<PAGE>
PRESIDENT'S LETTER
Dear Shareholder:
The performance of the international markets, though positive for 1996, has been
disappointing compared to the returns achieved in the United States. Perspective
is key to successful international investing, and we encourage investors to
remember this is a long-term investment, which should be part of a total
portfolio asset allocation encompassing domestic and international components.
Deregulation and corporate restructuring, prevalent in the United States over
the last 5 years and responsible for increasing both productivity and profits,
should also in our opinion occur near-term in both Europe and Japan. In
addition, at a time when valuations in the U.S. appear extended, valuations in
many international markets appear reasonable. Accordingly, we continue to expect
positive performance contribution from international portfolio exposure and we
continue to believe in the wisdom of international diversification.
WINTHROP INTERNATIONAL EQUITY FUND
The total return of the Fund, for the fiscal year ended October 31, 1996, was
8.35% for Class "A" shares and 7.52% for Class "B" shares compared to 9.09% for
the Morgan Stanley EAFE (Europe, Australia, Far East) GDP weighted benchmark.
In continental Europe as well as Japan, the environment during the year was
characterized by a slow economic recovery coupled with low inflation.
Simultaneously, Asian countries like Hong Kong and Singapore were experiencing a
significant slowdown from their historically rapid growth.
The road toward European Monetary Union (EMU) determined the economic policies
conducted in most European countries. On the budget side, EMU countries made the
necessary efforts to reduce their yearly deficits to no more than 3% of GDP. In
many cases, this forced governments to increase direct or indirect taxes, which,
in turn, limited the potential upside of consumption. In order to avoid the
recessionary effect of this evolution, European monetary authorities (beginning
with the German and the French central banks) maintained a consistently loose
monetary policy: short-term rates were gradually cut and reached historical
lows. These rate reductions, coupled with a gradual improvement in corporate
profits and expectations for economic recovery, had a positive effect on
European equity markets.
In contrast, performance of the Japanese market was disappointing in absolute
and relative terms. It fell 14.5% in the second half of the fiscal year while
the EAFE index lost only 3.2%. Our performance was impacted by our slightly
overweighted position in Japan. We believe that Japanese institutional investors
will once again become active in their own market in 1997, and the market will
recover from its recent levels.
Considering the moderately encouraging economic conditions which prevailed
during the year, the behavior of the European markets was noteworthy. The Dutch,
German, Spanish and French equity markets were among the best performers, even
taking into account the negative impact of the rise of the dollar versus each
currency. The breakdown of the portfolio as of October 31, 1996 was:
- 60.0% invested in Europe
- 31.8% invested in Asia
- 8.2% in cash
WINTHROP DEVELOPING MARKETS FUND
For the fiscal year ended October 31, 1996, the Winthrop Developing Markets Fund
"A" shares returned 4.51% and "B" shares returned 3.57%. The MSCI Emerging
Market Free Index (the Fund's benchmark) was up 4.31% over the same period.
The first half of the year showed a substantial increase in the emerging stock
markets due to significant capital inflows in January and a decline in U.S.
interest rates. The second half of the fiscal year, however, was disappointing
due to the weakness of emerging markets in Asia, the Middle East and Europe. Our
Asian holdings produced meager returns due to the fact that countries of this
region tightened their monetary policies. The Latin American countries, on the
other hand, driven by the movement of U.S. interest rates and the Mexican
economic recovery, produced more impressive returns.
The allocation of the Fund during the fiscal year remained close to its index
with several exceptions contributing to the Fund's performance over the period:
an overweighted position in Brazil since May; a continued underweighting in
South African stocks; and an overweighted investment in Thailand which was then
modified to a strongly underweighted position in June. The breakdown of the
portfolio at the end of October 1996 was:
- 42.4% invested in Asia
- 36.7% invested in Latin America
- 18.0% invested in Europe
- 2.9% in cash
We are pleased to be able to offer investors the opportunity to participate in
international markets through the Winthrop Opportunity Funds and look forward to
reporting your Fund's progress throughout the coming New Year.
Sincerely,
[/S/ G. MOFFETT COCHRAN]
G. Moffett Cochran
President December, 1996
<PAGE>
OPPORTUNITY FUND HIGHLIGHTS
WINTHROP INTERNATIONAL EQUITY FUND
ASSET ALLOCATION BY COUNTRY OCTOBER 31, 1996 (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
JAPAN 29.4%
<S> <C>
France 15.8%
Germany 14.3%
Italy 10.1%
Cash & Other
Assets/Liabilities 8.2%
United Kingdom 6.6%
Netherlands 5.0%
Switzerland 2.9%
Hong Kong 2.1%
Austria 1.9%
Spain 1.4%
Finland 0.8%
Norway 0.7%
Belgium 0.5%
Indonesia 0.3%
100.0%
</TABLE>
TEN LARGEST HOLDINGS OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
COUNTRY US$ VALUE NET ASSETS
----------- --------- -------------
<S> <C> <C> <C>
Royal Dutch Petroleum Co................. Netherlands $1,032,698 2.2%
Bayer AG................................. Germany 975,258 2.1
Mannesman AG............................. Germany 779,804 1.7
Ente Nazionale Idrocarburi SPA........... Italy 770,410 1.6
Telecom Italia SPA....................... Italy 759,878 1.6
Instituto Mobilaire Italiano............. Italy 733,118 1.6
Siemens AG............................... Germany 729,693 1.5
Mitsui Re Fudosan Ltd.................... Japan 719,008 1.5
Telecom Italia Mobile SPA................ Italy 691,360 1.5
Credit Suisse Holding AG................. Switzerland 631,902 1.3
--------- ---
$7,823,129 16.6%
--------- ---
--------- ---
</TABLE>
INVESTMENT RESULTS FOR PERIODS ENDED OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------------
WINTHROP INTERNATIONAL
EQUITY FUND
------------------------
MSCI EAFE
WITHOUT LOAD WITH LOAD GDP WEIGHTED INDEX*
------------ ---------- ---------------------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Class A:
1 Year................. 8.35 % 2.12 % 9.09 %
From Inception
9/13/95.............. 3.62 % -2.07 6.21
Class B:
1 Year................. 7.52 % 3.52 9.09
From Inception
9/13/95.............. 2.76 % -.24 6.21
</TABLE>
<TABLE>
<CAPTION>
WINTHROP
INTERNATIONAL
EQUITY FUND
CL.A:
MSCI EAFE GDP
<S> <C> <C> <C> <C>
Without Sales Load Weighted Index* With Sales Load
9/95
(Inception) 10,000 10,000 9,425
10/95 9,580 9,765 9,029
10/96 10,380 10,653 9,783
</TABLE>
COMPARISON OF CHANGE IN VALUE
OF $10,000 INVESTMENT
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO
INDICATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST. NO ADJUSTMENT HAS BEEN MADE FOR ANY
INCOME TAXES PAYABLE BY SHAREHOLDERS ON DIVIDENDS OR CAPITAL GAINS, BUT
THE RETURNS CALCULATED ABOVE HAVE BEEN COMPUTED AFTER DEDUCTION OF ALL
FUND EXPENSES INCLUDING ADVISORY FEES. CLASS A RETURNS SHOWN ABOVE ARE
COMPUTED WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 5.75% FRONT-END
SALES LOAD. CLASS B SHARES WHICH, INSTEAD OF A FRONT-END SALES LOAD, ARE
SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE (CDSC) RANGING FROM 4%
DURING THE FIRST YEAR TO 0% AFTER 4 YEARS. ACCORDINGLY, RETURNS ON CLASS B
SHARES WILL DIFFER FROM THOSE OF CLASS A SHARES AND ARE REFERENCED IN THE
TABLE ABOVE WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 4% CDSC.
