DLJ WINTHROP Funds
Prospectus
February 28, 2000
Leadership through Experience
DLJ WINTHROP FOCUS FUNDS
DLJ Winthrop Growth Fund
DLJ Winthrop Growth and Income Fund
DLJ Winthrop Small Company Value Fund
DLJ Winthrop Fixed Income Fund
DLJ Winthrop Municipal Trust Fund
DLJ WINTHROP OPPORTUNITY FUNDS
DLJ Winthrop International Equity Fund
DLJ Winthrop Developing Markets Fund
DLJ Winthrop High Income Fund
DLJ Winthrop Municipal Money Fund
DLJ Winthrop U.S. Government Money Fund
This prospectus provides information about two separate series of Funds: the DLJ
Winthrop Focus Funds and the DLJ Winthrop Opportunity Funds. Each series has a
number of individual funds. Each fund has a separate investment objective and
portfolio of investments.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
An investment in any of the Funds is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
TABLE OF CONTENTS
4 DLJ Winthrop Focus Funds' Risk Return Summary
9 DLJ Winthrop Opportunity Funds' Risk Return Summary
13 Summary of DLJ Winthrop Fund Expenses
14 Annual Fund Operating Expenses
16 Purchase Information
17 DLJ Winthrop Focus Funds' Investment Objectives and Policies
23 DLJ Winthrop Opportunity Funds' Investment Objectives and Policies
29 Additional Information on Investment Policies and Risks
33 Fund Management
35 How to Buy and Sell Shares
38 Other Shareholder Information
42 Additional Shareholder Services
44 Distribution Charges
44 Dividend and Distribution Information
45 Taxes
47 Financial Highlights
52 For More Information
<PAGE>
This part of the prospectus summarizes each Fund's investment objective,
principal investment strategies and principal risks. This section also contains
limited performance data. More information about the DLJ Winthrop Funds is
contained in "DLJ Focus Funds' Investment Objectives and Policies", DLJ Winthrop
Opportunity Funds' Investment Objectives and Policies" and "Additional
Information on Investment Policies and Risks." Please read the entire prospectus
carefully before investing and save it for future reference.
DLJ WINTHROP FOCUS FUNDS' RISK RETURN SUMMARY
THE DLJ WINTHROP GROWTH FUND
The DLJ WINTHROP GROWTH FUND's investment objective is long-term capital
appreciation. The Fund seeks to achieve its objective by investing in companies
that offer long-term capital appreciation. The Fund invests in common stock,
securities convertible into common stock and other equity securities of
well-known and established companies. The Fund takes a long-term view of each
stock it buys, holding each company until its long-term growth potential no
longer meets the Fund's requirements. Generally, the Fund attempts to identify
companies with growth rates that will exceed that of the S&P 500 Index. The Fund
may also make an investment to earn income when its Adviser believes that it
will not compromise the investment objective. To achieve this objective, the
Fund may invest up to 35% of the value of its assets in investment-grade fixed
income securities, including bonds, debentures, notes, asset and mortgage-backed
securities and money market instruments such as commercial paper and bankers'
acceptances and other financial instruments. The Fund may also invest in
non-U.S. securities.
Like any investment, an investment in the DLJ Winthrop Growth Fund is subject to
risk and you could lose money. While investments are selected that the Adviser
believes will experience long-term appreciation, their value could decline. The
Fund is subject to risks that affect equity securities markets in general, such
as general economic conditions and adverse changes (generally increases) in
interest rates. These and other factors could adversely affect your investment.
The following chart and table illustrate the risk by showing variability of the
Fund's returns by showing the rate of return from year to year and how annual
returns for 1, 5 and 10 years compare to those of the S&P 500 Composite Index,
which is a broad measure of market performance. The Fund's past performance is
not necessarily an indication of how it will perform in the future.
1999 28%
1998 28%
1997 28%
1996 20%
1995 24%
1994 -4%
1993 14%
1992 2%
1991 28%
1990 -7%
<PAGE>
During the 10-year period shown in the bar chart for Class A shares, the
highest return for a quarter was 21.16% (quarter ending 12/31/98) and the
lowest return for a quarter was -15.22% (quarter ending 9/30/90).
The annual returns referenced in the bar chart do not include sales
charges. If sales charges were included, the annual returns would be lower
than those shown.
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
================================================================================
Growth Fund Class A 20.57% 24.14% 14.54%
Growth Fund Class B 22.93% N/A N/A
================================================================================
S&P 500* 21.04% 28.55% 18.21%
================================================================================
The Fund commenced offering Class D shares on May 13, 1999. Prior to the date of
this prospectus, the Fund had not yet commenced offering Class C shares.
*The S & P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices. The returns for the
S&P 500 do not include any sales charges, fees or other expenses. The returns
for the Fund reflect the maximum applicable sales charges currently in effect.
THE DLJ WINTHROP GROWTH AND INCOME FUND
The DLJ Winthrop Growth and Income Fund's investment objective is long-term
capital appreciation and continuity of income. The Fund seeks to achieve its
objective by investing in dividend paying common stock and by diversifying its
investments among different industries and different companies. Securities are
selected on the basis of their investment merit and their potential for
appreciation in value and/or income, with a focus on stability. The Adviser
identifies companies that it believes are undervalued and waits for the market
to discover that value. A portion of the Fund is invested in debt securities
that are of investment-grade quality, U.S. Government securities and money
market instruments. The Fund may also invest in non-U.S. securities. There is no
fixed percentage of the Fund's assets that must be invested in any particular
type of security.
Like any investment, an investment in the DLJ Winthrop Growth and Income Fund is
subject to risk and you could lose money. While the Fund seeks investments that
will appreciate in value and/or provide income, the Adviser could select
securities that will decline in value and provide no income.
The Fund is also subject to risks that affect equity securities markets in
general, such as general economic conditions and adverse changes (generally
increases) in interest rates. These and other factors could adversely affect
your investment.
The following chart and table illustrate risk by showing the variability of the
Fund's returns by showing the rate of return from year to year and how annual
returns for 1, 5 and 10 years compare to those of the S&P 500 Composite Index,
which is a broad measure of market performance. The Fund's past performance is
not necessarily an indication of how it will perform in the future.
1999 10%
1998 19%
1997 33%
1996 22%
<PAGE>
1995 30%
1994 -2%
1993 16%
1992 6%
1991 24%
1990 -3%
During the 10-year period shown in the bar chart for Class A shares, the
highest return for a quarter was 16.00% (quarter ending 12/31/98) and the
lowest return for a quarter was -9.97% (quarter ending 9/30/90).
The annual returns referenced in the bar chart do not include sales
charges. If sales charges were included, the annual returns would be lower
than those shown.
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
================================================================================
Growth and Income Fund Class A 4.06% 20.94% 14.01%
Growth and Income Fund Class B 5.64% N/A N/A
================================================================================
S&P 500* 21.04% 28.55% 18.21%
================================================================================
The Fund commenced offering Class D shares on April 30, 1999. Prior to the date
of this prospectus, the Fund had not yet commenced offering Class C shares.
*The S&P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a widely
recognized, unmanaged index of common stock prices. The returns for the S&P 500
do not include any sales charges, fees or other expenses. The returns for the
Fund reflect the maximum applicable sales charges currently in effect.
THE DLJ WINTHROP SMALL COMPANY VALUE FUND
The DLJ Winthrop Small Company Value Fund's investment objective is a high level
of growth of capital. The Fund seeks to achieve its objective by investing in
common stock and other equity securities of "small cap" companies that appear to
be undervalued. Companies with market capitalizations of $2 billion or less at
the time of purchase are considered to be "small cap" companies.
This Fund's investment objective causes it to be riskier than other funds and
you could lose money. While the Fund seeks investments that provide a high level
of growth of capital, they may decline in value. You should not invest in this
Fund if your principal objective is assured income or capital preservation.
Investments in smaller companies often involve greater risks than investments in
larger, more established companies. Smaller companies may have less management
experience, fewer financial resources, and limited product diversification, all
of which may increase risk.
The frequency and trading volume for securities of smaller companies are
substantially less than for larger companies. This can result in greater and
more abrupt price fluctuations and can cause small cap stocks to be less liquid
than securities of larger companies. The Fund is also subject to risks that
affect equity securities markets in general, such as general economic conditions
and adverse changes (generally increases) in interest rates. These and other
factors could adversely affect your investment.
<PAGE>
The following chart and table illustrate risk by showing the variability of the
Fund's returns by showing the rate of return from year to year and how annual
returns for 1, 5 and 10 years compare to those of the Russell 2000 Index, which
is a broad measure of market performance. The Fund's past performance is not
necessarily an indication of how it will perform in the future.
1999 1%
1998 -5%
1997 26%
1996 15%
1995 20%
1994 -1%
1993 22%
1992 18%
1991 51%
1990 -13%
During the 10 year period shown in the bar chart for Class A shares, the
highest return for a quarter was 17.81% (quarter ending 3/31/91) and the
lowest return for a quarter was -18.15% (quarter ending 9/30/98).
The annual returns referenced in the bar chart do not include sales
charges. If sales charges were included, the annual returns would be lower
than those shown. Prior to the date of this prospectus, the Fund had not
yet commenced offering Class C shares.
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
================================================================================
Small Company Value Fund Class A -4.35% 9.65% 11.48%
Small Company Value Fund Class B -3.29% N/A N/A
================================================================================
Russell 2000* 21.26% 16.69% 13.40%
================================================================================
*The Russell 2000 Index is an unmanaged index of common stock prices and is
composed of the 2,000 smallest companies in the Russell 3000 Index. The Russell
3000 Index is composed of 3,000 of the largest U.S. companies by market
capitalization. The returns for the Russell 2000 Index do not include any sales
charges, fees or other expenses. The returns for the Fund reflect the maximum
applicable sales charges currently in effect.
THE DLJ WINTHROP FIXED INCOME FUND
The DLJ Winthrop Fixed Income Fund's investment objective is to provide as high
a level of total return as is consistent with capital preservation by investing
principally in debt securities, including, without limitation, convertible and
non-convertible debt securities of foreign and domestic companies, including
both well-known and established and new and lesser-known companies. The Fund
seeks to achieve its objective by investing primarily in a diversified portfolio
of high-grade intermediate-term corporate bonds and U.S. Government securities,
as well as in commercial paper and obligations issued or guaranteed by national
or state banks. In addition, the Adviser actively manages the maturities of the
securities in the
<PAGE>
portfolio in response to the Adviser's anticipation of the movement of interest
rates and relative yields. The Fund seeks to limit risk by selecting
investment-grade debt securities.
While the Fund seeks investments that will satisfy its investment objective, the
investments could decline in value and you could lose money. Concerns about an
issuer's ability to repay its borrowings or to pay interest will adversely
affect the value of its securities.
The Fund is subject to risks that affect the bond markets in general, such as
general economic conditions and adverse changes (generally increases) in
interest rates. As interest rates rise, absent other factors, bond prices and
the value of your investments will fall. The Fund is also subject to the risk
that, in seeking to enhance total return, the Adviser will incorrectly forecast
changes in interest rates or improperly assess the value of debt securities.
These and other factors could adversely affect your investment.
The following chart and table illustrate risk by showing the variability of the
Fund's returns by showing the rate of return from year to year and how annual
returns for 1, 5 and 10 years compare to those of the Lehman Brothers
Government/Corporate Intermediate Bond Index, which is a broad measure of market
performance. The Fund's past performance is not necessarily an indication of how
it will perform in the future.
1999 -1%
1998 8%
1997 8%
1996 3%
1995 15%
1994 -4%
1993 10%
1992 7%
1991 14%
1990 9%
During the 10 year period shown in the bar chart for Class A shares, the
highest return for a quarter was 5.09% (quarter ending 12/31/91) and the
lowest return for a quarter was -2.88% (quarter ending 3/31/94).
The annual returns referenced in the bar chart do not include sales
charges. If sales charges were included, the annual returns would be lower
than those shown.
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years Past 10 years
================================================================================
Fixed Income Fund Class A -5.38% 5.16% 6.24%
Fixed Income Fund Class B -5.35% N/A N/A
================================================================================
Lehman Index** 0.39% 7.10% 7.26%
================================================================================
The Fund commenced offering Class D shares on April 30, 1999. Prior to the date
of this prospectus, the Fund had not yet commenced offering Class C shares.
**The Lehman Brothers Government/Corporate Intermediate Bond Index is comprised
of securities in the Lehman Brothers Government/Corporate Bond Index that have
maturities of 5-10 years. The Lehman Brothers Government/Corporate Bond Index
includes the Lehman Brothers Government Bond Index and
<PAGE>
the Lehman Brothers Corporate Bond Index and does not include fees or expenses
in its calculation. The returns for the Fund reflect the maximum applicable
sales charges currently in effect.
THE DLJ WINTHROP MUNICIPAL TRUST FUND
The DLJ Winthrop Municipal Trust Fund's investment objective is to provide as
high a level of total return as is consistent with capital preservation by
investing principally in high-grade tax-exempt municipal securities. By
high-grade tax-exempt municipal securities, we mean securities rated Aaa, Aa, A
or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. It is important to note that
unlike most other municipal bond funds, the Fund's objective is not to provide
current income that is exempt from federal and/or state income tax. The Fund
seeks to achieve its objective by investing primarily in a diversified portfolio
of high-grade, intermediate-term municipal securities. In addition, the Adviser
actively manages the maturities of the securities in the portfolio in response
to the Adviser's anticipation of the movement of interest rates and relative
yields. Certain investments are selected that the Adviser believes are
undervalued. The Fund attempts to limit risk by selecting investment-grade debt
securities and by maintaining an average maturity of between five and ten years.
While the Fund seeks investments that will satisfy its investment objective,
these investments could decline in value and you could lose money. Concerns
about an issuer's ability to repay its borrowings or to pay interest will
adversely affect the value of its securities. The Fund is also subject to the
risk that, in seeking to enhance total return, the Adviser will incorrectly
forecast changes in interest rates or improperly assess the value of municipal
securities. Like all bond funds, this Fund is subject to risks that affect the
bond markets in general, such as general economic conditions and adverse changes
(generally increases) in interest rates. As interest rates rise, absent other
factors, bond prices and the value of your investment will fall. The Fund is
also subject to risks of investing in municipal securities. These risks include
uncertainties regarding the securities' tax status, political and legislative
changes and the rights of their holders. These and other factors could adversely
affect your investment.
The following chart and table illustrate risk by showing the variability of the
Fund's returns by showing the rate of return from year to year and how annual
returns for 1 and 5 years and from inception, compare to those of the Lehman
Brothers Seven Year Municipal Bond Index, which is a broad measure of market
performance. The Fund's past performance is not necessarily an indication of how
it will perform in the future.
1999 -1%
1998 5%
1997 8%
1996 4%
1995 12%
1994 -3%
During the 6 year period shown in the bar chart for Class A shares, the
highest return for a quarter was 4.52% (quarter ending 3/31/95) and the
lowest return for a quarter was -4.18% (quarter ending 3/31/94). 1994 was
the first full calendar year of operations.
The annual returns referenced in the bar chart do not include sales
charges. If sales charges were included, the annual returns would be lower
than those shown. Prior to the date of this prospectus, the Fund had not
yet commenced offering Class C shares.
<PAGE>
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year Past 5 years From inception on 7/28/93
================================================================================
Municipal Trust Fund Class A -6.10% 4.32% 3.22%
Municipal Trust Fund Class B -5.89% N/A N/A
================================================================================
LBSYMBI* -0.14% 6.35% 5.12%**
================================================================================
* The Lehman Brothers Seven Year Municipal Bond Index ("LBSYMBI") is comprised
of municipal securities having an average approximate maturity of seven years
and does not include fees or expenses in its calculation. The returns for the
Fund reflect the maximum applicable sales charges currently in effect.
** For comparative purposes the value of the index on 7/31/93 is used for the
beginning value on 7/28/93.
DLJ WINTHROP OPPORTUNITY FUNDS' RISK RETURN SUMMARY
THE DLJ WINTHROP DEVELOPING MARKETS FUND'S
The DLJ Winthrop Developing Markets Fund's investment objective is to provide
long-term growth by investing in common stocks and other equity securities of
companies from developing countries. The Fund seeks to achieve its objective by
investing in companies from the countries included in the Morgan Stanley Capital
Index ("MSCI") Emerging Markets Free Index that are identified by the Adviser as
being best positioned to take advantage of certain economic and political
factors. The Fund seeks to identify countries, and then the industries, where
economic and political factors are likely to produce above average growth. The
Fund uses a fundamental analysis on common stock in countries the Adviser
believes demonstrate a strong potential for expansion, a trend toward
modernizing production and high levels of economic growth. The Fund invests in
securities of issuers in at least three different developing countries. You
should not invest in this Fund if your principal objective is assured income or
capital preservation.
This Fund's investment objective causes it to be riskier than other Funds and
you could lose money. While the Fund seeks investments that provide a high level
of growth of capital, they may decline in value. The Fund invests primarily in
non-U.S. securities (securities of non-U.S. based issuers or issuers that do
business principally outside the United States) from issuers in developing
markets. Investments in non-U.S. securities present additional risks including
greater price volatility and a lack of liquidity. Investments in developing
markets present further risks because they tend to be smaller, less mature and
less stable than developed markets. The Fund is also subject to risks that
affect equity securities markets in general, such as general economic conditions
and adverse changes in interest and foreign exchange rates. These and other
factors could adversely affect your investment.
The following chart and table illustrate risk by showing the variability of the
Fund's returns by showing the rate of return from year to year and how annual
returns for 1 year and from inception, compare to those of the MSCI Emerging
Markets Free Index, which is a broad measure of market performance. The Fund's
past performance is not necessarily an indication of how it will perform in the
future.
1999 69%
1998 -22%
1997 -6%
1996 4%
During the 4 year period shown in the bar chart for Class A shares, the
highest return for a quarter was 27.74% (quarter ending 12/31/99) and the
lowest return for a quarter -21.96%(quarter ending 6/30/98). 1996 was the
first full calendar year of operations.
The annual returns referenced in the bar chart do not include sales
charges. If sales charges were included, the annual returns would be lower
than those shown. Prior to the date of this prospectus, the Fund had not
yet commenced offering Class C shares.
<PAGE>
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year From Inception on 9/8/95
================================================================================
Developing Markets Fund Class A 59.11% 4.16%
Developing Markets Fund Class B 63.45% 4.78%
================================================================================
MSCI Emerging Markets Free Index* 66.41% 3.09%
================================================================================
* 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 returns for the Index do not include any sales charges, fees
or other expenses. The returns for the Fund reflect the maximum applicable sales
charges.
THE DLJ WINTHROP INTERNATIONAL EQUITY FUND
The DLJ Winthrop International Equity Fund's investment objective is long-term
growth by investing in equity securities from established international markets.
The Fund seeks to achieve this objective by investing in a diversified portfolio
of investments that include companies from the countries of the MSCI Europe,
Australia and Far East Index (the "EAFE Index"), an unmanaged index of over
1,000 foreign stock prices. The Fund seeks to identify countries and industries
with favorable growth prospects. Once the countries have been selected, the
Adviser chooses the stocks and industries in each country. The Adviser employs a
comprehensive top-down approach to invest in industries in each country that
are, in the opinion of the Adviser, likely to do well and in stocks with
reasonable value, reliable earnings and high quality management.
Like any investment, an investment in the Fund is subject to risk and you could
lose money. While the Fund selects investments that the Adviser believes will
appreciate in value, those securities could decline in value and provide no
income. The Fund invests primarily in non-U.S. securities (securities of
non-U.S. based issuers or issuers that do business principally outside the
United States ). Investments in non-U.S. securities present additional risks
including greater price volatility and a lack of liquidity. The Fund is also
subject to risks that affect equity securities markets in general, such as
general economic conditions and adverse changes in interest and foreign exchange
rates. These and other factors could adversely affect your investment.
The following chart and table illustrate risk by showing the variability of the
Fund's returns by showing the rate of return from year to year and how annual
returns for 1 year and from inception compare to those of the MSCI-EAFE(R)
Index, which is a broad measure of market performance. The Fund's past
performance is not necessarily an indication of how it will perform in the
future.
1999 28%
1998 18%
1997 7%
1996 6%
<PAGE>
During the 4 year period shown in the bar chart for Class A shares, the
highest return for a quarter was 19.76% (quarter ending 12/31/99) and the
lowest return for a quarter was -15.46% (quarter ending 9/30/98). 1996 was
the first full calendar year of operations.
The annual returns, referenced in the bar chart, do not include sales
charges. If sales charges were included, the annual returns would be lower
than those shown.
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year From inception 9/8/95
================================================================================
International Equity Fund Class A 20.57% 12.10%
International Equity Fund Class B 22.97% 12.81%
================================================================================
MSCI -EAFE* 27.30% 14.02%
================================================================================
The Fund commenced offering Class D shares on May 13, 1999. Prior to the date of
this prospectus, the Fund had not yet commenced offering Class C shares.
*The MSCI-EAFE(R) 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 returns for
the Index do not include any sales charges, fees or other expenses. The returns
for the Fund reflect the maximum applicable sales charges.
THE DLJ WINTHROP MUNICIPAL MONEY FUND
The DLJ Winthrop Municipal Money Fund's investment objective is maximum current
income, consistent with liquidity and safety of principal. The Fund seeks to
achieve this objective by investing in a diversified portfolio of municipal
securities that is intended to be exempt from Federal income taxes. The Fund
earns income at current money market rates, and its yield generally reflects
short-term interest rates which vary from day to day. Such municipal securities
will have varying lengths of maturities but will generally have remaining
maturities of one year or less. In general, securities with longer maturities
are more vulnerable to price changes, although they may provide higher yields.
Like any money market fund investment, this investment is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The Fund seeks to preserve the value of your investment at $1.00 per share,
however, it is possible to lose money by investing in the Fund.
Because this Fund began operations in February, 1997, the first full calendar
year of performance was 1998. The Fund's past performance is not necessarily an
indication of how it will perform in the future.
1999 2%
1998 3%
<PAGE>
During the 2 year period shown in the bar chart, the highest return for a
quarter was 0.70% (quarter ending 6/30/98) and the lowest return for a
quarter was .53% (quarter ending 3/31/99).
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year From Inception on 2/24/97
================================================================================
Municipal Money Fund 2.44 % 2.67%
================================================================================
Seven Day Yield as of December 31, 1999 was 3.64%
THE DLJ WINTHROP U.S. GOVERNMENT MONEY FUND
The DLJ Winthrop U.S. Government Money Fund's investment objective is maximum
current income, consistent with liquidity and safety of principal. The Fund
seeks to achieve its objective by investing in a portfolio of U.S. Government
securities, including issues of the U.S. Treasury and other government agencies,
which generally have remaining maturities of one year or less and collateralized
repurchase agreements.
Like any money market fund investment, this investment is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. The Fund seeks to preserve the value of your investment at $1.00 per
share, however, it is possible to lose money by investing in the Fund. The Fund
earns income at current market rates, and its yield generally reflects
short-term interest rates, which vary from day to day.
Because this Fund began operations in February, 1997, the first full calendar
year of performance was 1998. The Fund's past performance is not necessarily an
indication of how it will perform in the future.
1999 4%
1998 5%
During the 2 year period shown in the bar chart, the highest return for a
quarter was 1.19% (quarter ending 9/30/98) and the lowest return for a
quarter was 1.00% (quarter ending 3/31/99).
================================================================================
Average Annual Total Returns
(for the periods ending
December 31, 1999) Past Year From Inception on 2/24/97
================================================================================
U.S. Government Money Fund 4.34% 4.60%
================================================================================
Seven Day Yield as of December 31, 1999 is 4.54%
THE DLJ WINTHROP HIGH INCOME FUND
The DLJ Winthrop High Income Fund's primary investment objective is to provide a
high level of current income and a secondary objective is capital appreciation.
The Fund seeks to achieve its objective by investing in fixed income securities
of U.S. issuers that are rated below investment-grade quality or unrated fixed
income securities deemed to be of comparable quality. Lower grade fixed income
securities are commonly known as "junk bonds".
<PAGE>
This investment objective causes it to be riskier than other Funds and you could
lose money. Investments in lower grade securities are subject to special risks,
including greater price volatility and a greater risk of loss of principal and
non-payment of interest. The market value of longer maturity debt securities,
like those held by the Fund, is more sensitive to interest rate changes than the
market value of shorter maturity debt securities. The Fund is not recommended
for investors whose principal objectives are assured income or capital
preservation. This Fund is designed for investors willing to assume additional
risk in return primarily for the potential for high current income and
secondarily capital appreciation.
Because this Fund began operations in March 1999 it does not have a full
calendar year of performance.
SUMMARY OF DLJ WINTHROP FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the DLJ Winthrop Funds.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Fixed Income Funds* Equity Funds** Money
Funds***
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER FEES: Class A Class B Class C Class D Class A Class B Class C Class D
(These fees are paid (1) (2) (1) (2)
directly from your
investment.)
- --------------------------- -------------
Maximum sales charge 4.75% None None None 5.75% None None None None
(load) imposed on
purchases (as a
percentage of offering
price)
- --------------------------- -------------
Maximum sales charge None None None None None None None None None
(load) imposed on
reinvested dividends (as
a percentage of offering
price)
- --------------------------- -------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------- -------------
Maximum deferred sales None 4% (3) 1% (4) None None 4% (3) 1% (4) None None
charge (as a percentage
of original purchase
price or redemption
proceeds, as applicable)
- --------------------------- -------------
Redemption Fees None None None None None None None None None
- --------------------------- -------------
Exchange Fee None None None None None None None None None
- --------------------------- ---------- ---------- --------- --------- ---------- ----------- --------- ------- -------------
</TABLE>
* Includes the Fixed Income Fund, Municipal Trust Fund and the High Income
Fund.
** Includes the Growth Fund, the Growth and Income Fund, the Small Company
Value Fund, the Developing Markets Fund, and the International Equity
Fund.
*** Includes the Municipal Money Fund and U.S. Government Money Fund.
(1) The maximum sales charge imposed is reduced for larger purchases.
Purchases of $1,000,000 or more are not subject to an initial sales charge
but may be subject to a 1% CDSC (Contingent Deferred Sales Charge) on
redemptions made within one year of purchase. See "Other Shareholder
Information."
(2) Class B shares of each Fund automatically convert to Class A shares after
eight years. The effect of the automatic conversion feature is reflected
in the Examples on page 15. See "Other Shareholder Information".
(3) 4% during the first year decreasing 1% annually to 0% after the fourth
year.
(4) 1% during the first year.
ANNUAL FUND OPERATING EXPENSES
These examples help you compare the cost of investing in the Funds with the cost
of investing in other mutual funds. They assume that you invest $10,000 in the
applicable Fund for the periods indicated and then sell all of your shares at
the end of those periods. The examples also assume that your investment has a 5%
return each year and that the Fund's operating expenses remain the same. For
those Funds that have Waived Fees below, only the After 1 Year Examples and the
first year in each of the other Examples reflect the Waived Fees. Other
expenses for Class C shares are estimates based on the expense ratio referenced
for the Funds' other classes. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
Annual Fund Operating Expenses Examples
(expenses that are deducted from Fund assets)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth Fund Class A Class B Class C Class D Examples+ Class A Class B* Class B** Class C * Class C** Class D
Management Fee .67% .67% .67% .67% After 1 Year $693 $596 $196 $296 $196 $95
Distribution .30% 1.00 % 1.00% .00% After 3 Years $943 $806 $606 $606 $606 $296
(12b-1) and
Service Fees (a)
Other Expenses .26 % .26 % .26% .26% After 5 Years $1,212 $1,042 $1,042 $1,042 $1,042 $515
Total Annual 1.23% 1.93% 1.93% .93% After 10 Years $1,978 $2,072 $2,072 $2,254 $2,254 $1,143
Fund Operating
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Growth and Class A Class B Class C Class D Examples+ Class A Class B* Class B ** Class C * Class C** Class D
Income Fund
Management Fee .58% .58% .58% .58% After 1 Year $682 $584 $184 $284 $184 $83
Distribution .30% 1.00% 1.00% .00% After 3 Years $908 $769 $569 $569 $569 $259
(12b-1) and
Service Fees (a)
Other Expenses 23% .23% .23% .23% After 5 Years $1,151 $980 $980 $980 $980 $450
Total Annual 1.11% 1.81% 1.81% .81% After 10 Years $1,849 $1,943 $1,943 $2,127 $2,127 $1,002
Fund Operating
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Company Class A Class B Class C Examples+ Class A Class B* Class B** Class C* Class C**
Value Fund
Management Fee .79% .79% .79% After 1 Year $706 $610 $210 $310 $210
Distribution .30% 1.00% 1.00% After 3 Years $984 $849 $649 $649 $649
(12b-1) and
Service Fees (a)
Other Expenses .28% .28% .28% After 5 Years $1,282 $1,114 $1,114 $1,114 $1,114
Total Annual 1.37% 2.07% 2.07% After 10 Years $2,127 $2,221 $2,221 $2,400 $2,400
Fund Operating
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income Class A Class B Class C Class D Examples+ Class A Class B* Class B** Class C* Class C ** Class D
Fund
Management Fee .63% .63% .63% .63% After 1 Year $572 $573 $173 $273 $173 $72
Distribution .30% 1.00% 1.00% .00% After 3 Years $807 $765 $565 $565 $565 $254
(12b-1) and
Service Fees (a)
Other Expenses .21% .21% .21% .21% After 5 Years $1,060 $982 $982 $982 $982 $452
Total Annual 1.14% 1.84% 1.84% .84% After 10 Years $1,783 $1,964 $1,964 $2,147 $2,147 $1,024
Fund Operating
Expenses
Waived Fees (d) (.14%) (.14%) (.14%) (.14%)
Total Expenses 1.00% 1.70% 1.70% .70%
Less Waived Fees
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal Class A Class B Class C Examples+ Class A Class B* Class B** Class C * Class C **
Trust Fund
Management Fee .63% .63% .63% After 1 Year $572 $573 $173 $273 $173
Distribution .30% 1.00% 1.00% After 3 Years $864 $824 $624 $624 $624
(12b-1) and
Service Fees(a)
Other Expenses .49% .49% .49% After 5 Years $1,176 $1,101 $1,101 $1,101 $1,101
Total Annual 1.42% 2.12% 2.12% After 10 Years $2,062 $2,240 $2,240 $2,419 $2,419
Fund Operating
Expenses
Waived Fees (e) (.42%) (.42%) (.42%)
Total Expenses 1.00% 1.70% 1.70%
Less Waived Fees
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Developing Class A Class B Class C Examples+ Class A Class B* Class B** Class C * Class C **
Markets Fund
Management Fees 1.25% 1.25% 1.25% After 1 Year $781 $693 $293 $393 $293
Distribution .25% 1.00% 1.00% After 3 Years $1,357 $1,250 $1,050 $1,050 $1,050
(12b-1) and
Service Fees (a)
Other Expenses 1.41% 1.41% 1.41% After 5 Years $1,957 $1,828 $1,828 $1,828 $1,828
Total Annual 2.91% 3.66% 3.66% After 10 Years $3,571 $3,701 $3,701 $3,866 $3,866
Fund Operating
Expense (b)
Waived Fees (f) (.76%) (.76%) (.76%)
Total Expenses 2.15% 2.90% 2.90%
Less Waived Fees
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
International Class A Class B Class C Class D Examples+ Class A Class B* Class B** Class C * Class C** Class D
Equity Fund
Management Fees 1.25% 1.25% 1.25% 1.25% After 1 Year $781 $693 $293 $393 $293 $193
Distribution
(12b-1) and After 3
Service Fees (a) .25% 1.00% 1.00% .00% Years $1,217 $1,106 $906 $906 $906 $605
After 5
Other Expenses .69% .69% .69% .69% Years $1,679 $1,544 $1,544 $1,544 $1,544 $1,043
Total Annual
Fund Operating After 10
Expenses (b) 2.19% 2.94% 2.94% 1.94% Years $2,951 $3,082 $3,082 $3,258 $3,258 $2,261
Waived Fees (g) (.04%) (.04%) (.04%) (.04%)
Total Expenses
Less Waived Fees 2.15% 2.90% 2.90% 1.90%
- ------------------------------------------------------------------------------------------------------------------------------------
Municipal Money
Fund Examples++
Management Fees .40% After 1 Year $92
Distribution
(12b-1) and After 3
Service Fees(c) .25% Years $317
Other Expenses .39% After 5
Total Annual Years $560
Fund Operating After 10
Expenses 1.04% Years $1,258
Waived Fees (h) (.14%)
Total Expenses
Less Waived Fees .90%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
Money Fund Examples++
Management Fees .40% After 1 Year $92
Distribution
(12b-1) and After 3
Service Fees(c) .25% Years $328
Other Expenses .44% After 5
Total Annual Years $582
Fund Operating After 10
Expenses 1.09% Years $1,312
Waived Fees (i) (.19%)
Total Expenses
Less Waived Fees .90%
- ------------------------------------------------------------------------------------------------------------------------------------
High Income Fund Class A Class B Class C Class D Examples+ Class A Class B* Class B** Class C* Class C** Class D
Management Fees .70% .70% .70% .70% After 1 Year $582 $588 $188 $288 $188 $87
Distribution .25% 1.00% 1.00% .00% After 3
(12b-1) and Years $1,095 $1,076 $876 $876 $876 $575
Service Fees(a) After 5
Years $1,634 $1,589 $1,589 $1,589 $1,589 $1,090
After 10
Years $3,102 $3,306 $3,306 $3,479 $3,479 $2,504
Other Expenses(k) 1.58% 1.58% 1.58% 1.58%
Total Annual
Fund Operating
Expenses 2.53% 3.28% 3.28% 2.28%
Waived Fees (j) (1.43%) (1.43%) (1.43%) (1.43%)
Total Expenses
Less Waived Fees 1.10% 1.85% 1.85% .85%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Assumes reinvestment of all dividends and redemption at end of period.
** Assumes reinvestment of all dividends and no redemption at end of period.
+ Ten year figures assume conversion of Class B shares to Class A shares at
the end of the eighth year following the date of purchase.
++ Shares purchased directly into a Money Fund will not be subject to a CDSC
and therefore expenses paid will remain unaffected by redemption.
(a) The Fund has adopted a Rule 12b-1 plan for the indicated classes of shares
that allows the Fund to pay distribution fees for the sale and
distribution of those classes of shares out of the assets applicable to
those classes. Because these fees are paid out over time, they will
increase the cost of your investment and may cost you more than paying
other types of sales charges. A portion of the 12b-1 fee represents an
asset-based sales charge.
(b) The expense ratios for each class of shares of the Developing Markets Fund
and the International Equity Fund are higher than those paid by most other
investment companies, but DLJ Asset Management Group, Inc. (as Adviser)
and AXA Investment Managers GS Ltd. (as subadviser)
<PAGE>
believe the fees are comparable to those paid by investment companies of
similar investment orientation.
(c) The maximum allowable amount payable for distributing shares is .40 of 1%
of the average daily net assets of each Money Fund. The Board of Trustees
has currently limited the amount payable to .25 of 1% of the average daily
not assets of each Money Fund.
(d) The Adviser has undertaken, in writing, to limit Total Expenses of the
Fixed Income Fund to .70% and 1.00% per year for the Fund's Class D and
Class A shares, respectively and 1.70% for the Fund's Class B and Class C
shares. This arrangement will remain in place at least until October 31,
2000.
(e) The Adviser has undertaken, in writing, to limit Total Expenses of the
Municipal Trust Fund to 1.00% per year for the Fund's Class A shares and
1.70% for the Fund's Class B and Class C shares. This arrangement will
remain in place at least until October 31, 2000.
(f) The Adviser has undertaken, in writing, to limit Total Expenses of the
Developing Markets Fund to 2.15% per year for the Fund's Class A shares
and 2.90% for the Fund's, Class B and Class C shares. This arrangement
will remain in place at least until October 31, 2000.
