<PAGE>
PRESIDENT'S LETTER
Dear Shareholders,
While the relative performance results of both the Developing Markets and
International Equity Funds have been excellent, principally as a result of the
upheaval which has occurred in the Southeast Asian markets, the Funds' absolute
performance has been disappointing. We expect that the international markets
will stabilize and we believe that our Funds are well positioned for the rebound
when it occurs.
WINTHROP DEVELOPING MARKETS FUND
The total return of the Winthrop Developing Markets Fund for the year ended
October 31, 1997, amounted to -4.18% (Class A shares) and -4.83% (Class B
shares) vs. -10.31% for the Fund's benchmark, the MSCI Emerging Markets Free
Index.
The Asian crisis was the major event affecting the portfolio during the period.
Although Thailand had already been under the scrutiny of the rating agencies
since September 1996, the rest of the region did not enter a state of turmoil
until this summer. Facing speculation against its overvalued currency, Malaysia
decided to take measures by tightening market conditions near the end of August.
Many investors lost confidence in the Malaysian market rules and reacted by
initially taking their money out of the country and finally, out of the region
completely, thus weakening the different financial systems and opening the way
to currency speculators. During the month of October, the Asian crisis touched
larger countries, such as Hong Kong and Singapore, and indirectly affected the
major developed economies who worried about their exports to the region. At the
same time, all of the emerging markets were affected, particularly those in
which the currency looked overvalued and current deficits were large.
For more than 10 years, Asia has been looked upon by many investors as the
strongest growth region of the world. Questions regarding the future export
markets for many western countries and the source of new investment
opportunities have shaken the European and US stock markets. It is comforting to
know that an international rescue plan has offered potential solutions to the
crisis by requiring tight economic measures in the countries concerned.
Asian emerging economies were not only criticized for economic reasons such as
wide deficits and overvalued currencies, but also for political indecision
fueled by lobbying and corruption. Latin American countries, however, were not
in the same situation, as the Mexican crisis had already forced governments to
initiate active measures. Throughout the period, the Fund was well positioned
as its portfolio was underweighted in Asia and overweighted in Latin America.
WINTHROP INTERNATIONAL EQUITY FUND
The total return of the Winthrop International Equity Fund for the year ended
October 31, 1997, amounted to 10.02% (Class A shares) and 9.23% (Class B shares)
vs. 3.04% in USD for the Fund's benchmark MSCI EAFE Index. The Fund
significantly outperformed its index over this period primarily due to its
consistent underweighting in Asia and its effective stock selection within the
Japanese market.
The Japanese stock market showed a very poor performance during the period due
to a combination of its deteriorating domestic economy and the collapse of
companies within its financial sector. The government seemed committed to fiscal
austerity despite obviously worsening domestic demand. Despite all-time low
interest rates, there was no support for the equity market.
European markets continued an upward trend over the period despite some
misgivings at the beginning of the year about the sustainability of the rally.
However, restructuring in Europe and a low interest-rate environment, along with
a stronger dollar, enabled the European stock market to hit all-time highs in
August. After a period of increased volatility, the Southeast Asia theme took
over and in November finally threw the indices into reverse with extreme
volatility.
We are expecting a slow start to the new year as the true dimension of the Asian
crisis is realized and companies begin reporting earnings that may well be
disappointing. However, over the next year, we remain positive on the European
markets where economic fundamentals and restructuring will be conducive to
corporate reform regardless of the slowdown in Asia.
Thank you for your investment in the Winthrop Opportunity Funds. The Officers
and Trustees would like to wish you a happy and prosperous New Year.
Sincerely,
G. Moffett Cochran
President December, 1997
<PAGE>
OPPORTUNITY FUND HIGHLIGHTS (unaudited)
Winthrop International Equity Fund
Asset Allocation by Country October 31, 1997
[PIE CHART]
Belgium 0.7
Singapore 0.5
Austria 0.5
Japan 21.8
United Kingdom 16.7
Germany 15.0
Cash & Other Assets/Liabilities 9.0
France 8.6
Italy 7.4
Switzerland 6.2
Netherlands 6.0
Spain 3.3
Sweden 1.8
Finland 1.4
Hong Kong 1.1
Ten Largest Holdings October 31, 1997
<TABLE>
<CAPTION>
Percent of
Country US $ Value Net Assets
------------ ------------- ----------
<S> <C> <C> <C>
Royal Dutch Petroleum Co. ................. Netherlands $ 1,640,470 3.2%
SAP AG .................................... Germany 1,046,247 2.0
Adidas AG ................................. Germany 1,035,411 2.0
Telecom Italia Mobil SPA .................. Italy 932,627 1.8
Telecom Italia SPA ........................ Italy 889,321 1.7
Marui Co. Ltd ............................. Japan 860,813 1.7
Siemens AG ................................ Germany 814,396 1.6
Commerzbank AG ............................ Germany 745,576 1.5
Boots Co. Plc ............................. United Kingdom 713,990 1.4
Credit Suisse Holdings AG ................. Switzerland 711,938 1.4
----------- ----
$ 9,390,789 18.3%
=========== ====
</TABLE>
Investment Results For the Periods Ended October 31, 1997
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------------
Winthrop International
Equity Fund
--------------------
Without With MSCI EAFE
Load Load INDEX*
-------- ----- --------
<S> <C> <C> <C>
Class A:
1 year ..................... 10.02% 3.69% 3.04%
From inception 9/13/95 ..... 6.43 3.51 1.28
Class B:
1 year ..................... 9.23 5.23 3.04
From inception 9/13/95 ..... 5.64 4.75 1.28
</TABLE>
[PERFORMANCE GRAPH]
WINTHROP INTERNATIONAL EQUITY FUND - C1.A
MSCI EAFE INDEX With Load Without Load
Sep-95 10,000 9,425 10,000
Oct-95 9,765 9,029 9,580
Oct-96 10,653 9,783 10,380
Oct-97 10,977 10,763 11,420
COMPARISON OF CHANGE IN VALUE
OF $10,000 INVESTMENT
The performance data quoted represents past performance, which is no indication
of future performance. Investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. No adjustment has been made for any income taxes payable by
shareholders on dividends or capital gains. Class A returns shown above are
computed with and without the imposition of the maximum 5.75% front-end sales
load. Class B shares are subject to a contingent deferred sales charge (CDSC)
ranging from 4% during the first year to 0% after 4 years. Accordingly, returns
on Class B shares will differ from those of Class A shares and are referenced in
the table above with and without the imposition of the maximum 4% CDSC.
The MSCI EAFE is an unmanaged index composed of a sample of companies
representative of the market structure of European and Pacific Basin countries.
The index is the property of Morgan Stanley & Co. Incorporated. The index does
not take into account charges, fees and other expenses. Further information
relating to Fund performance, including expense reimbursements, if applicable,
is contained in the Financial Highlights section of the Prospectus and elsewhere
in this report.
