Fund are set forth
below. There can be, of course, no assurance that either Money Fund will
achieve its respective investment objective.
The investment objectives of each Money Fund are fundamental policies of
that Money Fund and may not be changed without the approval of that Money
Fund's shareholders. Except as set forth in 'Investment Policies and
Restrictions' in the Statement of Additional Information, or as otherwise
indicated below, the investment policies of each Money Fund are not
fundamental policies and may be changed by the Board of Trustees without a
shareholder vote. A more detailed explanation of the Money Funds' policies and
the securities and instruments they may buy or use is contained in the Money
Funds' Statement of Additional Information, which is available upon request.
The Winthrop Municipal Money Fund
The Municipal Fund's investment objectives are to seek maximum current
income, consistent with liquidity and safety of principal, that is exempt from
income taxation to the extent described below. As a matter of fundamental
policy, the Municipal Fund pursues its objectives by investing in high quality
municipal securities having remaining maturities of one year or less, which
maturities may extend to 397 days, and at least 80% of the Municipal Fund's
total assets will be invested in such securities (as opposed to the taxable
investments described below). However, the Municipal Fund reserves the right
to lower the percentage to 65% if economic or political conditions
warrant. To increase the Municipal Fund's ability to reach its investment
objectives, the dollar weighted average maturity of its portfolio securities
is always 90 days or less. In general, securities with longer maturities are
more
4
<PAGE>
vulnerable to price changes, although they may provide higher yields. It
is possible that a major change in interest rates or a default on the
Municipal Fund's investments could cause their share prices to change. There
can be no assurance, as is true with all investment companies, that the
Municipal Fund's investment objectives will be achieved.
Normally, substantially all the Municipal Fund's income will be tax-exempt
as described below. Such income may be subject to state or local income taxes.
The municipal securities in which the Municipal Fund invests include
municipal notes and short-term municipal bonds. Municipal notes are generally
used to provide for short-term capital needs and generally have maturities of
one year or less. Examples include tax anticipation and revenue anticipation
notes, which are generally issued in anticipation of various seasonal
revenues, bond anticipation notes, and tax-exempt commercial paper. Short-term
municipal bonds may include general obligation bonds, which are secured by the
issuer's pledge of its faith, credit and taxing power for payment of principal
and interest, and revenue bonds, which are generally paid from the revenues of
a particular facility or a specific excise or other source.
The Municipal Fund may invest in variable rate obligations whose interest
rates are adjusted either at predesignated periodic intervals or whenever
there is a change in the market rate to which the security's interest rate is
tied. Such adjustments minimize changes in the market value of the obligation
and, accordingly, enhance the ability of the Municipal Fund to maintain a
stable net asset value. Variable rate securities purchased may include
participation interests in industrial development bonds which may be backed by
letters of credit from banking or other financial institutions. The letters of
credit of any single of such institutions in respect of all variable rate
obligations will not cover more than the allowable percentage of the Municipal
Fund's total assets in accordance with Rule 2a-7 of the Investment Company Act
of 1940 (the '1940 Act').
The Municipal Fund may invest without limitation in tax-exempt municipal
securities subject to the alternative minimum tax (the 'AMT'). Under current
Federal income tax law, (1) interest on tax-exempt municipal securities issued
after August 7, 1986 which are 'specified private activity bonds,' and the
proportionate share of any exempt-interest dividends paid by a regulated
investment company which receives interest from such specified private
activity bonds, will be treated as an item of tax preference for purposes of
the AMT imposed on individuals and corporations, though for regular Federal
income tax purposes such interest will remain fully tax-exempt, and (2)
interest on all tax-exempt obligations will be included in 'adjusted current
earnings' of corporations for AMT purposes. Such bonds have provided, and may
continue to provide, somewhat higher yields than other comparable municipal
securities. While the Municipal Fund may invest without limitation in
securities subject to AMT, the AMT affects only a small percentage of all tax
paying investors. (See 'Daily Dividends, Other Distributions and Taxes.')
All of the Municipal Fund's municipal securities at the time of purchase
are rated within the two highest quality ratings of Moody's Investors Service,
Inc. (Aaa and Aa, MIG 1 and MIG 2 or VMIG1 and VMIG2) or Standard & Poor's
Corporation (AAA and AA or SP-1 and SP-2), or judged by the Adviser (as
defined under 'Management') to be of comparable quality.
Pursuant to the 1940 Act, a 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 Municipal Fund may
invest in such investment companies if, in the judgment of the Adviser, the
potential benefits of such investment justifies the payment of any applicable
premium or sales charge. As a shareholder in an investment company, the
Municipal Fund would bear its ratable share of that investment company's
expenses, including its advisory and administrative fees. At the same time the
Municipal Fund would continue to pay its own management fees and other expenses.
5
<PAGE>
To maintain portfolio diversification and reduce investment risk, the
Municipal Fund may not: (1) borrow money except from banks on a temporary
basis or via entering into reverse repurchase agreements to be used
exclusively to facilitate the orderly maturation and sale of portfolio
securities during any periods of abnormally heavy redemption requests, if they
should occur; such borrowings may not be used to purchase investments; or (2)
pledge, hypothecate or in any manner transfer, as security for indebtedness,
its assets except to secure such borrowings.
The Municipal Fund may also invest in stand-by commitments,
delayed-delivery and when-issued securities, which may involve certain
expenses and risks. The Municipal Fund's custodian will maintain a segregated
account containing liquid securities having value equal to, or greater than,
such securities. The price of such securities, which is generally expressed in
yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for such securities takes place at a later time. Normally
the settlement date occurs from within ten days to one month after the
purchase of the issue. The value of such securities may fluctuate prior to
their settlement, thereby creating an unrealized gain or loss to the Municipal
Fund. Such securities are examples of what the Securities and Exchange
Commission (the 'SEC') considers 'illiquid securities' because their
settlement date occurs more than seven days after their purchase. The SEC
limits money market funds to hold only up to 10% of their net assets for
securities which settle more than seven days after purchase.
The Municipal Fund may also invest in municipal leases, which are leases
or installment purchases used by state and local governments as a means to
acquire property, equipment or facilities without involving debt issuance
limitations. It is possible that more than 5% of the Municipal Fund's net
assets will be invested in municipal leases which have been determined to be
liquid securities by the Municipal Fund's adviser.
The taxable investments in which the Municipal Fund may invest include
obligations of the U.S. Government and its agencies, high quality certificates
of deposit and bankers' acceptances, prime commercial paper, and repurchase
agreements.
To seek to reduce investment risk, the Municipal Fund may not invest in
the securities of any one issuer, except the U.S. Government, in excess of the
percentage of the Municipal Fund's total assets allowed under Rule 2a-7 of the
Investment Company Act of 1940.
The Municipal Fund earns income at current money market rates and its
yield will vary from day to day and generally reflects current short-term
interest rates and other market conditions. It is important to note that
neither the Municipal Fund nor its yields are insured or guaranteed by the
U.S. Government.
The Winthrop U.S. Government Money Fund
The Winthrop U.S. Government Money Fund (the 'Government Fund') investment
objectives are to seek maximum current income, consistent with liquidity and
safety of principal. As a matter of fundamental policy, the Government Fund
pursues its objectives by maintaining a portfolio of high quality money market
securities, including the types described in the succeeding paragraph, which
at the time of investment generally have remaining maturities of one year or
less, although maturities may extend to 397 days. The dollar weighted average
maturity of the Government Fund's portfolio securities will vary, but will
always be 90 days or less. In general, securities with longer maturities are
more vulnerable to price changes, although they may provide higher yields. It
is possible that a major change in interest rates or a default on the
Government Fund's investments could cause their share prices to change. There
can be no assurance, as is true with all investment companies, that the
Government Fund's objectives will be achieved.
The securities in which the Government Fund invests are: (1) marketable
obligations of, or guaranteed by, the United States Government, its agencies
or instrumentalities (collectively, the 'U.S. Government'), including issues
of the United States Treasury, such as bills, certificates of indebtedness,
notes and bonds, and issues of agencies and instrumentalities established
under the authority of an act of Congress, including variable rate obligations
such as floating rate notes; and (2) repurchase agreements that are
collateralized in full each day by eligible mortgage related securities or the
types of securities listed above. These agreements are entered into with
'primary dealers' (as designated by the Federal
6
<PAGE>
Reserve Bank of New York) in U.S. Government securities and would create a loss
to the Government Fund if, in the event of a dealer default, the proceeds from
the sale of the collateral were less than the repurchase price. In addition, if
the seller of repurchase agreements becomes insolvent, the Government Fund's
right to dispose of the securities might be restricted.
The Government Fund may commit up to 10% of its net assets to the purchase
of illiquid securities, which includes when-issued U.S. Government securities,
whose value may fluctuate prior to their settlement, thereby creating an
unrealized gain or loss to the Government Fund.
The Government Fund earns income at current money market rates and its
yield will vary from day to day and generally reflects current short-term
interest rates and other market conditions. It is important to note that
neither the Government Fund nor its yield is insured or guaranteed by the U.S.
Government.
To maintain portfolio diversification and reduce investment risk, the
Government Fund may not: (1) borrow money except from banks on a temporary
basis or via entering into reverse repurchase agreements to be used
exclusively to facilitate the orderly maturation and sale of portfolio
securities during any periods of abnormally heavy redemption requests, if they
should occur; such borrowings may not be used to purchase investments; or (2)
pledge, hypothecate or in any manner transfer, as security for indebtedness,
its assets except to secure such borrowings.
In addition to the above referenced securities, the Money Funds reserve
the right as a defensive measure to hold temporarily other types of securities
which are permitted by Rule 2a-7 of the Investment Company Act of 1940. See
'Investment Objectives' in the Statement of Additional Information for a more
complete description of the Money Funds' objectives, strategies, instruments
to be used in connection therewith and risks associated therewith.
MANAGEMENT
The Money Funds' Board of Trustees (who, with its officers, are described
in the Statement of Additional Information) has overall responsibility for the
management of the Funds.
DLJ Investment Management Corp. (the 'Adviser'), a Delaware corporation
with principal offices at 277 Park Avenue, New York, New York 10172, has been
retained under an investment advisory agreement to provide investment advice
and to supervise the management and investment programs of the Money Funds,
subject to the general supervision and control of the Trustees of the Funds.
The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette
Securities Corporation, which is a member of the New York Stock Exchange and a
wholly-owned subsidiary of Donaldson, Lufkin & Jenrette, Inc. ('DLJ'), a major
international supplier of financial services. DLJ is an independently
operated, indirect subsidiary of The Equitable Companies Incorporated, a
holding company controlled by AXA, a member of a large French insurance group.
AXA is indirectly controlled by a group of five French mutual insurance
companies. The Adviser was formed in November, 1995 for the initial purpose of
acting as investment adviser to a select group of individual and institutional
investors, and hence, as an entity, has not acted as an adviser to other
investment companies in the past. The Adviser, however, has hired personnel
from both within and outside of DLJ who have experience in the investment
company industry, specifically the operation and management of money market
funds.
Under its Advisory Agreement with the Money Funds, the Adviser or its
affiliates (i) provide investment advisory services and order placement
facilities for each of the Money Funds and pays all compensation of Trustees
of the Money Funds who are affiliated persons of the Adviser and (ii) furnish
the Money Funds' management supervision and assistance and office facilities in
addition to administrative and other nonadvisory services for which it may be
reimbursed.
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The Money Funds pay a fee of .40% of the average daily net assets of each Money
Fund to the Adviser which is reduced to .35% of each Money Fund's average daily
net assets in excess of $1 billion. The advisory fees to be paid by the Money
Funds are similar to those paid by other money market mutual funds.
For the period from the inception of the Money Funds on February 24, 1997
through April 30, 1997, pursuant to the investment advisory agreement, the
Money Funds paid the Adviser, advisory fees equivalent to .40% (annualized) of
the average daily net assets of each Fund. The total operating expenses of the
Municipal Fund and the Government Fund for such period were $52,536 and
$45,574, respectively. Commencing at the inception of the Money Funds through
October 31, 1997, the Adviser has agreed to reduce its management fees and the
Adviser or its affiliates have agreed to reimburse operating expenses by the
amount that total operating expenses exceed .90% of the average daily net
assets of each Money Fund. After October 31, 1997, the Adviser or its
affiliates may, in their discretion, determine to discontinue this practice
with respect to either Money Fund.
EXPENSES OF THE MONEY FUNDS
General
In addition to the payments to the Adviser under the investment advisory
agreement described above, the Money Funds pay the other expenses incurred in
the Money Funds' organization and operations, including the costs of printing
prospectuses and other reports to existing shareholders; all expenses and fees
related to registration and filing with the SEC and with state regulatory
authorities; custody, transfer and dividend disbursing expenses; legal and
auditing costs; clerical, accounting, and other office costs; fees and
expenses of Trustees who are not affiliated with the Adviser; costs of
maintenance of existence; and interest charges, taxes, brokerage fees, and
commissions.
The investment advisory agreement provides that the Adviser will reimburse
the Money Funds up to the amount of its advisory fee for the expenses of any
Money Fund (exclusive of interest, taxes, brokerage, expenditures pursuant to
the distribution services agreement described below, and extraordinary
expenses, all to the extent permitted by applicable state law and regulations)
which in any year exceed the limits prescribed by any state in which shares of
such Money Fund are qualified for sale.
Distribution Agreement
Rule 12b-1 adopted by the SEC under the 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 Money Funds could be deemed to be
distribution expenses within the meaning of such rule. Thus, pursuant to Rule
12b-1, the Money Funds' Trustees, including a majority of its disinterested
Trustees, have adopted separate 12b-1 Plans for the expenses to be incurred in
distributing each Money Fund's shares (the 'Rule 12b-1 Plans') and the Money
Funds have entered into a Distribution Agreement (the 'Agreement') with
Donaldson, Lufkin & Jenrette Securities Corporation, the Funds' distributor
(the 'Distributor'). The Distributor may enter into service agreements with
other entities. The Distributor is located at 277 Park Avenue, New York, New
York 10172.
With respect to each Money Fund, the maximum amount payable by the Money
Funds under the Rule 12b-1 Plans for distributing shares is .40 of 1% of the
average daily net assets of each Fund during the year. The current amount
payable by the Money Funds under the Rule 12b-1 Plans to the Distributor is
.25 of 1% of the average daily net assets of each Fund during the year.
Pursuant to the Agreements, the Trustees can raise the distribution fees up to
the maximum amount by a majority vote if the Trustees, in their opinion, feel
that the raise is in the best interest of the Money Funds and their
shareholders. The Agreement but not the Rule 12b-1 Plans terminate in the event
of assignment of the Agreement.
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An initial concession or ongoing maintenance fee may be paid to
broker-dealers on sales of both Money Funds' shares. Pursuant to the Rule
12b-1 Plans, the Distributor is then reimbursed for such payments with amounts
paid from the assets of such Money Fund. The payments to the broker-dealer,
although a Money Fund expense which is paid by all shareholders, will only
directly benefit investors who purchase their shares through a broker-dealer
rather than directly from the Money Funds. Broker-dealers who sell shares of
the Money Funds may provide services to their customers that are not available
to investors who purchase their shares directly from the Money Funds. The
payments to the broker-dealers will continue to be paid for as long as the
related assets remain in the Money Funds.
Amounts paid under the Rule 12b-1 Plans and the Agreement are used in
their entirety to reimburse the Distributor for actual expenses incurred to
(i) promote the sale of shares of each Money Fund by, for example, paying for
the preparation, printing and distribution of prospectuses, sales brochures
and other promotional materials sent to prospective shareholders, by directly
or indirectly purchasing radio, television, newspaper and other advertising or
by compensating the Distributor's employees or employees of the Distributor's
affiliates for their distribution assistance, (ii) make payments to the
Distributor to compensate broker-dealers or other persons for providing
distribution assistance and (iii) make payments to compensate financial
intermediaries for providing administrative and accounting services with
respect to the Money Funds' shareholders. In addition to the concession or
maintenance fee which may be paid to dealers or agents, the Distributor will
from time to time pay additional compensation to dealers or agents in
connection with the sale of shares. Such additional amounts may be utilized,
in whole or in part, in some cases together with other revenues of such
dealers or agents, to provide additional compensation to registered
representatives of such dealers or agents who sell shares of a Money Fund. On
some occasions, such compensation will be conditioned on the sale of a
specified minimum dollar amount of the shares of the Money Funds during a
specific period of time. Such incentives may take the form of payment for
meals, entertainment, or attendance at educational seminars and associated
expenses such as travel and lodging. Such dealer or agent may elect to receive
cash incentives of equivalent amounts in lieu of such payments. The Rule 12b-1
Plans permit payments to be made in subsequent years for expenses incurred in
prior years if the Money Funds' Trustees specifically authorize such payment.
For the period from the inception of the Money Funds on February 24, 1997
through April 30, 1997, distribution costs incurred for the Municipal Fund and
the Government Fund were $11,501 and $10,194, respectively.
As of the date of this Prospectus, the Money Funds have not commenced
operations and, accordingly, have not made payments under the Rule 12b-1 Plans
or the Agreement.
PURCHASES, REDEMPTIONS AND SHAREHOLDER SERVICES
Purchases
Shares of each of the Money Funds will be offered on a continuous basis
directly by the Money Funds and by the Distributor, acting as agent for the
Money Funds, at the respective net asset value per share determined as of the
close of the regular trading session of the New York Stock Exchange (the
'NYSE'), currently 4:00 p.m., New York City time, following receipt of a
purchase order in proper form. (See 'Net Asset Value.') The investor should
send a completed Share Purchase Application (found in this Prospectus) and
enclose a check in the amount of the initial investment to the Transfer Agent,
FPS Services, Inc., 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.' Checks made payable to the
shareholder or another third party (third party checks) will not be accepted by
the Money Funds or the Transfer Agent for investment. To open a new account by
wire, first call Winthrop Opportunity Funds at 1-800-225-8011 (option
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#2) to obtain an account number. A representative will instruct you to send a
completed, signed application to the Transfer Agent. Accounts cannot be opened
without a completed, signed application and a fund account number. Contact your
bank to arrange a wire transfer to:
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 who purchase shares of the Money Funds through a wire transfer will
be eligible to receive the daily dividend declared on the date of purchase if
the Transfer Agent is notified of such purchase by 12:00 Noon and wired funds
are received by the Transfer Agent by 4:00 p.m. (See 'Daily Dividends,
Distributions and Taxes.')
Investors may also open accounts via their securities dealer. In addition,
securities dealers may offer an automatic sweep for the shares of the Money
Funds in the operation of cash accounts for its customers. Shares of the Money
Funds purchased through an automatic sweep by 1:00 p.m. are eligible to
receive that day's daily dividend. Contact your securities dealer to determine
if a sweep is available and what the sweep parameters are.
The minimum initial and subsequent investment in each Money Fund is $250
and $25, respectively. (For example, an investor wishing to make an initial
investment in shares of both Money Funds would be required to invest at least
$250 in each Money Fund.) Full and fractional shares will be credited to an
investor's account in the amount of the investment. Share certificates will
not be issued for full or fractional shares of the Money Funds. Each Money
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 Money Fund's minimum initial investment
and minimum subsequent investment requirements: (i) retirement plans qualified
under section 401(k) of the Code; (ii) plans described in section 403(b) of
the Code; (iii) deferred compensation plans described in section 457 of the
Code; (iv) simplified employee pension (SEP) plans; and (v) savings incentive
match plans for employees (SIMPLE).
Existing shareholders wishing to purchase additional shares of a Money
Fund may use an investment stub found at the bottom of the Money Fund's
Shareholder Statement form or, if one is not available, they may send a check
payable to such Money Fund (with Fund Account information referenced) directly
to the Transfer Agent, FPS Services, Inc., 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.) Existing
shareholders may also purchase additional shares via wire by contacting and
providing the Fund Account information to the Transfer Agent and following the
wire instructions above.
Further information and assistance is available by contacting the Money
Funds at the address or telephone number listed on the cover page of this
Prospectus.
Redemptions
Shares of the Money Funds may be redeemed at a redemption price equal to
the net asset value per share, as next computed as of the close of the regular
trading session of the NYSE, currently 4:00 p.m., New York City time,
following the receipt in proper form by the Money Fund of shares tendered for
redemption. (See 'Net Asset Value.')
The value of a shareholder's shares on redemption though expected to
remain at $1.00 per share may be more or less than the cost of such shares to
the shareholder, depending upon the value of a Money Fund's portfolio
securities at the time of such redemption or repurchase. Shares do not earn
dividends on the day a redemption is effected. (See 'Daily 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 Money Funds containing a request for redemption of such shares at the
next determined net asset value per share. Alternatively, the
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shareholder may elect the right to redeem shares by telephone. If you wish to
have Federal funds wired the same day as your telephone redemption request,
make sure that your request will be received by the Money Funds prior to 12:00
Noon. (See 'Additional Shareholder Services -- Telephone Redemption and Exchange
Privilege.') If a shareholder's securities dealer offers an automatic sweep
service, the sweep will automatically transfer from the Money Fund account
sufficient cash to cover any debit balance that may occur in your cash
account. Shares of the Money Funds redeemed prior to 1:00 p.m. through an
automatic sweep service will be eligible for same day federal funds wiring.
If the total value of the shares being redeemed exceeds $50,000 or a
redemption request directs proceeds to a party other than the registered
account owner(s), the signature or signatures on the letter or the endorsement
must be guaranteed by an 'eligible guarantor institution' as defined in Rule
17Ad-15 under the Securities Exchange Act of 1934. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations. A broker-dealer guaranteeing signatures must be a
member of a clearing corporation or maintain net capital of at least $100,000.
Credit unions must be authorized to issue signature guarantees. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program. Additional documents may be
required for redemption of corporate, partnership or fiduciary accounts.
The requirement for a guaranteed signature is for the protection of the
shareholder in that it is intended to prevent an unauthorized person from
redeeming shares and obtaining the redemption proceeds.
A Money Fund may request in writing that a shareholder whose account in a
Money Fund has an aggregate balance less than $250 increase his account to at
least that amount within 60 days. If the shareholder fails to do so, such
Money Fund reserves the right to close such account and send the proceeds to
the shareholder. A Money Fund will not redeem involuntarily any shareholder
account based solely on the market movement of such Money Fund's shares.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after shares are tendered in
proper form, except for any period during which the NYSE is closed (other than
customary weekend and holiday closings) or during which trading on the
exchange is deemed to be restricted under rules of the SEC, or for any period
during which an emergency (as determined by the SEC) exists as a result of
which disposal by a Money Fund of its portfolio securities is not reasonably
practicable, or as a result of which it is not reasonably practicable for a
Money Fund to determine the value of its net assets, or for such other period
as the SEC may by order permit for the protection of shareholders. Generally,
redemption will be made by payment in cash or by check. For information
concerning circumstances in which redemptions may be effected through the
delivery of in kind portfolio securities, see the Statement of Additional
Information.
Additional Shareholder Services
Exchange Privilege. Shares of each Money Fund can be exchanged for shares
of the other Money Fund. Shareholders whose initial investment was directly
into a Money Fund may exchange such shares into either class of the
International Funds or the Focus Funds. Shares of each Money Fund established
pursuant to Winthrop's exchange privilege will be eligible for exchange into
the International Funds or Focus Funds provided that the exchange is directed
into the same class of shares upon which the initial investment was made.
Exchanges may be made by mail or telephone (see 'Additional Shareholder
Services -- Telephone Redemption and Exchange Privilege'). Unless otherwise
indicated in the initial Share Purchase Application or by written notice to
the Money Funds or its Transfer Agent, shareholders whose initial investment was
invested directly into a Money Fund will, upon an exchange request,
automatically be exchanged into Class A shares of the requested International
Funds or Focus Funds. The exchange privilege for the International Funds and the
Focus Funds is available only in states in which shares of the relevant
International Fund or Focus Fund may be legally sold. Prospectuses for each of
the International Funds and the Focus Funds may be obtained from the address or
telephone number
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listed on the cover page of this Prospectus. An exchange is effected on the
basis of each Money Fund's relative net asset value per share next computed
following receipt of an order for such exchange from the shareholder.
The Money Funds impose no separate charge for exchanges. A shareholder
will not be assessed any contingent deferred sales charge at the time of an
exchange between any of the Money Funds, International Funds or Focus Funds.
However, shares of the Money Funds established through an exchange of shares
subject to a contingent deferred sales charge will be charged at the time of
redemption. The period of time during which a shareholder owns shares in any
of the Money Funds, International 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 shares of the Money Funds (.25 of 1%
annually) for Class A shares of the Focus Funds (.30 of 1% annually) or Class
B shares of the International Funds or Focus Funds (1% annually).
There is no sales load associated with the purchase and sale of shares of
the Money Funds. However, a shareholder may be subject to sales charges upon
exchanging shares of the Money Funds for Class A shares of the International
Funds and Focus Funds. Currently, Class A shares of the International Funds
and Focus Funds have initial sales loads of 5.75% and 4.75%, respectively,
while Class B shares of the International Funds and Focus Funds are subject to
a contingent deferred sales charge which declines from 4% during the first
year of investment to zero after four years. A prospectus describing the sales
charges associated with either the International Funds or Focus Funds can be
obtained from the address or phone number at the beginning of this Prospectus.
The exchange privilege is intended to provide shareholders with a
convenient way to switch their investments when their objectives or perceived
market conditions suggest a change. The 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 Money
Funds, International Funds and Focus Funds. Shareholders who engage in such
frequent transactions 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
applicable fund into which exchanges are made. Annual fund operating expenses
for such other fund may be higher than the funds exchanged from.
Automatic Monthly Investment Plan. Any shareholder may elect on the Share
Purchase Application to make additional investments in a Money Fund
automatically, by authorizing the Money Funds to draw on the shareholder's
designated bank 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 Money Funds at least three business
days before the change becomes effective. The plan may be terminated at any
time without penalty by the shareholder or the Money Funds.
Automatic Exchange Plan. Shareholders may authorize Winthrop to exchange
an amount established in advance automatically for shares of the other Money
Fund or shares of the International 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').
Dividend Direction Option. Shareholders may elect on the Share Purchase
Application to have their dividends paid to another individual or directed for
reinvestment into the other Money Fund or into the International Funds or
Focus Funds provided that an existing account in such other fund is maintained
by the shareholder.
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Systematic Withdrawal Plan. Any shareholder who owns or purchases shares
of a Money Fund having a current net asset value of at least $10,000 may
establish a systematic withdrawal plan under which the shareholder or a third
party will receive payment by check in a stated amount of not less than $50 on
a monthly, quarterly, semi-annual or annual basis. A contingent deferred sales
charge which may otherwise be imposed on a withdrawal redemption (via an
exchange from the International Funds or Focus Funds) will be waived in
connection with redemptions made pursuant to Winthrop's systematic withdrawal
plan up to 1% monthly or 3% quarterly of an account (excluding dividend
reinvestment) not to exceed 10% over any 12-month rolling period. Systematic
withdrawals elected on a semi-annual or annual basis are not eligible for the
waiver.
Checkwriting Privileges. Shareholders may redeem shares by writing checks
against their account balance for at least $100. Investments in the Money
Funds will continue to earn dividends until a shareholder's check is presented
to the Money Funds for payment. Checks will be returned by the Money Funds'
Transfer Agent if there are insufficient shares to meet the withdrawal amount.
Shareholders should not attempt to close an account by check because the exact
balance at the time the check clears will not be known when the check is
written. There is currently no charge to shareholders for checkwriting, but
the Money Funds reserve the right to impose a charge in the future. The Money
Funds may modify, suspend or terminate checkwriting privileges at any time
upon notice to shareholders and will terminate checkwriting privileges without
notice for accounts whose assets are exchanged completely out of the Money
Funds. In addition, United Missouri Bank N.A., as agent for the Transfer Agent
in processing redemptions via the checkwriting privilege, reserves the right
to terminate checkwriting privileges at any time without notice to
shareholders. Checkwriting privileges will not be available for accounts whose
shares are subject to a contingent deferred sales charge.
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 Money Funds by the shareholder
or the shareholder's investment dealer of record. A shareholder may also
exchange assets via telephone from such shareholder's account to the Class A
or Class B shares of the International Funds and Focus Funds. Each Money Fund
will employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. Such procedures include the requirement that redemption
or exchange orders must include the account name and the account number as
registered with the Money Funds. The minimum amount for a wire transfer is
$1,000. Proceeds of telephone redemptions may also be sent by automated
clearing house funds to a shareholder's designated bank account. Neither the
Money Funds, the Adviser, the International Funds, the Focus Funds, nor any
transfer agent for any of the foregoing will be responsible for following
instructions communicated by telephone that are reasonably believed to be
genuine and, accordingly, investors bear the risk of loss. The Telephone
Exchange Privilege will be offered automatically unless a shareholder declines
such option on the Share Purchase Application or by writing to the Money
Funds' Transfer Agent at the address listed in the back of this Prospectus.
Timing of Redemptions and Exchanges. If a redemption or exchange order for
a Money Fund is received on a Money Fund Business Day prior to the close of
the regular session of the NYSE, which is generally 4:00 p.m. New York City
time, the proceeds will be transferred as soon as possible, normally on the
next Money Fund Business Day, and shares of each Money Fund will be priced
that Money Fund Business Day. If the redemption or exchange order is received
after the close of the regular session of the NYSE, shares of each Money Fund
will be priced the next Money Fund Business Day and the proceeds will be
transferred the next Money Fund Business Day after pricing. A shareholder also
may request that proceeds be sent by check to a designated bank. Exchanges are
made without any charge by the Money Funds.
Purchases by check may not be redeemed by a Money Fund until after a
reasonable time necessary to verify that the purchase check has been paid
(approximately ten Money Fund Business Days from receipt of the purchase
check). When a purchase is made by wire and subsequently redeemed, the
proceeds from such
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redemption normally will not be transmitted until two Money Fund Business Days
after the purchase by wire. Bank acknowledgment of payment initialed by the
shareholder may shorten delays.
Additional information concerning these Additional Shareholder Services
may be obtained by contacting the Money Funds' Transfer Agent at the address
or telephone number listed on the cover page of this Prospectus.
NET ASSET VALUE
The net asset value per share for purchases and redemptions of shares of
each Money Fund is determined as of the close of the regular session of the
NYSE, which is generally 4:00 p.m., New York City time, on each day that
trading is conducted during such session on the NYSE. In accordance with the
Money Funds' Agreement and Declaration of Trust and By-Laws, net asset value
for each Money Fund is determined separately by dividing the value of each
Money Fund's net assets less its liabilities, by the total number of each
Fund's shares then outstanding. The Net Asset Value is expected to be
maintained at a constant at $1.00 per share although this price is not
guaranteed. For purposes of this computation, the securities in each Money
Fund's portfolio are valued at amortized cost, which minimizes the effect of
changes in a security's market value and helps maintain a stable $1.00 per
share price. All expenses, including the fees payable to the Adviser, are
accrued daily.
Events affecting the values of investments that occur between the time
their prices are determined and 4:00 p.m. on each day that the NYSE is open
will not be reflected in the net asset value of a Money Fund's shares unless
the Adviser, under the supervision of such Fund's Board of Trustees,
determines that the particular event would materially affect net asset value.
As a result, the net asset value of a Money Fund's shares may be significantly
affected by such trading on days when a shareholder has no access to such
Money Fund.
DAILY DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends from net investment income are declared daily and paid monthly.
Net investment income consists of all accrued interest income on Money Fund
assets less the Money Fund's expenses applicable to that dividend period.
There is no fixed dividend rate and there can be no assurance that a Money
Fund will distribute any net investment income. The amount of any distribution
paid by each Money Fund depends upon the realization by the Money Fund of
income from that Money Fund's investments. All distributions will be made to
shareholders of a Money Fund solely from assets of that Money Fund.
Distributions by the Money Funds may also be subject to certain state and
local taxes. Each year, by January 31, the Money Funds will send tax
information stating amount and type of all its distributions for the year just
ended.
Each Money Fund intends to qualify as a regulated investment company under
Subchapter M of the Code, so that it will not be liable for federal income
taxes to the extent that its net taxable income and net capital gains are
distributed.
RETIREMENT PLANS
Each of the Money Funds may be a suitable investment vehicle for part or
all of the assets held in various tax-sheltered retirement plans such as
IRA's, SEP's, SIMPLE plans and other pension and profit-
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sharing plans. Semper Trust Company serves as custodian under these prototype
retirement plans and charges an annual account maintenance fee of $15 per
participant, regardless of the number of Winthrop Funds selected. Persons
desiring information concerning these plans should write or telephone the Money
Funds or the Money Funds' Transfer Agent. For a more detailed explanation of
the retirement plans offered by the Money Funds, see the Money Funds' Statement
of Additional Information.
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. The Opportunity Funds are currently divided into
the Money Funds and the International Funds, each of which are divided into
two series. Each share of each Money Fund is normally entitled to one vote
(with proportional voting for fractional shares). Generally, shares of both
Money Funds vote as a single series on matters that affect all Money Funds in
substantially the same manner. As to matters affecting each Money Fund
separately, such as approval of the investment advisory agreement, shares of
each Money Fund would vote as separate series. The Money Funds will not have
annual meetings of shareholders so long as at least two-thirds of the Trustees
then in office have been elected by the shareholders. Section 16(c) of the
1940 Act provides certain rights to shareholders which the Money Funds will
honor regarding the calling of meetings of shareholders and other
communications with shareholders. Trustees may also call meetings of
shareholders from time to time as the Trustees deem necessary or desirable.
Shares of a Money Fund are freely transferable, are entitled to dividends
as determined by the Trustees and, in liquidation of a Money Fund, are
entitled to receive the net assets of that Money Fund. Shareholders have no
preemptive rights.
Distributor
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of the
Adviser, serves as the Money Funds' Distributor.
Custodian, Dividend Disbursing Agent and Transfer Agent
Citibank, N.A. acts as Custodian for the securities and cash of the Money
Funds, but plays no part in deciding on the purchase or sale of portfolio
securities. FPS Services, Inc. acts as dividend disbursing agent, registrar
and transfer agent.
Information for Shareholders
Any shareholder inquiry regarding the Money Funds or the status of the
shareholder's account can be made to the Money 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 Money
Funds, will be sent to shareholders.
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WINTHROP MONEY FUNDS
(800) 225-8011
ADVISER
DLJ Investment Management Corp.
277 Park Avenue, New York, New York 10172
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue, New York, New York 10172
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
Summary of Money Fund Expenses 2
Financial Highlights 3
Introduction 4
Investment Objectives, Policies and Risk
Considerations 4
Management 7
Expenses of the Money Funds 8
Purchases, Redemptions and Shareholder Services 9
Net Asset Value 14
Daily Dividends, Distributions and Taxes 14
Retirement Plans 14
General Information 15
This Prospectus does not constitute an offering in any
state in which such offering may not lawfully be made.
WMF-1
[WINTHROP LOGO]
Winthrop
Money
Funds
Winthrop Municipal
Money Fund
Winthrop U.S.