(g) The Adviser has undertaken, in writing, to limit Total Expenses of the
International Equity Fund to 1.90% and 2.15% per year for the Fund's Class
D and Class A shares respectively and 2.90% for the Fund's Class B and
Class C shares. This arrangement will remain in place at least until
October 31, 2000.
(h) The Adviser has undertaken, in writing, to limit Total Expenses of the
Municipal Money Fund to .90% per year. This arrangement will remain in
place at least until October 31, 2000.
(i) The Adviser has undertaken, in writing, to limit Total Expenses of the
U.S. Government Money Fund to .90% per year. This arrangement will remain
in place at least until October 31, 2000.
(j) The Adviser has undertaken, in writing, to limit Total Expenses, of the
High Income Fund to .85% and 1.10% per year for the Fund's Class D and
Class A shares, respectively, and 1.85% for the Fund's Class B and Class C
shares. This arrangement will remain in place at least until October 31,
2000.
PURCHASE INFORMATION
Shares of the DLJ Winthrop Municipal Money Fund and the DLJ Winthrop U.S.
Government Money Fund (the "Money Funds") or Class A, Class B or Class C shares
of the other Funds may be purchased directly by using the Share Purchase
Application found in this Prospectus, or through Donaldson, Lufkin & Jenrette
Securities Corporation, the Funds' distributor, or by contacting your securities
dealer.
The minimum initial investment in each Fund is $250. The minimum for additional
investments is $25. These minimums are waived for certain types of accounts.
Share certificates will not be issued for full or fractional shares of the
Funds. Further information can be obtained from DLJ Winthrop at the address and
telephone number shown on the back cover of this Prospectus. See "How to Buy and
Sell Shares" and "Other Shareholder Services."
The Funds, except the Money Funds, offer Class A, Class B and Class C shares.
Class A shares may be purchased at the net asset value per share of the Fund
plus an initial sales charge imposed at the time of purchase and may be subject
to a contingent deferred sales charge ("CDSC") in cases where the initial sales
charge was not applied because of the size of the purchase. Class B shares may
be purchased at the net
<PAGE>
asset value per share, but are subject to a CDSC upon redemption. The CDSC
applicable to Class B shares declines from 4% for redemptions made during the
first year of purchase to zero after four years. Class C shares may be purchased
at the net asset value per share, but are subject to a 1% CDSC if redeemed
within the first year of purchase. The Growth Fund, Growth and Income Fund,
Fixed Income Fund, High Income Fund and the International Equity Fund also offer
Class D shares. Class D shares are offered without any initial sales charge or
CDSC to employees of Donaldson, Lufkin & Jenrette Inc. ("DLJ, Inc.") and its
subsidiaries that are eligible to participate in the DLJ 401(k) Retirement
Savings Plan. These employees should contact the DLJ 401(k) Hotline at
1-877-401k-DLJ concerning how to purchase Class D shares. See "How to Buy and
Sell Shares."
Shares of the Money Funds may be purchased at a price equal to the net asset
value per share of each Money Fund, which is expected to be $1.00 per share. See
"Net Asset Value" in the sidebar included on this page.
The DLJ Winthrop Opportunity Funds and the DLJ Winthrop Focus Funds are
different legal entities and are separately offering their securities through
this Prospectus. Based on the advise of counsel, the Funds believe that the
potential liability of each Fund with respect to the disclosure in this
Prospectus extends only to the disclosure relating to that Fund.
[side bar]
Net Asset Value:
Net asset value per share (or "NAV") is determined separately for each class by
taking the total assets of each class of a Fund and subtracting its total
liabilities and then dividing the difference by the total number of shares
outstanding in each class.
The NAV is determined at the close of the New York Stock Exchange each day that
the New York Stock Exchange is open for trading. The price at which a purchase
or redemption is effected is based on the next calculation of NAV after the
order is placed.
For the Money Funds, the NAV is expected to be maintained at a constant $1.00
per share, although this price is not guaranteed.
For purposes of computing NAV, the securities in each Money Fund's portfolio are
valued at amortized cost, which minimizes the effect of changes in a security's
market value and helps maintain a stable $1.00 per share price.
In calculating the NAV of the DLJ Winthrop Funds, except the Money Funds, each
Fund's investments are valued at their current market value determined on the
basis of market quotations or, if such quotations are not readily available,
such other method as the Trustees of the applicable Fund believe in good faith
would accurately reflect their fair value.
[side bar]
The investment objectives and policies of each Fund are set forth below. There
can be, of course, no assurance that any Fund will achieve its investment
objective. The Funds' investment objectives are fundamental policies that cannot
be changed without the approval of the shareholders of the applicable Fund. The
Board of Trustees of a Fund may change non-fundamental policies without
shareholder approval.
DLJ WINTHROP FOCUS FUNDS' INVESTMENT OBJECTIVES AND POLICIES
DLJ WINTHROP GROWTH FUND
<PAGE>
Goal: The investment objective of the DLJ Winthrop Growth Fund is long-term
capital appreciation. Investments are made based on their potential for
long-term capital appreciation. The Growth Fund may make an investment to earn
income when, in the opinion of the Adviser, such an investment will not
compromise the Growth Fund's investment objective.
Strategy: The Growth Fund invests in common stock, securities convertible into
common stock and other equity securities (e.g., preferred stock and interests in
master limited partnerships). It invests primarily in well-known and established
companies (generally, companies in operation for more than three years). The
Fund may occasionally invest in new and unseasoned companies which, in the
opinion of the Adviser, have the potential for long-term capital appreciation.
The Adviser applies extensive research that has been conducted primarily by
research analysts employed by DLJ on the growth prospects of stocks that are
considered for the Fund's portfolio. Target companies normally have market
capitalizations of at least $1 billion at the time of purchase. Generally, the
Adviser attempts to identify companies with growth rates that will exceed that
of the S&P 500 Index. The Growth Fund is "sector neutral." This means that its
investments are allocated to industries in proportion to the sector allocation
of the S&P 500 Index, with the exception of the electric and the gas utilities
sectors. Other factors considered in the selection of securities include the
economic and political outlook, the value of a particular security relative to
another security, trends in the determinants of corporate profits, and
management capability and practices. See "Risks for the Growth Fund and the
Growth and Income Fund" on page 18.
Investments: Under normal circumstances, the Growth Fund invests at least 65% of
its total assets in equity securities of companies that the Adviser believes
have above-average long-term capital appreciation potential. For temporary
defensive purposes, the Growth Fund may invest in investment-grade short-term
fixed-income securities, enter into repurchase agreements and hold cash. A
temporary defensive position could affect the Fund's ability to achieve its
investment objective. In addition, the Fund may invest in equity securities
selected on a basis other than the potential for long-term capital appreciation.
The Fund may invest up to 35% of the value of its assets in investment-grade
fixed-income securities, including bonds, debentures, notes, asset and
mortgage-backed securities and money market instruments such as commercial paper
and bankers'-acceptances and other financial instruments. The Fund may invest in
both listed and unlisted securities and may also:
o invest up to 10% of the value of its total assets in non-U.S. securities;
o invest no more than 10% of its net assets in restricted securities or
other instruments with no ready market;
o invest up to 5% of its total assets in warrants; and
o attempt to minimize the effect of a market decline on the value of its
securities, subject to market conditions, by writing covered call options
on securities or stock indices. See "Additional Information on Investment
Policies and Risks."
[side bar]
Risks for the Growth Fund and the Growth and Income Fund:
Like any investment, an investment in the Growth Fund or Growth and Income Fund
is subject to risk and you could lose money. While the Funds seek investments
that will appreciate in value and/or provide income, the value of the securities
could decline and provide no income.
The Funds are subject to risks that affect equity securities markets in general,
such as general economic conditions and adverse changes in interest rates
(generally increases). If the value of equity markets in general declines, you
can expect the value of your investment in the Funds to decline, possibly to a
greater extent than the decline in equity markets generally.
The Growth Fund may invest in new and unseasoned companies. Stocks of these
companies tend to be more volatile than stocks of larger and more established
companies. In addition, because stocks are selected on the basis of their
appreciation potential, they tend to be more risky than many investments that
provide current income.
<PAGE>
The Growth and Income Fund may invest in debt securities. Debt securities are
subject to risks that the issuer will not repay its borrowings or pay interest.
They are also subject to the risk of declines in value because of increases in
interest rates and decreases in the credit quality of the issuer.
The Growth Fund and the Growth and Income Fund may each invest in unlisted
securities. Investments in unlisted securities may be less liquid and more
volatile than investments in listed securities and could result in losses to the
Funds if they had to be sold quickly.
The Growth Fund and the Growth and Income Fund may each invest in non-U.S.
securities. Non-U.S. securities carry the same risks as securities of U.S.
companies and the added risks of being traded in less liquid markets than U.S.
securities. Non-U.S. securities are also issued by companies that are not
subject to U.S. reporting requirements and involve political systems, economies
and markets that may not be as developed as in the U.S. See "Additional
Information on Investment Policies and Risks".
[end side bar]
DLJ WINTHROP GROWTH AND INCOME FUND
Goal: The investment objective of the DLJ Winthrop Growth and Income Fund is
long-term capital appreciation and continuity of income.
Strategy: The Growth and Income Fund pursues its investment objective by
investing principally in dividend-paying common stock and by diversifying its
investments among different industries and companies. Securities are selected
based on the Adviser's evaluation of their investment merit and their potential
for appreciation in value and/or income. The selection of securities on the
basis of their capital appreciation or income potential does not ensure against
possible loss in value.
Investments: The Growth and Income Fund invests in common stock, preferred stock
and securities convertible into common stock. The Growth and Income Fund may
invest in debt securities that are of investment-grade quality at the time of
purchase (including bonds, debentures, notes and asset and mortgage-backed
securities), U.S. government securities, municipal securities (including general
and special obligation securities and industrial revenue bonds) and money market
instruments. See "Additional Information on Investment Policies and Risks--
Mortgage and Asset-Backed Securities" and "Investment-Grade Debt Securities."
There is no fixed proportion of the Growth and Income Fund's assets that must be
invested in particular types of securities. The percentage of assets invested in
various types of securities may be changed from time to time by the Adviser.
The Growth and Income Fund invests in both listed and unlisted securities. The
Growth and Income Fund may invest in non-U.S. securities and restricted
securities. To minimize the effect of a market decline in the value of its
securities, the Fund may, depending on market conditions, write covered call
options on securities or stock indices. The Fund may invest up to 10% of its
assets in non-U.S. securities and up to 10% of its assets in restricted
securities. For additional information on the use, risks and costs of the above
referenced policies and practices, see "Additional Information on Investment
Policies and Risks."
DLJ WINTHROP SMALL COMPANY VALUE FUND
Goal: The investment objective of the DLJ Winthrop Small Company Value Fund is a
high level of growth of capital. The Small Company Value Fund is not intended
for investors whose principal objective is assured income or preservation of
capital.
Strategy: The Small Company Value Fund invests primarily in common stock and may
also invest in securities convertible into common stock, preferred stock, other
equity securities, bonds or other debt securities as described below. Under
normal market conditions, at least 65% of the Fund's assets are invested in
equity securities of small market capitalization companies. Small cap companies,
for purposes
<PAGE>
of this Fund, are considered to be companies with market capitalizations of $2
billion or less at the time of purchase. If the market capitalization of a small
cap company in which the Fund has invested increases to a level above $2
billion, the investment adviser will continue to hold the securities of that
company until the investment adviser determines that the company no longer has
growth potential.
Investments: The Small Company Value Fund pursues its investment objective by
employing a value-oriented investment approach. This means that the Adviser
seeks securities that appear to be underpriced. The Adviser looks for stocks
issued by companies with proven management, consistent earnings, sound finances
and strong potential for market growth. By investing in such companies, the
Small Company Value Fund tries to enhance its potential for appreciation and
limit the risk of decline in the value of its portfolio. The Small Company Value
Fund focuses on the fundamentals of each small-cap company instead of trying to
anticipate what changes might occur in the stock market, the economy, or the
political environment. This approach differs from that used by many other funds
investing in small-cap company stocks. Those other funds often buy stocks of
companies they believe will have above-average earnings growth, based on
anticipated future developments. In contrast, the Small Company Value Fund's
securities are generally selected with the belief that they are currently
undervalued based on existing conditions and that their earning power or
franchise value does not appear to be reflected in their current stock price. To
further reduce risk, the Small Company Value Fund diversifies its holdings among
many companies and industries. The Adviser also considers whether a company has
an established presence in its industry, a product or market niche and whether
management owns a significant stake in the company.
The Small Company Value Fund may also invest in special situation companies. A
special situation company is a company whose value may increase within a
reasonable period of time solely by reason of a development particularly or
uniquely applicable to that company. The securities of these companies may be
affected by particular developments unrelated to business conditions generally.
These investments may fluctuate without relation to general market trends. In
general, the principal risk associated with investing in special situation
companies is the potential decline in the value of these securities likely to
occur if the anticipated development fails to take place. Examples of special
situation companies are companies that are being reorganized or merged, have
unusual new products, enjoy particular tax advantages, or acquire new
management.
The Small Company Value Fund invests primarily in common stock. It may also
invest in securities convertible into common stock, preferred stock,
investment-grade debt securities (including bonds, debentures, notes, asset and
mortgage-backed securities), U.S. Government Securities, municipal securities
(including general and special obligation securities and industrial revenue
bonds), money market instruments (such as commercial paper and bankers'
acceptances) and other financial instruments.
The Small Company Value Fund may also invest in unlisted securities and
securities traded in the over-the-counter markets. The Small Company Value Fund
may allocate a larger percentage of its assets to unlisted securities than would
a typical large company mutual fund. The Small Company Value Fund may also:
o purchase or sell options on securities and on indices to seek to enhance
return or hedge its portfolio;
o purchase or sell financial futures contracts and options thereon for
hedging and risk management purposes;
o invest up to 20% of total assets in non-U.S.securities;
o invest up to 5% of total assets in rights or warrants; and
o invest not more than 10% of net assets in instruments having no ready
market.
However, the Fund does not invest in restricted securities.
[sidebar]
Risks for the Small Company Value Fund:
The investment objective for the Small Company Value Fund causes it to be
riskier than other funds and you could lose money. While it seeks investments
that will provide a high level of growth of capital, they may decline in value.
You should not invest in the Small Company Value Fund if your principal
objective
<PAGE>
is assured income or capital preservation. While smaller companies generally
have the potential for rapid growth, they often involve greater risks than
investments in larger, more established companies. Small companies may have less
management experience, fewer financial resources, and limited product
diversification.
In addition, in many instances the frequency and trading volume for securities
of smaller companies are substantially less than those of larger companies,
causing such securities to be subject to greater and more abrupt price
fluctuations and to be less liquid than securities of larger companies. When
making large sales of portfolio securities, it may be necessary for the Small
Company Value Fund to sell such securities at discounts from quoted prices or to
execute a series of small sales over an extended period of time. These factors
cause an investment in the Small Company Value Fund to be riskier than an
investment in a typical "large company" mutual fund.
The Small Company Value Fund also is subject to risks that affect equity
securities markets in general, such as general economic conditions and adverse
changes in interest rates. These factors also could adversely affect an
investment in the Fund. If the value of equity markets in general declines, the
value of your investment in the Small Company Value Fund could also decline,
possibly to a greater extent than the decline in equity markets generally.
The Small Company Value Fund may invest in various types of debt securities.
Debt securities are subject to the risk that the issuer will not repay its
borrowings or pay interest. They are also subject to the risk of declines in
value because of increases in interest rates and decreases in the perceived
credit quality of the issuer.
The Fund may also invest in unlisted securities. Investments in unlisted
securities may be less liquid and more volatile than investments in listed
securities and could result in losses if they had to be sold quickly.
The Fund may also invest in non-U.S. securities. Not only do non-U.S. securities
carry the same risks as securities of U.S. companies, they also have the added
risks of generally being traded in less liquid markets than U.S. securities,
involve political systems, economies and markets that may not be as developed as
in the U.S. and may be issued by companies that are not subject to reporting
requirements that are as rigorous as those imposed on U.S. issuers.
The Fund also may invest in options, warrants and financial futures contracts.
Selecting options, warrants and financial futures contracts involves
determinations as to how a particular security, index, interest rate, or
currency will change. If the Adviser is wrong in its prediction, the Fund could
lose money. In addition, such instruments may not be available, or if available,
may be too expensive to utilize. See "Additional Information on Investment
Policies and Risks".
[end sidebar]
DLJ WINTHROP FIXED INCOME FUND
Goal: The investment objective of the DLJ Winthrop Fixed Income Fund is to
provide as high a level of total return as is consistent with capital
preservation by investing principally in debt securities, including, without
limitation, convertible and nonconvertible debt securities of domestic and
foreign companies, including both well-known and established and new and
lesser-known companies. Total return means the sum of net investment income (if
any) and realized and unrealized gains less losses. Capital preservation means
minimizing the risk of capital loss in a period of falling prices (rising
interest rates) for debt securities.
Strategy: The Fund invests in and holds debt securities that the Adviser
believes will maximize total return at a level consistent with capital
preservation. The average maturity of the Fund's portfolio is adjusted based on
the Adviser's assessment of relative yields on debt securities and expectations
of future interest rate patterns.
<PAGE>
A change in the price of a debt security generally is inversely related to
market interest rates. This means that the value of the Fund's investments will
tend to decrease during periods of rising interest rates and to increase during
periods of falling rates. In general, as the average maturity of the portfolio
increases, so does the potential volatility in share price. As a matter of
fundamental policy, the Fund will invest at least 80% of the value of its total
assets in debt securities. In normal circumstances, the Fixed Income Fund
invests at least 65% of the value of its total assets in fixed income
securities. However, the Fund may hold cash and short-term fixed income
securities and may enter into repurchase agreements for temporary defensive
purposes as determined by the Adviser without regard to the above limits. A
temporary defensive position could affect the Fund's ability to achieve its
investment objective.
Investments: The Fixed Income Fund may invest in bonds, including municipal
bonds (taxable and tax-exempt) and other debt securities rated Aaa, Aa, A or
MIG-1 by Moody's Investors Service, Inc. ("Moody's"), or AAA, AA, A or SP-1 by
Standard & Poor's Ratings Group ("S&P"), U.S. Government Securities, obligations
issued or guaranteed by national or state bank holding companies, and commercial
paper rated Prime-1 by Moody's or A-1+ or A-1 by S&P.
The Fixed Income Fund may also invest not more than 25% of its total assets in
lower-rated debt securities that are not rated below BBB or SP-2 by S&P or Baa
or MIG-2 by Moody's to the extent the Adviser views such investments as
consistent with this fund's investment objective. See "Additional Information on
Investment Policies and Risks" for a description of securities rated BBB by S&P
and Baa by Moody's. The Fixed Income Fund may enter into repurchase agreements,
terminable within seven days or less, involving U.S. Treasury securities, with
member banks of the Federal Reserve System or primary dealers in U.S. Government
Securities. The Fixed Income Fund may invest up to 10% of its assets in
restricted securities and in instruments having no ready market value.
[side bar]
Risks for the Fixed Income Fund and Municipal Trust Fund:
While these Funds seek investments that will satisfy their investment
objectives, the Funds' investments could decline in value and you could lose
money. Concerns about an issuer's ability to repay its borrowings or to pay
interest will adversely affect the value of its securities. The Funds' Adviser
seeks to limit this risk generally by selecting higher-quality debt securities.
In addition, the Funds are subject to risks that affect the bond markets in
general, such as general economic conditions and adverse changes (generally
increases) in interest rates.
Each Fund may invest in unlisted securities. Unlisted securities may be less
liquid and more volatile than listed securities and could result in losses if
they had to be sold quickly. The Municipal Trust Fund is also subject to risks
of investing in municipal securities. These risks include uncertainties
regarding the tax status of a particular security, political and legislative
changes and the rights of their holders. These factors could adversely affect
your investment.
[end of side bar]
[side bar]
High Quality Ratings are Aaa, Aa, A or MIG-1 by Moody's , or AAA, AA, A or SP-1
by S&P.
[end of side bar]
DLJ WINTHROP MUNICIPAL TRUST FUND
Goal: The investment objective of the DLJ Winthrop Municipal Trust Fund is to
provide as high a level of total return as is consistent with capital
preservation by investing principally in high-grade tax-exempt municipal
securities. This investment objective, unlike that of most other municipal bond
funds, is not to provide current income exempt from federal and/or state income
tax. Total return means the sum of net investment income and capital gains less
capital losses. The Fund intends to distribute annually its net
<PAGE>
capital gains. Such distributions, if any, will be taxable to a shareholder as
capital gain. See "Dividend and Distribution Information" and "Taxes."
Strategy: The Municipal Trust Fund attempts to maximize total return by actively
managing the maturities of the bonds in its portfolio to reflect the Adviser's
assessment of anticipated interest rate movements and relative yields. The
Municipal Trust Fund currently maintains an average maturity of between 5 and 10
years in order to help reduce the interest rate risk associated with investing
in long-term bonds. However, the Fund may adjust this average maturity as the
Adviser's views on interest rate movements change, shortening maturities in
periods of rising interest rates and lengthening maturities in periods of
falling interest rates. The Fund attempts to supplement total return by
identifying and purchasing undervalued municipal securities.
As with any fixed income investment, the success of these strategies depends
upon the Adviser's ability to accurately forecast changes in interest rates and
to assess the value of municipal securities. You should be aware that there are
no assurances that the Fund's investment strategies will be successful. See
"Risks for the Fixed Income Fund and the Municipal Trust Fund" on page 22.
Investments: The Municipal Trust Fund seeks to achieve its objective by
investing primarily in a diversified portfolio of high-grade, intermediate-term
municipal securities. Municipal securities fall into two principal classes:
bonds and notes, both of which may have fixed, variable or floating rates of
interest. The Fund invests in tax-exempt municipal bonds and notes which are
rated Aaa, Aa, A or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. The Fund may
also invest up to 25% of its total assets in lower-rated municipal securities to
the extent the Adviser views such investments as consistent with this Fund's
investment objective. See "Additional Information on Investment Policies and
Risks-- Investment-Grade Debt Securities" for a description of securities rated
BBB by S&P and Baa by Moody's. The Fund may also invest in unrated municipal
securities when the Adviser believes they are of comparable quality to that of
rated securities and are consistent with the Fund's objective and policies.
Because a change in the market value of a debt security generally is inversely
related to market interest rates, the market value of the Municipal Trust Fund's
investments will tend to decrease during periods of rising interest rates and to
increase during periods of falling rates. In general, as the average maturity of
the portfolio increases, so does the potential volatility in share price.
Fluctuations in market value of the Municipal Trust Fund's portfolio resulting
from fluctuations in interest rates will generally be greater at times when the
average maturity of the Municipal Trust Fund's portfolio is longer.
The Municipal Trust Fund may enter into repurchase agreements terminable within
seven days or less. The Fund may also invest in restricted securities, in
instruments having no ready market and municipal bonds that are subject to the
alternative minimum tax. The Municipal Trust Fund reserves the right to hold
cash and short-term fixed income securities and to enter into repurchase
agreements as necessary for temporary defensive or emergency purposes as
determined by the Adviser, without regard for the above limitation. A temporary
defensive position could affect the Fund's ability to achieve its investment
objective. Dividends of the Municipal Trust Fund will consist of income exempt
from federal income tax, income subject to the federal alternative minimum tax
("AMT"), and taxable ordinary income and capital gains. See "Dividend and
Distribution Information" and "Taxes."
DLJ WINTHROP OPPORTUNITY FUNDS'
INVESTMENT OBJECTIVES AND POLICIES
THE INTERNATIONAL FUNDS
DLJ WINTHROP DEVELOPING MARKETS FUND
<PAGE>
Goal: The investment objective of the DLJ Winthrop Developing Markets Fund is
long-term growth of capital by investing primarily in common stocks and other
equity securities in developing countries. Under normal market conditions, the
Fund invests at least 65% of its assets in equity securities of developing
countries.
Strategy: The Fund seeks to identify those countries and industries where
economic and political factors are likely to produce above average growth rates.
The Fund seeks to invest in those companies and in such industries and countries
that are best positioned and managed to take advantage of these economic and
political factors. The assets of the Fund ordinarily will be invested in the
securities of issuers in at least three different developing countries.
Investments: Equity securities include common and preferred stock, warrants,
rights or options that are convertible into common stock, debt securities that
are convertible into common stock, depository receipts for those securities and
other classes of stock that may exist. The Fund may purchase non-U.S. securities
in the form of sponsored or unsponsored depository receipts or other securities
restricted or otherwise representing underlying shares of non-U.S. issuers. The
Fund may purchase a limited amount of illiquid securities. The Fund may enter
into forward foreign currency exchange contracts to attempt to protect the value
of its assets against future changes in the level of currency exchange rates.
The Fund may purchase and sell financial futures contracts and options thereon
which are traded on a commodities exchange or board of trade for certain
hedging, return enhancement and risk management purposes. The Fund may purchase
and sell financial futures contracts and related options, without limitation,
for bona fide hedging purposes. Subject to the foregoing, the value of all
financial futures contracts sold will not exceed the total market value of the
Fund's portfolio.
As used in this Prospectus, a company in a developing country is an entity for
which either the principal securities trading market is in a developing country,
it is organized under the laws in a developing country or it has its principal
office in a developing country. The Fund invests primarily in countries
represented within the MSCI Emerging Markets Free Index. Those countries
currently include Argentina, Brazil, Chile, China, Colombia, Czech Republic,
Egypt, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia,
Mexico, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Sri Lanka,
Taiwan, Thailand, Turkey and Venezuela. The Fund generally does not invest more
than 25% of its total assets in developing countries not represented within the
MSCI Emerging Markets Free Index.
[side bar]
Developing Markets Fund Risks. Like any investment, an investment in the
Developing Markets Fund is subject to risk and you could lose money. While the
Fund selects investments that the Fund believes will experience long-term
appreciation, their value could decline. The Fund is also subject to risks that
affect equity securities markets in general, such as general economic conditions
and adverse changes (generally increases) in interest rates.
There are certain risks involved in investing in non-U.S. securities, in
addition to the risks inherent in U.S. investments. These risks may include
currency fluctuations, currency revaluations, adverse political and economic
developments, currency exchange blockages, foreign governmental laws or
restrictions, reduced public information concerning issuers, and the lack of
uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements comparable for domestic companies.
Furthermore, non-U.S. securities may be less liquid and more volatile than
comparable U.S. securities. There is also a possibility of expropriation,
nationalization, confiscatory taxation, and limitations on use or removal of
Funds or assets. Investments in non-U.S. securities may result in higher
expenses due to currency conversions, brokerage commissions which generally are
higher than U.S. commissions and the expense of maintaining securities with
non-U.S. custodians.
In addition to the general risks of investing in non-U.S. securities,
characteristics of developing countries may affect certain investments, such as
national policies that restrict foreign investment and the absence of developed
legal structures governing private property and private and foreign investments.
The typically
<PAGE>
small size of securities markets and the possibility of a low or nonexistent
volume of trading in developing countries may also result in a lack of liquidity
and substantial price volatility.
You should be aware that investing in developing countries generally involves
exposure to economic structures that are generally less diverse and mature, and
to political systems with less stability than those of developed countries.
[end side bar]
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Information on Investment Policies and
Risks."
DLJ WINTHROP INTERNATIONAL EQUITY FUND
Goal: The investment objective of the DLJ Winthrop International Equity Fund is
long-term growth of capital by investing primarily in common stocks and other
equity securities from established non-U.S. markets. During normal market
conditions, the Fund invests most of its assets in securities of issuers from at
least three different countries outside the United States. The Fund may invest
in securities of companies incorporated in the United States but having their
principal activities and interests outside of the United States.
Strategy: In pursuing its investment objective, the International Equity Fund
attempts to diversify its equity investments primarily among countries
represented within the EAFE Index. Those countries currently include Australia,
Austria, Belgium, France, Germany, Hong Kong, Ireland, Italy, Japan, the
Netherlands, New Zealand, Portugal, Singapore, Spain, Switzerland, the United
Kingdom, and the Scandinavian countries. The Fund generally does not intend to
invest more than 10% of its total assets in countries not represented within the
EAFE Index.
This Fund seeks to identify countries and industries with favorable growth
prospects. Then the Fund invests in the companies in such countries and
industries that are reasonably valued. Typically these companies offer reliable
earnings and high quality management.
Investments: Equity securities include common and preferred stock, warrants,
rights or options that are convertible into common stock, debt securities that
are convertible into common stock, depositary receipts for those securities and
other classes of stock that may exist. The Fund may purchase non-U.S. securities
in the form of sponsored or unsponsored depositary receipts or other securities
representing underlying shares of non-U.S. issuers. This Fund may invest a
limited amount of its assets in restricted or otherwise illiquid securities. The
Fund may enter into forward foreign currency exchange contracts to protect the
value of its assets against future changes in the level of currency exchange
rates. The Fund may purchase and sell financial futures contracts and options
thereon which are traded on a commodities exchange or board of trade for certain
hedging, return enhancement and risk management purposes. The Fund may purchase
and sell financial futures contracts and related options, without limitation,
for bona fide hedging purposes. Subject to the foregoing, the value of all
financial futures contracts sold will not exceed the total market value of the
Fund's portfolio.
[ side bar]
ADRs: ADRs are Depositary Receipts typically issued by a U.S. bank or trust
company which evidence ownership of underlying securities issued by a non-U.S.
corporation.
EDRs and GDRs are Depositary Receipts typically issued by non-U.S. banks or
trust companies, although they also may be issued by U.S. banks or trust
companies, and evidence ownership of underlying securities issued by either a
non-U.S. or a U.S. corporation.
[end side bar]
[side bar]
<PAGE>
Cash Equivalents: The International Funds may from time to time take a defensive
position by holding all or a portion of the Fund in other types of securities,
including commercial paper, bankers' acceptances, short-term debt securities
(corporate and government) or government and high quality money market
securities of U.S. and non-U.S. issuers, repurchase agreements, time deposits or
cash (foreign currencies or U.S. dollars). The International Funds may also
temporarily hold cash and invest in high quality foreign or domestic money
market instruments with up to 35% of their assets, pending investment of
proceeds from new sales of International Funds' shares or to meet ordinary daily
cash needs.
[end side bar]
[side bar]
Risks for the International Equity Fund: Like any investment, an investment in
the International Equity Fund is subject to risk and you could lose money. While
the Fund selects investments the Fund believes will experience long-term
appreciation, their value could decline.
The Fund is also subject to risks that affect equity securities markets in
general, such as general economic conditions and adverse changes (generally
increases) in interest rates.
There are certain risks involved in investing in non-U.S. securities, in
addition to the risks inherent in U.S. investments. These risks may include
currency fluctuations, currency revaluations, adverse political and economic
developments, currency exchange blockages, foreign governmental laws or
restrictions, reduced public information concerning issuers, and the lack of
uniform accounting, auditing and financial reporting standards and other
regulatory practices and requirements comparable for domestic companies.
Furthermore, non-U.S. securities may be less liquid and more volatile than
comparable U.S. securities. There is also a possibility of expropriation,
nationalization, confiscatory taxation, and limitations on use or removal of
funds or assets.
Investments in non-U.S. securities may result in higher expenses due to currency
conversions, brokerage commissions which generally are higher than U.S.
commissions and the expense of maintaining securities with non-U.S. custodians.
[end side bar]
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Information on Investment Policies and
Risks."
THE MONEY FUNDS
DLJ WINTHROP MUNICIPAL MONEY FUND
Goal: The DLJ Winthrop Municipal Money Fund seeks maximum current income,
consistent with liquidity and safety of principal, that is exempt from Federal
income taxation to the extent described herein.
Strategy: The Fund pursues its objectives by investing at least 80% of its total
assets in municipal securities. One hundred percent of the securities the Fund
invests in are high quality having remaining maturities of one year or less,
although their maturities may extend to 397 days. The Fund reserves the right to
lower the percentage of investments in municipal securities if economic or
political conditions warrant. To increase the Fund's ability to reach its
investment objectives, the dollar-weighted average maturity of its portfolio
securities is always 90 days or less. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a default
on the Municipal Money Fund's investments could cause its net asset value per
share to deviate from $1.00.
Investments: Normally, substantially all the Municipal Money Fund's income will
be exempt from Federal income taxation. Such income may be subject to state or
local and/or Federal AMT income taxes. The Fund invests in municipal notes and
short-term municipal bonds, which may have fixed, variable or
<PAGE>
floating rates of interest. Municipal securities with variable rates may include
participation interests in industrial development bonds which may be backed by
letters of credit from banking or other financial institutions. The letters of
credit of any single institution in respect of all variable rate obligations
will not cover more than the allowable percentage of the Municipal Money Fund's
total assets in accordance with Rule 2a-7 under the Investment Company Act of
1940, as amended ("1940 Act") . For a more complete discussion of Municipal
Securities, see "Additional Information on Investment Policies and
Risks--Municipal Securities." All of the Fund's municipal securities at the time
of purchase are rated within the two highest quality ratings of Moody's or
S&P's, or judged by the Adviser to be of comparable quality.
The Municipal Money Fund may also invest without limitation in tax-exempt
municipal securities subject to the AMT. (See"Dividend and Distribution
Information" and "Taxes".')
The Municipal Money Fund may invest to a limited extent in stand-by commitments,
delayed-delivery, when-issued securities and other illiquid securities. This
Fund may also invest a small percentage of its net assets in municipal leases,
which are leases or installment purchases used by state and local governments as
a means to acquire property, equipment or facilities without involving debt
issuance limitations. The Fund may from time to time invest in taxable
securities including obligations of the U.S. Government and its agencies, high
quality certificates of deposit and bankers' acceptances, prime commercial
paper, and repurchase agreements.
[sidebar]
Risks for the Municipal Money Fund: Like any money market fund investment, this
investment is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. This fund seeks to preserve the
value of your investment at $1.00 per share; however, it is possible to lose
money by investing in this Fund. To seek to reduce investment risk, the
Municipal Money Fund may not invest in the securities of any one issuer, (except
the U.S. Government), in excess of the percentage of the Municipal Money Fund's
total assets allowed under Rule 2a-7 of the 1940 Act.
The Municipal Money Fund earns income at current money market rates and its
yield varies from day to day and generally reflects current short-term interest
rates and other market conditions. It is important to note that neither the
Municipal Money Fund nor its yield are insured or guaranteed by the U.S.
Government.
[end sidebar]
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Information on Investment Policies and
Risks."
DLJ WINTHROP U.S. GOVERNMENT MONEY FUND
Goal: The DLJ Winthrop U.S. Government Money Fund seeks maximum current income,
consistent with liquidity and safety of principal.
Strategy: This Fund pursues its objectives by maintaining a portfolio of high
quality money market securities, including the types described in the succeeding
paragraph, which at the time of investment generally have remaining maturities
of one year or less. Some maturities may extend to 397 days. The dollar weighted
average maturity of the U.S. Government Money Fund's portfolio securities will
vary, but will always be 90 days or less. In general, securities with longer
maturities are more vulnerable to price changes, although they may provide
higher yields. It is possible that a major change in interest rates or a default
on the U.S. Government Money Fund's investments could cause its net asset value
per share to deviate from $1.00.
Investments: The Fund invests in U.S. Government Securities, including issues of
the U.S. Treasury, such as bills, certificates of indebtedness, notes and bonds,
and issues of agencies and instrumentalities established under the authority of
an act of Congress, including variable rate obligations such as floating rate
notes. The Fund also invests in repurchase agreements that are collateralized in
full each day by eligible mortgage related securities or the types of securities
listed above. These agreements are entered
<PAGE>
into with "primary dealers" (as designated by the Federal Reserve Bank of New
York) in U.S. Government Securities. This type of investment could create a loss
to the Fund if, in the event of a dealer default, the proceeds from the sale of
the collateral were less than the repurchase price. In addition, if the seller
of repurchase agreements becomes insolvent, the Fund's right to dispose of the
securities might be restricted.
In addition to the investments listed, the Money Funds may take temporary
defensive measures by holding other types of securities which are permitted by
Rule 2a-7 of the 1940 Act.