2
<PAGE>
OPPORTUNITY FUND HIGHLIGHTS (unaudited)
Winthrop Developing Markets Fund
Asset Allocation by Country October 31, 1997
[PIE CHART}
Brazil 19.9
Portugal 10.2
Argentina 9.6
Mexico 9.5
South Africa 7.4
Taiwan 6.9
Chile 5.7
Greece 5.4
Cash & Other Assets/Liabilities 4.9
Hong Kong 4.2
India 4.0
Czech Republic 3.0
South Korea 2.7
Malaysia 2.1
Indonesia 1.2
China 1.2
Hungary 0.9
Philippines 0.7
Thailand 0.5
Ten Largest Holdings October 31, 1997
<TABLE>
<CAPTION>
Percent of
Country US $ Value Net Assets
-------- ---------- ----------
<S> <C> <C> <C>
Centrais Electricas Brasileira
SA Prf Cl. 'B' ............................... Brazil $ 1,188,562 3.5%
Portugal Telecom SA .......................... Portugal 1,173,556 3.4
Telecomunicacoes Brasilerais
SA Prf (Telebras)............................. Brazil 1,119,649 3.3
YPF Sociedad Anonima SA ADR .................. Argentina 1,105,600 3.2
Petroleo Brasileiro SA Prf ................... Brazil 718,690 2.1
Banco Espirito Santo e Comercial
de Lisbon SA ................................. Portugal 680,145 2.0
Telefonica de Argentina SA ADR ............... Argentina 647,663 1.9
Femsa 'B' .................................... Mexico 595,196 1.7
Perez Compane SA ............................. Argentina 585,295 1.7
Companhia Vale do Rio Doce Prf ............... Brazil 544,166 1.6
------------- ----
$ 8,358,522 24.4%
============= ====
</TABLE>
Investment Results For the Periods Ended October 31, 1997
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------------
MSCI
Winthrop Developing EMERGING
Markets Fund MARKETS
-------------------
Without With FREE
Load Load INDEX*
-------- ------ --------
<S> <C> <C> <C>
Class A:
1 year -4.18% -9.69% -10.31%
From inception 9/13/95 -2.17 -4.85 -5.56
Class B:
1 year -4.83 -8.64 -10.31
From inception 9/13/95 -2.94 -3.86 -5.56
</TABLE>
[PERFORMANCE GRAPH]
WINTHROP DEVELOPING MARKETS FUND - C1.A
MSCI EMF INDEX With Load Without Load
Sep-95 10,000 9,425 10,000
Oct-95 9,462 8,982 9,530
Oct-96 9,870 9,387 9,960
Oct-97 8,853 8,995 9,544
COMPARISON OF CHANGE IN VALUE
OF $10,000 INVESTMENT
The performance data quoted represents past performance, which is no indication
of future performance. Investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. No adjustment has been made for any income taxes payable by
shareholders on dividends or capital gains. Class A returns shown above are
computed with and without the imposition of of the maximum 5.75% front-end sales
load. Class B shares are subject to a contingent deferred sales charge (CDSC)
ranging from 4% during the first year to 0% after 4 years. Accordingly, returns
on Class B shares will differ from those of Class A shares and are referenced in
the table above with and without the imposition of the maximum 4% CDSC.
The MSCI Emerging Markets Free Index is an unmanaged index composed of a sample
of companies representative of the market structure of developing countries
worldwide. The index is the property of Morgan Stanley & Co. Incorporated. The
Index does not take into account charges, fees and other expenses. Further
information relating to Fund performance, including expense reimbursements, if
applicable, is contained in the Financial Highlights section of the Prospectus
and elsewhere in this report.
3
<PAGE>
Winthrop Opportunity Funds--Statement of Investments October 31,1997
- --------------------------------------------------------------------------------
Winthrop International Equity Fund
COMMON STOCKS--91.0%
Shares U.S. $ Value
--------- ------------
AUSTRIA--0.5%
VA Technologie AG ........................... 1,400 $248,820
----------
BELGIUM--0.7%
Credit Communal Holding/Dexia ............... 3,340 364,970
----------
FINLAND--1.4%
Oy Nokia (Ab) Ser 'A' ....................... 7,900 691,041
----------
FRANCE--8.6%
Alcatel Alsthom ............................. 3,300 399,024
Carrefour SA ................................ 434 226,951
Compagnie Bancaire SA ....................... 242 31,112
Compagnie de Saint Gobain ................... 1,615 232,316
Compagnie Generale des Eaux ................. 2,300 268,918
Danone Groupe ............................... 1,897 290,678
Elf Aquitaine SA ............................ 3,032 376,100
France Telecom SA* .......................... 2,222 84,270
Lafarge SA .................................. 4,900 306,801
Legrand SA .................................. 2,188 408,252
L'Oreal ..................................... 805 285,860
LVMH (Moet-Hennessy Louis
Vuitton) ................................... 1,207 205,499
Promodes .................................... 622 202,938
Renault SA* ................................. 7,200 200,763
Rhone - Poulenc Co .......................... 11,669 509,857
----------
Total SA .................................... 3,326 369,810
----------
4,399,149
----------
GERMANY--15.0%
Adidas AG ................................... 7,100 1,035,411
Bayer AG .................................... 17,600 633,993
Bayerische Motoren Werke AG ................. 690 501,118
Commerzbank AG .............................. 21,750 745,576
Daimler Benz AG ............................. 8,100 552,031
Dresdner Bank AG ............................ 16,400 679,382
Linde AG .................................... 800 488,045
Mannesmann AG ............................... 1,300 551,375
SAP AG ...................................... 3,500 1,046,247
Siemens AG .................................. 13,100 814,396
Veba AG ..................................... 10,800 608,662
----------
7,656,236
----------
HONG KONG--1.1%
Cathay Pacific Airways Ltd .................. 117,000 123,365
Hang Seng Bank Ltd .......................... 14,500 126,156
Hong Kong Telecommunications Ltd ............ 103,000 197,218
New World Development Company Ltd ........... 30,500 107,329
----------
554,068
----------
ITALY--7.4%
Ente Nazionale Idrocarburi SPA ............. 120,600 679,296
Fiat SPA ................................... 85,800 273,368
Instituto Mobilaire Italiano ............... 69,000 618,087
Stet Societa Finanziaria
Telefonica SPA ............................. 99,000 400,651
Telecom Italia Mobile SPA .................. 251,000 932,627
Telecom Italia SPA ......................... 141,667 889,321
-----------
3,793,350
-----------
JAPAN--21.8%
Asahi Glass Co. Ltd ......................... 45,000 303,068
Bank of Tokyo-Mitsubishi Ltd ................ 27,000 352,457
Bridgestone Corp. Ltd ....................... 13,000 281,034
Capcom Company Ltd .......................... 18,800 312,630
Daiwa Securities Co. Ltd .................... 35,000 211,857
Fuji Photo Film Co. Ltd ..................... 9,000 326,266
Hokuetsu Paper Mills Ltd .................... 126,000 695,635
Marui Co. Ltd ............................... 51,000 860,813
Matsushita - Electric Industry Ltd .......... 13,000 218,342
Matsushita - Kotobuki Electronic Ltd ........ 12,000 373,160
Mitsubishi Estate Co. Ltd ................... 25,000 315,956
Mitsui Re Fudosan Ltd ....................... 34,000 384,468
Mori Seiki Ltd .............................. 18,000 203,542
NEC Corp .................................... 14,000 153,654
Nomura Securities Co. Ltd ................... 26,000 302,652
NTT Corp .................................... 70 593,664