* A Morgan Stanley Capital International ("MSCI") Europe, Australia, Far
East Index.
<PAGE>
OPPORTUNITY FUND HIGHLIGHTS
WINTHROP DEVELOPING MARKETS FUND
ASSET ALLOCATION BY COUNTRY OCTOBER 31, 1996 (UNAUDITED)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MALAYSIA 17.3%
<S> <C>
Brazil 15.9%
Mexico 9.0%
South Africa 7.0%
Argentina 6.7%
Portugal 6.3%
Chile 5.1%
Thailand 4.6%
Korea 4.5%
Taiwan 3.3%
Indonesia 3.3%
India 3.2%
Greece 3.0%
Hong Kong 3.0%
Philippines 2.8%
Cash & Other
Assets/Liabilities 2.9%
Poland 1.7%
China 0.4%
100.0%
</TABLE>
TEN LARGEST HOLDINGS OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
COUNTRY US$ VALUE NET ASSETS
--------- --------- -------------
<S> <C> <C> <C>
ROC Taiwan Fund............................ Taiwan $1,346,475 3.3%
Korea Fund, Inc............................ Korea 1,295,308 3.2
Telecomunicacoes Brasileiras SA Prf
(Telebras)............................... Brazil 1,119,212 2.7
Centrais Electricas Brasileiras SA Prf Cl.
'B'...................................... Brazil 1,106,816 2.7
Telecom Malaysia Bhd....................... Malaysia 1,085,609 2.7
Telefonos de Mexico SA Cl. 'L' ADR......... Mexico 747,555 1.8
Portugal Telecom SA........................ Portugal 735,320 1.8
Perez Compane SA........................... Argentina 645,509 1.6
Companhia Vale do Rio Doce Prf............. Brazil 645,064 1.6
Banco Bradesco SA Prf...................... Brazil 608,636 1.5
--------- ---
$9,335,504 22.9%
--------- ---
--------- ---
</TABLE>
INVESTMENT RESULTS FOR PERIODS ENDED OCTOBER 31, 1996 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURN
-------------------------------------------
WINTHROP DEVELOPING
MARKETS FUND
----------------------
WITHOUT MSCI EMERGING
LOAD WITH LOAD MARKETS FREE INDEX*
---------- ---------- -------------------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Class A:
1 Year................. 4.51 % -1.50 % 4.31 %
From Inception
9/13/95.............. -.38 % -5.85 -1.24
Class B:
1 Year................. 3.57 % -.43 4.31
From Inception
9/13/95.............. -1.34 % -4.34 -1.24
</TABLE>
<TABLE>
<CAPTION>
WINTHROP
DEVELOPING
Markets Fund Cl.A
<S> <C> <C> <C> <C>
MSCI Emerging
Without Sales Load Markets Free Index* With Sales Load
9/95
(Inception) 10,000 10,000 9,425
10/95 9,530 9,462 8,982
10/96 9,960 9,870 9,387
</TABLE>
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, BUT
THE RETURNS CALCULATED ABOVE HAVE BEEN COMPUTED AFTER DEDUCTION OF ALL
FUND EXPENSES INCLUDING ADVISORY FEES. CLASS A RETURNS SHOWN ABOVE ARE
COMPUTED WITH AND WITHOUT THE IMPOSITION OF THE MAXIMUM 5.75% FRONT-END
SALES LOAD. CLASS B SHARES WHICH, INSTEAD OF A FRONT-END SALES LOAD, 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.
* A Morgan Stanley Capital International ("MSCI") Index.
<PAGE>
Winthrop Opportunity Funds--Notes to Financial Statements OCTOBER 31, 1996
- --------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES. Winthrop Opportunity Funds (the "Fund"
or "Funds") operates as a series company currently consisting of two portfolios
(the "Portfolios"): Winthrop International Equity Fund and Winthrop Developing
Markets Fund. The Fund constitutes a diversified, open-end investment company
which is registered under the Investment Company Act of 1940, as amended. The
Fund accounts separately for the assets, liabilities and operations of each
Portfolio. Expenses directly attributable to each Portfolio are charged to that
Portfolio's operations; expenses which are applicable to both Portfolios are
allocated between them on a pro rata basis.