[side bar]
U.S. Government Money Fund Risks: Like any money market fund investment, this
investment is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
This Fund seeks to preserve the value of your investment at $1.00 per share,
however, it is possible to lose money by investing in this Fund.
The U.S. Government Money Fund earns income at current money market rates and
its yield will vary from day to day and generally reflects current short-term
interest rates and other market conditions.
It is important to note that neither the U.S. Government Money Fund nor its
yield is insured or guaranteed by the U.S. Government.
[end side bar]
[side bar]
To maintain portfolio diversification and reduce investment risk, the Money
Funds do not:
(1) borrow money, except from banks on a temporary basis or via entering into
reverse repurchase agreements to be used exclusively to facilitate the orderly
maturation and sale of portfolio securities during any periods of abnormally
heavy redemption requests (the borrowings are not used to purchase investments);
or
(2) pledge, hypothecate or in any manner transfer, as security for indebtedness,
its assets, except to secure such borrowings.
[end sidebar]
For additional information on the use, risks and costs of the above referenced
policies and practices, see "Additional Information on Investment Policies and
Risks."
DLJ WINTHROP HIGH INCOME FUND
Goal: The DLJ Winthrop High Income Fund seeks a high level of current income and
a secondary objective of capital appreciation. . This Fund is not recommended
for investors whose principal objective is assured income or capital
preservation.
Strategy: This Fund seeks to achieve its investment objectives by investing in
fixed-income securities, including corporate bonds and notes, convertible
securities and preferred stocks, that are rated in the lower rating categories
of the established rating services (Baa or lower by Moody's and BBB or lower by
S & P), or, if unrated, are of comparable quality. Securities rated Baa or lower
by Moody's and BBB or lower by Standard & Poor's are commonly known as "junk
bonds." These bonds are considered by those rating agencies to have speculative
characteristics. These bonds can be expected to provide higher yields. However
these securities may be subject to greater market fluctuations and risk of loss
of income and principal than lower yielding, higher-rated fixed-income
securities. Investment in such high-yield securities entails relatively greater
risk of loss of income or principal.
<PAGE>
Investments: This Fund seeks to achieve its objective by investing primarily in
a diversified portfolio of lower-rated fixed-income securities including
convertible and non-convertible debt securities and preferred stock. The Fund
may also hold assets in cash or cash equivalents. This Fund generally does not
invest in common stocks, rights or other equity securities. From time to time,
the Fund may acquire or hold such securities (if consistent with its objectives)
when they are acquired in unit offerings with fixed-income securities or in
connection with an actual or proposed conversion, exchange or restructuring of
fixed-income securities.
Selection and supervision by the management of the Fund of investments in
lower-rated fixed-income securities involves continuous analysis of individual
issuers, general business conditions and other factors. The furnishing of these
services does not, of course, guarantee successful results. The Adviser's
analysis of issuers includes, among other things, historic and current financial
conditions, current and anticipated cash flow and borrowing requirements, value
of assets in relation to historical cost, strength of management, responsiveness
to business conditions, credit standing, and current and anticipated results of
operations. Analysis of general business conditions and other factors may
include anticipated changes in economic activity and interest rates, the
availability of new investment opportunities, and the economic outlook for
specific industries. While the Adviser considers as one factor in its credit
analysis the ratings assigned by the rating services, the Adviser performs its
own independent credit analysis of issuers and consequently, the High Income
Fund may invest, without limit, in unrated securities. The Fund's ability to
achieve its investment objective may depend on the Adviser's own credit analysis
to a greater extent than the funds that invest in higher-rated securities.
Although the High Income Fund primarily invests in lower-rated securities, it
will generally not invest in securities rated at the time of investment in the
lowest rating categories (Ca or below for Moody's and CC or below for S & P).
Securities which are subsequently downgraded may continue to be held and will be
sold only if, in the judgment of the Adviser, it is advantageous to do so.
[side bar]
High Income Fund Risks:
While the Fund seeks investments that will satisfy our investment objective, our
investments could decline in value and you could lose money. Concerns about an
issuer's ability to repay its borrowings or to pay interest will adversely
affect the value of its securities. The Fund is also subject to risks that
affect the bond markets in general, such as general economic conditions and
adverse changes (generally increases) in interest rates.
The market value of longer maturity debt securities, like those held by the
Fund, is more sensitive to interest rate changes than the market value of
shorter maturity debt securities. In addition, the Fund's investments in lower
grade securities will subject investors to additional risk than normally
experienced in other fixed income securities.
Lower grade securities are regarded as being predominantly speculative as to the
issuer's ability to pay the principal and interest. Issuers of lower grade
securities are more likely to experience financial stress in periods of economic
downturn or rising interest rates. The issuer's ability to service its debt may
be adversely affected by poor management, inability to meet business forecasts
or unavailability of additional financing.
There is a higher default rate with lower grade securities because they may be
unsecured or subordinate to other securities of the issuer. There are fewer
dealers in lower grade securities which may make the market less liquid and
cause larger differences in prices quoted than that of higher-rated fixed income
securities.
In addition, the Fund may incur additional expense when it is required to seek
recovery upon a default or restructuring.
[end side bar]
ADDITIONAL INFORMATION ON INVESTMENT POLICIES AND RISKS
<PAGE>
The following general investment policies and risks supplement those set forth
above for each Fund.
Equity Securities. "Equity securities" include common stock, preferred stock
(including convertible preferred stock), bonds convertible into common or
preferred stock, rights and warrants, equity interests in trusts and depositary
receipts for equity securities.
Convertible Securities. A "convertible security" is a bond or preferred stock
which may be converted at a stated price within a specified period of time into
a certain quantity of the common or preferred stock of the same or a different
issuer. Convertible securities have characteristics of both bonds and equity
securities. Like a bond, a convertible security tends to increase in market
value when interest rates decline and tends to decrease in market value when
interest rates rise. However, the price of a convertible security is also
influenced by the market value of the underlying stock. The price of a
convertible security tends to increase as the market value of the underlying
stock rises, whereas it tends to decrease as the market value of the underlying
stock declines.
Warrants. A "warrant" gives the holder thereof the right to buy equity
securities at a specific price during a specified period of time. Warrants tend
to be more volatile than the underlying security, and if at a warrant's
expiration date the security is trading at a price below the price set in the
warrant, the warrant will expire worthless. Conversely, if at the expiration
date the underlying security is trading at a price higher than the price set in
the warrant, the holder of the warrant can acquire the security at a price below
its market value.
Mortgage and Asset-Backed Securities. Except for the Municipal Trust Fund, the
DLJ Winthrop Funds may invest in mortgage and asset-backed securities.
"Mortgage-backed securities" are securities that directly or indirectly
represent a participation in, or are secured by and payable from mortgage loans
on real property, including pass-through securities such as Ginnie Mae, Fannie
Mae and Freddie Mac Certificates. The yield and credit characteristics of
mortgage-backed securities differ in a number of ways from traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments, usually monthly, and the possibility that
prepayment of principal may be made at any time. Prepayment rates are influenced
by changes in current interest rates and a variety of other factors. In general,
changes in the rate of prepayment on a security will change the yield to
maturity of that security. Under certain interest rate or prepayment rate
scenarios, a Fund may fail to recoup fully its investment in such securities
notwithstanding the credit quality of the issuers of such securities. Based on
historic prepayment patterns, amounts available for reinvestment are likely to
be greater during a period of declining interest rates and, thus, are likely to
be reinvested at lower interest rates, than during a period of rising interest
rates. Mortgage-backed securities may decrease in value as a result of increases
in interest rates and may benefit less than other fixed income securities from
declining interest rates because of the risk of prepayment.
Asset-Backed Securities. "Asset-backed securities" have similar structural
characteristics to mortgage-backed securities, but the underlying assets include
assets such as motor vehicle installment sales or installment loan contracts,
leases of various types of real and personal property and receivables from
revolving credit agreements, rather than mortgage loans or interests in mortgage
loans. Asset-backed securities present certain risks that are not present in
mortgage-backed securities; primarily, these securities do not have the benefit
of the same security interest in the related collateral. There is the
possibility that recoveries of repossessed collateral may not, in some cases, be
available to support payments on these securities. For example, in the event
that the collateral underlying an asset-backed security must be disposed of, it
may be difficult to convert that collateral into a stream of payments to be paid
to the holders of the security.
<PAGE>
Municipal Securities. "Municipal securities" are either bonds or notes.
Municipal bonds, which are longer-term debt obligations meeting long-term
capital needs, are either "general obligation" bonds or "revenue" bonds. Payment
of principal and interest on general obligation bonds is secured by the issuing
municipality's pledge of its full faith and credit and taxing power. Payment on
revenue bonds is met from the revenues obtained from a certain facility, class
of facilities, special excise or other tax, but not from general tax revenues.
Variations on these two classifications exist, such as revenue bonds backed by a
municipality's general taxing power, or general obligation bonds backed by
limited taxing power.
Municipal notes are short-term debt obligations generally maturing in one year
or less meeting short-term capital needs and are also either "general
obligation" or "revenue" debt securities. They include tax anticipation notes,
revenue anticipation notes, bond anticipation notes, construction loan notes and
tax- exempt commercial paper.
Municipal securities may have fixed, variable or floating rates of interest.
Variable and floating rate securities pay interest at rates that are adjusted
periodically, according to a specified formula, in order to minimize fluctuation
in the value of the principal of the securities. A "variable" interest rate
adjusts at predetermined intervals (e.g., daily, weekly, or monthly), while a
"floating" interest rate adjusts whenever a specified benchmark rate (such as
the bank prime lending rate) changes.
The Municipal Money Fund and Municipal Trust Fund may invest in variable rate
obligations. Such adjustments minimize changes in the market value of the
obligation, and in the case of the Municipal Money Fund enhances the ability of
such Fund to maintain a stable $1.00 net asset value. See "'Net Asset Value" on
page 17.
Investment-Grade Debt Securities. All of the DLJ Winthrop Funds may invest in
debt securities of investment-grade quality. "Investment-grade debt securities"
are debt securities rated in one of the four highest rating categories by a
nationally recognized statistical rating organization, such as S&P or Moody's.
Investment-grade debt securities may also include debt securities believed by
the Adviser (on the basis of criteria believed by the Adviser to be comparable
to that applied by such rating agencies) to be of comparable quality to debt
securities so rated by the rating agencies.
Debt securities rated Baa or higher by Moody's or BBB or higher by S&P are
investment-grade securities. Securities rated BBB are regarded by S&P as having
an adequate capacity to pay interest and repay principal; while such securities
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely, in the opinion of S&P, to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
Securities rated Baa by Moody's are considered to be medium-grade obligations.
These securities are neither highly protected nor poorly secured. The rating
organization determines that interest payments and principal security appear to
be adequate for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time. For a more
complete description of Moody's and S&P's ratings, see the Appendix to the
Statement of Additional Information of each of the DLJ Winthrop Funds. The
investment-grade limitations referenced for each Fund are applicable at the time
of initial investment and a Fund may determine to retain securities of issuers
which have had their credit characteristics downgraded.
Repurchase Agreements. The DLJ Winthrop Funds may enter into a repurchase
agreement with member banks of the Federal Reserve System or "primary dealers"
(as designated by the Federal Reserve Bank of New York) in such securities.
Repurchase agreements permit a Fund to keep all of its assets at work while
retaining "overnight" flexibility in pursuit of investments of a longer-term
nature. The Adviser requires continual maintenance of collateral with a Fund's
custodian in an amount equal to, or in excess of, the market value of the
securities that are the subject of a repurchase agreement. In the event a
counterparty defaults on its repurchase obligation, a Fund might suffer a loss
to the extent that the proceeds from the sale of the collateral are less than
the repurchase price. If the counterparty becomes the subject of bankruptcy
proceedings, the Fund might be delayed in selling the collateral.
<PAGE>
Non-U.S. Securities. All of the DLJ Winthrop Funds, except the Money Funds and
the Municipal Trust Fund, may invest in "non-U.S. securities." There are
additional risks involved in investing in non-U.S. securities. These risks
include those resulting from fluctuations in currency exchange rates,
revaluation of currencies, and the possible imposition of currency exchange
blockages. In addition, there are risks associated with future adverse political
and economic developments and a limited availability of public information
concerning issuers. Non-U.S. issuers typically are subject to different
accounting, auditing and financial reporting standards. Securities of many
non-U.S. companies may be less liquid and their prices more volatile than those
of domestic companies. There is the possibility of expropriation,
nationalization, confiscatory taxation and limitations on the use or removal of
Funds or other assets of a non-U.S. issuer, including the withholding of
dividends.
Non-U.S. securities may be subject to taxes imposed by foreign governments that
would reduce the net yield on such securities. Investment in non-U.S. securities
may result in higher expenses due to the cost of converting foreign currency
into U.S. dollars, the payment of fixed brokerage commissions on foreign
exchanges (which generally are higher than commissions on U.S. exchanges) and
the expense of maintaining securities with non-U.S. custodians.
Investments in non-U.S. securities include securities issued by European
issuers. On January 1, 1999, the countries participating in the European
Monetary Union ("EMU") implemented a new currency unit, the Euro, which is
reshaping financial markets, banking systems and monetary policies in Europe and
other parts of the world. Although it is not possible to predict the eventual
impact of the Euro implementation plan on the Funds, the transition to the Euro
may change the economic environment and behavior of investors, particularly in
European markets. Certain European investments may be subject to additional
risks as a result of this conversion. These risks include adverse tax and
accounting consequences, as well as difficulty in processing transactions. The
Funds are aware of such potential problems and are coordinating ways to prevent
or alleviate their adverse impact on the Funds.
Investment Companies. Certain Funds may invest a limited amount of their assets
in shares of other investment companies. Investments in other mutual funds may
involve the payment of substantial premiums above the value of such investment
companies' portfolio securities. In addition, such investments are subject to
limitations under the 1940 Act and market availability. Currently, the
International Funds and the Municipal Money Fund may invest in such investment
companies if, in the judgment of the Adviser or Subadviser, the potential
benefits of such investments justify the payment of any applicable premium or
sales charge. As a shareholder in an investment company, the Municipal Money
Fund or an International Fund would bear its ratable share of that investment
company's expenses, including its advisory and administrative fees. At the same
time shareholders of the Municipal Money Fund or an International Fund would
continue to pay their own management fees and other expenses.
Options. A call option is a contract that gives the holder the right to buy from
the seller the security underlying the call option at a pre-determined price
while a put option is a contract that gives the buyer the right to require the
seller to purchase the security underlying the put option at a pre-determined
price. The Growth Fund and the Growth and Income Fund may write covered call
options on individual securities or stock indices. For these Funds, this
practice will only be used to minimize the effect of a market decline in the
value of securities in their respective portfolios. We cannot guarantee that,
should a Fund seek to enter into such transactions, it could do so at all or on
terms that are acceptable. The Small Company Value Fund may purchase or sell put
and call options on individual securities or stock indices as a means of
achieving additional return or of hedging the value of its portfolio. The
International Funds may purchase and sell put and call options on securities,
currencies and financial indices that are traded on U.S. or non-U.S. securities
exchanges or in the over-the-counter market. Options traded in the
over-the-counter market are considered illiquid investments.
Lower-Grade or Unrated Securities. The High Income Fund will purchase lower or
unrated securities. "Lower-grade securities" are regarded as being predominantly
speculative as to the issuer's ability to make payments of principal and
interest. Investment in these securities involves substantial risk. Lower-grade
securities are commonly referred to as "junk bonds". Issuers of lower-grade
securities may be highly leveraged and may not have traditional methods of
financing. The risks associated with acquiring the
<PAGE>
securities of these issuers generally are greater than is the case with
higher-rated securities. For example, during an economic downturn or a sustained
period of rising interest rates, issuers of lower-grade securities may be more
likely to experience financial stress, especially if such issuers are highly
leveraged. The risk of loss due to default is significantly greater for the
holders of lower-grade securities because such securities may be unsecured and
may be subordinate to other securities of the issuer.
FUND MANAGEMENT
DLJ Asset Management Group, Inc. (formerly known as Wood, Struthers & Winthrop
Management Corp)., a Delaware corporation with principal offices at 277 Park
Avenue, New York, New York 10172 ("DLJAM" or the "Adviser"), serves as the
investment adviser for each of the DLJ Winthrop Funds. AXA Investment Managers
GS Ltd, a UK registered company with principal offices at 60 Gracechurch Street,
London EC3V 0HR, England serves as sub-investment adviser for the International
Funds and is a wholly-owned subsidiary of AXA Investment Managers, an investment
management subsidiary of AXA. Effective October 1, 1999, due to an internal
restructuring within the AXA Investment Managers Group of Companies, AXA
Investment Managers GS Ltd assumed the sub-investment advisory responsibilities
formerly undertaken by AXA Asset Management Partenaires, a French wholly-owned
subsidiary of AXA Investment Managers. Investment personnel and policies remain
unchanged.
DLJAM is a subsidiary of Donaldson, Lufkin & Jenrette Securities Corporation,
which is a member of the New York Stock Exchange and a wholly-owned subsidiary
of DLJ, Inc., a major international supplier of financial services. DLJ, Inc. is
an independently operated, indirect subsidiary of AXA Financial, Inc., a holding
company controlled by AXA, a member of a large French insurance group. AXA is
indirectly controlled by a group of four French mutual insurance companies.
The fees paid for the fiscal year ended October 31, 1999 were as follows:
Fund % of Average Net Assets Fees Paid
- --------------------------------------------------------------------------------
Growth Fund .67% $984,475
- --------------------------------------------------------------------------------
Growth and Income Fund .58% $1,377,123
- --------------------------------------------------------------------------------
Small Company Value Fund .79% $1,826,662
- --------------------------------------------------------------------------------
Fixed Income Fund .625% $641,978
- --------------------------------------------------------------------------------
Municipal Trust Fund .625% $247,109
- --------------------------------------------------------------------------------
High Income Fund .70% $44,319
- --------------------------------------------------------------------------------
International Equity Fund 1.25% $641,576
- --------------------------------------------------------------------------------
Developing Markets Fund 1.25% $215,235
- --------------------------------------------------------------------------------
U.S. Government Money Fund .40% $234,429
- --------------------------------------------------------------------------------
Municipal Money Fund .40% $212,914
- --------------------------------------------------------------------------------
* The following individuals are responsible for management of the DLJ Winthrop's
Funds.
Cathy A. Jameson is the portfolio manager of the Fixed Income Fund, a position
she has held since the Fund was started in 1986. Ms. Jameson is a Vice President
of the DLJ Winthrop Focus Funds. She is also a Managing Director of DLJAM and
has been an employee of DLJAM since 1979.
Roger W. Vogel serves as the primary portfolio manager of the Small Company
Value Fund and as of February, 2000, the Growth and Income Fund. He has acted as
the portfolio co-manager of the Growth Fund, the Growth and Income Fund, and the
Small Company Value Fund since July 1993. Mr. Vogel is a Vice President of the
DLJ Winthrop Focus Funds, and a Managing Director of DLJAM. Prior to becoming
associated with the Funds, Mr. Vogel was a Vice President and portfolio manager
with Chemical Banking Corp.
<PAGE>
Marybeth B. Leithead is the portfolio manager of the Municipal Trust Fund, a
position she has held since the commencement of its operations on July 28, 1993.
Ms. Leithead is also a Vice President of the DLJ Winthrop Focus Funds and a
Senior Vice President of DLJAM. She has been an employee of DLJAM since 1989. A
tax-exempt fixed income specialist, Ms. Leithead is responsible for short-term
and long-term municipal bond investment management for clients of the Advisers.
Prior to joining DLJAM, Ms. Leithead was an employee of Citicorp Securities
Markets Inc.
Hugh M. Neuburger is the primary portfolio manager of the Growth Fund. He has
also served as the co-portfolio manager of the Growth Fund, the Growth and
Income Fund and the Small Company Value Fund since August 1995. Mr. Neuburger is
a Managing Director and Director of Quantitative Analysis of DLJAM and has been
an employee of DLJAM since March 1995. Prior to March 1995, Mr. Neuburger was
the president of Hugh M. Neuburger, Inc., a consulting firm providing domestic
and global tactical asset allocation advice and other consulting services to
large corporate and state pension plans. From 1986 through 1991, Mr. Neuburger
was Managing Director of Matrix Capital Management, an investment management
firm. Prior to 1986, Mr. Neuburger managed asset allocation portfolios for
Prudential Insurance Company of America.
Michael A. Snyder is the portfolio manager of the High Income Fund. Mr. Snyder
was appointed Vice President of the DLJ Winthrop Opportunity Funds and Managing
Director of DLJAM in October 1998. Prior to becoming associated with the DLJ
Winthrop Funds and joining DLJAM, Mr. Snyder spent two years as a managing
director with Bear Stearns Asset Management where he was responsible for the
firm's high-yield bond management effort. Prior to that position, Mr. Snyder
spent ten years at Prudential Investments where he was a senior portfolio
manager in the firm's High Yield Mutual Fund Group.
Robert de Guigne, an employee of the Subadviser, serves as portfolio manager of
the International Funds. Mr. de Guigne assumed the day-to-day investment
responsibilities of the Developing Markets Fund in August 1996 and the
International Equity Fund in June 1997. Mr. de Guigne has been an asset manager
responsible for emerging market equities for a subsidiary of AXA since April
1996. Previously, Mr. de Guigne was a portfolio manager for State Street Bank in
Paris.
HOW TO BUY AND SELL SHARES
Opening an Account:
Decide whether your first payment will be delivered by check or wire. Initial
payment must be at least $250.
By check using U.S. mail:
Complete an application and send it along with a check made payable to the DLJ
Winthrop Funds to:
DLJ Winthrop Funds
PFPC, Inc.
P.O. Box 61503
King of Prussia, PA 19406-3101
By check using U.S. overnight delivery.
Complete an application and send it along with a check made payable to the DLJ
Winthrop Funds to:
<PAGE>
DLJ Winthrop Funds
PFPC, Inc.
211 S. Gulph Road
King of Prussia, PA 19406-3101
By wire:
Call DLJ Winthrop Funds at 1-800-225-8011 (option #2) to obtain an account
number. A representative will instruct you to send a completed, signed
application to the Transfer Agent, PFPC, Inc ("Transfer Agent"). Your account
cannot be opened without a completed, signed application and a Fund account
number.
Contact your bank to arrange a wire transfer to:
Boston Safe Deposit & Trust
ABA #:011001234
Credit: (Insert Name of Your Fund)
ACCT#: 006068
FBO (Shareholder name and account number)
Your wire instructions must also include: the name of the Fund, your account
number and the name(s) of the account holders.
The account will be established once the application and check are received in
good order. If you purchase shares of the Money Funds through a wire transfer,
you will be eligible to receive the daily dividend declared on the date of
purchase, as long as the Transfer Agent is notified of such purchase by 12:00
noon. The funds must be received by the Transfer Agent by 4:00 P.M.
Investors may also open accounts for their DLJ Winthrop Funds through their
securities dealer. In addition, securities dealers may offer an automatic sweep
for the shares of the Money Funds in the operation of cash accounts for their
customers. Shares of the Money Funds purchased through an automatic sweep by
1:00 P.M. are eligible to receive that day's daily dividend. For more
information, contact your securities dealer.
Shareholder accounts established on behalf of the following types of plans will
be exempt from the Fund's minimum and additional investment amounts: 401K Plans,
403B Plans, 457 Plans, SEP Plans, and SIMPLE Plans. An account established for
the Funds' Class D shares will also be exempt from the Funds' minimum and
subsequent purchase requirements. In addition, the Funds reserve the right to
waive their minimum purchase requirements.
Additional investments may be made at any time by sending a check payable to the
Funds along with an investment stub found at the bottom of the Funds'
Shareholder Statement form. If the stub is not available, you may send a check
payable to the "DLJ Winthrop Funds" directly to the Transfer Agent at the
address listed above. Please reference the account number to be credited on the
check, as well as the Fund you have selected to purchase.
Selling Shares of the Money
Funds or Class A, Class B or Class C shares of the Other DLJ Winthrop Funds
Will you be requesting a redemption of your holdings in the DLJ Winthrop Funds
through the Funds' Telephone Redemption Privilege?
Yes.
<PAGE>
Call 1-800-225-8011 to sell your shares. Requests for redemptions of more than
$50,000 must be made in writing and be accompanied by a signature guarantee.
(A "signature guarantee" is a signature guaranteed by an eligible bank, broker,
dealer, credit union, national securities exchange, registered securities
association, clearing agency or savings association.)
Remember, DLJ has a minimum account size of $250.
No.
For shares held at the Fund, write to the Fund at:
DLJ Winthrop Funds
PFPC, Inc.
P.O. Box 61503
(211 S. Gulph Road)*
King of Prussia, PA 19406-3101
Remember, any account that has less than $250, the Fund may redeem.
* For overnight delivery.
For shares purchased through a broker-dealer: call your broker or securities
dealer representative.
Your redemption will be processed at the net asset value per share, next
computed following the receipt of your request in proper form. If you own Class
B or Class C shares or purchased Class A shares without paying an initial sales
charge, any applicable CDSC will be applied to the net asset value and deducted
from your redemption. The value of your shares may be more or less than your
investment depending on the net asset value of your Fund on the day you redeem.
The DLJ Winthrop Funds have a minimum account size of $250. You may be requested
to increase your balance if it falls below $250. The Funds reserve the right to
close such account and send the proceeds to you. A Fund will not redeem
involuntarily any shareholder account with an aggregate balance of less than
$250 based solely on the market movement of such Fund's shares.
For information concerning circumstances in which redemptions may be effected
through the delivery of in-kind portfolio securities, see your Statement of
Additional Information.
Purchasing additional shares
Decide if you are making additional purchases by mail, wire, or automatic
investment. If using mail or wire, please check to make sure funds meet the
$25.00 minimum.
By Mail:
Complete the investment stub found at the bottom of the Funds' shareholder
statement form, or if an investment stub is not available, reference on the
check the account number to be credited and the Fund you have selected to
purchase and mail to:
DLJ Winthrop Funds
PFPC, Inc.
P.O. Box 61503
King of Prussia, PA. 19406-3101
<PAGE>
By Wire:
Please call the Transfer Agent at 800-225-8011 (option #2) to notify them of the
impending wire.
Provide your bank with funds and with the following information:
Boston Safe Deposit & Trust
ABA #:011001234
Credit: (Insert Name of Your Fund)
ACCT#: 006068
FBO Shareholder name and account number
Purchase should reference your name, account number, and name of Fund.
Automatic Investment Program:
The automatic investment program requires purchases of at least $25.00. Fill out
the application, designating the automatic investment option and provide your
bank information. The Fund automatically deducts payment from your account on a
regular basis.
Provide your bank with funds and with the following information:
Boston Safe Deposit & Trust
ABA #:011001234
Credit: (Insert Name of Your Fund)
ACCT#: 006068
FBO Shareholder name and account number
Shares of the Money Funds or Class A, Class B or Class C shares of the other DLJ
Winthrop Funds may be purchased directly by using the Share Purchase Application
found in the prospectus, or through Donaldson, Lufkin & Jenrette Securities
Corporation, or by contacting your securities dealer. Shareholders should read
the prospectus carefully before investing in the Funds.
The minimum initial investment in each Fund is $250. The minimum for additional
investments is $25. There is a maximum purchase limitation in the Funds' Class B
shares of $250,000 and $1,000,000 in the Funds' Class C shares. Each of the
Funds, except the Money Funds, offers Class A, Class B and Class C shares. Class
A shares may be purchased at a price equal to net asset value of the Fund plus
an initial sales charge imposed at the time of purchase. On a purchase of
$1,000,000 or more, there is no initial sales charge, but there could be a CDSC
if the shares are redeemed within one year of purchase. Class B shares may be
purchased for net asset value, but may be subject to a CDSC upon redemption. The
CDSC declines from 4% during the first year of purchase to zero after four
years. Class B shares will convert to Class A shares approximately eight years
from the time of purchase. Class C shares may be purchased for net asset value,
but may be subject to a 1% CDSC if redeemed in the first year. Class D shares
are offered exclusively to employees of DLJ and its subsidiaries that are
eligible to participate in the DLJ 401(k) Retirement Savings Plan. These
employees should contact the DLJ Hotline at 1-877-401k-DLJ to learn how to
purchase Class D shares. Shares of the Money Funds may be purchased at a price
equal to the net asset value per share which is expected to be $1.00.
OTHER SHAREHOLDER INFORMATION
Classes of Shares and Sales Charges
The DLJ Winthrop Funds, except the Money Funds, offer Class A shares, Class B
shares, and Class C shares to the general public. Class D shares are offered
exclusively to employees of DLJ and its subsidiaries who are eligible to
participate in the DLJ 401(k) Retirement Savings Plan. Class D shares are only
offered by the Growth Fund, the Growth and Income Fund, the Fixed Income Fund,
the High Income
<PAGE>
Fund and the International Equity Fund. Shares held in each Fund are normally
entitled to one vote (with proportional voting for fractional shares) for all
purposes.
With respect to the DLJ Winthrop Focus Funds and DLJ Winthrop Opportunity Funds,
each class is identical in all respects except that each class bears different
distribution service fees (except for Class D shares, which are not subject to
any distribution service fees and are offered only to a limited group of
investors). Each class has different exchange privileges and only Class B shares
have a conversion feature. Class A, Class B and Class C have exclusive voting
rights with respect to that class's 12b-1 Plan.
CLASS A Shares
[side bar]
Offering Price:
The offering price for Class A shares (with a sales charge) is NAV plus the
applicable sales charge (unless you are entitled to a waiver).
[end side bar]
The offering price for Class A shares of the Funds is the net asset value plus
the applicable sales charge from the schedule below.
Initial Sales Charge-Class A
Fixed Income Funds (1)
- --------------------------------------------------------------------------------
Amount Purchased As a % of Amount As a % of Offering Commission to
Invested Price Dealer/Agent as a %
of Offering Price
- --------------------------------------------------------------------------------
Less than $50,000 4.99% 4.75% 4.25%
- --------------------------------------------------------------------------------
$50,000 to less than 4.71% 4.50% 4.00%
$100,000
- --------------------------------------------------------------------------------
$100,000 to less than 3.63% 3.50% 3.25%
$250,000
- --------------------------------------------------------------------------------
$250,000 to less than 2.56% 2.50% 2.25%
$500,000
- --------------------------------------------------------------------------------
$500,000 to less than 2.04% 2.00% 1.75%
$1,000,000
- --------------------------------------------------------------------------------
$1,000,000 or more 0 0 1.00%*
- --------------------------------------------------------------------------------
Equity Funds(2):
- --------------------------------------------------------------------------------
Amount Purchased As a % of Amount As a % of Offering Commission to
Invested Price Dealer/Agent as a %
of Offering Price
- --------------------------------------------------------------------------------
Less than $50,000. 6.10% 5.75% 5.00%
- --------------------------------------------------------------------------------
$50,000 to less than 4.99% 4.75% 4.00%
$100,000
- --------------------------------------------------------------------------------
$100,000 to less than 3.90% 3.75% 3.00%
$250,000.
- --------------------------------------------------------------------------------
$250,000 to less than 2.56% 2.50% 2.00%
$500,000.
- --------------------------------------------------------------------------------
$500,000 to less than 2.04% 2.00% 1.75%
$1,000,000
- --------------------------------------------------------------------------------
$1,000,000 or more 0 0 1.00%*
- --------------------------------------------------------------------------------
<PAGE>
(1) The Fixed Income Funds include the Fixed Income Fund, the Municipal Trust
Fund and the High Income Fund.
(2) The Equity Funds include the Growth Fund, Growth and Income Fund, the
Small Company Value Fund, the Developing Markets Fund and the
International Equity Fund.
*On purchases of $1,000,000 or more, there is no initial sales charge although
there could be a Limited CDSC (as described below). The Distributor may pay the
dealer a fee of up to 1% as follows: 1% on purchases up to and including $3
million, .50% on the next $47 million, .25% on purchases over $50 million. In
addition, Class A shares issued upon conversion of Class B shares of the Funds
are not subject to an initial sales charge.
From time to time, the Distributor may re-allow the full amount of the sales
charge to brokers as a commission for sales of such shares.
In addition, investors may be charged a fee by a securities dealer if they
effect transactions through a broker or agent.
The initial sales charge is waived for the following shareholders or
transactions:
(1) investment advisory clients of the Advisers;
(2) officers, Trustees and retired Trustees of the Funds, directors or trustees
of other investment companies managed by the Advisers, officers, directors and
full-time employees of the Advisers and of their wholly-owned subsidiaries or
parent entities ("Related Entities"); or the spouse, siblings, children, parents
or grandparents of any such person or any such person's spouse (collectively,
"relatives"), or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or relative; or the estate of
any such person or relative, if such sales are made for investment purposes
(such shares may not be resold except to the Funds);
(3) certain employee benefit plans for employees of the Advisers and Related
Entities;
(4) full-time employees of the Funds' Transfer Agent or an entity that provides
distribution to the Funds, an agent or broker of a dealer that has a sales
agreement with the Distributor, for their own account or an account of a
relative of any such person, or any trust or individual retirement account or
self-employed retirement plan for the benefit of any such person or relative; or
the estate of any such person or relative, if such sales are made for investment
purposes (such shares may not be resold except to the Funds);
(5) shares purchased by registered investment advisers on behalf of fee-based
accounts or by broker-dealers that have sales agreements with the Funds and for
which shares have been purchased on behalf of wrap fee client accounts and for
which such registered investment advisers or broker-dealers perform advisory,
custodial, record keeping or other services;
(6) shareholders who received shares in the DLJ Winthrop Funds as a result of
the merger of Neuwirth Fund, Inc., Pine Street Fund, Inc. or deVegh Mutual Fund,
Inc., and who have maintained their investment in such shares;
(7) shares purchased for 401(k) Plans, 403(b) Plans and 457 Plans; and employee
benefit plans sponsored by an employer; and
(8) Class B shares which are automatically converted to Class A shares.
Reduced sales charges are available to participants in the following programs:
<PAGE>
Letter of Intent. By initially investing at least $250 and submitting a Letter
of Intent to the Funds' Distributor or Transfer Agent, you may purchase shares
of a DLJ Winthrop Fund over a 13-month period at the reduced sales charge, which
applies, to the aggregate amount of the intended purchases stated in the Letter.
The Letter only applies to purchases made up to 90 days before the date of the
Letter.
Right of Accumulation. For investors who already have an account with the Funds,
reduced sales charges based upon the Funds' sales charge schedules are
applicable to subsequent purchases. The sales charge on each additional purchase
is determined by adding the current net asset value of the shares the investor
currently owns to the amount being invested. The Right of Accumulation is
illustrated by the following example: If a previous purchase currently valued in
the amount of $50,000 had been made subject to a sales charge and the shares are
still held, a current purchase of $50,000 will qualify for a reduced sales
charge (i.e., the sales charge on a $100,000 purchase).
The reduced sales charge is applicable only to current purchases. It is the
investor's responsibility to notify the Transfer Agent at the time of subsequent
purchases that the account is eligible for the Right of Accumulation.
Concurrent Purchases. To qualify for a reduced sales charge, you may combine
concurrent purchases of shares purchased in any DLJ Winthrop Fund. For example,
if the investor concurrently invests $25,000 in one Fund and $25,000 in another,
the sales charge would be reduced to reflect a $50,000 purchase. In order to
exercise the Concurrent Purchases privilege, the investor must notify the
Distributor or Transfer Agent prior to his or her purchase.
Combined Purchase Privilege. By combining the investor's holdings of shares in
any DLJ Winthrop Fund, the investor can reduce the initial sales charges on any
additional purchases of Class A shares. The investor may also use these
combinations under a Letter of Intent. This allows the investor to make
purchases over a 13-month period and qualify the entire purchase for a reduction
in initial sales charges on Class A shares. A combined purchase of $1,000,000 or
more may trigger the payment of a dealer's commission and the applicability of a
Limited CDSC. See "Other Shareholder Information - Class A Limited CDSC."