Omron Corp .................................. 41,000 695,435
Shin - Etsu Chemical Co. Ltd ................ 17,000 415,565
Sony Music Entertainment Inc ................ 4,000 332,252
Sumitomo Bank Ltd ........................... 62,000 659,849
Sumitomo Electric Industries Ltd ............ 47,000 621,352
Sumitomo Heavy Industries Ltd ............... 222,000 710,651
Taisei Corp ................................. 68,000 238,596
Takashimaya Co. Ltd ......................... 21,000 199,052
TDK Corp. Ltd ............................... 3,000 248,940
Terumo Corp ................................. 20,000 329,259
Tokyo Electron Ltd .......................... 4,000 199,551
Toyota Motor Corp. Ltd ...................... 21,000 584,934
-----------
11,124,634
-----------
NETHERLANDS--6.0%
Elsevier NV ................................. 22,430 352,505
Koninklijke Ahold NV ........................ 12,423 318,141
Royal Dutch Petroleum Co .................... 31,000 1,640,470
Unilever NV- CVA ............................ 6,180 328,628
Wolters Kluwer NV ........................... 3,500 429,943
-----------
3,069,687
-----------
SINGAPORE--0.5%
City Developments Ltd ....................... 19,000 79,719
Overseas - Chinese Banking Co. Ltd .......... 15,600 86,776
Singapore Telecommunications Ltd ............ 66,000 104,894
-----------
271,389
-----------
SPAIN--3.3%
Banco Santander SA .......................... 17,900 501,806
Catalana Occidente SA* ...................... 3,000 152,311
Repsol SA ................................... 13,960 585,829
Telefonica de Espana SA ..................... 15,650 427,425
-----------
1,667,371
-----------
SWEDEN--1.8%
Astra AB-A SA ............................... 27,386 442,759
Nordbanken SA ............................... 15,930 500,192
-----------
942,951
-----------
See notes to financial statements.
4
<PAGE>
Winthrop Opportunity Funds--Statement of Investments October 31,1997 (continued)
- --------------------------------------------------------------------------------
Winthrop International Equity Fund
Shares U.S. $ Value
----------- ------------
SWITZERLAND--6.2%
ABB AG - Bearer ......................... 440 $575,056
Credit Suisse Holding AG ................ 5,040 711,938
Nestle SA ............................... 500 706,466
Novartis AG ............................. 300 474,367
Novartis AG - Reg. Shares ............... 140 219,868
Roche Holding AG ........................ 56 493,474
----------
3,181,169
----------
UNITED KINGDOM--16.7%
Billiton Plc* ........................... 158,768 461,257
Boots Co. Plc ........................... 48,800 713,990
British Aerospace Plc ................... 23,000 612,085
British Petroleum Co. Plc ............... 21,878 321,563
CMG Plc ................................. 30,000 696,754
Glaxo Wellcome Plc ...................... 30,825 659,570
Lloyds TSB Group Plc .................... 49,542 605,216
Marks & Spencer Plc ..................... 60,140 624,254
Norwich Union Plc* ...................... 87,800 500,588
Prudential Corporation Plc .............. 55,532 591,788
Shell Transport & Trading Co. Plc ....... 26,050 184,562
Smithkline Beecham Plc .................. 39,062 369,765
Smiths Industries Plc ................... 40,000 576,854
Standard Chartered Plc .................. 40,000 433,646
TI Group Plc ............................ 54,203 495,367
Zeneca Group Plc ........................ 22,000 697,255
-----------
8,544,514
-----------
TOTAL INVESTMENTS--91.0%
(cost $40,923,760) ...................... 46,509,349
-----------
Cash and Other Assets
Net of Liabilities--9.0% ................ 4,627,225
-----------
NET ASSETS--100% ......................... $51,136,574
===========
*Non-income producing.
See notes to financial statements.
5
<PAGE>
Winthrop Opportunity Funds--Statement of Investments October 31, 1997
Winthrop Developing Markets Fund
COMMON STOCKS--95.1%
Shares U.S. $ Value
------------ ------------
ARGENTINA--9.6%
Alpargatas SA* ............................. 384,400 $ 203,854
Banco de Galicia y Buenos Aires SA ......... 54,077 324,656
Perez Compane SA ........................... 97,491 585,295
Siderca SA Cl.'A' .......................... 184,048 435,902
Telefonica de Argentina SA ADR ............. 23,028 647,663
YPF Sociedad Anonima SA ADR ................ 34,550 1,105,600
---------
3,302,970
---------
CHILE--5.7%
Banco Santander- Chile ADR ................. 16,250 211,250
Chilgener SA ADR ........................... 11,185 304,791
Cia Cervecerias Unidas SA ADR .............. 6,690 163,069
Cia de Telecomunicaciones
de Chile SA ADR ........................... 10,435 289,571
Empresa Nacional Electricidad
SA ADR .................................... 9,410 189,376
Enersis SA ADR ............................. 8,590 283,470
Madeco GDR ................................. 4,388 92,697
---------
Maderas y Sinteticos Sociedad
Anonima SA ADR ............................ 9,630 117,968
---------
Quimica Minera Chile SA ADR ................ 4,760 246,925
---------
Supermercados Unimarc SA ADR* .............. 4,510 67,650
---------
1,966,767
---------
CHINA--1.2%
Beijing Yanhua Retrochemical
Company Ltd* .............................. 5,000 69,688
Ek Chor China Motorcycle
Company Ltd ............................... 10,500 44,625
Huaneng Power International, Inc.* ......... 13,000 286,000
---------
400,313
---------
CZECH REPUBLIC--3.0%
Ceske Energeticke Zavody AS* ............... 5,721 182,059
Inzenyrske Prumyslove Stavby* .............. 2,850 19,521
Komercni Banka AS .......................... 1,240 54,493
Skoda Plzen AS* ............................ 3,851 100,375
SPT Telecom AS* ............................ 3,834 441,558
Tabak AS ................................... 869 219,074
---------
1,017,080
---------
GREECE--5.4%
Aktor SA ................................... 2,700 24,716
Alpha Credit Bank SA ....................... 5,250 347,311
Attica Enterprises ......................... 19,560 206,735
Elais SA ................................... 1,700 53,122
Ergo Bank SA ............................... 1,798 107,345
Hellas Can Packaging SA .................... 1,000 13,970
Hellenic Bottling Company SA ............... 8,900 368,086
Hellenic Telecommunication
Organization SA ........................... 1,000 109,819
National Bank of Greece .................... 3,080 322,703
National Bank of Greece Rights* ............ 616 12,455
Silver & Baryte Ores Mining SA ............. 1,100 17,591
Titan Cement Company SA .................... 5,800 283,801
---------
1,867,654
---------
HONG KONG--4.2%
Beijing Enterprises Holdings Ltd* .......... 42,000 $ 140,462
China Eastern Airlines Ltd.* ............... 429,000 97,128
China Telecom Ltd* ......................... 92,000 146,995
Guangshen Railway Co. Ltd .................. 698,000 216,728
Jiangxi Copper Co. Ltd* .................... 150,000 28,139
Maanshan Iron & Steel Co. Ltd .............. 950,000 151,174
Qingling Motors Co. Ltd .................... 524,000 342,351
Shanghai Petrochemicals Co. Ltd ............ 916,000 245,902
Tsingtao Brewery Co. Ltd.* ................. 204,000 69,280
---------
1,438,159
---------
HUNGARY--0.9%
Gedeon Richter Rt .......................... 460 48,933
Magyar Tavkozlesi Rt.* ..................... 12,000 260,400
---------
