COMMONFUND INSTITUTIONAL FUNDS, 497, 2000-12-20

COMMONFUND INSTITUTIONAL FUNDS
497, 2000-12-20

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<PAGE> 1

COMMONFUND
INSTITUTIONAL FUNDS

PROSPECTUS
December 18, 2000

[Common Fund LOGO]

------------------------------------------------------------

CIF INFLATION-INDEXED BOND FUND
CIF SHORT DURATION FUND
CIF LOW DURATION BOND FUND
CIF CORE PLUS BOND FUND

INVESTMENT MANAGER
Commonfund Asset Management Company, Inc.

DISTRIBUTOR
Commonfund Securities, Inc.

The Securities and Exchange Commission has not approved or
disapproved the Funds' shares or determined whether this
prospectus is accurate or complete. It is a crime for anyone
to tell you otherwise.

<PAGE> 2

COMMONFUND INSTITUTIONAL FUNDS
--------------------------------------------------------------------------------

Commonfund Institutional Funds (the "Company") is a no-load, open-end management
investment company that seeks to improve the net investment returns of its
shareholders by making available to them a series of investment funds, each with
its own investment objectives and policies. The investment funds are sold
primarily to institutional investors, including colleges, universities, private
secondary schools, hospitals, foundations, pension funds, museums, libraries,
performing arts groups and centers, public secondary school districts,
charitable service organizations and others. The investment funds are not
available to individuals, except current and former directors, officers and
employees of Commonfund Asset Management Company, Inc. (the "Investment
Manager"), its affiliates, consultants, and members of Commonfund advisory
groups ("Eligible Individuals").

HOW TO READ THIS PROSPECTUS
--------------------------------------------------------------------------------

The Company offers a number of separate investment portfolios (each a "Fund"
and, collectively, the "Funds"). Each Fund has individual investment goals and
strategies. This prospectus gives you important information about the CIF
Inflation-Indexed Bond, CIF Short Duration, CIF Low Duration Bond and CIF Core
Plus Bond Funds that you should know before investing. This prospectus has been
arranged into different sections so that you can easily review this important
information. Please read this prospectus and keep it for future reference.

THE FIXED INCOME FUNDS
--------------------------------------------------------------------------------

Fixed income funds are subject to the risks of investing in bonds and other
fixed income securities. The prices of bonds and other fixed income securities
respond to economic developments, particularly interest rate changes, as well as
to changes in the actual or perceived creditworthiness of individual issuers,
including governments. Generally, fixed income securities decrease in value if
interest rates rise and vice versa. Also, longer term securities are generally
more volatile, so the average maturity or duration of these securities affects
risk. Fixed income funds offer shares and accept redemptions every day at
current net asset value and they generally do not hold securities until
maturity. Gains and losses from price fluctuations in fixed income securities
can affect investment returns. Some of these gains and losses could be avoided
by purchasing fixed income securities directly and holding them until maturity.
Lower rated securities are also more volatile, since the prospects for repayment
of principal and interest are more speculative. Moreover, fixed income funds may
substantially underperform funds that invest primarily in other asset classes,
including equity-oriented funds.

CIF Inflation-Indexed Bond Fund.............................................. 3
CIF Short Duration Fund...................................................... 6
CIF Low Duration Bond Fund................................................... 8
CIF Core Plus Bond Fund...................................................... 11
Portfolio Management......................................................... 14
Purchasing and Redeeming Shares.............................................. 17
Dividends, Distributions and Taxes........................................... 19

To obtain more information about the Company please refer to the Back Cover of
the Prospectus.

2
<PAGE> 3

CIF INFLATION-INDEXED BOND FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

Maximize real return to the extent consistent with preservation of capital and
liquidity

INVESTMENT FOCUS
------------------------------------------------------

A portfolio of investment grade U.S. government securities that are linked to
general measures of inflation

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF Inflation-Indexed Bond Fund invests at least 65% of the value of its
total assets, under normal market conditions, in U.S. Treasury Securities whose
principal value is periodically adjusted to the U.S. Consumer Price Index. Up to
25% of the Fund may be invested in investment grade securities that are not
indexed to inflation. Investment grade securities are those rated in one of the
four highest categories at the time of investment, or determined by a
Sub-Adviser to be of equivalent quality. The benchmark for the Fund is the
Lehman U.S. TIPS Index. The Fund will normally maintain effective duration
within (+/-) 1.5 years of the Lehman Brothers U.S. TIPS Index.

The Investment Manager allocates the Fund's assets among selected Sub-Advisers,
who in turn manage the assets on a day-to-day basis, subject to oversight by the
Investment Manager. The initial Sub-Advisers are Pacific Investment Management
Company ("PIMCO") and Western Asset Management Company ("WAMCO"). Each
Sub-Adviser selects investments for its portion of the Fund based on its own
investment style and strategy. PIMCO attempts to identify secular trends
affecting real and nominal interest rates and short term economic imbalances and
relies on value measures to guide sector and issue selection. PIMCO also
measures various types of risk by focusing on yield curve and duration
management. WAMCO applies a value-oriented approach to managing assets for the
Fund, with an emphasis on multiple strategies, including duration, term
structure and sector allocation. WAMCO implements its strategy through an
assessment of real interest rates, expected inflation rates and the relative
volatility of real yield to nominal yields.

The Sub-Advisers seek to achieve the Fund's objectives on a total return basis
and will not limit transactions to avoid tax consequences. The Fund's portfolio
turnover rate may be higher as a result. Higher portfolio turnover will result
in higher transaction costs and shareholders subject to tax may be required to
recognize more taxable gain than if the Fund was managed to limit its portfolio
turnover.

OTHER INVESTMENTS
------------------------------------------------------

The Fund also may invest in other securities, use other strategies and engage in
other investment practices, which are not principal investments and/or
strategies. These other investments and strategies, as well as those described
in this prospectus, are described in greater detail in the Fund's Statement of
Additional Information (SAI).