Reinstatement Privilege. The Reinstatement Privilege permits shareholders to
reinvest the proceeds provided by a redemption of a Fund's Class A shares within
120 days from the date of redemption without an initial sales charge. It is the
investor's responsibility to notify the Transfer Agent prior to his or her
purchase in order to exercise the Reinstatement Privilege. In addition, a CDSC
paid to the Distributor will be eligible for reimbursement at the current net
asset value of the applicable Fund if a shareholder reinstates his Fund account
holdings within 120 days from the date of redemption.
CLASS B SHARES
You may choose to purchase Class B shares at the Fund's net asset value although
such shares may be subject to a CDSC when you redeem your investment. The CDSC
does not apply to investments held for more than four years or shares received
pursuant to dividend reinvestment.
Where the CDSC is imposed, the amount of the CDSC will depend on the number of
years that you have held the shares according to the table on this page. The
CDSC will be assessed on an amount equal to the lesser of the then current net
asset value or the original purchase price of the shares identified for
redemption.
[sidebar]
Year after Purchase/ CDSC Percentage
1st 4%
2nd 3%
3rd 2%
4th 1%
After 4th year None
[end sidebar]
<PAGE>
The CDSC on Class B shares will be waived for the following shareholders or
transactions:
(1) shares received pursuant to the exchange privilege which are currently
exempt from a CDSC;
(2) redemptions as a result of shareholder death or disability (as defined in
the Internal Revenue Code of 1986, as amended);
(3) redemptions made pursuant to a DLJ Winthrop Fund's systematic withdrawal
plan pursuant to which up to 1% monthly or 3% quarterly of an account (excluding
dividend reinvestments) may be withdrawn, provided that no more than 12% of the
total market value of an account may be withdrawn over any 12 month period.
Shareholders who elect systematic withdrawals on a semi-annual or annual basis
are not eligible for the waiver; and
(4) liquidations, distributions or loans from the following types of retirement
plan accounts:
o Section 401(k) retirement Plans;
o Section 403(b) Plans; or
o Section 457 Plans;and
(5) A total or partial redemption related to certain distributions from
retirement plans or accounts at age 70 1/2, which are permitted without penalty
pursuant to the Internal Revenue Code.
Redemptions effected by the Funds pursuant to their right to liquidate a
shareholder's account with a current net asset value of less than $250 will not
be subject to the CDSC.
Class A Limited CDSC. A Limited Contingent Deferred Sales Charge ("Limited
CDSC") will be imposed by the Funds upon certain redemptions of Class A shares
(or shares into which such Class A shares are exchanged) made within 12 months
of purchase, if such purchases were made at net asset value and triggered the
payment by the Distributor of the dealer's commission described above (i.e.,
purchases of $1,000,000 or more).
The Limited CDSC will be paid to the Distributor and will be equal to the lesser
of 1% of:
o the net asset value at the time of purchase of the Class A shares being
redeemed; or
o the net asset value of such Class A shares at the time of redemption.
For purposes of this formula, the "net asset value at the time of purchase" will
be the "net asset value at the time of purchase" of such Class A shares even if
those shares are later exchanged, and in the event of an exchange of such Class
A shares, the "net asset value of such shares at the time of redemption" will be
the net asset value of the shares into which the Class A shares have been
exchanged. The Limited CDSC on Class A shares will be waived on redemptions made
pursuant to a DLJ Winthrop Fund's systematic withdrawal plan under the same
circumstances as outlined in item (3) above related to the waiver of the CDSC on
Class B shares.
CLASS C SHARES
You may choose to purchase Class C shares at the Fund's net asset value,
although such shares will be subject to a 1% CDSC if you redeem your shares
within 1 year. If you exchange your shares for Class C shares of another DLJ
Winthrop Fund, the 1% CDSC also will apply to those Class C shares. The 1 year
period for the CDSC begins with the date of your original purchase, not the date
of the exchange for the other Class C shares. The 1% CDSC on Class C shares will
be waived under the circumstances that would result in a waiver of the CDSC on
Class B shares.
<PAGE>
CLASS D SHARES
Class D shares are offered only to employees of DLJ and its subsidiaries who are
eligible to participate in the DLJ 401(k) Retirement Savings Plan for Employees.
Class D shares are not subject to any sales charges or distribution fees. These
employees should contact the DLJ 401(k) Hotline at 1-877-401k -DLJ to learn how
to purchase Class D shares.
ADDITIONAL SHAREHOLDER SERVICES
The following privileges are provided by the Transfer Agent and do not apply to
Class D shares:
Exchange Privilege. You may exchange shares of Class A, Class B or Class C of a
Fund for shares of the same class in any other DLJ Winthrop Fund. Shareholders
whose initial investment was directly into a Money Fund may exchange such shares
for either Class A, Class B or Class C of the other DLJ Winthrop Opportunity
Funds or the DLJ Winthrop Focus Funds. Shares of each Money Fund purchased
pursuant to the DLJ Winthrop Funds' exchange privilege will be eligible for
exchange into the DLJ Winthrop Opportunity Funds or DLJ Winthrop Focus Funds
provided that the exchange is directed into the same class of shares upon which
the initial investment was made. Shareholders whose initial investment was
invested directly into a Money Fund will, upon an exchange request,
automatically be exchanged into Class A shares of the requested Fund (unless
otherwise indicated on the purchase application or by written notice to the
Transfer Agent). You should be aware that for federal income tax purposes an
exchange is treated as a sale and a purchase of shares which may result in
recognition of a gain or loss.
Automatic Monthly Investment Plan. You may elect on the Application to make
additional investments in a Fund automatically by authorizing DLJ Winthrop to
withdraw funds from your bank or other cash account and purchase additional
shares with those funds. You select the date (either the 10th, 15th or 20th of
each month) and amount (subject to a minimum of $25). The plan may be terminated
at any time without penalty by you or the Fund.
Automatic Exchange Plan. You may authorize the DLJ Winthrop Funds in advance to
exchange a set dollar amount of shares in one Fund for shares of the same class
of another Fund or for shares of the Money Funds on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum
exchange amount under the Automatic Exchange Plan is $50. These exchanges are
subject to the terms of the Exchange Privilege described above.
Dividend Direction Option. A shareholder may elect on the Application to have
his or her dividends paid to another individual or directed for reinvestment
within the same class of another Fund provided that an existing account in such
other Fund is maintained by the shareholder.
Systematic Withdrawal Plan. Any shareholder who owns or purchases shares of a
Fund having a current net asset value of at least $10,000 may establish a
Systematic Withdrawal Plan under which the shareholder or a third party will
receive payment by check in a stated amount of not less than $50 on a monthly,
quarterly, semi-annual or annual basis. A CDSC which may otherwise be imposed on
a redemption will be waived in connection with redemptions made pursuant to DLJ
Winthrop Funds' Systematic Withdrawal Plan up to 1% monthly or 3% quarterly of
an account (excluding dividend reinvestment) not to exceed 12% over any 12 month
rolling period. Systematic withdrawals elected on a semi-annual or annual basis
are not eligible for the waiver.
Checkwriting Privileges. Shareholders of the Money Funds may redeem shares by
writing checks of at least $100 against their account balance. Investments in
the Money Funds will continue to earn dividends until a shareholder's check is
presented to the Money Funds for payment. Checks will be returned by the
Transfer Agent if there are insufficient shares to meet the withdrawal amount.
You should not attempt to close an account by check because the exact balance at
the time the check clears will not be known when the check is written. There is
currently no charge to shareholders for checkwriting, but the Money Funds
reserve the right to impose a charge in the future. The Money Funds
<PAGE>
may modify, suspend or terminate checkwriting privileges at any time upon notice
to shareholders and will terminate checkwriting privileges without notice for
accounts whose assets are exchanged completely out of the Money Funds. In
addition, Boston Safe Deposit & Trust., as agent for the Transfer Agent in
processing redemptions via the checkwriting privilege, reserves the right to
terminate checkwriting privileges at any time without notice to you.
Checkwriting privileges are not available for accounts subject to a CDSC.
Retirement Plans. DLJ Winthrop offers a range of qualified retirement plans
including Traditional, Educational and Roth IRAs, SEPs, SIMPLE plans and other
pension and profit sharing plans. Semper Trust Company serves as custodian under
these prototype retirement plans and charges an annual account maintenance fee
of $15 per participant, regardless of the number of Funds selected. For more
information you should write or telephone the Transfer Agent at 1-800-225-8011.
For a more detailed explanation of the retirement plans offered by the Funds,
see each Fund's Statement of Additional Information.
Additional information concerning shareholder services is available by
contacting the Funds at the address or telephone number listed on the last page
of this Prospectus.
The Funds do not permit market-timing. Do not invest in these Funds if you are a
market-timer. DLJ reserves the right to impose short-term redemption fees to
discourage market-timing in the Funds.
DISTRIBUTION CHARGES
Each Fund has adopted 12b-1 Plans pursuant to the rules of the 1940 Act. These
plans allow each Fund to collect distribution and service fees for the sale and
servicing of the individual classes of each Fund's shares. Since these fees are
paid out of each Fund's assets on an on-going basis, over time these fees will
increase the cost of your investment. These fees may cost you more than paying
other types of sales charges. The following payments were made in the fiscal
year ending October 31, 1999. The Funds do not pay any of the expenses for
distributing Class D shares.
FUND % OF AVERAGE
NET ASSETS' FEES PAID
- --------------------------------------------------------------------------------
Growth Fund Class A 0.30% $362,168
Growth Fund Class B 1.00% $252,991
Growth Fund Class C* 1.00% NA
- --------------------------------------------------------------------------------
Growth and Income Fund Class A 0.30% $522,846
Growth and Income Fund Class B 1.00% $389,799
Growth and Income Fund Class C* 1.00% N/A
- --------------------------------------------------------------------------------
Small Company Value Fund Class A 0.30% $632,837
Small Company Value Fund Class B 1.00% $213,205
Small Company Value Fund Class C* 1.00% N/A
- --------------------------------------------------------------------------------
Fixed Income Fund Class A 0.30% $133,853
Fixed Income Fund Class B 1.00% $54,120
Fixed Income Fund Class C* 1.00% N/A
- --------------------------------------------------------------------------------
Municipal Trust Fund Class A 0.30% $114,538
Municipal Trust Fund Class B 1.00% $13,582
Municipal Trust Fund Class C* 1.00% N/A
- --------------------------------------------------------------------------------
High Income Fund Class A 0.25% $13,858
High Income Fund Class B 1.00% $5,164
High Income Fund Class C* 1.00% N/A
- --------------------------------------------------------------------------------
International Equity Fund Class A 0.25% $112,495
International Equity Fund Class B 1.00% $58,838
<PAGE>
International Equity Fund Class C* 1.00% N/A
- --------------------------------------------------------------------------------
Developing Markets Fund Class A 0.25% $36,671
Developing Markets Fund Class B 1.00% $25,503
Developing Markets Fund Class C* 1.00% N/A
- --------------------------------------------------------------------------------
U.S. Government Money Fund 0.25% $146,518
Municipal Money Fund 0.25% $133,071
- --------------------------------------------------------------------------------
*Prior to the date of this prospectus, the Class C shares of each Fund were not
available for purchase.
[side bar]
Distribution and Service Fees:
Distribution and service fees are used to pay the Distributor to promote the
sale of shares and the servicing of accounts of each Fund.
The expenses incurred by the Distributor under the 12b-1 Plans include the
preparation, printing and distribution of prospectuses, sales brochures and
other promotional materials sent to prospective shareholders. They also include
purchasing radio, television, newspaper and other advertising and compensating
the Distributor's employees or employees of the Distributor's affiliates for
their distribution assistance.
Distribution fees also allow the Distributor to compensate broker/dealers or
other persons or entities for providing distribution assistance, as well as
financial intermediaries for providing administrative and accounting services
for their account holders.
[end side bar]
DIVIDEND AND DISTRIBUTION INFORMATION
Dividends are declared daily and paid monthly to shareholders of the Money
Funds, Fixed Income Fund, Municipal Trust Fund and the High Income Fund from net
investment income. Dividends are paid to shareholders of the Growth and Income
Fund quarterly, if net investment income has been earned, and to shareholders of
the Growth Fund, the Small Company Value Fund and the International Funds once a
year. Capital gains earned in any of the Funds are normally distributed to
shareholders once a year. For purposes of this calculation, net investment
income consists of all accrued income on fund assets less the Fund's expenses
applicable to that dividend period.
For your convenience, dividends and capital gains are automatically reinvested
in your Fund. If you ask us to pay the distributions in cash, the Fund will send
you a check instead of purchasing more shares of your Fund. You will receive a
confirmation that shows the payment amount and a summary of all transactions.
Checks are normally mailed within five business days of the payment date.
TAXES
As with any investment, you should consider how your investment in the Funds
will be taxed. If your account is not a tax-deferred retirement account, you
should be aware of these tax consequences. For federal income tax purposes, a
Fund's income and short-term capital gain distributions are taxed as ordinary
income. Long-term capital gain distributions are taxed as long-term capital
gains. Your distributions may also be subject to state and local income taxes.
The distributions are taxable when they are paid, whether you receive them in
cash or participate in the dividend reinvestment program. Each January, your
Fund will mail you a form indicating the federal tax status of your dividend and
capital gain distributions. For individuals, long-term capital gains are
generally subject to a maximum tax rate of 20%. If you hold shares in a
tax-deferred retirement account, your distributions will be taxed when you
receive a distribution from your tax-deferred account.
<PAGE>
Distributions to shareholders of tax-exempt interest income earned by the
Municipal Trust Fund and the Municipal Money Fund are not subject to federal
income tax if, at the close of each quarter of each Fund's taxable year, at
least 50% of the value of each Fund's total assets consists of tax-exempt
obligations. Both Funds intend to meet this requirement. Because the Municipal
Trust Fund and Municipal Money Fund can invest in taxable municipal bonds and
other taxable securities as well as tax-exempt municipal bonds, the portion of
their dividends exempt from or subject to regular federal income taxes cannot be
predicted. In addition, these distributions may also be subject to state and
local taxes.
If you are subject to the AMT, you should be aware that a portion of the
distributions out of tax-exempt interest earned by the Municipal Trust Fund and
the Municipal Money Fund may be taxable.
When you redeem your shares, the tax treatment of any gains or losses may be
affected by the length of time for which you hold your shares.
As a shareholder, you must provide your Fund with a correct taxpayer
identification number (generally your Social Security number) and certify that
you are not subject to backup withholding. If you fail to do so, the IRS can
require your Fund to withhold 31% of your taxable distributions and redemptions.
Federal law also requires your Fund to withhold 30% or the applicable tax treaty
rate from dividends paid to certain non-resident alien, non-U.S. partnership and
non-U.S. corporation shareholder accounts.
Please see the Statement of Additional Information for your Fund for more
information on the tax consequences of your investment. You should also consult
your own tax adviser for further information.
[side bar]
The Taxpayer Relief Act of 1997:
The Taxpayer Relief Act of 1997 made certain changes to capital gains tax rates.
Under this law, certain taxpayers will pay a lower tax rate when it comes to
capital gains.
The Fund will provide information relating to the portion of any Fund
distribution that is eligible for the reduced capital gains tax rate.
[end side bar]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand your Fund's
financial performance for the past 5 years (or, if shorter, the period of the
Fund's operations.) Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the indicated Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Ernst & Young LLP, the Funds' independent auditors, whose unqualified
reports, along with the Funds' financial statements, are included in the
Statements of Additional Information, which are available upon request.
Additional information about the performance of the Focus Funds and the
Opportunity Funds is contained in each Fund's annual report to shareholders,
which may be obtained without charge. Prior to February 28, 1996, the Focus
Funds offered only a single class of shares. Accordingly, the data presented
below with respect to Class A shares of the Focus Funds for periods prior to
such date have been obtained from the financial statements for the Focus Funds'
sole class of shares outstanding during such prior fiscal years.
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Net Realized Total from Dividends Distributions
Value Investment and Unrealized Investment from Net from Capital
Beginning Income/(Loss) Gains/(Losses) Operations Investment Gains
of Period on Securities Income
<S> <C> <C> <C> <C> <C> <C>
GROWTH FUND CLASS A
Year Ended
October 31, 1999 $16.52 ($0.030)* $5.040 $5.010 $ -- ($0.260)
Year Ended
October 31, 1998 14.56 (0.003)* 2.882 2.879 (0.017) (0.902)
Year Ended 12.69 0.028 3.065 3.093 (0.048) (1.175)
October 31, 1997
Year Ended 11.35 0.053 2.107 2.160 (0.038) (0.782)
October 31, 1996
Year Ended 10.82 0.037 1.190 1.227 (0.012) (0.685)
October 31, 1995
Class B
Year Ended
October 31, 1999 16.25 (0.165)* 4.925 4.760 -- (0.260)
Year Ended 14.41 (0.115)* 2.857 2.742 -- (0.902)
October 31, 1998
Year Ended 12.63 (0.030) 3.016 2.986 (0.031) (1.175)
October 31, 1997
Year Ended 11.88 (0.013) 0.763 0.750 -- --
October 31, 1996+
CLASS D
Year Ended
October 31, 1999++ 20.29 0.005* 0.975 0.980 -- --
GROWTH AND INCOME FUND CLASS A
Year Ended
October 31, 1999 $22.60 $0.119* $2.872 $2.991 ($0.091) ($2.010)
Year Ended
October 31, 1998 20.09 0.202* 3.509 3.711 (0.170) (1.031)
Year Ended 17.18 0.211 4.588 4.799 (0.214) (1.675)
October 31, 1997
Year Ended 14.57 0.266 2.935 3.201 (0.241) (0.350)
October 31, 1996
Year Ended 13.38 0.254 1.769 2.023 (0.266) (0.567)
October 31, 1995
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Year Ended
October 31, 1999 22.55 (0.042)* 2.882 2.840 (0.010) (2.010)
Year Ended 20.06 0.045* 3.500 3.545 (0.024) (1.031)
October 31, 1998
Year Ended 17.15 0.079 4.577 4.656 (0.071) (1.675)
October 31, 1997
Year Ended 16.05 0.136 1.109 1.245 (0.145) --
October 31, 1996+
CLASS D
Year Ended
October 31, 1999+++ 23.73 0.098* (0.260) (0.162) (0.068) --
SMALL COMPANY VALUE FUND CLASS A
Year Ended $19.54 $0.058* $1.009 $1.067 ($0.073) ($0.014)
October 31, 1999
Year Ended 23.34 0.066* (2.548) (2.482) (0.063) (1.255)
October 31, 1998
Year Ended 18.41 0.073 5.661 5.734 (0.081) (0.723)
October 31, 1997
Year Ended 16.61 0.084 2.162 2.246 (0.037) (0.409)
October 31, 1996
Year Ended 15.65 0.035 1.621 1.656 -- (0.696)
October 31, 1995
Class B
Year Ended 19.23 (0.143)* 1.057 0.914 -- (0.014)
October 31, 1999
Year Ended 23.12 (0.089)* (2.546) (2.635) -- (1.255)
October 31, 1998
Year Ended 18.34 (0.021) 5.576 5.555 (0.052) (0.723)
October 31, 1997
Year Ended 17.41 (0.023) 0.953 0.930 -- --
October 31, 1996+
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FIXED INCOME FUND CLASS A
Year Ended $10.46 $0.496 ($0.525) ($0.029) ($0.496) ($0.105)
October 31, 1999
Year Ended 10.16 0.531 0.300 0.831 (0.531) --
October 31, 1998
Year Ended 10.07 0.575 0.090 0.665 (0.575) --
October 31, 1997
Year Ended 10.22 0.577 (0.150) 0.427 (0.577) --
October 31. 1996
Year Ended 9.66 0.588 0.560 1.148 (0.588) --
October 31, 1995
CLASS B
Year Ended 10.46 0.425 (0.525) (0.100) (0.425) (0.105)
October 31, 1999
Year Ended 10.16 0.456 0.300 0.756 (0.456) --
October 31, 1998
Year Ended 10.07 0.504 0.090 0.594 (0.504) --
October 31, 1997
Year Ended 10.22 0.339 (0.150) 0.189 (0.339) --
October 31, 1996+
CLASS D
Year Ended 10.09 0.263 (0.260) 0.003 (0.263) --
October 31, 1999+++
</TABLE>
+ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
++ For the period May 13,1999 (commencement of offering of Class D shares) to
October 31, 1999.
+++ For the period April 30, 1999 (commencement of offering of Class D shares)
to October 31, 1999.
* Based on average shares outstanding.
** 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. An initial sales charge or contingent deferred
sales charge is not reflected in the calculation of total return.
<TABLE>
<CAPTION>
Total Net Asset Total Return ** Net Assets End Ratio of Ratio of Net
Distributions Value End of of Period (000 Expenses to Investment Income/ Portfolio
Period omitted) Average Net (Loss) to Average Turnover
Assets (2) Net Assets (2) Rate
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
($0.260) $21.27 30.77% $135,677 1.23% (0.16%) 34.7%
(0.919) 16.52 21.00 97,078 1.29 (0.02) 21.0
(1.223) 14.56 26.48 82,926 1.36 0.21 41.1
(0.820) 12.69 20.32 68,096 1.48 0.47 60.6
(0.697) 11.35 12.21 55,946 1.63 0.35 101.7
(0.260) 20.75 29.73 32,783 1.93 (0.86) 34.7
(0.902) 16.25 20.20 17,438 1.99 (0.72) 21.0
(1.206) 14.41 25.66 10,378 2.06 (0.51) 41.1
-- 12.63 6.40 3,177 2.17(1) (0.34)(1) 60.6
-- 21.27 4.83 4,839 1.17(1) 0.07(1) 34.7
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
($2.101) $23.49 14.37% $174,213 1.11% 0.52% 24.5%
(1.201) 22.60 19.14 163,936 1.13 0.92 32.7
(1.889) 20.09 30.53 145,586 1.22 1.15 19.8
(0.591) 17.18 22.60 113,803 1.36 1.68 44.0
(0.833) 14.57 16.10 87,975 1.58 1.94 31.8
(2.020) 23.37 13.66 41,144 1.81 (0.18) 24.5
(1.055) 22.55 18.29 33,325 1.83 0.22 32.7
(1.746) 20.06 29.59 19,664 1.92 0.39 19.8
(0.145) 17.15 7.67 6,545 1.99(1) 1.06(l) 44.0
(0.068) 23.50 (0.67) 48,152 0.97(1) 0.99(1) 24.5
- ----------------------------------------------------------------------------------------------------------------------
(0.087) $20.52 5.47% $188,192 1.37% 0.33% 29.6%
(1.318) 19.54 (11.20) 237,873 1.29 0.30 41.5
(0.804) 23.34 32.48 283,001 1.35 0.37 21.1
(0.446) 18.41 13.80 227,716 1.47 0.48 35.1
(0.696) 16.61 11.10 202,730 1.64 0.23 25.1
(0.014) 20.13 4.75 19,257 2.07 (0.71) 29.6
(1.255) 19.23 (11.98) 22,284 1.99 (0.40) 41.5
(0.775) 23.12 31.55 18,395 2.05 (0.32) 21.1
-- 18.34 5.28 6,305 2.15(1) (0.34)(1) 35.1
- ----------------------------------------------------------------------------------------------------------------------
($0.601) $9.83 (0.26%) $43,060 1.00% 4.91% 84.3%
(0.531) 10.46 8.46 47,834 1.00 5.24 114.0
(0.575) 10.16 6.84 54,755 1.00 5.74 119.3
(0.577) 10.07 4.34 56,388 1.00 5.72 90.2
(0.588) 10.22 12.23 53,885 1.00 5.90 66.1
(0.530) 9.83 (0.97) 4,471 1.70 4.21 84.3
(0.456) 10.46 7.71 5,849 1.70 4.50 114.0
(0.504) 10.16 6.10 3,375 1.70 4.99 119.3
(0.339) 10.07 2.23 1,629 1.70(1) 5.03(1) 90.2
(0.263) 9.83 0.04 116,424 0.70(1) 6.30(1) 84.3
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized
(2) See footnote (3) on page 51.
<PAGE>
<TABLE>
<CAPTION>
Net Asset Net Net Realized Contrib- Total from Dividends Distrib Tax
Value Investment and Unrealized ution Investment from Net -utions Return
Beginning of Income/ Gains/(Losses) from Operations Investment from Capital of
Period (Loss) on Securities Sub-Advisor Income Gains Capital
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL TRUST FUND
CLASS A
Year Ended October 31, $10.53 $0.377 ($0.480) $ -- ($0.103) ($0.377) $ -- $ --
1999
Year Ended October 31, 10.29 0.383 0.240 -- 0.623 (0.383) -- --
1988
Year Ended October 31, 10.01 0.445 0.280 -- 0.725 (0.445) -- --
1997
Year Ended October 31, 10.06 0.425 (0.050) -- 0.375 (0.425) -- --
1996
Year Ended October 31, 9.51 0.389 0.550 -- 0.939 (0.389) -- --
1995
CLASS B
Year Ended October 31, 10.53 0.305 (0.480) -- (0.175) (0.305) -- --
1999
Year Ended October 31, 10.29 0.318 0.240 -- 0.558 (0.318) -- --
1998
Year Ended October 31, 10.01 0.370 0.280 -- 0.650 (0..370) -- --
1997
Year Ended October 31, 10.12 0.248 (0.110) -- 0.138 (0.248) -- --
1996+
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY
FUND CLASS A
Year Ended October 31, $12.20 ($0.060)** $2.560 -- $2.500 $-- ($0.700) --
1999
Year Ended October 31, 11.42 (0.060)** 0.990 -- 0.930 (0.060) (0.090) --
1998
Year Ended October 31, 10.38 (0.070)** 1.110 -- 1.040 -- -- --
1997
Year Ended October 31, 9.58 (0.040)** 0.840 -- 0.800 -- -- --
1996
Year Ended October 31, 10.00 -- (0.420) (0.420) -- -- --
1995*
CLASS B
Year Ended October 31, 11.98 (0.150)** 2.500 -- 2.350 -- (0.700) --
1999
Year Ended October 31, 11.24 (0.150)** 0.980 -- 0.830 -- (0.090) --
1998
Year Ended October 31, 10.29 (0.150)** 1.100 -- 0.950 -- -- --
1997
Year Ended October 31, 9.57 (0.130)** 0.850 -- 0.720 -- -- --
1996
Year Ended October 31, 10.00 (0.020)** (0.410) -- (0.430) -- -- --
1995*
CLASS D
Year Ended October 31, 12.69 (0.140)** 1.470 -- 1.330 -- -- --
1999+++
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DEVELOPING MARKETS
FUND CLASS A
Year Ended October 31, $7.14 $0.030** $2.580 $0.230 $2.840 ($0.010) -- $(0.020)
1999
Year Ended October 31, 9.52 0.020** (2.400) -- (2.380) -- -- --
1998
Year Ended October 31, 9.96 (0.020)** (0.400) -- (0.420) -- (0.020) --
1997
Year Ended October 31, 9.53 (0.010)** 0.440 -- 0.430 -- -- --
1996
Year Ended October 31, 10.00 -- (0.470) -- (0.470) -- -- --
1995*
CLASS B
Year Ended 6.96 (0.030)** 2.500 $0.230 $2.700 $ -- $ -- --
October 31, 1999
Year Ended October 31, 9.36 (0.040)** (2.360) -- (2.400) -- -- --
1998
Year Ended October 31, 9.86 (0.190)** (0.290) -- (0.480) -- (0.020) --
1997
Year Ended October 31, 9.52 (0.080)** 0.420 -- 0.340 -- -- --
1996
Year Ended October 31, 10.00 (0.010)** (0.470) (0.480) -- --
1995*
- ------------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL MONEY FUND
Year Ended $1.00 $0.023 $ -- $ -- $0.023 ($0.023) $ -- $ --
October 31, 1999
Year Ended October 31, 1.00 0.027 -- -- 0.027 (0.027) -- --
1998
Year Ended October 31, 1.00 0.020 -- -- 0.020 (0.020) -- --
1997***
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
Year Ended October 31, $1.00 $0.042 $ -- $ -- $0.042 ($0.042) $ -- $ --
1999
Year Ended October 31, 1.00 0.047 -- -- 0.047 (0.047) -- --
1998
Year Ended October 31, 1.00 0.032 -- -- 0.032 (0.032) -- --
1997***
- ------------------------------------------------------------------------------------------------------------------------------------
HIGH INCOME FUND CLASS A
Year Ended October 31, $10.00 $0.563 ($0.340) -- $0.223 ($0.563) $ -- $ --
1999++
Class B
Year Ended October 31, 10.00 0.504 (0.340) -- 0.164 (0.504) -- --
1999++
Class D
Year Ended October 31, 10.23 0.414 (0.580) -- (0.166) (0.414) -- --
1999++++
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
* Commencement of operations for the International Equity Fund and the
Developing Markets Fund was September 8, 1995.
** Based on average shares outstanding.
*** Commencement of operations for the Municipal Money Fund and the U.S.
Government Money Fund was February 24, 1997.
+ For the period February 28, 1996 (commencement of offering of Class B
shares) to October 31, 1996.
++ Commencement of operations for the High Income Fund was March 8, 1999.
+++ For the period May 17, 1999 (commencement of offering of Class D Shares)
to October 31, 1999.
++++ For the period May 13,1999 (commencement of offering of Class D shares) to
October 31, 1999.
<TABLE>
<CAPTION>
Total Net Asset Total Return(2) Net Assets End Ratio of Ratio of Net
Distributions Value End of of Period (000 Expenses to Investment Income Portfolio
Period omitted) Average Net (Loss) to Average Turnover
Assets (3) Net Assets (3) Rate
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
($0.377) $10.05 (1.02%) $29,912 1.00% 3.65% 76.5%
(0.383) 10.53 6.28 44,306 1.00 3.78 51.5
(0.445) 10.29 7.37 35,878 0.70 4.38 84.3
(0.425) 10.01 3.83 38,794 0.80 4.26 79.3
(0.389) 10.06 10.06 39,059 1.00 3.97 49.3
(0.305) 10.05 (1.71) 1,044 1.70 2.94 76.5
(0.318) 10.53 5.54 1,430 1.70 3.04 51.5
(0.370) 10.29 6.62 546 1.40 3.66 84.3
(0.248) 10.01 1.42 489 1.23(1) 3.81(1) 79.3
($0.700) $14.00 21.76% $48,181 2.15% (0.44)% 82.0%
(0.150) 12.20 8.20 44,286 2.15 (0.49) 69.7
-- 11.42 10.02 44,316 2.15 (0.59) 73.9
-- 10.38 8.35 42,170 2.15 (0.39) 94.1
-- 9.58 (4.20) 28,819 2.15(1) (0.02)(1) --
(0.700) 13.63 20.86 5,527 2.90 (1.18) 82.0
(0.090) 11.98 7.43 6,133 2.90 (1.24) 69.7
-- 11.24 9.23 6,821 2.90 (1.32) 73.9
-- 10.29 7.52 4,955 2.90 (1.25) 94.1
-- 9.57 (4.30) 1,803 2.90(1) (1.77)(1) --
-- 14.02 10.48% 1,586 1.90(1) (1.19)(1) 82.0
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
($0.030) $9.95 39.82% $16,023 2.15% 0.32% 36.9%
-- 7.14 (25.00) 16,355 2.15 0.22 43.6
(0.020) 9.52 (4.18) 29,402 2.15 (0.17) 52.8
-- 9.96 4.51 36,918 2.15 (0.14) 26.8
-- 9.53 (4.70) 14,622 2.15(1) 0.32(1) --
-- 9.66 38.79 2.685 2.90 (0.36) 36.9
-- 6.96 (25.64) 2,509 2.90 (0.50) 43.6
(0.020) 9.36 (4.83) 4,941 2.90 (1.74) 52.8
-- 9.86 3.57 3,641 2.90 (0.83) 26.8
-- 9.52 (4.80) 1,004 2.90(1) (1.00)(1) --
- ----------------------------------------------------------------------------------------------------------------------
($0.023) $1.00 2.37% $44,347 0.90% 2.33% N/A
(0.027) 1.00 2.72 57,778 0.90 2.68 N/A
(0.020) 1.00 2.90(1) 38,681 0.90(1) 2.87(1) N/A
- ----------------------------------------------------------------------------------------------------------------------
($0.042) $1.00 4.26% $59,877 0.90% 4.19% N/A
(0.047) 1.00 4.79 56,697 0.90 4.68 N/A
(0.032) 1.00 4.68(l) 35,174 0.90(1) 4.65(1) N/A
- ----------------------------------------------------------------------------------------------------------------------
($0.563) $9.66 2.19% $10,488 1.10%(1) 8.61%(1) 188.4%
(0.504) 9.66 1.60 1,447 1.85(1) 7.83(1) 188.4
(0.414) 9.65 (1.63) 926 0.85(1) 9.36(1) 188.4
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized
(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. An 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
except for the Money Funds. Total return for the year ended October 31,
1999 excluding the effect of the contribution from the subadvisor for
realized and unrealized securities losses was 36.59% and 35.49% for the
Developing Markets Fund Class A and B Shares, respectively.
(3) Net of voluntary assumption by the investment adviser of expenses,
expressed as a percentage of average net assets, as follows: Fixed Income
Fund Class A shares, .14%, .30%, .30%, .34%, and .51%, for the years
ended 10/31/99, 98, 97, 96, and 95 respectively; Fixed Income Fund Class B
shares, .14%, .30%, and .30% for the years ended 10/31/99, 98 and 97, and
.34% (annualized) for the period 2/28/96 through 10/31/96; Fixed Income
Fund Class D shares, .14% for the period 4/30/99 through 10/31/99;
Municipal Trust Fund Class A shares, .42%, .41%, .74%, .64%, and .58%,
(annualized) for the years ended 10/31/99, 98, 97, 96, and 95,
respectively; Municipal Trust Fund Class B shares, .42 %, .41 % and .74%
for the years ended 10/31/99, 98 and 97, and .64% (annualized) for the
period 2/28/96 through 10/31/96; Developing Markets Fund Class A and Class
B shares, .76%, .61%, .34%, .54% and .60% (annualized) for the years ended
10/31/99, 98, 97, 96 and 95, respectively; International Equity Fund Class
A and Class B shares, .04%,.10%, .18%, .27% and .60% (annualized) for the
years ended 10/31/99, 98, 97, 96 and 95, respectively; International
Equity Fund Class D shares, .04% (annualized) for the period 5/17/99
through 10/31/99; Municipal Money Fund, .14%, .15% and .40% (annualized)
for the years ended 10/31/99, 98 and 97, respectively; and U.S. Government
Money Fund, .19%, .25% and .45% (annualized) for the years ended 10/31/99,
98, and 97, respectively; and High Income Fund Class A, Class B and Class
D shares 1.43% (annualized) for the period 3/8/99 through 10/31/99.
BACK COVER
<PAGE>
FOR MORE INFORMATION
General Information and Other Available Information
The Funds send out a semi-annual report and an annual report to all
shareholders. These reports include a list of your Fund's investments and
financial statements. The annual report contains a statement from the Fund's
Adviser discussing market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
The Funds have Statements of Additional Information that contain additional
information on all aspects of the Funds and are incorporated by reference into
this Prospectus. The Statements of Additional Information have been filed with
the Securities and Exchange Commission and are available for review at the SEC's
Public Reference Room in Washington, DC (1-202-942-8090) or on the SEC's web
site at http://www.sec.gov. You can also obtain copies of Fund documents filed
with the SEC by electronic request at the following e-mail address:
[email protected], or by writing:
Securities and Exchange Commission
Public Reference Section
Washington, DC 20549-0102
Payment of a duplicating fee may be required.
Shareholders may obtain any of these documents free of charge and may request
other information about the Funds by calling 800-225-8011.
DLJ Winthrop Funds
PFPC, Inc.