309,333
---------
INDIA--4.0%
Crompton Greaves Ltd GDR ................... 34,200 70,110
Eih Limited GDR* ........................... 9,300 138,338
Grasim Industries Ltd GDR .................. 9,400 78,725
Indian Aluminum Co. Ltd GDR* ............... 35,000 108,500
Mahindra & Mahindra Ltd GDR* ............... 11,800 123,900
Ranbaxy Laboratories GDR ................... 8,100 184,680
State Bank of India GDR .................... 15,900 302,498
Tata Engineering and
Locomotive Co. Ltd GDR .................... 25,400 264,160
Videsh Sanchar GDR* ........................ 6,700 92,125
---------
1,363,036
---------
INDONESIA--1.2%
PT Bank International Indonesia ............ 65,925 14,172
PT Bank International Indonesia
Warran Exp. 01/17/00* ..................... 6,060 343
PT Gudang Garam Co ......................... 22,500 63,662
PT Hanjaya Mandala Sampoerna LCL ........... 37,000 64,404
PT Indah Kiat Pulp & Paper Co. ............. 130,500 49,775
PT Semen Gresik LCL ........................ 30,000 29,126
PT Telekomunikasi Indonesia
Foreign .................................... 224,000 208,155
---------
429,637
---------
MALAYSIA--2.1%
AMMB Holdings Bhd Warrant
Exp. 05/13/02* ............................ 3,700 817
Arab Malaysian Merchant Bhd ................ 10,200 16,594
Berjaya Group Bhd .......................... 70,300 15,739
Ekran Bhd .................................. 68,500 61,343
Ekran Bhd Warrants* ........................ 15,000 5,328
Hong Leong Properties Bhd .................. 21,400 8,177
Kedah Cement Bhd ........................... 117,700 74,134
Leader Universal Holdings Bhd .............. 23,000 14,006
Malayan Banking Bhd ........................ 30,500 117,448
Perusahaan Otomobil Bhd .................... 26,700 63,761
Petronas Gas Bhd ........................... 23,000 61,791
Resorts World Bhd .......................... 19,800 35,167
Technology Resources Industries Bhd* ....... 3,400 12,961
Telecom Malaysia Bhd ....................... 50,500 130,396
Tenaga Nasional Bhd ........................ 21,400 45,994
United Engineers Malaysia Ltd .............. 30,500 71,926
---------
735,582
---------
See notes to financial statements.
6
<PAGE>
Winthrop Opportunity Funds--Statement of Investments October 31, 1997(continued)
Winthrop Developing Markets Fund
Shares U.S. $ Value
------------ ------------
MEXICO--9.5%
Carso Global Telecom Cl.'A1'* .............. 1,147 $ 3,801
Cifra SA de CV Ser.'A'* .................... 17,185 31,227
Cifra SA de CV Ser.'C'* .................... 218,000 370,237
Cydsa SA Ser.'A' ........................... 171,000 406,176
Empresa La Moderna
SA de CV ADR* ............................. 10,820 211,666
Femsa 'B' .................................. 88,700 595,196
Grupo Carso SA de CV Ser.'A1'* ............. 23,890 148,390
Grupo Financiero Bancomer
SA de CV Cl 'B' ........................... 257,750 119,998
Grupo Televisa SA GDR* ..................... 5,140 159,340
Kimberly-Clark de Mexico
SA de CV Cl.'A' ........................... 50,350 211,984
Telefonos de Mexico SA Cl.'L' ADR .......... 11,310 489,158
Tubos de Acero de Mexico SA* ............... 19,500 414,549
TV Azteca SA de CV* ........................ 4,600 87,975
---------
3,249,697
---------
PHILIPPINES--0.7%
DMCI Holdings, Inc.* ....................... 258,000 20,421
Metro Pacific Corp ......................... 968,652 64,622
Petron Corporation Corp .................... 298,300 31,622
Philippine Commercial
International Bank ........................ 12,950 48,688
SM Prime Holdings, Inc ..................... 343,980 60,288
Southeast Asia Cement
Holdings, Inc.* .......................... 824,000 15,839
241,480
---------
PORTUGAL--10.2%
Banco Espirito Santo e Comercial de
Lisbon SA* ................................ 23,437 680,145
Banco Totta & Acores SA .................... 15,032 290,820
Cimpor Cimentos De Portugal SA ............. 20,739 525,142
Corticeira Amorim SA ....................... 2,293 27,400
Electricidade De Portugal SA ............... 3,000 52,748
Engil-Sociedade Gestora De
Participacoes Sociais SA .................. 7,252 81,912
Estabelecimentos Jeronimo Martins &
Filho SGPS SA ............................. 3,478 227,592
Portucel Industrial Empresa Produtora
De Celulosa SA ............................ 20,197 152,046
Portugal Telecom SA* ....................... 28,585 1,173,556
Sonae Investimentos - SGPS SA .............. 7,862 293,919
---------
3,505,280
---------
SOUTH AFRICA--7.4%
Anglo American Corp ........................ 4,800 207,459
Barlow Ltd ................................. 14,200 143,106
De Beers Centenary AG ...................... 13,375 319,054
Free State Consolidated
Gold Mines Ltd ............................ 8,400 $ 42,938
Liberty Life Association of
Africa Ltd ............................... 8,275 206,337
Metro Cash & Carry Ltd ..................... 242,740 234,543
Nedcor Ltd .................................. 9,814 205,966
Pick' N Pay Stores Ltd ..................... 72,100 108,619
Rembrandt Group Ltd ........................ 31,700 260,186
Sasol Ltd .................................. 36,078 434,809
South African Breweries Ltd ................ 14,640 388,168
---------
2,551,185
---------
SOUTH KOREA--2.7%
Hyundai Motors GDR* ........................ 8,000 26,000
Korea Electrical Power ADR ................. 34,000 278,375
Pohang Iron ADR ............................ 20,000 325,000
Samsung Electronics GDR .................... 19,314 196,713
South Korea Telecom Co. ADR* ............... 16,480 90,640
---------
916,728
---------
TAIWAN--6.9%
Cathay Construction Corp ................... 376,300 401,393
Cathay Life Insurance Co. Ltd .............. 40,250 179,542
Far Eastern Textile Ltd .................... 236,823 221,995
Formosa Chemicals & Fibre Corp ............. 150,075 138,253
Hon Hai Precision Industry* ................ 105,000 444,613
Hua Nan Commercial Bank .................... 60,000 204,609
International Commercial Bank of China ..... 84,000 153,408
Microtek International, Inc.* .............. 168,000 195,494
Pacific Electrical Wire & Cable Corp.* ..... 297,000 301,445
Pacific Electrical Wire & Cable Rights* .... 16,200 733
U-Ming Marine Transport Corp ............... 262,500 154,427
---------
2,395,912
---------
THAILAND--0.5%
Bangkok Bank Public Co. Ltd ................ 11,800 40,268
Banpu Public Co. Ltd ....................... 3,200 21,996
PTT Exploration and
Production Public Co. Ltd ................. 4,100 37,977
Shinawatra Computer Company Plc ............ 1,400 5,457
Siam Cement Public Co. Ltd ................. 2,200 18,340
Siam City Cement Public Co. Ltd ............ 4,800 7,371
Siam City Cement Public Rights* ............ 1,352 99
Siam Commercial Bank Public Co. Ltd ........ 8,400 16,073
Thai Telephone &
Communication Public Co. Ltd* ............. 41,500 9,104
United Communication Industry
Public Co. Ltd ............................ 3,700 6,133
162,818
---------
Total Common Stocks
(cost $26,073,959) ........................ 25,853,631
---------
7
<PAGE>
Winthrop Opportunity Funds--Statement of Investments October 31, 1997
(continued)
Winthrop Developing Markets Fund
PREFERRED
STOCKS -- 19.9%
<TABLE>
<CAPTION>
Shares U.S. $ Value
------------- ------------
<S> <C> <C>
BRAZIL--19.9%