The Fund was organized as a Delaware business trust under the laws of Delaware
on May 31, 1995. Prior to commencing operations on September 8, 1995, the Fund
had no operations other than the sale and issuance to each of Wood, Struthers &
Winthrop Management Corp. (the "Advisor") and AXA Asset Management Europe, an
affiliate of AXA Asset Management Partenaires (the "Subadvisor"), of 1,250 Class
A shares and 1,250 Class B shares of beneficial interest in each of the two
Portfolios.
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. The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin
and Jenrette, Inc. which is an indirect subsidiary of the Equitable Life
Assurance Society of the United States, (the "Equitable"). 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, 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.
<PAGE>
WINTHROP OPPORTUNITY FUNDS--NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996
(CONTINUED)
- --------------------------------------------------------------------------------
(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 International Equity Fund has an unused
capital loss carryover of approximately $207,000 available for Federal income
tax purposes to be applied against future net securities profits, if any,
realized subsequent to October 31, 1996. If not applied, the carryover expires
in fiscal 2004.
(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.
The Advisory Agreement provides that the Advisor will reimburse the Funds for
its expenses (exclusive of interest, taxes, brokerage, distribution services
fees and extraordinary expenses, all to the extent permitted by applicable state
securities law and regulations) which in any year exceed the limits prescribed
by any state in which shares of the Fund are qualified for sale. The Fund
believes that presently the most restrictive applicable expense ratio limitation
imposed on the Fund by any state is 2 1/2% of average net assets of the first
$30 million, 2% of average net assets of the next $70 million and 1 1/2% of
average net assets in excess of $100 million.
Commencing at the inception of each Fund through October 31, 1996, 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, 1996 through April 30, 1997, 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, 1997, 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
$112,542 and $181,527 for the International Equity Fund and Developing Markets
Fund, respectively, during the year ended October 31, 1996.
The Fund has entered into a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940 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
<PAGE>
WINTHROP OPPORTUNITY FUNDS--NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1996
(CONTINUED)
- --------------------------------------------------------------------------------
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 Adviser 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.
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, 1996, aggregated $47,838,929 and $37,212,146 for the
International Equity Fund; and $38,048,609 and $8,155,064 for the Developing
Markets Fund, respectively.
The Fund's may enter into forward exchange currency contracts in order to hedge
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings. A forward exchange currency 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 exchange currency 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.
At October 31, 1996, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes. At October
31, 1996, 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)................ $3,751,839 $ 3,419,927
Gross depreciation (investments having an excess of cost over value)................ (1,718,670) (4,319,625)
------------ -------------
Net unrealized appreciation (depreciation) of investments........................... $2,033,169 $ (899,698)
------------ -------------
------------ -------------
</TABLE>
NOTE (D) SHARES OF BENEFICIAL INTEREST: There is an unlimited number of shares
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 PERIOD ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995* OCTOBER 31, 1996 OCTOBER 31, 1995*
--------------------- --------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold................... 1,762,635 $18,326,646 3,006,328 $30,025,797 2,674,932 $27,515,135 1,531,521 $15,261,869
Shares redeemed............... (707,635) (7,314,187) -- -- (500,614) (5,065,351) -- --
--------- ---------- --------- ---------- --------- ---------- --------- ----------
Net increase.................. 1,055,000 $11,012,459 3,006,328 $30,025,797 2,174,318 $22,449,784 1,531,521 $15,261,869
--------- ---------- --------- ---------- --------- ---------- --------- ----------
--------- ---------- --------- ---------- --------- ---------- --------- ----------
CLASS B
Shares sold................... 318,343 $3,273,880 185,880 $1,810,674 285,158 $2,933,036 102,943 $1,006,679
Shares redeemed............... (25,335) (263,984) -- -- (21,340) (219,203) -- --
--------- ---------- --------- ---------- --------- ---------- --------- ----------
Net increase.................. 293,008 $3,009,896 185,880 $1,810,674 263,818 $2,713,833 102,943 $1,006,679
--------- ---------- --------- ---------- --------- ---------- --------- ----------
--------- ---------- --------- ---------- --------- ---------- --------- ----------
</TABLE>
* Commencement of operations was September 8, 1995.
<PAGE>
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>
DEVELOPING
MARKETS
INTERNATIONAL EQUITY FUND FUND
--------------------------------------------------------- -----------
CLASS A CLASS B CLASS A
--------------------------- --------------------------- -----------
YEAR SEPTEMBER 8, YEAR SEPTEMBER 8, YEAR
ENDED 1995* THROUGH ENDED 1995* THROUGH ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 1995 1996 1995 1996
----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 9.58 $ 10.00 $ 9.57 $10.00 $ 9.53
----------- ------------- ----------- ------ -----------
Net investment income (loss)(1).................... (0.04) 0.00 (0.13) (0.02) (0.01)
Net realized and unrealized gain(loss) on
investments and foreign currency transactions.... 0.84 (0.42) 0.85 (0.41) 0.44
----------- ------------- ----------- ------ -----------
Net increase (decrease) in net asset value from
operations....................................... 0.80 (0.42) 0.72 (0.43) 0.43
----------- ------------- ----------- ------ -----------
Net asset value, end of period..................... $ 10.38 $ 9.58 $10.29 $ 9.57 $ 9.96
----------- ------------- ----------- ------ -----------
----------- ------------- ----------- ------ -----------
Total Return(2).................................... 8.35% (4.20)% 7.52% (4.30)% 4.51%
Ratio of expenses to average net assets+........... 2.15% 2.15%(3) 2.90% 2.90%(3) 2.15%
Ratio of net investment income(loss) to average net
assets........................................... (.39)% (.02)%(3) (1.25)% (1.77)%(3) (.14)%
Portfolio turnover rate............................ 94.12% 0.00% 94.12% 0.00% 26.76%
Average commission rate paid....................... $ 0.041 -- $0.041 -- $ 0.028
Net assets, end of period (000 omitted)............ $42,170 $28,819 $4,955 $1,803 $36,918
<CAPTION>
CLASS B
---------------------------
SEPTEMBER 8, YEAR SEPTEMBER 8,
1995* THROUGH ENDED 1995* THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1996 1995
------------- ----------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 10.00 $ 9.52 $10.00
------------- ----------- ------
Net investment income (loss)(1).................... 0.00 (0.08) (0.01)
Net realized and unrealized gain(loss) on
investments and foreign currency transactions.... (0.47) 0.42 (0.47)
------------- ----------- ------
Net increase (decrease) in net asset value from
operations....................................... (0.47) 0.34 (0.48)
------------- ----------- ------
Net asset value, end of period..................... $ 9.53 $ 9.86 $ 9.52
------------- ----------- ------
------------- ----------- ------
Total Return(2).................................... (4.70)% 3.57% (4.80)%
Ratio of expenses to average net assets+........... 2.15%(3) 2.90% 2.90%(3)
Ratio of net investment income(loss) to average net
assets........................................... 0.32%(3) (.83)% (1.00)%(3)
Portfolio turnover rate............................ 0.00% 26.76% 0.00%
Average commission rate paid....................... -- $0.028 --
Net assets, end of period (000 omitted)............ $14,622 $3,641 $1,004
</TABLE>
* Commencement of Operations.