Government Money
Fund
Prospectus
July 24, 1997
WINTHROP
OPPORTUNITY
FUNDS
<PAGE>
A SPECTRUM OF INVESTMENT
ALTERNATIVES
The Winthrop Family of Mutual Funds ('Winthrop') gives investors the opportunity
to invest in pools of managed assets, or 'Funds,' with differing investment
objectives as stated below:
WINTHROP FOCUS FUNDS
GROWTH FUND
Seeks . . . Long-term growth of capital by investing principally in equity
securities with long-term capital appreciation potential.
GROWTH AND INCOME FUND
Seeks . . . Long-term growth of capital and continuity of income by investing
principally in dividend-paying common stocks and other equity securities.
SMALL COMPANY VALUE FUND
Seeks . . . A high level of growth of capital by investing principally in equity
securities selected on the basis, in the investment adviser's opinion, of their
potential for a high level of growth of capital.
FIXED INCOME FUND
Seeks . . . To provide as high a level of total return as is consistent with
capital preservation by investing principally in debt securities.
MUNICIPAL TRUST FUND
Seeks . . . To provide as high a level of total return as is consistent with
capital preservation by investing principally in municipal securities. This
investment objective, unlike most other municipal bond funds, is not to provide
current income which is exempt from U.S. federal and/or state income tax. Please
read carefully 'Investment Objectives and Policies-- Municipal Trust Fund.'
WINTHROP INTERNATIONAL FUNDS
DEVELOPING MARKETS FUND
Seeks . . . Long-term growth of capital by investing primarily in common stocks
and other equity securities from developing countries.
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.
WINTHROP MONEY FUNDS
MUNICIPAL MONEY FUND
Seeks . . . Maximum current income, consistent with liquidity and safety of
principal, that is exempt from Federal income taxes by investing principally in
a diversified portfolio of municipal securities.
U.S. GOVERNMENT MONEY FUND
Seeks . . . Maximum current income, consistent with liquidity and safety of
principal, by investing in a portfolio of U.S. Government securities.
Each Winthrop Fund is a diversified, open-end investment management company
commonly known as a 'mutual fund.' The Focus Funds are portfolios of the
Winthrop Focus Funds. The International Funds and the Money Funds are portfolios
of the Winthrop Opportunity Funds (the 'Opportunity Funds'). Because the Focus
Funds and the Opportunity Funds each offer multiple Funds, they are known as
'series funds.' They are empowered to establish additional Funds with different
investment objectives and policies and offer additional classes of shares.
There can, of course, be no assurance that any Winthrop Fund will achieve its
investment objective. See 'Investment Objectives and Policies' for a more
detailed description of the investment objectives and policies of each of the
Winthrop Funds.
PURCHASE INFORMATION
Shares of Winthrop Funds may be purchased directly by using the Share Purchase
Application found in this Prospectus, or through Winthrop's Distributor,
Donaldson, Lufkin & Jenrette Securities Corporation, or by contacting your
securities dealer.
The minimum initial investment in each Fund is $250 and the minimum for
subsequent investments is $25. These minimums are waived for investments by
certain types of accounts. Further information can be obtained from Winthrop at
the address and telephone number shown on the back cover of this Prospectus. See
'Purchases, Redemptions and Shareholder Services.'
Shares of the Focus and International Funds may be purchased at a price equal to
the net asset value of the Fund (i) plus, in the case of Class A shares, 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 ('CDSC') upon
redemption, which declines from 4% during the first year of purchase to zero
after four years. See 'Expenses of Winthrop' and 'Purchases, Redemptions and
Shareholder Services.'
Shares of the Money Funds may be purchased at a price equal to the net asset
value of the Money Fund, which is expected to be $1.00 per share. See 'Net Asset
Value.'
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF WINTHROP FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES--Fund investors pay various expenses, either
directly or indirectly. The purpose of the following tables and Examples is to
assist investors in understanding the various costs which shareholders of
Winthrop may bear. Maximum transaction costs when investing in a Fund have been
summarized, and the annual expenses you would pay are estimated based on the
expenses which were incurred by each Fund during the past fiscal year or for the
most recent reimbursement policy in effect for the current fiscal year.
<TABLE>
<CAPTION>
FOCUS FUNDS INTERNATIONAL FUNDS MONEY FUNDS
-------------------------------- -------------------------------- ---------------
SHAREHOLDER TRANSACTION CLASS A CLASS B CLASS A CLASS B
EXPENSES SHARES(1) SHARES(2) SHARES(1) SHARES(2)
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Maximum sales load imposed on
purchases
(as a percentage of offering
price)...................... 4.75% None 5.75% None None
Maximum sales load imposed on
reinvested dividends (as a
percentage of offering
price)...................... None None None None None
Deferred sales load (as a
percentage of original
purchase price or redemption
proceeds, as applicable).... None(3) 4%-0%(4) None 4%-0%(4) None
Redemption fees (as a
percentage of amount
redeemed)................... None None None None None
Exchange fee.................. None None None None None
</TABLE>
(1) The maximum sales charge imposed is reduced for larger purchases. Purchases
of $1,000,000 or more are not subject to an initial sales charge but may be
subject to a 1% CDSC on redemptions within one year of purchase. See
'Purchase and Sale of Shares.'
(2) Class B shares of each Fund automatically convert to Class A shares after
eight years. See 'Purchase and Sale of Shares.'
(3) Focus Fund Class A shareholders who received their shares upon conversion of
shares purchased prior to February 28, 1996 may be subject to a CDSC as
described under 'Purchases, Redemptions and Shareholder Services--Contingent
Deferred Sales Charge on Converted Shares.'
(4) 4% during the first year decreasing 1% annually to 0% after the fourth year.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES EXAMPLES++
------------------- --------------------------------------------------------------------
FOCUS FUNDS+
GROWTH FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.75% 0.75% After 1 year $ 61 $ 62 $ 22
12b-1 fees(a) 0.30% 1.00% After 3 years $ 90 $ 86 $ 66
Other expense 0.37% 0.37% After 5 years $121 $114 $ 114
------- ------- After 10 years $210 $227 $ 227
Total fund operating expenses 1.42% 2.12%
------- -------
------- -------
<CAPTION>
GROWTH AND INCOME FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.68% 0.68% After 1 year $ 60 $ 60 $ 20
12b-1 fees(a) 0.30% 1.00% After 3 years $ 87 $ 83 $ 63
Other expense 0.32% 0.32% After 5 years $115 $108 $ 108
------- ------- After 10 years $197 $214 $ 214
Total fund operating expenses 1.30% 2.00%
------- -------
------- -------
<CAPTION>
SMALL COMPANY VALUE FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.80% 0.80% After 1 year $ 61 $ 61 $ 21
12b-1 fees(a) 0.30% 1.00% After 3 years $ 90 $ 86 $ 66
Other expense 0.31% 0.31% After 5 years $121 $113 $ 113
------- ------- After 10 years $209 $226 $ 226
Total fund operating expenses 1.41% 2.11%
------- -------
------- -------
<CAPTION>
FIXED INCOME FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.63% 0.63% After 1 year $ 57 $ 57 $ 17
12b-1 fees(a) 0.30% 1.00% After 3 years $ 78 $ 74 $ 54
Other expense(b) 0.07% 0.07% After 5 years $100 $ 92 $ 92
------- ------- After 10 years $164 $182 $ 182
Total fund operating
expenses(b) 1.00% 1.70%
------- -------
------- -------
<CAPTION>
MUNICIPAL TRUST FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 0.63% 0.63% After 1 year $ 57 $ 57 $ 17
12b-1 fees(a) 0.30% 1.00% After 3 years $ 78 $ 74 $ 54
Other expense(b) 0.07% 0.07% After 5 years $100 $ 92 $ 92
------- ------- After 10 years $164 $182 $ 182
Total fund operating
expenses(b) 1.00% 1.70%
------- -------
------- -------
</TABLE>
- --------------------------------------------------------------------------------
Refer to footnotes on following page.
3
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF WINTHROP FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES EXAMPLES++
------------------- --------------------------------------------------------------------
INTERNATIONAL FUNDS
DEVELOPING MARKETS FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 1.25% 1.25% After 1 year $ 78 $ 69 $ 29
12b-1 fees(a) 0.25% 1.00% After 3 years $121 $110 $ 9
Other expense(b) 0.65% 0.65% After 5 years $166 $153 $ 153
------- ------- After 10 years $291 $304 $ 304
Total fund operating
expenses(b) 2.15%(c) 2.90%(c)
------- -------
------- -------
<CAPTION>
INTERNATIONAL EQUITY FUND CLASS A CLASS B CLASS A CLASS B* CLASS B**
------- ------- ---------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Management fees 1.25% 1.25% After 1 year $ 78 $ 69 $ 29
12b-1 fees(a) 0.25% 1.00% After 3 years $121 $110 $ 90
Other expense(b) 0.65% 0.65% After 5 years $166 $153 $ 153
------- ------- After 10 years $291 $305 $ 305
Total fund operating
expenses(b) 2.15%(c) 2.90%(c)
------- -------
------- -------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND
OPERATING EXPENSES EXAMPLES++
------------------ ----------
<S> <C> <C> <C>
MONEY FUNDS
MUNICIPAL MONEY FUND
Management fees 0.40% After 1 year $ 9
12b-1 fees 0.25% After 3 years $ 29
Other expense(b) 0.25%
---
Total fund operating
expenses(b) 0.90%
---
---
U.S. GOVERNMENT MONEY FUND
Management fees 0.40% After 1 year $ 9
12b-1 fees 0.25% After 3 years $ 29
Other expense(b) 0.25%
---
Total fund operating
expenses(b) 0.90%
---
---
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
* Assumes reinvestment of all dividends and redemption at end of
period.
** Assumes reinvestment of all dividends and no redemption at end of
period.
+ Total Fund Operating Expenses for the Focus Funds are based on
expenses expected to have been incurred if Class A Shares and
Class B Shares had been outstanding during the entire fiscal year
ended October 31, 1996. Prior to February 28, 1996, only one
class of shares was issued. As a result, the above information is
based on restated data for each Fund's fiscal year ended October
31, 1996.
++ Shares purchased directly into a Money Fund will not be subject
to Winthrop's CDSC and therefore the expenses paid by a Money
Fund shareholder will remain unaffected by redemption.
++ Ten year figures assume conversion of Class B Shares to Class A
shares at the end of the eighth year following the date of
purchase.
(a) Long-term Class B 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. A portion of the 12b-1 Fees represents an
asset-based sales charge. See 'Expenses of Winthrop-Distribution
Agreement.'
(b) Other Expenses and Total Fund Operating Expenses have been
adjusted to reflect the most recent reimbursement policy in
effect. Referenced below is the amount of management fees
voluntarily waived or expenses assumed by each Fund's adviser or
its affiliates or, in the case of the International Equity Fund
and the Developing Markets Fund, the Funds' adviser and
subadviser. In addition, the table below shows what Other
Expenses and Total Fund Operating Expenses would have been
without such reimbursement during the past fiscal year or, in the
case of the Municipal Money Fund and U.S. Government Money Fund,
during the period from the Funds' inception on February 24, 1997
through April 30, 1997.
</TABLE>
<TABLE>
<CAPTION>
VOLUNTARY ASSUMPTION OTHER TOTAL FUND
OF EXPENSES EXPENSES OPERATING EXPENSES
-------------------- -------- ------------------
<S> <C> <C> <C>
Fixed Income Fund Class A 0.28% 0.35% 1.28%
Fixed Income Fund Class B 0.28% 0.35% 1.98%
Municipal Trust Fund Class A 0.37% 0.44% 1.37%
Municipal Trust Fund Class B 0.37% 0.44% 2.07%
Developing Markets Fund Class A 0.54% 1.19% 2.69%
Developing Markets Fund Class B 0.54% 1.19% 3.44%
International Equity Fund Class A 0.27% 0.92% 2.42%
International Equity Fund Class B 0.27% 0.92% 3.17%
Municipal Money Fund(d) 0.24% 0.49% 1.14%
U.S. Government Money Fund(d) 0.22% 0.47% 1.12%
</TABLE>
<TABLE>
<S> <C>
For the Funds referenced, the Funds' investment adviser or its
affiliates or, in the case of the Developing Markets Fund and the
International Equity Fund, the Funds' investment adviser and
investment subadviser have agreed to the current reimbursement
policy through October 31, 1997. After October 31, this practice
may be discontinued with respect to any of the above Winthrop
Funds.
(c) The expense ratios for each class of shares of the Developing
Markets Fund and the International Equity Fund are higher than
those paid by most other investment companies, but Wood,
Struthers & Winthrop Management Corp. (as adviser) and AXA Asset
Management Partenaires (as subadviser) believe the fees are
comparable to those paid by investment companies of similar
investment orientation.
(d) Annualized
</TABLE>
For each Fund and share class, the Examples show the cumulative expenses a
shareholder would pay on a hypothetical $1,000 investment over various periods
assuming that the investment appreciated at a 5% annual rate of return. The
Examples should not be considered a representation of past or future expenses
and actual expenses may be greater or less than those shown. Winthrop has
entered into a Distribution Agreement and 12b-1 Plan for each class of each Fund
pursuant to which a 12b-1 fee is paid to Winthrop's distributor each month. The
12b-1 fee for each class is comprised of a service fee not exceeding .25% of the
average daily net assets of the Fund attributable to the class and an
asset-based sales charge equal to the remaining portion of the rule 12b-1 fee.
See 'Expenses of Winthrop--Distribution Agreement.'
4
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following financial highlights, except as noted otherwise, have been audited
by Ernst & Young LLP, the Fund's independent auditors, whose unqualified report
thereon appears in the Statement of Additional Information. Financial statements
and related notes are included in the Statement of Additional Information, which
is available upon request. Additional information about the performance of the
Focus Funds and the International Funds is contained in each Fund's annual
report to shareholders, which may be obtained without charge.
Contained on the following pages is per share operating performance data for a
share of beneficial interest outstanding for each class of each Fund, total
investment return, ratios to average net assets and other supplemental data for
each period indicated. Prior to February 28, 1996, the Focus Funds offered only
a single class of shares. Accordingly, the data presented below with respect to
Class A shares of the Focus Funds for periods prior to such date have been
obtained from the financial statements for the Funds' sole class of shares
outstanding during such prior fiscal years.
5
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DIVIDENDS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT GAINS/(LOSSES) INVESTMENT INVESTMENT FROM CAPITAL
OF PERIOD INCOME (LOSS) ON SECURITIES OPERATIONS INCOME GAINS
--------- ------------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
GROWTH FUND
CLASS A
Six Months Ended April 30,
1997 (1)................ $ 12.69 $ 0.014 $ 1.583 $ 1.597 $ (0.048) $(1.175)
Year Ended October 31,
1996.................... 11.35 0.053 2.107 2.160 (0.038) (0.782)
Year Ended October 31,
1995.................... 10.82 0.037 1.190 1.227 (0.012) (0.685)
Year Ended October 31,
1994.................... 10.97 0.014 0.435 0.449 -- (0.599)
Year Ended October 31,
1993.................... 11.10 0.061 1.386 1.447 (0.077) (1.500)
Year Ended October 31,
1992.................... 11.45 0.123 0.418 0.541 (0.163) (0.728)
Year Ended October 31,
1991.................... 9.20 0.148 2.512 2.660 (0.198) (0.212)
Year Ended October 31,
1990.................... 11.69 0.270 (1.355) (1.085) (0.244) (1.161)
Year Ended October 31,
1989.................... 10.49 0.276 1.832 2.108 (0.437) (0.471)
Year Ended October 31,
1988.................... 9.65 0.210 0.888 1.098 (0.051) (0.207)
Year Ended October 31,
1987++.................. 10.00 0.044 (0.394) (0.350) -- --
CLASS B
Six Months Ended April 30,
1997 (1)................ 12.63 (0.015) 1.562 1.547 (0.031) (1.175)
Year Ended October 31,
1996@@.................. 11.88 (0.013) 0.763 0.750 -- --
GROWTH AND INCOME FUND
CLASS A+
Six Months Ended April 30,
1997 (1)................ $ 17.18 $ 0.122 $ 1.807 $ 1.929 $ (0.117) $(1.635)
Year Ended October 31,
1996.................... 14.57 0.266 2.935 3.201 (0.241) (0.350)
Year Ended October 31,
1995.................... 13.38 0.254 1.769 2.023 (0.266) (0.567)
Year Ended October 31,
1994.................... 13.42 0.244 0.358 0.602 (0.223) (0.419)
Year Ended October 31,
1993.................... 12.35 0.270 1.720 1.990 (0.271) (0.649)
Year Ended October 31,
1992*................... 12.03 0.083 0.572 0.655 (0.165) (0.170)
Year Ended June 30,
1992.................... 11.70 0.320 0.916 1.236 (0.234) (0.672)
Year Ended June 30,
1991.................... 12.48 0.380 0.010 0.390 (0.386) (0.784)
Year Ended June 30,
1990.................... 12.68 0.565 0.703 1.268 (0.562) (0.906)
Year Ended June 30,
1989.................... 11.64 0.464 1.549 2.013 (0.577) (0.396)
Year Ended June 30,
1988.................... 14.58 0.423 (2.016) (1.593) (0.415) (0.932)
Year Ended June 30,
1987.................... 14.38 0.456 1.209 1.665 (0.365) (1.100)
CLASS B
Six Months Ended April 30,
1997 (1)................ 17.15 0.061 1.800 1.861 (0.058) (1.635)
Year Ended October 31,
1996@@.................. 16.05 0.136 1.109 1.245 (0.145) --
SMALL COMPANY VALUE FUND(4)
CLASS A+
Six Months Ended April 30,
1997 (1)................ $ 18.41 $ 0.026 $ 0.960 $ 0.986 $ (0.081) $(0.723)
Year Ended October 31,
1996.................... 16.61 0.084 2.162 2.246 (0.037) (0.409)
Year Ended October 31,
1995.................... 15.65 0.035 1.621 1.656 -- (0.696)
Year Ended October 31,
1994.................... 16.11 0.105 0.603 0.708 (0.026) (1.142)
Year Ended October 31,
1993.................... 14.00 0.123 3.195 3.318 (0.011) (1.197)
Year Ended October 31,
1992**.................. 14.16 0.011 1.482 1.493 (0.027) (1.626)
Year Ended December 31,
1991.................... 10.16 0.023 5.090 5.113 (0.024) (1.089)
Year Ended December 31,
1990.................... 11.90 0.157 (1.720) (1.563) (0.177) --
Year Ended December 31,
1989.................... 12.64 0.062 1.962 2.024 (0.062) (2.702)
Year Ended December 31,
1988.................... 11.52 0.018 3.391 3.409 (0.009) (2.280)
Year Ended December 31,
1987.................... 13.35 (0.066) (1.225) (1.291) -- (0.540)
Year Ended December 31,
1986.................... 15.21 (0.071) 1.467 1.396 (0.044) (3.212)
CLASS B
Six Months Ended April 30,
1997 (1)................ 18.34 (0.022) 0.941 0.919 (0.052) (0.723)
Year Ended October 31,
1996@@.................. 17.41 (0.023) 0.953 0.930 -- --
</TABLE>
- ------------------------------------------
* For the period 7/1/92 to 10/31/92.
** For the period 1/1/92 to 10/31/92.
++ Commencement of operations for the Growth Fund was December 15, 1986.
+ Financial highlights for the years ended June 30 for the Growth and Income
Fund and December 31 for the Small Company Value Fund were previously
audited by auditors other than Ernst & Young LLP whose reports thereon
were unqualified.
@@ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
## 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.
6
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
NET ASSET NET ASSETS EXPENSES
TOTAL VALUE, TOTAL END OF PERIOD TO AVERAGE
DISTRIBUTIONS END OF PERIOD RETURN++ (000 OMITTED) NET ASSETS(3)
------------- ------------- -------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ (1.223) $ 13.06 13.45% $ 75,802 1.40%(2)
(0.820) 12.69 20.32 68,096 1.48
(0.697) 11.35 12.21 55,946 1.63
(0.599) 10.82 4.15 52,455 1.65
(1.577) 10.97 14.36 49,446 1.36
(0.891) 11.10 4.66 48,678 1.26
(0.410) 11.45 29.71 50,426 1.34
(1.405) 9.20 (11.05) 42,937 1.33
(0.908) 11.69 21.72 53,142 1.37
(0.258) 10.49 11.72 52,626 1.37
-- 9.65 (3.99) (2) 54,809 1.69(2)
(1.206) 12.97 13.10 6,165 2.10(2)
-- 12.63 6.40 3,177 2.17(2)
$ (1.752) $ 17.36 12.01% $ 125,947 1.22%(2)
(0.591) 17.18 22.60 113,803 1.36
(0.833) 14.57 16.10 87,975 1.58
(0.642) 13.38 4.58 67,020 1.64
(0.920) 13.42 16.93 52,166 1.33
(0.335) 12.35 16.39(2) 46,457 1.32(2)
(0.906) 12.03 10.45 45,342 1.35
(1.170) 11.70 3.86 47,340 1.23
(1.468) 12.48 10.13 50,687 1.21
(0.973) 12.68 18.36 52,337 1.19
(1.347) 11.64 (10.20) 55,404 1.17
(1.465) 14.58 13.04 70,753 1.14
(1.693) 17.32 11.59 12,426 1.92(2)
(0.145) 17.15 7.67 6,545 1.99(2)
$ (0.804) $ 18.59 5.52% $ 220,864 1.39%(2)
(0.446) 18.41 13.80 227,716 1.47
(0.696) 16.61 11.10 202,730 1.64
(1.168) 15.65 4.67 144,624 1.70
(1.208) 16.11 25.34 77,903 1.44
(1.653) 14.00 13.95(2) 39,683 1.74(2)
(1.113) 14.16 50.55 33,340 1.89
(0.177) 10.16 (13.12) 22,041 1.98
(2.764) 11.90 16.25 24,999 1.84
(2.289) 12.64 29.59 21,821 1.93
(0.540) 11.52 (10.61) 21,081 1.69
(3.256) 13.35 8.53 23,338 1.78
(0.775) 18.48 5.15 9,564 2.09(2)
-- 18.34 5.28 6,305 2.15(2)
<CAPTION>
RATIO OF NET AVERAGE
INVESTMENT INCOME PORTFOLIO COMMISSION
(LOSS) TO AVERAGE TURNOVER RATE
NET ASSETS(3) RATE PAID(5)
----------------- -------- ----------
<S> <C> <C> <C>
0.77%(2) 46.5% $ 0.07
0.47 60.6 0.06
0.35 101.7 N/A
0.06 28.2 N/A
0.56 61.7 N/A
1.11 65.7 N/A
1.40 31.7 N/A
2.53 68.2 N/A
2.53 64.3 N/A
2.15 42.3 N/A
0.60(2) 90.6 N/A
0.45(2) 46.5 0.07
(0.34)(2) 60.6 0.06
1.39%(2) 16.9% $ 0.07
1.68 44.0 0.06
1.94 31.8 N/A
1.88 25.9 N/A
2.12 36.4 N/A
1.99(2) 14.4 N/A
2.62 29.0 N/A
3.25 48.0 N/A
4.35 41.0 N/A
3.92 46.0 N/A
3.35 38.0 N/A
3.23 48.0 N/A
0.71(2) 16.9 0.07
1.06(2) 44.0 0.06
0.89%(2) 21.0 $ 0.06
0.48 35.1 0.06
0.23 25.1 N/A
(0.04) 31.6 N/A
0.32 134.3 N/A
0.10(2) 164.1 N/A
0.18 91.3 N/A
1.45 87.6 N/A
0.43 107.4 N/A
0.13 107.9 N/A
(0.49) 117.4 N/A
(0.45) 73.7 N/A
0.54(2) 21.0 0.06
(0.34)(2) 35.1 0.06
</TABLE>
- ------------------------------------------
(1) Unaudited
(2) Annualized
(3) Net of voluntary assumption by the investment adviser of expenses, expressed
as a percentage of average net assets, as follows: Growth and Income Fund,
.01%. .08%, .03%, .03%, and .03% for the years ended 6/30/92, 91, 90, 89 and
88, respectively; and Small Company Value Fund, .01% and .06% for the years
ended 12/31/91 and 90, respectively.
(4) Effective February 20, 1997, the Winthrop Aggressive Growth Fund's name was
changed to the Winthrop Small Company Value Fund.
(5) For fiscal years beginning after September 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of equity securities.
7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DIVIDENDS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET DISTRIBUTIONS
BEGINNING INVESTMENT GAINS/(LOSSES) INVESTMENT INVESTMENT FROM CAPITAL
OF PERIOD INCOME (LOSS) ON SECURITIES OPERATIONS INCOME GAINS
--------- ------------- -------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
FIXED INCOME FUND
CLASS A
Six Months Ended April 30,
1997(1)................. $ 10.07 $ 0.291 $ (0.171) $ 0.120 $ (0.291) $ --
Year Ended October 31,
1996++++................ 10.22 0.577 (0.150) 0.427 (0.577) --
Year Ended October 31,
1995.................... 9.660 0.588 0.560 1.148 (0.588) --
Year Ended October 31,
1994.................... 10.930 0.567 (1.027) (0.460) (0.567) (0.243)
Year Ended October 31,
1993.................... 10.400 0.622 0.567 1.189 (0.622) (0.037)
Year Ended October 31,
1992.................... 10.080 0.695 0.320 1.015 (0.695) --
Year Ended October 31,
1991.................... 9.570 0.773 0.510 1.283 (0.773) --
Year Ended October 31,
1990.................... 9.720 0.809 (0.150) 0.659 (0.809) --
Year Ended October 31,
1989.................... 9.520 0.830 0.200 1.030 (0.830) --
Year Ended October 31,
1988.................... 9.260 0.749 0.260 1.009 (0.749) --
Year Ended October 31,
1987++.................. 10.000 0.554 (0.740) (0.186) (0.554) --
CLASS B
Six Months Ended April 30,
1997(1)................. 10.07 0.256 (0.167) 0.089 (0.256) --
Year Ended October 31,
1996++++................ 10.22 0.339 (0.150) 0.189 (0.339) --
MUNICIPAL TRUST FUND
CLASS A
Six Months Ended April 30,
1997 (1)................ $ 10.01 $ 0.232 $ (0.038) $ 0.194 $ (0.232) $ --
Year Ended October 31,
1996.................... 10.06 0.425 (0.050) 0.375 (0.425) --
Year Ended October 31,
1995.................... 9.51 0.389 0.550 0.939 (0.389) --
Year Ended October 31,
1994.................... 10.10 0.365 (0.590) (0.225) (0.365) --
Year Ended October 31,
1993*................... 10.00 0.085 0.100 0.185 (0.085) --
CLASS B
Six Months Ended April 30,
1997 (1)................ 10.01 0.197 (0.039) 0.158 (0.197) --
Year Ended October 31,
1996++++................ 10.12 0.248 (0.110) 0.138 (0.248) --
INTERNATIONAL EQUITY FUND
CLASS A
Six Months Ended April 30,
1997(1)................. $ 10.38 $(0.050) $ 0.520 $ 0.470 $ -- $ --
Year Ended October 31,
1996.................... 9.58 (0.040) 0.840 0.800 -- --
Year Ended October 31,
1995**.................. 10.00 -- (0.420) (0.420) -- --
CLASS B
Six Months Ended April 30,
1997(1)................. 10.29 (0.090) 0.530 0.440 -- --
Year Ended October 31,
1996.................... 9.57 (0.130) 0.850 0.720 -- --
Year Ended October 31,
1995**.................. 10.00 (0.020) (0.410) (0.430) -- --
DEVELOPING MARKETS FUND
CLASS A
Six Months Ended April 30,
1997(1)................. $ 9.96 $ -- $ 1.160 $ 1.160 $ -- $(0.020)
Year Ended October 31,
1996.................... 9.53 (0.010) 0.440 0.430 -- --
Year Ended October 31,
1995**.................. 10.00 -- (0.470) (0.470) -- --
CLASS B
Six Months Ended April 30,
1997(1)................. 9.860 (0.040) 1.150 1.110 -- (0.020)
Year Ended October 31,
1996.................... 9.520 (0.080) 0.420 0.340 -- --
Year Ended October 31,
1995**.................. 10.00 (0.010) (0.470) (0.480) -- --
MUNICIPAL MONEY FUND
Period Ended April 30,
1997+................... $ 1.00 $ 0.005 $ -- $ 0.005 $ (0.005) $ --
U.S. GOVERNMENT MONEY FUND
Period Ended April 30,
1997++(1)............... $ 1.00 $ 0.008 $ -- $ 0.008 $ (0.008) $ --
</TABLE>
- ------------------------------------------
<TABLE>
<S> <C>
* Commencement of operations for the Municipal Trust Fund was July 28,
1993.
** Commencement of operations for the International Equity Fund and the
Developing Markets Fund was September 8, 1995.
+ Commencement of operations for the Municipal Money Fund and the U.S.
Government Money Fund was February 24, 1997.
## 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.
++ Commencement of operations for the Fixed Income Fund was December 15,
1986.
++++ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
(1) Unaudited
(2) Annualized
</TABLE>
8
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
NET ASSET NET ASSETS EXPENSES INVESTMENT INCOME
TOTAL VALUE, TOTAL END OF PERIOD TO AVERAGE (LOSS) TO AVERAGE
DISTRIBUTIONS END OF PERIOD RETURN++ (000 OMITTED) NET ASSETS(3) NET ASSETS(3)
------------- ------------- -------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$(0.291) $ 9.90 1.21% $52,793 1.00%(2) 5.87%(2)
(0.577) 10.07 4.34 56,388 1.00 5.72
(0.588) 10.22 12.23 53,885 1.00 5.90
(0.810) 9.66 (4.37) 39,150 0.93 5.58
(0.659) 10.93 11.79 40,881 0.83 5.79
(0.695) 10.40 10.37 32,358 0.51 6.71
(0.773) 10.08 13.92 23,783 -- 7.75
(0.809) 9.57 7.14 10,300 -- 8.34
(0.830) 9.72 11.42 5,861 -- 8.74
(0.749) 9.52 11.27 5,335 0.32 7.96
(0.554) 9.26 (2.15)(2) 4,697 1.00(2) 6.60(2)
(0.256) 9.90 0.86 2,548 1.70(2) 5.12(2)
(0.339) 10.07 2.23 1,629 1.70(2) 5.03(2)
$(0.232) $ 9.97 1.92% $36,991 0.50%(2) 4.65%(2)
(0.425) 10.01 3.83 38,794 0.80 4.26
(0.389) 10.06 10.06 39,059 1.00 3.97
(0.365) 9.51 (2.27) 34,470 0.83 3.71
(0.085) 10.10 7.15(2) 33,794 0.75(2) 3.28(2)
(0.197) 9.97 1.57 567 1.20(2) 3.95(2)
(0.248) 10.01 1.42 489 1.23(2) 3.81(2)
$ -- $ 10.85 0.28% $38,499 2.15%(2) (0.25)%(2)
-- 10.38 8.35 42,170 2.15 (0.39)
-- 9.58 (4.20) 28,819 2.15(2) (0.02)(2)
-- 10.73 (0.46) 5,960 2.90(2) (0.42)(2)
-- 10.29 7.52 4,955 2.90 (1.25)
-- 9.57 (4.30) 1,803 2.90(2) (1.77)(2)
$(0.020) $ 11.10 5.28% $35,509 2.15%(2) (0.05)%(2)
-- 9.96 4.51 36,918 2.15 (0.14)
-- 9.53 (4.70) 14,622 2.15(2) 0.32(2)
(0.020) 10.95 4.35 4,622 2.90(2) (0.73)(2)
-- 9.86 3.57 3,641 2.90 (0.83)
-- 9.52 (4.80) 1,004 2.90(2) (1.00)(2)
$(0.005) $ 1.00 0.05% $21,824 0.90%(2) 2.74%(2)
$(0.008) $ 1.00 0.08% $21,610 0.90%(2) 4.51%(2)
<CAPTION>
AVERAGE
PORTFOLIO COMMISSION
TURNOVER RATE
RATE PAID(4)
-------- ----------
<S> <C> <C>
104.0% N/A
90.2 N/A
66.1 N/A
55.9 N/A
95.6 N/A
62.8 N/A
35.9 N/A
37.9 N/A
30.3 N/A
48.2 N/A
51.1 N/A
104.0 N/A
90.2 N/A
95.9% N/A
79.3 N/A
49.3 N/A
42.5 N/A
-- N/A
95.9 N/A
79.3 N/A
51.1% $ 0.05
94.1 0.04
-- N/A
51.1 0.05
94.1 0.04
-- N/A
48.6% $ 0.02
26.8 0.03
-- N/A
48.6 0.02
26.8 0.03
-- N/A
N/A N/A
N/A N/A
</TABLE>
------------------------------------------
(3) Net of voluntary assumption by the investment adviser of expenses, expressed
as a percentage of average net assets, as follows: Fixed Income Fund Class A
shares, .30% (annualized) for the six months ended 4/30/97 .34%, .51%, .67%,
.58%, .98%, 2.19%, 2.92%, 2.91%, 1.68% and 1.00% for the years ended
10/31/96, 95, 94, 93, 92, 91, 90, 89, 88, and 87, respectively; Fixed Income
Fund Class B shares, .30% (annualized) for the six months ended 4/30/97,
.34% (annualized) for the period 2/28/96 through 10/31/96; Municipal Trust
Fund Class A shares, .97% (annualized) for the six months ended 4/30/97,
.64%, .58%, .77% and 1.15% (annualized) for the years ended 10/31/96, 95, 94
and 93, respectively, Municipal Trust Fund Class B shares, .97% (annualized)
for the six months ended 4/30/97, .64% (annualized ) for the period 2/28/96
through 10/31/96; Developing Markets Fund Class A and Class B shares, .42%
(annualized) for the six months ended 4/30/97, .54% and .60% (annualized),
respectively, for the years ended 10/31/96 and 95; International Equity Fund
Class A and Class B shares, .23% (annualized) for the six months ended
4/30/97, .27% and .60% (annualized), respectively, for the years ended
10/31/96 and 95; Municipal Money Fund, .24% (annualized) for the period
ended 4/30/97; and U.S. Government Money Fund, .22% (annualized) for the
period ended 4/30/97.
(4) For fiscal years beginning after September 1, 1995, the Fund is required to
disclose its average commission rate paid per share for purchases and sales
of equity securities.
9
<PAGE>
---------------------------------------------------------------
INTRODUCTION
---------------------------------------------------------------
Each of Winthrop's Funds is a separate pool of assets constituting, in effect, a
separate Fund with its own investment objective and policies. (See 'Investment
Objectives and Policies.') A shareholder may utilize Winthrop's exchange
privilege to transfer assets to the same class of shares in another Winthrop
Fund or to shares of the Money Funds in accordance with his or her changing
perception of the relative investment potential of each investment alternative.
(See 'Purchases, Redemptions and Shareholder Services-- Additional Shareholder
Services.') Shareholders of all classes of a Fund are entitled to their pro rata
share of any dividends and distributions arising from that Fund's assets except
that with respect to each Fund, each class of shares bears different
distribution expenses. (See 'Dividends, Distributions and Taxes.') Upon
redeeming shares of a Fund, the shareholder will receive the next-determined net
asset value of that Fund represented by the redeemed shares less the applicable
contingent deferred sales charge, if any. (See 'Purchases, Redemptions and
Shareholder Services.')