Banco Bradesco SA Prf .............. 58,573,040 $ 456,917
Banco Itau SA Prf .................. 1,031,000 439,530
Brahman PN Prf* .................... 493,000 319,738
Brasmotor SA Prf ................... 1,411,000 197,101
Cemig PN Prf ....................... 10,368,000 404,393
Centrais Electricas Brasileiras
SA Prf Cl.'B' ..................... 2,788,000 1,188,562
Companhia Energetica de
Minas Gerais Prf .................. 2,626,000 333,451
Companhia Vale do Rio Doce Prf ..... 29,538 544,166
Ericsson Telecomucacoes SA Prf ..... 10,806,000 336,202
Lojas Americanas SA Prf ............ 10,742,000 70,155
Petroleo Brasileiro SA Prf ......... 3,585,000 718,690
Telecomunicacoes Brasileiras
SA Prf (Telebras ) ................ 11,767,000 1,119,649
Telecomunicacoes do
Rio Janeiro SA Prf* ............... 1,565,000 166,089
Unipar Unaio de
Industrias Petroquimicas SA Prf ... 879,000 $ 279,060
Usinas Siderurgicas de
Minas Gerais SA Prf ............... 33,703 244,568
-----------
6,818,271
-----------
Total Preferred Stocks
(cost $5,618,034) .......... 6,818,271
-----------
TOTAL INVESTMENTS--95.1%
(cost $31,691,993) ................ 32,671,902
-----------
Cash and Other Assets
Net of Liabilities--4.9% .......... 1,670,713
-----------
NET ASSETS--100% ................... $34,342,615
===========
</TABLE>
*Non-income producing.
See notes to financial statements.
8
<PAGE>
Winthrop Opportunity Funds--Statement of Assets and Liabilities October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Developing
Equity Fund Markets Fund
-------------- --------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $40,923,760 and $31,691,993, respectively) ................ $ 46,509,349 $ 32,671,902
Cash, at value (cost $4,315,923 and $1,615,034, respectively) ..... 4,324,734 1,614,179
Receivable for capital stock sold ................................. 351,330 122,700
Dividends and interest receivable ................................. 160,051 58,735
Deferred organization costs (Note A) .............................. 59,261 59,261
------------- -------------
Total assets ..................................................... 51,404,725 34,526,777
------------- -------------
LIABILITIES:
Payable to investment advisor ..................................... 129,046 100,691
Payable to distributor ............................................ 16,191 12,477
Payable for securities purchased .................................. 37,177 14,995
Payable for capital stock redeemed ................................ 17,358 3,074
Accrued expenses and other liabilities ............................ 68,379 52,925
------------- -------------
Total liabilities ................................................ 268,151 184,162
------------- -------------
NET ASSETS ............................................................. $ 51,136,574 $ 34,342,615
============= =============
NET ASSETS CONSIST OF:
Capital paid-in ................................................... $ 45,778,766 $ 36,861,032
Accumulated net investment loss ................................... (530,190) (203,721)
Accumulated net realized gain (loss) on investments and
foreign currency transactions .................................... 296,871 (3,291,941)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities ...................... 5,591,127 977,245
------------- -------------
$ 51,136,574 $ 34,342,615
============= =============
CLASS A SHARES:
Net assets ........................................................ $ 44,315,852 $ 29,401,938
------------- -------------
Shares outstanding ................................................ 3,880,845 3,087,039
------------- -------------
Net asset value and redemption value per share .................... $11.42 $9.52
======= =======
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) ............................... $12.12 $10.10
======= =======
CLASS B SHARES:
Net assets ........................................................ $ 6,820,722 $ 4,940,677
------------- -------------
Shares outstanding ................................................ 606,690 527,718
------------- -------------
Net asset value and offering price per share ...................... $ 11.24 $ 9.36
======= =======
</TABLE>
See notes to financial statements.
9
<PAGE>
Winthrop Opportunity Funds--Statement of Operations for the Year Ended
October 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Developing
Equity Fund Markets Fund
------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income ........................................................... $ 793,253 $ 779,390
Interest income ........................................................... 54,356 40,277
---------- -----------
847,609 819,667
Less withholding tax on foreign source dividends ...................... (92,427) (57,388)
---------- -----------
Total investment income ............................................... 755,182 762,279
EXPENSES:
Investment advisory fees (Note B) ......................................... 605,376 506,870
Distribution fees--Class A (Note B) ....................................... 105,661 89,391
Distribution fees--Class B (Note B) ....................................... 61,657 47,933
Custodian fees ............................................................ 112,000 153,000
Transfer agent fees ....................................................... 83,000 85,000
Auditing fees ............................................................. 40,500 28,500
Legal fees ................................................................ 34,000 23,000
Printing fees ............................................................. 30,500 23,000
Trustees'fees ............................................................. 19,000 13,500
Registration fees ......................................................... 51,000 46,500
Miscellaneous ............................................................. 10,729 7,948
Amortization of organization costs (Note A) ............................... 22,721 22,721
---------- -----------
1,176,144 1,047,363
Less fees waived by investment advisor and subadvisor (Note B) ........ (88,653) (139,596)
---------- -----------
Net expenses .......................................................... 1,087,491 907,767
---------- -----------
NET INVESTMENT (LOSS) .......................................................... (332,309) (145,488)
---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS--Note C:
Net realized gain (loss) on investments ................................... 572,220 (3,200,660)
Net realized gain (loss) on foreign currency transactions ................. 342,674 (38,091)
Net change in unrealized appreciation on investments ...................... 3,552,420 1,879,607
Net change in unrealized appreciation on translation of foreign currency
denominated assets and liabilities .................................... 6,931 5,356
---------- -----------
Net realized and unrealized gain (loss) on investments and foreign currency
transactions .......................................................... 4,474,245 (1,353,788)
---------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .............................. $ 4,141,936 $(1,499,276)
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements.