(1) Based on average shares outstanding
(2) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period. Initial sales charge or contingent deferred
sales charge is not reflected in the calculation of total return. Total
return calculated for a period of less than one year is not annualized.
(3) Annualized
+ Net of voluntary reduction of management fees by Adviser and Subadviser
expressed as a percentage of average daily net assets, as follows: during
the year ended October 31, 1996, .27% of both Class A and Class B shares of
the International Equity Fund and .54% of both Class A and Class B shares of
the Developing Markets Fund; and .60% during the period from inception
through October 31, 1995 of both Class A and Class B shares of each of the
International Equity Fund and Developing Markets Fund.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of Winthrop Opportunity Funds
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Winthrop Opportunity Funds (comprising,
respectively, Winthrop Developing Markets Fund and Winthrop International Equity
Fund) as of October 31, 1996, and the related statement of operations for the
year then ended and the statement of changes in net assets and financial
highlights for the year then ended and for the period from September 8, 1995
(commencement of operations) to October 31, 1995. 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. Our procedures included confirmation of securities owned as of
October 31, 1996 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 each
of the respective Funds constituting Winthrop Opportunity Funds at October 31,
1996, the results of their operations for the year then ended and the changes in
their net assets and financial highlights for the year then ended and for the
period from September 8, 1995 to October 31, 1995, in conformity with generally
accepted accounting principles.
[LOGO]
New York, New York
December 13, 1996
<PAGE>
Winthrop Opportunity Funds--Statement of Investments OCTOBER 31, 1996
- --------------------------------------------------------------------------------
WINTHROP INTERNATIONAL EQUITY FUND
COMMON STOCKS--91.8%
<TABLE>
<CAPTION>
U.S. $
SHARES VALUE
--------- -----------
<S> <C> <C>
AUSTRIA--1.9%
EVN Energie--Versorgung
Niederoesterreich AG.... 1,680 $ 227,995
Oesterreichisch
Elektrizitatswirtschafts
AG Cl. 'A'.............. 1,750 121,928
OMV AG.................... 3,700 362,438
VA Technologie AG......... 1,400 195,913
-----------
908,274
-----------
BELGIUM--0.5%
Barko Industries NV *..... 1,500 246,714
-----------
FINLAND--0.8%
Oy Nokia (Ab) Ser 'A'..... 7,900 365,058
-----------
FRANCE--15.8%
Air Liquide............... 2,904 448,545
Alcatel Alsthom........... 3,020 257,766
BIC Societe SA............ 1,970 295,797
Carrefour SA.............. 860 477,628
Cetelem................... 1,300 277,652
Compagnie Bancaire SA..... 1,067 106,529
Compagnie de Saint
Gobain.................. 3,773 509,645
Compagnie Francaise
d'Etudeset de
Construction............ 1,880 164,475
Danone Groupe............. 2,092 286,676
Elf Aquitaine SA.......... 6,700 536,189
Essilor International..... 968 254,876
Groupe Saint Louis........ 390 99,023
Imetal.................... 2,040 318,288
Legrand SA................ 940 163,224
L'Oreal................... 1,430 484,580
LVMH (Moet-Hennessy Louis
Vuitton)................ 2,270 520,373
Primagaz Cie.............. 2,200 227,399
Promodes.................. 1,600 432,246
Roussel-Uclaf............. 1,003 265,663
Societe Generale De
Paris................... 3,487 376,128
Sodexho SA................ 460 222,517
Total SA.................. 5,978 467,993
Valeo SA.................. 4,390 263,665
-----------
7,456,877
-----------
GERMANY--14.3%
Adidas AG................. 6,400 539,255
Allianz AG Holding........ 330 593,834
Bayer AG.................. 25,800 975,258
Bayerische Motoren Werke
AG...................... 500 293,087
Daimler Benz AG........... 9,850 579,986
Deutsch Bank AG........... 9,000 418,418
Dresdner Bank AG.......... 16,000 431,404
Linde AG.................. 1,000 623,844
Mannesmann AG............. 2,000 779,804
Siemens AG................ 14,100 729,693
SGL Carbon AG............. 3,000 332,672
Veba AG................... 8,000 427,333
-----------
6,724,588
-----------
<CAPTION>
U.S. $
SHARES VALUE
--------- -----------
<S> <C> <C>
HONG KONG--2.1%
Hong Kong
Telecommunications
Ltd..................... 140,000 $ 247,145
Hong Kong Shanghai Bank
Ltd..................... 20,000 407,382
New World Development
Company Ltd............. 60,000 349,185
-----------
1,003,712
-----------
INDONESIA--0.3%
Indocement Tunggal
Perkasa................. 104,000 157,440
-----------
ITALY--10.1%
Brembo SPA................ 29,200 365,879
Ente Nazionale Idrocarburi
SPA..................... 160,800 770,410
Fiat SPA.................. 104,700 279,987
Instituto Mobilaire
Italiano................ 92,600 733,118
Instituto Nazionale delle
Assicurazioni SPA....... 365,300 504,701
Montedison SPA............ 452,140 295,791
Stet Societa Finanziaria
Telefonica SPA.......... 99,700 344,530
Telecom Italia Mobile
SPA..................... 334,400 691,360
Telecom Italia SPA........ 340,900 759,878
-----------
4,745,654
-----------
JAPAN--29.4%
Autobacs Seven Co. Ltd.... 7,000 552,664
Asahi Glass Co. Ltd....... 45,000 474,767
Bank of Tokyo-Mitsubishi
Ltd..................... 25,000 509,935
Capcom Company Ltd........ 18,800 386,777
Daiichi Pharmaceutical Co.