During unusual economic or market conditions, or for liquidity purposes, the
Fund may invest up to 100% of its assets in cash, repurchase agreements and
short-term obligations. When so invested, the Fund may not achieve its
investment objective.

PRINCIPAL RISKS
------------------------------------------------------

The value of an investment in the Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers, including
governments. These price movements, sometimes called volatility, may be larger
or smaller depending on the types of securities the Fund owns and the markets in
which they trade. Generally, the Fund's fixed income securities will decrease in
value if interest rates rise and vice versa. The prices of fixed income
securities also may fluctuate in response to changes in credit risk. Also,
prices of longer-term securities are generally more volatile, so the average
maturity of the Fund's portfolio affects risk.

The Investment Manager's allocation of Fund assets to the Sub-Advisers and the
Sub-Advisers' judgments about the markets, the economy and/or companies may not
anticipate actual market movements, economic conditions or company performance,
and may affect the Fund's return. In fact, you can lose money on your investment
in the Fund, just as you could with other investments. A Fund share is not a
bank deposit, and it is not insured or guaranteed by the FDIC or any other
government agency.

3
<PAGE> 4

RISKS OF HOLDING CERTAIN SECURITIES

U.S. Government Securities. U.S. Government securities are considered to be
those with the least credit risk, but U.S. Government securities are subject to
price movements due to changing interest rates. Obligations issued by some U.S.
Government agencies are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources, and are subject to slightly greater credit risks.

Inflation-Indexed Securities. The value of inflation-indexed bonds generally
will fluctuate in response to changes in real interest rates, which are in turn
tied to the relationship between nominal interest rates and the rate of
inflation. As a result, if nominal interest rates increased at a faster rate
than inflation, real interest rates might rise, leading to a decrease in value
of inflation-indexed bonds. In contrast, if inflation were to rise at a faster
rate than nominal interest rates, real interest rates might decline, leading to
an increase in value of inflation-indexed bonds.

Asset-Backed Securities. Asset-backed securities are fixed income securities
representing an interest in a pool of loans or receivables of an entity, such as
a bank or credit card company. Therefore, repayment depends largely on the cash
flows generated by the assets backing the securities. Prepayments on underlying
assets generally alter the cash flow from asset-backed securities and as a
result, the Fund may have to reinvest prepaid amounts in securities paying lower
interest rates. It may not be possible to predict with certainty the actual
maturity date or average life of an asset-backed security and, therefore, to
assess the volatility risk of the Fund.

Mortgage-Backed Securities. Mortgage-backed securities are fixed income
securities representing an interest in a pool of underlying mortgage loans.
Mortgage-backed securities are sensitive to changes in interest rates, but may
respond to these changes differently than other fixed income securities due to
the possibility of prepayment of the underlying mortgage loans. Declining
interest rates tend to encourage the prepayment of mortgage-backed securities.
As a result, the Fund may have to reinvest prepaid amounts in securities paying
lower interest rates. It may not be possible to determine in advance the actual
maturity date or average life of a mortgage-backed security and, therefore, to
assess the volatility risk of the Fund.

Corporate Securities. Corporate securities are fixed income securities issued by
private businesses. Corporate securities respond to economic developments,
especially changes in interest rates, as well as to perceptions of the
creditworthiness of individual issuers.

PRIOR PERFORMANCE INFORMATION

As of the date of this prospectus, the Fund had not yet commenced operations,
and did not have a performance history.

FUND FEES AND EXPENSES
------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES
(expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees*........ 0.35%
Distribution (12b-1) Fees........ None
Other Expenses**................. 0.20%

TOTAL ANNUAL FUND OPERATING
EXPENSES....................... 0.55%
Fee waivers and expense
reimbursements................. 0.10%

NET ANNUAL FUND OPERATING
EXPENSES....................... 0.45%***
---------------------------------------------
</TABLE>

* THE INVESTMENT ADVISORY FEES VARY WITH FUND PERFORMANCE. THE TOTAL ADVISORY
FEE PAYABLE BY THE FUND WILL BE 0.25% (25 BASIS POINTS) PER ANNUM OF AVERAGE
DAILY NET ASSETS UNDER MANAGEMENT IF THE RETURN ON THE FUND IS 50 BASIS
POINTS ABOVE THE LEHMAN U.S. TIPS INDEX FOR THE PRIOR 12 MONTHS ("FULCRUM
POINT"), AND WILL VARY UPWARDS OR DOWNWARDS BY AN AMOUNT EQUAL TO 20% OF ANY
PERFORMANCE ABOVE OR BELOW THE FULCRUM POINT. IN NO EVENT WILL THE FEE
EXCEED 35 BASIS POINTS OR DECLINE BELOW 15 BASIS POINTS.

** OTHER EXPENSES WERE ESTIMATED ASSUMING AVERAGE DAILY NET ASSETS OF THE FUND
OF $100 MILLION.

*** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP OTHER EXPENSES FROM EXCEEDING BY 10 BASIS POINTS OF AVERAGE
DAILY NET ASSETS. THIS FEE WAIVER AND EXPENSE REIMBURSEMENT AGREEMENT MAY BE
AMENDED OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF DIRECTORS. FOR
PURPOSES OF THIS TABLE, INVESTMENT ADVISORY FEES ARE ASSUMED TO BE 35 BASIS
POINTS.

4
<PAGE> 5

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<S> <C>
1 Year $ 46*
3 Years $144*
</TABLE>

------------------------------------------------------

* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (0.45%). EXPENSES
MAY VARY FROM 0.25% TO 0.45%.