P.O. Box 61503
King of Prussia, PA. 19406-0903
DLJ WINTHROP FUNDS
SEC file numbers: Focus Funds 811-04604
Opportunity Funds 811-9054
<PAGE>
DLJ Winthrop Focus Funds
277 PARK AVENUE, NEW YORK, NEW YORK 10172
Toll Free (800) 225-8011
STATEMENT OF ADDITIONAL INFORMATION
dated February 28, 2000
The DLJ Winthrop Focus Funds (the "DLJ Winthrop Focus Funds") is a
"series fund" comprised of the following diversified, open-end investment
management companies, commonly known as "mutual funds": DLJ Winthrop Growth
Fund, DLJ Winthrop Growth and Income Fund, DLJ Winthrop Small Company Value
Fund, DLJ Winthrop Fixed Income Fund and DLJ Winthrop Municipal Trust Fund
(individually, a "Fund" and collectively, the "Focus Funds" or the "Funds"). The
DLJ Winthrop Focus Funds is empowered to expand the series by establishing
additional Funds with investment objectives and policies that differ from those
of the current Funds. The DLJ Winthrop Focus Funds also may offer additional
classes of shares.
This Statement of Additional Information (the "SAI") is not a
prospectus and should be read in conjunction with the DLJ Winthrop Focus Funds'
current Prospectus dated February 28, 2000 (the "Prospectus"), as supplemented
from time to time, which is incorporated herein by refer ence. A copy of the
Prospectus may be obtained by contacting the DLJ Winthrop Focus Funds at the
address or telephone number listed above.
<PAGE>
TABLE OF CONTENTS
PAGE
Fund History 3
Description of the Funds and Their Investments And Risks 4
Management of the Funds 43
Investment Advisory and Other Services 49
Brokerage Allocation and Other Practices 59
Capital Stock and Organization 64
Purchases, Redemptions, Exchanges and Pricing of Fund Shares 67
Shareholder Investment Account 80
Net Asset Value 83
Taxes, Dividends, and Distributions 86
Performance Information 94
General Information 97
Financial Statements 98
Appendix I -- Description of Securities Ratings A-1
<PAGE>
FUND HISTORY
The DLJ Winthrop Focus Funds were organized under the laws of the
Commonwealth of Massachusetts on November 26, 1985 as a "business trust"under
the name "Winthrop Focus Funds".
On January 19, 1999, the name was changed from "Winthrop Focus
Funds" to "DLJ Winthrop Focus Funds."
In addition, on such date the names of Growth Fund, Growth and Income
Fund, Small Company Value Fund, Fixed Income Fund and Municipal Trust Fund were
changed to DLJ Winthrop Growth Fund, DLJ Winthrop Growth and Income Fund, DLJ
Winthrop Small Company Value Fund, DLJ Winthrop Fixed Income Fund and DLJ
Winthrop Municipal Trust Fund, respectively.
<PAGE>
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
(a) Classification
Each of the Funds is a diversified open-end management investment
company.
(b) Investment Strategies and Risks
The following investment policies and restrictions supplement, and
should be read in conjunction with, the information set forth under the heading
"DLJ Winthrop Focus Funds' Investment Objectives and Policies" in the
Prospectus. Except as noted in the Prospectus and in this SAI, the Funds'
investment policies are not fundamental and may be changed by the Trustees of
the DLJ Winthrop Focus Funds without shareholder approval; however, shareholders
will be notified prior to a significant change in such policies. A Fund's
fundamental investment restrictions may not be changed without shareholder
approval as defined in "Investment Restrictions" in this SAI. DLJ Winthrop Focus
Funds' investment adviser is DLJ Asset Management Group, Inc. (formerly known as
Wood, Struthers & Winthrop Management Corp.) (the "Adviser").
I. DLJ Winthrop Growth Fund, DLJ Winthrop Small Company Value Fund and
DLJ Winthrop Growth and Income Fund
The investment objective of the DLJ Winthrop Growth Fund is
long-term capital appreciation. It seeks to achieve this objective by investing
principally in common stock, securities convertible into common stock and other
equity securities (i.e., preferred stock, interests in master limited
partnerships) of well-known and established companies (generally, companies in
operation for more than three years) which, in the opinion of the Adviser, have
the
<PAGE>
potential for long-term capital appreciation. There can be no assurance that the
DLJ Winthrop Growth Fund's investment objective will be achieved.
The investment objective of the DLJ Winthrop Growth and Income Fund
is long-term capital appreciation and continuity of income. It seeks to achieve
this objective by investing principally in dividend-paying common stock and
diversifying its investments among different industries and different companies.
Accordingly, the Growth and Income Fund invests in securities on the basis of
the Adviser's evaluation of their investment merit and their potential for
appreciation in value and/or income. The selection of securities on the basis of
their capital appreciation or income potential cannot ensure against possible
loss in value. There can be no assurance that the DLJ Winthrop Growth and Income
Fund's investment objective will be achieved.
The investment objective of the DLJ Winthrop Small Company Value
Fund is a high level of growth of capital. It seeks to achieve this objective by
investing principally in common stock and securities convertible into common
stock, but it may, when deemed appropriate by the Adviser, invest part of its
assets in preferred stock, other equity securities, bonds or other debt
securities as described below. There can be no assurance that the DLJ Winthrop
Small Company Value Fund's investment objective will be achieved.
The DLJ Winthrop Small Company Value Fund will pursue its investment
objective by employing a value-oriented investment approach. The Adviser's
research efforts may also play a greater role in selecting securities for the
DLJ Winthrop Small Company Value Fund than in a fund that invests in larger,
more established companies. The DLJ Winthrop Small Company Value Fund seeks
securities that appear to be underpriced and are issued by companies with proven
management, consistent earnings, sound finances and strong potential for market
growth. By investing in such companies, the Small Company Value Fund tries to
enhance the potential for appreciation and limit the risk of decline in the
value of its
<PAGE>
portfolio. The DLJ Winthrop Small Company Value Fund focuses on the fundamentals
of each small-cap company instead of trying to anticipate what changes might
occur in the stock market, the economy, or the political environment. This
approach differs from that used by many other funds investing in small-cap
company stocks. Those funds often buy stocks of companies they believe will have
above-average earnings growth, based on anticipated future developments. In
contrast, the DLJ Winthrop Small Company Value Fund's securities are generally
selected with the belief that they are currently undervalued based on existing
conditions, and that their earning power or franchise value does not appear to
be reflected in their current stock price. In addition, to further reduce risk,
the DLJ Winthrop Small Company Value Fund diversifies its holdings among many
companies and industries. Other factors considered in the selection of
securities include whether a company has an established presence in its
industry, a product or market niche or whether management owns a significant
stake in the company's operation.
For a further description of the Funds' investment objectives and
policies, see "DLJ Winthrop Focus Funds' Investment Objective and Policies" in
the Prospectus.
<PAGE>
Warrants
The DLJ Winthrop Growth Fund and the DLJ Winthrop Small Company
Value Fund each may invest up to 5% of their respective total assets in
warrants. Warrants may be considered more speculative than certain other types
of investments in that they do not entitle a holder to dividends or voting
rights with respect to the securities which may be purchased, nor do they
represent any rights in the assets of the issuing company. Also, the value of a
warrant does not necessarily change in proportion to the value of the underlying
securities and a warrant ceases to have value if it is not exercised prior to
the expiration date.
Foreign Securities
The DLJ Winthrop Growth Fund and the DLJ Winthrop Growth and Income
Fund may invest up to 10% of the value of their respective total assets in
securities of issuers doing business primarily outside the U.S. or domiciled
outside the U.S. ("foreign securities") and the DLJ Winthrop Small Company Value
Fund may invest up to 20% of the value of its total assets in foreign
securities. Investment in foreign securities involves certain risks not
ordinarily associated with investments in securities of domestic issuers. These
risks include fluctuations in foreign exchange rates, future political and
economic developments, and the possible imposition of exchange controls or other
foreign governmental laws or restrictions. In addition, with respect to certain
countries, there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments which could
adversely affect investments in those countries.
There may be less publicly available information about a foreign
company than about a U.S. company, and foreign companies may not be subject to
accounting, auditing and financial reporting standards and requirements
comparable to or as uniform as those to which U.S. companies are subject.
Non-U.S. securities markets, while experiencing increases in the volume of
securities traded, generally have substantially less volume than U.S. markets,
and
<PAGE>
securities of many foreign companies are less liquid and their prices more
volatile than securities of comparable U.S. companies. Transaction costs
associated with investing in non-U.S. securities markets generally are higher
than in the U.S. There is generally less government supervision and regulation
of exchanges, brokers and issuers than in the U.S. The Funds might have greater
difficulty taking appropriate legal action in non-U.S. courts. Non-U.S. markets
also have different clearance and settlement procedures, which in some markets
have at times failed to keep pace with the volume of transactions, thereby
creating substantial delays and settlement failures that could adversely affect
a Fund's performance. Dividend and interest income from non-U.S. securities will
generally be subject to withholding taxes by the country in which the issuer is
located and may not be recoverable by the Funds or investors.
Investment-Grade Securities
The DLJ Winthrop Growth Fund and DLJ Winthrop Small Company Value
Fund may invest up to 35% of the value of their respective total assets in
investment-grade fixed-income securities, while the DLJ Winthrop Growth and
Income Fund may invest in investment-grade fixed- income securities without
limitation. Investment-grade obligations are those obligations rated BBB or
better by Standard and Poor's Ratings Group ("S&P") or Baa or better by Moody's
Investors Service, Inc. ("Moody's") in the case of long-term obligations and
equivalently rated obligations in the case of short-term obligations, or unrated
instruments believed by the Adviser to be of comparable quality to such rated
instruments. Issuers with securities rated BBB by S&P are regarded by S&P as
having an adequate capacity to pay interest and repay principal. While such
securities normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely, in the opinion of S&P, to
lead to a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories. Securities rated Baa by Moody's are
considered by Moody's to be medium-grade obligations; they are neither highly
protected nor poorly secured; interest
<PAGE>
payments and principal security appear to be adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time; in the opinion of Moody's, they lack
outstanding investment characteristics and in fact have speculative
characteristics as well. Fixed-income securities in which the Funds may invest
include asset and mortgage backed securities. Prepayments of principal may be
made at any time on the obligations underlying asset and mortgage backed
securities and are passed on to the holders of the asset and mortgage backed
securities. As a result, if a Fund purchases such a security at a premium,
faster than expected prepayments will reduce, and slower than expected
prepayments will increase, yield to maturity. Conversely, if a Fund purchases
these securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity.
Options
The DLJ Winthrop Growth Fund and the DLJ Winthrop Growth and Income
Fund may write covered calls on securities or securities indices for purposes of
hedging against a decline in the value of their respective portfolio securities.
The DLJ Winthrop Small Company Value Fund may write covered calls, purchase
calls and write covered put options on securities and securities indices both
for hedging and return enhancement purposes.
A call option on a security gives the purchaser of the option, upon
payment of a premium to the writer of the option, the right to purchase from the
writer of the option a specified number of shares of a specified security on or
before a fixed date, at a predetermined price. A call option on a securities
index represents the holder's right to obtain from the writer in cash a fixed
multiple of the amount by which the exercise price is less than the value of the
underlying securities index on the exercise date. So long as a Fund remains
obligated as a writer of a covered call option, it will forego the opportunity
to profit from increases in the market price of the underlying security or index
above the exercise price of the option. A Fund will not write
<PAGE>
a call option on a security unless at all times during the option period the
Fund owns either (i) the optioned securities, or securities convertible into or
carrying rights to acquire the optioned securities at no additional cost, or
(ii) an offsetting call option on the same securities at the same or a lower
strike price. When a Fund writes a call option on a securities index, it will
establish a segregated account with its custodian into which it will deposit
cash or other liquid unencumbered assets, marked-to-market daily, or a
combination of both, with a value equal to or greater than the market value of
the option and will maintain the account while the option is open.
If either the DLJ Winthrop Growth Fund, the DLJ Winthrop Growth and
Income Fund or the DLJ Winthrop Small Company Value Fund desires to sell a
particular security from its portfolio on which it has written an option, such
Fund will seek to effect a closing purchase transaction with respect to such
option prior to or concurrently with the sale of the portfolio security. A Fund
may also enter into a closing purchase transaction in order to terminate its
obligation under an option it has written. A closing purchase transaction is a
transaction in which an investor who is obligated as the writer of an option
terminates his obligation by purchasing an option on the same security and same
terms as the previously written option. There can be no assurances that a
closing purchase transaction can be effected. If a closing purchase transaction
cannot be effected, a Fund will not be able to sell the underlying security
until the option expires or it delivers the underlying security upon exercise. A
Fund will realize a profit from a closing purchase transaction for an option it
has written if the cost of such transaction is less than the premium received
from the writing of the option and will realize a loss if the cost of such
transaction is more than the premium received. The DLJ Winthrop Growth Fund and
DLJ Winthrop Growth and Income Fund will only purchase call options in closing
purchase transactions. As indicated above, the DLJ Winthrop Small Company Value
Fund may write or purchase a put option on securities or securities indices. A
put option is a
<PAGE>
contract that gives the holder of the option the right, in return for a premium,
to sell to the writer of the option the underlying security at a specified
price. The seller of the put, on the other hand, has the obligation to buy the
underlying security at the exercise price. The DLJ Winthrop Small Company Value
Fund will only write "covered" put options (i.e., so long as the Fund is
obligated under the put, it will have on deposit cash or other liquid
unencumbered assets, marked-to-market daily, or a combination of both, with a
value equal to or greater than the exercise price of the underlying securities
or index). It is possible that, as a result of writing a put, the Fund may have
to purchase the underlying securities at an amount greater than their market
price at the time of writing the put.
If the DLJ Winthrop Small Company Value Fund purchases an option, it
runs the risk that the option will expire "out of the money", resulting in a
loss equal to the amount of the premium paid plus any transaction costs. Thus,
in some periods the DLJ Winthrop Small Company Value Fund may receive a lower
total return in connection with its options transactions than it would have
received from the underlying securities had options not been purchased.
Neither the DLJ Winthrop Growth Fund nor the DLJ Winthrop Growth and
Income Fund may write a covered call option if, as a result thereof, the
aggregate value of such Fund's portfolio securities subject to outstanding call
options (valued at the lower of the option price or the market value of the
underlying securities) or the amount deposited in a segregated account would
exceed 5% of such Fund's total assets. The DLJ Winthrop Small Company Value Fund
may not purchase options if, as a result, the aggregate cost of all outstanding
options exceeds 10% of its total assets.
Because exercises of index options are settled in cash, a call
writer such as the DLJ Winthrop Growth Fund, the DLJ Winthrop Growth and Income
Fund or the DLJ Winthrop Small Company Value Fund cannot determine the amount of
its settlement obligation in advance
<PAGE>
and, unlike call writing on specific stocks, cannot provide in advance for, or
cover, its potential obligations by acquiring and holding a particular security.
Price movements in a Fund's portfolio probably will not correlate
precisely with movements in the level of an index underlying an option and,
therefore, a Fund bears the risk that the price of the securities held by such
Fund may not increase as much as the index on which a Fund has written a covered
call option. In such event, a Fund would bear a loss on the covered call option
that it has written that is not completely offset by movements in the price of
such Fund's portfolio. It is also possible that the index underlying a covered
call may rise when the Fund's portfolio does not rise. If this occurred, a Fund
would incur a loss on the call that would not be offset by an increase in the
value of its portfolio and might also experience a loss in its portfolio.
However, because the value of a diversified portfolio will, over time, generally
tend to move in the same direction as the market, movements in the value of a
Fund in the opposite direction as the market would be likely to occur for only a
short period or to a small degree.
Unless a Fund that has written a call option has other liquid assets
which are sufficient to satisfy the exercise of a call on an index, such Fund
would be required to liquidate portfolio securities in order to satisfy the
exercise.
When a Fund has written a call on an index, there is also a risk
that the market may decline between the time such Fund has a call exercised
against it, at a price which is fixed as of the closing level of the index on
the date of exercise, and the time such Fund is able to sell stocks in its
portfolio. As with stock options, the Fund will not learn that an index option
has been exercised until the day following the exercise date but, unlike a call
on stock where a Fund would be able to deliver the underlying securities in
settlement, such Fund may have to sell part of its investment portfolio in order
to make settlement in cash, and the price of such investments might decline
before they can be sold. This timing risk makes certain strategies involving
more than one option substantially riskier with index options than with stock
options. For example,
<PAGE>
even if an index call which a Fund has written is "covered" by an index call
held by such Fund with the same strike price, such Fund will bear the risk that
the level of the index may decline between the close of trading on the date the
exercise notice is filed with the clearing corporation and the close of trading
on the date such Fund exercises the call it holds or the time such Fund sells
the call which, in either case, would occur no earlier than the day following
the day the exercise notice was filed.
If a Fund holds an index option and exercises it before final
determination of the closing index value for that day, it runs the risk that the
level of the underlying index may change before closing. If such a change causes
the exercised option to fall out-of-the-money, the Fund will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer. Although a Fund
may be able to minimize this risk by withholding exercise instructions until
just before the daily cutoff time or by selling rather than exercising an option
when the index level is close to the exercise price, it may not be possible to
eliminate this risk entirely because the cutoff times for index options may be
earlier than those fixed for other types of options and may occur before
definitive closing index values are announced.
Financial Futures and Options Thereon
The DLJ Winthrop Small Company Value Fund may also seek to increase
its return or to hedge all or a portion of its portfolio investments through the
use of financial instruments currently or hereafter available, such as financial
futures contracts and options thereon.
On the futures markets, the Adviser may, with respect to the DLJ
Winthrop Small Company Value Fund, adopt an overall strategy in response to
expected market movements. Such a strategy would involve the purchase or sale of
securities index futures contracts and related options traded on regulated
exchanges, to the extent permitted by the Commodity Futures
<PAGE>
Trading Commission ("CFTC"), for bona fide hedging purposes or for other
appropriate risk management purposes permitted under regulations promulgated by
the CFTC. A securities index futures contract is an agreement to take or make
delivery of an amount of cash equal to the difference between the value of the
index at the beginning and at the end of the contract period. The DLJ Winthrop
Small Company Value Fund may enter into securities index futures contracts in
anticipation of or during a market decline to attempt to offset the decrease in
the market value of securities in its portfolio that might otherwise result.
An option on a futures contract gives the purchaser the right, but
not the obligation, to assume a position in a futures contract (a long position
if the option is a call and a short position if the option is a put) at a
specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the holder and writer of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin account
which represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract. With respect to
stock indices, options are traded on futures contracts for various U.S. and
foreign stock indices, including the S&P 500 Stock Index and the NYSE Composite
Index. The holder or writer of an option may terminate its position by selling
or purchasing an option of the same series. There is no guarantee that such
closing transactions can be effected.
The DLJ Winthrop Small Company Value Fund may only invest in futures
contracts and related options to the extent that the Fund would not be required
to register with the CFTC. The DLJ Winthrop Small Company Value Fund will not
engage in financial futures or related options transactions for speculative
purposes but only in an effort to hedge portfolio
<PAGE>
risks as described above. In accordance with the foregoing, under current
regulations the DLJ Winthrop Small Company Value Fund may not purchase or sell
futures contracts if, immediately thereafter, the sum of the amount of initial
margin deposits on the Fund's open futures positions and premiums on open
positions thereon would exceed 5% of the market value of the DLJ Winthrop Small
Company Value Fund's total assets. Certain provisions of the federal tax laws
may limit the extent to which the DLJ Winthrop Small Company Value Fund may
engage in options and financial futures transactions. Such transactions may also
affect the amount, character and timing of income, gain or loss recognized by
the Fund for federal tax purposes.
The DLJ Winthrop Small Company Value Fund's successful use of
options and financial futures depends on the ability of the Adviser to predict
the direction of the market and is subject to various additional risks. The
investment techniques and skills required to develop and implement a successful
options and futures strategy are different from those required to select equity
and debt securities for investment. The correlation between movements in the
price of an option or future and the price of securities index futures and
options may decline if the composition of the Fund's portfolio diverges from the
composition of the index underlying such index futures and options. In addition,
the ability of the Fund to close out an option or futures position depends on
the existence of a liquid secondary market for those contracts. There is no
assurance that liquid secondary markets will exist for any particular option or
futures contract at any particular time. A Fund's losses on futures transactions
could be unlimited.
New and innovative financial instruments continue to be developed
and the DLJ Winthrop Small Company Value Fund may invest in any such instrument
as may be developed to the extent that the utilization of such instrument is
consistent with its investment objective and policies and the regulatory
requirements applicable to the Fund.
Risks of Options, Currency Exchange Contracts and Financial Futures Strategies
<PAGE>
Participation in the options or futures markets and in currency exchange
transactions involves investment risks and transaction costs to which a Fund
would not be subject absent the use of these strategies. If the Adviser's
predictions of movements in the direction of the securities, foreign currency
and interest rate markets are inaccurate, the adverse consequences to a Fund may
leave the Fund in a worse position than if such strategies were not used. The
loss from entering into futures contracts is potentially unlimited. Risks
inherent in the use of options, foreign currency and futures contracts and
options on futures contracts include (1) dependence on the investment manager's
ability to predict correctly movements in the direction of interest rates,
securities prices and currency markets; (2) imperfect correlation between the
price of options and futures contracts and options thereon and movements in the
prices of securities or currencies being hedged; (3) skills needed to use these
strategies which are different from those needed to select portfolio securities;
(4) the possible absence of a liquid secondary market for any particular
instrument at any time; (5) the possible need to defer closing out certain
hedged positions to avoid adverse tax consequences; and (6) the possible
inability of a Fund to purchase or sell a portfolio security at a time that
otherwise would be favorable for it to do so, or the possible need for a Fund to
sell a portfolio security at a disadvantageous time, due to the need for such
Fund to maintain "cover" or to segregate securities in connection with hedging
transactions.
Small Company Stocks
At least 65% of the DLJ Winthrop Small Company Value Fund's total
assets normally will be invested in equity securities of small market
capitalization companies, which for the purposes of this Fund, are those
companies with a market capitalization of $2 billion or less at the time of the
Fund's investment. While small-cap company stocks generally pay low or no
dividends, they are considered to offer greater potential for appreciation than
securities of companies with larger market capitalizations. Small-cap company
stocks generally also have higher risk and volatility, because most are not as
broadly traded as stocks of companies with
<PAGE>
larger capitalizations and their prices thus may fluctuate more widely and
abruptly. Small-cap company securities generally are also less researched.
Special Situation Companies
The DLJ Winthrop Small Company Value Fund may also invest in
securities of companies in special situations, that is, in securities the values
of which may be affected by particular developments unrelated to business
conditions generally, and which may fluctuate without relation to general market
trends. In general, a special situation company is a company whose securities
could reasonably be expected to be accorded market recognition within a
foreseeable period of time at an appreciated value solely by reason of a
development particularly or uniquely applicable to that company. The principal
risk associated with an investment in special situation companies is that if the
anticipated development does not occur, the investment is likely not to
appreciate or may decline. Examples of special situation companies are companies
being reorganized or merged, having unusual new products, enjoying particular
tax advantages, or acquiring new management. The DLJ Winthrop Small Company
Value Fund will not, however, invest more than 10% of its assets (at the time of
purchase) in equity securities of companies (including predecessors) that have
less than three years of operations.
Short-Term Portfolio Transactions
The DLJ Winthrop Small Company Value Fund may engage in short-term
portfolio transactions in an attempt to generate capital gains when deemed
appropriate by the Adviser under the circumstances, taking into consideration
the market analysis factors of any particular security and the technical
conditions of the securities markets in general. In accordance with the
investment policy of engaging in short-term portfolio transactions, the DLJ
Winthrop Small Company Value Fund has no restrictions with respect to portfolio
turnover and the rate of portfolio turnover is not considered a prohibitive
factor by the Adviser when considering short-term portfolio transactions. As a
result of this policy, it is possible that the
<PAGE>
DLJ Winthrop Small Company Value Fund's annual portfolio turnover rate may
exceed 100%, although the Adviser anticipates that such rate will not exceed
100%. Because it is difficult to predict accurately portfolio turnover rates,
actual turnover may be higher or lower. The portfolio turnover rate is computed
by dividing the lesser of the amount of the securities purchased or the
securities sold by the average monthly value of securities owned during the
year, excluding securities whose maturities at the time of acquisition were one
year or less. A high degree of portfolio turnover results in increased
transaction costs.
IOs and POs
Although the DLJ Winthrop Small Company Value Fund has no present
intention to so invest, the DLJ Winthrop Small Company Value Fund may invest in
securities representing interests in a pool of mortgages or other assets the
cash flow of which has been separated into its interest and principal
components, commonly known as "IOs" (interest only) and "POs" (principal only).
IOs and POs issued by parties other than agencies or instrumentalities of the
U.S. Government are considered, under current guidelines of the staff of the
Securities and Exchange Commission, to be illiquid securities.
Additional Investment Policies of the DLJ Winthrop Growth Fund and DLJ Winthrop
Growth and Income Fund
The following additional policies have been adopted by the DLJ
Winthrop Growth Fund and the DLJ Winthrop Growth and Income Fund and may be
changed by the Trustees without shareholder approval:
1. The Funds will not make or maintain a short position (other than short
sales against the box) or write, purchase or sell puts, calls, straddles,
spreads or combinations thereof, provided, however, that the Funds may write
covered call options and purchase call options in closing purchase transactions.
<PAGE>
2. The Funds will not invest in oil, gas or other mineral exploration or
development programs, but this shall not prohibit the Funds from investing
in securities of companies engaged in oil, gas or mineral activities or
investigations.
II. DLJ Winthrop Fixed Income Fund
The investment objective of the DLJ Winthrop Fixed Income Fund is to
provide as high a level of total return as is consistent with capital
preservation by investing principally in debt securities, including, without
limitation, convertible and nonconvertible debt securities of foreign and
domestic companies, including both well-known and established and new and
lesser-known companies. Total return means the sum of net investment income (if
any) and realized and unrealized gains less losses. Capital preservation means
minimizing the risk of capital loss in a period of falling prices (rising
interest rates) for debt securities.
Specifically, the investment policies of the Fixed Income Fund
permit it to invest, without restriction, in the following types of securities:
(1) Bonds, including municipal bonds (taxable and tax-exempt, including,
among others, special and general obligation bonds and industrial
development bonds) and other debt securities, which are rated Aaa,
Aa, A or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P ;
(2) U.S. Government Securities;
(3) Obligations issued or guaranteed by national or state bank holding
companies, which obligations are not rated as a matter of policy by
either Moody's or S&P, but which, in the opinion of the Adviser (on
the basis of criteria believed by the Adviser to be comparable to
that used by nationally recognized statistical rating organizations
for assigning ratings), meet the Fixed Income Fund's investment
objective; and
(4) Commercial paper rated Prime-1 by Moody's or A-1+ or A-1 by S&P.
<PAGE>
The DLJ Winthrop Fixed Income Fund may also invest not more than 25%
(in the aggregate) of its total assets at the time of investment in (i) debt
securities rated Baa or MIG-2 by Moody's or BBB or SP-2 by S&P, to the extent
that such investments would, in the opinion of the Adviser, be consistent with
the DLJ Winthrop Fixed Income Fund's investment objective. See "Additional
Information on Investment Policies and Risks" in the Prospectus for a
description of securities rated BBB by S&P and Baa by Moody's and of asset and
mortgage-backed securities.
As a matter of fundamental policy, which cannot be changed without
approval by the vote of a majority of the DLJ Winthrop Fixed Income Fund's
outstanding voting securities (as defined in this SAI), the DLJ Winthrop Fixed
Income Fund will invest at least 80% of the value of its total assets at the
time of investment in debt securities. In normal circumstances, the DLJ Winthrop
Fixed Income Fund will invest at least 65% of the value of its total assets at
the time of investment in fixed-income securities. However, the DLJ Winthrop
Fixed Income Fund reserves the right to hold cash and short-term fixed-income
securities and to enter into repurchase agreements as necessary for temporary
defensive or emergency purposes as determined by the Adviser without regard for
the above limitations.
The DLJ Winthrop Fixed Income Fund may also invest in restricted
securities and in instruments having no ready market if such purchases at the
time thereof would not cause more than 10% of the value of its net assets to be
invested in not readily marketable assets.
The DLJ Winthrop Fixed Income Fund generally does not intend to
acquire common stocks or equity securities exchangeable for common stock or
rights or warrants to subscribe for or purchase common stock, except that, with
respect to convertible debt securities, the Fund may acquire common stock
through the exercise of conversion rights in situations where it believes such
exercise is in the best interest of the DLJ Winthrop Fixed Income Fund and its
shareholders. In such event, the DLJ Winthrop Fixed Income Fund will sell the
common
<PAGE>
stock resulting from such conversion as soon as practicable. The DLJ Winthrop
Fixed Income Fund may acquire debt securities, including convertible and
non-convertible debt securities which may have voting rights, but in no case
will the DLJ Winthrop Fixed Income Fund acquire more than 10% of the voting
securities of any one issuer. The relative size of the DLJ Winthrop Fixed Income
Fund's investments in any grade or type of security will vary from time to time.
Critical factors which are considered in the selection of securities or other
investment alternatives include trends in the determinates of interest rates,
corporate profits and management capabilities and practices.
The DLJ Winthrop Fixed Income Fund may use a variety of techniques
in seeking to attain its investment objective. In making investment decisions,
for example, the DLJ Winthrop Fixed Income Fund seeks to balance favorable
factors, such as high yields to maturity and high current rates of income,
against unfavorable factors, such as increased risk which accompanies longer
maturities.
The DLJ Winthrop Fixed Income Fund may use trading to attain its
investment objectives and policies. Trading may be used in anticipation of
market developments or to take advantage of yield disparities between major
sectors of the investment-grade market. For example, the DLJ Winthrop Fixed
Income Fund may employ trading in order to (i) shorten the average maturity of
the portfolio in anticipation of higher interest rates, (ii) lengthen the
average maturity of the portfolio in anticipation of lower interest rates, (iii)
change the average coupon of the portfolio when yield disparities occur between
debt securities selling at differing levels of premium or discount, (iv) sell
one type of debt security (e.g., industrial bonds) and buy another type of debt
security (e.g., Federal agency bonds or notes) when disparities arise in the
relative value of each, and (v) sell one class of fixed-income securities (e.g.,
preferred stocks) and buy another class (e.g., publicly offered utility bonds)
when disparities arise in the relative values of each.
<PAGE>
Debt securities acquired for the DLJ Winthrop Fixed Income Fund's
portfolio may be subject to call by the issuer prior to maturity, in which case
the DLJ Winthrop Fixed Income Fund may be forced to sell such securities at
prices below market value. The DLJ Winthrop Fixed Income Fund may seek
protection against calls at prices below market value. Such protection may be
sought by (i) purchasing securities with high call prices relative to their
market prices, (ii) purchasing securities with sinking fund features which are
selling at a premium where the period before inception of the sinking fund
payments is relatively long, (iii) selling a security whose market price has
risen above its call price and purchasing another security of comparable quality
whose market price is below its call price and (iv) substituting for a security
with a refunding date a comparable security with a more distant refunding date.
Depending on market conditions, debt securities may be purchased at a discount
or premium from face value, producing a yield of more or less than the coupon
rate. The market value of the DLJ Winthrop Fixed Income Fund's assets will
reflect yields generally available on debt securities of similar quality. When
such yields (i.e., interest rates) decline, the market value of the DLJ Winthrop
Fixed Income Fund's assets already invested can be expected to rise. Similarly,
when such yields increase, the market value of the Fund's assets already
invested can be expected to decline.
III. DLJ Winthrop Municipal Trust Fund
The investment objective of the DLJ Winthrop Municipal Trust Fund is
to provide as high a level of total return as is consistent with capital
preservation by investing principally in high grade tax-exempt municipal
securities. This investment objective, unlike that of most other municipal bond
funds, is not to provide current income which is exempt from federal and/or
state income tax. Total return means the sum of net investment income (if any)
and realized and unrealized gains less losses. The DLJ Winthrop Municipal Trust
Fund intends to distribute
<PAGE>
annually its net capital gains. Any such distributions will be taxable to a
shareholder as capital gain. See "Taxes, Dividends, and Distributions."
The DLJ Winthrop Municipal Trust Fund attempts to provide high total
return by actively managing the maturities of the bonds in the portfolio in
response to the Adviser's anticipation of the movement of interest rates and its
assessment of the relative yields. The Fund will shorten the portfolio's
maturities when the Adviser believes that interest rates will rise and lengthen
maturities when the Adviser believes that rates will fall. To a lesser extent,
the DLJ Winthrop Municipal Trust Fund will also attempt to enhance total return
by selecting municipal securities which the Adviser believes are undervalued.
The success of these strategies depends upon the Adviser's ability to accurately
forecast changes in interest rates and to properly assess the value of municipal
securities. The investor should be aware that there can be no assurances that
the DLJ Winthrop Municipal Trust Fund's investment strategies will be
successful.
Under normal circumstances, it is the DLJ Winthrop Municipal Trust
Fund's policy to invest at least 80% of the value of its net assets at the time
of investment in tax-exempt municipal securities. However, the DLJ Winthrop
Municipal Trust Fund reserves the right to hold cash and short-term fixed-income
securities and to enter into repurchase agreements as necessary for temporary
defensive or emergency purposes as determined by the Adviser without regard for
the above limitation.
The DLJ Winthrop Municipal Trust Fund seeks to achieve its objective
by investing primarily in a diversified portfolio of high grade, intermediate
term municipal securities. Municipal securities fall into two principal classes:
bonds and notes, both of which may have fixed, variable or floating rates of
interest. The investment policies of the Municipal Trust Fund permit it to
invest without restriction, in tax-exempt municipal bonds and notes which are
rated Aaa, Aa, A or MIG-1 by Moody's or AAA, AA, A or SP-1 by S&P. The Municipal
Trust Fund may also invest not more than 25% (in the aggregate) of its total
assets at
<PAGE>
the time of investment in (i) municipal securities rated Baa or MIG-2 by Moody's
or BBB or SP-2 by S&P and (ii) commercial paper rated Prime-2 by Moody's or A-2
by S&P, to the extent that such investments would, in the opinion of the
Adviser, be consistent with the Municipal Trust Fund's investment objective.
Non-rated municipal securities will also be considered for
investment by the DLJ Winthrop Municipal Trust Fund when the Adviser believes
that the financial condition of the issuers of such obligations and the
protection afforded by the terms of the obligations themselves limit the risk to
the DLJ Winthrop Municipal Trust Fund to a degree comparable to that of rated
securities which are consistent with the DLJ Winthrop Municipal Trust Fund's
objective and policies.
Municipal securities include municipal bonds as well as short-term
(i.e., maturing in under one year to as much as three years) municipal notes,
demand notes and tax-exempt commercial paper. In the event the DLJ Winthrop
Municipal Trust Fund invests in demand notes, the Adviser will continually
monitor the ability of the obligor under such notes to meet its obligations.
Typically, municipal bonds are issued to obtain funds used to construct a wide
range of public facilities, such as schools, hospitals, housing, mass
transportation systems, airports, highways and bridges. The funds may also be
used for general operating expenses, refunding of outstanding obligations and
loans to other public institutions and facilities.
Municipal bonds fall into two general classes: general obligation
bonds and revenue or special obligation bonds. Payment of principal of and
interest on general obligation bonds is secured by the issuer's pledge of its
faith, credit and taxing power. Payment on revenue or special obligation bonds
is met only from the revenues obtained from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or other
specific revenue source but not from general tax and other unrestricted revenues
of the issuer. The term "issuer" means the agency, authority, instrumentality or
other political subdivision whose assets
<PAGE>
and revenues are available for the payment of principal of and interest on the
bonds. Certain types of private activity bonds are also considered municipal
bonds if the interest thereon is exempt from federal income tax.
Private activity bonds are issued by or on behalf of public
authorities to obtain funds for various privately-operated manufacturing
facilities, airports, housing projects, resource recovery programs, solid waste
disposal facilities, student loan programs and water and sewage disposal
facilities.
Private activity bonds are in most cases revenue bonds and do not
generally constitute the pledge of the credit or taxing power of the issuer of
such bonds. The payment of the principal and interest on such industrial revenue
bonds depends solely on the ability of the user of the facilities financed by
the bonds to meet its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.