Ltd..................... 3,000 43,257
Daiwa Securities Co.
Ltd..................... 35,000 378,495
Furukawa Electric Co...... 104,000 552,277
Hitachi Maxell Ltd........ 3,000 59,346
Jusco Co. Ltd............. 19,000 564,621
Kyocera Corp.............. 7,000 462,194
Izumiya Co. Ltd........... 13,000 208,018
Marubeni Corp............. 118,000 546,738
Marui Co. Ltd............. 26,000 482,328
Matsushita - Kotobuki
Electronic Ltd.......... 18,000 416,211
Mitsubishi Estate Co.
Ltd..................... 40,000 499,385
Mitsui Re Fudosan Ltd..... 58,000 719,008
New OJI Paper............. 66,000 483,366
Nippon Express Co. Ltd.... 6,000 48,796
Nissan Motor Co. Ltd...... 78,000 590,452
Nomura Securities Co.
Ltd..................... 26,000 429,752
Omron Corp................ 30,000 535,432
Promise Co. Ltd........... 1,000 46,685
Sekisui Chemical Co....... 51,000 569,457
Sharp Corp................ 23,000 349,833
Shimano Inc............... 30,000 535,432
Sony Music Entertainment
Inc..................... 4,900 294,241
Sumitomo Electric
Industries Ltd.......... 37,000 487,955
Sumitomo Heavy Industries
Ltd..................... 92,000 324,354
Sumitomo Sitix Corp....... 14,000 242,483
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP OPPORTUNITY FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996
(CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
U.S. $
SHARES VALUE
--------- -----------
<S> <C> <C>
Taisei Corp............... 78,000 $ 480,042
Tokyu Land Ltd............ 97,000 456,260
Toshiba Corp.............. 93,000 582,170
Toyota Motor Corp......... 21,000 496,659
Yokogawa Electric Corp.... 3,000 26,640
-----------
13,836,030
-----------
NETHERLANDS--5.0%
Elsevier NV............... 22,430 372,996
Koninklijke Ahold NV...... 4,141 241,750
PolyGram NV............... 4,700 220,893
Royal Dutch Petroleum
Co...................... 6,250 1,032,698
Unilever NV- CVA.......... 1,545 235,057
Ver Ned Uitgeversbedr..... 13,000 236,113
-----------
2,339,507
-----------
NORWAY--0.7%
Saga Petroleum ASA Cl.
'A'..................... 18,200 309,747
-----------
SPAIN--1.4%
Acerinox SA............... 600 72,014
Banco Santander SA........ 2,000 102,765
Empresa Nacional de
Electridad SA........... 2,200 134,787
Repsol SA................. 5,000 163,366
Telefonica de Espana SA... 10,000 200,824
-----------
673,756
-----------
SWITZERLAND--2.9%
Credit Suisse Holding
AG...................... 6,300 631,902
<CAPTION>
U.S. $
SHARES VALUE
--------- -----------
<S> <C> <C>
Roche Holding AG.......... 40 $ 303,806
Sandoz AG................. 375 436,162
-----------
1,371,870
-----------
UNITED KINGDOM--6.6%
B.A.T. Industries Plc..... 18,000 125,472
British Petroleum Co.
Plc..................... 21,491 231,361
Carlton Communications
Plc..................... 25,750 206,336
CRH Plc................... 23,073 237,870
Glaxo Wellcome Plc........ 11,120 174,588
Grand Metropolitan Plc.... 73,000 551,067
Lloyds TSB Group Plc...... 30,000 190,552
Marks & Spencer Plc....... 21,892 183,800
Pearson Plc............... 16,413 203,158
Prudential Corporation
Plc..................... 7,380 55,771
Reuters Holdings Plc...... 32,000 398,436
RTZ Corporation Plc....... 20,175 322,833
Siebe Plc................. 15,000 236,116
-----------
3,117,360
-----------
TOTAL INVESTMENTS--91.8%
(COST $41,223,418)................. 43,256,587
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES--8.2%........... 3,868,111
-----------
NET ASSETS--100%..................... $47,124,698
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
Winthrop Opportunity Funds--Statement of Investments OCTOBER 31, 1996
- --------------------------------------------------------------------------------
WINTHROP DEVELOPING MARKETS FUND
COMMON STOCKS--81.2%
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
ARGENTINA--6.7%
Astra Cia Argentina de
Petroeo SA................. 154,900 $ 280,425
Banco de Galicia y Buenos
Aires SA................... 57,157 238,864
Cia Interamericana de Automo
SA*........................ 22,429 100,726
Molinos Rio de la Plata SA... 36,866 116,151
Perez Compane SA............. 102,117 645,509
Siderca SA Cl. 'A'........... 208,070 328,816
Telecom Argentina SA ADR..... 2,570 97,018
Telefonica de Argentina SA
ADR........................ 15,528 361,026
YPF Sociedad Anonima SA
ADR........................ 23,650 538,038
------------
2,706,573
------------
CHILE--5.1%
Banco Santander- Chile ADR... 19,740 275,014
Chilgener SA ADR............. 10,070 227,834
Cia Cervecerias Unidas SA
ADR........................ 8,010 162,203
Cia de Telecomunicaciones de
Chile SA ADR............... 2,940 289,958
Empresa Nacional Electricidad
SA ADR..................... 11,270 207,086
Enersis SA ADR............... 10,290 302,269
Madeco SA ADR................ 4,600 110,400
Maderas y Sinteticos Sociedad
Anonima SA ADR............. 11,540 164,445
Quimica Minera Chile SA ADR.. 5,700 327,750
------------
2,066,959
------------
CHINA--0.4%
China Yuchai International
Ltd........................ 20,000 87,500
Ek Chor China Motorcycle
Company Ltd................ 10,500 61,688
------------
149,188
------------
GREECE--3.0%
Alpha Credit Bank SA......... 4,200 268,574
Aktor SA..................... 1,800 23,475
Attica Enterprises........... 16,300 112,804
Elais SA..................... 1,700 50,135
Ergo Bank SA................. 1,300 76,376
Hellas Can Packaging SA...... 1,000 18,195
Hellenic Bottling Company
SA......................... 8,900 286,807
Hellenic Telecommunication
Organization SA............ 2,000 35,381
National Bank of Greece...... 2,800 177,871
Silver & Baryte Ores Mining
SA......................... 1,100 19,668
Titan Cement Company SA...... 2,900 164,459
------------
1,233,745
------------
HONG KONG--3.0%
Amoy Properties Ltd.......... 220,000 271,717
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
Bank of East Asia Ltd........ 66,320 $ 259,026
Chengdu Telecom Cable Co. Cl.