5
<PAGE> 6

CIF SHORT DURATION FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

Current interest income with some price appreciation, each consistent with
liquidity and safety of principal

INVESTMENT FOCUS
------------------------------------------------------

A portfolio of U.S. Government securities and other high quality debt securities

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF Short Duration Fund invests at least 65% of the value of its total
assets, under normal market conditions, in a diversified portfolio of securities
issued or guaranteed by the U.S. Government and its agencies and
instrumentalities, obligations of U.S. and foreign commercial banks, corporate
debt securities, including commercial paper, and fully-collateralized repurchase
agreements with highly rated counterparties. The fixed income securities
acquired by the Fund may include mortgage-backed and asset-backed securities.
The Fund will invest only in fixed income securities rated at the time of
investment in one of the three highest rating categories by a major rating
agency, or determined by a Sub-Adviser to be of equivalent quality. The
benchmark for the Fund is the Merrill Lynch 3-Month U.S. Treasury Bill Index.

The Fund's investment strategies are designed to produce a total rate of return
that exceeds the total return on 90 day U.S. Treasury bills. The Fund seeks to
minimize fluctuations in net asset value by maintaining high credit quality
standards and employing a relatively short effective duration. Duration is a
measure of a security's price volatility or risk associated with changes in
interest rates. The Fund's effective duration generally will not exceed one (1)
year, and the maximum remaining maturity of any individual security will be five
and one-half (5 1/2) years, except for certain mortgage-related and asset-backed
securities.

The Investment Manager allocates the Fund's assets among selected Sub-Advisers,
who in turn manage the Fund's assets on a day-to-day basis, subject to oversight
by the Investment Manager. The initial Sub-Advisers are Wellington Management
Company, LLP ("Wellington Management") and Western Asset Management Company
("WAMCO"). Each Sub-Adviser selects investments for its portion of the Fund
based on its own investment style and strategy. Wellington Management's
investment philosophy is to maximize total return while limiting the level of
risk appropriate for the Fund by combining a top-down strategy which directs
portfolio structure including duration and sector weights, and a bottom-up
securities selection process. WAMCO applies a team approach to portfolio
management that revolves around their investment outlook, focusing on duration
weighting, term structure position, sector and issue selection. While duration
and yield curve structure decisions underlie WAMCO's investment process, the
company concentrates primarily on sector and issue selection for adding value.

The Sub-Advisers seek to achieve the Fund's objectives on a total return basis
and without regard to tax consequences. The Fund's portfolio turnover rate may
be higher as a result. Higher portfolio turnover will result in higher
transaction costs and shareholders subject to tax may be required to recognize
more taxable gain than if the Fund was managed to limit its portfolio turnover.

OTHER INVESTMENTS
------------------------------------------------------

The Fund also may invest in other securities, use other strategies and engage in
other investment practices, which are not principal investments and strategies.
These investments and strategies, as well as those described in this prospectus,
are described in greater detail in the Fund's Statement of Additional
Information (SAI).

During unusual economic or market conditions, or for temporary defensive or
liquidity purposes, the Fund may invest up to 100% of its assets in cash,
repurchase agreements and short-term obligations. When so invested, the Fund may
not achieve its investment objective.

PRINCIPAL RISKS
------------------------------------------------------

6
<PAGE> 7

interest rates rise and vice versa. The price of fixed income securities also
may fluctuate in response to changes in credit risk. Also, prices of longer-term
securities are generally more volatile, so the average maturity of the Fund's
portfolio affects risk.

The Investment Manager's allocation of Fund assets to the Sub-Advisers and the
Sub-Advisers' judgments about the markets, the economy and/or companies may not
anticipate actual market movements, economic conditions or company performance,
and these judgments may affect the Fund's return. In fact, you can lose money on
your investment in the Fund, just as you could with other investments. A Fund
share is not a bank deposit, and it is not insured or guaranteed by the FDIC or
any other government agency.

RISKS OF HOLDING CERTAIN SECURITIES

PRIOR PERFORMANCE INFORMATION

The CIF Short Duration Fund commenced operations on May 1, 2000. Since the Fund
does not have a full calendar year of performance, performance results have not
been provided.

FUND FEES AND EXPENSES
------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES (expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees.......... 0.19%
Distribution (12b-1) Fees......... None
Other Expenses*................... 0.30%
TOTAL ANNUAL FUND OPERATING
EXPENSES........................ 0.49%
Fee waivers and expense
reimbursements.................. 0.24%
NET ANNUAL FUND OPERATING
EXPENSES........................ 0.25%**
-------------------------------------------
</TABLE>

* OTHER EXPENSES ARE ESTIMATED ASSUMING THE AVERAGE DAILY NET ASSETS OF THE
FUND WILL BE $100 MILLION.

** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 0.25% OF AVERAGE
DAILY NET ASSETS PER YEAR. THIS FEE WAIVER AND EXPENSE REIMBURSEMENT
AGREEMENT MAY BE AMENDED OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF
DIRECTORS.

EXAMPLE

<TABLE>
<S> <C>
1 Year $26*
3 Years $80*
</TABLE>

------------------------------------------------------
* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (0.25%).

7
<PAGE> 8

CIF LOW DURATION BOND FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

Preservation of capital with higher total return than is generally obtainable
from money market instruments

INVESTMENT FOCUS
------------------------------------------------------

A diversified portfolio of investment grade bonds and other fixed income
securities with maturities between one and three years

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF Low Duration Bond Fund invests at least 65% of the value of its total
assets, under normal market conditions, in a diversified portfolio of dollar
denominated investment grade bonds, including obligations issued or guaranteed
by the U.S. Government or its agencies and instrumentalities, as well as
corporate, asset-backed and mortgage-backed securities. Investment grade
securities are those rated in one of the four highest categories at the time of
investment, or determined by a Sub-Adviser to be of equivalent quality. The Fund
also may invest up to 20% of its assets in other fixed income securities,
including non-dollar denominated securities and securities rated below
investment grade at the time of purchase. The benchmark for the Fund is the
Merrill Lynch 1-3 Year Treasury Index. The Fund will maintain an average
portfolio duration of between one and three years.