A shareholder will pay a higher 12b-1 Fee after exchanging Class A shares of the
International Funds (.25 of 1% annually) for Class A shares of the Focus Funds
(.30 of 1% annually) or after exchanging shares of the Money Funds (.25 of 1%
annually) for Class A shares of the Focus Funds or for Class B shares of either
the Focus Funds or the International Funds (1% annually). (See 'Purchases,
Redemptions and Shareholder Services.')
Wood Struthers & Winthrop Management Corp. ('WSWMC') acts as the investment
adviser to the Focus Funds and the International Funds. DLJ Investment
Management Corp. ('DLJIM') acts as the investment adviser to the Money Funds.
WSWMC and DLJIM (each, an 'Adviser' and together, the 'Advisers') are
subsidiaries of Donaldson, Lufkin & Jenrette Securities Corporation, the Funds'
distributor. (See 'Management' for a more detailed discussion of the Funds'
investment advisers and investment advisory services).
This Prospectus sets forth information about all the Funds. The Opportunity
Funds and the Focus Funds are different legal entities and are separately
offering their securities hereby. Based on the advice of counsel, the Funds
believe that the potential liability of each Fund with respect to the disclosure
in this Prospectus extends only to the disclosure relating to that Fund.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of each Fund are fundamental policies of that Fund and
may not be changed without the approval of that Fund's shareholders. Except as
set forth in the Funds' Statements of Additional Information, or as otherwise
indicated below, the investment policies and restrictions of each Fund are not
fundamental policies and may be changed by the Board of Trustees (the
'Trustees') of such Fund without a shareholder vote. A more detailed explanation
of the Funds' policies and the securities and instruments they may buy or use is
contained in the Funds' Statement of Additional Information, which is available
upon request.
The investment objectives and policies of each Fund are set forth below. There
can be, of course, no assurance that any of the Funds will achieve its
respective investment objective.
---------------------------------------------------------------
THE FOCUS FUNDS
---------------------------------------------------------------
THE WINTHROP GROWTH FUND
The investment objective of the Winthrop Growth Fund (the 'Growth Fund') is
long-term capital appreciation. Investments will be made based upon their
potential for long-term capital appreciation. However, the Growth Fund may make
an investment to earn income when, in the opinion of the Adviser, such an
investment will not compromise the Growth Fund's investment objective.
It is the policy of the Growth Fund to invest principally in common stock,
securities convertible into common stock and other equity securities (i.e.,
preferred stock, interests in master limited partnerships) of well-known and
established companies (generally, companies in operation for more than three
years) as well as new and unseasoned companies which, in the opinion of the
Adviser, have the potential for long-term capital appreciation. Investments in
new and unseasoned companies which have limited operating histories may involve
risks not present in investments in established and well-known companies.
Under normal circumstances, the Growth Fund will have at least 65% of the value
of its total assets invested in equity securities of companies which in the
opinion of the Adviser have long-term capital appreciation potential. The
selection of securities on the basis of their appreciation possibilities
provides an opportunity for greater capital gain which may involve a
corresponding greater risk of capital loss than would the selection of a more
conservative equity portfolio. However, the Growth Fund reserves the right, when
the Adviser determines it is appropriate, to invest in investment grade
short-term fixed income securities and other investment grade debt securities,
enter into repurchase agreements and hold cash for temporary defensive purposes
without regard for the above limitation. In addition, under normal circumstances
the Growth Fund may invest up to 35% of the value of its total assets in equity
securities selected on a basis other than long-term capital appreciation
potential, investment grade fixed income securities, including bonds,
debentures, notes, asset and mortgage-backed securities and money market
instruments such as commercial paper and bankers acceptances and other financial
10
<PAGE>
instruments. The Growth Fund may invest only in debt securities that are of
investment grade quality at the time of purchase. (See 'Additional General
Investment Policies--Mortgage and Asset-Backed Securities' and 'Investment Grade
Debt Securities.')
It is the policy of the Growth Fund to invest in companies or industries
believed to offer the opportunity for long-term capital appreciation.
The Adviser applies extensive research on the growth prospects of stocks the
Growth Fund is considering buying. Target companies normally have a market
capitalization of at least $1 billion at the time of purchase, and the Adviser
seeks to identify companies with growth rates that it expects will exceed that
of the S&P 500 index. In addition, with the exception of the electric and the
gas utilities sectors, the Fund is 'sector neutral,' which means that the
Adviser allocates its assets among industries in proportion to the sector
allocation of the S&P 500 index. Other factors considered in the selection of
securities include the economic and political outlook, the value of a particular
security relative to another security, trends in the determinants of corporate
profits, and management capability and practices.
The Growth Fund may invest in both listed and unlisted securities. Unlisted
securities may be less liquid and more volatile than listed securities. The
Growth Fund may also (i) invest up to 10% of the value of its total assets in
foreign securities, (ii) invest no more than 10% of its net assets (determined
at the time of purchase) in restricted securities or other instruments having no
ready market, (iii) invest up to 5% of its total assets in warrants, and (iv) to
minimize the effect of a market decline on the value of its securities, write
covered call options on securities or stock indices.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
THE WINTHROP GROWTH AND INCOME FUND
The investment objective of the Winthrop Growth and Income Fund (the 'Growth and
Income Fund') is long-term capital appreciation and continuity of income. The
Growth and Income Fund pursues its investment objective by investing principally
in dividend-paying common stock and diversifying its investments among different
industries and different companies. Accordingly, the Growth and Income Fund
invests in securities on the basis of the Adviser's evaluation of their
investment merit and their potential for appreciation in value and/or income.
The selection of securities on the basis of their capital appreciation or income
potential cannot ensure against possible loss in value.
The Growth and Income Fund may invest in common stock, securities convertible
into common stock, preferred stock, debt securities that are of investment grade
quality at the time of purchase (including bonds, debentures, notes and asset
and mortgage-backed securities), marketable obligations of, or guaranteed by,
the U.S. Government, its agencies or instrumentalities ('U.S. Government
Securities'), municipal securities (including general and special obligation
securities and industrial revenue bonds) and money market instruments, such as
commercial paper, bankers acceptances and other financial instruments. (See
'Additional General Investment Policies--Mortgage and Asset-Backed Securities'
and 'Investment Grade Debt Securities.') Although the Growth and Income Fund
emphasizes investment in common stock, there is no fixed proportion of the
Growth and Income Fund's assets that must be invested in particular types of
securities. The proportion of assets to be invested in various types of
securities will be determined from time to time by the Adviser.
The Growth and Income Fund may invest in both listed and unlisted securities.
Unlisted securities may be less liquid and more volatile than listed securities.
The Growth and Income Fund may also (i) invest up to 10% of the value of its
total assets in foreign securities, (ii) invest no more than 10% of its net
assets (determined at the time of purchase) in restricted securities or other
instruments having no ready market, and (iii) to minimize the effect of a market
decline in the value of its securities, write covered call options on securities
or stock indices.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
THE WINTHROP SMALL COMPANY VALUE FUND
The investment objective of the Winthrop Small Company Value Fund (the 'Small
Company Value Fund') is a high level of growth of capital. The Small Company
Value Fund is not intended for investors whose principal objective is assured
income or preservation of capital.
It is the policy of the Small Company Value Fund to invest principally in common
stock and securities convertible into common stock, but it may, when deemed
appropriate by the Adviser, invest part of its assets in preferred stock, other
equity securities, bonds or other debt securities as described below. Under
normal market conditions, at least 65% of the Small Company Value Fund's total
assets will be invested in equity securities of small market capitalization
companies, which, for the purposes of the Small Company Value Fund, are those
companies with a market capitalization of $2 billion or less at the time of
purchase. While smaller companies generally have potential for rapid growth,
investments in smaller companies often involve greater risks than investments in
larger, more established companies because smaller companies may lack the
management experience,
11
<PAGE>
financial resources, product diversification, and competitive strengths of
larger companies. In addition, in many instances the securities of smaller
companies are traded only over-the-counter or on a regional securities exchange,
and the frequency and volume of their trading is substantially less than is
typical of larger companies. As a result, the securities of smaller companies
may be subject to greater and more abrupt price fluctuations. When making larger
sales of portfolio securities, the Small Company Value Fund may have to sell
such securities at discounts from quoted prices or may have to make a series of
small sales over an extended period of time due to the trading volume of smaller
company securities. Investors should be aware that, based on the foregoing
factors, an investment in the Small Company Value Fund may be subject to greater
price fluctuations than an investment in a fund that invests primarily in
larger, more established companies. The Adviser's research efforts may also play
a greater role in selecting securities for the Small Company Value Fund than in
a fund that invests in larger, more established companies.
The Small Company Value Fund will pursue its investment objective by employing
the value-oriented investment approach. The Small Company Value Fund seeks
securities that appear to be underpriced and are issued by companies with proven
management, consistent earnings, sound finances and strong potential for market
growth. By investing in such companies, the Small Company Value Fund tries to
enhance the potential for appreciation and limit the risk of decline in the
value of its portfolio. The Small Company Value Fund focuses on the fundamentals
of each small-cap company instead of trying to anticipate what changes might
occur in the stock market, the economy, or the political environment. This
approach differs from that used by many other funds investing in small-cap
company stocks. Those funds often buy stocks of companies they believe will have
above-average earnings growth, based on anticipated future developments. In
contrast, the Small Company Value Fund's securities are generally selected with
the belief that they are currently undervalued, based on existing conditions and
that their earning power or franchise value does not appear to be reflected in
their current stock price. In addition, to further reduce risk, the Small
Company Value Fund diversifies its holdings among many companies and industries.
Other factors considered in the selection of securities include whether a
company has an established presence in its industry, a product or market niche
or whether management owns a significant stake in the company's operation.
The Small Company Value Fund may also invest in special situations, that is, in
securities the values of which may be affected by particular developments
unrelated to business conditions generally, and which may fluctuate without
relation to general market trends. In general, a special situation company is a
company whose securities could reasonably be expected to be accorded market
recognition within a foreseeable period of time at an appreciated value solely
by reason of a development particularly or uniquely applicable to that company.
The principal risk associated with investment in special situation companies is
that if the anticipated development does not occur, the investment is likely not
to appreciate or may decline. Examples of special situations are companies being
reorganized or merged, having unusual new products, enjoying particular tax
advantages, or acquiring new management. The Small Company Value Fund will not,
however, invest more than 10% of its assets (at the time of purchase) in equity
securities of companies (including predecessors) that have less than three years
of operations.
In addition to common stock and securities convertible into common stock, the
Small Company Value Fund may invest in preferred stock, investment grade debt
securities (including bonds, debentures, notes, asset and mortgage-backed
securities and convertible securities), U.S. Government Securities, municipal
securities (including general and special obligation securities and industrial
revenue bonds), money market instruments (such as commercial paper and bankers'
acceptances) and other financial instruments. (See 'Additional General
Investment Policies--Mortgage and Asset-Backed Securities' and 'Investment Grade
Debt Securities.') The Small Company Value Fund will not invest more than 35% of
its total assets in investment grade debt securities, each determined at the
time of purchase.
The Small Company Value Fund may invest in securities listed on a securities
exchange and securities traded in the over-the-counter markets. A greater
proportion of the securities in which the Fund invests may not be listed on any
national securities exchange as compared with an investment company that invests
primarily in securities of larger companies. Securities not listed on a national
securities exchange may be less liquid and more volatile than listed securities.
The Small Company Value Fund may purchase or sell options on individual
securities as well as on indices of securities as a means of achieving
additional return or of hedging the value of its portfolio. However, the Small
Company Value Fund will not purchase options if, as a result, the aggregate cost
of all outstanding options exceeds 10% of its assets. The Small Company Value
Fund may also purchase and sell financial futures contracts and options thereon
for hedging and risk management purposes. A financial futures contract is an
agreement to purchase or sell an agreed amount of securities at a set price for
delivery in the future. To the extent that puts, calls, straddles and similar
investment strategies involve instruments regulated by the Commodity Futures
Trading Commission, the Small Company Value Fund is limited to an investment not
in excess of 5% of its total assets.
The Small Company Value Fund may also (i) invest up to 20% of the value of its
total assets in foreign
12
<PAGE>
securities, (ii) invest up to 5% of its total assets in rights or warrants, and
(iii) invest no more than 10% of its net assets (determined at the time of
purchase) in restricted securities or other instruments having no ready market.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
THE WINTHROP FIXED INCOME FUND
The investment objective of the Winthrop Fixed Income Fund (the 'Fixed Income
Fund') is to provide as high a level of total return as is consistent with
capital preservation by investing principally in debt securities, including,
without limitation, convertible and nonconvertible debt securities of foreign
and domestic companies, including both well-known and established and new and
lesser-known companies. Total return means the sum of interest income, dividend
income (if any) and capital gains less capital losses. Capital preservation
means minimizing the risk of capital loss in a period of falling prices (rising
interest rates) for debt securities.
Specifically, the investment policies of the Fixed Income Fund permit it to
invest, without restriction, in the following types of securities:
(1) Bonds, including municipal bonds (taxable and tax-exempt, including, among
others, special and general obligation bonds and industrial development
bonds) and other debt securities, which are rated Aaa, Aa, A or MIG-1 by
Moody's Investors Service, Inc. ('Moody's'), or AAA, AA, A or SP-1 by
Standard & Poor's Ratings Group ('S&P');
(2) U.S. Government Securities;
(3) Obligations issued or guaranteed by national or state bank holding
companies, which obligations are not rated as a matter of policy by either
Moody's or S&P, but which, in the opinion of the Adviser (on the basis of
criteria believed by the Adviser to be comparable to that used by
nationally recognized statistical rating organizations for assigning
ratings), meet the Fixed Income Fund's investment objective; and
(4) Commercial paper rated Prime-1 by Moody's or A-1 + or A-1 by S&P.
The Fixed Income Fund may also invest not more than 25% (in the aggregate) of
its total assets at the time of investment in (i) debt securities rated Baa or
MIG-2 by Moody's or BBB or SP-2 by S&P and (ii) commercial paper rated Prime-2
by Moody's or A-2 by S&P, to the extent that such investments would, in the
opinion of the Adviser, be consistent with the Fixed Income Fund's investment
objective. (See 'Additional General Investment Policies,' for a description of
securities rated BBB by S&P and Baa by Moody's and of asset and mortgage-backed
securities.)
The Fixed Income Fund may enter into repurchase agreements, terminable within
seven days or less, with respect to issues of the U.S. Treasury, with member
banks of the Federal Reserve System or primary dealers in U.S. Government
Securities, as long as such investments do not in the aggregate exceed 15% of
the total assets of the Fixed Income Fund (except where such investments are
made for temporary defensive purposes, in which case no limit is applicable).
As a matter of fundamental policy, which cannot be changed without approval by
the vote of a majority of the Fixed Income Fund's outstanding voting securities
(as defined in the Statement of Additional Information), the Fixed Income Fund
will invest at least 80% of the value of its total assets at the time of
investment in debt securities. In normal circumstances, the Fixed Income Fund
will invest at least 65% of the value of its total assets in fixed income
securities. However, the Fixed Income Fund reserves the right to hold cash and
short-term fixed income securities and to enter into repurchase agreements as
necessary for temporary defensive or emergency purposes as determined by the
Adviser without regard for the above limitations.
The Fixed Income Fund may also invest in restricted securities and in
instruments having no ready market if such purchases at the time thereof would
not cause more than 10% of the value of its net assets to be invested in not
readily marketable assets. (See 'Investment Restrictions.')
The Adviser intends to adjust the average maturity of the Fund's portfolio
depending upon its assessment of the relative yields on debt securities of
different maturities and its expectations of future interest rate patterns.
Because a change in the market value of a debt security generally is inversely
related to market interest rates, the market value of the Fixed Income Fund's
investments will tend to decrease during periods of rising interest rates and to
increase during periods of falling rates. The magnitude of the fluctuations in
the market value of the Fund's portfolio as a result of fluctuations in interest
rates will generally be greater at times when the average maturity of the Fund's
portfolio is longer. The Fixed Income Fund will invest and hold debt securities
which, in the opinion of the Adviser, will maximize the total return of the
portfolio.
THE WINTHROP MUNICIPAL TRUST FUND
The investment objective of the Winthrop Municipal Trust Fund (the 'Municipal
Trust Fund') is to provide as high a level of total return as is consistent with
capital preservation by investing principally in high grade tax-exempt municipal
securities. This investment objective, unlike most other municipal bond funds,
is not to provide current income which is exempt from federal and/or state
income tax. Total return means the sum of interest income and capital gains less
capital losses. The Municipal Trust Fund intends to distribute annually its net
capital gains. Any such distributions
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will be taxable to a shareholder as capital gain. (See 'Dividends, Distributions
and Taxes.')
The Municipal Trust Fund attempts to provide high total return by actively
managing the maturities of the bonds in the portfolio in response to the
Adviser's anticipation of the movement of interest rates and its assessment of
the relative yields. The Fund will shorten the portfolio's maturities when the
Adviser believes that interest rates will rise and lengthen maturities when the
Adviser believes that rates will fall. Currently, the Fund invests primarily in
securities to maintain an average maturity of 10 years or less to help reduce
the risk associated with long-term bonds, as is consistent with its objective of
capital preservation. To a lesser extent, the Municipal Trust Fund will also
attempt to enhance total return by selecting municipal securities which the
Adviser believes are undervalued. The success of these strategies depends upon
the Adviser's ability to accurately forecast changes in interest rates and to
properly assess the value of municipal securities. The investor should be aware
that there can be no assurances that the Municipal Trust Fund's investment
strategies will be successful.
Under normal circumstances, it is the Municipal Trust Fund's policy to invest at
least 80% of the value of its net assets at the time of investment in tax-exempt
municipal securities. However, the Municipal Trust Fund reserves the right to
hold cash and short-term fixed income securities and to enter into repurchase
agreements as necessary for temporary defensive or emergency purposes as
determined by the Adviser without regard for the above limitation.
The Municipal Trust Fund seeks to achieve its objective by investing primarily
in a diversified portfolio of high grade, intermediate term municipal
securities. Municipal securities fall into two principal classes: bonds and
notes which may have fixed, variable or floating rates of interest. The
investment policies of the Municipal Trust Fund permit it to invest, without
restriction, in tax-exempt municipal bonds and notes which are rated Aaa, Aa, A
or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. For a more complete discussion
of Municipal Securities, see 'Additional General Investment Policies--Municipal
Securities.'
The Municipal Trust Fund may also invest not more than 25% (in the aggregate) of
its total assets at the time of investment in (i) municipal securities rated Baa
or MIG-2 by Moody's or BBB or SP-2 by S&P and (ii) commercial paper rated
Prime-2 by Moody's or A-2 by S&P, to the extent that such investments would, in
the opinion of the Adviser, be consistent with the Municipal Trust Fund's
investment objective. (See 'Additional General Investment Policies--Investment
Grade Debt Securities' for a description of securities rated BBB by S&P and Baa
by Moody's.) Non-rated municipal securities will also be considered for
investment by the Municipal Trust Fund when the Adviser believes that the
financial condition of the issuers of such obligations and the protection
afforded by the terms of the obligations themselves limit the risk to the
Municipal Trust Fund to a degree comparable to that of rated securities which
are consistent with the Municipal Trust Fund's objective and policies.
Because a change in the market value of a debt security generally is inversely
related to market interest rates, the market value of the Municipal Trust Fund's
investments will tend to decrease during periods of rising interest rates and to
increase during periods of falling rates. The magnitude of the fluctuations in
market value of the Municipal Trust Fund's portfolio as a result of fluctuations
in interest rates will generally be greater at times when the average maturity
of the Municipal Trust Fund's portfolio is longer.
The Municipal Trust Fund may enter into repurchase agreements, terminable within
seven days or less, with respect to issues of the U.S. Treasury, with member
banks of the Federal Reserve System or primary dealers in U.S. Government
Securities, as long as such investments do not in the aggregate exceed 15% of
the total assets of the Municipal Trust Fund (except where such investments are
made for temporary defensive purposes in which case no limit is applicable).
The Municipal Trust Fund may also invest in (i) restricted securities and in
instruments having no ready market if such purchases at the time thereof would
not cause more than 15% of the value of its net assets to be invested in not
readily marketable assets and (ii) municipal bonds that are subject to the
alternative minimum tax ('AMT-Subject Bonds').
Dividends of the Municipal Trust Fund will consist of income exempt from federal
income tax, income subject to the federal AMT, and taxable ordinary income and
capital gains. (See 'Dividends, Distributions and Taxes.')
See the Statement of Additional Information for a more complete description of
the Municipal Trust Fund's investment practices and the risks associated
therewith.
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THE INTERNATIONAL FUNDS
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THE WINTHROP DEVELOPING MARKETS FUND
The investment objective of the Winthrop Developing Markets Fund (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. 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
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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 the International Funds investment subadviser, AXA Asset Management
Partenaires (the '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 Winthrop International Equity Fund (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. 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.
The International Equity Fund seeks to identify those countries and industries
with favorable growth prospects. The International Equity Fund then seeks to
invest in those companies in such countries and industries that are reasonably
valued with reliable earnings and high quality management.
ADDITIONAL INVESTMENT POLICIES OF THE INTERNATIONAL FUNDS Each International
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 International
Fund's assets in convertible securities rated below investment grade by Standard
and Poor's Ratings Group ('S&P') and Moody's Investor Service, Inc. ('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 International 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 of the International Funds for the risks associated with
investing in convertible securities with such ratings. For a further discussion
on Convertible Securities, see 'Additional General Investment
Policies--Convertible Securities.'
The International Funds may purchase sponsored or unsponsored ADRs, EDRs and
GDRs (collectively,
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'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.
Each International 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 International 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 International Fund to sell them promptly at an acceptable
price.
The International 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 U.S. and non-U.S.
issuers, repurchase agreements, time deposits or cash (foreign currencies or
U.S. dollars), in such proportions as, in the opinion of the Adviser or
Subadviser, prevailing market, economic or political conditions warrant. Each
International 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 International Fund shares or to meet
ordinary daily cash needs.
Each International Fund may also (i) invest up to 35% of its total assets in
investment grade fixed income securities, (ii) invest up to 5% of its net assets
in warrants, (iii) purchase and sell put and call options, (iv) invest up to 15%
of its net assets in restricted securities or other instruments having no ready
market, (v) enter into forward foreign currency exchange contracts to protect
the value of its assets against future changes in the level of currency exchange
rates, (vi) 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 and (vii) 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
International Fund's portfolio.
Because the markets for certain options and futures contracts in which the
International Funds will invest (including markets located in foreign countries)
are relatively new and still developing and may be subject to regulatory
restraints, each International Fund's ability to engage in transactions using
such investments may be limited.
For additional information on the use, risks and costs of the above referenced
policies and practices, see 'Additional General Investment Policies.'
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THE MONEY FUNDS
---------------------------------------------------------------
THE WINTHROP MUNICIPAL MONEY FUND
The Winthrop Municipal Money Fund's (the 'Municipal Money Fund') investment
objective is to seek maximum current income, consistent with liquidity and
safety of principal, that is exempt from Federal income taxation to the extent
described below. As a matter of fundamental policy, the Municipal Money Fund
pursues its objectives by investing in high quality municipal securities having
remaining maturities of one year or less, which maturities may extend to 397
days, and at least 80% of the Municipal Money Fund's total assets will be
invested in such securities (as opposed to the taxable investments described
below). However, the Municipal Money Fund reserves the right to lower the
percentage to 65% if economic or political conditions warrant. To increase the
Municipal Money Fund's ability to reach its investment objectives, the dollar
weighted average maturity of its portfolio securities is always 90 days or less.
In general, securities with longer maturities are more vulnerable to price
changes, although they may provide higher yields. It is possible that a major
change in interest rates or a default on the Municipal Money Fund's investments
could cause their share prices to change.
Normally, substantially all the Municipal Money Fund's income will be tax-exempt
as described below. Such income may be subject to state or local and or Federal
AMT income taxes.
The municipal securities in which the Municipal Money Fund invests include
municipal notes and short-term municipal bonds which may have fixed, variable or
floating rates of interest. Municipal securities with variable rates may include
participation interests in industrial development bonds which may be backed by
letters of credit from banking or other financial institutions. The letters of
credit of any single of such institutions in respect of all variable rate
obligations will not cover more than the allowable percentage of the Municipal
Money Fund's total assets in accordance with Rule 2a-7 of the Investment Company
Act of 1940, as amended ('1940 Act'). For a more complete discussion of
Municipal Securities, see 'Additional General Investment Policies--Municipal
Securities.'
The Municipal Money Fund may also invest without limitation in tax-exempt
municipal securities subject to
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<PAGE>
the alternative minimum tax (the 'AMT'). (See 'Dividends, Distributions and
Taxes.')
All of the Municipal Money Fund's municipal securities at the time of purchase
are rated within the two highest quality ratings of Moody's (Aaa and Aa, MIG 1
and MIG 2 or VMIG1 and VMIG2) or S&P's (AAA and AA or SP-1 and SP-2), or judged
by the Adviser to be of comparable quality.
The Municipal Money Fund may also invest (i) up to 10% of its net assets in
stand-by commitments, delayed-delivery, when-issued securities and other
illiquid securities, (ii) more than 5% of its net assets in municipal leases,
which are leases or installment purchases used by state and local governments as
a means to acquire property, equipment or facilities without involving debt
issuance limitations and (iii) in taxable securities including obligations of
the U.S. Government and its agencies, high quality certificates of deposit and
bankers' acceptances, prime commercial paper, and repurchase agreements.
To seek to reduce investment risk, the Municipal Money Fund may not invest in
the securities of any one issuer, except the U.S. Government, in excess of the
percentage of the Municipal Money Fund's total assets allowed under Rule 2a-7 of
the 1940 Act.
The Municipal Money Fund earns income at current money market rates, and its
yield will vary from day to day and generally reflects current short-term
interest rates and other market conditions. It is important to note that neither
the Municipal Money Fund nor its yield are insured or guaranteed by the U.S.
Government.
THE WINTHROP U.S. GOVERNMENT MONEY FUND
The Winthrop U.S. Government Money Fund (the 'Government Fund') investment
objective is to seek maximum current income, consistent with liquidity and
safety of principal. As a matter of fundamental policy, the Government Fund
pursues its objectives by maintaining a portfolio of high quality money market
securities, including the types described in the succeeding paragraph, which at
the time of investment generally have remaining maturities of one year or less,
although maturities may extend to 397 days. The dollar weighted average maturity
of the Government Fund's portfolio securities will vary, but will always be 90
days or less. In general, securities with longer maturities are more vulnerable
to price changes, although they may provide higher yields. It is possible that a
major change in interest rates or a default on the Government Fund's investments
could cause their share prices to change.
The securities in which the Government Fund primarily invests are: (1) U.S.
Government Securities, including issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an act of Congress,
including variable rate obligations such as floating rate notes; and (2)
repurchase agreements that are collateralized in full each day by mortgage
related securities or the types of securities listed above. These agreements are
entered into with 'primary dealers' (as designated by the Federal Reserve Bank
of New York) in U.S. Government Securities and would create a loss to the
Government Fund if, in the event of a dealer default, the proceeds from the sale
of the collateral were less than the repurchase price. In addition, if the
seller of repurchase agreements becomes insolvent, the Government Fund's right
to dispose of the securities might be restricted.
The Government Fund may commit up to 10% of its net assets to the purchase of
illiquid securities, which includes when-issued U.S. Government Securities,
whose value may fluctuate prior to their settlement, thereby creating an
unrealized gain or loss to the Government Fund.
The Government Fund earns income at current money market rates and its yield
will vary from day to day and generally reflects current short-term interest
rates and other market conditions. It is important to note that neither the
Government Fund nor its yield is insured or guaranteed by the U.S. Government.
ADDITIONAL INVESTMENT POLICIES OF THE MONEY FUNDS To maintain portfolio
diversification and reduce investment risk, the Money Funds may not: (1) borrow
money except from banks on a temporary basis or via entering into reverse
repurchase agreements to be used exclusively to facilitate the orderly
maturation and sale of portfolio securities during any periods of abnormally
heavy redemption requests, if they should occur; such borrowings may not be used
to purchase investments; or (2) pledge, hypothecate or in any manner transfer,
as security for indebtedness, its assets except to secure such borrowings.
In addition to the above referenced securities, the Money Funds reserve the
right as a defensive measure to hold temporarily other types of securities which
are permitted by Rule 2a-7 of the 1940 Act. See 'Investment Policies and
Restrictions' in the Statement of Additional Information for a more complete
description of the Money Funds' objectives, strategies, instruments to be used
in connection therewith, and risks associated therewith.
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ADDITIONAL GENERAL
---------------------------------------------------------------
INVESTMENT POLICIES
---------------------------------------------------------------
The following general investment policies supplement those set forth above for
each Fund.
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EQUITY SECURITIES 'Equity Securities,' as used in this Prospectus, refers to
common stock, preferred stock (including convertible preferred), bonds
convertible into common or preferred stock, rights and warrants, equity
interests in trusts and depositary receipts for equity securities.
CONVERTIBLE SECURITIES A convertible security is a bond or preferred stock which
may be converted at a stated price within a specified period of time into a
certain quantity of the common or preferred stock of the same or a different
issuer. Convertible securities have characteristics of both bonds and equity
securities. Like a bond, a convertible security tends to increase in market
value when interest rates decline and tends to decrease in market value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the underlying stock. The price of a
convertible security tends to increase as the market value of the underlying
stock rises, whereas it tends to decrease as the market value of the underlying
stock declines.
WARRANTS A warrant gives the holder thereof the right to buy equity securities
at a specific price during a specified period of time. Warrants tend to be more
volatile than the underlying security, and if at a warrant's expiration date the
security is trading at a price below the price set in the warrant, the warrant
will expire worthless. Conversely, if at the expiration date the underlying
security is trading at a price higher than the price set in the warrant, the
holder of the warrant can acquire the stock at a price below its market value.
MORTGAGE AND ASSET-BACKED SECURITIES Except for the Municipal Trust Fund, the
Funds may invest in mortgage and asset-backed securities. 'Mortgage-backed
securities' are securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans on real property,
including pass-through securities such as Ginnie Mae, Fannie Mae and Freddie Mac
Certificates. The yield and credit characteristics of mortgage-backed securities
differ in a number of respects from traditional fixed income securities. The
major differences typically include more frequent interest and principal
payments, usually monthly, and the possibility that prepayment of principal may
be made at any time. Prepayment rates are influenced by changes in current
interest rates and a variety of other factors. In general, changes in the rate
of prepayment on a security will change the yield to maturity of the security.
Under certain interest rate or prepayment rate scenarios, a Fund may fail to
recoup fully its investment in such securities notwithstanding the credit
quality of the issuers of such securities. As a result of usual prepayment
patterns, amounts available for reinvestment are likely to be greater during a
period of declining interest rates and, thus, are likely to be invested at lower
interest rates, than during a period of rising interest rates. Mortgage-backed
securities may decrease in value as a result of increases in interest rates and
may benefit less than other fixed income securities from declining interest
rates because of the risk of prepayment. Except for the Municipal Trust Fund,
the Funds may also invest in private mortgage pass-through securities. Such
securities are not guaranteed by the U.S. Government or its agencies or
instrumentalities.
'Asset-backed securities' have similar structural characteristics to
mortgage-backed securities, but the underlying assets include assets such as
motor vehicle installment sales or installment loan contracts, leases of various
types of real and personal property, and receivables from revolving credit
agreements, rather than mortgage loans or interests in mortgage loans.
Asset-backed securities present certain risks that are not present in
mortgage-backed securities; primarily, these securities do not have the benefit
of the same security interest in the related collateral. There is the
possibility that recoveries of repossessed collateral may not, in some cases, be
available to support payments on these securities.
MUNICIPAL SECURITIES Municipal securities fall into two principal classes: bonds
and notes. Municipal bonds, which are longer-term debt obligations meeting long-
term capital needs, fall into two general classifications: 'general obligation'
bonds or 'revenue' bonds. Payment of principal and interest on general
obligation bonds is secured by the issuing municipality's pledge of its full
faith, credit, and taxing power. Payment on revenue bonds is met from the
revenues obtained from a certain facility, class of facilities, special excise
or other tax, but not from general tax revenues. Variations on these two
classifications exist, such as revenue bonds backed by a municipality's general
taxing power, or general obligation bonds backed by limited taxing power.
Municipal notes are short-term debt obligations generally maturing in a year or
less, meeting short-term capital needs and are also either 'general obligation'
or 'revenue' debt securities. They include tax anticipation notes, revenue
anticipation notes, bond anticipation notes, construction loan notes and tax-
exempt commercial paper.
Municipal securities may have fixed, variable or floating rates of interest.
Variable and floating rate securities pay interest at rates that are adjusted
periodically, according to a specified formula, in order to minimize fluctuation
in the principal value of the securities. A 'variable' interest rate adjusts at
predetermined intervals (e.g., daily, weekly, or monthly), while a 'floating'
interest rate adjusts whenever a specified benchmark rate (such as the bank
prime lending rate) changes.
The Municipal Money Fund and Municipal Trust Fund may invest in variable rate
obligations. Such adjustments minimize changes in the market value of the
obligation, and accordingly, enhance the ability of
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<PAGE>
the Municipal Money Fund to maintain a stable $1.00 net asset value. (See 'Net
Asset Value').
INVESTMENT GRADE DEBT SECURITIES The Funds may invest in debt securities of
investment grade quality. Investment grade debt securities are debt securities
rated in one of the four highest rating categories by a nationally recognized
statistical rating organization and unrated debt securities believed by the
Adviser (on the basis of criteria believed by the Adviser to be comparable to
that applied by such rating agencies) to be of comparable quality to debt
securities so rated. Debt securities rated Baa or higher by Moody's or BBB or
higher by S&P are investment grade securities. Securities rated BBB are regarded
by S&P as having an adequate capacity to pay interest and repay principal;
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. For a more
complete description of Moody's and S&P's ratings, see the Appendix to the
Statement of Additional Information of the Focus Funds or the Money Funds.
The investment grade limitations referenced for each Fund are applicable at the
time of initial investment and the Fund may determine to retain securities the
issuers of which have had their credit characteristics downgraded.
REPURCHASE AGREEMENTS The Funds may enter into 'repurchase agreements' with
respect to U.S. Government Securities. The Funds may enter into repurchase
agreements with member banks of the Federal Reserve System or 'primary dealers'
(as designated by the Federal Reserve Bank of New York) in such securities.
Repurchase agreements permit a Fund to keep all of its assets at work while
retaining 'overnight' flexibility in pursuit of investments of a longer-term
nature. Winthrop requires continual maintenance of collateral with a Fund's
custodian in an amount equal to, or in excess of, the market value of the
securities which are the subject of a repurchase agreement. In the event a
vendor defaults on its repurchase obligation, the Fund might suffer a loss to
the extent that the proceeds from the sale of the collateral were less than the
repurchase price. If the vendor becomes the subject of bankruptcy proceedings,
the Fund might be delayed in selling the collateral.