'H'........................ 910,000 89,443
Qingling Motors Co. Ltd...... 552,000 232,014
Shangri-La Asia Ltd.......... 166,000 237,226
Shanghai Petrochemicals Co.
Ltd........................ 418,000 112,172
------------
1,201,598
------------
INDIA--3.2%
Grasim Industries Ltd. GDR... 6,000 82,500
Indian Aluminium Co. Ltd.
GDR........................ 33,000 140,250
Indian Hotels GDR*........... 10,000 233,300
Industry Credit & Investment
GDR........................ 8,700 76,038
Indo Gulf Fertilisers and
Chemicals Corp. Ltd. GDR*.. 78,000 56,550
Larsen & Toubro Ltd. GDR..... 12,000 174,000
Mahindra & Mahindra Ltd.
GDR*....................... 21,000 220,500
Reliance Industries GDS
Ltd*....................... 13,000 143,000
Tata Engineering and
Locomotive Co. Ltd. GDR.... 16,000 193,920
------------
1,320,058
------------
INDONESIA--3.3%
Hero Supermarket Foreign..... 152,000 94,653
Indocement Tunggal Perkasa... 48,000 72,665
Indocement Tunggal Ord
Foreign.................... 43,000 65,096
PT Astra International Co.... 120,000 247,370
PT Bank International
Indonesia.................. 122,310 98,489
PT Bank Dagang Nasional,
Inc........................ 78,000 55,272
PT Gudang Garam Co........... 64,000 255,615
PT Mulia Industrindo
Foreign.................... 149,000 140,777
PT Telekomunikasi Indonesia
Foreign.................... 214,500 320,115
------------
1,350,052
------------
KOREA--4.5%
Korea Equity Fund............ 76,400 534,800
Korea Fund, Inc.............. 76,759 1,295,308
------------
1,830,108
------------
MALAYSIA--17.3%
Arab Malaysian Merchant Bhd.. 50,000 338,399
Berjaya Group Bhd............ 297,000 210,413
Commerce Asset Holding Bhd... 31,000 202,446
Edaran Otomobil NSNL Bhd..... 15,000 140,109
Golden Hope Plantation Bhd... 65,000 110,623
Guiness Anchor Bhd........... 117,000 300,997
Hong Leong Properties Bhd.... 220,000 292,567
Hume Industries Malaysia
Bhd........................ 19,000 119,568
Industrial Oxygen
Incorporated Bhd........... 198,000 311,897
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP OPPORTUNITY FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996
(CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP DEVELOPING MARKETS FUND
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
Jaya Tiasa Holdings Bhd...... 34,000 $ 192,433
Kuala Lumpur Kepong Bhd...... 18,000 45,239
Land and General Bhd......... 48,000 104,488
Leader Universal Holdings
Bhd........................ 68,000 152,062
Malayan Banking Bhd.......... 33,000 326,526
Public Bank Foreign Rgd...... 182,666 342,689
Perlis Plantations Bhd....... 52,500 150,647
Petronas Gas Bhd............. 66,000 269,057
Renong Bhd................... 128,000 201,631
Resorts World Bhd............ 50,000 286,947
Rothmans of Pall Mall Bhd.... 2,000 19,710
Sime Darby Bhd............... 100,000 354,231
Sungei Way Holdings Bhd...... 23,000 131,085
Tan Chong Motor Holdings
Bhd........................ 150,000 255,284
Technology Resources
Industries Bhd*............ 133,000 318,471
Telecom Malaysia Bhd......... 123,000 1,085,609
Tenaga Nasional Bhd.......... 99,000 395,749
United Engineers Malaysia
Ltd........................ 20,000 158,316
YTL Corporation Bhd.......... 41,000 220,692
------------
7,037,885
------------
MEXICO--9.0%
Apasco SA de CV.............. 73,420 432,691
Carso Global Telecom Cl.
'A1'*...................... 31,137 72,705
Cifra SA de CV Ser. 'C'*..... 388,000 488,135
Empresa ICA Sociedad
Controladora SA de CV
ADR*....................... 30,770 400,010
Empresa La Moderna SA de CV
ADR........................ 19,620 353,160
Fomento Economico Mexicano SA
de CV Cl. 'B'.............. 88,700 264,122
Grupo Carso SA de CV
Ser. 'A1'*................. 29,990 133,952
Grupo Financiero Bancomer SA
de CV Cl. 'B'.............. 441,750 180,320
Grupo Financiero Inbursa SA
Cl. 'B'.................... 1,046 3,413
Grupo Televisa SA GDR*....... 5,140 134,925
Hylsamex SA - BCP............ 68,270 247,334
Kimberly-Clark de Mexico SA
de CV Cl. 'A'.............. 10,070 188,660
Telefonos de Mexico SA Cl.