The Investment Manager allocates the Fund's assets among selected Sub-Advisers,
who in turn manage the assets on a day-to-day basis subject to over-sight by the
Investment Manager. The initial Sub-Advisers are Metropolitan West Asset
Management ("MetWest") and Seix Investment Advisors ("SEIX"). Each Sub-Adviser
selects investments for its portion of the Fund based on its own investment
style and strategy. MetWest invests opportunistically in all fixed income
sectors and adjusts portfolio duration based on its market views. SEIX manages
the Fund's assets using a duration neutral, sector rotation approach coupled
with bottom-up security selection. Each Sub-Adviser may use futures, options and
other fixed income derivatives as part of its investment strategy.

OTHER INVESTMENTS
------------------------------------------------------

The Fund also may invest in other securities, use other strategies and engage in
other investment practices, which are not principal investments and strategies.
These other investments and strategies, as well as those described in this
prospectus, are described in greater detail in the Fund's Statement of
Additional Information (SAI).

PRINCIPAL RISKS
------------------------------------------------------

The value of an investment in the Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers, including
governments. These price movements, sometimes called volatility, may be larger
or smaller depending on the types of securities the Fund owns and the markets in
which they trade. Generally, the Fund's fixed income securities will decrease in
value if interest rates rise and vice versa. The price of fixed income
securities also may fluctuate in response to changes in credit risk. Also,
prices of longer-term securities are generally more volatile, so the average
maturity of the Fund's portfolio affects risk.

8
<PAGE> 9

guaranteed by the FDIC or any other government agency.

RISKS OF HOLDING CERTAIN SECURITIES

Corporate Securities. Corporate securities are fixed income securities issued
by private businesses. Corporate securities respond to economic developments,
especially changes in interest rates, as well as to perceptions of the
creditworthiness of individual issuers.

Foreign Securities. Investing in foreign countries entails the risk that news
and events unique to a country or region will affect those markets and their
issuers. These same events will not necessarily have an effect on the U.S.
economy or similar issuers located in the United States. In addition, the Fund's
investments in foreign countries generally will be denominated in foreign
currencies. As a result, changes in the value of a country's currency compared
to the U.S. dollar may affect the value of the Fund's investments. These changes
may occur separately from and in response to events that do not otherwise affect
the value of the security in the issuer's home country.

Derivatives. Derivatives are instruments which derive their value from an
underlying security, financial asset or an index. One category of derivatives
("Derivative Instruments") are instruments such as futures contracts, options,
forward contracts, and swaps. Derivative Instruments are used to establish
market positions without transacting in the securities by which their value is
measured. Derivative Instruments often are used to adjust the risk
characteristics of a portfolio of securities investments. A second category of
derivatives ("Derivative Securities") are securities that carry rights to other
securities, such as, for example, a security convertible into some other
security. The primary risks of Derivative Instruments are that changes in the
market value of securities held by the Fund, and of derivatives relating to
those securities, may not be proportionate, there may not be a liquid market for
the Fund to sell a derivative which could result in difficulty closing the
position and certain derivatives can magnify the extent of losses incurred due
to changes in market value of the securities to which they relate. In addition,
some Derivative Instruments are subject to counterparty risk. See the SAI for
more about the risks of different types of derivatives.

PRIOR PERFORMANCE INFORMATION

As of the date of this prospectus, the Fund had not yet commenced operations,
and did not have a performance history.

9
<PAGE> 10

FUND FEES AND EXPENSES
------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES
(expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees.......... 0.30%
Distribution (12b-1) Fees......... None
Other Expenses*................... 0.20%

TOTAL ANNUAL FUND OPERATING
EXPENSES........................ 0.50%
Fee waivers and expense
reimbursements.................. 0.10%

NET ANNUAL FUND OPERATING
EXPENSES........................ 0.40%**
-------------------------------------------
</TABLE>

* OTHER EXPENSES ARE ESTIMATED ASSUMING AVERAGE DAILY NET ASSETS OF THE FUND OF
$100 MILLION.

** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 0.40% OF NET ASSETS
PER YEAR. THIS FEE WAIVER AND EXPENSE REIMBURSEMENT AGREEMENT MAY BE AMENDED
OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF DIRECTORS.

EXAMPLE

<TABLE>
<S> <C>
1 Year $ 41*
3 Years $128*
</TABLE>

------------------------------------------------------

* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (0.40%).

10
<PAGE> 11

CIF CORE PLUS BOND FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

High current income and price appreciation

INVESTMENT FOCUS
------------------------------------------------------

A diversified portfolio of investment grade bonds and other fixed income
securities

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF Core Plus Bond Fund invests at least 65% of the value of its total
assets, under normal market conditions, in investment grade bonds and other
fixed income securities in an attempt to outperform the broad U.S. bond market.
Investment grade securities are those rated in one of the four highest
categories at the time of investment, or determined by a Sub-Adviser to be of
equivalent quality. The Fund also may invest up to 10% of its assets in
securities rated below investment grade, but in one of the six highest rating
categories, and up to 20% of its assets in non-dollar denominated issuers. The
Sub-Advisers may invest in certain derivatives and may use certain techniques,
such as currency hedging in order to outperform the broad market. The benchmark
for the Fund is the Lehman Brothers Aggregate Bond Index. The Fund will maintain
an average portfolio duration of between three and six years.

The Fund seeks to achieve its investment objective by maintaining a core
portfolio of securities that is aligned with the composition and duration of the
Fund's benchmark index, which tracks the overall U.S. bond market. The
Sub-Advisers then seek to add value by investing a portion of the Fund's assets
in fixed income securities that are not represented in the benchmark and using
investment techniques designed to overweight or underweight the Fund's portfolio
relative to benchmark characteristics.

The Investment Manager allocates the Fund's assets among selected Sub-Advisers,
who in turn manage the Fund's assets on a day-to-day basis, subject to oversight
by the Investment Manager. The initial Sub-Advisers are Pacific Investments
Management Company ("PIMCO") and Western Asset Management Company ("WAMCO").
Each Sub-Adviser selects investments for its portion of the Fund based on its
own investment style and strategy. PIMCO utilizes a top-down portfolio
management strategy, based on its forecasts of secular and cyclical shifts in
the economy. In managing assets for the Fund, WAMCO employs a top-down sector
and duration management strategy, coupled with active security selection and
trading.