FOREIGN SECURITIES The International Funds will, and the Focus Funds except for
the Municipal Trust Fund may, invest in foreign securities. There are certain
risks involved in investing in foreign securities which are not the usual risks
inherent in U.S. investments. These risks include those resulting from
fluctuations in currency exchange rates, revaluation of currencies, future
adverse political and economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or restrictions,
reduced availability of public information concerning issuers and the lack of
uniform accounting, auditing and financial reporting standards or of other
regulatory practices and requirements comparable to those applicable to domestic
companies. Additionally, foreign securities may be adversely affected by
fluctuations in value of one or more currencies relative to the U.S. dollar.
Moreover, securities of many foreign companies may be less liquid and their
prices more volatile than those of securities of comparable U.S. companies. In
addition, with respect to certain foreign countries, there is the possibility of
expropriation, nationalization, confiscatory taxation and limitations on the use
or removal of funds or other assets of a foreign issuer, including the
withholding of dividends. Foreign securities may be subject to foreign
government taxes that would reduce the net yield on such securities. To the
extent a fund invests in securities denominated or quoted in currencies other
than the U.S. dollar, changes in foreign currency exchange rates will affect the
value of portfolio securities and the appreciation or depreciation of
investments. Investment in foreign securities may also result in higher expenses
due to the cost of converting foreign currency into U.S. dollars, the payment of
fixed brokerage commissions on foreign exchanges, which generally are higher
than commissions on U.S. exchanges, and the expense of maintaining securities
with foreign custodians.
INVESTMENT COMPANIES Pursuant to the 1940 Act, a 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 International Funds
or the Municipal Money Fund may invest in such investment companies if, in the
judgment of the Advisers or Subadviser, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in an investment company, the Municipal Money Fund or an
International Fund would bear its ratable share of that investment company's
expenses, including its advisory and administrative fees. At the same time the
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Municipal Money Fund or an International Fund would continue to pay its own
management fees and other expenses.
OPTIONS Each of the Growth Fund and the Growth and Income Fund may write covered
call options (as discussed below) on individual securities or stock indices, but
only in order to minimize the effect of a market decline in the value of
securities in its portfolio. The Small Company Value Fund may purchase or sell
put and call options on individual securities or stock indices as a means of
achieving additional return or of hedging the value of its portfolio. The
International Funds may purchase and sell put and call options on securities,
currencies and financial indices that are traded on U.S. or foreign securities
exchanges or in the over-the-counter market. (Options traded in the over-
the-counter market are considered illiquid investments.)
A call option is a contract that gives the holder of the option the right, in
return for a premium paid, to buy from the seller the security underlying the
option at a specified exercise price at any time during the term of the option
or, in some cases, only at the end of the term of the option. The seller of the
call option has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price. A put option is a
contract that gives the holder of the option the right, in return for a premium,
to sell to the seller of the option the underlying security at a specified
price. The seller of the put, on the other hand, has the obligation to buy the
underlying security upon exercise at the exercise price. The purchaser of an
option risks a total loss of the premium paid for the option if the price of the
underlying security does not increase or decrease sufficiently to justify
exercise. The seller of an option, on the other hand, will recognize the premium
as income if the option expires unexercised but forgoes any capital appreciation
in excess of the exercise price in the case of a call option and may be required
to pay a price in excess of current market value in the case of a put option.
Options purchased and sold in private transactions (other than on an exchange)
also impose on a fund the credit risk that the counterparty will fail to honor
its obligations.
An option is considered 'covered' for purposes of the Funds' investment
limitations if the party writing it owns, at all times during the option period,
either (i) the optioned securities, or securities convertible into or carrying
rights to acquire the optioned securities at no additional cost, or (ii) an
offsetting call option on the same securities at the same or lower price.
The success of a Fund's transactions with options depends on the ability of the
Adviser or Subadviser to predict the direction of the market and is subject to
certain additional risks, including generally greater volatility of options as
compared to common stocks and the risk that an option will expire without value.
RISKS OF OPTIONS, CURRENCY EXCHANGE CONTRACTS AND FINANCIAL FUTURES
STRATEGIES Participation in the options or futures markets and in currency
exchange transactions involves investment risks and transaction costs to which a
Fund would not be subject absent the use of these strategies. If the Adviser's
or Subadviser's predictions of movements in the direction of the securities,
foreign currency and interest rate markets are inaccurate, the adverse
consequences to a Fund may leave the Fund in a worse position than if such
strategies were not used. The loss from entering into futures contracts is
potentially unlimited. Risks inherent in the use of options, foreign currency
and futures contracts and options on futures contracts include (1) dependence on
the investment manager's ability to predict correctly movements in the direction
of interest rates, securities prices and currency markets; (2) imperfect
correlation between the price of options and futures contracts and options
thereon and movements in the prices of the securities or currencies being
hedged; (3) skills needed to use these strategies are different from those
needed to select portfolio securities; (4) the possible absence of a liquid
secondary market for any particular instrument at any time; (5) the possible
need to defer closing out certain hedged positions to avoid adverse tax
consequences; and (6) the possible inability of a Fund to purchase or sell a
portfolio security at a time that otherwise would be favorable for it to do so,
or the possible need for a Fund to sell a portfolio security at a
disadvantageous time, due to the need for such Fund to maintain 'cover' or to
segregate securities in connection with hedging transactions. See 'Dividends,
Distributions and Taxes' in the Statement of Additional Information of each
Fund.
WHEN ISSUED, DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS The Funds may,
to the extent consistent with their other investment policies and restrictions,
enter into forward commitments for the purchase or sale of securities, including
on a 'when issued' or 'delayed delivery' basis in excess of customary settlement
periods for the type of security involved. In some cases, a forward commitment
may be conditioned upon the occurrence of a subsequent event, such as approval
and consummation of a merger, corporate reorganization or debt restructuring,
i.e., a when, as and if issued security. When such transactions are negotiated,
the price is fixed at the time of the commitment, with payment and delivery
taking place in the future, generally a month or more after the date of the
commitment. While the Funds will only enter into a forward commitment with the
intention of actually acquiring the security, the Funds may sell the security
before the settlement date if it is deemed advisable.
Securities purchased under a forward commitment are subject to market
fluctuations, and no interest (or dividends) accrues to a Fund prior to the
settlement date. The Funds will segregate with their custodian cash or other
liquid, unencumbered assets, in an
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aggregate amount at least equal to the amount of their respective outstanding
forward commitments.
STAND-BY COMMITMENTS The Municipal Trust Fund and the Municipal Money Fund may
invest in stand-by commitments which may involve certain additional expenses.
Each of these Fund's custodian will maintain a segregated account containing
liquid securities having value equal to, or greater than, such securities. The
price of such securities, which is generally expressed in yield terms, is fixed
at the time the commitment to purchase is made, but delivery and payment for
such securities takes place at a later time. Normally the settlement date occurs
within ten days to one month after the purchase of the issue. The value of such
securities may fluctuate prior to their settlement, thereby creating an
unrealized gain or loss to the Fund. Such securities are examples of what the
SEC considers 'illiquid securities' because their settlement date occurs more
than seven days after their purchase. The SEC limits money market funds to hold
only up to 10% of their net assets for securities which settle more than seven
days after purchase.
INVESTMENT RESTRICTIONS
Certain investment restrictions applicable to each Fund are fundamental policies
and may not be changed with respect to a Fund without the approval of a majority
of the shareholders of that Fund. See 'Investment Policies and Restrictions' in
the applicable Fund's Statement of Additional Information.
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MANAGEMENT
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The Board of Trustees of each Fund has the overall responsibility for the
management of the Funds.
Wood, Struthers & Winthrop Management Corp., a Delaware corporation with
principal offices at 277 Park Avenue, New York, New York 10172 ('WSWMC'), has
been retained under an investment advisory agreement to provide investment
advice and to supervise the management and investment programs of the Focus
Funds and International Funds described above, subject to the general
supervision and control of each Fund's Trustees.
Pursuant to a Subadvisory Agreement among the International Funds, WSWMC 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, furnishes investment advisory services in connection with the management
of the International Funds. WSWMC 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 International
Funds are a party to the Subadvisory Agreement solely for purposes of
indemnification and termination.
The Subadviser is an indirect wholly-owned subsidiary of AXA, and the Subadviser
does not currently act as an investment adviser to any other investment
companies.
DLJ Investment Management Corp. ('DLJIM'), a Delaware corporation with principal
offices at 277 Park Avenue, New York, New York 10172, has been retained under an
investment advisory agreement to provide investment advice and to supervise the
management and investment programs of the Money Funds, subject to the general
supervision and control of the Trustees of the Money Funds. DLJIM was formed in
November 1995 for the initial purpose of acting as investment adviser to a
select group of individual and institutional investors, and hence, as an entity,
has not acted as an adviser to other investment companies in the past. DLJIM,
however, has hired personnel from both within and outside of DLJ who have
experience in the investment company industry, specifically the operation and
management of money market funds.
WSWMC and DLJIM (the 'Advisers') are subsidiaries 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 following individuals are responsible for management of Winthrop's
portfolios.
James A. Engle, currently the primary manager of the Growth and Income Fund,
acted as co-portfolio manager of the Growth and Income Fund (since July 1993)
prior to which he was its sole portfolio manager (since 1986, which includes its
predecessor, the Pine Street Fund, Inc.). Mr. Engle is also the co-portfolio
manager of the Growth Fund (since March 1993) and the Small Company Value Fund
(since 1989, which was previously named the Aggressive Growth Fund and includes
its predecessor, the Neuwirth Fund, Inc.). Mr. Engle is a Vice President of
Winthrop and is also the Chief Investment Officer and Managing Director of
WSWMC. Mr. Engle heads WSWMC's Investment Committee which focuses its attention
on identifying undervalued securities and has been an employee of the firm since
1983.
Cathy A. Jameson is the portfolio manager of the Fixed Income Fund, a position
she has held since the commencement of its operations and is a Vice President of
Winthrop. Ms. Jameson is also a Senior Vice President of WSWMC and has been an
employee of WSWMC since 1979.
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Roger W. Vogel, currently the primary manager of the Small Company Value Fund,
acted as the portfolio co-manager of the Growth Fund, the Growth and Income
Fund, and the Small Company Value Fund since July 1993. Mr. Vogel is a Vice
President of Winthrop, and a Senior Vice President and Director of Research of
WSWMC and the Chief Investment Officer--Equity of DLJIM. Prior to becoming
associated with Winthrop, Mr. Vogel was a Vice President and portfolio manager
with Chemical Banking Corp.
Marybeth B. Leithead is the portfolio manager of the Municipal Trust Fund, a
position she has held since the commencement of its operations on July 28, 1993.
Ms. Leithead is also a Vice President of Winthrop and of the Advisers and has
been an employee of WSWMC since 1989. A tax-exempt fixed income specialist, Ms.
Leithead is responsible for short and long municipal bond investment management
for clients of the Advisers. Prior to joining WSWMC, Ms. Leithead was an
employee of Citicorp Securities Markets Inc.
Hugh M. Neuburger, currently the primary portfolio manager of the Growth Fund,
was assigned as the co-portfolio manager of the Growth Fund, the Growth and
Income Fund and the Small Company Value Fund effective as of August 1995. Mr.
Neuburger is also a Senior Vice President and Director of Quantitative Analysis
of the Advisers and has been an employee of WSWMC since March 1995. Prior to
March 1995, Mr. Neuburger was the president of Hugh M. Neuburger, Inc., a
consulting firm providing domestic and global tactical asset allocation advice
and other consulting services to large corporate and state pension plans. From
1986 through 1991, Mr. Neuburger was Managing Director of Matrix Capital
Management, an investment management firm. Prior thereto, Mr. Neuburger was with
the Prudential Insurance Company of America managing asset allocation
portfolios.
Robert de Guigne, an employee of the Subadviser, is the portfolio manager of the
International Funds. Mr. de Guigne assumed the day-to-day investment
responsibilities of the International Equity Fund in August 1996 and the
Developing Markets Fund in June 1997. Mr. de Guigne has been an asset manager
responsible for emerging market equities for a subsidiary of AXA since April
1996. Previously, Mr. de Guigne was a portfolio manager for State Street Bank in
Paris.
Under the Advisory Agreements with Winthrop, the Advisers or its affiliates
provide investment advisory services and order placement facilities for each of
the Funds and pay all compensation of the Trustees of Winthrop who are
affiliated persons of the Adviser. The Adviser or its affiliates also furnish
Winthrop, without separate charge, management supervision and assistance and
office facilities in addition to administrative and other nonadvisory services
for which they may be reimbursed.
The Focus Funds pay a fee to WSWMC at the following annual percentage rates of
the average daily net assets of each Focus Fund: Growth Fund, .750 of 1% of the
first $100,000,000, .500 of 1% of the balance; Small Company Value Fund, .875 of
1% of the first $100,000,000, .750 of 1% of the next $100,000,000 and .625 of 1%
of net assets in excess of $200,000,000; Fixed Income Fund, .625 of 1% of the
first $100,000,000, .500 of 1% of the balance; Municipal Trust Fund, .625 of 1%
of the first $100,000,000, .500 of 1% of the balance; and Growth and Income
Fund, .750 of 1% of the first $75,000,000, .500 of 1% of the balance. The
advisory fees to be paid by the Growth Fund, the Small Company Value Fund and
the Growth and Income Fund are higher than those paid by many other mutual funds
with similar investment objectives.
Pursuant to the Advisory Agreement, the Growth Fund has paid WSWMC an advisory
fee equivalent to .75% of the average daily net assets for the year ended
October 31, 1996. The Growth Fund's total operating expenses of $943,669 for
such period amounted to 1.48% of the average daily net assets of its Class A
shares and for the period February 28, 1996 (commencement of offering Class B
shares) through October 31, 1996, 2.17% (annualized) of the average daily net
assets of its Class B shares.
Pursuant to the Advisory Agreement, the Growth and Income Fund has paid WSWMC an
advisory fee equivalent to .68% of the average daily net assets for the year
ended October 31, 1996. The Growth and Income Fund's total operating expenses of
$1,441,692 for such period amounted to 1.36% of the average daily net assets of
its Class A shares and for the period February 28, 1996 (commencement of
offering Class B shares) through October 31, 1996, 1.99% (annualized) of the
average daily net assets of its Class B shares.
Pursuant to the Advisory Agreement, the Small Company Value Fund has paid WSWMC
an advisory fee equivalent to .80% of the average daily net assets for the year
ended October 31, 1996. The Small Company Value Fund's total operating expenses
of $3,300,408 for such period amounted to 1.47% of the average daily net assets
of its Class A shares and for the period February 28, 1996 (commencement of
offering Class B shares) through October 31, 1996, 2.15% (annualized) of the
average daily net assets of its Class B shares.
Pursuant to the Advisory Agreement, the Fixed Income Fund has paid WSWMC an
advisory fee equivalent to .625% of the average daily net assets for the year
ended October 31, 1996. The Fixed Income Fund's total operating expenses for
such period were $780,350. Commencing July 1, 1994, the Adviser reimbursed
through February 27, 1996 such operating expenses in excess of 1.00% of the
average daily net assets of the Fixed Income Fund. For the period February 28,
1996 through October 31, 1997 WSWMC has agreed to
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reduce its management fees and reimburse expenses by the amount that total fund
operating expenses exceed 1.00% of the average daily net assets of Class A
shares and 1.70% of the average daily net assets of Class B shares of the Fixed
Income Fund. After October 31, 1997, WSWMC may continue or it may determine to
discontinue this practice. As a result of the voluntary assumption of expenses,
WSWMC reimbursed the Fund $198,923 during the year ended October 31, 1996.
Absent such reimbursement, the Fixed Income Fund's total operating expenses for
the year ended October 31, 1996 would have amounted to 1.34% of the average
daily net assets of its Class A shares and for the period February 28, 1996
(commencement of offering Class B shares) through October 31, 1996, 2.04%
(annualized) of the average daily net assets of its Class B shares.
Pursuant to the Advisory Agreement, the Municipal Trust Fund has paid WSWMC an
advisory fee equivalent to .625% of the average daily net assets for the year
ended October 31, 1996. The Municipal Trust Fund's total operating expenses for
such period were $558,864. Commencing July 1, 1994 the Adviser reimbursed
through February 27, 1996 all operating expenses in excess of 1.00% of the
average daily net assets of the Fund. For the period February 28, 1996 through
May 31, 1996 the Adviser reduced its management fees and reimbursed expenses by
the amount that total operating expenses exceeded 1.00% of the average daily net
assets of Class A shares and 1.70% of the average daily net assets of Class B
shares of the Municipal Trust Fund. For the period June 1, 1996 through June 2,
1997, WSWMC, with respect to the Municipal Trust Fund, reduced its management
fees and reimbursed operating expenses by the amount that total operating
expenses exceeded .50% of the average daily net assets of the Fund's Class A
shares and 1.20% of the average daily net assets of the Fund's Class B shares.
For the period June 3, 1997 through October 31, 1997, WSWMC has agreed to reduce
its management fees and reimburse operating expenses by the amount that total
fund operating expenses exceed 1.00% of the average daily net assets of the
Fund's Class A shares and 1.70% of the average daily net assets of the Fund's
Class B shares. After October 31, 1997, with respect to the Municipal Trust
Fund, the Adviser may, in its sole discretion, determine to continue to pay
certain expenses of the Fund or it may discontinue this practice. As a result of
the voluntary assumption of expenses, the Adviser reimbursed the Fund $249,651
during the year ended October 31, 1996. Absent such reimbursement, the Municipal
Trust Fund's total operating expenses for such period would have amounted to
1.44% of the average daily net assets of its Class A shares and for the period
February 28, 1996 (commencement of offering Class B shares) through October 31,
1996, 1.87% (annualized) of the average daily net assets of its Class B shares.
The International Funds pay a fee to WSWMC at the following annual percentage
rates of the average daily net assets of each International 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 International Funds
are higher than those paid by most other mutual funds.
Under the Subadvisory Agreement, WSWMC 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 International Fund: .625% of each International
Fund's first $100,000,000, .575% of the next $100,000,000 and .50% of the
balance.
For the year ended October 31, 1996, pursuant to the Advisory Agreement, the
International Funds paid WSWMC advisory fees equivalent to 1.25% of the average
daily net assets of each Fund. The total operating expenses of the International
Equity Fund and the Developing Markets Fund for such period were $1,049,831 and
$921,943, respectively. Commencing at the inception of the International Funds
through October 31, 1997, WSWMC and the 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 International Fund. Any such reduction will be
borne equally between the Adviser and Subadviser. After October 31, 1997, WSWMC
and the Subadviser may, in their sole discretion, determine to discontinue this
practice with respect to either International Fund.
The Money Funds pay a fee of .40% of the average daily net assets of each Money
Fund to DLJIM, which is reduced to .35% of each Money Fund's average daily net
assets in excess of $1 billion. The advisory fees to be paid by the Money Funds
are similar to those paid by other money market mutual funds.
For the period from the inception of the Money Funds on February 24, 1997
through April 30, 1997, pursuant to the Advisory Agreement, the Money Funds paid
DLJIM advisory fees equivalent to .40% (annualized) of the average daily net
assets of each Fund. The total operating expenses of the Municipal Money Fund
and the U.S. Government Money Fund for such period were $52,536 and $45,574,
respectively. Commencing at the inception of the Money Funds through October 31,
1997, DLJIM has agreed to reduce its management fees and DLJIM or its affiliates
have agreed to reimburse operating expenses by the amount that total operating
expenses exceed .90% of the average daily net assets of each Money Fund. After
October 31, 1997, DLJIM or its affiliates may, in their discretion, determine to
discontinue this practice with respect to either Money Fund.
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EXPENSES OF WINTHROP
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GENERAL
In addition to payments to each Fund's Adviser under the investment advisory
agreements described above, Winthrop 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 Advisers 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 Focus Funds by WSWMC under the investment advisory agreement, Winthrop may
employ its own personnel. For such services, it also may utilize personnel
employed by the Adviser or by its affiliates. In such event, the services shall
be provided to the Focus Funds at cost and the payments therefor must be
specifically approved in advance by the Focus Funds' Trustees, including a
majority of its disinterested Trustees. Under the terms of the investment
advisory agreements with the International Funds and the Money Funds, management
supervision and assistance and office facilities, in addition to administrative
and nonadviser services provided to the Adviser or their affiliates, may be
reimbursed.
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 Winthrop could be deemed to be distribution expenses within the meaning of
such rule. Thus, pursuant to Rule 12b-1, the Trustees of each Fund (including a
majority of its disinterested Trustees) have adopted separate 12b-1 Plans for
expenses incurred in distributing Class A shares (the '12b-1 Class A Plans') and
Class B shares (the '12b-1 Class B Plans') of the Focus Funds and International
Funds and in distributing shares of the Money Funds ('Money Fund 12b-1 Plans'
and collectively, the '12b-1 Plans'). Winthrop, on behalf of each Fund, has
entered into a Distribution Agreement (the 'Agreements') with Donaldson, Lufkin
& Jenrette Securities Corporation, Winthrop's 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.
In adopting the 12b-1 Plans, the Trustees of each Fund determined that there is
a reasonable likelihood that the 12b-1 Plans may benefit such Fund and its
shareholders.
With respect to each Focus Fund, the maximum amount payable under the 12b-1
Class A Plans is .30 of 1% of the average daily net assets of the Class A shares
during the year consisting of (i) an asset-based sales charge of .05 of 1% of
the average daily net assets of the Class A shares and (ii) a service fee of up
to .25 of 1% of the average daily net assets of the Class A shares. With respect
to each International Fund, the maximum amount payable under the Rule 12b-1
Class A Plans is .25 of 1% of the average daily net assets of the Class A shares
during the year. Under the 12b-1 Class B Plans, the maximum amount payable by
each Fund 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 Agreements,
but not the Rule 12b-1 Plans, will terminate in the event of their assignment.
With respect to each Money Fund, the maximum amount payable by the Money Funds
under the Money Fund 12b-1 Plans for distributing shares is .40 of 1% of the
average daily net assets of each Money Fund during the year. The current amount
payable by the Money Funds under the Money Fund 12b-1 Plans to the Distributor
is .25 of 1% of the average daily net assets of each Money Fund during the year.
Pursuant to the Money Fund's Agreement, the Trustees can raise the distribution
fees up to the maximum amount by a majority vote if the Trustees, in their
opinion, feel that the raise is in the best interest of the Money Funds and
their shareholders. The Agreements, but not the Money Fund 12b-1 Plans, will
terminate in the event of their assignment.
With respect to the 12b-1 Class A Plans and 12b-1 Class B Plans plans for the
International Funds (the 'International Fund 12b-1 Plans'), amounts paid by the
International Funds are used in their entirety to reimburse the Distributor for
actual expenses incurred. In contrast, under the 12b-1 Class A Plans, and 12b-1
Class B Plans for the Focus Funds (the 'Focus Fund 12b-1 Plans'), each Focus
Fund is obligated to pay distribution and/or service fees to the Distributor as
compensation for its distribution and service activities, not as reimbursement
for specific expenses incurred. If the Distributor's expenses exceed its
distribution and service fees, the Fund will not be obligated to pay any
additional expenses. If the Distributor's expenses are less than such
distribution and service fees, it will retain its full fees and realize a
profit.
Amounts paid under the 12b-1 Plans and the Agreements are used in their entirety
to pay the Distributor for expenses incurred to (i) promote the sale of shares
of each Fund by, for example, paying for the preparation, printing and
distribution of prospectuses, sales brochures and other
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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 Winthrop's shareholders.
With respect to sales of Class B shares through a broker-dealer, the
broker-dealer is paid a concession at the time of sale. In addition, an ongoing
maintenance fee may be paid to broker-dealers on sales of shares of the Funds.
The payments to the broker-dealer, although a Fund expense which is paid by all
shareholders, will only directly benefit investors who purchase their shares
through a broker-dealer rather than directly from the Funds. Broker-dealers who
sell shares of the Funds may provide services to their customers that are not
available to investors who purchase their shares directly. Investors who
purchase their shares directly from a Fund will pay a pro rata share of such
Fund's expenses of encouraging broker-dealers to provide such services but will
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 Fund.
The International Fund 12b-1 Plans and the Money Fund 12b-1 Plans permit
payments to be made in subsequent years for expenses incurred in prior years if
the 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.
The tables below shows distribution costs incurred during the past fiscal year
or, in the case of the Municipal Money Fund and U.S. Government Money Fund,
during the period from the Funds' inception on February 24, 1997 through April
30, 1997.
<TABLE>
<CAPTION>
DISTRIBUTION COSTS
-------------------
CLASS A CLASS B
-------- -------
<S> <C> <C>
Growth Fund........................ $225,915 $ 9,651*
Growth and Income Fund............. 372,389 21,572*
Small Company Value Fund........... 802,958 22,502*
Fixed Income Fund.................. 208,372 6,565*
Municipal Trust Fund............... 141,896 1,775*
International Equity Fund.......... 96,395 37,341
Developing Markets Fund............ 77,456 25,620
</TABLE>
* For the period February 28, 1996 (commencement of offering Class B shares) to
October 31, 1996.
<TABLE>
<CAPTION>
DISTRIBUTION COSTS
------------------
<S> <C>
Municipal Money Fund.................... $ 11,501
U.S. Government Money Fund.............. 10,194
</TABLE>
Under the Agreements, the Adviser may make payments to the Distributor from the
Adviser's own resources, which may include the management fees paid by Winthrop.
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 the Fund. On some
occasions, such compensation will be conditioned on the sale of a specified
minimum dollar amount of the shares of the Funds during a 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.
---------------------------------------------------------------
PURCHASES, REDEMPTIONS
---------------------------------------------------------------
AND SHAREHOLDER SERVICES
---------------------------------------------------------------
PURCHASES
Shares of the Funds will be offered on a continuous basis directly by the Funds
and by the Distributor, acting as agent for the Funds, at the respective net
asset value per share determined as of the close of the regular trading session
of the New York Stock Exchange (the 'NYSE'), currently 4:00 p.m., New York City
time, following receipt of a purchase order in proper form plus, in the case of
Class A shares of each Focus Fund and International Fund, an initial sales
charge imposed at the time of purchase or, subject to a contingent deferred
sales charge upon (i) redemption of Class B shares of each Focus Fund and
International Fund, (ii) certain redemptions of Class A shares of each Focus
Fund and International Fund and (iii) certain redemptions of shares of each
Money Fund. 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.' Checks made payable to the shareholder or another third party (third
party checks) will not be accepted for investment in Winthrop.
To open a new account by wire, first call Winthrop Mutual Funds at
1-800-225-8011 (option #2) to obtain an account number. A representative will
instruct you to send a completed, signed application to the Transfer Agent.
25
<PAGE>
Accounts cannot be opened without 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 who purchase shares of the Money Funds through a wire transfer will be
eligible to receive the daily dividend declared on the date of purchase if the
Transfer Agent is notified of such purchase by 12:00 Noon and wired funds are
received by the Transfer Agent by 4:00 p.m. (See 'Dividends, Distributions and
Taxes.')
Investors may also open Winthrop accounts via their securities dealer. In
addition, securities dealers may offer an automatic sweep for the shares of the
Money Funds in the operation of cash accounts for its customers. Shares of the
Money Funds purchased through an automatic sweep by 1:00 p.m. are eligible to
receive that day's daily dividend. Contact your securities dealer to determine
if a sweep is available and what the sweep parameters are.
The initial minimum investment in each Fund is $250 and $25 for subsequent
investments in a Fund. (For example, an investor wishing to make an initial
investment in shares of two Funds would be required to invest at least $250 in
each Fund.) Full and fractional shares will be credited to an investor's account
in the amount of the investment. Share certificates will not be issued for full
or fractional shares of the Money Funds. Each 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 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) plans.
With respect to Class B shares of an International Fund or Focus Fund, an
investor's maximum purchase of such shares is $250,000.
Existing shareholders wishing to purchase additional shares of a Fund may use
the investment stub found at the bottom of the Funds' Shareholder Statement form
or, if one is not available, they may send a check payable to such Fund directly
to Winthrop's Transfer Agent, FPS Services, Inc. at the address indicated on the
back cover of this Prospectus. Any check for additional shares sent directly to
Winthrop should reference the account number to which it should be credited.
Existing shareholders may also purchase additional shares of a Fund via a wire
transfer by contacting and providing the Fund account information to the
Transfer Agent and following the wire instructions above.
Further information and assistance is available by contacting Winthrop at the
address or telephone number listed on the back cover of this Prospectus.
REDEMPTIONS
Shares of Winthrop 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
Winthrop 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 and certain redemptions of shares of the Money Funds.
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 the Fund's
portfolio securities at the time of such redemption or repurchase. (See
'Dividends, Distributions and Taxes' for a discussion of the tax consequences of
a redemption.)
To redeem shares for which no share certificates have been issued, the
registered owner or owners should forward a letter to Winthrop's Transfer Agent,
FPS Services, Inc. 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'). The address of the
Transfer Agent can be found on the back cover of this Prospectus.
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
26
<PAGE>
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.
Winthrop may request in writing that a shareholder whose account in a Fund has
an aggregate balance of less than $250 increase his account to at least that
amount within 60 days. If the shareholder fails to do so, Winthrop reserves the
right to close such account and send the proceeds to the shareholder. IRAs and
other qualified retirement accounts are not subject to mandatory redemption. A
Fund will not redeem involuntarily any shareholder account with an aggregate
balance of less than $250 based solely on the market movement of such Fund's
shares.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after shares are tendered in
proper form for redemption, except for any period during which the NYSE is
closed (other than customary weekend and holiday closings) or during which
trading on the exchange is deemed to be restricted under rules of the SEC, or
for any period during which an emergency (as determined by the SEC) exists as a
result of which disposal by Winthrop of its portfolio securities is not
reasonably practicable, or as a result of which it is not reasonably practicable
for Winthrop 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,
redemptions will be made by payment in cash or by check. (See the Statement of
Additional Information.)
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 International Fund and Focus Fund are offered at the net
asset value next determined plus a sales charge, as follows:
FOCUS FUNDS:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
-----------------------------------------------
AS A % OF COMMISSION TO
NET AMOUNT AS A % OF DEALER/AGENT AS A
AMOUNT PURCHASED INVESTED OFFERING PRICE % OF OFFERING PRICE
- --------------------- ---------- -------------- -------------------
<S> <C> <C> <C>
Less than $50,000.... 4.99% 4.75% 4.25%
$50,000 to less than
$100,000........... 4.71 4.50 4.00
$100,000 to less than
$250,000........... 3.90 3.75 3.25
$250,000 to less than
$500,000........... 2.56 2.50 2.25
$500,000 to less than
$1,000,000......... 1.78 1.75 1.60
$1,000,000 or more... 0 0 0
</TABLE>
INTERNATIONAL FUNDS:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
-----------------------------------------------
AS A % OF COMMISSION TO
NET AMOUNT AS A % OF DEALER/AGENT AS A
AMOUNT PURCHASED INVESTED OFFERING PRICE % OF OFFERING 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. In
addition, Class A shares issued upon conversion of other shares of the Fund are
not subject to an initial sales charge.
From time to time, the Distributor may re-allow the full amount of the sales
charge to brokers as a commission for sales of such shares.
SALES AT NET ASSET VALUE
The initial sales charge will be waived for the following shareholders or
transactions:
(1) investment advisory clients of the Advisers;
(2) officers and Trustees of the Funds, directors or trustees of other
investment companies managed by the Adviser, officers, directors and
full-time employees of the Adviser and of its wholly-owned subsidiaries or
parent entities ('Related Entities'); or the spouse, siblings, children,
parents 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 Funds);
(3) certain employee benefit plans for employees of the Adviser and Related
Entities;
(4) an agent or broker of a dealer that has a sales agreement with the
Distributor, for their own account or an account of a relative of any such
person, or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the
estate of any such person or relative, if such sales are made for
investment purposes (such shares may not be resold except to the Funds). To
qualify, the Distributor or Transfer Agent must be notified at the time of
purchase;
(5) shares purchased by registered investment advisors on behalf of fee-based
accounts or by broker-dealers that have sales agreements with the Funds
27
<PAGE>
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, record keeping or other services;
(6) shareholders who received shares in Winthrop as a result of the merger of
Neuwirth Fund, Inc., Pine Street Fund, Inc. or deVegh Mutual Fund, Inc.,
and who have maintained their investment in such shares of Winthrop; and
(7) 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
to the Funds' Distributor or Transfer Agent, an investor may purchase shares of
Winthrop 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 investment contemplated by the Letter is
completed within the 13-month period. The 13-month period begins on the date of
the earliest purchase. If the intended investment is not completed, the Transfer
Agent will redeem an appropriate number of the escrowed shares in order to
realize the difference between the sales charge on the shares purchased at the
reduced rate and the sales charge applicable to the total shares purchased.
RIGHT OF ACCUMULATION For investors who already have an account with the Funds,
reduced sales charges based upon the Funds' sales charge schedule are applicable
to subsequent purchases. The sales charge on each additional purchase is
determined by adding the current market value of the shares the investor
currently owns to the amount being invested. The Right of Accumulation is
illustrated by the following example:
If a previous purchase currently valued in the amount of $50,000 had been made
subject to a sales charge and the shares are still held, a current purchase of
$50,000 will qualify for a reduced sales charge (i.e. the sales charge on a
$100,000 purchase).
The reduced sales charge is applicable only to current purchases. It is the
investor's responsibility to notify the Transfer Agent at the time of subsequent
purchases that the account is eligible for the Right of Accumulation.
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.
CONCURRENT PURCHASES To qualify for a reduced sales charge, the investor may
combine concurrent purchases of shares purchased in any Winthrop Fund. For
example, if the investor concurrently invests $25,000 in one Fund and $25,000 in
another, the sales charge would be reduced to reflect a $50,000 purchase. In
order to exercise the Concurrent Purchases privilege, the investor must notify
the Distributor or Transfer Agent prior to his or her purchase.
COMBINED PURCHASE PRIVILEGE By combining the investor's holdings of shares in
any Winthrop Fund, the investor can reduce the initial sales charges on any
additional purchases of Class A shares. The investor may also use these
combinations under a Letter of Intent. This allows the investor to make
purchases over a 13-month period and qualify the entire purchase for a reduction
in initial sales charges on Class A shares. A combined purchase of $1,000,000 or
more may trigger the payment of a dealer's commission and the applicability of a
Limited CDSC. (See 'Contingent Deferred Sales Charge on Class A Shares.')
REINSTATEMENT PRIVILEGE The Reinstatement Privilege permits shareholders to
reinvest the proceeds of each Fund's Class A shares redeemed, within 120 days
from the date of redemption, without an initial sales charge. It is the
investor's responsibility to notify the Transfer Agent prior to his or her
purchase in order to exercise the Reinstatement Privilege. In addition, a CDSC
paid to Winthrop will be eligible for reimbursement at the current net asset
value of the applicable Fund if a shareholder reinstates his Winthrop account
holdings within 120 days from the date of redemption.