Municipal notes in which the DLJ Winthrop Municipal Trust Fund may
invest include demand notes, which are tax-exempt obligations that have stated
maturities in excess of one year, but permit the holder to sell back the
security (at par) to the issuer within 1 to 7 days' notice. The payment of
principal and interest by the issuer of these obligations will ordinarily be
guaranteed by letters of credit offered by banks. The interest rate on a demand
note may be based upon a known lending rate, such as a bank's prime rate, and
may be adjusted when such rate changes, or the interest rate on a demand note
may be a market rate that is adjusted at specified intervals.
Other short-term obligations constituting municipal notes include
tax anticipation notes, revenue anticipation notes and bond anticipation notes,
and tax-exempt commercial paper.
Tax anticipation notes are issued to finance working capital needs
of municipalities. Generally, they are issued in anticipation of various
seasonal tax revenues, such as income, sales, use and business taxes. Revenue
anticipation notes are issued in expectation of receipt of other types of
revenues, such as federal revenues available under the Federal Revenue
<PAGE>
Sharing Programs. Bond anticipation notes are issued to provide interim
financing until long-term financing can be arranged. In most such cases, the
long-term bonds provide the money for the repayment of the notes.
Tax-exempt commercial paper is a short-term obligation with a stated
maturity of 365 days or less (however, issuers typically do not issue such
obligations with maturities longer than seven days). Such obligations are issued
by state and local municipalities to finance seasonal working capital needs or
as short-term financing in anticipation of longer-term financing.
There are, of course, variations in the terms of, and the security
underlying, municipal securities, both within a particular rating classification
and between such classifications, depending on many factors. The ratings of
Moody's and S&P represent their respective opinions of the quality of the
municipal securities rated by them. It should be emphasized that such ratings
are general and are not absolute standards of quality. Consequently, municipal
securities with the same maturity, coupon and rating may have different yields,
while the municipal securities of the same maturity and coupon, but with
different ratings may have the same yield. The Adviser appraises independently
the fundamental quality of the securities included in the Fund's portfolio.
Yields on municipal securities are dependent on a variety of
factors, including the general conditions of the municipal securities market,
the size of a particular offering, the maturity of the obligation and the rating
of the issue. Municipal securities with longer maturities tend to produce higher
yields and are generally subject to greater price movements than obligations
with shorter maturities. An increase in interest rates generally will reduce the
market value of portfolio investments, and a decline in interest rates generally
will increase the value of portfolio investments. The achievement of the Fund's
investment objectives depends in part on the continuing ability of the issuers
of municipal securities in which the Fund invests to meet
<PAGE>
their obligations for the payment of principal and interest when due. Municipal
securities historically have not been subject to registration with the
Securities and Exchange Commission, although from time to time there have been
proposals which would require registration in the future.
After purchase by the DLJ Winthrop Municipal Trust Fund, a municipal
security may cease to be rated or its rating may be reduced below the minimum
required for purchase by the DLJ Winthrop Municipal Trust Fund. Neither event
requires the sale of such security by the DLJ Winthrop Municipal Trust Fund, but
the Adviser will consider such event in its determination of whether the DLJ
Winthrop Municipal Trust Fund should continue to hold the security. To the
extent that the ratings given by Moody's or S&P may change as a result of
changes in such organizations or their rating systems, the Adviser will attempt
to use such changed ratings in a manner consistent with the Fund's quality
criteria as described in the Prospectus.
Obligations of issuers of municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code. In addition, the
obligations of such issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of
such obligations or upon the ability of municipalities to levy taxes. There is
also the possibility that, as a result of litigation or other conditions, the
ability of any issuer to pay, when due, the principal or the interest on its
municipal bonds may be materially affected.
From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income tax exemption
for interest on municipal securities. It can be expected that similar proposals
may be introduced in the future. If such a proposal were enacted, the
availability of municipal securities for investment by the Fund and
<PAGE>
the value of the Fund's portfolio would be affected. Additionally, the Fund
would reevaluate its investment objectives and policies.
IV. Additional General Investment Policies
The following general investment policies supplement those set forth
above for each Fund.
Short Sales ("Against the Box")
Except for the DLJ Winthrop Municipal Trust Fund, a Fund may effect
short sales "against the box". While a short sale is a sale of a security the
Fund does not own, it is "against the box" if at all times during which a short
position is open, the Fund owns an equal amount of the securities, or, by virtue
of the ownership of securities, has the right, without further consideration, to
obtain an equal amount of the securities sold short. No more than 10% of each
Fund's net assets (taken at the then current market value) will be held as
collateral for its short sales at any time. Neither the DLJ Winthrop Growth
Fund, the DLJ Winthrop Fixed Income Fund nor the DLJ Winthrop Growth and Income
Fund have an intention of entering into short sales against the box in the
foreseeable future.
Repurchase Agreements
A Fund may enter into repurchase agreements with respect to
marketable obligations of, or guaranteed by, the U.S. Government, its agencies
or instrumentalities ("U.S. Government Securities"). While the maturities of the
underlying securities may exceed one year, the term of the repurchase agreement
must always be less than one year. Repurchase agreements often are for short
periods such as one day or one week, but may be longer. In the event that a
vendor defaults on its repurchase obligation, a Fund might suffer a loss to the
extent that the proceeds from the sale of the collateral were less than the
repurchase price. If the vendor becomes the subject of bankruptcy proceedings, a
Fund might be delayed in selling the collateral.
Reverse Repurchase Agreements
<PAGE>
The DLJ Winthrop Growth Fund, DLJ Winthrop Small Company Value Fund,
DLJ Winthrop Fixed Income Fund and DLJ Winthrop Municipal Trust Fund each may
enter into reverse repurchase agreements. Under a reverse repurchase agreement,
a Fund would sell securities and agree to repurchase them at a mutually agreed
upon date and price. At the time a Fund enters into a reverse repurchase
agreement, it would establish and maintain with an approved custodian a
segregated account containing liquid high-grade debt securities having a value
not less than the repurchase price. Reverse repurchase agreements involve the
risk that the market value of the securities subject to such agreement could
decline below the repurchase price to be paid by a Fund for such securities. In
the event the buyer of securities under a reverse repurchase agreement filed for
bankruptcy or became insolvent, such buyer (or receiver for such buyer) would
receive an extension of time to determine whether to enforce the Fund's
obligations to repurchase the securities and the Fund's use of the proceeds of
the reverse repurchase could effectively be restricted pending such decision.
Reverse repurchase agreements create leverage, a speculative factor, but are not
considered senior securities by the Funds or the Securities and Exchange
Commission to the extent liquid, unencumbered assets, marked to market daily,
are segregated in an amount at least equal to the amount of the liability.
Securities Lending
The DLJ Winthrop Growth Fund, DLJ Winthrop Small Company Value Fund,
DLJ Winthrop Fixed Income Fund and DLJ Winthrop Municipal Trust Fund each may
seek to receive or increase income by lending their respective portfolio
securities. Under present regulatory policies, such loans may be made to member
firms of the New York Stock Exchange and are required to be secured continuously
by collateral held by Citibank, N.A. (the "Custodian") consisting of cash, cash
equivalents or U.S. Government Securities maintained in an amount at least equal
to the market value of the securities loaned. The Funds have the right to call
such a loan and obtain the securities loaned at any time on five days' notice.
As is the case
<PAGE>
with any extension of credit, loans of portfolio securities involve special
risks in the event that the borrower is unable to repay the loan, including
delays or inability to recover the loaned securities or foreclose against the
collateral. The aggregate value of securities loaned by a Fund may not exceed
25% of the value of its total assets at the time such loan is made.
Restricted Securities
The DLJ Winthrop Growth Fund, the DLJ Winthrop Growth and Income
Fund, the DLJ Winthrop Fixed Income Fund and the DLJ Winthrop Municipal Trust
Fund may invest in restricted securities and all of the Funds may invest in
other assets having no ready market if such purchases at the time thereof would
not cause more than 10% (or 15% in the case of the DLJ Winthrop Municipal Trust
Fund) of the value of a Fund's net assets to be invested in assets which are not
readily marketable. Restricted securities may be sold only in privately
negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 promulgated under such Act. Where registration is available or
required, the Fund may be obligated to pay all or part of the registration
expense, and a considerable period of time may elapse between the time of the
decision to sell and the time that the Fund may be permitted to sell a security
under an effective registration statement. If during such a period adverse
market conditions were to develop, the Fund might obtain a less favorable price
than that which prevailed when it decided to sell. Securities salable without
restriction among qualified institutional investors pursuant to rules
promulgated under the Securities Act of 1933 (e.g., Rule 144A) are not
considered to be subject to legal restrictions on transfer and may be considered
liquid if they satisfy liquidity standards established by the Board of Trustees.
The continued liquidity of such securities is less certain than that of publicly
traded securities, and accordingly the Board of Trustees will monitor their
liquidity. Restricted securities will be valued in such manner as the Trustees
of DLJ Winthrop Focus Funds in good faith deem appropriate to reflect their fair
value.
<PAGE>
The staff of the SEC has taken the position that purchased over the
counter ("OTC") options and the assets used as cover for written OTC options are
illiquid securities. However, a Fund may treat the securities it uses as cover
for written OTC options on U.S. Government Securities as liquid, provided the
Fund satisfies the following condition: A Fund may sell OTC options on U.S.
Government Securities only to qualified dealers who agree that the Fund may
repurchase options it writes for a maximum price to be calculated by a
predetermined formula. In such cases, OTC options would be considered liquid
only to the extent that the maximum repurchase price exceeds the intrinsic value
of the option.
When Issued, Delayed Delivery Securities and Forward Commitments
The Funds may, to the extent consistent with their other investment
policies and restrictions, enter into forward commitments for the purchase or
sale of securities, including on a "when issued" or "delayed delivery" basis in
excess of customary settlement periods for the type of security involved. In
some cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of the
commitment, with payment and delivery taking place in the future, generally a
month or more after the date of the commitment. While the Funds will only enter
into a forward commitment with the intention of actually acquiring the security,
the Funds may sell the security before the settlement date if it is deemed
advisable.
Securities purchased under a forward commitment are subject to
market fluctuations, and no interest (or dividends) accrues to a Fund prior to
the settlement date. The Funds will segregate with the Custodian cash or other
liquid, unencumbered assets, in an aggregate amount at least equal to the amount
of their respective outstanding forward commitments.
Stand-By Commitments
<PAGE>
The DLJ Winthrop Municipal Trust Fund may invest in stand-by commitments
which may involve certain additional expenses. The Custodian will maintain a
segregated account containing liquid securities having value equal to, or
greater than, such securities. The price of such securities, which is generally
expressed in yield terms, is fixed at the time the commitment to purchase is
made, but delivery and payment for such securities takes place at a later time.
Normally the settlement date occurs within ten days to one month after the
purchase of the issue. The value of such securities may fluctuate prior to their
settlement, thereby creating an unrealized gain or loss to the Fund. Such
securities are examples of what the SEC considers "illiquid securities" because
the settlement date occurs more than seven days after the purchase.
State Undertakings
The Funds also have entered into agreements with certain States
which (a) limit investment in warrants to not more than 5% of the value of each
Fund's net assets (only 2% of the value of each Fund's net assets may be
invested in warrants not listed on the New York or American Stock Exchange), (b)
generally prohibit any investment in oil, gas and other mineral leases, and (c)
prohibit purchases or sales of real property (including limited partnership
interests, but excluding readily marketable interests in real estate investment
trusts or readily marketable securities of com panies which invest in real
estate).
The DLJ Winthrop Small Company Value Fund has entered into
additional agreements with certain States which (a) limit to not more than 5% of
its total assets investments in not readily marketable securities, (b) prohibit
investment in commodities and commodity futures contracts, and (c) limit
investment in options, financial futures and stock index futures to 5% of the
value of its net assets. The DLJ Winthrop Municipal Trust Fund entered into
additional agreements with certain States which (a) prohibit the purchase of
securities of companies which have been in operation for less than three years,
(b) limit to no more than 10% of its total assets its investments in equity
securities and to no more than 5% of its total assets its
<PAGE>
investment in equity securities which are not readily marketable, and (c) limit
to no more than 5% of its total assets its aggregate investment in puts, calls,
straddles, spreads, and any combinations thereof.
The Funds intend to withdraw such undertakings at the earliest
practicable date. Such withdrawals are not expected to have a material effect on
the portfolio of the affected Fund.
(c) Investment Restrictions
The following restrictions are fundamental policies. Fundamental
policies are those which cannot be changed without the approval of the holders
of a majority of the Fund's outstanding voting securities. A "majority of the
Fund's outstanding voting securities," when used in this SAI, means the lesser
of (i) 67% of the voting shares represented at a meeting at which more than 50%
of the outstanding voting shares are present in person or represented by proxy
or (ii) more than 50% of the outstanding voting shares.
The following fundamental investment restrictions are in addition to
those set forth elsewhere in this SAI.
A Fund may not:
1. Purchase the securities of any one issuer other than the United
States Government or any of its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of the
Fund's assets would be invested in such issuer or the Fund would own
more than 10% of the outstanding voting securities of such issuer,
except that up to 25% of the value of the Fund's total assets may be
invested without regard to such 5% and 10% limitations;
2. Invest more than 25% of its total assets in the securities of
issuers conducting their principal business activities in any one
industry, provided that, for purposes of this policy, consumer
finance companies, industrial finance companies and gas, electric,
water and telephone utility companies are each considered to be
separate
<PAGE>
industries, and provided further, that there is no limitation for
the DLJ Winthrop Fixed Income Fund, the DLJ Winthrop Municipal Trust
Fund, the DLJ Winthrop Small Company Value Fund or the DLJ Winthrop
Growth and Income Fund in respect of investments in U.S. Government
Securities or, for the DLJ Winthrop Fixed Income Fund, the DLJ
Winthrop Municipal Trust Fund and the DLJ Winthrop Small Company
Value Fund, in municipal bonds (including industrial development
bonds). A Fund may be deemed to be concentrated to the extent that
it invests more than 25% of its total assets in taxable municipal
securities issued by a single issuer;
3. Purchase securities on margin, but a Fund may obtain such short-term
credits from banks as may be necessary for the clearance of
purchases and sales of securities;
4. Make loans of its assets to any person, except for (i) the purchase
of publicly distributed debt securities, (ii) the purchase of
non-publicly distributed securities subject to paragraph 7, (iii)
the lending of portfolio securities, and (iv) the entering of
repurchase agreements;
5. Borrow money except for (i) the short-term credits from banks
referred to in paragraph 3 above and (ii) borrowings from banks for
temporary or emergency purposes, including the meeting of redemption
requests which might require the disposition of securities.
Borrowing in the aggregate may not exceed 15%, and borrowing for
purposes other than meeting redemptions may not exceed 5% of the
value of the Fund's total assets (including all amounts borrowed)
less liabilities (not including all amounts borrowed) at the time
the borrowing is made. Outstanding borrowings in excess of 5% of the
value of the Fund's total assets will be repaid before any
subsequent investments are made. This restriction and
<PAGE>
asset limitation on borrowing shall not prohibit the Funds from
entering into reverse repurchase agreements;
6. Mortgage, pledge or hypothecate any of its assets, except as may be
necessary in connection with permissible borrowings mentioned in
paragraph 5 and except, with respect to the DLJ Winthrop Small
Company Value Fund and the DLJ Winthrop Growth and Income Fund, in
connection with hedging transactions, short sales (against the box),
when issued and forward commitment transactions and similar
investment strategies;
7. Act as an underwriter of securities of other issuers, except that a
Fund may acquire restricted or not readily marketable securities
under circumstances where, if such securities were sold, the Funds
or the Advisor might be deemed to be an underwriter for purposes of
the Securities Act of 1933 and except, with respect to the DLJ
Winthrop Small Company Value Fund, to the extent that in connection
with the disposition of portfolio securities such Fund may be deemed
to be an underwriter;
8. Invest more than 10%, or 15% in the case of the DLJ Winthrop
Municipal Trust Fund, of the value of its net assets in the
aggregate in restricted securities or other instruments not having a
ready market, including repurchase agreements not terminable within
seven days; provided that the DLJ Winthrop Small Company Value Fund
will not invest in restricted securities. Securities freely saleable
among qualified institutional investors under special rules adopted
by the Securities and Exchange Commission ("Rule 144A Securities")
are not considered to be subject to legal restrictions on transfer
and may be considered liquid if they satisfy liquidity standards
established by the Board of Trustees. The continued liquidity of
such securities is not as well assured as that of publicly
<PAGE>
traded securities, and accordingly, the Board of Trustees will
monitor their liquidity. Restricted securities will be valued in
such manner as the Trustees of DLJ Winthrop Focus Funds in good
faith deem appropriate to reflect their value;
9. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop Fixed
Income Fund, the DLJ Winthrop Municipal Trust Fund and the DLJ
Winthrop Growth and Income Fund, invest in the securities of any
issuer which has a record of less than three years of continuous
operation (including the operation of any predecessor) if such
purchase at the time thereof would cause more than 10% of the value
of the total assets of the Fund to be invested in the securities of
such issuer or issuers;
10. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop Fixed
Income Fund, the DLJ Winthrop Municipal Trust Fund and the DLJ
Winthrop Growth and Income Fund, purchase or retain the securities
of any issuer if, to the knowledge of DLJ Winthrop Focus Fund's
management, those officers and Trustees of the DLJ Winthrop Focus
Fund and its Adviser who each own beneficially more than one-half of
1% of the outstanding securities of such issuer together own more
than 5% of the securities of such issuer;
11. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop Fixed
Income Fund, the DLJ Winthrop Municipal Trust Fund and the DLJ
Winthrop Growth and Income Fund, invest more than 5% of the value of
its total assets at the time an investment is made in the
non-convertible preferred stock of issuers whose non-convertible
preferred stock is not readily marketable, subject to the limitation
in paragraph 8;
12. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop Fixed
Income Fund, the DLJ Winthrop Municipal Trust Fund and the DLJ
Winthrop Growth
<PAGE>
and Income Fund, participate on a joint or joint and several basis
in any securities trading account;
13. Issue any senior security within the meaning of the Investment
Company Act of 1940 (except to the extent that when-issued
securities transactions, forward commitments, stand-by commitments
or reverse repurchase agreements may be considered senior securities
and except, with respect to the DLJ Winthrop Small Company Value
Fund and the DLJ Winthrop Growth and Income Fund, that the hedging
transactions in which such Funds may engage and similar investment
strategies are not treated as senior securities);
14. Invest in real estate (other than money market securities secured by
real estate or interests therein or money market securities issued
by companies which invest in real estate or interests therein and,
with respect to the DLJ Winthrop Small Company Value Fund and the
DLJ Winthrop Growth and Income Fund, other than mortgage-backed
securities and similar instruments), or commodities or commodity
contracts except, with respect to the DLJ Winthrop Small Company
Value Fund, for hedging purposes;
15. With respect to the DLJ Winthrop Growth Fund, the DLJ Winthrop Fixed
Income Fund, the DLJ Winthrop Municipal Trust Fund and the DLJ
Winthrop Growth and Income Fund, invest in the securities of other
investment companies or investment trusts except by purchase in the
open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's
commission, or except when such purchase, though not in the open
market, is part of a plan of merger, acquisition or transfer of
assets, or consolidation and except, with respect to the DLJ
Winthrop Growth and Income Fund, for purchases of securities of
money market funds;
<PAGE>
16. Invest in companies for the purpose of exercising control or
management; or
17. With respect to the DLJ Winthrop Municipal Trust Fund, make short
sales of securities.
The Funds do not consider the segregation of assets in connection
with any of their investment practices to be a mortgage, pledge or hypothecation
of such assets.
The following fundamental investment restrictions are applicable
only to the DLJ Winthrop Fixed Income Fund and may not be changed with respect
to the DLJ Winthrop Fixed Income Fund without the approval of the shareholders
of the DLJ Winthrop Fixed Income Fund (as described above).
The DLJ Winthrop Fixed Income Fund may not:
1. Write, purchase or sell puts, calls, straddles or spreads, or
combinations thereof; or
2. Invest in oil, gas or other mineral exploration or development
programs.
(d) Temporary Defensive Position
The DLJ Winthrop Growth Fund reserves the right, when the Adviser
determines it appropriate, to invest in investment-grade short-term fixed-income
securities and other investment-grade debt securities, enter into repurchase
agreements and hold cash for temporary defensive purposes.
The DLJ Winthrop Fixed Income Fund may enter into repurchase
agreements, terminable within 7 days or less, with respect to issues of the U.S.
Treasury, with member banks of the Federal Reserve System or primary dealers in
U.S. Government Securities, without limit for temporary defensive purposes.
The DLJ Winthrop Municipal Trust Fund reserves the right to hold
cash and short-term fixed-income securities and to enter into repurchase
agreements as necessary for temporary defensive or emergency purposes, without
limit, as determined by the Adviser.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
(a) Trustees
The DLJ Winthrop Focus Funds has Trustees who, in addition to overseeing
the actions of the Funds' Adviser and Distributor, decide upon matters of
general policy. The Trustees also review the actions of the officers of the DLJ
Winthrop Focus Funds who conduct and supervise the daily business operations of
the Funds.
The Trustees and principal officers of the DLJ Winthrop Focus Funds,
their ages and their primary occupations during the past five years are set
forth below.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Name, Address and Age (1) Position(s) Held with DLJ Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------- -------------------------------------------
Winthrop Focus Funds
--------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ROBERT L. BAST (74) Trustee An attorney under private practice and was
formerly Of Counsel and partner to Reed Smith
Shaw & McClay, with which he has been
associated since prior to 1990. His address is 110
Spruce Lane, Ambler, PA 19002.
- -----------------------------------------------------------------------------------------------------------------------------
*G. MOFFETT COCHRAN (49) Chairman of the Board of Trustees President and Chief Executive Officer of the
and President Adviser with which he has been associated since
1992. Prior to his association with DLJ Winthrop
Focus Funds and the Adviser, Mr. Cochran was a
Senior Vice President with Bessemer Trust
Companies.
- -----------------------------------------------------------------------------------------------------------------------------
SAM M. D'AGOSTINO (74) Vice President Vice President and Mutual Fund Compliance
Director of Alliance Capital Management
Corporation, with which he has been associated
since prior to 1992. His address is 1345 Avenue
of the Americas, New York, New York 10105.
- -----------------------------------------------------------------------------------------------------------------------------
RICHARD J. HANLON (34) Vice President Vice President of the Adviser, with which he has
been associated since 1994. Prior to his becoming
associated with DLJ Winthrop Focus Funds and
the Adviser, Mr. Hanlon was a portfolio manager
at Manufacturers Hanover/Chemical Bank.
- -----------------------------------------------------------------------------------------------------------------------------
STIG HOST (73) Trustee Chairman of the Board of Kriti Exploration, Inc.,
Kriti Properties and Development Corp. and
International Marine Sales, Inc., a Trustee of Alli
ance International Fund, Alliance Global
Environmental Fund, Alliance New Europe Fund,
Alliance All-Asia Investment Fund and Alliance
Developing Markets Fund and a Director of
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Name, Address and Age (1) Position(s) Held with DLJ Principal Occupation(s) During Past 5 Years
- --------------------- ------------------------- -------------------------------------------
Winthrop Focus Funds
--------------------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Florida Fuels, Inc. His address is 103 Oneida
Drive, Greenwich, CT 06830.
- -----------------------------------------------------------------------------------------------------------------------------
MARTIN JAFFE (53) Vice President, Treasurer and Managing Director and Chief Operating Officer of
Secretary the Adviser, with which he has been associated
since prior to 1993.
- -----------------------------------------------------------------------------------------------------------------------------
CATHY A. JAMESON (46) Vice President Managing Director of the Adviser with which she
has been associated since prior to 1993.
- -----------------------------------------------------------------------------------------------------------------------------
BRIAN A. KAMMERER (42) Vice President Senior Vice President of the Adviser, with which he
has been associated since prior to 1993.
- -----------------------------------------------------------------------------------------------------------------------------
PETER F. KROGH (63) Trustee Dean Emeritus and Distinguished Professor of
International Affairs, School of Foreign Service,
Georgetown University, Washington, D.C. with
which he has been associated since 1992. He is
moderator of "Great Decisions", a foreign affairs
television series, author of numerous articles
relating to international issues for professional
publications and serves on the board of the
Carlisle Companies and several world affairs
organizations. His address is 3417 N. Street NW,
Washington, DC 20007.
- -----------------------------------------------------------------------------------------------------------------------------
MARYBETH B. LEITHEAD (37) Vice President Senior Vice President of the Adviser, with which she
has been associated since 1993.
- -----------------------------------------------------------------------------------------------------------------------------
DENNIS G. LITTLE (64) Trustee The former Executive Vice President and Chief
Financial Officer of Textron Inc. (conglomerate).
His address is 1915 Cutlass Cove Drive, Vero
Beach, FL 32963.
- -----------------------------------------------------------------------------------------------------------------------------
WILLIAM H. MATHERS (85) Trustee Counsel to the law firm of Chadbourne & Parke,
with which he had been associated since prior to
1990. His address is 1389 King George Farm
Road, Sutton, VT 05867-9623.
- -----------------------------------------------------------------------------------------------------------------------------
HUGH M. NEUBURGER (56) Vice President Managing Director of the Adviser, with which he
has been associated since March, 1995. Prior to
his association with DLJ Winthrop Focus Funds
and the Adviser, Mr. Neuburger was the President
of Hugh M. Neuburger, Inc., a consulting firm.
- -----------------------------------------------------------------------------------------------------------------------------
JOHN J. SHEEHAN (69) Trustee Consultant to Financial Data Processing with
which he has been associated since prior to
1990. His address is 4 Bennington Place, Newton,
PA 18940.
- -----------------------------------------------------------------------------------------------------------------------------
WILLIAM C. SIMPSON (80) Trustee Former President and Director of Royal Insurance
Companies with which he has been associated
since prior to 1990. His address is 123 Cove
Neck Road, Oyster Bay, NY 11771.
- -----------------------------------------------------------------------------------------------------------------------------
ROGER W. VOGEL (43) Vice President Managing Director of the Adviser, positions he
has held since July, 1993. Prior to his becoming
associated with DLJ Winthrop Focus Funds and
the Adviser, Mr. Vogel was a Vice President with
Chemical Banking Corp.
- -----------------------------------------------------------------------------------------------------------------------------
*STEPHEN K. WEST (71) Trustee Of Counsel to Sullivan & Cromwell, is counsel to
DLJ Winthrop Focus Funds, with which he has
been associated since prior to 1992. His address
is 42 Old Wood Road, Bernardsville, NJ 07924.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Unless otherwise specified, the address of each of such persons is 277
Park Avenue, New York, New York 10172.
<PAGE>
* Those Trustees whose names are preceded by an asterisk are "interested
persons" of DLJ Winthrop Focus Funds as defined by the Investment Company
Act of 1940.
Messrs. Host, Krogh, and Mathers are members of the Audit Committee,
whose function is to oversee and monitor the integrity of the Funds' financial
reporting processes. Messrs. Bast, Mathers and Cochran are members of the
Dividend Committee whose function is to declare dividends on behalf of the
Trustees. All of the Trustees who are not "interested persons" of DLJ Winthrop
Focus Funds as defined by the Investment Company Act of 1940 are members of the
Nominating Committee whose function is to select persons for election as
Trustees whenever a vacancy shall exist. Messrs. Host, Bast and Sheehan are
members of the Valuation Committee whose function is to value the securities of
each Fund in emergency situations.
<PAGE>
The following table sets forth the aggregate compensation paid by
the DLJ Winthrop Focus Funds to the Trustees who are not affiliated with the
Adviser for the fiscal year ended October 31, 1999 and the aggregate
compensation paid to such Trustees for service on the Funds' Boards and that of
all other investment companies that are part of the same fund complex. Below are
listed the Trustees who have served the DLJ Winthrop Focus Funds during its most
recent fiscal year.
Compensation Table
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Name and Position Aggregate Pension or Estimated Total Compensation
Compensation Retirement Benefits Annual from DLJ Winthrop
From DLJ Winthrop Accrued As Part of Benefits Upon Focus Funds and
Focus Funds DLJ Winthrop Focus Retirement Fund Complex Paid
Funds to Trustees in
Expenses Current Fiscal Year
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert L. Bast $ 10,000 None None $ 10,000
(Trustee)
- --------------------------------------------------------------------------------------------------
Stig Host 11,000 None None 11,000
(Trustee)
- --------------------------------------------------------------------------------------------------
Peter F. Krogh 11,000 None None 11,000
(Trustee)
- --------------------------------------------------------------------------------------------------
Dennis G. Little 8,000 None None 8,000
(Trustee)
- --------------------------------------------------------------------------------------------------
William H. Mathers 11,000 None None 11,000
(Trustee)
- --------------------------------------------------------------------------------------------------
John J. Sheehan 10,000 None None 10,000
(Trustee)
- --------------------------------------------------------------------------------------------------
William C. Simpson 10,000 None None 10,000
(Trustee)
- --------------------------------------------------------------------------------------------------
Stephen K. West 6,000 None None 6,000
(Trustee)
- --------------------------------------------------------------------------------------------------
</TABLE>
The Trustees of DLJ Winthrop Focus Funds who are officers or
employees of the Adviser or any of its affiliates receive no remuneration from
DLJ Winthrop Focus Funds. Each of the Trustees who is not affiliated with the
Adviser will be paid a $2,000 fee for each board meeting attended, a $500 fee
for each Audit Committee meeting attended and an annual retainer of $2,000. For
the year ended October 31, 1999, such remuneration totaled $77,000.
Messrs. Bast, Halsey, Sheehan, and West are former Directors of the
Neuwirth Fund, Inc. Messrs. Little, Mathers, and Simpson are former Directors of
the Pine Street Fund, Inc. The Neuwirth Fund, Inc. and the Pine Street Fund,
Inc. were subject to a plan of reorganization and a transfer of assets and
liabilities to the DLJ Winthrop Small Company Value Fund and the DLJ Winthrop
Growth and Income Fund, respectively, two portfolios of the DLJ Winthrop Focus
Funds, on July 10, 1992.
<PAGE>
(b) Control Persons
None.
(c) Principal Holders
To the best of the Fund's knowledge as of February 8, 2000, no
shareholder owned 5% or more of the outstanding Class A, Class B or Class D
shares of the DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company Value
Fund, or the DLJ Winthrop Growth and Income Fund. The Adviser manages accounts
over which it has discretionary power to vote or dispose of securities held in
such accounts and which accounts hold in the aggregate, as of February 8, 2000,
190,143 shares (2.03%) of the DLJ Winthrop Growth Fund, 163,853 shares (1.46%)
of the DLJ Winthrop Growth and Income Fund, 1,240,004 shares (12.05%) of the DLJ
Winthrop Small Company Value Fund, 362,594 shares (2.36%) of the DLJ Winthrop
Fixed Income Fund, and 477,304 shares (17.35%) of the DLJ Winthrop Municipal
Trust Fund.
Set forth below is certain information as to persons who owned 5% or
more of a Fund's outstanding shares as of February 2, 2000:
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Name and Address % of Class Nature of Ownership
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DLJ Winthrop Fixed Income First Clearing Corporation 5.52% Beneficial
Class B Louise M. Welch Trust
1912 Marsh Road
Wilmington, DE 19810-3954
- --------------------------------------------------------------------------------------------
DLJ Winthrop Municipal Bankers Trust Company 8.95% Record*
Trust Class A FBO 2448094242
P.O. Box 9005
New York, NY 10008
CIBC World Markets Corp. 7.80% Record*
FBO 33-94355-13
P.O. Box 3484
New York, NY 10008
Donaldson Lufkin Jenrette 47.52 % Record*
Securities Corporation Inc. 10.69%
P.O. Box 2052
Jersey City, NJ 07303
- --------------------------------------------------------------------------------------------
DLJ Winthrop Municipal Robert C. Grant 18.33% Beneficial
Trust Class B 99 J Arrowood Road
Manalapan, NJ 07726
- --------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Such Recordholder disclaims beneficial ownership.
(d) Management Ownership
As of February 2, 2000, the Trustees and officers of DLJ Winthrop
Focus Funds as a group owned beneficially less than 1.0% of all Funds.
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
(a) Investment Adviser
DLJ Asset Management Group, Inc. (formerly known as Wood, Struthers
& Winthrop Management Corp.), a Delaware corporation with principal offices at
277 Park Avenue, New York, New York 10172, has been retained under an Investment
Advisory Agreement as DLJ Winthrop Focus Funds' investment adviser (see "Fund
Management" in the Prospectus). The Adviser was established in 1871, as a
private concern to manage money for the Winthrop family of Boston.
The Adviser is a wholly-owned subsidiary of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ Securities" or the "Distributor"), the
distributor of the Funds' shares, which is a wholly-owned subsidiary of
Donaldson, Lufkin & Jenrette, Inc., which is in turn an independently operated,
indirect subsidiary of AXA Financial, Inc. ("AXA Financial"), a holding company
controlled by AXA ("AXA"), a French insurance holding company. The Adviser,
along with its affiliates, is an integral part of the DLJ Securities family, and
as one of the oldest money management firms in the country, maintains a
tradition of personalized service and performance.
As of February 1, 2000, AXA owned 60.5% of the outstanding shares of
the common stock of AXA Financial. AXA is the holding company for an
international group of insurance and related financial services companies. AXA's
insurance operations are comprised of activities in life insurance, property and
casualty insurance and reinsurance. The insurance operations are diverse
geographically with activities in France, the United States, the
<PAGE>
United Kingdom, Canada and other countries, principally in Europe. AXA is also
engaged in asset management, investment banking and brokerage, real estate and
other financial services activities in the United States and Europe. Based on
information provided by AXA, on Februry 1, 2000, 20.25% of the issued ordinary
shares (representing 31.9% of the voting power) of AXA were directly or
indirectly owned by Finaxa, a French holding company ("Finaxa"). Such percentage
of interest includes the interest of Colisee Vendome, a wholly-owned subsidiary
of Finaxa, which owned 2.7% of the issued ordinary shares (representing 4.25% of
the voting power) of AXA and the interest of les Ateliers de construction du
Nord de la France- ANF ("ANF"), a 95.4% owned subsidiary of Finaxa, which owned
0.4% of the issued ordinary shares (representing 0.6% of the voting power) of
AXA. As of February 1, 2000, 60.7% of the issued ordinary shares (representing
70.7% of the voting power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") and 22.3% of the issued ordinary shares
(representing 13.3% of the voting power) of Finaxa were owned by Banque Paribas,
a French bank ("Paribas"). Including the ordinary shares owned by Finaxa and its
subsidiaries on February 1, 2000, the Mutuelles AXA directly and indirectly
owned 23.3% of the issued ordinary shares of AXA (representing 36.7% of the
voting power). Acting as a group, the Mutuelles AXA will continue to control AXA
and Finaxa. The address of Donaldson, Lufkin & Jenrette, Inc. is 277 Park
Avenue, New York, New York 10172. The address of AXA Financial is 787 Seventh
Avenue, New York, New York 10019.
The Investment Advisory Agreement became effective on July 22, 1992.
The Investment Advisory Agreement replaced an earlier, substantially identical
agreement (the "First Advisory Agreement") that terminated because of its
technical assignment as a result of AXA's acquisition of control over AXA
Financial. In anticipation of the assignment of the First Advisory Agreement, on
February 12, 1992, the Trustees approved the Investment Advisory
<PAGE>
Agreement and on June 15, 1992, a majority of the outstanding voting securities
of DLJ Winthrop Focus Funds approved the Investment Advisory Agreement. The
Investment Advisory Agreement was approved with respect to the DLJ Winthrop
Municipal Trust Fund by the Trustees on June 16, 1993 and by the then sole
shareholder and the Adviser, on July 26, 1993 and became effective with respect
to the DLJ Winthrop Municipal Trust Fund on the same date. The Investment
Advisory Agreement continues in force for successive twelve month periods
computed from the first day of each fiscal year of DLJ Winthrop Focus Funds
provided that such continuation is specifically approved at least annually by a
majority vote of the Trustees who neither are interested persons of Winthrop nor
have any direct or indirect financial interest in the Investment Advisory
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement was continued until October 31, 2000
at a meeting of the Trustees on October 28, 1999.