OTHER INVESTMENTS
------------------------------------------------------

The Fund also may invest in other securities, use other strategies and engage in
other investment practices, which are not principal investments and strategies.
These other investments and strategies, as well as those described in this
prospectus are described in greater detail in the Fund's Statement of Additional
Information (SAI).

PRINCIPAL RISKS
------------------------------------------------------

The value of an investment in the Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers, including
governments. These price movements, sometimes called volatility, may be larger
or smaller depending on the types of securities the Fund owns and the markets in
which they trade. Generally, the Fund's fixed income securities will decrease in
value if interest rates rise and vice versa. The price of fixed income
securities also may fluctuate in response to changes in credit risk. Also,
prices of longer-term securities are generally more volatile, so the average
duration of the Fund's investment portfolio affects risk.

The Fund is permitted to invest in fixed income securities that are not included
in the Fund's benchmark index. As a result, the Fund's duration,

11
<PAGE> 12

credit quality and price volatility may deviate from that of the index and there
is an increased risk that the Fund may underperform the benchmark index.

The Investment Manager's allocation of Fund assets to the Sub-Advisers and the
Sub-Advisers' judgments about the markets, the economy and/or companies may not
anticipate actual market movements, economic conditions or company performance,
and may affect the Fund's return. The Sub-Advisers' use of derivatives also may
increase the possibility that the Fund will underperform the broad U.S. bond
market. In fact, you can lose money on your investment in the Fund, just as you
could with other investments. A Fund share is not a bank deposit, and it is not
insured or guaranteed by the FDIC or any other government agency.

RISKS OF HOLDING CERTAIN SECURITIES

Corporate Securities. Corporate securities are fixed income securities issued
by private businesses. Corporate securities respond to economic developments,
especially changes in interest rates, as well as to perceptions of the
creditworthiness of individual issuers.

Foreign Securities. Investing in foreign countries entails the risk that news
and events unique to a country or region will affect those markets and their
issuers. These same events will not necessarily have an effect on the U.S.
economy or similar issuers located in the United States. In addition, the Fund's
investments in foreign countries generally will be denominated in foreign
currencies. As a result, changes in the value of a country's currency compared
in the U.S. dollar may affect the value of the Fund's investments. These changes
may occur separately from and in response to events that do not otherwise affect
the value of the security in the issuer's home country.

Derivative Securities. Derivative Securities are securities which derive their
value from an underlying security, financial asset or an index. One category of
derivatives ("Derivative Instruments") are instruments such as futures
contracts, options, forward contracts, and swaps. Derivative Instruments are
used to establish market positions without transacting in the securities by
which their value is measured. Derivative Instruments often are used to adjust
the risk characteristics of a portfolio of securities investments. A second
category of derivatives ("Derivative Securities") are securities that carry
rights to other securities, such as, for example, a security convertible into
some other security. The primary risks of Derivative Instruments are that
changes in the market value of securities held by the Fund, and of derivatives
relating to those securities, may not be proportionate, there may not be a
liquid market for the Fund to sell a derivative which could result in difficulty
closing the position and certain derivatives can magnify the extent of losses
incurred due to changes in market value of the securities to which they relate.
In addition, some Derivative Instruments are subject to

12
<PAGE> 13

counterparty risk. See the SAI for more about the risks of derivatives.

PRIOR PERFORMANCE INFORMATION

As of the date of this prospectus, the Fund had not yet commenced operations,
and did not have a performance history.

FUND FEES AND EXPENSES
------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES
(expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees.......... 0.35%
Distribution (12b-1) Fees......... None
Other Expenses*................... 0.20%

TOTAL ANNUAL FUND OPERATING
EXPENSES........................ 0.55%
Fee waivers and expense
reimbursements.................. 0.10%

NET ANNUAL FUND OPERATING
EXPENSES........................ 0.45%**
-------------------------------------------
</TABLE>

* OTHER EXPENSES ARE ESTIMATED ASSUMING THE AVERAGE DAILY NET ASSETS OF THE
FUND WILL BE $100 MILLION.

** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 0.45% OF AVERAGE
DAILY NET ASSETS PER YEAR. THIS FEE WAIVER AND EXPENSE REIMBURSEMENT
AGREEMENT MAY BE AMENDED OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF
DIRECTORS.

EXAMPLE

<TABLE>
<S> <C>
1 Year $ 46*
3 Years $144*
</TABLE>

------------------------------------------------------

* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (0.45%).

13
<PAGE> 14

INVESTMENT MANAGER
------------------------------------------------------

COMMONFUND ASSET MANAGEMENT COMPANY, INC. is an indirect, wholly-owned
subsidiary of The Common Fund for Nonprofit Organizations ("Commonfund").
Employees of the Investment Manager also are responsible for Commonfund's
investment program, which is comprised of more than 40 funds with more than $22
billion in assets and is conducted in a "manager of managers" format. Each Fund
will pay the Investment Manager an annual fee shown as a percentage of average
net assets for its services, as follows:

<TABLE>
<S> <C>
CIF Inflation-Indexed Bond
Fund* 0.15-0.35%
CIF Short Duration Fund 0.19%
CIF Low Duration Bond Fund 0.30%
CIF Core Plus Bond Fund 0.35%
</TABLE>

* The Investment Advisory Fees vary with Fund performance. The total advisory
fee payable by the Fund will be 0.25% (25 basis points) per annum of assets
under management if the return on the Fund is 50 basis points above the Lehman
U.S. TIPS Index for the prior 12 months ("fulcrum point"), and will vary
upwards or downwards by an amount equal to 20% of any performance above or
below the fulcrum point. In no event will the fee exceed 35 basis points or
decline below 15 basis points.