CONTINGENT DEFERRED SALES CHARGE ON CLASS B SHARES
A shareholder can purchase Class B shares at net asset value without an initial
sales charge. However, a shareholder may pay a CDSC if such shareholder
28
<PAGE>
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 CDSC is imposed, the amount of the CDSC will depend on the number of
years since the shareholder made the purchase according to the table below.
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE PERCENTAGE CONTINGENT
PAYMENT WAS MADE DEFERRED SALES CHARGE
- -------------------------- --------------------------
<S> <C>
First 4%
Second 3%
Third 2%
Fourth 1%
Fifth and thereafter 0%
</TABLE>
The amount of any CDSC 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, recognized by a
shareholder on the redemption of shares.
The CDSC on Class B shares will be waived for the following shareholders or
transactions:
(1) shares received pursuant to the exchange privilege which are currently
exempt from a 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 Winthrop's systematic withdrawal plan pursuant
to which up to 1% monthly or 3% quarterly of an account (excluding dividend
reinvestments) may be withdrawn, provided that no more than 10% of the
total market value of an account may be withdrawn over any 12 month period
(shareholders who elect systematic withdrawals on a semi-annual or annual
basis are not eligible for the waiver); and
(4) liquidations, distributions or loans from the following types of retirement
plan accounts: (i) retirement plans qualified under section 401(k) of the
Code; (ii) plans described in section 403(b) of the Code and (iii) deferred
compensation plans described in section 457 of the Code.
Redemptions effected by the Funds pursuant to their right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the CDSC.
CONTINGENT DEFERRED SALES CHARGE ON CLASS A SHARES
A Limited Contingent Deferred Sales Charge ('Limited CDSC') will be imposed by
the Funds upon certain redemptions of Class A shares (or shares into which such
Class A shares are exchanged) made within 12 months of purchase, if such
purchases were made at net asset value and triggered the payment by the
Distributor of the dealer's commission described above (i.e., purchases of
$1,000,000 or more).
The Limited CDSC will be paid to the Distributor and will be equal to the lesser
of 1% of (i) the net asset value at the time of purchase of the Class A shares
being redeemed or (ii) the net asset value of such Class A shares at the time of
redemption. For purposes of this formula, the 'net asset value at the time of
purchase' will be the net asset value at the time of purchase of such Class A
shares even if those shares are later exchanged, and, in the event of an
exchange of such Class A shares, the 'net asset value of such shares at the time
of redemption' will be the net asset value of the shares into which the Class A
shares have been exchanged.
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 Funds will assess the
Limited CDSC if such 12-month period is not satisfied irrespective of whether
the redemption triggering its payment is of the Class A shares of the Funds or
shares into which the Class A shares have been exchanged.
In determining whether a Limited CDSC is payable, it will be assumed that shares
not subject to the Limited CDSC are the first redeemed followed by other shares
held for the longest period of time. The Limited CDSC will not be imposed upon
shares representing reinvested dividends or upon amounts representing share
appreciation. All investments made during a calendar month, regardless of when
during the month the investment occurred, will age one month on the last day of
that month and each subsequent month.
The Limited CDSC will be waived for the shareholders and transactions described
above as eligible for waiver under 'Contingent Deferred Sales Charge on Class B
Shares' and 'Sales at Net Asset Value.'
CONTINGENT DEFERRED SALES CHARGE ON CONVERTED SHARES--FOCUS FUNDS
Class A shares issued upon conversion of shares of a Focus Fund purchased prior
to February 28, 1996 ('Converted Shares') will be subject to the same contingent
deferred sales charge with the same terms as
29
<PAGE>
the Converted Shares were subject to at the time of purchase. This CDSC is
similar in all respects to the CDSC charged on Class B shares except that the
CDSC will not be imposed if the amount redeemed is obtained from increases in
the value of the account in a Fund (whether from appreciation or reinvestment of
dividends and capital gains distributions) above the amounts of purchase
payments during the past four years.
For purposes of the CDSC on Class A shares issued upon conversion of Converted
Shares, it is assumed that the redemption is made from the earliest purchase
payment from which a redemption (or exchange) has not already been effected.
Therefore, redemptions will first be made from increases in the value of the
account without imposition of a CDSC and then, if necessary, from the shares
which have been held the longest.
Because the CDSC on Class A shares issued upon conversion of Converted Shares is
based on dollar value rather than number of shares, it may be imposed even if
the number of shares in the investor's account has increased through
reinvestment of dividends and capital gains distributions.
The CDSC on Class A shares issued upon conversion of Converted Shares will be
waived for the following shareholders or transactions:
(1) investment advisory clients of the Advisers;
(2) officers, directors and full-time employees and Trustees of Winthrop and
Related Entities; or the 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 Winthrop);
(3) certain employee benefit plans for employees of the Adviser and Related
Entities;
(4) an agent or broker of a dealer that has a sales agreement with the
Distributor, for their own account or an account of a relative of any such
person, or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the
estate of any such person or relative, if such sales are made for
investment purposes (such shares may not be resold except to the Funds). To
qualify, the Distributor or Transfer Agent must be notified at the time of
purchase;
(5) shares purchased by registered investment advisers or by broker-dealers
that have sales agreements with the Funds and which shares have been
purchased on behalf of wrap fee client accounts and for which such
registered investment advisers or broker-dealers charge a fixed fee and
perform advisory, custodial, record keeping or other services.
(6) shareholders of Neuwirth Fund, Inc., Pine Street Fund, Inc. and deVegh
Mutual Fund, Inc., which were diversified, no-load open-end management
investment companies to which the Adviser provided investment advisory
services;
(7) liquidations, distributions or loans from the following types of retirement
plans established on or after February 1, 1995: (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;
(8) redemptions as a result of shareholder death or disability (as defined in
the Code); and
(9) redemptions made pursuant to Winthrop's systematic withdrawal plan up to 1%
monthly or 3% quarterly of the 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).
Redemptions effected by Winthrop pursuant to its right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the CDSC.
AUTOMATIC CONVERSION OF CLASS B SHARES
Class B shares held for eight years after purchase will be automatically
converted into Class A shares. Winthrop 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 a Fund can be exchanged for the same
class of another Fund. Shareholders whose initial investment was directly into a
Money Fund may exchange such shares into either class of the International Funds
or the Focus Funds. Shares of each Money Fund established pursuant to
30
<PAGE>
Winthrop's exchange privilege will be eligible for exchange into the
International Funds or Focus Funds provided that the exchange is directed into
the same class of shares upon which the initial investment was made. Unless
otherwise indicated in the initial Share Purchase Application or by written
notice to Winthrop or its Transfer Agent, shareholders whose initial investment
was invested directly into a Money Fund will, upon an exchange request,
automatically be exchanged into Class A shares of the requested International
Fund or Focus Fund. Exchanges may be made by mail or telephone (see 'Telephone
Redemption and Exchange Privilege'). The exchange privilege for all the Funds
are available only in states in which shares of the relevant Fund may be legally
sold. 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.
Class A shares subject to a contingent deferred sales charge as described in
'Contingent Deferred Sales Charge on Class A Shares,' and 'Contingent Deferred
Sales Charge on Converted Shares--Focus Funds,' and Class B shares which are
exchanged will continue to be subject to the same contingent deferred sales
charge at the same rate and for the same period of time as they were prior to
exchange. A shareholder will pay a higher 12b-1 Fee when exchanging (i) shares
of the Money Funds or Class A shares of the International Funds(.25 of 1%
annually) for Class A shares of the Focus Funds (.30 of 1% annually) or (ii)
shares of the Money Funds for Class B shares of the International Funds or Focus
Funds (1% annually).
Winthrop imposes no separate charge for exchanges. However, a shareholder may be
subject to an initial sales charge upon exchanging shares of a Money Fund for
Class A shares of the International Funds or Focus Funds. (See 'Purchases,
Redemptions and Shareholder Services--Initial Sales Charge.') A shareholder will
not be assessed any contingent deferred sales charge at the time of an exchange
between the Funds. Any applicable contingent deferred sales charge will be
assessed when the shareholder redeems shares of a Fund or from an account
established pursuant to Winthrop's exchange privilege in the Money Funds or
Alliance Money Market Funds. The period of time during which a shareholder owns
shares in any of the Funds will be credited to such shareholders holding period
in determining the applicable contingent deferred sales charge, if any. However,
the period of time during which a shareholder's funds are held in the Alliance
Money Market Funds will not be included in the holding period used to determine
the applicable contingent deferred sales charge.
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. Winthrop reserves the right to reject any exchange request or
otherwise modify, restrict or terminate the exchange privilege at any time upon
at least 60 days prior written notice. The exchange privilege is not meant to
afford shareholders an investment vehicle to play short term swings in the stock
market by engaging in frequent transactions in and out of the Funds.
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. Shareholders should be aware that an
exchange is treated for federal income tax purposes as a sale and a purchase of
shares which may result in recognition of a gain or loss.
AUTOMATIC MONTHLY INVESTMENT PLAN A shareholder may elect on the Share Purchase
Application to make additional investments in a Fund automatically by
authorizing Winthrop to draw on the shareholder's bank account.
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 Winthrop at least three business days before the change
becomes effective. The plan may be terminated at any time without penalty by the
shareholder or Winthrop.
AUTOMATIC EXCHANGE PLAN. Shareholders may authorize Winthrop to exchange an
amount established in advance automatically for shares of the same class of
another series of Winthrop or for shares of the Money Funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange Plan. The
minimum exchange into another 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.'
DIVIDEND DIRECTION OPTION A shareholder may elect on the Share Purchase
Application to have his or her dividends paid to another individual or directed
for reinvestment within the same class of another series of Winthrop 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 a
Fund having a current net asset value of at least $10,000 may establish a
systematic withdrawal plan under which the shareholder or a third party will
receive payment by check in a stated amount of not less than $50 on a monthly,
quarterly, semi-annual or annual basis. A 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
31
<PAGE>
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.'
CHECKWRITING PRIVILEGES. Shareholders of the Money Funds may redeem shares by
writing checks against their account balance for at least $100. Investments in
the Money Funds will continue to earn dividends until a shareholder's check is
presented to the Money Funds for payment. Checks will be returned by the
Transfer Agent if there are insufficient shares to meet the withdrawal amount.
Shareholders should not attempt to close an account by check because the exact
balance at the time the check clears will not be known when the check is
written. There is currently no charge to shareholders for checkwriting, but the
Money Funds reserve the right to impose a charge in the future. The Money Funds
may modify, suspend or terminate checkwriting privileges at any time upon notice
to shareholders and will terminate checkwriting privileges without notice for
accounts whose assets are exchanged completely out of the Money Funds. In
addition, United Missouri Bank N.A., as agent for the Transfer Agent in
processing redemptions via the checkwriting privilege, reserves the right to
terminate checkwriting privileges at any time without notice to shareholders.
Checkwriting privileges will not be available for accounts whose shares are
subject to a contingent deferred sales charge.
TELEPHONE REDEMPTION AND EXCHANGE PRIVILEGE A shareholder may elect on the
Share Purchase Application to be eligible to make withdrawals from such
shareholder's account via telephone orders (toll free (800) 225-8011) given to
Winthrop by the shareholder or the shareholder's investment dealer of record.
The maximum amount of such withdrawals is $50,000 per day. A shareholder may
also transfer assets via telephone from such shareholder's account to purchase
shares of another Fund. Winthrop 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 Winthrop. 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 Winthrop, the Advisers, 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; 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 Fund's Transfer Agent at the address listed on the back cover of this
Prospectus.
TIMING OF REDEMPTIONS AND EXCHANGES If a redemption or transfer order for a
Fund is received on a Fund Business Day prior to the close of the regular
session of the NYSE, which is generally 4:00 p.m. New York City time, the
proceeds will be transferred as soon as possible (in accordance with industry
settlement procedures), and shares of each Fund will be priced that Fund
Business Day. If the redemption or transfer order is received after the close of
the regular session of the NYSE, shares of each Fund will be priced the next
Fund Business Day and the proceeds will be transferred as soon as possible after
such pricing (also in accordance with industry settlement procedures). A
shareholder also may request that proceeds be sent by check to a designated
bank. Transfers are made without any charge by Winthrop.
With respect to the Money Funds, if you wish to have Federal funds wired the
same day as your telephone redemption request, make sure that your request will
be received by the Money Funds prior to 12:00 Noon. (See 'Additional Shareholder
Services--Telephone Redemption and Exchange Privilege.') If a shareholder's
securities dealer offers an automatic sweep service, the sweep will
automatically transfer from the Money Fund account sufficient cash to cover any
debit balance that may occur in your cash account. Shares of the Money Funds
redeemed prior to 1:00 p.m. through an automatic sweep service will be eligible
for same day federal funds wiring.
Purchases by check may not be redeemed by a Fund until after a reasonable time
necessary to verify that the purchase check has been paid (approximately ten
Fund Business Days from receipt of the purchase check). When a purchase is made
by wire and subsequently redeemed, the proceeds from such redemption normally
will not be transmitted until two Fund Business Days after the purchase by wire.
Bank acknowledgment of payment initialed by the shareholder may shorten delays.
Additional information concerning these Additional Shareholder Services may be
obtained by contacting Winthrop at the address or telephone number listed on the
back cover of this Prospectus.
---------------------------------------------------------------
NET ASSET VALUE
---------------------------------------------------------------
The net asset value per share for purchases and redemptions of shares of each
Fund is determined as of the close of the regular session of the NYSE, which is
generally 4:00 p.m. New York City time, on each day that trading is conducted
during such session on the NYSE. In accordance with the Funds' Agreement and
Declaration of Trust and By-Laws, net asset value for each Fund is determined
separately for each class, if applicable, 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. With regard to the Money Funds, Winthrop
currently
32
<PAGE>
offers only one class of shares. All expenses, including investment advisory
fees, are accrued daily.
For purposes of this computation, the securities in each portfolio of the Focus
and International Funds 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 applicable Trustees believe
in good faith would accurately reflect their fair value.
For the Money Funds, the net asset value is expected to be maintained at a
constant $1.00 per share although this price is not guaranteed. For purposes of
this computation, the securities in each Money Fund's portfolio are valued at
amortized cost, which minimizes the effect of changes in a security's market
value and helps maintain a stable $1.00 per share price.
Short-term securities purchased within the Focus Funds or International Funds
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 applicable Trustees that amortized cost equals fair value.
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 a Fund holds securities quoted or denominated in a foreign currency,
fluctuations in the value of such currencies in relation to the U.S. dollar will
affect the net asset value of such Fund's shares even though there has not been
any change in the value of such securities as quoted in the foreign currency.
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 International Fund's shares may not take place contemporaneously with the
determination of the prices of investments held by such International 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 International Fund's shares unless the
Adviser or Subadviser, under the supervision of such International 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 International Fund's shares
may be significantly affected by such trading on days when a shareholder has no
access to such International Fund.
---------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS
---------------------------------------------------------------
AND TAXES
---------------------------------------------------------------
Each of the Funds has qualified and intends to qualify in the future as a
regulated investment company under Subchapter M of the Internal Revenue 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. Annual statements as to
the current Federal tax status of distributions, if applicable, are mailed to
shareholders by January 31 each year.
Winthrop intends to distribute to shareholders of the Growth Fund, the Small
Company Value Fund and the International Funds on an annual basis and to
shareholders of the Growth and Income Fund on a quarterly basis substantially
all of such respective periods' net investment income, if any, for the
respective Funds. Dividends from net investment income on shares of the Money
Funds, Fixed Income Fund and Municipal Trust Fund are declared daily and paid
monthly. For purposes of this calculation, net investment income consists of all
accrued interest income on fund assets less the fund's expenses applicable to
that dividend period.
There is no fixed dividend rate, and there can be no assurance that a Fund will
distribute any net investment income. The amount of any distribution paid by
each Fund depends upon the realization by the Fund of income from that Fund's
investments. All distributions will be made to shareholders of a Fund solely
from assets of that Fund. Capital gains (short-term and long-term), if any,
realized by each of the Funds during a fiscal year of Winthrop will be
distributed to the respective shareholders shortly after the end of such fiscal
year.
Distributions may be subject to certain state and local taxes.
Each income dividend and capital gains distribution, if any, declared by
Winthrop on the outstanding shares of any Fund will, at the election of each
shareholder, be paid in cash or reinvested in additional full and fractional
shares of that Fund. 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 Winthrop from a shareholder or the shareholder's investment
dealer of record at least 30 days prior to the payable date for a particular
dividend or distribution on shares of each Fund. There is no charge in
connection with the reinvestment of dividends and capital gains distributions.
Such dividends and capital gains 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.
33
<PAGE>
Distributions to shareholders out of tax-exempt interest income earned by the
Municipal Trust Fund and the Municipal Money Fund ('Exempt-Interest Dividends')
are not subject to federal income tax if, at the close of each quarter of each
Fund's taxable year, at least 50% of the value of each Fund's total assets
consists of tax-exempt obligations. Both Funds intend to meet this requirement.
Because the Municipal Trust Fund and Municipal Money Fund can invest in taxable
municipal bonds and other taxable securities as well as tax-exempt municipal
bonds, the portion of its dividends exempt from or subject to regular federal
income taxes cannot be predicted.
Interest on certain tax-exempt municipal securities issued after August 7, 1986
is a preference item for purposes of the alternative minimum tax ('AMT')
applicable to individuals and corporations. Under tax regulations to be issued,
the portion of any exempt-interest dividends paid by a regulated investment
company that is allocable to these obligations will be treated as a preference
item for purposes of the AMT. Corporations should, however, be aware that
interest on all municipal securities will be included in calculating among other
things 'adjusted current earnings' of corporations for AMT purposes. Such bonds
have provided, and may continue to provide, somewhat higher yields than other
comparable municipal securities. While the Municipal Trust and Municipal Money
Fund may invest without limitation in securities subject to AMT, the AMT affects
only a small percentage of all tax paying investors.
Shareholders may be subject to state and local taxes on dividends from the
Municipal Trust Fund or Municipal Money Fund, including dividends which are
exempt from federal income taxes. In addition, for federal income tax purposes,
distributions of net short-term capital gains are taxable to shareholders of the
Municipal Trust Fund and Municipal Money Fund as ordinary income, and
distributions of net long-term capital gains are taxable to such shareholders as
long-term capital gains, regardless of the nature of the investments made by the
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 shares of a Fund
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. 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.
The foregoing discussion is a general summary of certain current federal income
tax laws regarding the Funds. The discussion does not purport to deal with all
of the federal income tax consequences applicable to the Funds or to all
categories of investors, some of whom may be subject to special rules. In
addition, this discussion does not describe any of the state or local tax
consequences that may be applicable to distributions by the Funds. Each
prospective and current shareholder should consult with his or her own
professional tax adviser regarding federal, state and local tax consequences of
ownership of shares of the Funds. Certain additional matters related to the tax
implications of investing in the Winthrop Funds are referenced in the Funds'
Statements of Additional Information.
---------------------------------------------------------------
ADDITIONAL INFORMATION
---------------------------------------------------------------
RETIREMENT PLANS
Winthrop offers a range of qualified retirement plans including IRAs, SEPs,
SIMPLE plans and other pension and profit sharing plans. Semper Trust Company
serves as custodian under these prototype retirement plans and charges an annual
account maintenance fee of $15 per participant, regardless of the number of
Funds selected. Persons desiring information concerning these plans should write
or telephone Winthrop's Transfer Agent at 1-800-225-8011. For a more detailed
explanation of the retirement plans offered by the Funds, see each Fund's
Statement of Additional Information.
CAPITALIZATION
The Focus Funds were organized as a Massachusetts business trust under the laws
of Massachusetts on November 26, 1985. The Focus Funds have an unlimited number
of authorized shares of beneficial interest, par value $.01 per share, 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 five
series.
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, par value $.001 per share, 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 International Funds and Money Funds.
Shares of the Focus Funds and the International Funds are divided into Class A
and Class B shares. Winthrop currently offers only one class of shares for the
Money Funds. Shares held in each Fund are normally entitled to one vote (with
proportional voting for fractional shares) for all purposes. Generally, shares
of the International Funds and Money Funds vote as a single
34
<PAGE>
series on matters that affect all Funds within the Opportunity Funds in
substantially the same manner and shares of the Focus Funds vote as a single
series on matters that affect all Funds within the Focus Funds in substantially
the same manner. As to matters affecting each Focus Fund, International Fund or
Money Fund separately, such as approval of the investment advisory agreement,
shares of each Focus Fund, International Fund or Money Fund would vote as
separate series.
With respect to the Focus Funds and International Funds, each Class is identical
in all respects except that (i) each Class bears different distribution service
fees, (ii) each Class has exclusive voting rights with respect to its 12b-1
Plan, (iii) each Class has different exchange privileges, and (iv) only Class B
shares have a conversion feature.
The Funds will not have annual meetings of shareholders so long as at least
two-thirds of their Trustees then in office have been elected by their
shareholders. Section 16(c) of the 1940 Act provides certain rights to
shareholders which Winthrop will honor regarding the calling of meetings of
shareholders and other communications with shareholders. Trustees also may call
meetings of shareholders from time to time as the Trustees deem necessary or
desirable.
Shares of a Fund are freely transferable, are entitled to dividends as
determined by the Trustees and, in liquidation of Winthrop, are entitled to
receive the net assets of that Fund. Since Class B shares of the Focus Funds and
International Funds are subject to greater distribution services fees than Class
A shares of such Funds, the liquidation proceeds to shareholders of Class B
shares are likely to be less than proceeds to Class A shareholders. Shareholders
have no preemptive rights.
PORTFOLIO TRANSACTIONS
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. and subject to seeking best execution, Winthrop may
consider sales of its shares as a factor in the selection of brokers and dealers
to execute portfolio transactions for Winthrop.
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of the
Advisers, serves as Winthrop's Distributor.
CUSTODIAN, DIVIDEND DISBURSING AGENT AND TRANSFER AGENT
Citibank, N.A. acts as Custodian for the securities and cash of Winthrop, 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
of Winthrop.
HOW WINTHROP CALCULATES PERFORMANCE
From time to time Winthrop may advertise its total return (including 'average
annual' total return and 'aggregate' total return) and yield in advertisements
or sales literature. Total return and yield are calculated separately for Class
A and Class B shares. These figures are based on historical earnings and are not
intended to indicate future performance. The 'total return' shows how much an
investment in a Fund would have increased (decreased) over a specified period of
time (i.e., one, five or ten years or since inception of that Fund) assuming
that all distributions and dividends by the Fund were reinvested on the
reinvestment dates during the period and less all recurring fees. The
'aggregate' total return reflects actual performance over a stated period of
time. 'Average annual' total return is a hypothetical rate of return that, if
achieved annually, would have produced the same aggregate total return if
performance had been constant over the entire period. 'Average annual' total
return smoothes out variations in performance. Winthrop's advertisements of
total return and average total return may not reflect any applicable initial or
contingent deferred sales charge, but such charges will be disclosed. Neither
'average annual' total return nor 'aggregate' total return takes into account
any federal or state income taxes which may be payable upon redemption. The
'yield' refers to the income generated by an investment in a Fund over a one-
month or 30-day period. This income is then 'annualized,' that is, the amount of
income generated by the investment during that 30-day period is assumed to be
generated each 30-day period for twelve periods and is shown as a percentage of
the investment. The income earned on the investment is also assumed to be
reinvested at the end of the sixth 30-day period. Winthrop may also include
comparative performance information in advertising or marketing Winthrop's
shares. Such performance information may include data from Lipper Analytical
Services, Inc., Morningstar Publications, Inc., other industry publications,
business periodicals, and market indices. Further performance information is
contained in Winthrop's annual reports to shareholders, which may be obtained
without charge.
INFORMATION FOR SHAREHOLDERS
Any shareholder inquiry regarding Winthrop or the status of the shareholder's
account can be made to Winthrop or to FPS Services, Inc. by telephone or by mail
at the telephone number or the addresses listed on the back 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 Winthrop, will be sent
to shareholders.
35
<PAGE>
WINTHROP MUTUAL FUNDS
277 Park Avenue, New York, NY 10172
(800) 225-8011
ADVISERS
DLJ INVESTMENT MANAGEMENT CORP.
277 Park Avenue, New York, NY 10172
WOOD, STRUTHERS & WINTHROP MANAGEMENT CORP.
277 Park Avenue, New York, NY 10172
SUBADVISER
AXA ASSET MANAGEMENT PARTENAIRES
40 rue du Colisee, 75008 Paris, France
DISTRIBUTOR
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
277 Park Avenue, New York, NY 10172
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue, New York, NY 10019
CUSTODIAN
CITIBANK, N.A.
111 Wall Street, New York, NY 10043
TRANSFER AGENT
FPS SERVICES, INC.
P.O. Box 61503 (3200 Horizon Drive),
King of Prussia, PA 19406-0903
COUNSEL
OPPORTUNITY FUNDS
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 Third Avenue, New York, NY 10022
FOCUS FUNDS
SULLIVAN & CROMWELL
125 Broad Street, New York, NY 10004
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF WINTHROP FUND EXPENSES 3
FINANCIAL HIGHLIGHTS 5
INTRODUCTION 10
INVESTMENT OBJECTIVES AND POLICIES 10
ADDITIONAL GENERAL INVESTMENT POLICIES 17
INVESTMENT RESTRICTIONS 21
MANAGEMENT 21
EXPENSES OF WINTHROP 24
PURCHASES, REDEMPTIONS AND SHAREHOLDER SERVICES 25
NET ASSET VALUE 32
DIVIDENDS, DISTRIBUTIONS AND TAXES 33
ADDITIONAL INFORMATION 34
</TABLE>
This Prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
PROS-7/97
<PAGE>
WINTHROP MUTUAL FUNDS PURCHASE APPLICATION
<TABLE>
<S> <C>
THE WINTHROP FOCUS FUNDS THE WINTHROP OPPORTUNITY FUNDS
Winthrop Growth Fund Winthrop Developing Markets Fund
Winthrop Growth and Income Fund Winthrop International Equity Fund
Winthrop Small Company Value Fund Winthrop Municipal Money Fund
Winthrop Fixed Income Fund Winthrop U.S. Government Money Fund
Winthrop Municipal Trust Fund
</TABLE>
Complete the entire application and return it to your financial advisor or mail
it to: WINTHROP MUTUAL FUNDS, C/O FPS SERVICES, INC. P.O. BOX 61503, (3200
HORIZON DR.), KING OF PRUSSIA, PA 19406-0903. For assistance, call (800)
225-8011, option 2.
1. ACCOUNT REGISTRATION
<TABLE>
<S> <C>
Todays Date:____________________, 19 _____ Existing Account #________________________
(if applicable)
</TABLE>
<TABLE>
<S> <C>
/ / INDIVIDUAL OR JOINT ACCOUNT
- -
- ------------------------------------------------------------------ -----------------------------
Owner's Name (first name) (MI) (last name) Social Security Number
(required to open account)
</TABLE>
- -------------------------------------------------------------------------------
Joint Owner's Name* (first name) (MI) (last name) *Joint Tenants with
right of survivorship
unless otherwise
indicated.
/ / GIFT TO A MINOR
- --------------------------------------------------------------------------------
Custodian (first name) (MI) (last name)
- --------------------------------------------------------------------------------
Minor (first name) (MI) (last name)
- -
- ------------------------ UNDER THE _______ UNIFORM GIFTS TO
Minor's Social Security Number MINOR'S ACT (Minor's state
(required to open account) residence)
/ / OTHER
- -
- ----------------------------------------------------------- -----------------
Name of corporation, organization, trusts, etc. Tax ID Number
/ / ADDRESS
- --------------------------------------------------------------------------------
Street City State
- --------------------------------------------------------------------------------
Zip Code Daytime Phone Evening Phone
2. INITIAL INVESTMENT
Please indicate the dollar amount you will invest in each fund and the class of
shares you will purchase. If no class is selected, Class A shares will be
purchased. Initial minimum per fund is $250. Maximum for Class B is $250,000.
Minimums are waived for SEP, SIMPLE, 401(k), 403B and 457 plans. Subsequent
purchases can be made for $25 or more. MAKE CHECKS PAYABLE TO WINTHROP MUTUAL
FUNDS.
<TABLE>
<CAPTION>
$ AMOUNT CLASS(FUND NUMBER)
<S> <C> <C> <C>
Winthrop Growth Fund --------------- / / Class A (530) / / Class B (630)
Winthrop Growth and Income Fund --------------- / / Class A (535) / / Class B (635)
Winthrop Small Company Value Fund --------------- / / Class A (534) / / Class B (634)
Winthrop Fixed Income Fund --------------- / / Class A (531) / / Class B (631)
Winthrop Municipal Trust Fund --------------- / / Class A (536) / / Class B (636)
Winthrop Developing Markets Fund --------------- / / Class A (540) / / Class B (640)
Winthrop International Equity Fund --------------- / / Class A (541) / / Class B (641)
Winthrop Municipal Money Fund --------------- (042)
Winthrop U.S. Government Money Fund --------------- (043)
</TABLE>
<PAGE>
3. REDUCED SALES CHARGES (CLASS A ONLY)
If you, your spouse or minor children own shares in other Winthrop Funds, you
may be eligible for a reduced sales charge. List any existing accounts to be
considered and, if eligible, complete the Rights of Accumulation or the Letter
of Intent sections below.
<TABLE>
<S> <C> <C> <C>
- ----------------------------- ----------------------- ------------------------------ --------------------------
Fund Account Number Fund Account Number
</TABLE>
/ / RIGHT OF ACCUMULATION Please link the accounts listed above for Right of
Accumulation privileges so that this purchase will receive any allowable
discount.
/ / LETTER OF INTENT I agree to the terms of the Letter of Intent set forth in
the prospectus (including escrowing of shares). Although I am not obligated to
do so, it is my intention to invest the following amount over a 13-month period
in one or more Winthrop mutual 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 account.
4. DISTRIBUTION OPTIONS
If no instructions are given, all distributions will be reinvested in additional
shares of the Fund.
INCOME DIVIDENDS (SELECT ONE): / / Reinvest / / Pay in cash
/ / Use Dividend Direction Option
CAPITAL GAINS DISTRIBUTION (SELECT ONE): / / Reinvest / / Pay 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 Address
- --------------------------------------------------------------------------------
City, State, Zip
- --------------------------------------------------------------------------------
Account or Policy Number (if applicable)
B
- --------------------------------------------------------------------------------
Fund Name Existing Account Number
- --------------------------------------------------------------------------------
Fund Name Existing Account Number
5. SHAREHOLDER OPTIONS
A. AUTOMATIC MONTHLY INVESTMENT PLAN -- ($25 minimum)
I hereby authorize Winthrop to draw on my bank account on or about the
/ / 10th / / 15th or / / 20th day of each month for regular investment
in my Fund account in the amount of $_________.
ATTACH A PREPRINTED VOIDED CHECK FROM THE BANK ACCOUNT YOU WISH TO USE.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------- --------- ------------------------------------ ---------
Individual Account Owner Signature Date Joint Account Owner Signature Date
</TABLE>
B. TELEPHONE TRANSACTIONS
TELEPHONE EXCHANGE PRIVILEGE-I understand that unless I have checked the
box below, this privilege will automatically apply.
NOTE: Telephone exchanges may only be processed between accounts that
have identical registrations.
/ / I do not elect the telephone exchange privilege.
TELEPHONE REDEMPTION PRIVILEGE-I authorize the Funds or their 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 6.
/ / Wire Redemption proceeds to the Bank referenced in Section 6 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.
<PAGE>
C. SYSTEMATIC CASH WITHDRAWAL PLAN (ALSO COMPLETE SECTION E) -- ($50 MINIMUM)
In order to establish systematic withdrawal, an investor must own or purchase
shares of the Fund having a current value of at least $10,000.
<TABLE>
<CAPTION>
FUND AMOUNT
- --------------------------------- --------
<S> <C> <C>
- --------------------------------- -------- Frequency: / / monthly / / quarterly / / semi-annually / / annually
- --------------------------------- -------- Frequency: / / monthly / / quarterly / / semi-annually / / annually
</TABLE>
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 6.
/ / by wire to the bank account referenced in Section 6 and charge my Fund
account the applicable wire fee.
/ / by check to the Special Payee referenced below:
- --------------------------------------------------------------------------------
Name of Payee Account or Policy Number Address
(if applicable)
NOTE: Systematic withdrawals selected on a semi-annual or annual
basis are not eligible for Winthrop's CDSC waiver.
D. AUTOMATIC EXCHANGE PLAN (ALSO COMPLETE SECTION E) - ($50 minimum)
<TABLE>
<CAPTION>
SHARE CLASS* FREQUENCY
FROM* FUND TO FUND (CIRCLE ONE) AMOUNT (CIRCLE ONE)+
- --------------------------------- ----------------------------------- -------- ------------- -----------
<S> <C> <C> <C> <C>
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
- --------------------------------- ----------------------------------- -------------
</TABLE>
* Automatic exchange selection must be between Winthrop Funds WITHIN THE SAME
SHARE CLASS unless it is directed to a Winthrop Money Fund, where class
designation will not be required. Automatic exchanges are only available for
accounts with identical registrations.
+ Monthly, quarterly, semi-annual or annual processing.
E. WITHDRAWAL OR EXCHANGE DATE
/ / I authorize this service to begin on the / / 5th / / 10th / / 15th or
/ / 25th day of ______________ 19__.
F. 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.
<TABLE>
<S> <C>
- ----------------------------------------------------- ------------------------------------------------
Fund name/class/account number Fund name/class/account number
- ----------------------------------------------------- ------------------------------------------------
Fund name/class/account number Fund name/class/account number
</TABLE>
CHECKWRITING APPLICATION / SIGNATURE CARD
Check the Winthrop Money Fund(s) that are to have checkwriting privileges.
Minimum check amount: $100.
<TABLE>
<CAPTION>
[ ] MUNICIPAL MONEY FUND [ ] U.S. GOVERNMENT MONEY FUND
<S> <C>
- ------------------------------------------------ ------------------------------------------------
Fund or Brokerage Account Number (if applicable) Fund or Brokerage Account Number (if applicable)
</TABLE>
Checkwriting is available only for accounts holding shares not subject to
Winthrop's contingent deferred sales charge. By signing this checkwriting
privilege authorization, the undersigned agree(s): (1) the use of the Money
Funds' checkwriting privilege shall be subject to all of the terms and
conditions contained in the Funds' prospectus in effect at the time each check
is presented, and to the rules and regulations as set forth on the reverse side
of this form; and (2) each signatory guarantees the genuineness of the other's
signature.
ALL REGISTERED OWNER(S) OF THE FUND(S) MUST SIGN BELOW:
<TABLE>
<S> <C> <C>
Account Name(s) as Registered Social Security Number Authorized Signature*
- ----------------------------------- ------------------------------------- --------------------------------------
- ----------------------------------- ------------------------------------- --------------------------------------
</TABLE>
* For joint accounts, all owners, or their legal representatives, must sign this
card.