'L' ADR.................... 24,510 747,555
------------
3,646,982
------------
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
PHILIPPINES--2.8%
Metro Pacific Corp........... 1,137,000 $ 276,895
Metropolitan Bank & Trust
Co......................... 8,875 195,871
Petron Corp.................. 336,250 98,521
Philippine Long Distance
Telephone Co. ADR.......... 2,150 128,731
San Miguel Corp. Cl. 'B'..... 40,920 147,922
SM Prime Holdings, Inc....... 531,600 113,279
Southeast Asia Cement
Holdings, Inc. *........... 1,696,000 161,339
------------
1,122,558
------------
POLAND--1.7%
Bank Rozwoju Eksportu SA..... 3,370 100,106
Bank Slaski SA w
Katowicach................. 2,560 236,784
Debica SA*................... 2,698 54,709
Elektrim Spolka Akcyjna SA... 15,820 132,255
Gorazdze SA*................. 2,180 57,777
Stomil Olsztyn SA*........... 4,540 48,129
Zaklady Piwowarskie w Zywcu
SA......................... 1,100 48,915
------------
678,675
------------
PORTUGAL--6.3%
Banco Espirito Santo e
Comercial de Lisbon SA*.... 23,437 412,143
Banco Totta & Acores SA...... 15,032 273,184
Cimpor Cimentos De Portugal
SA......................... 20,739 435,740
Corticeira Amorim SA......... 2,293 23,684
Engil-Sociedade Gestora De
Participacoes Sociais SA... 7,252 73,008
Estabelecimentos Jeronimo
Martins & Filho SGPS SA.... 2,609 237,756
Portucel Industrial Empresa
Produtora De Celulosa SA... 20,197 125,431
Portugal Telecom SA*......... 28,585 735,320
Sonae Investimentos - SGPS
SA......................... 7,862 229,739
------------
2,546,005
------------
SOUTH AFRICA--7.0%
Anglo American Corp.......... 3,200 190,241
Barlow Ltd................... 13,800 119,090
De Beers Centenary AG........ 13,475 390,496
Driefontein Consolidated
Ltd........................ 7,400 93,820
Iscor Ltd.................... 135,900 96,720
Kinross Mines Ltd.*.......... 11,500 90,054
Liberty Life Association of
Africa Ltd................. 13,193 357,023
Murray and Roberts Holdings
Ltd........................ 55,800 191,430
Nedcor Ltd................... 9,257 129,200
Pick' N Pay Stores Ltd. N
Shr........................ 118,600 112,459
Pick' N Pay Stores Ltd....... 59,300 63,179
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
WINTHROP OPPORTUNITY FUNDS--STATEMENT OF INVESTMENTS OCTOBER 31, 1996
(CONTINUED)
- --------------------------------------------------------------------------------
WINTHROP DEVELOPING MARKETS FUND
<TABLE>
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
Rembrandt Group Ltd.......... 30,300 $ 251,801
Sasol Ltd.................... 36,878 434,160
South African Breweries
Ltd........................ 12,495 319,497
------------
2,839,170
------------
TAIWAN--3.3%
ROC Taiwan Fund*............. 138,100 1,346,475
------------
THAILAND--4.6%
Advanced Info Service Pcl.... 12,500 169,575
Bangkok Bank Public Co.
Ltd........................ 9,500 71,515
Finance One Public Co.
Ltd........................ 10,700 24,121
Land and House Public Co.
Ltd........................ 10,700 70,900
Loxley Public Co. Ltd........ 7,700 55,852
Nava Finance and Securities
Public Co. Ltd............. 26,600 46,932
Phatra Thanakit Co. Ltd...... 11,100 38,081
PTT Exploration and
Production Public Co.
Ltd........................ 23,700 321,513
Shinawatra Computer Company
Plc........................ 6,000 94,099
Shinawatra Computer Co. Plc
Foreign.................... 5,000 78,416
Siam Cement Public Co.
Ltd........................ 4,400 143,533
Siam Commercial Bank Public
Co. Ltd.................... 8,000 61,163
Siam City Cement Public Co.
Ltd........................ 10,100 67,320
Thai Farmers Bank Public Co.
Ltd........................ 12,800 69,759
Tipco Asphalt Public Co.
Ltd........................ 39,500 213,723
TPI Polene Public Co. Ltd.... 38,700 81,937
Union Asia Finance Co.
Ltd........................ 52,500 117,330
United Communication Industry
Public Co. Ltd............. 16,500 134,562
------------
1,860,331
------------
TOTAL COMMON STOCKS
(COST $34,719,007)..................... 32,936,362
------------
<CAPTION>
SHARES U.S. $ VALUE
---------- ------------
<S> <C> <C>
PREFERRED STOCKS--15.9%
BRAZIL--15.9%
Aracruz Celulose SA Prf Cl.
'B'........................ 117,630 $ 183,206
Banco Bradesco SA Prf........ 70,650,040 608,636
Banco Itau SA Prf............ 1,315,000 572,184
Companhia Energetica de Minas
Gerais Prf................. 12,650,000 405,125
Ceval Alimentos SA Prf....... 21,940,000 207,162
Companhia Vale do Rio Doce
Prf........................ 30,538 645,064
Companhia Cervejaria Brahma
Prf........................ 590,000 366,130
Centrais Electricas
Brasileiras SA Prf Cl.