10
<PAGE>
Winthrop Opportunity Funds--Statement of Changes in Net Assets
<TABLE>
<CAPTION>
International Equity Fund Developing Markets Fund
--------------------------- ---------------------------
Year Ended Year Ended Year Ended Year Ended
10/31/97 10/31/96 10/31/97 10/31/96
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment loss .................................... $ (332,309) $ (195,448) $ (145,488) $ (63,622)
Net realized gain (loss) on investments and
foreign currency transactions ...................... 914,894 53,740 (3,238,751) 62,090
Net change in unrealized appreciation/depreciation
on investments and foreign currency denominated
assets and liabilities ............................. 3,559,351 2,622,139 1,884,963 (229,102)
----------- ------------ ------------ ------------
Increase (decrease) in net assets resulting from
operations............................................ 4,141,936 2,480,431 (1,499,276) (230,634)
----------- ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Realized gains on investments:
Class A ........................................... -- -- (87,147) --
Class B ........................................... -- -- (9,498) --
----------- ------------ ------------ ------------
Total dividends and distributions to shareholders ...... -- -- (96,645) --
----------- ------------ ------------ ------------
CAPITAL STOCK TRANSACTIONS--(Net) Note D .................... (130,060) 14,022,355 (4,621,133) 25,163,617
----------- ------------ ------------ ------------
Total increase (decrease) in net assets ................ 4,011,876 16,502,786 (6,217,054) 24,932,983
NET ASSETS:
Beginning of year ...................................... 47,124,698 30,621,912 40,559,669 15,626,686
----------- ------------ ------------ ------------
End of year ............................................ $51,136,574 $47,124,698 $34,342,615 $40,559,669
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
</TABLE>
See notes to financial statements.
11
<PAGE>
Winthrop Opportunity Funds--Notes to Financial Statements October 31, 1997
- --------------------------------------------------------------------------------
Note (A) Significant Accounting Policies. Winthrop International Funds ("Fund or
Funds") consists of two portfolios (the "Portfolios"), the Winthrop
International Equity Fund and the Winthrop Developing Markets Fund (together the
International Funds), each a separate diversified series of the Winthrop
Opportunity Funds (the "Trust"). In addition, the Trust also consists of the
Winthrop Municipal Money Fund and the Winthrop U.S. Government Money Fund. The
Trust was organized as a Delaware business trust under the laws of Delaware on
May 31, 1995 and is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as an open-end investment company.
The investment objective of the Developing Markets Fund is long-term growth of
capital by investing primarily in common stocks and other equity securities from
developing countries. The 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.
Each Portfolio offers two classes of shares. Class A shares are sold with a
front-end sales charge of up to 5.75%. Class B shares are sold with a contingent
deferred sales charge which declines from 4% to zero depending on the period of
time the shares are held. Both classes have identical voting, dividend,
liquidation and other rights, except that each class bears different
distribution expenses and has exclusive voting rights with respect to its
distribution plan. Wood, Struthers & Winthrop Management Corp. (the "Advisor")
is a wholly-owned subsidiary of Donaldson, Lufkin and Jenrette Securities
Corporation, which is a wholly-owned subsidiary of Donaldson, Lufkin and
Jenrette, Inc. ("DLJ"). DLJ is an independently operated, indirect subsidiary of
the Equitable Companies, Incorporated, a holding company controlled by AXA-UAP
("AXA"), a member of a large French insurance group. AXA is indirectly
controlled by a group of four French mutual insurance companies. The Advisor
has retained AXA Asset Management Partenaires as subadvisor to the Funds (the
"Subadvisor").
The Funds account separately for the assets, liabilities and operations of each
Portfolio. Expenses directly attributable to each Portfolio are charges to that
Portfolio's operations; expenses which are applicable to all portfolios are
allocated among them on a pro rata basis. The Fund's financial statements are
prepared in accordance with generally accepted accounting principles which may
require the use of management estimates and assumptions. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Funds.
(1) Security Valuation: All securities for which current market quotations are
readily available are valued at the last sale price prior to the time of
determination, or, if there is no sales price on such date, and if bid and ask
quotations are available, at the mean between the last current bid and asked
prices. Securities that are traded over-the-counter, if bid and asked
quotations are available, are valued at the mean between the current bid and
asked prices, or, if quotations are not available, are valued as determined in
good faith by the Board of Trustees of the Fund. Short-term investments having
a maturity of 60 days or less are valued at amortized cost. Securities and
assets for which current market quotations are not readily available are
valued at fair value as determined in good faith by the Board of Trustees of
the Fund.
(2) Foreign Currency Translations: Investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollars
at the bid prices of such currencies against the U.S. dollar as of the date of
valuation. Purchases and sales of portfolio securities, commitments under
forward foreign currency contracts, income receipts and expense accruals are
translated at the prevailing exchange rate on the date of each transaction.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
Reported net realized gain (loss) on foreign currency transactions arise from
sales and maturities of short-term securities, sales of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books and the
U.S. dollar equivalent of the amounts actually received or paid. Net change in
unrealized appreciation on translation of foreign currency denominated assets
and liabilities arises from changes in the value of assets and liabilities
other than investments in securities at fiscal year end, resulting from
changes in exchange rates.
(3) Federal Income Taxes: The Funds intend to be treated as "regulated
investment companies" under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of their net taxable income. Accordingly, no
provisions for Federal income or excise taxes have been made in the
accompanying financial statements. The Developing Markets Fund has an unused
capital loss carryover of approximately $3,185,000 available for Federal
income tax purposes to be applied against future net securities profits, if
any, realized subsequent to October 31, 1997. If not applied, the carryover
expires in fiscal 2005.
12
<PAGE>
Winthrop Opportunity Funds--Notes to Financial Statements
October 31, 1997 (continued)
- --------------------------------------------------------------------------------
(4) Investment Income and Securities Transactions: Dividend income is recorded
on the ex-dividend date or as soon as the Fund is informed of the dividend.
Interest income is accrued daily. Security transactions are accounted for on
the date securities are purchased or sold. Security gains and losses are
determined on the identified cost basis.