[ ] Check here if all signatures are required on checks. [ ] Check if all
signatures are not required on checks. Number of signatures required ______.
<PAGE>
6. BANK ACCOUNT INFORMATION
To be completed if applicable under Sections B or C. ATTACH VOIDED BLANK CHECK
FROM YOUR BANK ACCOUNT TO THIS FORM.
<TABLE>
<S> <C>
- -------------------------------------------------------------- --------------------------------------
Name of bank Branch (if applicable)
- -------------------------------------------------------------- --------------------------------------
Name in which bank account is established Bank account number
</TABLE>
7. SHAREHOLDER AUTHORIZATION
REQUIRED BY FEDERAL TAX LAW TO AVOID 31% BACKUP WITHOLDING: I certify under
penalties of perjury that the social security or taxpayer identification number
entered in Section 1 is correct and that I have not been notified by the IRS
that I am subject to backup withholding unless I have checked this box: / / 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:
<TABLE>
<S> <C>
- -------------------------------------------------------------- --------------------------------------
Signature Date
</TABLE>
By selecting any of the above telephone privileges, I agree that neither
the Winthrop Funds, the Advisers, the Subadviser 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.
<TABLE>
<S> <C>
- -------------------------------------------------------------- --------------------------------------
SIGNATURE DATE
- -------------------------------------------------------------- --------------------------------------
SIGNATURE DATE
(If an institution, please include documentation establishing authorized signatories).
</TABLE>
8. DEALER/AGENT AUTHORIZATION
We guarantee the signature(s) set forth in Section 7, as well as the legal
capacity of the shareholder.
<TABLE>
<S> <C> <C>
Name No.
---------------------------------------- -------------------------
Office Name Office No.
---------------------------------------- -------------------------
Office Address
----------------------------------------
Representative's Name Representative's No.
---------------------------------------- -------------------------
Representative's Phone No. ( ) - Authorized Signature
----- ---- ------------------------- -------------------------
</TABLE>
- --------------------------------------------------------------------------------
CHECKWRITING TERMS AND CONDITIONS
1. REDEMPTION AUTHORIZATION: The Signatory(s) whose signature(s) appear on the
reverse side, intending to be legally bound, hereby agree each with the other
and with United Missouri Bank N.A. (Bank) that the Bank is appointed agent for
such person(s) and, as such agent, is directed to request FPS Services, Inc.,
the Transfer Agent of the Winthrop Money Funds (each a Fund and collectively the
Funds), to redeem shares of the Fund registered in the name of such Signatory(s)
upon receipt of, and in the amount of, checks drawn upon the above numbered
account. The Fund or its Transfer Agent shall deposit the proceeds of such
redemptions in said account or otherwise arrange for application of such
proceeds to payments of said checks. The Bank and the Transfer Agent are
expressly authorized to commingle such proceeds in this account with the
proceeds of the redemption of the shareholders of the Fund. The Signatory(s)
understand that the Bank may also act as an agent and custodian for the Fund.
The Bank and Transfer Agent are expressly authorized to honor checks as
redemption instructions hereunder and may require signature guarantees in
accordance with the policies stated in the Prospectus, but neither the Fund's
Transfer Agent, the Bank, the Funds, the Funds' Adviser nor any clearing agent
of the foregoing shall be liable for any loss or liability resulting from the
absence of any such guarantee.
2. CHECK PAYMENT: The Signatory(s) authorize and direct the Bank to pay each
check presented hereunder, subject to all laws and Bank rules and regulations
pertaining to checking accounts. In addition, the Signatory(s) agree that: (a)
No check shall be issued or honored, or any redemption effected, in an amount
less than stated in the Prospectus; (b) No check shall be issued or honored, or
redemption effected, for any amounts represented by shares unless payment for
such shares has been made in full and any checks given in such payment have been
collected through normal banking channels; (c) No check shall be honored unless
the Fund has provided the Bank, from the proceeds of redemption or otherwise,
collected funds for the payment of such check; (d) Checks issued hereunder
cannot be cashed over the counter at the Bank; and (e) Checks shall be subject
to any further limitations set forth in the Prospectus issued by the Fund
including without limitation any additions, amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered owner of
the Fund shares, such as by joint ownership, ownership in common or tenants by
the entirety, then (a) each registered owner must sign the signature card, (b)
each registered owner must sign each check issued hereunder unless the parties
have indicated on the front of this card that not all Signatory(s) need sign, in
which case the Bank and the Transfer Agent are authorized to act upon the
indicated number of signatures, and (c) each Signatory guarantees to Bank and
Transfer Agent the genuineness and accuracy of the signature of the other
Signatory(s).
4. TERMINATION: The Bank may at any time terminate this account, related share
redemption service and Bank's agency for the Signatory(s) hereto without prior
notice by Bank to any of the Signatory(s). The Funds may terminate this
checkwriting privilege in accordance with the procedures stated in the
Prospectus.
5. HEIRS AND ASSIGNS: These terms and conditions shall bind the respective
heirs, executors, administrators and assigns of the Signatory(s).
<PAGE>
WINTHROP OPPORTUNITY FUNDS
277 PARK AVENUE, NEW YORK, NEW YORK 10172
Toll Free (800) 225-8011
STATEMENT OF ADDITIONAL INFORMATION
July 24, 1997
This Statement of Additional Information relates to 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"), each
of which is a series of the Winthrop Opportunity Funds and is not a prospectus
and should be read in conjunction with the Funds' current Prospectus dated July
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 Money
Funds at the address or telephone number listed above.
TABLE OF CONTENTS
PAGE
Investment Policies and Restrictions................................ 2
Management.......................................................... 10
Expenses of the Money Funds......................................... 14
Purchases, Redemptions and Exchanges................................ 16
Retirement Plans.................................................... 18
Net Asset Value..................................................... 19
Daily Dividends, Distributions and Taxes............................ 20
Portfolio Transactions.............................................. 25
Investment Performance Information.................................. 25
Shares of Beneficial Interest....................................... 28
General Information................................................. 29
Financial Statements................................................ 30
Appendix A -- Securities Ratings.................................... 31
Appendix B -- Description of Municipal Securities................... 33
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The following investment policies and restrictions supplement
should be read in conjunction with the information set forth under the heading
"Investment Objectives, Policies and Risk Considerations" in the Money Funds'
Prospectus. Except as noted in the Prospectus and this Statement of Additional
Information, the Money Funds' investment policies are not fundamental and may be
changed by the Trustees of the Money Funds without shareholder approval;
however, shareholders will be notified prior to a significant change in such
policies. The Money Funds' investment restrictions which are fundamental and may
not be changed without shareholder approval are indicated under "Fundamental
Investment Restrictions" in this Statement of Additional Information.
It is the policy of the Municipal Fund to seek maximum current
income, consistent with liquidity and safety of principal, that is exempt from
Federal income taxes by investing principally in a diversified portfolio of
municipal securities; it is the policy of the Government Fund to seek maximum
current income, consistent with liquidity and safety of principal, by investing
in a portfolio of U.S. Government securities. It is the policy of both Money
Funds to declare the net investment income associated with their investments as
a daily dividend to maintain the net asset value of the Funds at $1.00. (See
"Net Asset Value" and "Daily Dividends, Distributions and Taxes.") In addition,
one or both of the Money Funds may invest in the securities described below. The
Prospectus indicates which particular Money Fund is permitted to invest in, or
may be limited in investing in, the following securities.
Securities
U.S. Government Obligations. The Money Funds may purchase
marketable obligations of, or guaranteed by, the United States Government, its
agencies or instrumentalities. These include issues of the United States
Treasury, such as bills, certificates of indebtedness, notes and bonds, and
issues of agencies and instrumentalities established under the authority of an
act of Congress, including variable rate obligations such as floating rate
notes. The latter issues include, but are not limited to, obligations of the
Bank for Cooperatives, Federal Financing Bank, Federal Home Loan Bank, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association and Tennessee Valley Authority. Some of these securities are
supported by the full faith and credit of the United States Treasury, others are
supported by the right of the issuer to borrow from the Treasury, and still
others are supported only by the credit of the agency or instrumentality.
Repurchase Agreements. The Money Funds may enter into
"repurchase agreements" with member banks of the Federal Reserve System,
"primary dealers" (as designated by the Federal Reserve Bank of New York) in
such securities, or with any domestic or foreign broker/dealer which is
recognized as a reporting government securities dealer. Repurchase agreements
permit the Money Funds to keep all of their assets at work while retaining
"overnight" flexibility in pursuit of investments of a longer-term nature. The
Money
2
<PAGE>
Funds require continual maintenance of collateral with an approved custodian in
an amount equal to, or in excess of, the market value of the securities which
are the subject of a repurchase agreement. In the event a vendor defaults on its
repurchase obligation, the Money Funds might suffer a loss to the extent that
the proceeds from the sale of the collateral were less than the repurchase
price. If the vendor becomes the subject of bankruptcy proceedings, the Money
Funds might be delayed in selling the collateral. Pursuant to Rule 2a-7 of the
Investment Company Act of 1940, as amended (the "Act") (as described later), a
repurchase agreement is deemed to be an acquisition of the underlying securities
provided that the obligation of the seller to repurchase the securities from the
Money Funds is collateralized fully (as defined in such Rule). Accordingly, the
vendor of a fully collateralized repurchase agreement is deemed to be the issuer
of the underlying securities.
Reverse Repurchase Agreements. The Money Funds may also enter
into reverse repurchase agreements. Under a reverse repurchase agreement, the
Money Funds would sell securities and agree to repurchase them at a mutually
agreed upon date and price. At the time the Money Funds enter into a reverse
repurchase agreement, they would establish and maintain with an approved
custodian a segregated account containing liquid securities having a value not
less than the repurchase price. Reverse repurchase agreements involve the risk
that the market value of the securities subject to such agreement could decline
below the repurchase price to be paid by the Money Funds for such securities. In
the event the buyer of securities under a reverse repurchase agreement filed for
bankruptcy or became insolvent, such buyer or receiver would receive an
extension of time to determine whether to enforce the Money Funds' obligations
to repurchase the securities and the Money Funds' use of the proceeds of the
reverse repurchase could effectively be restricted pending such decision.
Reverse repurchase agreements create leverage, a speculative factor, but are not
considered senior securities by the Money Funds or the Securities and Exchange
Commission to the extent liquid debt securities are segregated in an amount at
least equal to the amount of the liability.
When-Issued and Delayed-Delivery Securities. The Money Funds
may, to the extent consistent with their other investment policies and
restrictions, enter into forward commitments for the purchase or sale of
securities, including on a "when-issued" or "delayed-delivery" basis, in excess
of customary settlement periods for the type of security involved. In some
cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at
the time of the commitment, with payment and delivery taking place in the
future, generally ten days to a month, or more, after the date of the
commitment. While the Money Funds will only enter into a forward commitment with
the intention of actually acquiring the security, the Money Funds may sell the
security before the settlement date if it is deemed advisable.
3
<PAGE>
Securities purchased under a forward commitment are subject to
market fluctuation, and no interest (or dividends) accrues to the Money Funds
prior to the settlement date. The Money Funds will segregate with their
custodian cash or liquid debt securities in an aggregate amount at least equal
to the amount of their respective outstanding forward commitments.
Standby Commitments. The Municipal Fund may purchase municipal
securities together with the right to resell them to the seller at an
agreed-upon price or yield within specified periods prior to their maturity
dates. Such a right to resell is commonly known as a "standby commitment," and
the aggregate price which the Municipal Fund pays for securities with a standby
commitment may be higher than the price which otherwise would be paid. The
primary purpose of this practice is to permit the Municipal Fund to be as fully
invested as practicable in municipal securities while preserving the necessary
flexibility and liquidity to meet unanticipated redemptions. In this regard, the
Municipal Fund acquires standby commitments solely to facilitate liquidity and
does not exercise its rights thereunder for trading purposes. Since the value of
a standby commitment is dependent on the ability of the standby commitment
writer to meet its obligation to repurchase, the Municipal Fund's policy is to
enter into standby commitment transactions only with municipal securities
dealers which are determined to present minimal credit risks.
The acquisition of a standby commitment does not affect the
valuation or maturity of the underlying municipal securities which continue to
be valued in accordance with the amortized cost method. Standby commitments
acquired by the Municipal Fund are valued at zero in determining net asset
value. Where a Municipal Fund pays directly or indirectly for a standby
commitment, its cost is reflected as unrealized depreciation for the period
during which the commitment is held. Standby commitments do not affect the
average weighted maturity of the Municipal Fund's portfolio of securities.
Municipal Securities. The term "municipal securities," as used
in the Prospectus and this Statement of Additional Information, means
obligations issued by or on behalf of states, territories, and possessions of
the United States or their political subdivisions, agencies and
instrumentalities, the interest from which is exempt (subject to the alternative
minimum tax - as later described) from Federal income taxes. The municipal
securities in which the Municipal Fund invests are limited to those obligations
which at the time of purchase are:
1. Backed by the full faith and credit of the United States; or
2. Municipal notes rated MIG-1 or MIG-2 and VMIG-1 or VMIG-2,
by Moody's Investors Service, Inc. ("Moody's") or SP-1 or
SP-2 by Standard and Poor's Corporation ("S&P"), or, if not
rated, are of equivalent investment quality as determined by
the Municipal Fund's adviser; or
4
<PAGE>
3. Municipal bonds rated Aa or higher by Moody's, AA- or
higher by S&P or, if not rated, are of equivalent investment
quality as determined by the Municipal Funds' adviser; or
4. Other types of municipal securities, provided that such
obligations are rated Prime-1 by Moody's, A-1 or higher by S&P
or, if not rated, are of equivalent investment quality as
determined by the Municipal Fund's adviser.
See Appendix A for a description of municipal ratings and Appendix B for a
description of municipal securities.
Alternative Minimum Tax. The Municipal Fund may invest without
limitation in tax-exempt municipal securities subject to the alternative minimum
tax (the "AMT"). Under current Federal income tax law, (1) interest on
tax-exempt municipal securities issued after August 7, 1986 which are "specified
private activity bonds," and the proportionate share of any exempt-interest
dividend paid by a regulated investment company which receives interest from
such specified private activity bonds will be treated as an item of tax
preference for purposes of the AMT imposed on individuals and corporations,
though for regular Federal income tax purposes, such interest will remain fully
tax-exempt, and (2) interest on all tax-exempt obligations will be included in
"adjusted current earnings" for corporation for AMT purposes. Such private
activity bonds ("AMT-Subject Bonds") have provided, and may continue to provide,
somewhat higher yields than other comparable municipal securities.
Investors should consider that, in most instances, no state,
municipality or other governmental unit with taxing power will be obligated with
respect to AMT-Subject Bonds. AMT-Subject Bonds are in most cases revenue bonds
and do not generally have the pledge of the credit or the taxing power, if any,
of the issuer of such bonds. AMT-Subject Bonds are generally limited obligations
of the issuer supported by payments from private business entities and not by
the full faith and credit of a state or any governmental subdivision. Typically
the obligation of the issuer of an AMT-Subject Bond is to make payments to bond
holders only out of, and to the extent of, payments made by the private business
entity for whose benefit the AMT-Subject Bonds were issued. Payment of the
principal and interest on such revenue bonds depends solely on the ability of
the user of the facilities financed by the bonds to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment. It is not possible to provide specific detail on each
of these obligations in which Municipal Fund assets may be invested.
While the Municipal Fund may invest without limitation in
securities subject to AMT, the AMT affects only a small percentage of all
taxpaying investors.
Taxable Securities for the Municipal Fund. The Municipal Fund
is, and expects to be, largely invested in municipal securities, but may elect
to invest up to 20% of its total assets in taxable money market securities when
such action is deemed to be in the best interests of shareholders. Such taxable
money market securities also are limited to remaining maturities
5
<PAGE>
of 397 days or less at the time of the Municipal Fund's investment, and the
Municipal Fund's municipal and taxable securities are maintained at a
dollar-weighted average of 90 days or less.
Variable Rate Obligations. The interest rate payable on
certain municipal securities in which the Municipal Fund may invest, called
"variable rate" obligations, is not fixed and may fluctuate based upon changes
in market rates. The interest rate payable on a variable rate municipal security
is adjusted either at pre-designated periodic intervals or whenever there is a
change in the market rate to which the security's interest rate is tied. Other
features may include the right of the Municipal Fund to demand prepayment of the
principal amount of the obligation prior to its stated maturity and the right of
the issuer to prepay the principal amount prior to maturity. The main benefit of
a variable rate municipal security is that the interest rate adjustment
minimizes changes in the market value of the obligation. As a result, the
purchase of variable rate municipal securities enhances the ability of the
Municipal Fund to maintain a stable net asset value per share and to sell an
obligation prior to maturity at a price approximating the full principal amount.
The payment of principal and interest by issuers of certain municipal securities
purchased by the Municipal Fund may be guaranteed by letters of credit or other
credit facilities offered by banking or other financial institutions. Such
guarantees will be considered in determining whether a municipal security meets
the Municipal Fund's investment quality requirements.
Variable rate obligations purchased by the Municipal Fund may
include participation interests in variable rate industrial development bonds.
Purchase of a participation interest gives the Municipal Fund an undivided
interest in certain such bonds. The Municipal Fund can exercise the right, on
not more than 30 days' notice, to sell such an instrument back to the financial
institution from which it purchased the instrument and, if applicable, draw on
the letter of credit for all or any part of the principal amount of the
Municipal Fund's participation interest in the instrument, plus accrued
interest, but will do so only (i) as required to provide liquidity to the
Municipal Fund, (ii) to maintain a high quality investment portfolio, or (iii)
upon a default under the terms of the demand instrument. Financial institutions
retain portions of the interest paid on such variable rate industrial
development bonds as their fees for servicing such instruments and the issuance
of related letters of credit and repurchase commitments. No single financial
institution will issue its letters of credit with respect to variable rate
obligations or participation interests therein covering more than the allowable
percentage of the total assets of the Municipal Fund pursuant to Rule 2a-7 of
the Act. The Municipal Fund will not purchase participation interests in
variable rate industrial development bonds unless it receives an opinion of
counsel or a ruling of the Internal Revenue Service that interest earned by the
Municipal Fund from the bonds in which it holds participation interests is
exempt from Federal income taxes. The Municipal Fund's adviser will monitor the
pricing, quality and liquidity of variable rate demand obligations and
participation interests therein held by the Municipal Fund on the basis of
published financial information, rating agency reports and other research
services to which the adviser may subscribe.
6
<PAGE>
Municipal Leases and Participations Therein. These are
obligations in the form of a lease or installment purchase which is issued by
state and local governments to acquire equipment and facilities. Income from
such obligations is exempt from local and state taxes in the state of issuance.
"Participations" in such leases are undivided interests in a portion of the
total obligation. Municipal leases frequently have special risks not normally
associated with general obligation or revenue bonds. The constitutions and
statutes of all states contain requirements that the state or a municipality
must meet to incur debt. These often include voter referenda, interest rate
limits and public sale requirements. Leases and installment purchase or
conditional sale contracts (which normally provide for title to the leased asset
to pass eventually to the governmental issuer) have evolved as a means for
governmental issuers to acquire property and equipment without meeting the
constitutional and statutory requirements for the issuance of debt. The
debt-issuance limitations are deemed to be inapplicable because of the inclusion
in many leases or contracts of "non-appropriation" clauses that provide that the
governmental issuer has no obligation to make future payments under the lease or
contract unless money is appropriated for such purpose by the appropriate
legislative body on a yearly or other periodic basis.
In addition to the "non-appropriation" risk, municipal leases
have additional risk aspects because they represent a relatively new type of
financing that has not yet developed in many cases the depth of marketability
and liquidity associated with conventional bonds; moreover, although the
obligations will be secured by the leased equipment, the disposition of the
equipment in the event of non-appropriation or foreclosure might, in some cases,
prove difficult. In addition, in certain instances the tax-exempt status of the
obligations will not be subject to the legal opinion of a nationally recognized
"bond counsel," as is customarily required in larger issues of municipal
obligations. However, in all cases the Municipal Fund will require that a
municipal lease purchased by the Municipal Fund be covered by a legal opinion
(typically from the issuer's counsel) to the effect that, as of the effective
date of such lease, the lease is the valid and binding obligation of the
governmental issuer.
Municipal leases and participations will be purchased pursuant
to analysis and review procedures which the Municipal Fund's adviser believes
will minimize risks to shareholders. It is possible that more than 5% of the
Fund's net assets will be invested in municipal leases which have been
determined by the Municipal Fund's adviser to be liquid securities. When
evaluating the liquidity of a municipal lease, the investment adviser considers
all relevant factors including frequency of trading, availability of quotations,
the number of dealers and their willingness to make markets, the nature of
trading activity and the assurance that liquidity will be maintained. With
respect to unrated municipal leases, credit quality is also evaluated.
General. Net income to shareholders is aided both by the Money
Funds' ability to make investments in large denominations and by its
efficiencies of scale. Also, the Money Funds may seek to improve its income by
selling certain portfolio securities prior to maturity in order to take
advantage of yield disparities that occur in money markets. The market value of
7
<PAGE>
the Money Funds' investments tends to decrease during periods of rising interest
rates and to increase during intervals of falling rates.
Rule 2a-7 Under the Investment Company Act of 1940
The Money Funds will comply with Rule 2a-7 under the Act, as
amended from time to time, including the diversity, quality and maturity
limitations imposed by the Rule.
Currently, pursuant to Rule 2a-7, the Money Funds may invest
only in "eligible securities," as that term is defined in the Rule. Generally,
an eligible security is a security that (i) is denominated in U.S. Dollars and
has a remaining maturity of 397 days or less; (ii) is rated, or is issued by an
issuer with short-term debt outstanding that is rated, in one of the two highest
rating categories by two nationally recognized statistical rating organizations
("Rating Organizations") or, if only one has issued a rating, by that Rating
Organization; and (iii) has been determined by the Money Funds' adviser to
present minimal credit risks. A security that originally had a maturity of
greater than 397 days is an eligible security if its remaining maturity at the
time of purchase is 397 calendar days or less and the issuer has outstanding
short-term debt that would be an eligible security. Unrated securities may also
be eligible securities if the Money Funds' adviser determines that they are of
comparable quality to a rated eligible security pursuant to guidelines approved
by the Trustees. A description of the ratings of some Rating Organizations
appears in Appendix A attached hereto.
Under Rule 2a-7, the Money Funds may not invest more than 5%
of its assets in the securities of any one issuer other than the United States
Government, its agencies or instrumentalities. In addition, the Money Funds may
not invest in a security that has received, or is deemed comparable in quality
to a security that has received, the second highest rating by the requisite
number of Rating Organizations (a "second tier security") if immediately after
the acquisition thereof the Money Funds would have invested more than (A) the
greater of one percent of its total assets or one million dollars in securities
issued by that issuer which are second tier securities, or (B) five percent of
its total assets in second tier securities.
Securities with a settlement of more than seven days from the
date of purchase, as calculated pursuant to Rule 2a-7, are considered by the
Securities and Exchange Commission to be illiquid securities in an open-end
investment company. The Money Funds are restricted to invest no more than 10% of
their net assets in illiquid securities.
Other General Information About the Municipal Fund
Yields on municipal securities are dependent on a variety of
factors, including the general condition of the money market and of the
municipal bond and municipal note market, the size of a particular offer, the
maturity of the obligation and the rating of the issue. Municipal securities
with longer maturities tend to produce higher yields and are generally subject
to greater price movements than obligations with shorter maturities. (An
increase in interest rates
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will generally reduce the market value of portfolio investments, and a decline
in interest rates will generally increase the value of portfolio investments.)
The achievement of the Municipal Fund's investment objectives is dependent in
part on the continuing ability of the issuers of municipal securities in which
the Municipal Fund invests to meet their obligations for the payment of
principal and interest when due. Municipal securities historically have not been
subject to registration with the Securities and Exchange Commission, although
there have been proposals which would require registration in the future. The
Municipal Fund may seek to improve income by selling certain securities prior to
maturity in order to take advantage of yield disparities that occur in
securities markets.
Obligations of issuers of municipal securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the Bankruptcy Code. In addition, the
obligations of such issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of
such obligations or upon the ability of municipalities to levy taxes. There is
also the possibility that, as a result of litigation or other conditions, the
ability of any issuer to pay, when due, the principal of, and interest on, its
municipal securities may be materially affected.
Fundamental Investment Restrictions
The following fundamental investment restrictions are
applicable to each of the Money Funds and may not be changed with respect to a
Money Fund without the approval of a majority of the shareholders of that Money
Fund, which means the affirmative vote of the holders of (a) 67% or more of the
shares of that Money Fund represented at a meeting at which more than 50% of the
outstanding shares of the Money Fund are represented or (b) more than 50% of the
outstanding shares of that Money Fund, whichever is less. Except as set forth in
the Prospectus and this Statement of Additional Information, all other
investment policies or practices are considered by each Money Fund not to be
fundamental and accordingly may be changed without shareholder approval. If a
percentage restriction is adhered to at the time of investment, a later increase
or decrease in percentage resulting from a change in values or assets will not
constitute a violation of such restriction.
Briefly, these fundamental restrictions provide that each
Money Fund may not:
(1) Invest 25% or more of the value of its total
assets in any one industry, other than the United States
Government, or any of its agencies or instrumentalities,
provided that, for purposes of this policy, consumer finance
companies, industrial finance companies and gas, electric,
water and telephone utility companies are each considered to
be separate industries;
(2) Issue senior securities, except as permitted
under the Investment Company Act of 1940;
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(3) Make loans of money or property to any person,
except through loans of portfolio securities, the purchase of
fixed income securities consistent with the Money Funds'
investment objective and policies or the acquisition of
securities subject to repurchase agreements;
(4) Underwrite the securities of other issuers,
except to the extent that in connection with the disposition
of portfolio securities the Money Funds may be deemed to be an
underwriter;
(5) Purchase real estate or interests therein unless
acquired as a result of ownership from investing in securities
or other instruments (but this shall not prevent the Money
Funds from investing in securities or other interests backed
by real estate or securities of companies engaged in the real
estate business);
(6) Purchase or sell commodities or commodities
contracts except for purposes, and only to the extent,
permitted by applicable law without the Money Funds becoming
subject to registration with the Commodity and Futures Trading
Commission as a commodity pool;
(7) Make any short sale of securities except in
conformity with applicable laws, rules and regulations and
unless, giving effect to such sale, the market value of all
securities sold short does not exceed 25% of the value of the
Money Fund's total assets and the Money Fund's aggregate short
sales of a particular class of securities does not exceed 25%
of then outstanding securities of that class; and
(8) Borrow money, except that the Money Funds may (i)
borrow money for temporary or emergency purposes (not for
leveraging or investment) and (ii) engage in reverse
repurchase agreements for any purpose; provided that (i) and
(ii) in combination do not exceed 33 1/3% of the Money Fund's
total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with
the 33 1/3% limitation.
MANAGEMENT
The Trustees and principal officers of the Money Funds, their
ages and their primary occupations during the past five years are set forth
below. Unless otherwise specified, the address of each such person is 277 Park
Avenue, New York, New York 10172. Those Trustees whose names are preceded by an
asterisk are "interested persons" of the Funds as defined by Section 2(a)(19) of
the Act.
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*G. Moffett Cochran, 46, Chairman of the Board of Trustees and
President of the Opportunity Funds, is President and Chairman of the Adviser. He
has been associated with affiliates of the Adviser since 1992. Prior to his
association with the Money Funds and the Adviser, Mr. Cochran was a Senior Vice
President with Bessemer Trust Companies.
Robert E. Fischer, 67, Trustee of the Opportunity Funds, has
been a 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, the Chief Operating
Officer and Treasurer of the Adviser. He has been associated with affiliates of
the Adviser 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,
has been associated with affiliates of the Adviser since prior to 1991.
Marybeth B. Leithead, 34, Vice President of the Opportunity
Funds, has been associated with affiliates of the Adviser since prior to 1991.
Brian A. Kammerer, 39, Assistant Treasurer of the Opportunity
Funds, has been associated with affiliates of the Adviser since prior to 1991.
The following table sets forth certain information regarding compensation of the
Money Funds' Trustees and officers. No executive officer or person affiliated
with the Money Funds received compensation from the Funds for the calendar year
ended December 31, 1996 in excess of $60,000.
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Compensation Table
<TABLE>
<CAPTION>
Total
Pension or Compensation
Retirement Estimated From Trust
Aggregate Benefits Accrued Annual and Fund
Compensation as Part of Trust Benefits Upon Complex Paid
Name and Position From Trust1 Expenses Retirement to Trustees(2)
------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C>
G. Moffett Cochran $0 None None $0 (9)
Trustee
Robert E. Fischer $10,000 None None $10,000 (4)
Trustee
Martin Jaffe $0 None None $0 (4)
Trustee
Wilmot H. Kidd, III $10,000 None None $10,000 (4)
Trustee
John W. Waller, III $7,000 None None $7,000 (4)
Trustee
</TABLE>
The Trustees of the Opportunity Funds who are officers or
employees of the Money Funds' 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 Opportunity Fund
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
DLJ Investment Management Corp. (the "Adviser"), a Delaware
corporation with principal offices at 277 Park Avenue, New York, New York 10172,
has been retained under an Investment Advisory Agreement as the Money Funds'
investment adviser (see "Management" in the Prospectus). The Adviser was
established in 1996 to serve a select group of individual and institutional
investors.
- ----------------------
1 The Opportunity Funds anticipate paying each independent Trustee approximately
$10,000 in each calendar year.
2 Represents the total compensation paid to such persons during the calendar
year ending December 31, 1996. The parenthetical number represents the number
of portfolios (including the Money Funds) for which such person acts as a
Trustee, that are considered part of the same fund complex as the Money Funds.
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The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJ Securities" or the "Distributor"), the
distributor of the Funds' shares, which is a wholly-owned subsidiary of
Donaldson, Lufkin & Jenrette, Inc., which is in turn an independently operated,
indirect subsidiary of The Equitable Companies, Incorporated ("ECI"), a holding
company controlled by AXA, a French insurance holding company. The Adviser along
with its affiliates are an integral part of the DLJ Securities family, and as
one of the oldest money management firms in the country, they maintain a
tradition of personalized service and performance. The address of Donaldson,
Lufkin & Jenrette, Inc. is 277 Park Avenue, New York, New York 10172. The
address of ECI is 787 Seventh Avenue, New York, New York 10019.
As of September 10, 1996, AXA owns 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, on September 10, 1996, 35.6% of the issued ordinary shares
(representing 48.6% of the voting power) of AXA were directly or indirectly
owned by Finaxa, a French holding company ("Finaxa"). Such percentage of
interest includes the interest of Colisee Vendome, a wholly-owned subsidiary of
Finaxa, which owned 5.3% of the issued ordinary shares (representing 4.3% of the
voting power) of AXA and the interest of les Ateliers de construction du Nord de
la France- ANF ("ANF"), a 95.4% owned subsidiary of Finaxa, which owned 0.3% of
the issued ordinary shares (representing 0.4% of the voting power) of AXA. As of
September 10, 1996, 61.3% of the issued ordinary shares (representing 73.5% of
the voting power) of Finaxa were owned by five French mutual insurance companies
(the "Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle, owned
34.8% of the issued ordinary shares (representing 40.6% of the voting power) and
23.7% of the issued ordinary shares (representing 15.0% of the voting power) of
Finaxa were owned by Banque Paribas, a French bank ("Paribas"). Including the
ordinary shares owned by Finaxa and its subsidiaries on September 10, 1996, the
Mutuelles AXA directly and indirectly owned 41.3% of the issued ordinary shares
of AXA (representing 56.3% of the voting power). Acting as a group, the
Mutuelles AXA will continue to control AXA and Finaxa.
The Investment Advisory Agreement dated October 22, 1996 (the
"Investment Advisory Agreement") was approved by the Board of Trustees of the
Winthrop Opportunity Funds on October 22, 1996 and by the then shareholders on
January 24, 1997 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 17, 1997. The Investment Advisory Agreement continues in
force for successive twelve month periods provided that such continuation is
specifically approved at least annually by a majority vote of the Trustees who
neither are interested persons
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<PAGE>
of the Funds nor have any direct or indirect financial interest in the
Investment Advisory Agreement, cast in person at a meeting called for the
purpose of voting on such approval. Under the Investment Advisory Agreement, the
Adviser is paid a management fee equal to .40 of 1% of the average daily net
assets of the Money Funds which are reduced to .35% of the average daily net
assets in excess of $1 billion.
Pursuant to the terms of the Investment Advisory Agreement,
the Adviser may retain, at its own expense, a subadviser to assist in the
performance of its services to the Money Funds.
EXPENSES OF THE MONEY FUNDS
General
In addition to the payments to the Adviser under the
Investment Advisory Agreement, each Money Fund pays the other expenses incurred
in its organization and operations, including the costs of printing prospectuses
and other reports to existing shareholders; all expenses and fees related to
registration and filing with the Securities and Exchange Commission and with
state regulatory authorities; custody, transfer and dividend disbursing
expenses; legal and auditing costs; clerical, accounting and other office costs;
fees and expenses of Trustees who are not affiliated with the Adviser; costs of
maintenance of existence; and interest charges, taxes, brokerage fees and
commissions.
As to the obtaining of clerical and accounting services not
required to be provided to the Money Funds by the Adviser under the Investment
Advisory Agreement, the Money Funds may employ their own personnel. For such
services, they also may utilize personnel employed by the Adviser or their
affiliates. In such event, the services shall be provided to the Money Funds at
cost and the payments therefor must be specifically approved in advance by the
Money Funds' Trustees, including a majority of its disinterested Trustees.
Distribution Agreement
Pursuant to Rule 12b-1 adopted by the Securities and Exchange
Commission under the Act, the Money Funds have adopted a Distribution Agreement
(the "Distribution Agreement") and a Rule 12b-1 Plan for each Money Fund (the
"12b-1 Plans") to permit such Money Fund directly or indirectly to pay expenses
associated with the distribution of shares.
Pursuant to the Distribution Agreement and the 12b-1 Plans,
the Treasurer of the Money Funds reports the amounts expended under the
Distribution Agreement and the purposes for which such expenditures were made to
the Trustees of the Money Funds on a quarterly basis. Also, the 12b-1 Plans
provide that the selection and nomination of disinterested Trustees (as defined
in the Act) are committed to the discretion of the disinterested Trustees then
in office. The Distribution Agreement and 12b-1 Plans may be continued annually
if approved by a
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<PAGE>
majority vote of the Trustees, including a majority of the Trustees who neither
are interested persons of the Money Funds nor have any direct or indirect
financial interest in the Distribution Agreement, the 12b-1 Plans or in any
other agreements related to the 12b-1 Plans, cast in person at a meeting called
for the purpose of voting on such approval. The Distribution Agreement was
initially approved by each Money Fund's Trustees on October 22, 1996 and by the
then shareholders on January 24, 1997. The Distribution Agreement was most
recently reviewed and reapproved on July 17, 1997. All material amendments to
the 12b-1 Plans must be approved by a vote of the Trustees, including a majority
of the Trustees who neither are interested persons of the Money Funds nor have
any direct or indirect financial interest in the 12b-1 Plans or any related
agreement, cast in person at a meeting called for the purpose of voting on such
approval. Each Money Fund's 12b-1 Plan may be terminated without penalty at any
time by a majority vote of the disinterested Trustees, by a majority vote of the
outstanding shares of a Money Fund or by the Adviser. Any agreement related to
the 12b-1 Plans may be terminated at any time, without payment of any penalty,
by a majority vote of the independent Trustees or by majority vote of the
outstanding shares of a Money Fund on not more than 60 days notice to any other
party to the agreement, and any agreement, but not the 12b-1 Plans, will
terminate automatically in the event of assignment.