'B'........................ 3,364,000 1,106,816
Lojas Americanas SA Prf...... 7,860,000 123,106
Petroleo Brasileiro SA Prf... 3,380,000 424,433
Telecomunicacoes Brasileiras
SA Prf (Telebras).......... 15,010,000 1,119,212
Telecomunicacoes de Sao Paulo
SA Prf..................... 1,255,000 232,114
Usinas Siderurgicas de Minas
Gerais SA Prf.............. 426,510,000 442,589
------------
6,435,777
------------
TOTAL PREFERRED STOCKS
(COST $5,552,830)...................... 6,435,777
------------
TOTAL INVESTMENTS--97.1%
(COST $40,271,837)..................... 39,372,139
------------
CASH AND OTHER ASSETS
NET OF LIABILITIES--2.9%............... 1,187,530
------------
NET ASSETS--100%......................... $ 40,559,669
------------
------------
</TABLE>
* NON-INCOME PRODUCING
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL DEVELOPING
EQUITY FUND MARKETS FUND
------------ -------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $41,223,418 and $40,271,837, respectively)................................ $43,256,587 $39,372,139
Cash, at value (cost $270,917 and $1,173,708, respectively)....................... 268,354 1,166,731
Receivable for investments sold................................................... 5,707,832 --
Receivable for capital stock sold................................................. 49,476 34,510
Dividends and interest receivable................................................. 112,602 80,735
Deferred organization costs (Note A).............................................. 87,710 87,710
------------ -------------
Total assets...................................................................... 49,482,561 40,741,825
------------ -------------
LIABILITIES:
Payable for securities purchased.................................................. 993,045 --
Payable to custodian.............................................................. 1,176,090 --
Payable to investment advisor..................................................... 137,231 116,230
Accrued expenses and other liabilities............................................ 51,497 65,926
------------ -------------
Total liabilities................................................................. 2,357,863 182,156
------------ -------------
NET ASSETS.......................................................................... $47,124,698 $40,559,669
------------ -------------
------------ -------------
NET ASSETS CONSIST OF:
Capital paid-in................................................................... $45,908,826 $41,482,165
Accumulated net investment loss................................................... (197,881) (58,233)
Accumulated net realized gain (loss) on investments and foreign currency
transactions.................................................................... (618,023) 43,455
Net unrealized appreciation (depreciation) of investments and foreign currency
denominated assets and liabilities.............................................. 2,031,776 (907,718)
------------ -------------
$47,124,698 $40,559,669
------------ -------------
------------ -------------
CLASS A SHARES:
Net assets........................................................................ $42,169,653 $36,918,388
------------ -------------
Shares outstanding................................................................ 4,063,828 3,708,339
------------ -------------
Net asset value and redemption value per share.................................... $ 10.38 $ 9.96
------ -----
------ -----
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price)................................................................. $11.01 $10.57
------ ------
------ ------
CLASS B SHARES:
Net assets........................................................................ $ 4,955,045 $ 3,641,281
------------ -------------
Shares outstanding................................................................ 481,388 369,261
------------ -------------
Net asset value and offering price per share...................................... $ 10.29 $ 9.86
------ -----
------ -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL DEVELOPING
EQUITY FUND MARKETS FUND
------------ -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income................................................................... $ 91,560 $ 109,908
Dividend income................................................................... 745,088 624,817
------------ -------------
836,648 734,725
Less withholding tax on foreign source dividends................................ (94,807) (57,931)
------------ -------------
Total investment income......................................................... 741,841 676,794
------------ -------------
EXPENSES:
Investment advisory fees (Note B)................................................. $ 528,653 $ 419,303
Distribution fees--Class A (Note B)............................................... 96,395 77,456
Distribution fees--Class B (Note B)............................................... 37,341 25,620
Legal fees........................................................................ 42,000 37,000
Transfer agent fees............................................................... 77,000 74,000
Custodian fees.................................................................... 119,000 148,000
Auditing fees..................................................................... 35,000 32,000
Printing fees..................................................................... 28,000 25,000
Trustees' fees.................................................................... 14,000 12,000
Registration fees................................................................. 39,000 34,000
Miscellaneous..................................................................... 10,658 14,780
Amortization of organization costs (Note A)....................................... 22,784 22,784
------------ -------------
1,049,831 921,943
Less fees waived/reimbursed by investment advisor and subadvisor................ (112,542) (181,527)
------------ -------------
Net expenses.................................................................... 937,289 740,416
------------ -------------
NET INVESTMENT (LOSS)............................................................... (195,448) (63,622)
------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS--NOTE C:
Net realized gain (loss) on investments........................................... (211,066) 66,934
Net realized gain (loss) on foreign currency transactions......................... 264,806 (4,844)
Net change in unrealized appreciation on investments.............................. 2,802,218 (221,084)
Net change in unrealized appreciation on translation of foreign currency
denominated assets and liabilities.............................................. (180,079) (8,018)
------------ -------------
Net realized and unrealized gain (loss) on investments and foreign currency
transactions.................................................................... 2,675,879 (167,012)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS................................... $2,480,431 $ (230,634)
------------ -------------
------------ -------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND DEVELOPING MARKETS FUND
-------------------------- --------------------------
<S> <C> <C> <C> <C>
YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
10/31/96 10/31/95* 10/31/96 10/31/95*
------------ ------------ ------------ ------------
<CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......................... $ (195,448) $ (2,433) $ (63,622) $ 5,389
Net realized gain (loss) on investments and foreign
currency transactions............................... 53,740 (671,763) 62,090 (18,635)
Net change in unrealized appreciation/depreciation on
investments and foreign currency denominated assets
and liabilities..................................... 2,622,139 (590,363) (229,102) (678,616)
------------ ------------ ------------ ------------
Increase (decrease) in net assets resulting from
operations.......................................... 2,480,431 (1,264,559) (230,634) (691,862)
CAPITAL STOCK TRANSACTIONS--(NET) NOTE D................ 14,022,355 31,836,471 25,163,617 16,268,548
------------ ------------ ------------ ------------
Total increase (decrease) in net assets............... 16,502,786 30,571,912 24,932,983 15,576,686
NET ASSETS:
Beginning of period................................... 30,621,912 50,000 15,626,686 50,000
------------ ------------ ------------ ------------
End of period (including undistributed net investment
income of $5,389 for the Developing Markets Fund at
10/31/95)........................................... $ 47,124,698 $30,621,912 $ 40,559,669 $15,626,686
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
*Commencement of operations was September 8, 1995.
SEE NOTES TO FINANCIAL STATEMENTS.