Under the Investment Advisory Agreement, DLJ Winthrop Focus Funds
has agreed to change its name to one that does not suggest an affiliation with
the Adviser in the event that the Adviser ceases to act as the DLJ Winthrop
Focus Funds' investment adviser. Pursuant to the terms of the Investment
Advisory Agreement, the Adviser may retain, at its own expense, a sub-adviser to
assist in the performance of its services to DLJ Winthrop Focus Funds, although
such an arrangement is not currently contemplated.
Certain other clients of the Adviser may have investment objectives
and policies similar to those of the DLJ Winthrop Focus Funds. The Adviser may,
from time to time, make recommendations which result in the purchase or sale of
a particular security by its other clients simultaneously with the DLJ Winthrop
Focus Funds. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of the
securities being sold, there may be an adverse effect on price. It is the policy
of the Adviser to allocate advisory recommendations and the placing of orders in
a manner which is deemed
<PAGE>
equitable by the Adviser to the accounts involved, including the DLJ Winthrop
Focus Funds. When two or more of the clients of the Adviser (including the DLJ
Winthrop Focus Funds) are purchasing the same security on a given day from the
same broker-dealer, such transactions may be averaged as to price.
For the fiscal years ending October 31, 1999, 1998 and 1997 the DLJ
Winthrop Growth Fund paid the Adviser fees of $984,475, $791,152 and $636,464
respectively; the DLJ Winthrop Small Company Value Fund paid the Adviser fees of
$1,826,662, $2,257,326 and $1,993,178 respectively; the DLJ Winthrop Fixed
Income Fund paid the Adviser fees of $641,978, $347,059 and $354,902
respectively; the DLJ Winthrop Growth and Income Fund paid the Adviser fees of
$1,377,123, $1,138,550 and $915,897 respectively; and the DLJ Winthrop Municipal
Trust Fund paid the Adviser fees of $247,109, $252,180 and $234,803
respectively. During the fiscal years ended October 31, 1999, 1998 and 1997, the
Adviser reimbursed the DLJ Winthrop Fixed Income Fund $157,981, $164,206 and
$164,718 respectively, and the DLJ Winthrop Municipal Trust Fund $163,442,
$165,742 and $269,050 respectively, for operating expenses.
The Fund intends to enter into arrangements with certain
broker-dealers (including affiliates of the Distributor) whose customers are DLJ
Winthrop Focus Funds shareholders pursuant to which the broker-dealers may
perform shareholder servicing functions, such as opening new shareholder
accounts, processing purchase and redemption transactions, and responding to
certain inquiries regarding a Fund's performance and the status of shareholder
accounts. A Fund may pay for the electronic communications equipment maintained
at the broker-dealers' offices that permits access to the Fund's computer files
and, in addition, may reimburse the broker-dealers at cost for personnel
expenses involved in providing the services.
(b) Principal Underwriter, Distributor and Rule 12b-1 Plans
<PAGE>
The address of the Distributor is 277 Park Avenue, New York, New
York 10172.
Pursuant to Rule 12b-1 adopted by the Securities and Exchange
Commission under the Investment Company Act of 1940, DLJ Winthrop Focus Funds
has adopted a Distribution Agreement (the "Distribution Agreement") and 12b-1
Plans for Class A shares, Class B shares and Class C shares of each Fund to
permit DLJ Winthrop Focus Funds to compensate the Distributor for activities
associated with the distribution of shares.
Pursuant to the Distribution Agreement and the 12b-1 Plans, the
officers, Adviser or Distributor of DLJ Winthrop Focus Funds reports the amounts
expended under the Distribution Agreement and the purposes for which such
expenditures were made to the Trustees of DLJ Winthrop Focus Funds on a
quarterly basis. Also, the 12b-1 Plans provide that the selection and nomination
of disinterested Trustees (as defined in the Investment Company Act of 1940) are
committed to the discretion of the disinterested Trustees then in office. The
Distribution Agreement and 12b-1 Plans may be continued annually if approved by
a majority vote of the Trustees, including a majority of the Trustees who
neither are interested persons of DLJ Winthrop Focus Funds nor have any direct
or indirect financial interest in the Distribution Agreement, the 12b-1 Plans or
in any other agreement related to the 12b-1 Plans, cast in person at a meeting
called for the purpose of voting on such approval.
The Distribution Agreement and 12b-1 Plans for the Class A shares
and Class B shares were initially approved by the Trustees, including a majority
of the disinterested Trustees, on October 19, 1995. The Class A 12b-1 Plans were
approved by shareholders at a special meeting on February 7, 1996. The Class B
12b-1 Plans were approved by the sole Class B shareholder of each Fund on
February 27, 1996. The 12b-1 Plans were last approved by the Board of Trustees
on October 28, 1999. Prior to February 28, 1996, the Funds operated under 12b-1
Plans pursuant to which each Fund reimbursed the Distributor up to .50 of 1% of
the average daily net assets of such Fund. The Distribution Agreement and 12b-1
Plans for the Class
<PAGE>
C shares were initially approved by the Trustees, including a majority of the
disinterested Trustees, on January 27, 2000. The Class C 12b-1 Plans were
approved by the sole Class C shareholder of each Fund on February 25, 2000.
As approved, the Class A Plans currently provide that: (i) an asset
based sales charge of .05 of 1% per year and (ii) a service fee of .25 of 1% per
year, in each case, of the average daily net assets of the Class A shares of the
Fund may be paid as compensation to the Distributor for its services. The Class
B Plans currently provide that: (i) an asset based sales charge of .75 of 1% per
year and (ii) a service fee of .25 of 1% per year, in each case, of the average
daily net assets of the Class B shares of the Fund may be paid as compensation
to the Distributor for its services. The Class C Plans currently provide that:
(i) an asset based sales charge of .75 of 1% per year and (ii) a service fee
of .25 of 1% per year, in each case, of the average daily net assets of the
Class C shares of the Fund may be paid as compensation to the Distributor for
its services.
All material amendments to the 12b-1 Plans must be approved by a
vote of the Trustees, including a majority of the Trustees who neither are
interested persons of DLJ Winthrop Focus Funds nor have any direct or indirect
financial interest in the 12b-1 Plans or any related agreement, cast in person
at a meeting called for the purpose of voting on such approval. In addition to
such Trustee approval, the 12b-1 Plans may not be amended in order to increase
materially the costs which the Funds may bear pursuant to the 12b-1 Plans
without the approval of a majority of the outstanding shares of each class of
shares of each Fund, voting separately. The 12b-1 Plans may be terminated
without penalty at any time by a majority vote of the disinterested Trustees, by
a majority vote of the outstanding shares of each class of shares of each Fund,
voting separately, or by the Adviser. Any agreement related to the 12b-1 Plans
may be terminated at any time, without payment of any penalty, by a majority
vote of the independent
<PAGE>
Trustees or by majority vote of the outstanding shares of each class of shares
of each Fund, voting separately, and will terminate automatically in the event
of assignment.
The 12b-1 Plans require that the Board of Trustees shall review at
least quarterly a written report of the payments made pursuant to each Plan and
the purpose for which such payments were made. For the year ended October 31,
1999, distribution fees paid or payable with respect to Class A shares and Class
B shares for each fund were as follows:
- --------------------------------------------------------------------------------
Fund Class A Shares Class B Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DLJ Winthrop Growth Fund $362,168 $252,991
- --------------------------------------------------------------------------------
DLJ Winthrop Fixed Income Fund 133,853 54,120
DLJ Winthrop Small Company Value
Fund 632,837 213,205
- --------------------------------------------------------------------------------
DLJ Winthrop Growth and Income
Fund 522,846 389,799
- --------------------------------------------------------------------------------
DLJ Winthrop Municipal Trust Fund 114,538 13,582
- --------------------------------------------------------------------------------
During the year ended October 31, 1999, the Distributor received from each
Fund the following amounts as initial sales charges, which are paid in respect
of Class A shares, and contingent deferred sales charges ("CDSC"), which are
paid in respect of Class B shares:
- --------------------------------------------------------------------------------
Fund Initial Sales Charges CDSC
- --------------------------------------------------------------------------------
DLJ Winthrop Growth Fund 32,325 51,829
- --------------------------------------------------------------------------------
DLJ Winthrop Fixed Income Fund 1,925 18,054
- --------------------------------------------------------------------------------
DLJ Winthrop Small Company 7,914 109,113
Value Fund fun
- --------------------------------------------------------------------------------
DLJ Winthrop Growth and Income 24,733 81,404
Fund
- --------------------------------------------------------------------------------
DLJ Winthrop Municipal Trust Fund 575 9,847
- --------------------------------------------------------------------------------
<PAGE>
During the year ended October 31, 1999, the Distributor expended
$1,135,379 in respect of the DLJ Winthrop Growth Fund in distributing such
Fund's shares. Of such amount, it is estimated that $93,485 was spent on
advertising; $22,488 was spent on printing and mailing of prospectuses to other
than current shareholders; $0 was spent on compensation to underwriters;
$567,937 was spent on compensation to broker-dealers; $377,000 was spent on
compensation to sales personnel; and $74,469 was spent on other distributing and
consulting costs.
During the year ended October 31, 1999, the Distributor expended $318,087
in respect of the DLJ Winthrop Fixed Income Fund in distributing such Fund's
shares. Of such amount, it is estimated that $35,835 was spent on advertising;
$7,735 was spent on printing and mailing of prospectuses to other than current
shareholders; $0 was spent on compensation to underwriters; $102,702 was spent
on compensation to broker-dealers; $144,986 was spent on compensation to sales
personnel; and $26,829 was spent on other distributing and consulting costs.
During the year ended October 31, 1999, the Distributor expended
$1,400,244 in respect of the DLJ Winthrop Small Company Value Fund in
distributing such Fund's shares. Of such amount, it is estimated that $167,861
was spent on advertising; $40,854 was spent on printing and mailing of
prospectuses to other than current shareholders; $0 was spent on compensation to
underwriters; $372,538 was spent on compensation to broker-dealers; $686,272 was
spent on compensation to sales personnel; and $132,719 was spent on other
distributing and consulting costs.
During the year ended October 31, 1999, the Distributor expended
$1,435,140 in respect of the DLJ Winthrop Growth and Income Fund in distributing
such Fund's shares. Of such amount, it is estimated that $144,840 was spent on
advertising; $34,758 was spent
<PAGE>
on printing and mailing of prospectuses to other than current shareholders; $0
was spent on compensation to underwriters; $555,848 was spent on compensation to
broker-dealers; $587,273 was spent on compensation to sales personnel; and
$112,421 was spent on other distributing and consulting costs.
During the year ended October 31, 1999, the Distributor expended $229,573
in respect of the DLJ Winthrop Municipal Trust Fund in distributing such Fund's
shares. Of such amount, it is estimated that $28,530 was spent on advertising;
$6,533 was spent on printing and mailing of prospectuses to other than current
shareholders; $0 was spent on compensation to underwriters; $49,696 was spent on
compensation to broker-dealers; $122,391 was spent on compensation to sales
personnel; and $22,423 was spent on other distributing and consulting costs.
The Distribution Agreement also provides that the Distributor will
serve as distributor for the Class D shares without compensation from the Funds.
(c) Other Service Providers
Citibank, N.A. serves as Custodian for the Funds' portfolio
securities and cash and in that capacity maintains certain records pursuant to
an agreement with the DLJ Winthrop Focus Funds.
PFPC, Inc., 211 S. Gulph Road, King of Prussia, PA 19406-3101,
serves as Transfer Agent to the DLJ Winthrop Focus Funds and provides customary
transfer agency services to the Funds, including the handling of shareholder
communications, the processing of shareholder transactions, the maintenance of
shareholder account records, the payment of dividends and distributions and
related functions.
Ernst & Young LLP, 787 Seventh Avenue, New York, NY 10019, serves as
the independent auditors of the DLJ Winthrop Focus Funds.
<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
Subject to the general supervision of the Board of Trustees of DLJ
Winthrop Focus Funds, the Adviser is responsible for the investment decisions
and the placing of the orders for portfolio transactions for DLJ Winthrop Focus
Funds. Portfolio transactions for the DLJ Winthrop Municipal Trust Fund and the
DLJ Winthrop Fixed Income Fund occur primarily with issuers, underwriters or
major dealers acting as principals, while transactions for the DLJ Winthrop
Growth Fund, the DLJ Winthrop Small Company Value Fund and the DLJ Winthrop
Growth and Income Fund are normally effected by brokers.
DLJ Winthrop Focus Funds has no obligation to enter into
transactions in portfolio securities with any broker, dealer, issuer,
underwriter or other entity. In placing orders, it is the policy of DLJ Winthrop
Focus Funds to obtain the best price and execution for its transactions. Where
best price and execution may be obtained from more than one broker or dealer,
the Adviser may, in its discretion, purchase and sell securities through brokers
and dealers who provide research, statistical and other information to the
Adviser. Such services may be used by the Adviser for all of its investment
advisory accounts, and accordingly, not all such services may be used by the
Adviser in connection with DLJ Winthrop Focus Funds. If DLJ Winthrop Focus Funds
determines in good faith that the amount of transaction costs charged by a
broker or dealer is reasonable in relation to the value of the brokerage and
research and statistical services provided by the executing broker or dealer,
DLJ Winthrop Focus Funds may utilize such broker or dealer although the
transaction costs of another broker or dealer are lower.
<PAGE>
The supplemental information received from a broker or dealer is in addition to
the services required to be performed by the Adviser under the Investment
Advisory Agreement, and the expenses of the Adviser will not necessarily be
reduced as a result of the receipt of such information.
During the fiscal year ended October 31, 1999, commissions of
$76,049, $54,173 and $50,262 related to transactions of $41,949,685, $44,980,186
and $15,969,390 were paid to brokers that provided research or other services to
the DLJ Winthrop Growth Fund, the DLJ Winthrop Growth and Income Fund and the
DLJ Winthrop Small Company Value Fund, respectively.
The investment information provided to the Adviser is of the types
described in Section 28(e)(3) of the Securities Exchange Act of 1934 and is
designed to augment the Adviser's own internal research and investment strategy
capabilities. Research and statistical services furnished by brokers through
which DLJ Winthrop Focus Funds effects securities transactions are used by the
Adviser in carrying out its investment management responsibilities with respect
to all its client accounts but not all such services may be utilized by the
Adviser in connection with DLJ Winthrop Focus Funds.
The DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company Value
Fund and the DLJ Winthrop Growth and Income Fund may deal in some instances in
equity securities which are not listed on a national securities exchange but are
traded in the over-the-counter market. In addition, most transactions for the
DLJ Winthrop Municipal Trust Fund and the DLJ Winthrop Fixed Income Fund are
executed in the over-the-counter market. Where transactions are executed in the
over-the-counter market, DLJ Winthrop Focus Funds seeks to deal with the primary
market-makers; but when necessary in order to obtain the best price and
execution, it utilizes the services of others. In all cases, DLJ Winthrop Focus
Funds will attempt to negotiate best execution.
<PAGE>
DLJ Winthrop Focus Funds may from time to time place orders for the
purchase or sale of securities (including listed call options) with DLJ
Securities, the Distributor, or other affiliates in accordance with the
provisions of Section 11(a) of the Securities Exchange Act of 1934 referred to
below. With respect to orders placed with DLJ Securities for execution on a
national securities exchange, commissions received must conform to Section
17(e)(2)(A) of the Investment Company Act of 1940 and Rule 17e-1 thereunder,
which permit an affiliated person of a registered investment company (such as
DLJ Winthrop Focus Funds), or any affiliated person of such person, to receive a
brokerage commission from such registered investment company provided that such
commission is reasonable and fair compared to the commissions received by other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time.
Pursuant to Section 11(a) of the Securities Exchange Act of 1934,
DLJ Securities and its affiliates are restricted as to the nature and extent of
the brokerage services they may perform for DLJ Winthrop Focus Funds. The
Securities and Exchange Commission has adopted rules under Section 11(a) which
permit an investment adviser to a registered investment company, or the
adviser's affiliates, to receive compensation for effecting, on a national
securities exchange, transactions in portfolio securities of such investment
company, including causing such transactions to be transmitted, executed,
cleared and settled and arranging for unaffiliated brokers to execute such
transactions.
To the extent permitted by such rule, DLJ Securities and its
affiliates may receive compensation relating to transactions in portfolio
securities of DLJ Winthrop Focus Funds provided that DLJ Winthrop Focus Funds
enters into a written agreement, as required by such rules, with that firm
authorizing it to retain compensation for such services. The Trustees of DLJ
Winthrop Focus Funds have granted authorization conforming to the requirements
of Section
<PAGE>
11(a) to the Adviser to effect transactions in portfolio securities of DLJ
Winthrop Focus Funds through its affiliates, DLJ Securities and Autranet, Inc.
The tables below show certain information regarding the payment of
commissions by the DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company
Value Fund and the DLJ Winthrop Growth and Income Fund for the three years
ending October 31, 1999.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Fiscal Years ended October 31,
- -----------------------------------------------------------------------------------------------------------
1999 1998 1997
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Winthrop Growth Fund $ 150,653 $ 63,125 $ 97,707
- -----------------------------------------------------------------------------------------------------------
Total dollar amount paid to Autranet, Inc. $ 24,637 $ 0 $ 1,722
- -----------------------------------------------------------------------------------------------------------
Percentage of total brokerage commissions paid to Autranet, Inc. 16.4% 0% 1.8%
- -----------------------------------------------------------------------------------------------------------
Total dollar amount paid to Donaldson, Lufkin & Jenrette Securities $ 19,912 $ 11,200 $ 2,105
Corporation
- -----------------------------------------------------------------------------------------------------------
Percentage of total brokerage commissions paid to Donaldson, Lufkin & 13.2% 17.7% 2.2%
Jenrette Securities Corporation
- -----------------------------------------------------------------------------------------------------------
Percentage of aggregate dollar amount of transactions involving the 10.6% 11.9% 2.1%
payment of commissions to Donaldson, Lufkin & Jenrette Securities
Corporation
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Fiscal Years ended October 31,
- -----------------------------------------------------------------------------------------------------------
1999 1998 1997
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Winthrop Small $388,342 $468,261 $228,166
Company Value Fund
- -----------------------------------------------------------------------------------------------------------
Total dollar amount paid to Autranet, Inc. $ 24,070 $ 59,082 $ 18,403
- -----------------------------------------------------------------------------------------------------------
Percentage of total brokerage commissions paid to Autranet, Inc. 6.2% 12.6% 8.1%
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Fiscal Years ended October 31,
- -----------------------------------------------------------------------------------------------------------
1999 1998 1997
---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total brokerage commissions incurred by the DLJ Winthrop Growth and $120,954 $141,358 $111,814
Income Fund
- -----------------------------------------------------------------------------------------------------------
Total dollar amount paid to Autranet, Inc. $ 25,758 $ 29,410 $ 17,752
- -----------------------------------------------------------------------------------------------------------
Percentage of total brokerage commissions paid to Autranet, Inc. 21.3% 20.8% 15.9%
- -----------------------------------------------------------------------------------------------------------
Total dollar amount paid to Donaldson, Lufkin & Jenrettte Securities $ 1,050
Corporation
- -----------------------------------------------------------------------------------------------------------
Percentage of total broker commissions paid to Donaldson, Lufkin & 0.9%
Jenrette Securities Corporation
- -----------------------------------------------------------------------------------------------------------
Percentage of aggregate dollar amount of transactions involving the 0.9%
payment of commissions to Donaldson, Lufkin & Jenrette Securities
Corporation
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CAPITAL STOCK
AND ORGANIZATION
Each Fund of the DLJ Winthrop Focus Funds is authorized to issue an
unlimited number of shares of beneficial interest per share divided into three
classes, designated Class A, Class B and Class C. In addition, DLJ Winthrop
Growth Fund, DLJ Winthrop Growth and Income Fund and DLJ Winthrop Fixed Income
Fund are also authorized to issue an unlimited number of shares of beneficial
interest per share, designated Class D. Each class of shares represents an
interest in the same assets of a Fund and is identical in all respects except
that (i) each class is subject to different sales charges and distribution
and/or service fees (except for Class D shares, which are not subject to any
sales charges and distribution and/or service fees), which may affect
performance, (ii) each class has exclusive voting rights on any matter submitted
to shareholders that relates solely to its arrangement and has separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class, (iii) each class has a
different exchange privilege, (iv) only Class B shares have a conversion feature
and (v) Class D shares are offered exclusively for sale to employees of
Donaldson, Lufkin & Jenrette Inc. and its subsidiaries that are eligible to
participate in the 401(k) Retirement Savings Plan for Employees of Donaldson
Lufkin & Jenrette Inc. In accordance with the DLJ Winthrop Focus Funds' Amended
and Restated Agreement and Declaration of Trust, the Trustees may authorize the
creation of additional series and classes within such series, with such
preferences, privileges, limitations and voting and dividend rights as the
Trustees may determine. Currently, the Fund is offering three classes of shares,
designated Class A, Class B and Class C
<PAGE>
for each of the DLJ Winthrop Focus Funds and, in addition, Class D shares for
the DLJ Winthrop Growth Fund, DLJ Winthrop Growth and Income Fund and DLJ
Winthrop Fixed Income Fund.
The Trust was formed on November 26, 1985 as a "business trust"
under the laws of The Commonwealth of Massachusetts. Under Massachusetts law,
shareholders of a business trust, unlike shareholders of a corporation, could be
held personally liable as partners for the obligations of the trust under
certain circumstances. The Amended and Restated Agreement and Declaration of
Trust, however, provides that shareholders of DLJ Winthrop Focus Funds shall not
be subject to any personal liability for the acts or obligations of DLJ Winthrop
Focus Funds and that every written obligation, contract, instrument or
undertaking made by DLJ Winthrop Focus Funds shall contain a provision to that
effect. Upon payment of any liability, the share holder will be entitled to
reimbursement from the general assets of the appropriate Fund. The Trustees
intend to conduct the operation of DLJ Winthrop Focus Funds, with the advice of
counsel, in such a way as to avoid, to the extent possible, ultimate liability
of the shareholders for liabilities of DLJ Winthrop Focus Funds.
The Amended and Restated Agreement and Declaration of Trust further
provide that no Trustee, officer, employee or agent of DLJ Winthrop Focus Funds
is liable to DLJ Winthrop Focus Funds or to a shareholder, nor is any Trustee,
officer, employee or agent liable to any third persons in connection with the
affairs of DLJ Winthrop Focus Funds, except such liability as may arise from his
or its own bad faith, willful misfeasance, gross negligence or reckless
disregard of his or its duties. It also provides that all third parties shall
look solely to the property of DLJ Winthrop Focus Funds or the property of the
appropriate Fund for satisfaction of claims arising in connection with the
affairs of DLJ Winthrop Focus Funds or of the particular Fund, respectively.
With the exceptions stated, the Amended and Restated Agreement and Declaration
of Trust permits the Trustees to provide for the indemnification of Trustees,
officers,
<PAGE>
employees or agents of DLJ Winthrop Focus Funds against all liability in
connection with the affairs of DLJ Winthrop Focus Funds.
All shares of DLJ Winthrop Focus Funds when duly issued will be
fully paid and non-assessable. The Trustees are authorized to re-classify and
issue any unissued shares to any number of additional series or classes without
shareholder approval. Accordingly, the Trustees in the future, for reasons such
as the desire to establish one or more additional Funds with different
investment objectives, policies or restrictions, may create additional series or
classes of shares. Any issuance of shares of such additional series or classes
would be governed by the Investment Company Act of 1940 and the laws of the
Commonwealth of Massachusetts.
<PAGE>
PURCHASES, REDEMPTIONS, EXCHANGES AND PRICING OF FUND SHARES
The following information supplements that set forth in the Prospectus under the
heading "How to Buy and Sell Shares" and "Other Shareholder Information."
(a) Purchases
Shares of the Funds are offered at the respective net asset value
per share ("NAV") next determined following receipt of a purchase order in
proper form by DLJ Winthrop Focus Funds or by the Distributor plus, in the case
of Class A shares of each Fund, an initial sales charge imposed at the time of
purchase or, in the case of Class B shares or Class C shares of each Fund,
subject to a contingent deferred sales charge or "CDSC" upon redemption. Class D
shares of the DLJ Winthrop Growth Fund, the DLJ Winthrop Growth and Income Fund,
and the DLJ Winthrop Fixed Income Fund are offered to employees of Donaldson,
Lufkin & Jenrette Inc. and its subsidiaries that are eligible to participate in
the 401(k) Retirement Savings Plan for Employees of Donaldson Lufkin & Jenrette
Inc. at NAV without any sales charge. The Funds calculate NAV as of the close of
the regular session of the New York Stock Exchange, which is generally 4:00 p.m.
New York City time on each day that trading is conducted on the New York Stock
Exchange.
Each class of shares of a Fund represents an interest in the same
assets of such Fund and is identical in all respects except that (i) each class
is subject to different sales charges and distribution and/or service fees
(except for Class D shares, which are not subject to any sales charges and
distribution and/or service fees), which may affect performance, (ii) each class
has exclusive voting rights on any matter submitted to shareholders that relates
solely to its
<PAGE>
arrangement and has separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv) only
Class B shares have a conversion feature and (v) Class D shares are offered
exclusively for sale to employees of Donaldson, Lufkin & Jenrette Inc. and its
subsidiaries that are eligible to participate in the 401(k) Retirement Savings
Plan for Employees of Donaldson Lufkin & Jenrette Inc.
To open a new account by wire, first call DLJ Winthrop Funds at
1-800-225-8011 (option #2) to obtain an account number. A representative will
instruct you to send a completed, signed application to the Transfer Agent.
Accounts cannot be opened without a completed, signed application and a fund
account number. Contact your bank to arrange a wire transfer to:
Boston Safe Deposit & Trust
ABA #011001234
For: PFPC, Inc.
A/C #006068
Attn: DLJ Winthrop Funds
Your wire instructions must also include:
--the name of the Fund in which the money is to be
invested,
--your account number at the Fund, and
--the name(s) of the account holder(s)
Orders for the purchase of shares of a Fund become effective at the
next transaction time after Federal funds or bank wire monies become available
to Citibank, N.A. ("Citibank") for a shareholder's investment. Federal funds are
a bank's deposits in a Federal Reserve Bank. These funds can be transferred by
Federal Reserve wire from the account of one member bank to that of another
member bank on the same day and are considered to be immediately available
funds; similar immediate availability is accorded monies received at Citibank by
bank wire. Investors should note that their banks may impose a charge for this
service. Money transmitted by a check drawn on a member of the Federal Reserve
System is
<PAGE>
converted to Federal Funds in one business day following receipt. Checks drawn
on banks which are not members of the Federal Reserve System may take longer.
All payments (including checks from individual investors) must be in United
States dollars.
All shares purchased are confirmed to each shareholder and are
credited to such shareholder's account at NAV and with respect to Class A
shares, less any applicable sales charge. To avoid unnecessary expense to the
Funds and to facilitate the immediate redemption of shares, share certificates
are not issued except upon the written request of a shareholder and payment of a
fee in the amount of $50 for such share issuance. The Funds retain the right to
waive such fee in their sole discretion.
Shareholders maintaining Fund accounts through brokerage firms and
other institutions should be aware that such institutions may necessarily set
deadlines for receipt of transaction orders from their clients that are earlier
than the transaction times of the Fund itself so that the institutions may
properly process such orders prior to their transmittal to the Fund or the
Distributor. Should an investor place a transaction order with such an
institution after its deadline, the institution may not effect the order with
the Fund until the next business day. Accordingly, an investor should
familiarize himself or herself with the deadlines set by his or her institution.
(For example, a brokerage firm may accept purchase orders from its customers up
to 2:15 p.m. for issuance at the 4:00 p.m. transaction time and price.) A
brokerage firm acting on behalf of a customer in connection with transactions in
Fund shares is subject to the same legal obligations imposed on it generally in
connection with transactions in securities for a customer, including the
obligation to act promptly and accurately.
A Fund may also issue its shares in return for securities or other
assets, subject to approval of the Board of Trustees.
<PAGE>
(b) Contingent Deferred Sales Charges
Redemptions of Class B shares will be subject to a contingent
deferred sales charge or CDSC declining from 4% to zero over a four-year period.
Redemptions of Class C shares will be subject to a CDSC of 1% if such
redemptions occur within one year of purchase of the shares redeemed. The CDSC
for Class B shares and Class C shares will be waived for the following
shareholders or transactions:
(1) investment advisory clients of the Adviser;
(2) officers, directors and full-time employees and Trustees of DLJ Winthrop
Focus Funds, the Adviser and related entities; or the relatives of any
such person, or any trust or individual retirement account or
self-employed retirement plan for the benefit of any such person or
relative; or the estate of any such person or relative, if such sales are
made for investment purposes (such shares may not be resold except to the
Funds);
(3) certain employee benefit plans for employees of the Advisers and related
entities;
(4) an agent or broker of a dealer that has a sales agreement with the
Distributor, for their own account or an account of a relative of any such
person, or any trust or individual retirement account or self-employed
retirement plan for the benefit of any such person or
<PAGE>
relative; or the estate of any such person or relative, if such sales are
made for investment purposes (such shares may not be resold except to the
Funds). To qualify, the Distributor or Transfer Agent must be notified at
the time of purchase;
(5) shares purchased by registered investment advisers or by broker-dealers
that have sales agreements with the Funds and which shares have been
purchased on behalf of wrap fee client accounts and for which such
registered investment advisers or broker-dealers charge a fixed fee and
perform advisory, custodial, record keeping or other services;
(6) shareholders of Neuwirth Fund, Inc., Pine Street Fund, Inc. and deVegh
Mutual Fund, Inc., which were diversified, no-load open-end management
investment companies to which WSWMC provided investment advisory services;
(7) liquidations, distributions or loans from the following types of
retirement plans established on or after February 1, 1995: (i) retirement
plans qualified under section 401(k) of the Code; (ii) plans described in
section 403(b) of the Code; and (iii) deferred compensation plans
described in section 457 of the Code;
(8) redemptions as a result of shareholder death or disability (as defined in
the Code); and
(9) redemptions made pursuant to the DLJ Winthrop Focus Funds' systematic
withdrawal plan up to 1% monthly or 3% quarterly of the account's total
purchase payments (excluding dividend reinvestment) not to exceed 10% of
total purchase payments over any 12 month rolling period (systematic
withdrawals elected on a semi-annual or annual basis are not eligible for
the waiver).
Redemptions effected by DLJ Winthrop Focus Funds pursuant to its right to
liquidate a shareholder's account with a current net asset value of less than
$250 will not be subject to the CDSC.
<PAGE>
The CDSC will be deducted from the redemption proceeds and reduce
the amount paid to you. In the case of Class B shares and Class C shares, a CDSC
will be applied on the lesser of the original purchase price or the current
value of the shares being identified for redemption. Increases in the value of
your shares identified for redemption or shares acquired through reinvestment of
dividends or distributions are not subject to a CDSC. The amount of any CDSC
will be paid to and retained by the Distributor.
The amount of the CDSC, if any, will vary depending on the number of
years from the time of payment for the purchase of shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchase of shares, all payments
during a month will be aggregated and deemed to have been made on the last day
of the month. The CDSC will be calculated from the first day of the month after
the initial purchase, excluding the time shares were held in a money market
fund, if the initial purchase was made in such money market fund.
The following table sets forth the rates of the CDSC applicable to
redemptions of Class B shares:
- --------------------------------------------------------------------------------
Contingent Deferred
-------------------
Sales Charge as a
-----------------
Percentage of Dollars
---------------------
Year Since Purchase Invested of
- ------------------- -----------
Payment Made Redemption Proceeds
------------ -------------------
- --------------------------------------------------------------------------------
First 4.0%
- --------------------------------------------------------------------------------
Second 3.0%
- --------------------------------------------------------------------------------
Third 2.0%
- --------------------------------------------------------------------------------
Fourth 1.0%
- --------------------------------------------------------------------------------
Fifth 0.0%
- --------------------------------------------------------------------------------
Sixth 0.0%
- --------------------------------------------------------------------------------
Seventh 0.0%
- --------------------------------------------------------------------------------
<PAGE>
For federal income tax purposes, the amount of the CDSC will reduce
the gain or increase the loss, as the case may be, on the amount recognized on
the redemption of shares.
(c) Redemptions
Payment of the redemption price may be made either in cash or in
portfolio securities (selected at the discretion of the Trustees and taken at
their value used in determining the redemp tion price), or partly in cash and
partly in portfolio securities. However, payments will be made wholly in cash
unless the Trustees believe that economic conditions exist which would make such
a practice detrimental to the best interest of DLJ Winthrop Focus Funds. DLJ
Winthrop Focus Funds has filed a formal election with the Securities and
Exchange Commission pursuant to which DLJ Winthrop Focus Funds will only effect
a redemption in portfolio securities where the particular shareholder of record
is redeeming more than $250,000 or 1% of a Fund's total net assets, whichever is
less, during any 90 day period. In the opinion of DLJ Winthrop Focus Funds'
management, however, the amount of a redemption request would have to be
significantly greater than $250,000 or 1% of total net assets of a Fund before a
redemption wholly or partly in portfolio securities would be made. If payment
for shares redeemed is made wholly or partly in portfolio securities, brokerage
costs may be incurred by the investor in converting the securities to cash. See
the Prospectus for a description of the CDSC which may be applicable to certain
redemptions.
To redeem shares represented by share certificates, investors should
forward the appropriate share certificates, endorsed in blank or with blank
stock powers attached, to DLJ Winthrop Focus Funds with the request that the
shares represented thereby or a specified portfolio thereof be redeemed at the
next determined net asset value per share. The share assignment form on the
reverse side of each share certificate surrendered to DLJ Winthrop Focus Funds
for re demption must be signed by the registered owner or owners exactly as the
registered name appears on the face of the certificate or, in the alternative, a
stock power signed in the same
<PAGE>
manner may be attached to the share certificate or certificates, or, where
tender is made by mail, separately mailed to DLJ Winthrop Focus Funds. The
signature or signatures on the assignment form must be guaranteed in the manner
described below.
If the total value of the shares being redeemed exceeds $50,000
(before deducting any applicable CDSC) or a redemption request directs proceeds
to a party other than the registered account owner(s), the signature or
signatures on the letter or the endorsement must be guaranteed by an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934. Eligible guarantor institutions include banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. A broker-dealer
guaranteeing signatures must be a member of a clearing corporation or maintain
net capital of at least $100,000. Credit unions must be authorized to issue
signature guarantees. Signature guarantees will be accepted from any eligible
guarantor institution which participates in a signature guarantee program.
Additional documents may be required for redemption of corporate, partnership or
fiduciary accounts.
The requirement for a guaranteed signature is for the protection of
the shareholder in that it is intended to prevent an unauthorized person from
redeeming his shares and obtaining the redemption proceeds.
(d) Exchanges
Class A, Class B or Class C shares of a Fund may be exchanged by
mail or telephone for shares of the same class of another Fund or for shares of
the DLJ Winthrop Opportunity Funds, another investment company managed by the
Adviser, which is currently comprised of five portfolios: the DLJ Winthrop
Developing Markets Fund, and the DLJ Winthrop International Equity Fund (the
"Opportunity International Funds") and together with the DLJ Winthrop High
Income Fund (the "Opportunity Long-term Funds"), and the DLJ Winthrop Municipal
Money Fund and DLJ Winthrop U.S. Government Money
<PAGE>
Fund (the "DLJ Winthrop Opportunity Money Funds"). Shares exchanged from a Fund
must be exchanged for the same class of shares of the DLJ Winthrop Opportunity
Long-term Funds. Each DLJ Winthrop Opportunity Long-term Fund portfolio offers
three classes of shares: Class A shares, Class B shares and Class C shares.