An initial concession or ongoing maintenance fee may be paid
to broker-dealers on sales of both Money Funds' shares. Pursuant to the Money
Funds' 12b-1 Plans, if such fee is paid, the Distributor is then reimbursed for
such payments with amounts paid from the assets of such Money Fund. The payments
to the broker-dealer, although a Money Fund expense which is paid by all
shareholders, will only directly benefit investors who purchase their shares
through a broker-dealer rather than from the Money Funds. Broker-dealers who
sell shares of the Money Funds may provide services to their customers that are
not available to investors who purchase their shares directly from the Money
Funds. Investors who purchase their shares directly from a Money Fund will pay a
pro rata share of such Money Fund's expenses of encouraging broker-dealers to
provide such services but not receive any of the direct benefits of such
services. The payments to the broker-dealers will continue to be paid for as
long as the related assets remain in the Money Funds.
Pursuant to the provisions of the 12b-1 Plans and the
Distribution Agreement, the maximum amount payable by the Money Funds under the
12b-1 Plans for distributing shares is .40 of 1% of the average daily net assets
during the fiscal year. Currently, each Money Fund pays a distribution services
fee each month to the Distributor, with respect to shares of each Money Fund, at
an annual rate of up to .25 of 1% of the aggregate average daily net assets
attributable to each Money Fund.
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<PAGE>
PURCHASES, REDEMPTIONS AND EXCHANGES
The following information supplements that set forth in the
Money Funds' Prospectus under the heading "Purchases, Redemptions and
Shareholder Services."
Purchases
Shares of the Money Funds are offered at the respective net
asset value per share next determined following receipt of a purchase order in
proper form by the Money Funds, the Money Funds' transfer agent, FPS Services,
Inc. (the "Transfer Agent"), or by the Distributor. The Money Funds calculate
net asset value per share as of the close of the regular session of the New York
Stock Exchange, which is generally 4:00 p.m. New York City time on each day that
trading is conducted on the New York Stock Exchange (the "NYSE") (see "Net Asset
Value").
Orders for the purchase of shares of a Money Fund become
effective at the next transaction time (as stated in the Prospectus) after
Federal funds or bank wire monies become available to the Transfer Agent for a
shareholder's investment. Federal funds are a bank's deposits in a Federal
Reserve Bank. These funds can be transferred by Federal Reserve wire from the
account of one member bank to that of another member bank on the same day and
are considered to be immediately available funds. Investors should note that
their banks may impose a charge for this service. Money transmitted by a check
drawn on a member of the Federal Reserve System is converted to Federal funds in
one business day following receipt. Checks drawn on banks which are not members
of the Federal Reserve System may take longer. All payments (including checks
from individual investors) must be in United States dollars. All shares
purchased are confirmed to each shareholder and are credited to such
shareholder's account at net asset value. To avoid unnecessary expense to the
Money Funds, share certificates representing shares of the Money Fund purchased
are not issued for full or fractional shares.
Redemptions
Shares of the Money Funds may be redeemed at a redemption
price equal to the net asset value per share, as next completed as of the
closing of the regular trading session of the NYSE following the receipt in
proper form by the Money Fund of the shares tendered for redemption.
Payment of the redemption price may be made either in cash or
in portfolio securities (selected in the discretion of the Trustees and taken at
their value used in determining the redemption price), or partly in cash and
partly in portfolio securities. However, payments will be made wholly in cash
unless the Trustees believe that an appropriate situation exists which would
make such a practice detrimental to the best interest of the Money Funds or its
shareholders. 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.
16
<PAGE>
To redeem shares, the registered owner or owners should
forward a letter to the Money Funds containing a request for redemption of such
shares at the next determined net asset value per share. Alternatively, the
shareholder may elect the right to redeem shares by telephone as described in
the Prospectus. The signature or signatures in the redemption letter must be
guaranteed in the manner described below.
If the total value of the shares being redeemed exceeds
$50,000 or a redemption request directs proceeds to a party other than the
registered account owner(s), the signature or signatures on the letter or the
endorsement must be guaranteed by an "eligible guarantor institution" as defined
in Rule 17Ad-15 under the Securities Exchange Act of 1934. Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. A broker-dealer guaranteeing signatures must be a member of a
clearing corporation or maintain net capital of at least $100,000. Credit unions
must be authorized to issue signature guarantees. Signature guarantees will be
accepted from any eligible guarantor institution which participates in a
signature guarantee program. Additional documents may be required for redemption
of corporate, partnership or fiduciary accounts.
The requirement for a guaranteed signature is for the
protection of the shareholder in that it is intended to prevent an unauthorized
person from redeeming his shares and obtaining the redemption proceeds.
Exchanges
Shares of each Money Fund can be exchanged for shares of the
other Money Fund. Shareholders whose initial investment was directly into a
Money Fund may exchange such shares into either class of the (i) Winthrop
Developing Markets Fund or the Winthrop International Equity Fund, both series
of the Winthrop Opportunity Funds (the "International Funds") or (ii) Winthrop
Growth Fund, Winthrop Fixed Income Fund, Winthrop Small Company Value Fund,
Winthrop Growth and Income Fund and Winthrop Municipal Trust Fund (collectively,
the "Focus Funds"). Shares of each Money Fund established pursuant to Winthrop's
exchange privilege will be eligible for exchange into the International Funds or
Focus Funds provided that the exchange is directed into the same class of shares
upon which the initial investment was made. Shareholders may exchange shares by
mail. Shareholders or the shareholders' investment dealer of record may exchange
shares by telephone.
In the case of the International Funds or the Focus Funds, the
exchange privilege is available only in those jurisdictions where shares of such
fund may be legally sold and is subject to the restrictions stated under
"Additional Shareholder Services-Exchange Privilege" in the Prospectus. In
addition, the exchange privilege is available only when payment for the shares
to be redeemed has been made.
Only those shareholders who have had shares in a Money Fund
for at least seven days may exchange all or part of those shares for shares of
the International Funds or the Focus
17
<PAGE>
Funds, and no partial exchange may be made if, as a result, the shareholders'
interest in a Money Fund would be reduced to less than $250. The minimum initial
exchange into the International Funds or Focus Funds is $250.
All exchanges are subject to the minimum investment
requirements and any other applicable terms set forth in the Prospectus for the
relevant fund or class whose shares are being acquired. If for these or other
reasons the exchange cannot be effected, the shareholder will be so notified.
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
International 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 and
distribution fees for such fund may be higher and a sales charge differential
may apply. See "Additional Shareholder Services - Exchange Privilege" in the
Prospectus for a description of these expense differences.
RETIREMENT PLANS
Each of the Money Funds may be a suitable investment vehicle for part
or all of the assets held in various tax sheltered retirement plans, such as
those listed below. Semper Trust Company serves as custodian under these
prototype retirement plans and charges an annual account maintenance fee of $15
per participant, regardless of the number of Funds selected. Persons desiring
information concerning these plans should write or telephone the Money Funds'
Transfer Agent. While the Money Funds' reserve the right to suspend sales of its
shares in response to conditions in the securities markets or for other reasons,
it is anticipated that any such suspension of sales would not apply to the types
of plans listed below.
Individual Retirement Accounts ("IRA")
The Adviser has available a prototype form of IRA for investment in
shares of any one or more Money Funds. Under the Code, individuals may make IRA
contributions of up to $2,000 annually. An individual with a non-working spouse
may establish a separate IRA for the spouse and contribute a combined maximum of
$2,250 annually to one or both IRAs, provided that no more than $2,000 may be
contributed to the IRA of either spouse. Contributions to an IRA may be wholly
or partly tax- deductible, depending upon the contributor's income level and
participation in an employer-sponsored retirement plan. The income earned on
shares held in an IRA is not subject to Federal income tax until withdrawn in
accordance with the Code. Investors may be subject to penalties or additional
taxes on contributions to or withdrawals from IRAs
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<PAGE>
under certain circumstances. As with tax-deductible contributions, taxes on the
income earned from nondeductible IRA contributions will be deferred until
distributed from the IRA.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA is available for investment and may be established on a group
basis by an employer who wishes to sponsor a tax-sheltered retirement program by
making IRA contributions on behalf of all eligible employees.
Savings Incentive Match Plan for Employees ("SIMPLE") - SIMPLE IRA and SIMPLE
401(k)
SIMPLE plans offer 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. Please
telephone Winthrop's 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 Money Funds. The
prototype retirement plan may be used by sole proprietors and partnerships as
well as corporations to establish a tax qualified profit sharing plan or money
purchase pension plan (or both) of their own.
Under the prototype retirement plan, an employer may make annual
tax-deductible contributions for allocation to the accounts of the plan
participants to the maximum extent permitted by the federal tax law for the type
of plan implemented. The Adviser has received favorable opinion letters from the
IRS that the prototype retirement plan is acceptable by qualified employers.
Self-Directed Retirement Plans
Shares of the Money Funds may be suitable for self-directed IRA
accounts and prototype retirement plans such as those developed by Donaldson,
Lufkin & Jenrette Securities Corporation, an affiliate of the Adviser and
Winthrop's Distributor.
NET ASSET VALUE
Shares of the Money Funds will be priced at the net asset
value per share as computed each Money Fund Business Day in accordance with the
Agreement and Declaration of Trust and By-Laws. For this purpose, a Money Fund
Business Day is any day on which the NYSE is open for business, typically,
Monday through Friday exclusive of New Year's Day, Washington's Birthday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
Good Friday.
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The net asset value of the shares of each Money Fund is
determined as of the close of the regular session on the NYSE, which is
generally at 4:00 p.m., New York City time, on each day that trading is
conducted on the NYSE. The net asset value per share is calculated by taking the
sum of the value of each Money Fund's investments and any cash or other assets,
subtracting liabilities, and dividing by the total number of shares outstanding.
All expenses, including the fees payable to the Adviser, are accrued daily. For
purposes of this computation, the securities in each Money Fund's portfolio are
valued at their amortized cost, which does not take into account unrealized
securities gains or losses as measured by market valuations. The amortized cost
method involves valuing an instrument at its cost and thereafter applying a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
During periods of declining interest rates, the daily yield on shares of the
Money Fund may be higher than that of a fund with identical investments
utilizing a method of valuation based upon market prices for its portfolio
instruments; the converse would apply in a period of rising interest rates.
The valuation at amortized cost is in accordance with the
provisions of Rule 2a-7 under the Act. Pursuant to such rule, the Money Funds
maintain a dollar-weighted average portfolio maturity of 90 days or less and
invests only in securities of high quality (as defined by the Rule). The Money
Funds also purchase instruments which, at the time of investment, have remaining
maturities of no more than one year which maturities may extend to 397 days. The
Money Funds maintain procedures designed to stabilize, to the extent reasonably
possible, the price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Money Funds'
portfolio holdings by the Adviser at such intervals as the Adviser deems
appropriate to determine whether and to what extent the net asset value of the
Money Funds calculated by using available market quotations or market
equivalents deviates from net asset value based on amortized cost. If such
deviation exceeds 1/2 of 1%, the Adviser will promptly consider what action, if
any, should be initiated. In the event the Adviser determines that such a
deviation may result in material dilution or other unfair results to new
investors or existing shareholders, they will consider corrective action which
might include (1) selling instruments prior to maturity to realize capital gains
or losses or to shorten average portfolio maturity, (2) withholding dividends of
net income on shares, or (3) establishing a net asset value per share using
available market quotations or equivalents. There can be no assurance, however,
that the Money Funds' net asset value per share will remain constant at $1.00.
DAILY DIVIDENDS, DISTRIBUTIONS AND TAXES
Daily Dividend. The net investment income of the Money Funds
is declared daily as a dividend to holders of record, after giving effect to
redemptions received during the day, following the determination of net asset
value as of the close of business of regular sessions of the NYSE. Net
investment income consists of all accrued interest income on the Money Funds'
portfolio assets less the Money Funds' actual and accrued expenses applicable to
that dividend
20
<PAGE>
period. Realized gains and losses are reflected in net asset value and are not
included in net investment income.
Because the net investment income of each Money Fund is
declared as a dividend each time the net investment income of the Fund is
determined and is expressed by an increase in the number of shares held at a
$1.00 price, the net asset value per share of each Money Fund (i.e., the value
of the net assets of the Fund divided by the number of shares of the Money Fund
outstanding) is expected to remain at $1.00 per share immediately after each
such determination and dividend declaration, unless (i) there are unusual or
extended fluctuations in short-term interest rates or other factors, such as
unfavorable changes in the creditworthiness of issuers affecting the value of
securities in the Money Fund's portfolio, or (ii) net income is a negative
amount. Normally, each Money Fund will have a positive net investment income at
the time of each determination thereof. Net investment income may be negative if
an unexpected liability must be accrued or a loss realized. If the net
investment income of a Money Fund determined at any time is a negative amount,
the net asset value per share will be reduced below $1.00 unless one or more of
the following steps are taken: the Adviser has the authority (i) to reduce the
number of shares in each shareholder's account, (ii) to offset each
shareholder's pro rata portion of negative net investment income from the
shareholder's accrued dividend account or from future dividends, or (iii) to
combine these methods in order to seek to maintain the net asset value per share
at $1.00. Each Money Fund may endeavor to restore the net asset value per share
to $1.00 by not declaring dividends from net investment income on subsequent
days until restoration, with the result that the net asset value per share will
increase to the extent of positive net investment income which is not declared
as a dividend.
Should the Money Funds incur or anticipate any unusual or
unexpected significant expense or loss which would affect disproportionately the
Money Funds' income for a particular period, the Adviser would at that time
consider whether to adhere to the dividend policy described above or to revise
it in light of the then prevailing circumstances in order to ameliorate to the
extent possible the disproportionate effect of such expense, loss or
depreciation on then existing shareholders. Such expenses or losses may
nevertheless result in a shareholder's receiving no dividends for the period
during which the shares are held and in receiving upon redemption a price per
share lower than that which was paid.
The Money Funds do not anticipate realizing any long-term
capital gains. Distributions of realized capital gains, if any, would normally
be paid in November or December. The Money Funds expect to follow the practice
of distributing any net realized capital gains to shareholders at least
annually. However, if any realized capital gains are retained by the Money Funds
for reinvestment and Federal income taxes are paid thereon by the Money Funds,
the Money Funds will elect to treat such capital gains as having been
distributed to shareholders; as a result, shareholders would be able to claim
their share of the taxes paid by the Money Funds on such gains as a credit
against their individual Federal income tax liability.
There is no fixed dividend rate and there can be no assurance
that a Money Fund will pay any dividends or realize any gains. The amount of any
dividend or distribution paid by
21
<PAGE>
each Money Fund depends upon the realization by the Money Fund of income and
capital gains from that Money Fund's investments. All dividends and
distributions will be made to shareholders of a Money Fund solely from assets of
that Money Fund.
Taxation of Distributions. For shareholders' Federal income
tax purposes, all distributions by the Money Funds out of interest income and
net realized short-term capital gains are treated as ordinary income, and
distributions of long-term capital gains, if any, are treated as long-term
capital gains irrespective of the length of time the shareholder held shares in
the Money Funds. Since the Money Funds derive nearly all of their gross income
in the form of interest income, and not dividends from domestic corporations, it
is expected that for corporate shareholders, none of the Money Funds'
distributions will be eligible for the dividends-received deduction under
current law.
For shareholders' Federal income tax purposes, distributions
to shareholders out of tax-exempt interest income earned by the Municipal Fund
generally are not subject to Federal income tax. However, distributions derived
from interest which is exempt from regular federal income tax may subject
corporate shareholders to or increase their liability under the AMT. A portion
of such distributions may constitute a tax preference item for individual
shareholders and may subject them to or increase their liability under the AMT.
Shareholders of the Money Funds may be subject to state and
local taxes on distributions received from the Money Funds and on redemptions of
the Money Funds' shares. Under the laws of certain states, distributions of
investment company taxable income are taxable to shareholders as dividends, even
though a portion of such distributions may be derived from interest on U.S.
Government obligations which, if received directly by such shareholders, would
be exempt from state income tax.
Shareholders will be advised annually as to the federal (and
state, for the Municipal Fund) tax status of dividends and capital gains
distributions, if any, made by each Money Fund for the preceding year.
Tax Qualification of the Money Funds. Each Money Fund intends
to qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986 (the "Code"), as amended, so that it will not be liable for
federal income taxes to the extent that its net taxable income and net capital
gains are distributed. Accordingly, each Money Fund must, among other things,
(a) derive at least 90% of its gross income from dividends, interest, payments
with respect to securities loans, gains from the sale or other disposition of
stock or securities or other foreign currencies, or other income (including but
not limited to gains from futures and forward contracts) derived with respect to
its business of investing in stock, securities or currencies; (b) derive less
than 30% of its gross income from the sale or other disposition of stock,
securities, futures or forward contracts held less than three months; and (c)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the market value of the Money Fund's assets is represented by cash, U.S.
Government securities and other securities, with such other securities limited,
in respect of any one issuer, to an amount not greater than 5%
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<PAGE>
of the Fund's assets and 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any one issuer (other than U.S. Government securities). In
addition, each Money Fund will be subject to a nondeductible 4% excise tax on
the excess, if any, of certain required distribution amounts over the amounts
actually distributed by that Money Fund. To the extent possible, each Money Fund
intends to make such distributions as may be necessary to avoid this excise tax.
Subchapter M of the Code also permits the character of
tax-exempt interest distributed by a regulated investment company to
flow-through as tax-exempt interest to its shareholders, provided that at least
50% of the value of its assets at the end of each quarter of the taxable year is
invested in state, municipal and other obligations the interest on which is
exempt under Section 103(a) of the Code. The Municipal Fund intends to satisfy
this 50% requirement in order to permit distributions of tax-exempt interest to
be treated as such for Federal income tax purposes in the hands of their
shareholders. Distributions to shareholders of tax-exempt interest earned by the
Municipal Fund for the taxable year are therefore not subject to regular Federal
income tax, although they may be subject to the individual and corporate
alternative minimum taxes described above. Discount from certain stripped
tax-exempt obligations or their coupons, however, may be taxable.
The Revenue Reconciliation Act of 1993 requires that any
market discount recognized on a tax-exempt bond is taxable as ordinary income.
This rule applies only for disposals of bonds purchased after April 30, 1993. A
market discount bond is a bond acquired in the secondary market at a price below
its redemption value. Under prior law, the treatment of market discount as
ordinary income did not apply to tax-exempt obligations. Instead, realized
market discount on tax-exempt obligations was treated as capital gain. Under the
new law, gain on the disposition of a tax-exempt obligation or any other market
discount bond that is acquired for a price less than its principal amount will
be treated as ordinary income (instead of capital gain) to the extent of accrued
market discount. This rule is effective only for bonds purchased after April 30,
1993.
Since the Money Funds are not treated as a single entity for
Federal income tax purposes, the performance of one Money Fund will have no
effect on the income tax liability of shareholders of another Money Fund.
Dividend or capital gains distributions with respect to shares
of any Money Fund held by a tax-deferred or qualified retirement plan, such as
an IRA, Keogh Plan or corporate pension or profit sharing plan, will not be
taxable to the plan. Distributions from such plans will be taxable to individual
participants under applicable tax rules without regard to the character of the
income earned by the qualified plan.
Taxation of Investor's Indebtedness. It is unlikely that
interest on indebtedness incurred by shareholders to purchase or carry shares of
the Money Funds will be deductible for Federal income tax purposes. Under rules
of the Internal Revenue Service for determining when borrowed funds are used for
purchasing or carrying particular assets, shares may be considered
23
<PAGE>
to have been purchased or carried with borrowed funds even though those funds
are not directly linked to the shares. Further, persons who are "substantial
users" (or related persons) of facilities financed by private activity bonds
(within the meaning of Section 147(a) of the Code) should consult their tax
advisers before purchasing shares of the Municipal Fund. The Municipal Fund has
not undertaken any investigation as to the users of the facilities financed by
bonds in its portfolio.
Tax Withholding. Each Money Fund is required to withhold and
remit to the U.S. Treasury 31% of the dividends or the proceeds of any
redemptions or exchanges of shares with respect to any shareholder who fails to
furnish the Money Funds with a correct taxpayer identification number, who
under-reports dividend or interest income, or who fails to certify to the Money
Funds that he or she is not subject to such withholding. An individual's tax
identification number is his or her social security number.
Tax Legislation. Tax legislation in recent years has included
several provisions that may affect the supply of, and the demand for, tax-exempt
bonds, as well as the tax-exempt nature of interest paid thereon. It is not
possible to predict with certainty the effect of these recent tax law changes
upon the tax-exempt bond market, including the availability of obligations
appropriate for investment, nor is it possible to predict any additional
restrictions that may be enacted in the future. The Municipal Fund will monitor
developments in this area and consider whether changes in its objectives or
policies are desirable.
General. The foregoing discussion of U.S. federal income
tax law relates solely to the application of that law to U.S. persons,
i.e., U.S. citizens and residents and U.S. corporations, partnerships, trusts
and estates. Each shareholder who is not a U.S. person should consider
the U.S. and foreign tax consequences of ownership of shares of the Money
Funds, including the possibility that such a shareholder may be subject to a
U.S. withholding tax at a rate of 30% (or at a lower rate under an applicable
income tax treaty) on amounts constituting ordinary income received by the
shareholder, where such amounts are treated as income from U.S. sources under
the Code.
Shareholders should consult their tax advisers about the
application of the provisions of tax law described in this combined Statement of
Additional Information in light of their particular tax situations.
The foregoing discussion is a general summary of certain
current Federal income tax laws regarding the Money Funds. The discussion does
not purport to deal with all of the Federal income tax consequences applicable
to the Money Funds, or to all categories of investors, some of whom may be
subject to special rules. Each prospective shareholder should consult with his
or her own professional tax adviser regarding federal, state and local tax
consequences of ownership of shares of the Money Funds.
24
<PAGE>
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees of
the Money Funds, the Adviser is responsible for the investment decisions and the
placing of orders for portfolio transactions for the Money Funds. Portfolio
transactions for the Money Funds are normally effected by brokers.
The Money Funds have no obligation to enter into transactions
in portfolio securities with any broker, dealer, issuer, underwriter or other
entity. In general, the securities the Money Funds will purchase are in
over-the-counter markets in which purchases and sales are affected directly with
a dealer acting as principal. The dealers impose a mark-up on their cost which
is usually not disclosed to the Money Funds. Therefore, the Money Funds will
generally make purchases based exclusively on best price, although execution may
be a factor in certain circumstances. In placing orders, it is the policy of the
Money Funds to obtain the best price and execution for its transactions.
INVESTMENT PERFORMANCE INFORMATION
The Money Funds may furnish data about its investment
performance in advertisements, sales literature and reports to shareholders.
From time to time evaluations of performance are made by independent sources
that may be used in advertisements concerning each Money Fund. These sources
include Lipper Analytical Services, Weisenberger Investment Company Service,
Barron's, Business Week, Kiplinger's Personal Finance, Financial World, Forbes,
Fortune, Money, Personal Investor, Sylvia Porter's Personal Finance, Bank Rate
Monitor, Morningstar and The Wall Street Journal.
These performance figures may be calculated in the following
manner:
Yield
Yield is the net annualized yield based on a specified 7
calendar days calculated at simple interest rates. Yield is calculated by
determining the net change exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return. The yield is
annualized by multiplying the base period return by 365/7. The yield figure is
stated to the nearest hundredth of one percent. The yield quotation based on the
7 days ended April 30, 1997 was 3.55% and 4.63% for the Municipal Fund and
Government Fund, respectively.
25
<PAGE>
Effective Yield
Effective yield is the net annualized yield for a specified 7
calendar days assuming a reinvestment of the income or compounding. Effective
yield is calculated by the same method as yield except the effective yield
figure is compounded by adding 1, raising the sum to a power equal to 365
divided by 7, and subtracting 1 from the result, according to the following
formula:
Effective yield = [(Base Period Return + 1)^(365/7)] - 1.
The effective yield quotation based on the 7 days ended April
30, 1997 was 3.61% and 4.74% for the Municipal Fund and Government Fund,
respectively.
Tax-Equivalent Yield
Tax-equivalent yield is the net annualized taxable yield
needed to produce a specified tax-exempt yield at a given tax rate based on a
specified 30-day period assuming a reinvestment of all dividends paid during
such period. Tax-equivalent yield is calculated by dividing that portion of each
Money Fund's yield (as computed in the yield description above) which is
tax-exempt by one minus a stated income tax rate and adding the product to that
portion, if any, of the yield of the Money Fund that is not tax-exempt.
The following chart will illustrate the effects of tax-exempt
income versus taxable income.
26
<PAGE>
Tax-Exempt Income vs. Taxable Income
Federal income tax rates in effect for the 1996 calendar year.
Federal To Equal Hypothetical Tax-Free Yields of
Tax Rates 5%, 7% and 9%, a Taxable Investment
1996 Taxable Individual Would Have To Earn(3)
Income Brackets Return 5% 7% 9%
- --------------- ------ ----- ----- -----
$0 - $24,000 15.0% 5.88 8.24 10.59
$24,001 - $58,150 28.0% 6.94 9.72 12.50
$58,151 - $121,300 31.0% 7.25 10.14 13.04
$121,301 - $263,750 36.0% 7.81 10.95 14.06
Over $263,750 39.6% 8.28 11.59 14.90
Joint
Return
------
$0 - $40,000 15.0% 5.88 8.24 10.59
$40,001 - $96,900 28.0% 6.94 9.72 12.50
$96,901 - $147,700 31.0% 7.25 10.14 13.04
$147,701 - $263,750 36.0% 7.81 10.95 14.06
Over $263,750 39.6% 8.28 11.59 14.90
Based on 1996 Federal tax rates, a married couple filing a
joint return with two exemptions and taxable income of $50,000 would have to
earn a tax-equivalent yield of 6.94% in order to match a tax-free yield of 5%.
There is no guarantee that a fund will achieve a specific
yield. While most of the income distributed to the shareholders of each Money
Fund will be exempt from Federal income taxes, distributions may be subject to
state and local taxes.
Quotations of total return will reflect only the performance
of an investment in any Money Fund during the particular time period shown. Each
Money Fund's total return and current yield may vary from time to time depending
on market conditions, the compositions of
- -----------------
(3) These illustrations assume the Federal alternative minimum tax is not
applicable, that an individual is not a "head of household" and claims one
exemption and that taxpayers filing a joint return claim two exemptions.
Note also that these Federal income tax brackets and rates do not take into
account the effects of (i) a reduction in the deductibility of itemized
deductions for taxpayers whose Federal adjusted gross income exceeds
$117,950 ($58,975 in the case of a married individual filing a separate
return), or of (ii) the gradual phaseout of the personal exemption amount
for taxpayers whose federal adjusted gross income exceeds $88,495 (for
single individuals). The effective Federal tax rates and equivalent yields
for such taxpayers would be higher than those shown above.
27
<PAGE>
its portfolio and operating expenses. These factors and possible differences in
the methods used in calculating yield should be considered when comparing each
Money Fund's current yield to yields published for other investment companies
and other investment vehicles. Total return and yield should also be considered
relative to change in the value of each Money Fund's shares and the risks
associated with each Money Fund's investment objectives, policies and risk
considerations.
In connection with communicating its yield, effective yield or
tax-equivalent yield to current or prospective shareholders, each Money Fund may
also compare these figures to the performance of other mutual funds tracked by
mutual fund rating services or to other unmanaged indices which may assume
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs.
Any quotations of a Fund's performance are based on historical
earnings and are not intended to indicate future performance. An investor's
shares when redeemed may be worth more or less than their original cost.
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 July 8, 1997.
<TABLE>
<CAPTION>
Nature of
Municipal Money Fund Name and Address % of Class Ownership
-------------------- ---------------- ---------- ---------
<S> <C> <C> <C>
Laurence Gilbert 7.73 Beneficial(a)
and Arlene Gilbert
JTWROS
30 Willow Rd
Woodmere, NY 11598-2227
Marilyn Thypin 6.01 Beneficial(a)
400 E 56th Street
New York, NY 10022-4147
Neil Hammer 5.87 Beneficial(a)
4746 Logan Ln SE
Cedar Rapids, IA 52403-3281
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
U.S. Government Money Fund
--------------------------
<S> <C> <C> <C>
Protective Insurance Company 6.47 Beneficial(a)
1099 N. Meridan St., Ste 700
Indianapolis, IN 46204
Schulb Beba Foundation 6.54 Beneficial(a)
Vaduz Aeulestrasse 5 Furstentum
Leichtenstein
Robert Winthrop 13.15 Beneficial
c/o Wood Struthers&Winthrop
277 Park Avenue
New York, NY 10172
</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.
The Adviser manages accounts over which it has discretionary power to
vote or dispose of securities held in such accounts and which accounts hold in
the aggregate, as of July 21, 1997, 2,049,035 shares (6.48%) of the Municipal
Money Fund and 4,839,445 shares (21.64%) of the U.S. Government Money Fund.
GENERAL INFORMATION
Organization and Capitalization
Winthrop Opportunity Funds was formed on May 31, 1995 as a
"business trust" under the laws of the state of Delaware.
The Agreement and Declaration of Trust provides that no
Trustee, officer, employee or agent of the Opportunity Funds is liable to the
Funds or to a shareholder, nor is any Trustee, officer, employee or agent liable
to any third person in connection with the affairs of the Funds, except as such
liability may arise from his or its own bad faith, willful misfeasance, gross
negligence or reckless disregard of his or her duties. It also provides that all
third parties shall look solely to the property of the appropriate Opportunity
Fund for satisfaction of claims arising in connection with the affairs of an
Opportunity Fund. With the exceptions stated, the Agreement and Declaration of
Trust permits the Trustees to provide for the indemnification of Trustees,
officers, employees or agents of the Opportunity Funds against all liability in
connection with the affairs of the Opportunity Funds.
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<PAGE>
All shares of the Opportunity Funds when duly issued will be
fully paid and non-assessable. The Trustees are authorized to re-classify and
issue any unissued shares to any number of additional series without shareholder
approval. Accordingly, the Trustees in the future, for reasons such as the
desire to establish one or more additional Opportunity Funds with different
investment objectives, policies, risk considerations or restrictions, may create
additional series or classes of shares. Any issuance of shares of such
additional series would be governed by the Act and the laws of the State of
Delaware.
Counsel and Independent Auditors
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue,
New York, New York 10022, serves as legal counsel for the Money Funds.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York
10019, have been appointed as independent auditors for the Money Funds.
Additional Information
This Statement of Additional Information does not contain all
the information set forth in the Registration Statement filed by the Funds with
the Securities and Exchange Commission under the Securities Act of 1933. Copies
of the Registration Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the offices of the Commission
in Washington, D.C.
Financial Statements
The unaudited financial statements of each Money Fund for the period
ended April 30, 1997 are included in the April 30, 1997 Semi-Annual Report to
Shareholders. The Semi-Annual Report is incorporated by reference into this
Statement of Additional Information. You can obtain a copy of the Money Funds'
Semi-Annual Report by writing or calling the Money Funds at the address or
telephone numbers set forth on the cover of this Statement of Additional
Information.
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<PAGE>
APPENDIX A
SECURITIES RATINGS
The following is a description of the ratings given by S&P and
Moody's to U.S. municipal and government securities in which the Money Funds are
permitted to invest in accordance with Rule 2a-7 of the Act.
Rating of Municipal Obligations
S&P:
The two highest ratings of S&P for municipal bonds are AAA
(Prime) and AA (High-grade). Bonds rated AAA have the highest rating assigned by
S&P to a municipal obligation. Capacity to pay interest and repay principal is
extremely strong. Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in a small degree.
The rating may be modified by the addition of a plus (+) or a minus (-) to show
relative standing within the category.
S&P top ratings for municipal notes are SP-1 and SP-2. The
designation SP-1 indicates a very strong capacity to pay principal and interest.
A "+" is added for those issues determined to possess overwhelming safety
characteristics. An "SP-2" designation indicates a satisfactory capacity to pay
principal and interest.
Moody's:
The two highest ratings of Moody's for municipal bonds are Aaa
and Aa. Bonds rated Aaa are judged by Moody's to be of the best quality. Bonds
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. Moody's
states that Aa bonds are rated lower than the best bonds because margins of
protection or other elements make long-term risks appear somewhat larger than
for Aaa municipal bonds. Moody's rates a bond in the Aa category as Aa1 if
Moody's believes the bond possesses strong attributes within the category.
Moody's ratings for municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and Variable Rate Demand
Obligation Moody's Investment Grade (VMIG). This distinction is in recognition
of the differences between short-term and long-term credit risk. Loans bearing
the designation MIG1/VMIG1 are of the best quality, enjoying strong protection
by establishing cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation MIG2/VMIG2 are of high quality with margins of protection ample
although not as large as in the preceding group.
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<PAGE>
Commercial Paper Ratings
S&P:
Commercial paper rated A-1 or better by S&P has the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; the issuer has access to at least two additional
channels of borrowing; and basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the issuer's industry
is well established and the issuer has a strong position within the industry.
The reliability and quality of management are unquestioned.
Moody's:
The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend earnings over a
period of ten years; (7) financial strength of a parent company and the
relationship which exists with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
32
<PAGE>
APPENDIX B
DESCRIPTIONS OF MUNICIPAL SECURITIES
Municipal Notes generally are used to provide for short-term
capital needs and usually have maturities of one year or less. They include the
following:
1. Project Notes, which carry a U.S.
Government guarantee, are issued by public bodies
(called "local issuing agencies") created under the
laws of a state, territory, or U.S. possession. They
have maturities that range up to one year from the
date of issuance. Project Notes are backed by an
agreement between the local issuing agency and the
Federal Department of Housing and Urban Development.
These Notes provide financing for a wide range of
financial assistance programs for housing,
redevelopment, and related needs (such as low-income
housing programs and renewal programs).
2. Tax Anticipation Notes are issued to finance working
capital needs of municipalities. Generally, they
are issued in anticipation of various seasonal
tax revenues, such as income, sales, use and business
taxes, and are payable from those specific future
taxes.
3. Revenue Anticipation Notes are issued in expectation
of receipt of other types of revenues, such as
Federal revenues available under the Federal Revenue
Sharing Programs.
4. Bond Anticipation Notes are issued to provide interim
financing until long-term financing can be arranged.
In most cases, the long-term bonds then provide the
money for the repayment of the Notes.
5. Construction Loan Notes are sold to provide
construction financing. After successful completion
and acceptance, many projects receive permanent
financing through the Federal Housing Administration
under the Federal National Mortgage Association or
the Government National Mortgage Association.