The Investment Manager acts as a "manager of managers" for the Fund, and
supervises adherence by the Sub-Advisers with each Fund's investment policies
and guidelines. The Investment Manager can also recommend the appointment of
additional or replacement Sub-Advisers to the Company's Board of Directors. The
Funds and the Investment Manager have applied for exemptive relief from the
Securities and Exchange Commission (the "SEC") to permit the Investment Manager
and the Company to add or terminate Sub-Advisers without shareholder approval.

The Investment Manager employs a team to supervise the Sub-Advisers, which
includes the following members:

Todd E. Petzel, President and Chief Investment Officer. Mr. Petzel assumed the
position of President and Chief Investment Officer of the Investment Manager as
of August 1999. From January 1996 until July 1999, he served as Executive Vice
President and Chief Investment Officer for Commonfund. Prior to that, Mr. Petzel
was Executive Vice President, Business Development of the Chicago Mercantile
Exchange ("CME"), and prior to 1994, Senior Vice President, Research and Chief
Economist of the CME. Mr. Petzel received his A.B., A.M., and Ph.D. degrees from
the University of Chicago.

MaryEllen Beaudreault, Senior Vice President, Head of the Fixed Income Team. Ms.
Beaudreault assumed the position of Senior Vice President, Head of the Fixed
Income Team as of August 1999. From July 1993 until July 1999 she served as
Senior Vice President, Head of the Fixed Income Team for Commonfund. She is
responsible for the oversight of all fixed income funds. Ms. Beaudreault has
over 15 years of professional experience. Ms. Beaudreault received her B.S. from
Central Connecticut State University.

Sarah E. Clark, Managing Director. As a member of the Fixed Income Team, Ms.
Clark helps manage the team and is a generalist for all the products. Prior to
joining Commonfund in 2000, Ms. Clark was a Vice President at Schroder
Investment Management North America, where she was a member of the fixed income
Investment Strategy Group. She has over 16 years investment experience. Ms.
Clark received her A.B. from Lafayette College.

INVESTMENT SUB-ADVISERS AND PORTFOLIO MANAGERS
------------------------------------------------------

CIF INFLATION-INDEXED BOND FUND

- Pacific Investment Management Company ("PIMCO") serves as Sub-Adviser to the
CIF Inflation-Indexed Bond Fund. PIMCO, located at 840 Newport Beach, Newport
Beach, CA 92658, provides investment advisory services to individuals,
investment companies and other institutions. Established in 1980, PIMCO has
$207.3 billion in assets under management as of September 30, 2000.

John Brynjolfsson, CFA, serves as portfolio manager to the CIF
Inflation-Indexed Bond Fund. Mr. Brynjolfsson is Executive Vice President of
PIMCO and joined PIMCO in 1989. He has 14 years of investment experience.

- Western Asset Management Company ("WAMCO") serves as Sub-Adviser to the CIF
Inflation-Indexed Bond Fund. WAMCO, located at 117 East Colorado Blvd.,
Pasadena, CA 91105 provides investment advisory services to corporations,
public funds and other institutional inves-

14
<PAGE> 15

tors. Established in 1971, WAMCO has $71.1 billion in assets under management
as of September 30, 2000.

Alan R. McClymonds serves as portfolio manager to the CIF Inflation-Indexed
Bond Fund. Mr. McClymonds joined WAMCO in 1999. Prior to joining WAMCO, Mr.
McClymonds was a Senior Vice President of Proprietary Trading at Nationsbank
from 1996-1999, and a Director of Trading at CS First Boston from 1994-1996.
Mr. McClymonds has 17 years of fixed income experience.

CIF SHORT DURATION FUND

- Wellington Management Company, LLP ("Wellington Management") serves as
sub-adviser to the CIF Short Duration Fund. Wellington Management, located at
75 State Street, Boston, MA 02109, provides investment advisory services to
individuals, investment companies, and other institutions. Established in
1928, Wellington Management has $266.8 billion in assets under management as
of September 30, 2000.

John C. Keogh and Timothy E. Smith serve as portfolio managers to the CIF
Short Duration Fund. Mr. Keogh is a Partner and Senior Vice President of
Wellington Management, and has been with the firm since 1983. He has 21 years
of investment experience. Mr. Smith is a Vice President of Wellington
Management and has been with the firm since 1992. He has 15 years of
investment experience.

- Western Asset Management Company ("WAMCO") serves as Sub-Adviser to the CIF
Short Duration Fund. Information about WAMCO is included under the CIF
Inflation-Indexed Bond Fund listed above.

Stephen A. Walsh and Carl E. Eichstaedt serve as portfolio managers to the CIF
Short Duration Fund. Mr. Walsh, is a Managing Director and has been with WAMCO
since 1991. He has 19 years of professional experience. Mr. Eichstaedt has
been with WAMCO since 1994. He has 14 years of investment experience.

CIF LOW DURATION BOND FUND

- Seix Investment Advisors ("SEIX") serves as Sub-Adviser to the CIF Low
Duration Bond Fund. SEIX, located at 300 Tice Boulevard, Woodcliff Lake, NJ
07675, provides investment advisory services to corporations, public funds and
other institutional investors. Established in 1992, SEIX has $7.23 billion in
assets under management as of September 30, 2000.

An investment team provides investment advice to the CIF Low Duration Bond
Fund.

- Metropolitan West Asset Management ("MetWest") serves as Sub-Adviser to the
CIF Low Duration Bond Fund. MetWest, located at 11766 Wishire Blvd., Los
Angeles, CA 90025, provides investment advisory services to individual,
investment companies and other institutions. Established in 1996, MetWest has
$9.23 billion in assets under management as of September 30, 2000.

Tad Rivelle, CIO, serves as portfolio manager to the CIF Low Duration Bond
Fund. Prior to founding MetWest in 1996, he was a Principal and co-director of
fixed income at Hotchkis and Wiley. Mr. Rivelle has 15 years of investment
experience.