(5) Dividends and Distributions: Dividends and distributions to shareholders
are recorded on the ex-dividend date. Income dividends and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles.
(6) Deferred Organization Costs: The Funds will reimburse the Advisor for
costs incurred in connection with the Fund's organization. The costs are being
amortized on a straight-line basis over five years commencing with the Fund's
operation.
Note (B) Advisory and Distribution Services Agreement: Under the terms of an
Advisory Agreement with the Advisor, for the investment management services
furnished to each Portfolio, such Portfolio will pay the Advisor an advisory
fee, on a graduated basis at an annual rate of 1.25% of the first $100 million
of average daily net assets, 1.15% of the next $100 million and 1% of average
daily net assets over $200 million. Such fee will be accrued daily and paid
monthly. Under a Subadvisory Agreement between the Advisor and Subadvisor, the
Advisor pays the Subadvisor for its services, out of the Advisor's own
resources, at the following annual percentage rates of the average daily net
assets of each Portfolio: .625 of 1% of each Portfolio's first $100 million,
.575 of 1% of the next $100 million and .50 of 1% of the balance.
Commencing at the inception of each Fund through October 31, 1997, the Advisor
and Subadvisor voluntarily reduced their management fees by the amount that
total fund operating expenses exceeded 2.15% and 2.90% of the average daily net
assets of the Class A and Class B shares, respectively, of each Fund. Any such
reduction will be borne equally between the Advisor and Subadvisor. For the
period November 1, 1997 through April 30, 1998, the Advisor and Subadvisor have
agreed to continue to voluntarily reduce their management fees by the amount
that total fund operating expenses exceed 2.15% and 2.90% of the average daily
net assets of the Class A and Class B shares, respectively, of each Fund. After
April 30, 1998, the Advisor and Subadvisor may, in their sole discretion,
determine to discontinue this practice with respect to either Fund. As a result
of the voluntary waiver, the Advisor and Subadvisor waived fees amounting to
$88,653 and $139,596 for the International Equity Fund and Developing Markets
Fund, respectively, during the year ended October 31, 1997.
The Fund has entered into a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Act for Class A and Class B shares with
Donaldson, Lufkin & Jenrette Securities Corporation, the Fund's Distributor.
Under the Agreement, each Portfolio will pay a distribution services fee to the
Distributor at an annual rate of up to .25 of 1% of the average daily net assets
attributable to Class A shares and 1% of the average daily net assets
attributable to Class B shares. The fees are accrued daily and paid monthly. The
Agreement provides that the Distributor will use such payments in their entirety
for distribution assistance and promotional activities. The Agreement also
provides that the Advisor may use its own resources to finance the distribution
of the Fund's shares.
Each Trustee who is not an affiliated person receives an attendance fee of
$2,000 per meeting. In addition, each unaffiliated Trustee who is a member of
the audit committee receives an attendance fee of $1,000 per meeting. Attendance
fees are charged to all series of the Trust and are allocated on a pro rata
basis.
Note (C) Investment Transactions: Purchases and sales of investment securities
(excluding short-term securities and forward currency exchange contracts) during
the year ended October 31, 1997, aggregated $34,557,503 and $35,429,381 for the
International Equity Fund; and $20,573,200 and $25,952,384 for the Developing
Markets Fund, respectively.
The Funds may enter into forward currency exchange contracts in order to hedge
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings. A forward currency exchange contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The gain or loss arising from the difference between the original
contracts and the closing of such contracts is included in net realized gain or
loss from foreign currency transactions.
Fluctuations in the value of forward currency exchange contracts are recorded
for financial reporting purposes as net change in unrealized appreciation
(depreciation) of foreign currency denominated assets and liabilities. Risks may
arise from the potential inability of a counterparty to meet the terms of a
contract and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
13
<PAGE>
Winthrop Opportunity Funds--Notes to Financial Statements October 31, 1997
(continued)
- --------------------------------------------------------------------------------
At October 31, 1997, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes. At October
31, 1997, the components of net unrealized appreciation (depreciation) of
investments were as follows:
<TABLE>
<CAPTION>
International Developing
Equity Fund Markets Fund
----------- -----------
<S> <C> <C>
Gross appreciation (investments having an excess of value over cost) ......... $ 8,212,654 $ 6,684,330
Gross depreciation (investments having an excess of cost over value) ......... (2,627,065) (5,704,421)
----------- -----------
Net unrealized appreciation of investments ................................... $ 5,585,585 $ 979,909
=========== ===========
</TABLE>
Note (D) Shares of Beneficial Interest: There is an unlimited number of shares
($0.001 par value) of beneficial interest authorized, divided into two classes,
designated Class A and Class B shares. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
International Equity Fund Developing Markets Fund
--------------------------------------------------- -------------------------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996 October 31, 1997 October 31, 1996
------------------------- ------------------------ ----------------------- ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A
Shares sold ............... 822,555 $ 9,553,450 1,762,635 $ 18,326,646 352,037 $ 3,898,784 2,674,932 $ 27,515,135
Shares issued through
reinvestment of dividends -- -- -- -- 8,374 84,414 -- --
Shares redeemed ........... (1,005,538) (11,086,992) (707,635) (7,314,187) (981,711) (10,394,319 (500,614) (5,065,351)
----------- ------------ ---------- ------------ --------- ------------ ---------- ------------
Net increase (decrease) ... (182,983) ($ 1,533,542) 1,055,000 $ 11,012,459 (621,300) ($ 6,411,121) 2,174,318 $ 22,449,784
=========== ============ ========== ============ ========= ============ ========== ============
Class B
Shares sold ............... 201,057 $ 2,251,556 318,343 $ 3,273,880 218,192 $ 2,441,467 285,158 $ 2,933,036
Shares issued through
reinvestment of dividends -- -- -- -- 950 9,486 -- --
Shares redeemed ........... (75,755) (848,074) (25,335) (263,984) (60,685) (660,965) (21,340) (219,203)
----------- ------------ ---------- ------------ --------- ------------ ---------- ------------
Net increase .............. 125,302 $ 1,403,482 293,008 $ 3,009,896 158,457 $ 1,789,988 263,818 $ 2,713,833
=========== ============ ========== ============ ========= ============ ========== ============
</TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth financial data for a share of capital stock
outstanding throughout the periods presented. This information has been derived
from information provided in the financial statements.