6. Tax-Exempt Commercial Paper is a short-term
obligation with a stated maturity of 365 days or
less. It is issued by agencies of state and local
governments to finance seasonal working capital needs
or as short-term financing in anticipation of longer
term financing.
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<PAGE>
Municipal Bonds, which meet longer term capital needs and
generally have maturities of more than one year when issued, have three
principal classifications:
7. General Obligation Bonds are issued by such
entities as states, counties, cities, towns, and
regional districts. The proceeds of these
obligations are used to fund a wide range of public
projects, including construction or improvement of
schools, highways, and roads, and water and sewer
systems. The basic security behind General
Obligation bonds is the issuer's pledge of its
full faith and credit and taxing power for the
payment of principal and interest. The taxes that
can be levied for the payment of debt service may
be limited or unlimited as to the rate or amount
of special assessments.
8. Revenue Bonds generally are accrued by the net
revenues derived from a particular facility, group
of facilities, or, in some cases, the proceeds of a
special excise or other specific revenue source.
Revenue Bonds are issued to finance a wide variety
of capital projects including electric, gas, water
and sewer systems; highways, bridges, and tunnels;
port and airport facilities; colleges and
universities; and hospitals. Many of these Bonds
provide additional security in the form of a debt
service reserve fund to be used to make principal
and interest payments. Housing authorities have a
wide range of security, including partially or
fully insured mortgages, and/or the net revenues
from housing or other public projects. Some
authorities provide further security in the form of
a state's ability (without obligation) to make up
deficiencies in the debt service reserve fund.
9. Industrial Development Bonds are considered
municipal bonds if the interest paid thereon is
exempt from Federal income tax and are issued by or
on behalf of public authorities to raise money to
finance various privately operated facilities for
business and manufacturing, housing, sports, and
pollution control. These Bonds are also used to
finance public facilities such as airports, mass
transit system, ports, and parking. The payment of
the principal and interest on such Bonds is dependent
solely on the ability or the facility's user to meet
its financial obligations and the pledge, if any, of
real and personal property as security for such
payment.
34
<PAGE>
WINTHROP OPPORTUNITY FUNDS
277 PARK AVENUE,
NEW YORK, NEW YORK 10172
Toll Free (800) 255-8011
STATEMENT OF ADDITIONAL INFORMATION
July 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 "International 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 International Funds' current Prospectus dated July 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 International Funds at
the address or telephone number listed above.
TABLE OF CONTENTS Page
Investment Policies and Restrictions............................. 2
Management....................................................... 10
Expenses of the International Funds.............................. 14
Purchases, Redemptions and Exchanges............................. 15
Retirement Plans................................................. 18
Net Asset Value.................................................. 20
Dividends, Distributions and Taxes............................... 21
Portfolio Transactions........................................... 25
Portfolio Turnover............................................... 27
Investment Performance Information............................... 27
Shares of Beneficial Interest.................................... 29
General Information.............................................. 30
Financial Statements............................................. 31
Appendix -- Securities Ratings................................... 32
1
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The following investment policies and restrictions supplement and
should be read in conjunction with the information set forth under the heading
"Investment Objectives and Policies" in the International Funds' Prospectus.
Except as noted in the Prospectus, each International 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
significant change in such policies. Each International 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 International Fund may invest in any of the securities
described below.
Depositary Receipts. The International 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 International Fund's investment
policies, an International Fund's investments in Depositary Receipts will be
deemed to be investments in the underlying securities.
2
<PAGE>
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 International 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 International 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 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 International 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
International 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 International 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 International Fund purchases these securities at a discount,
faster than expected prepayments will increase, while
3
<PAGE>
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 International Fund may
determine to retain in its portfolio securities the issuers of which have had
their credit characteristics downgraded.
Options. The International 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 International Fund
writes a call option, that Fund gives up the potential for gain on the
underlying securities or currency in excess of the exercise price of the option
during the period that the option is open.
A put option gives the purchaser, in return for a premium, the right,
for a specified period of time, to sell securities or currency subject to the
option to the writer of the put at the specified exercise price. The writer of
the put option, in return for the premium, has the obligation, upon exercise of
the option, to acquire the securities or currency underlying the option at the
exercise price. An International 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 International Fund desires to sell a particular security from its
portfolio on which it has written an option, the International 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 International Fund
may enter into a closing purchase transaction to realize a profit on a
previously written option or to enable the International Fund to write another
option on the underlying security with either a different exercise price or
expiration date or both. An International 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 International 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 International Fund may not write a call option if, as a result
thereof, the aggregate of such International 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
International Funds may also purchase and sell financial futures contracts and
options
4
<PAGE>
thereon for hedging and risk management purposes and to enhance gains as
permitted by the Commodity Futures Trading Commission (the "CFTC").
The International 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
International 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 International 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 International
securities for investment. The ability of an International 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 International Fund's
ability to effectively hedge its portfolio. There is also the risk of loss by
the International Funds of margin deposits or collateral in the event of
bankruptcy of a broker with whom the International 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 International Fund is
limited to an investment not in excess of 5% of its total assets, except that
each International 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 International Funds will generally enter into forward contracts
only under two circumstances. First, when an International 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 International Fund's portfolio securities
denominated in such foreign
5
<PAGE>
currency. This second investment practice is generally referred to as
"cross-hedging." Although forward contracts will be used primarily to protect
the International Funds from adverse currency movements, they also involve the
risk that anticipated currency movements will not be accurately predicted.
Futures and Options Thereon. The International 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 International 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 International Fund to keep all of its assets at work while retaining
"overnight" flexibility in pursuit of investments of a longer-term nature. The
International 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 International 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 International Fund might be delayed in selling the
collateral.
Reverse Repurchase Agreements. The International Funds may also enter
into reverse repurchase agreements. Under a reverse repurchase agreement an
International Fund would sell securities and agree to repurchase them at a
mutually agreed upon date and price. At the time an International 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
International 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 International Fund's obligations to repurchase the securities and
an International 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 International 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.
6
<PAGE>
Illiquid Investments. Each International 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 International 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 International Fund to sell them promptly at an acceptable
price. The staff of the SEC currently takes the position that OTC options
purchased by an International Fund, and portfolio securities "covering" the
amount of that International 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 International Fund's limitations on
investments in illiquid securities.
Borrowing. Each International 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 International 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 International 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.
Securities Lending. The International 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 International 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 International
Funds have the right to call such a loan and obtain the securities loaned at any
time on five days notice. Cash collateral may be invested in fixed income
securities rated at least A or 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 International Fund may not exceed
25% of the value of its net assets.
When Issued, Delayed Delivery Securities and Forward Commitments. The
International 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
7
<PAGE>
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
International Fund will only enter into a forward commitment with the intention
of actually acquiring the security, such International 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 International Fund
prior to the settlement date. Each International 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 International Funds in privatization in
appropriate circumstances. In certain countries, the ability of foreign entities
such as the International Funds to participate in privatization may be limited
by local law and/or the terms on which the International 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
International investments by foreigners. The International Funds may be able to
invest in such markets solely or primarily through governmentally authorized
investment vehicles or companies. Pursuant to the 1940 Act, each International
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 International 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 International Fund
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. At the same time, an International Fund
would continue to pay its own management fees and other expenses.
8
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Fundamental Investment Restrictions
The following fundamental investment restrictions are applicable to
each of the International Funds and may not be changed with respect to an
International Fund without the approval of a majority of the shareholders of
that International Fund, which means the affirmative vote of the holders of (a)
67% or more of the shares of that International Fund represented at a meeting at
which more than 50% of the outstanding shares of the International Fund are
represented or (b) more than 50% of the outstanding shares of that International
Fund, whichever is less. Except as set forth in the Prospectus, all other
investment policies or practices are considered by each International 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 International 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 International Fund
would own more than 10% of the outstanding voting securities of such
issuer, except that up to 25% of the value of the International 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 International 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 International 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 International Fund's investment
objective and policies or the acquisition of securities subject to
repurchase agreements;
9
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(5) underwrite the securities of other issuers, except to the
extent that in connection with the disposition of portfolio securities
the International 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 International 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 International Fund's total assets and
the International 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.
MANAGEMENT
The Trustees and principal officers of the International 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 International 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 International Funds and the Adviser, Mr. Cochran was a
Senior Vice President with Bessemer Trust Companies.
Robert E. Fischer, 67, 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.
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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.
Marybeth B. Leithead, 34, 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
International Funds' Trustees and officers. Except as disclosed below, no
executive officer or person affiliated with the International Funds received
compensation from the International Funds for the calendar year ended December
31, 1996 in excess of $60,000.
Compensation Table
<TABLE>
<CAPTION>
Pension or
Retirement Total Compensation
Benefits From Trust
Aggregate Accrued and Fund
Compensation As Part Estimated Annual Complex
From of Trust Benefits Upon Paid
Name and Position Trust(1) Expenses Retirement 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.
(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 International Funds) for which such person
acts as Trustee that are considered part of the same fund complex as
the International 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.
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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 International 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 International 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 International 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 17, 1997. The Investment
Advisory Agreement continues in force for successive twelve month periods
provided that such continuation is specifically approved at least annually by a
majority vote of the Trustees who neither are interested persons of the
International 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 International Funds.
Subadviser
The Subadviser has been retained under a subadvisory agreement by the
Adviser to assist in the performance of its services to the International 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
International 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 International 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 International Funds. When two or more of the clients of the
Adviser and Subadviser (including the International Funds) are purchasing the
same security on a given day from the same broker-dealer, such transactions may
be averaged as to price.
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EXPENSES OF THE INTERNATIONAL FUNDS
General
In addition to the payments to the Adviser under the investment
advisory agreement, each International 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 International Funds by the Adviser under the investment
advisory agreement or Subadviser under the investment subadvisory agreement, the
International 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 International
Funds at cost and the payments therefor must be specifically approved in advance
by the International Funds' Trustees, including a majority of its disinterested
Trustees.
Distribution Plan
Pursuant to Rule 12b-1 adopted by the SEC under the 1940 Act, the
International Funds have adopted a Distribution Agreement (the 'Distribution
Agreement') and a Rule 12b-1 Plan for each Class of shares of each International
Fund (the "12b-1 Plans") to permit such International 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 International Funds reports the amounts expended under the
Distribution Agreement and the purposes for which such expenditures were made to
the Trustees of the International 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 International
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
International 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 17, 1997. 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 International 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
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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
International Funds may bear pursuant to the 12b-1 Plans without the approval of
a majority of the outstanding shares of such International Funds. Each
International 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 International 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 International 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 International 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
International Funds' 12b-1 Plans, the Distributor is then reimbursed for such
payments with amounts paid from the assets of such International Fund. The
payments to the broker-dealer, although an International 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 International Funds.
Broker-dealers who sell shares of the International Funds may provide services
to their customers that are not available to investors who purchase their shares
directly from the International Funds. Investors who purchase their shares
directly from an International Fund will pay a pro rata share of such
International 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 International Funds.
Pursuant to the provisions of the 12b-1 Plans and the Distribution
Agreement, each International Fund pays a distribution services fee each month
to the Distributor, with respect to the Class A shares of each International
Fund at an annual rate of up to .25 of 1%, and with respect to the Class B
shares of each International 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 International Fund.
PURCHASES, REDEMPTIONS, EXCHANGES AND
SYSTEMATIC WITHDRAWAL PLAN
The following information supplements that set forth in the International Funds'
Prospectus under the heading "Purchases, Redemptions and Shareholder Services."
Purchases
Shares of the International Funds are offered at the respective net
asset value per share next determined following receipt of a purchase order in
proper form by the International Funds, the International Funds' transfer agent,
FPS Services, Inc. (the "Transfer Agent"), or by the
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Distributor. The International 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 NYSE.
Orders for the purchase of shares of an International Fund become
effective at the next transaction time after Federal funds or bank wire monies
become available to the Transfer Agent for a shareholder's investment. Federal
funds are a bank's deposits in a Federal Reserve Bank. These funds can be
transferred by Federal Reserve wire from the account of one member bank to that
of another member bank on the same day and are considered to be immediately
available funds. Investors should note that their banks may impose a charge for
this service. Money transmitted by a check drawn on a member of the Federal
Reserve System is converted to Federal Funds in one business day following
receipt. Checks drawn on banks which are not members of the Federal Reserve
System may take longer. All payments (including checks from individual
investors) must be in United States dollars.
All shares purchased are confirmed to each shareholder and are credited
to such shareholder's account at net asset value 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 International Funds, share
certificates representing shares of the International 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 International 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 International Funds).
Redemptions
Shares of the International 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
International 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 International 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
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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 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 International Fund can be exchanged for
shares of the same class of another International 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 Small Company Value 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 International Fund
for at least seven days may exchange all or part of those shares for shares of
the other International Fund, the Money Funds or Focus Funds, and no partial
exchange may be made if, as a result, the
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shareholders' interest in an International Fund would be reduced to less than
$250. The minimum initial exchange into another International 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 International
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. See "Summary of Winthrop
Fund Expenses" and "Additional Shareholder Services - Exchange Privilege" in the
Prospectus for a description of these expense differences.
Systematic Withdrawal Plans
Shares of an International Fund owned by a participant in the
International 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 International 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
International 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.
RETIREMENT PLANS
Each of the International 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 these
prototype retirement plans and charges an annual account maintenance fee of $15
per participant, regardless of the number of Funds selected. Persons desiring
information concerning these plans should write or telephone the International
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Funds' Transfer Agent. While the International 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 ("IRA")
The Adviser has available a prototype form of IRA for investment in
shares of any one or more International Funds. Under the Code, individuals may
make IRA contributions of up to $2,000 annually. An individual with a
non-working spouse may establish a separate IRA for the spouse and contribute a
combined maximum of $2,250 annually to one or both IRAs, provided that no more
than $2,000 may be contributed to the IRA of either spouse. Contributions to an
IRA may be wholly or partly tax-deductible, depending upon the contributor's
income level and participation in an employer-sponsored retirement plan. The
income earned on shares held in an IRA is not subject to federal income tax
until withdrawn in accordance with the Code. Investors may be subject to
penalties or additional taxes on contributions to or withdrawals from IRAs under
certain circumstances. As with tax-deductible contributions, taxes on the income
earned from nondeductible IRA contributions will be deferred until distributed
from the IRA.
Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA is available for investment and may be established on a group
basis by an employer who wishes to sponsor a tax-sheltered retirement program by
making IRA contributions on behalf of all eligible employees.
Savings Incentive Match Plan for Employees ("SIMPLE") - SIMPLE IRA and SIMPLE
401(k)
SIMPLE plans offer 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. Please
telephone Winthrop's 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 International 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.
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Self-Directed Retirement Plans
Shares of the International Fund 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
Winthrop's Distributor.
NET ASSET VALUE
Shares of each International Fund will be priced at the net asset value
per share as computed each International Fund Business Day in accordance with
the International Funds' Agreement and Declaration of Trust and By-Laws. For
this purpose, an International 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 International 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 International 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 International 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 International 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 International 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 International Fund's shares may not take place contemporaneously
with the determination of the prices of investments held by such International
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
International Fund's shares unless the Adviser or Subadviser, under the
supervision of such International 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 International Fund's shares may be significantly affected by
such trading on days when a shareholder has no access to such International
Fund.
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For purposes of the computation of net asset value, each of the
International 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 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
International 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 International
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 International 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 International
Funds.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The International Funds intend to distribute to shareholders of the
International Funds on an annual basis, substantially all of such respective
periods' net investment income, if any, for each respective International Fund.
Capital gains (short-term and long-term), if any, realized by each of
the International 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 International Funds on the outstanding shares of any International Fund
will, at the election of each
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shareholder, be paid in cash or reinvested in additional full and fractional
shares of that International 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 International Funds from a
shareholder at least 30 days prior to the record date for a particular dividend
or distribution on shares of each International 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
International Fund will pay any dividends or realize any gains. The amount of
any dividend or distribution paid by each International Fund depends upon the
realization by the International Fund of income and capital gains from that
International Fund's investments. All dividends and distributions will be made
to shareholders of an International Fund solely from assets of that
International 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
International Fund shares held for six months or less will be treated for
Federal income tax purposes as a long-term capital loss to the extent of any
distributions of long-term capital gains received by the shareholder with
respect to such shares. Note that any loss realized on the sale of shares will
be disallowed to the extent the shares disposed of are replaced within a period
of 61 days beginning 30 days before the disposition of such shares. In such
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
Each International Fund intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986 (the
"Code"), as amended, so that it will not be liable for Federal income taxes to
the extent that its net taxable income and net capital gains are distributed.
Accordingly, each International 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 International 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
International 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 International 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
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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
International Fund.
Since the International Funds are not treated as a single entity for
Federal income tax purposes, the performance of one International Fund will have
no effect on the income tax liability of shareholders of another International
Fund. A dividend or capital gains distribution with respect to shares of any
International 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 International 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 International 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 International
Fund. To the extent possible, each International 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
International 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 International Fund for
the preceding year.
Some of the investment practices of each International Fund are subject
to special provisions that, among other things, may defer the use of certain
losses of such International Funds and affect the holding period of the
securities held by the International Funds and the character of the gains or
losses realized. These provisions may also require the International Fund to
mark-to-market some of the positions in their respective portfolios (i.e., treat
them as if they were closed out), which may cause such International 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
International 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 International Fund as a regulated investment company.
23
<PAGE>
The International 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 International Fund accrues income or receivables or expenses or other
liabilities denominated in a foreign currency and the time the International
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 International 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 International Fund's net investment income available for
distribution.
If an International Fund owns shares in certain foreign investment
entities, referred to as passive foreign investment companies ("PFICs"), such
International 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 International Fund to its
shareholders. If an International Fund were able and elected to treat a PFIC as
a "qualified electing fund," in lieu of the treatment described above, such
International Fund would be required each year to include in income, the
International Fund's pro rata share of the ordinary earnings and net capital
gains of the company, whether or not actually received by the International
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 International 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 International Fund's income under either
election, maintain its qualification as a regulated investment company, and
avoid income or excise taxes, such International 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 % of the value of the each
International 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
International 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
International Fund; (2) treat the shareholder's pro rata share of the foreign
income taxes paid by such International 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 International Fund's taxable year
whether the foreign income taxes paid by an International 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.
24
<PAGE>
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 International
Fund from its foreign source income will be treated as foreign source income.
Each International Fund's gains and losses from the sale of securities, and
certain currency gains and losses, will generally be treated as derived from
United States sources. The limitation on the foreign tax credit is applied
separately to foreign source "passive income," such as dividend income. Because
of these limitations, a shareholder may be unable to claim a credit for the full
amount of the shareholder's proportionate share of foreign income taxes paid by
such International 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 International 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 International Fund's gross income be derived
from the disposition of securities held for less than three months.
Each International 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 International
Funds with a correct taxpayer identification number, who under-reports dividend
or interest income or who fails to certify to the International 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 International Funds. The discussion does
not purport to deal with all of the federal income tax consequences applicable
to the International 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 International Funds.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees of the
International Funds, the Adviser and Subadviser are responsible for the
investment decisions and the placing of the orders for portfolio transactions
for the International Funds. Portfolio transactions for the International Funds
are normally effected by brokers.
The International 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 International 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
25
<PAGE>
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 International Funds.
If an International 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 International 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 International 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
International 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 International Funds. While
it is impossible to place an actual dollar value on such investment information,
its receipt by the Adviser and Subadviser probably does not reduce the overall
expenses of the Adviser or Subadviser to any material extent.
The investment information provided to the Adviser and Subadviser is of
the types described in Section 28(e)(3) of the Securities Exchange Act of 1934
and is designed to augment the Adviser's and Subadviser's own internal research
and investment strategy capabilities. Research and statistical services
furnished by brokers through which the International 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 International Funds.
The International 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
International 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 International Funds will attempt to
negotiate best execution.
The International Funds may from time to time place orders for the
purchase or sale of securities (including listed call options) with DLJ
Securities, the International 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
International Funds), or any affiliated person of such person, to
26
<PAGE>
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 International 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
International Funds provided that each International 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 International 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
International 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 Subadvisor, did not receive any amounts of such brokerage
commissions.
PORTFOLIO TURNOVER
Each International 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
International Fund and may result in the realization of net capital gains, which
would be taxable to shareholders when distributed.
INVESTMENT PERFORMANCE INFORMATION
Each International 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.
27
<PAGE>
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)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 International Fund during the particular
time period shown. Each International 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
International 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 International
Fund's shares and the risks associated with each International 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 International 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 International 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 International Fund's average annual total return
will represent the average annual compounded rate of return of a hypothetical
investment in each International Fund over periods of 1, 5, and 10 years (or up
to the life of each International Fund), and are calculated pursuant to the
following formula:
P(1+T)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
28
<PAGE>
made at the beginning of the period). All average annual total return figures
will reflect the deduction of International Fund expenses (net of certain
expenses reimbursed by the Adviser and Subadviser) on an annual basis, and will
assume that all dividends and distributions are reinvested and will deduct the
maximum sales charge, if any is imposed. The International Funds may also quote
total return that eliminates any applicable initial sales charge or contingent
deferred sales charge.
For the year ended April 30, 1997, the average annual total return for
the Class A and Class B shares of the Developing Markets Fund was +5.27% and
+4.35%, respectively, and +.28% and -.46% 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 -.78% and + .35%, respectively, and
- -5.49% and -4.45% for Class A and Class B shares, respectively, of the
International Equity Fund. For the period from inception of the International
Funds' investment operations on September 8, 1995 through April 30, 1997, the
average annual total return for the Class A and Class B shares of the Developing
Markets Fund was +6.79% and +5.90%, respectively, and +5.14% and +4.42% 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 +2.97% and
+ 4.11%, respectively, and +1.38% and +2.62% 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 July 8, 1997.
<TABLE>
<CAPTION>
Nature of
Developing Markets Fund Name and Address % of Class Ownership
----------------------- ---------------- ---------- ---------
<S> <C> <C> <C>
Class A Hamilton E. James 21.99 Beneficial(a)
Donaldson Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
DLJ Growth Fund 6.41 Record(a)
Bank of New York
One Wall Street
25th Floor
New York, NY 10286
Class B None
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
International Equity Fund
<S> <C> <C> <C>
Class A DLJ Growth Fund 7.90 Record(a)
Bank of New York
One Wall Street
25th Floor
New York, NY 10286
Hamilton E. James 7.64 Beneficial(a)
Donaldson Lufkin & Jenrette
277 Park Avenue
New York, NY 10172
Donaldson Lufkin Jenrette 6.71 Record(a)
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
Robert Winthrop 5.71 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.
The Adviser manages accounts over which it has discretionary power to
vote or dispose of securities held in such accounts and which accounts hold in
the aggregate, as of July 21, 1997, 791,599 shares (22.09%) of the Developing
Markets Fund and 1,078,625 shares (24.57%) of the International Equity Fund.
GENERAL INFORMATION
Organization and Capitalization
The Trust was formed on May 31, 1995 as a 'business trust' under the
laws of the State of Delaware.
The Agreement and Declaration of Trust provides that no Trustee,
officer, employee or agent of the International Funds is liable to the
International 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
International Funds or the property of the appropriate International Fund for
satisfaction of claims arising in connection with the affairs of
30
<PAGE>
an International 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 International Funds against all liability
in connection with the affairs of the International Funds.
All shares of the International 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 International 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.
Counsel and Independent Auditors
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
New York 10022, serves as legal counsel for the International Funds.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, have
been appointed as independent auditors for the International Funds.
Additional Information
This Statement of Additional Information does not contain all the
information set forth in the Registration Statement filed by the International
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 International 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 unaudited financial statements of each International
Fund for the period ended April 30, 1997 are included in the April 30, 1997
Semi-Annual Report to Shareholders. The Annual Report and Semi-Annual Report are
incorporated by reference into this Statement of Additional Information. You can
obtain a copy of the International Funds' Annual Report and Semi-Annual Report
by writing or calling the International Funds at the address or telephone
numbers set forth on the cover of this Statement of Additional Information.
31
<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.
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<PAGE>
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 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 A-1 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.
33
<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'
Semi-Annual Report to Shareholders for the period ended April 30,
1997 (unaudited):
Statement of Investments as of April 30, 1997; Statement of
Assets and Liabilities as of April 30, 1997; Statement of
Operations for the period ended April 30, 1997; Statement of
Changes in Net Assets for the year ended October 31, 1996
and the period ended April 30, 1997; Financial Highlights
for the period from September 8, 1995 (commencement of
operations) through October 31, 1995, and for the year ended
October 31, 1996 and for the period ended April 30, 1997;
Notes to Financial Statements as of April 30, 1997.
The following reports and financial statements are incorporated in
Part B of this Registration Statement by reference to the Fund's
Annual Report of Shareholders for the year ended October 31, 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; Report of Ernst & Young LLP,
Independent Auditors.
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, and
for the year ended October 31, 1996 and for the period ended
April 30, 1997
Financial Statements for the Winthrop Municipal Money Fund and the
Winthrop U.S. Government Money Fund
The following reports and financial statements are incorporated in
Part B of this Registration Statement by reference to the Funds'
Semi-Annual Report to Shareholders for the period ended April 30,
1997 (unaudited):
Statement of Investments as of April 30, 1997; Statement
of Assets and Liabilities as of April 30, 1997; Statement of
Operations for the period ended April 30, 1997; Statement of
Changes in Net Assets for the period ended April 30, 1997;
Financial Highlights for the period from February 24, 1997
(commencement of operations) through April 30, 1997; Notes
to Financial Statements as of April 30, 1997.
<PAGE>
Included in the Prospectus constituting Part A of this Registration
Statement:
Financial Highlights for the period from February 24, 1997
(commencement of operations) through April 30, 1997
(b) Exhibits
<TABLE>
<S> <C>
(1) Form of Agreement and Declaration of Trust+
(2) Form of Bylaws+
(3) Not Applicable
(4) (a) Form of Stock Certificate of the Winthorp Developing
Markets Fund+
(b) Form of Stock Certificate of the Winthorp 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 Markets 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+
(b) Form of Custody Administration and Agency Agreement for
the Winthorp 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+
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(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+
(g) Form of Joint Fidelity Bond for the Winthrop
Opportunity Funds
(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 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) (a) Schedule of Performance Calculation -- International Funds
(b) Schedule of Performance Calculation -- Money Funds***
(17) (a) Financial Data Schedules**
(b) Powers of Attorney+
(18) Rule 18F-3 Plan+
</TABLE>
- -----------
+ Previously filed.
Item 25 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable
Item 26 NUMBER OF HOLDERS OF SECURITIES
- -------------
+ Previously filed.
** Included in the Prospectus.
*** Included in the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
Title of Numbers of Record
Class Holders (6/30/97)
-------- ------------------
<S> <C>
Winthrop Developing Markets Fund-Class A 470
Winthrop Developing Markets Fund-Class B 357
Winthrop International Equity Fund-Class A 444
Winthrop International Equity Fund-Class B 383
Winthrop Municipal Money Fund 217
Winthrop U.S. Government Money Fund 238
</TABLE>
INDEMNIFICATION
Registrant's Agreement and Declaration of Trust provides that the
Trust (for the appropriate Money or Equity Fund) shall indemnify each person who
is or has been a trustee or officer of the Trust (including persons who serve,
or have served, at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise) against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants and counsel fees,
incurred in connection with the defense or disposition of any action, suit or
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such person may be or may have been threatened, while
in office or thereafter, by reason of being or having been such a person, except
with respect to any matter as to which it has been determined that such person
(i) did not act in good faith in the reasonable belief that such person's action
was in the best interests of the Trust or (ii) had acted with willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such person's office.
The Investment Advisory Agreements between Registrant and DLJ
Investment Management Corp. (for the Money Funds) and Wood, Struthers & Winthrop
Management Corp. (for the International Funds) (together, the "Advisors") and
the Investment Sub-Advisory Agreement among the Registrant, AXA Asset Management
Partenaires (the "Sub-Advisor") and Wood, Struthers & Winthrop Management Corp.
(the "Sub-Advisory Agreement") provides that Advisors will not be liable
thereunder for any mistake of judgment or in any event whatsoever except for
lack of good faith and that nothing therein shall be deemed to protect Advisors
and Sub-Advisor against any liability to Registrant or its security holders to
which they would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties thereunder, or by
reason of reckless disregard of its duties and obligations thereunder.
The Sub-Advisory Agreement provides that the Sub-Advisor will
indemnify Wood, Struthers & Winthrop Management Corp. and its directors,
officers, employees, agents, associates and controlling persons while acting in
any capacity set forth in the Sub-Advisory
<PAGE>
Agreement except such activities arising by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard to the duties involved in the
conduct of such person's office.
The Sub-Advisory Agreement provides that Wood, Struthers & Winthrop
Management Corp. will indemnify the Sub-Advisor and its directors, officers,
employees, agents, associates and controlling persons while acting in any
capacity set forth in the Sub-Advisory Agreement except such activities arising
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard to the duties involved in the conduct of such person's office.
The Distribution Agreement between the Registrant and Donaldson,
Lufkin & Jenrette Securities Corporation provides that Registrant will
indemnify, defend and hold Donaldson, Lufkin & Jenrette Securities Corporation,
and any other person who controls it within the meaning of Section 15 of the
Investment Company Act of 1940, free and harmless from and against any and all
claims, demands, liabilities and expenses which Donaldson, Lufkin & Jenrette
Securities Corporation or any controlling person may incur arising out of or
based upon any alleged untrue statement of a material fact contained in
Registrant's Registration Statement, Prospectus or Statement of Additional
Information or arising out of, or based upon any alleged omission to state a
material fact required to be stated in any one of the foregoing or necessary to
make the statements in any one of the foregoing not misleading.
The foregoing summaries are qualified by the entire text of
Registrant's Agreement and Declaration of Trust, the Investment Advisory
Agreements between Registrant and the Advisors and the Distribution Agreement
between Registration and Donaldson, Lufkin & Jenrette Securities Corporation.
The Registrant's Investment Advisory Agreements are attached hereto as exhibit 6
or have been previously filed, and the Agreement and Declaration of Trust and
the Distribution Agreement have been previously filed in response to Item 24.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to trustees,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee, officer
or the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such trustee, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
The Equitable Life Assurance Society of the United States (the
parent of Advisors' parent) carries for itself and its subsidiaries Directors
and Officers Liability Insurance. Coverage under this policy has been extended
to directors and officers of the investment companies managed by the Advisors.
Under this policy, outside trustees would be covered up to
<PAGE>
the limits specified for any claim against them for acts committed in their
capacities as members of the Board.
Item 28 BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The description of the Adviser under the caption "Management" in the
Prospectus and in the Statement of Additional Information constituting Parts A
and B, respectively, of this Registration Statement as well as the Adviser's
respective current Forms ADV are incorporated by reference herein
Item 29 PRINCIPAL UNDERWRITERS
(a) Donaldson, Lufkin & Jenrette Securities Corporation, the
Registrant's Distributor (Underwriter) also acts as Distributor for
the following investment companies:
Winthrop Focus Funds: Winthrop Growth Fund, Winthrop Fixed Income
Fund, Winthrop Small Company Value Fund, Winthrop Growth & Income
Fund and Winthrop Municipal Trust Fund.
(b) For information required with respect to the directors and officers
of the Funds' Distributor, reference is made to the Form BD filed
by the Distributor under the Securities Exchange Act of 1934.
(c) Not Applicable
Item 30 LOCATION OF ACCOUNTS AND RECORDS
The majority of accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder are maintained at the offices of the Winthrop Opportunity Funds at
277 Park Avenue, New York, New York 10172 (see "Management" in the Prospectus).
Additional records are maintained at the offices of Citibank, N.A., the
Registrant's Custodian, 111 Wall Street, New York, New York 10043.
Item 31 MANAGEMENT SERVICES
Not Applicable
Item 32 UNDERTAKINGS
(a) Not Applicable
(b) Not Applicable
<PAGE>
(c) Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of Registrant's latest Annual
Report to Shareholders upon request and without charge.
<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 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 24th
day of July, 1997.
Winthrop Opportunity Funds
By: /s/ G. Moffett Cochran
--------------------------
Name: G. Moffett Cochran
Title: President
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed below by the following persons in the capacities and
on the date included:
<TABLE>
<CAPTION>
Signature* Title Date
---------- ----- ----
<S> <C> <C>
/s/ G. Moffett Cochran
______________________ Trustee and President July 24, 1997
G. Moffett Cochran
/s/ Martin Jaffe
______________________ Trustee and Vice President, July 24, 1997
Martin Jaffe Secretary and Treasurer
/s/ Robert E. Fischer
______________________ Trustee July 24, 1997
Robert E. Fischer
/s/ Wilmot H. Kidd III
______________________ Trustee July 24, 1997
Wilmot H. Kidd III
/s/ John W. Waller III
______________________ Trustee July 24, 1997
John W. Waller III
</TABLE>
- -----------
* Signature by G. Moffett Cochran pursuant to a Power of Attorney filed
with the Securities and Exchange Commission.
<PAGE>
Index of Exhibits to Form N-1A
<TABLE>
<CAPTION>
Exhibits
--------
<S> <C>
(11) Consent of Independent Auditors
(16) (a) Schedule of Performance Calculation --
International Funds
</TABLE>
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions 'Financial
Highlights' and 'General Information -- Counsel and Independent Auditors' and
to the use of our report dated December 13, 1996, in this Registration
Statement (Form N-1A No. 33-92982) of Winthrop Opportunity Funds.
ERNST & YOUNG LLP
New York, New York
January 22, 1997
<PAGE>
SCHEDULE OF PERFORMANCE CALCULATION
Quotations of each Fund's average annual return for the year April 30,
1997 and the period from September 13, 1995 (commencement of investment
operations)(1) to April 30, 1997 are calculated pursuant to the following
formula:
n
P(1+T) =ERV
P = a hypothetical initial payment of $1,000
T = the average annual total return,
n = the number of years
ERV = ending redeemable value at April 30, 1997 of a hypothetical
$1,000 payment made at the beginning of the year
AVERAGE ANNUAL RETURN FOR THE YEAR ENDED APRIL 30, 1997
Developing Markets Fund International Equity Fund
Average Average
Ending Annual Ending Annual
Redeemable Total Redeemable Total
Value Return* Value Return*
----- ------- ----- -------
Class A............ 992 -.78% 945 -5.49%
Class B............ 1004 .35% 956 -4.45%
- --------
(1) While the International Funds commenced operations on September 8, 1995,
assets were not available for investment until September 13, 1995.
* 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).
* 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).
<PAGE>
AVERAGE ANNUAL RETURN FOR THE PERIOD FROM SEPTEMBER 8, 1995
(COMMENCEMENT OF OPERATIONS) TO APRIL 30, 1997
Developing Markets Fund International Equity Fund
Average Average
Ending Annual Ending Annual
Redeemable Total Redeemable Total
Value Return* Value Return*
----- ------- ----- -------
Class A.......... 1049 2.97% 1023 1.38%
Class B.......... 1068 4.11% 1043 2.62%
- --------
* 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).
* 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).