CIF CORE PLUS BOND FUND

- Pacific Investment Management Company ("PIMCO") serves as Sub-Adviser to the
CIF Core Plus Bond Fund. Information about PIMCO is included under the CIF
Inflation-Indexed Bond Fund listed above.

William Gross serves as portfolio manager to the CIF Core Plus Bond Fund. He
is the Founder and Managing Director of PIMCO and has been associated with the
firm for 29 years.

- Western Asset Management Company ("WAMCO") serves as Sub-Adviser to the CIF
Core Plus Bond Fund. Information about WAMCO is included under the CIF
Inflation-Indexed Bond Fund listed above.

S. Kenneth Leech, CIO serves as portfolio manager to the CIF Core Plus Bond
Fund. Mr. Leech has 23 years of investment experience, including 10 years with
WAMCO. Prior to joining WAMCO, he was a portfolio manager with Greenwich
Capital Markets and the First Boston Corporation.

15
<PAGE> 16

PRIOR PERFORMANCE OF SUB-ADVISERS

The following tables present composite investment returns of all relevant
discretionary accounts and investment companies managed by each Sub-Adviser that
have investment objectives, policies and strategies that are substantially
similar to the Funds' in all material respects. The Sub-Advisers have provided
this information and have informed the Funds that it is calculated using a
methodology that is consistent with AIMR Performance Presentation Standards.
This table does not indicate how a Fund may perform in the future. The extent to
which the performance of a particular Sub-Adviser affects a Fund's performance
will be limited to the portion of the Fund's assets allocated to that
Sub-Adviser by the Investment Manager.

Performance results below reflect the deduction of net annual fund operating
expenses after the Investment Manager's fee waivers.

To the extent that these accounts are not registered investment companies, they
are not subject to certain investment limitations, diversification requirements
and other restrictions imposed by the Investment Company Act of 1940 and the
Internal Revenue Code which, if applicable, may have adversely affected
performance results.

CIF Inflation-Indexed Bond Fund

Neither Sub-Adviser has a performance history for accounts managed in accordance
with investment objectives, policies and strategies that are substantially
similar to the Fund's in all material respects.

CIF Short Duration Fund

Historical Performance for Periods ended September 30, 2000

Average Annual Total Return

<TABLE>
<CAPTION>
Past Past Past Past
one three five ten
year years years years
<S> <C> <C> <C> <C>
Wellington Management 6.20% 5.62% N/A N/A
WAMCO 6.02% 5.56% 5.48% 5.13%
Merrill Lynch 90 Day
U.S. Treasury Bill
Index 5.79% 5.28% 5.35% 5.11%
</TABLE>

CIF Low Duration Bond Fund

Historical Performance for Periods Ended September 30, 2000

Average Annual Total Return

<TABLE>
<CAPTION>
Past Past Past Past
one three five ten
year years years years
<S> <C> <C> <C> <C>
Seix 6.39% 5.59% 5.94% N/A
MetWest 6.40% 6.32% N/A N/A
Merrill Lynch 1-3 Year
Treasury Index 5.79% 5.64% 5.89% 6.48%
</TABLE>

CIF Core Plus Bond Fund

Historical Performance for Periods Ended September 30, 2000

Average Annual Total Return

<TABLE>
<CAPTION>
Past Past Past Past
one three five ten
year years years years
<S> <C> <C> <C> <C>
PIMCO -0.74% 5.99% 8.17% 8.36%
WAMCO 7.19% 5.96% 6.86% 8.89%
Lehman Brothers
Aggregate Bond Index 6.99% 5.92% 6.47% 8.04%
</TABLE>

16
<PAGE> 17

INVESTING IN THE COMMONFUND INSTITUTIONAL FUNDS -- A SUMMARY:
---------------------------------------------------------

In order to open a new account, you must complete and mail the New Account
Application that you receive with this prospectus to:

Commonfund Institutional Funds
15 Old Danbury Road
P.O. Box 812
Wilton, CT 06897-0812

The minimum initial investment for each Fund is $1,000,000 for institutions
(except for the CIF Short Duration Fund, which is $100,000) and $1,000 for
Eligible Individuals. The minimum subsequent investment is $1,000, except that
no minimum applies to reinvestments from dividends and distributions. The
minimum initial investment may be waived by the Investment Manager.
---------------------------------------------------------
Once you are a shareholder of the Commonfund Institutional Funds you can do the
following:

* Via Internet: Shareholders can request a transaction by logging on to
www.commonfund.org.

* Purchase or redeem Fund shares by phone:

Call 1-888-TCF-FUND to place and trade for the CIF Inflation-Indexed Bond,
CIF Low Duration Bond and CIF Core Plus Bond Funds or 1-888-404-1454 for the
CIF Short Duration Fund.

* Purchase Fund shares by wiring federal funds or by electronically
transferring funds through ACH to:

For the CIF Inflation-Indexed Bond, CIF Low Duration Bond and CIF Core Plus
Bond Funds:

Investors Bank & Trust Company

ABA #011001438

Account #020103345

Further Credit: Fund name, shareholder name and shareholder account number
must be specified.

For the CIF Short Duration Fund:

Bancorp
ABA #031101114
Account #0011001338

Further Credit: TA2 Bancorp, the Fund name, shareholder name and shareholder
account number must be specified.

PURCHASING AND REDEEMING COMMONFUND INSTITUTIONAL FUNDS SHARES
------------------------------------------------------

This section tells you how to purchase and redeem shares of the Funds.

PURCHASING SHARES

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares of a Fund on any day that the New York Stock Exchange
("NYSE") and the Federal Reserve System are both open for business (a "Business
Day").

To open an account:

Please send your completed New Account Application to Commonfund
Institutional Funds, 15 Old Danbury Rd., P.O. Box 812, Wilton, CT
06897-0812. All investments by institutions must be made by wire or ACH.