<TABLE>
<CAPTION>
International Equity Fund
------------------------------------------------------
Class A Class B
-------------------------------------------------------
Year Ended October 31, Year Ended October 31,
--------------------------- --------------------------
1997 1996 1995* 1997 1996 1995*
-------- -------- --------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ................................ $10.38 $9.58 $10.00 $10.29 $9.57 $10.00
-------- -------- --------- ------- ------- ----------
Net investment income (loss)(1) ......... (0.07) (0.04) 0.00 (0.15) (0.13) (0.02)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ................... 1.11 0.84 (0.42) 1.10 0.85 (0.41)
-------- -------- --------- ------- ------- ----------
Net increase (decrease) in net
asset value from operations ........... 1.04 0.80 (0.42) 0.95 0.72 (0.43)
-------- -------- --------- ------- ------- ----------
Distributions from capital gains ........ -- -- -- -- -- --
-------- -------- --------- ------- ------- ----------
Net asset value, end of period ........ $11.42 $10.38 $9.58 $11.24 $10.29 $9.57
======== ======== ========= ======= ======= ==========
Total return(2) ......................... 10.02% 8.35% (4.20)% 9.23% 7.52% 4.30%
Ratio of expenses to
average net assets .................... 2.15% 2.15% 2.15%(3) 2.90% 2.90% 2.90%(3)
Ratio of net investment income
(loss) to average net assets(4) ....... (0.59)% (0.39)% (0.02)%(3) (1.32)% (1.25)% (1.77)%(3)
Portfolio turnover rate ................. 73.92% 94.12% 0.00% 73.92% 94.12% 0.00%
Average commission rate paid(5) ......... 0.048 0.041 -- 0.048 $0.041 --
Net assets, end of period
(000 omitted) ......................... $44,316 $42,170 $28,819 $6,821 $4,955 $1,803
</TABLE>
<TABLE>
<CAPTION>
Developing Markets Fund
------------------------------------------------------
Class A Class B
--------------------------------------------------------
Year Ended October 31, Year Ended October 31,
--------------------------- ---------------------------
1997 1996 1995* 1997 1996 1995*
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ................................ $9.96 $9.53 $10.00 $9.86 $9.52 $10.00
-------- -------- --------- -------- -------- ---------
Net investment income (loss)(1) ......... (0.02) (0.01) 0.00 (0.19) (0.08) (0.01)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ................... (0.40) 0.44 (0.47) (0.29) 0.42 (0.47)
-------- -------- --------- -------- -------- ---------
Net increase (decrease) in net
asset value from operations ........... (0.42) 0.43 (0.47) (0.48) 0.34 (0.48)
-------- -------- --------- -------- -------- ---------
Distributions from capital gains ........ (0.02) -- -- (0.02) -- --
-------- -------- --------- -------- -------- ---------
Net asset value, end of period ........ $9.52 $9.96 $9.53 $9.36 $9.86 $9.52
======== ======== ========= ======== ======== =========
Total return(2) ......................... (4.18)% 4.51% (4.70)% (4.83)% 3.57% (4.80)%
Ratio of expenses to
average net assets(4) ................. 2.15% 2.15% 2.15%(3) 2.90% 2.90% 2.90%(3)
Ratio of net investment income
(loss) to average net assets(4) ....... (0.17)% (0.14)% 0.32%(3) (1.74)% (0.83)% (1.00)%(3)
Portfolio turnover rate ................. 52.79% 26.76% 0.00% 52.79% 26.76% 0.00%
Average commission rate paid(5) ......... 0.016 0.028 -- 0.016 0.028 --
Net assets, end of period
(000 omitted).......................... $29,402 $36,918 $14,622 $4,941 $3,641 $1,004
</TABLE>
* Commencement of operations was September 8, 1995
(1) Based on average shares outstanding
(2) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period. Initial sales charge or contingent deferred
sales charge is not reflected in the calculation of total return. Total
return calculated for a period of less than one year is not annualized.
(3) Annualized
(4) Net of voluntary reduction of management fees by Adviser and Subadviser
expressed as a percentage of average daily net assets of both Class A and
Class B shares of each Fund as follows: International Equity Fund .18%,
.27% and .60% for the years ended 10/31/97, 96 and 95, respectively, and
Developing Markets Fund .34%, .54% and .60% for the years ended 10/31/97,
96 and 95, respectively.
(5) For fiscal years beginning after November 1, 1995, the Funds are required
to disclose the average commission rate paid for purchases
14
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
- -------------------------------------------------------------------------------
Shareholders and Board of Trustees
Winthrop Developing Markets Fund and Winthrop International Equity Fund
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Winthrop Developing Markets Fund and Winthrop
International Equity Fund (two of the Funds constituting Winthrop Opportunity
Funds) as of October 31, 1997, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Winthrop Developing Markets Fund and Winthrop International Equity Fund at
October 31, 1997, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended
and the financial highlights for each of the indicated periods, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
______________________________
New York, New York
December 10, 1997
<PAGE>
WINTHROP OPPORTUNITY FUNDS--TAX INFORMATION (unaudited)
- --------------------------------------------------------------------------------
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you as to the federal tax status of distributions received by
shareholders during the Funds' fiscal year ended October 31, 1997. Accordingly,
we are advising you that the following distributions paid during the fiscal year
by the Fund were derived from the following sources:
From
Long-Term
Fund Capital Gains
---- -------------
Winthrop Developing Markets Fund - Class A ...... $0.012
Winthrop Developing Markets Fund - Class B ...... 0.012
Because the Fund's fiscal year is not the calendar year, calendar year taxpayers
should use the dollar amounts and the nature of those amounts referenced on Form
1099-DIV which will be mailed to you in January, 1998. Shareholders are advised
to consult their own tax advisors with respect to the tax consequences of their
investment in the Fund.
15
<PAGE>
WINTHROP OPPORTUNITY FUNDS
(800) 225-8011
TRUSTEES
G. MOFFETT COCHRAN ROBERT E. FISCHER
WILMOT H. KIDD, III MARTIN JAFFE
JOHN W. WALLER, III
OFFICERS
G. MOFFETT COCHRAN, Chairman and President
JAMES A. ENGLE, Vice President
MARTIN JAFFE, VICE PRESIDENT, Secretary and Treasurer
BRIAN A. KAMMERER, Assistant Treasurer
INVESTMENT ADVISER
WOOD STRUTHERS & WINTHROP MANAGEMENT CORP.
An Investment Management Subsidiary of
Donaldson, Lufkin & Jenrette
277 Park Avenue, New York, NY 10172
SUBADVISER
AXA ASSET MANAGEMENT
Partenaires
46, Avenue de la Grand Armee
Paris, France 75017
CUSTODIAN
CITIBANK, N.A.
111 Wall Street, New York, NY 10043
TRANSFER AGENT
FPS SERVICES, INC.
P.O. Box 61503 (3200 Horizon Drive)
King of Prussia, PA 19406
DISTRIBUTOR
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
277 Park Avenue, New York, NY 10172
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue, New York, NY 10019
LEGAL COUNSEL
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue, New York, NY 10022
This report is submitted for the general information of the stockholders of
the Fund. It is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an
effective prospectus, which should be read
carefully before investing.
WOOD, STRUTHERS & WINTHROP
ESTABLISHED 1871
[LOGO]
INVESTMENT MANAGEMENT SUBSIDIARY OF
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
(THE FUND DISTRIBUTOR)
WOF-2
[LOGO] WINTHROP [LOGO]
MUTUAL FUNDS
------------------------
WINTHROP DEVELOPING MARKETS FUND
WINTHROP INTERNATIONAL EQUITY FUND
OCTOBER 31, 1997
ANNUAL
REPORT
16