Class A shares are sold with a front-end sales charge of up to 5.75% for the
Opportunity International Funds and up to 4.75% for the DLJ Winthrop High Income
Fund. In addition, Class A shares of the Opportunity Long-term Funds are sold
with a 12b-1 fee of .25% annually. Class B shares are sold with a CDSC which
declines from 4% to zero, depending on the period of time the shares are held,
and a 12b-1 fee of 1% annually. Class C shares are sold subject to a CDSC of 1%
if such shares are redeemed within one year of purchase, and a 12b-1 fee of 1%
annually. In addition, the DLJ Winthrop High Income Fund and DLJ Winthrop
International Equity Fund offer Class D shares which are sold without an initial
sales charge or CDSC at net asset value to employees of Donaldson, Lufkin &
Jenrette Inc. and its subsidiaries that are eligible to participate in the
401(k) Retirement Savings Plan for Employees of Donaldson Lufkin & Jenrette Inc.
Each DLJ Winthrop Opportunity Money Fund Portfolio currently offers only one
class of shares, and a 12 b-1 fee of 1% annually.
Class A shares subject to a CDSC as described in the Prospectus and
Class B shares and Class C shares which are exchanged for shares of the DLJ
Winthrop Opportunity Funds will continue to be subject to the same CDSC at the
same rate and for the same period of time as they were prior to exchange. The
telephone exchange privilege will be offered automatically unless a shareholder
declines such option on the Share Purchase Application found in the Funds'
Prospectus, or by writing to the Funds' Transfer Agent, PFPC, Inc., 211 S. Gulph
Road, King of Prussia, PA 19406-3101, Attn.: DLJ Winthrop Mutual Funds.
Participants within the DLJ 401(k) Retirement Savings Plan should contact the
DLJ 401(k) Hotline at 1-877-401k-DLJ for information regarding the exchange of
Class D shares.
<PAGE>
In the case of each of the DLJ Winthrop Opportunity Funds, the
exchange privilege is available only in those jurisdictions where shares of the
relevant Fund may be legally sold. Prospectuses for the DLJ Winthrop Opportunity
Funds may be obtained from DLJ at the address or telephone number listed on the
cover page of the Prospectus. An exchange is effected on the basis of each
Fund's relative NAV next computed following receipt of an order for such
exchange from the shareholder. In addition, the exchange privilege is available
only when payment for the shares to be redeemed has been made and the shares
exchanged are held by the Transfer Agent or Distributor.
Only those shareholders who have had shares in a Fund for at least
seven days may exchange all or part of those shares for shares of another Fund
or one of the DLJ Winthrop Opportunity Funds and no partial exchange may be made
if, as a result, the shareholders' interest in a Fund would be reduced to less
than $250. The minimum initial exchange into another Fund is $250.
All exchanges into the DLJ Winthrop Opportunity Funds are subject to
the minimum investment requirements and any other applicable terms set forth in
the Prospectus for the relevant DLJ Winthrop Opportunity Fund whose shares are
being acquired. If for these or other reasons the exchange cannot be effected,
the shareholder will be so notified.
A shareholder of DLJ Winthrop Focus Funds who has exchanged shares
for shares of the DLJ Winthrop Opportunity Funds will have all of the rights and
privileges of a shareholder of the relevant DLJ Winthrop Opportunity Fund.
The exchange privilege is intended to provide shareholders with a
convenient way to switch their investments when their objectives or perceived
market conditions suggest a change. The exchange privilege is not meant to
afford shareholders an investment vehicle to play short-term swings in the stock
market by engaging in frequent transactions in and out of the
<PAGE>
Funds or the DLJ Winthrop Opportunity Funds. Shareholders who engage in such
frequent transactions may be prohibited or restricted from placing future
exchange orders.
(e) Systematic Withdrawal Plan
Shares of a Fund owned by a participant in DLJ Winthrop Focus Funds'
systematic withdrawal plan will be redeemed as necessary to meet withdrawal
payments. A CDSC which would otherwise be imposed will be waived in connection
with redemptions made pursuant to DLJ Winthrop Focus Funds' systematic
withdrawal plan of up to 1% monthly or 3% quarterly of an account (excluding
dividend reinvestments) not to exceed 12% over any 12 month rolling period;
however, the CDSC will not be waived for systematic withdrawals elected on a
semi-annual or annual basis. See "How to Buy and Sell Shares" in the Prospectus
for a description of the CDSC. A shareholder's systematic withdrawal plan may be
terminated at any time by the shareholder or DLJ Winthrop Focus Funds.
Redemption of shares for withdrawal purposes may reduce or even
liquidate an account. While an occasional lump sum investment may be made by a
shareholder who is main taining a systematic withdrawal plan, such investment
should normally be an amount equivalent to three times the annual withdrawal or
$5,000 whichever is less.
<PAGE>
SHAREHOLDER INVESTMENT ACCOUNT
Each Fund may be a suitable investment vehicle for part or all of
the assets held in various tax-sheltered retirement plans, such as those listed
below. Semper Trust Company serves as custodian under these prototype retirement
plans and charges an annual account maintenance of $15 per participant,
regardless of the number of Funds selected. Persons desiring information
concerning these plans should write or telephone the Focus Funds' Transfer
Agent. While the Focus Funds reserves the right to suspend sales of its shares
in response to conditions in the securities markets or for other reasons, it is
anticipated that any such suspension of sales would not apply to sales to the
types of plans listed below.
(a) Individual Retirement Accounts ("IRA")
The Adviser has available a prototype form of a traditional IRA for
investment in shares of any one or more Funds. Under the Code, individuals may
currently make tax-deferred IRA contributions of up to $2,000 annually. Married
individuals filing jointly may make tax-deferred contributions of up to $2,000
for each spouse if the combined compensation of both spouses is at least equal
to the contributed amount. Contributions to a traditional IRA may be wholly or
partly tax-deductible, depending upon the contributor's income level and
participation in an employer- sponsored retirement plan. The income earned on
shares held in a traditional IRA is not subject to federal income tax until
withdrawn in accordance with the Code. Investors may be subject to penalties or
additional taxes on contributions to or withdrawals from traditional IRAs under
certain circumstances.
The Adviser has available a prototype form of the new Roth IRA.
Unlike traditional IRAs, contributions to a Roth IRA are not currently
deductible. However, amounts
<PAGE>
within a Roth IRA account will accumulate tax-free, and qualified distributions
from a Fund held within such an account will not be included in a shareholder's
taxable income. An individual may contribute a maximum of $2,000 annually to a
Roth IRA ($4,000 for joint returns). However, such limit is calculated in the
aggregate with contributions to traditional IRAs. Roth IRAs are not available to
individuals above certain income levels.
The Adviser also has available a prototype form of the new Education
IRA for investment in shares of any one or more DLJ Winthrop Focus Funds. Like
the Roth IRA, contributions are not currently deductible. However, the
investment earnings accumulate tax-free, and qualifying distributions used for
higher education expenses are not taxable. An individual may contribute a
maximum of $500 per account annually. In addition, Educational IRA's are not
available to individuals above certain income levels.
(b) Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA is available for investment and may be established on a
group basis by an employer who wishes to sponsor a tax-sheltered retirement
program by making IRA contributions on behalf of all eligible employees.
(c) Savings Incentive Match Plan for Employees ("SIMPLE")--SIMPLE IRA and SIMPLE
401(k)
SIMPLE plans offer employers with 100 or fewer eligible employees
who earned at least $5,000 from the employer in the preceding calendar year
the ability to establish a retirement plan that permits employee contributions.
An employer may also elect to make additional contributions to these Plans.
Please telephone DLJ Winthrop Focus Funds' shareholder servicing representatives
at (800) 225-8011 for more information.
(d) Employer-Sponsored Retirement Plans
The Adviser has a prototype retirement plan available which provides
for investment of plan assets in shares of any one or more of the Focus Funds.
The prototype
<PAGE>
retirement plan may be used by sole proprietors and partnerships as well as
corporations to establish a tax qualified profit sharing plan or money purchase
pension plan (or both) of their own.
Under the prototype retirement plan, an employer may make annual
tax-deductible contributions for allocation to the accounts of the plan
participants to the maximum extent permitted by the federal tax law for the type
of plan implemented. The Adviser has received favorable opinion letters from the
IRS stating that the prototype retirement plan is acceptable by qualified
employers.
(e) Self-Directed Retirement Plans
Shares of the Focus Funds may be suitable for self-directed IRA
accounts and prototype retirement plans such as those developed by Donaldson,
Lufkin & Jenrette Securities Corporation, an affiliate of the Adviser and DLJ
Winthrop Focus Funds' Distributor.
<PAGE>
NET ASSET VALUE
Net asset value per share is computed each Fund Business Day in
accordance with the Focus Funds' Amended and Restated Agreement and Declaration
of Trust and By-Laws. For this purpose, a Fund Business Day is any day on which
the New York Stock Exchange is open for business, typically, Monday through
Friday exclusive of New Year's Day, Martin Luther King Jr. Day, Presidents Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
Good Friday.
The Funds calculate net asset value on each Fund Business Day, as of
the close of the regular session of the New York Stock Exchange, generally 4:00
p.m. New York City time. The NAV is calculated by taking the sum of the value of
a Fund's investments and any cash or other assets, subtracting liabilities, and
dividing by the total number of shares outstanding. All expenses, including the
fees payable to the Adviser, are accrued daily.
The net asset value is calculated separately for each class of
shares. Although the legal rights of each class of shares are substantially
identical, the different expenses attributable to each class will result in
different net asset values and dividends. The net asset value of Class B and
Class C shares will generally be lower than the net asset value of Class A
shares as a result of the larger distribution and service fees imposed on Class
B and Class C shares. The net asset value of Class A shares will generally be
lower than the net asset value of Class D shares because Class D shares are not
subject to any distribution or service fees. It is expected that the net asset
value of Class A shares, Class B shares, Class C shares and Class D shares will
tend to
<PAGE>
converge immediately after the recording of dividends, if any, which will differ
in amount by approximately the differential of the accrual of distribution fees.
For purposes of the computation of net asset value, each of the
Funds value securities held in their respective portfolios as follows: readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price at the close of the
New York Stock Exchange on the business day as of which such value is being
determined. However, where a foreign securities market remains open at the time
that the Fund values its portfolio securities, or closing prices of securities
from that market may not be retrieved because of local time differences or other
difficulties in obtaining such prices at that time, last sale prices in such
market at a point in time most practicable to timely valuation of the Fund may
be used. If there has been no sale on such day, the securities are valued at the
mean of the closing bid and asked prices on such day, unless it is determined
that such mean does not reasonably reflect true market value, in which case such
value shall be taken at such amount as shall be deemed reasonable by Trustees of
DLJ Winthrop Focus Funds, but not less than said bid price nor more than said
asked price. If no bid or asked prices are quoted on such day, then the security
is valued by such method as the Trustees of DLJ Winthrop Focus Funds shall
determine in good faith to reflect its fair value.
Readily marketable securities, including certain options, not listed
on the New York Stock Exchange but listed on other national securities exchanges
or admitted to trading on the National Association of Securities Dealers
Automatic Quotations, Inc. ("NASDAQ") National Market System (the "System") are
valued in a like manner. Portfolio securities traded on more than one national
securities exchange are valued at the last sale price on the business day as of
which such value is being determined at the close of the exchange representing
the principal market for such securities.
Readily marketable securities, including certain options traded only
in the over-the-counter market, and listed securities whose primary market is
believed by the Adviser to be over-the-counter (excluding those admitted to
trading on the System) are valued at the mean of the current bid and asked
prices as reported by NASDAQ, or in the case of securities not quoted by NASDAQ,
the National Quotation Bureau, Inc. or such other comparable source that the
<PAGE>
Trustees of the Fund deem appropriate to reflect their fair market value.
However, fixed-income securities (except short-term securities) may be valued on
the basis of prices provided by a pricing service when such prices are believed
by the Adviser to reflect the fair market value of such securities. The prices
provided by a pricing service are determined without regard to bid or last sale
prices but take into account institutional size trading in similar groups of
securities and any developments related to specific securities. The money market
securities in which each Fund invests are traded primarily in the
over-the-counter market and are valued at the mean between most recent bid and
asked prices as obtained from dealers that make markets in such securities,
except for securities having 60 days or less remaining until maturity which are
stated at amortized cost. Portfolio securities underlying listed call options
will be valued at their market prices and reflected in net assets accordingly.
Premiums received on call options written by the Fund will be included in the
liability section of the Statement of Assets and Liabilities as a deferred
credit and subsequently adjusted (marked-to-market) to the current market value
of the option written. Investments for which market quotations are not readily
available are valued at fair value as determined in good faith by the Trustees
of DLJ Winthrop Focus Funds.
<PAGE>
TAXES, DIVIDENDS, AND DISTRIBUTIONS
Each of the Funds has elected to qualify and intends to remain
qualified as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, a Fund will not be subject to federal income taxes if at least 90% of
its net investment income and net short-term capital gains less any available
capital loss carryforwards are distributed to shareholders within allowable time
limits. However, a Fund will be subject to tax on its income and gains to the
extent that it does not distribute to its shareholders an amount equal to such
income and gains. In addition, a Fund will be subject to a nondeductible 4%
excise tax to the extent that it does not make distributions to its shareholders
on a basis such that the distributions are taxed to shareholders in the same
year in which the related income or gain was realized by such Fund. To the
extent possible, each Fund intends to make such distributions as may be
necessary to avoid this excise tax.
Each Fund normally will distribute substantially all of its net
investment income and net capital gain, if any, to shareholders in the form of
dividends to be paid from time to time. Any dividends or distributions paid
shortly after the purchase of shares by an investor may have the effect of
reducing the per share value of the shares owned by the investor by the per
share amount of the dividends or distributions. Furthermore, such dividends and
distributions, although in effect a return of capital, are subject to income
taxes.
In the event that total distributions (including distributed or
designated net capital gain) of a Fund for a taxable year exceed its investment
company taxable income and net capital gain, a portion of each distribution
generally will be treated as a tax return of capital. Distributions treated as a
return of capital reduce a shareholder's basis in its shares and could
<PAGE>
result in a tax on capital gain either when a distribution is in excess of basis
or, more likely, when a shareholder redeems shares.
Upon a redemption or other disposition of shares of a Fund, a
shareholder will generally recognize gain or loss in an amount equal to the
difference between the amount realized and the shareholder's tax basis in such
shares. Generally, such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the shareholder's holding period for such
shares exceeds one year. Long-term capital gain of a non-corporate shareholder
is generally subject to a maximum tax rate of 20% in respect of property held
for more than one year.
Dividends distributed by a Fund will be eligible for the
dividends-received deduction available to corporate shareholders only to the
extent of the portion of the Fund's gross income which consists of dividends
received on equity securities issued by domestic corporations with respect to
which such Fund meets the same holding period, risk of loss, and borrowing
limitations applicable to the Fund's shareholders. Section 246 of the Code
generally permits the dividends-received deduction to corporate shareholders
only if the shares with respect to which the dividends were paid have been held
for more than 45 days. If the holding period is not satisfied, the
dividends-received deduction is disallowed, regardless of whether the shares
with respect to which the dividends were paid have been sold or otherwise
disposed of. The holding period requirements are separately applicable to each
block of shares acquired, including each block of shares received in payment of
the Fund's dividends. The Internal Revenue Service ("IRS") has specific
regulations governing the identification of shares to be redeemed by a
shareholder that wishes to redeem some, but not all, of its shares. For purposes
of determining whether this holding period requirement has been met, the day of
acquisition and any day after the first 45 days after the date on which such
shares become ex-dividend must be disregarded. In addition, the holding period
is suspended during periods in which the stock is
<PAGE>
subject to diminished risk of loss including, for example, because the holder
has acquired a put option or sold a call option (other than certain covered call
options where the exercise price is not substantially below the selling price)
or otherwise hedged his position.
A corporate shareholder would not be entitled to a
dividends-received deduction for dividends paid or accrued after September 5,
1997 unless the 45 day holding period were satisfied over a period immediately
before or immediately after the shareholder became entitled to receive the
dividend. A transition rule provides that the provision will not apply to
dividends received within two years of the date of enactment if (1) the dividend
is paid with respect to stock held on June 8, 1997, and all times thereafter
until the dividend is received; (2) the stock is continuously subject to a
diminished risk of loss (as described above) on June 8, 1997, and all times
thereafter until the dividend is received; and (3) such stock and related
position was identified by the taxpayer by September 30, 1997.
The dividends-received deduction will also be reduced for
shareholders who incur indebtedness that is directly attributable to the
purchase of shares by the percentage of the cost of such shares. Such reduction
depends on the particular facts and circumstances of each situation and
accordingly shareholders are urged to consult their tax advisers.
Under section 1059 of the Code, a corporation which receives an
"extraordinary dividend" and disposes of the stock with respect to which such
dividend was paid is required to reduce its basis in such stock (but not below
zero) by the amount of the dividend which was not taxed because of the
dividends-received deduction, with such basis reduction generally being treated
as having occurred immediately before the sale or disposition of such stock
unless such stock has not been held for at least two years prior to the date of
declaration, announcement or agreement about the extraordinary dividend. To the
extent such untaxed amount exceeds the shareholder's basis, such excess will be
taxed as gain upon sale or disposition of such stock. An extraordinary dividend
generally is any dividend that equals or exceeds 10% of the shareholder's
<PAGE>
basis in the stock (5% in the case of preferred stock). For this purpose,
generally, all dividends having ex-dividend dates within any 85-day period and,
if such dividends total more than 20% of the shareholder's basis in its stock,
all dividends having ex-dividend dates within one year, must be aggregated. The
shareholder may elect to determine the status of extraordinary dividends by
reference to the fair market value of the stock as of the date before the
ex-dividend date, rather than by reference to the adjusted basis of such stock
(provided the shareholder establishes the fair market value to the satisfaction
of the Commissioner of the IRS). In determining whether the above mentioned
two-year holding period has been met, the same rules apply as are applicable to
the 45-day holding period requirement for the dividends-received deduction.
Each Fund intends to declare and pay dividends and capital gains
distributions so as to avoid imposition of the 4% federal excise tax referred to
above. Accordingly, each Fund expects to distribute during the calendar year an
amount at least equal to the sum of (i) 98% of its calendar year net investment
income, (ii) 98% of its net capital gain income (the excess of short and
long-term capital gain over short and long-term capital loss) for each one-year
period ending October 31, and (iii) 100% of any undistributed net investment
income or capital gain from the prior year which has not been distributed by
such Fund. Dividends declared in October, November, or December and made payable
to shareholders of record in such month would be deemed paid by a Fund and
taxable to its shareholders on December 31 of such year provided that such
dividends are actually paid during or before January of the following year. A
Fund may make a deemed distribu tion with respect to its net capital gain by
paying the tax with respect to the net capital gain and then designating, but
not distributing, all or a portion of such gain as a capital gain dividend. Such
Fund's shareholders will treat such designated amounts as net capital gain on
their income tax returns, but will receive a credit or refund equal to federal
income taxes paid by such Fund with respect to such capital gains. In addition,
shareholders will increase their basis in the Fund's shares by the difference
between the amount of such includible
<PAGE>
gains and the tax deemed paid by such shareholders in respect of such gains. If
a capital gain dividend is paid with respect to any shares of a Fund which are
sold at a loss after being held for less than six months, any loss realized upon
the sale of such shares will be treated as long-term capital loss to the extent
of such capital gain dividend. Any loss realized on the sale of shares will be
disallowed to the extent the shares disposed of are replaced within a period of
61 days beginning 30 days before the disposition of such shares. In such case,
the basis of shares acquired will be adjusted to reflect the disallowed loss.
Some of the investment practices of the DLJ Winthrop Growth Fund,
DLJ Winthrop Small Company Value Fund and the DLJ Winthrop Growth and Income
Fund are subject to special provisions that, among other things, may defer the
use of certain losses of such Funds and affect the holding periods of the
securities held by the Funds and the character of the gains or losses realized.
These provisions may also require the DLJ Winthrop Growth Fund, the DLJ Winthrop
Small Company Value Fund and the DLJ Winthrop Growth and Income Fund to
mark-to-market some of the positions in their portfolio (i.e., treat them as if
they were closed out), which may cause such Funds to recognize income without
receiving cash with which to make distributions in amounts necessary to satisfy
the distribution requirements for qualification as a regulated investment
company and for avoiding income and excise taxes. Each Fund will monitor its
transactions and may make certain tax elections in order to mitigate the effect
of these rules and prevent dis qualification of the Fund as a regulated
investment company.
Dividend and interest income from non-U.S. equity and debt
securities may be subject to a withholding tax imposed by the country in which
the issuer is located. Each Fund expects to claim a deduction or foreign tax
credit with respect to any such withholding tax, to the extent allowable under
the Code, regulations thereunder, or an applicable treaty. Since a Fund's
investment policies would preclude it from investing more than 50% of the value
of the total
<PAGE>
assets of such Fund in non-U.S. equity and debt securities, shareholders are not
expected to be eligible for a pass-through of the credit for foreign taxes paid.
For shareholders' federal income tax purposes, distributions to
shareholders out of tax-exempt interest income (less expenses applicable
thereto) earned by the DLJ Winthrop Municipal Trust Fund are not subject to
federal income tax if, at the close of each quarter of the DLJ Winthrop
Municipal Trust Fund's taxable year, at least 50% of the value of the DLJ
Winthrop Municipal Trust Fund's total assets consist of tax-exempt obligations.
The DLJ Winthrop Municipal Trust Fund intends to meet this requirement. However,
under current tax law, some individuals and corporations may be subject to an
alternative minimum tax (the "AMT") with respect to their receipt of certain
distributions of tax-exempt interest income from the DLJ Winthrop Municipal
Trust Fund. Distributions of taxable interest income, other investment income,
and short-term capital gains are taxable to shareholders as ordinary income.
Since the DLJ Winthrop Municipal Trust Fund's investment income is derived from
interest rather than dividends, no portion of such distributions is eligible for
the dividends-received deduction available to corporations. Long-term capital
gains, if any, distributed by the DLJ Winthrop Municipal Trust Fund to a
shareholder are taxable to the shareholder as long-term capital gain, regardless
of the length of time the shareholder may have held the DLJ Winthrop Municipal
Trust Fund shares.
Each Fund is required to withhold and remit to the U.S. Treasury 31%
of the dividends or proceeds of any redemptions or exchanges of shares with
respect to any shareholder who fails to furnish his or her Fund with a correct
taxpayer identification number, who has been notified by the U.S. Treasury that
he or she has under-reported dividend or interest income or who fails to certify
to his or her Fund that he or she is not subject to such withholding. An
individual's tax identification number is generally his or her social security
number.
<PAGE>
Shareholders will be notified annually by the Funds as to the
Federal tax status of dividends and distributions paid during the calendar year.
Dividends and distributions may also be subject to state and local taxes. State
and local tax treatment may vary according to applicable laws.
The foregoing discussion is a general summary of certain current
federal income tax laws regarding the Funds and relates solely to the
application of that law to (i) citizens or residents of the United States, (ii)
domestic corporations or partnerships, or (iii) entities otherwise subject to
U.S. taxation on a net income basis. The discussion does not purport to deal
with all of the federal income tax consequences applicable to the Funds, or to
all categories of investors, some of whom may be subject to special rules. Each
prospective and current shareholder should consult with his or her own
professional tax adviser regarding federal, state and local tax consequences of
ownership of shares of the Funds.
<PAGE>
PERFORMANCE INFORMATION
Presented below is certain performance information with respect to
an investment in Class A, Class B and Class D shares of beneficial interest of
the Funds. Prior to February 28, 1996, Class A shares were not offered.
Accordingly, the information presented below with respect to Class A shares has
been obtained from the financial statements for the Funds' prior fiscal years.
Because Class C shares have not yet been issued, no performance information is
included for Class C shares.
(a) Average Annual Total Return
The average annual total return of Class A shares for the one, five
and ten year periods ended October 31, 1999 was 23.25%, 20.56% and 13.86% for
the DLJ Winthrop Growth Fund and -5.00%, 5.21% and 6.38% for the DLJ Winthrop
Fixed Income Fund, respectively. The average annual total return of Class A
shares for the one, five and ten year periods ended October 31, 1999 for the DLJ
Winthrop Small Company Value Fund (which was previously named the Winthrop
Aggressive Growth Fund and which includes its predecessor, the Neuwirth Fund,
Inc.) and the DLJ Winthrop Growth and Income Fund (which includes its
predecessor, the Pine Street Fund, Inc.) was -0.60%, 8.14% and 11.12% for the
DLJ Winthrop Small Company Value Fund and 7.80%, 19.00% and 13.84% for the DLJ
Winthrop Growth and Income Fund, respectively. The average annual total return
of Class A shares for the one and five year periods ended October 31, 1999 for
the DLJ Winthrop Municipal Trust Fund was -5.72% and 4.22% respectively and
3.28% for the period July 28, 1993 (commencement of operations) through October
31, 1999.
<PAGE>
The average annual total return for Class B shares for the one year
period ended October 31, 1999 was 25.73%, -4.93%, 0.75%, 9.66% and -5.64% and
for the period February 28, 1996 (commencement of offering of Class B shares)
through October 31, 1999 was 21.96%, 3.80%, 6.65%, 18.50% and 2.92%, for the DLJ
Winthrop Growth Fund, the DLJ Winthrop Fixed Income Fund, the DLJ Winthrop Small
Company Value Fund, the DLJ Winthrop Growth and Income Fund and the DLJ Winthrop
Municipal Trust Fund, respectively.
The average annual total return for Class D shares for the period
April 30, 1999 (commencement of offering of Class D shares) through October 31,
1999 was -.67% and .04% for the DLJ Winthrop Growth and Income Fund, and the
DLJ Winthrop Fixed Income Fund, respectively, and for the period May 17, 1999
(commencement of offering Class D shares) through October 31, 1999 for the DLJ
Winthrop Growth Fund was 4.83%.
These amounts were computed by assuming a hypothetical initial
investment of $1,000. It was then assumed that all of the dividends and
distributions by each of the Funds over the relevant time periods were
reinvested. It was then assumed that with respect to the Class A shares of the
DLJ Winthrop Growth Fund, the DLJ Winthrop Small Company Value Fund and the DLJ
Winthrop Growth and Income Fund, the maximum initial sales charge of 5.75% was
deducted at the time of investment and, with respect to the Class A shares of
the DLJ Winthrop Fixed Income Fund and the DLJ Winthrop Municipal Trust Fund,
the maximum initial sales charge of 4.75% was deducted at the time of
investment. With respect to the Class B shares of each of the DLJ Winthrop Focus
Funds, it was assumed that at the end of these periods the entire amount was
redeemed and the appropriate sales load, if any, was deducted. With respect to
the Class B shares, for the period February 28, 1996 (commencement of offering
of Class B shares) to October 31, 1999, the appli cable deferred sales load
charged was 3% for each of the DLJ Winthrop Growth Fund, DLJ Winthrop Fixed
Income Fund, DLJ Winthrop Small Company Value Fund, the DLJ Winthrop Growth and
Income and the DLJ Winthrop Municipal Trust
<PAGE>
Fund. The average annual total return was then calculated by using the annual
rate required for the initial payment to grow to the amount which would have
been received upon redemption (i.e., the average annual compounded rate of
return). The results shown should not be considered an indication of future
performance from an investment in any Fund today.
(b) Computation of the DLJ Winthrop Fixed Income Fund's and DLJ Winthrop
Municipal Trust Fund's 30-Day Yield Quotation
The 30-day yield for each of the DLJ Winthrop Fixed Income Fund and
the DLJ Winthrop Municipal Trust Fund for the year ended October 31, 1999 was
with respect to Class A shares, 5.29% and 3.65%, respectively and, with respect
to Class B shares, 4.85% and 3.14%, respectively. The Fund's yield is based on a
30-day period and is computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last day
of the period, according to the following formula:
YIELD = 2[(a-b/cd+1)^6-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of
the period.
<PAGE>
GENERAL INFORMATION
(a) Counsel and Auditors
Sullivan & Cromwell, 125 Broad Street, New York, New York 10004,
serves as legal counsel for the DLJ Winthrop Focus Funds.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has
been appointed as independent auditors for the DLJ Winthrop Focus Funds.
(b) Additional Information
This Statement of Additional Information does not contain all the
information set forth in the Registration Statement filed by DLJ Winthrop with
the Securities and Exchange Commission under the Securities Act of 1933. Copies
of the Registration Statement may be obtained at a reasonable charge from the
Commission or may be examined, without charge, at the offices of the Commission
in Washington, D.C.
<PAGE>
FINANCIAL STATEMENTS
The audited financial statements of the Funds for the fiscal year
ended October 31, 1999 and the report of the Funds' independent auditors in
connection therewith have been included in the October 31, 1999 Annual Report to
Shareholders. The audited financial statements included in the Annual Report are
incorporated by reference into this Statement of Additional Information. You can
obtain a copy of the Fund's Annual Report by writing or calling DLJ Winthrop at
the address or telephone numbers set forth on the cover of this Statement of
Additional Information.
<PAGE>
Appendix I - Description of Security Ratings
Bond Ratings
Municipal and Corporate Bonds. The four highest ratings of Moody's
Investors Service, Inc. ("Moody's") for municipal corporate bonds are Aaa, Aa, A
and Baa. Bonds rated Aaa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. Moody's states that Aa bonds are rated lower than the best
bonds because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risks appear somewhat larger
than in Aaa securities. Bonds which are rated A are judged by Moody's to possess
many favorable investment attributes and are considered "upper medium grade
obligations". Factors giving security to principal and interest of A-rated bonds
are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future. Bonds rated Baa are
considered as medium-grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. The generic ratings Aa through Baa may be modified by
the addition of the numerals 1, 2 or 3. The modifier 1 indicates that the
security ranks in the higher end of the rating category; the modifier 2
indicates a mid-range rating; and the modifier 3 indicates that the issue ranks
in the lower end of such rating category.
<PAGE>
Moody's highest ratings for short-term municipal loans is MIG-1.
Moody's states that short-term municipal securities rated MIG-1 are of the best
quality, enjoying strong protection from established cash flows of funds for
their servicing and broad-based access to the market for refinancing, or both.
Loans bearing the MIG-2 designation are judged to be of high quality, with
margins of protection ample although not so large as in the MIG-1 group.
The four highest ratings of Standard & Poor's Ratings Group ("S&P")
for municipal and corporate bonds are AAA, AA, A and BBB. Bonds rated AAA have
the highest rating assigned by S&P to a debt obligation and indicate an
extremely strong capacity to pay interest and repay principal. Bonds rated AA
also qualify as high-quality debt obligations and have a very strong capacity to
pay interest and repay principal and in the majority of instances differ from
AAA issues only in a small degree. Bonds rated A have a strong capacity to pay
interest and repay principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than bonds
in higher rated categories. The BBB rating, which is the lowest
"investment-grade" security rating of S&P, indicates an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions of changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category. The ratings AA through BBB may
be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within such rating categories.
Notes rated SP-1 have a very strong capacity to pay principal and
interest. Those issues determined by S&P to possess overwhelming safety
characteristics are given an SP-1+ rating. Notes rated SP-2 have a satisfactory
capacity to pay principal and interest. Notes rated SP-3 have a speculative
capacity to pay principal and interest. The rating scale for notes is closely
related to long-term bond ratings; notes rated SP-1+ compare with bonds rated
AAA,
<PAGE>
AA+, AA and AA-; notes rated SP-1 compare with bonds rated A+, A and A-; and
notes rated SP-2 compare with bonds rated BBB+, BBB and BBB-.
Other Municipal Securities and Commercial Paper
"Prime-1" is the highest rating assigned by Moody's for other
short-term municipal securities and commercial paper, and "A-1+" and "A-1" are
the two highest ratings for commercial paper assigned by S&P (S&P does not rate
short-term tax-free obligations). Moody's uses the numbers 1, 2 and 3 to denote
relative strength within its highest classification of "Prime", while S&P uses
the numbers 1+, 1, 2 and 3 to denote relative strength within the highest
classification of "A". Issuers rated "Prime" by Moody's have the following
characteristics: their short-term debt obligations carry the smallest degree of
investment risk, margins or support for current indebtedness are large or stable
with cash flow and asset protection well assured, current liquidity provides
ample coverage of near-term liabilities and unused alternative financing
arrangements are generally available. While protective elements may change over
the intermediate or longer term, such changes are most likely to impair the
fundamentally strong position of short-term obligations. Commercial paper
issuers rated "A" by S&P have the following characteristics: liquidity ratios
are better than industry average, long-term debt rating is A or better, the
issuer has access to at least two additional channels of borrowing, the basic
earnings and cash flow are in an upward trend. Typically, the issuer is a strong
company, is in a well-established industry and has superior management.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act and has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and the State of New York on the 25th day of February, 2000.
DLJ Winthrop Focus Funds
By: /s/ G. Moffett Cochran*
---------------------------
G. Moffett Cochran
President
Pursuant to the requirements of the Securities Act of 1933, the Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:
Signature Title Date
- --------- ----- ----
/s/ G. Moffet Cochran* President February 25, 2000
- ------------------------ Chairman of the Board
G. Moffet Cochran
/s/ Martin Jaffe Treasurer February 25, 2000
- ------------------------
Martin Jaffe
/s/ Robert L. Bast* Trustee February 25, 2000
- ------------------------
Robert L. Bast
/s/ James Engle* Trustee February 25, 2000
- ------------------------
James Engle
/s/ Stig Host* Trustee February 25, 2000
- ------------------------
Stig Host
<PAGE>
/s/ Peter F. Krogh* Trustee February 25, 2000
- ------------------------
Peter F. Krogh
/s/ Dennis Little Trustee February 25, 2000
- ------------------------
Dennis Little
/s/ William H. Mathers* Trustee February 25, 2000
- ------------------------
William H. Mathers
/s/ John J. Sheehan Trustee February 25, 2000
- ------------------------
John J. Sheehan
/s/ William C. Simpson* Trustee February 25, 2000
- ------------------------
William C. Simpson
/s/ Stephen K. West* Trustee February 25, 2000
- ------------------------
Stephen K. West
*By:
/s/ Martin Jaffe
- ------------------------
Martin Jaffe
(Attorney-in-fact)
Pursuant to Power of Attorney
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned has
constituted and appointed, and by these presents does constitute and appoint, G.
Moffet Cochran and Martin Jaffe, or either of them, the true and lawful agents
and attorneys-in-fact of each of the undersigned with respect to all matters
arising in connection with the filing with the Securities and Exchange
Commission of this Post-Effective Amendment No. 23 to the Registration Statement
under the Securities Act of 1933 and under the Investment Company Act of 1940 on
Form N-1A and any subsequent amendments to the Registration Statement with full
power and authority to execute and deliver for and on behalf of each of the
undersigned all such consents and documents in connection therewith as said
agents and attorneys-in- fact may deem advisable. Each of the undersigned hereby
gives to said agents and attorneys-in-fact full power and authority to act in
the premises, including, but not limited to, the power and authority to execute
and file with the Securities and Exchange Commission this Post-Effective
Amendment No. 23 to the Registration Statement on Form N-1A and any amendments
thereto, and/or other documents in connection therewith, and to appoint a
substitute or substitutes to act hereunder with the same power and authority as
said agents and attorneys-in-fact would have if personally acting. Each of the
undersigned hereby ratifies and confirms all that said agents and
attorneys-in-fact, or any substitute or substitutes, may do by virtue hereof.
This Power of Attorney may be signed in more than one counterpart,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
/s/ Robert L. Bast /s/ Stephen K. West
- ------------------------ ------------------------
Robert L. Bast Stephen K. West
/s/ G. Moffett Cochran /s/ James A. Engle
- ------------------------ ------------------------
G. Moffett Cochran James A. Engle
/s/ Stig Host /s/ Peter F. Krogh
- ------------------------ ------------------------
Stig Host Peter F. Krogh
/s/ Dennis G. Little /s/ William H. Mathers
- ------------------------ ------------------------
Dennis G. Little William H. Mathers
<PAGE>
/s/ John J. Sheehan /s/ William C. Simpson
- ------------------------ ------------------------
John J. Sheehan William C. Simpson
Dated as of February 25, 2000
<PAGE>
Exhibit Index
A complete list of exhibits is included in Part C, Item 23 of the Registration
Statement.