Please call the Funds to let us know that you intend to make an investment.
You will need to instruct your bank to wire federal funds or to
electronically transfer funds through ACH to: Investors Bank & Trust
Company; ABA #011001438; Account #020103345 for the CIF Inflation-Indexed
Bond, CIF Low Duration Bond and CIF Core Plus Bond Funds or Bancorp, ABA
#031101114; Account #0011001338 for the CIF Short Duration Fund; Further
Credit: The Fund name, shareholder name and shareholder account number must
be specified.

HOW ARE FUND SHARE PRICES CALCULATED?

The price per share (the offering price) will be the net asset value ("NAV") per
share next determined after a Fund receives your purchase order in good order
(defined below). Each Fund's NAV is calculated once each Business Day as of the
regularly scheduled close of normal trading on the NYSE (normally, 4:00 p.m.
Eastern time).

NET ASSET VALUE

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund. In calculating NAV, a Fund generally values its portfolio at
market price. If market prices are unavailable or the Investment Manager thinks
that they are unreliable, fair value prices may be determined in good faith
using methods approved by the Board of Directors. The Funds may hold portfolio
securities that are listed on foreign exchanges. These securities

17
<PAGE> 18

may trade on weekends or other days when the Funds do not calculate NAV. As a
result, the value of these investments may change on days when you cannot
purchase or sell shares.

ACCEPTANCE OF SUBSCRIPTIONS

In order for your purchase to be processed on the trade date, your order must be
received in good order prior to the time the Fund determines its NAV. To be in
good order, a Fund must receive funds by 3:00 p.m. Eastern time. A Fund may
reject any purchase order if it is determined that accepting the order would not
be in the best interests of the Fund or its shareholders.

PURCHASING ADDITIONAL SHARES

Current shareholders are eligible to purchase shares by phone by calling
1-888-TCF-FUND for the CIF Inflation-Indexed Bond, CIF Low Duration Bond and CIF
Core Plus Bond Funds or 1-888-404-1454 for the CIF Short Duration Fund if they
have requested that privilege by checking the appropriate box on the New Account
Application.

PURCHASES BY ELIGIBLE INDIVIDUALS

Eligible Individuals may purchase shares by mail at the address of Commonfund
Institutional Funds. The purchase price may be tendered by personal check. We do
not accept third party checks or cash.

TELEPHONE TRANSACTIONS

Purchasing or redeeming Fund shares over the telephone is extremely convenient,
but not without risk. Although we have certain safeguards and procedures to
confirm the identity of callers and the authenticity of instructions, we are not
responsible for any losses or costs incurred by following telephone instructions
we reasonably believe to be genuine. If you or your financial institution
transact with us over the telephone, you will generally bear the risk of any
loss.

REDEEMING SHARES

You may redeem your shares on any Business Day by contacting us directly by mail
or telephone. The redemption price of each share will be the NAV next determined
after a Fund receives your request.

In the case of institutions and Eligible Individuals, payments in redemption
will be made by wire transfer to the account designated in your New Account
Application or another account that has properly been designated with a
signature guarantee.

SIGNATURE GUARANTEES

A signature guarantee is a widely accepted way to protect shareholders by
verifying signatures. The signature(s) must be guaranteed by an acceptable
financial institution such as a national or state bank, a trust company, a
federal savings and loan association, a credit union or a broker-dealer that is
a member of a national securities exchange. Notarization is not acceptable.
Financial institutions which participate in one of the medallion signature
programs must use the specific "Medallion Guaranteed" stamp.

METHODS FOR REDEEMING SHARES

* Via Internet -- Shareholders can request a transaction by logging on to
www.commonfund.org.

* By Mail -- If you wish to redeem shares of a Fund by mail, you should send us
a letter with your name, Fund and account number and the amount of your
request. All letters must be signed by the owner(s) of the account. In
certain circumstances, additional documentation may be required. You may
obtain additional details by phoning 1-888-TCF-FUND for the CIF Inflation-
Indexed Bond, CIF Low Duration Bond and CIF Core Plus Bond Funds or
1-888-404-1454 for the CIF Short Duration Fund.

* By Phone -- When filling out your New Account Application, you are given the
opportunity to establish telephone redemption privileges.

* Systematic Withdrawal Plan -- Under the plan you may arrange monthly,
quarterly, semi-annual or annual automatic withdrawals.

REDEMPTIONS IN KIND -- The Funds generally pay redemption proceeds in cash.
However, under unusual conditions that make the payment of cash unwise (and for
the protection of a Fund's remaining shareholders), a Fund might pay all or part
of your redemption proceeds in liquid securities with a market value equal to
the redemption price (redemption in kind). In the highly unlikely event that
your shares are redeemed in kind, you will have to pay brokerage costs to sell
the securities distributed to you.

SUSPENSION OF YOUR RIGHT TO REDEEM SHARES -- A Fund may suspend your right to
redeem your shares if the NYSE restricts trading, the SEC declares an

18
<PAGE> 19

emergency or for such other periods as the SEC may by order permit.

INVOLUNTARY SALES OF YOUR SHARES -- If your account balance drops below the
required minimum of $1,000,000 for institutions ($100,000 in the CIF Short
Duration Fund), or $1,000 for Eligible Individuals as a result of shareholder
redemptions, a Fund may redeem your shares. You will always be given at least 60
days' written notice to give you time to add to your account and avoid
redemption of your shares.

RECEIVING YOUR MONEY

Normally, a Fund will send your sale proceeds the next Business Day after it
receives your request. In unusual circumstances, it may take up to seven days.
Proceeds will be wired to your properly designated account at a financial
institution.

DISTRIBUTION OF FUND SHARES
------------------------------------------------------

Commonfund Securities, Inc. is the distributor of the Funds and receives no
compensation from the Funds for that service.

DIVIDENDS, DISTRIBUTIONS AND TAXES
------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

The Funds declare and pay dividends monthly. The Funds make distributions of
capital gains, if any, at least annually.

Shareholders will receive dividends and distributions in the form of additional
shares. Dividends generally are not paid in cash.

TAXES

Each Fund is managed without regard to tax consequences to shareholders.
Shareholders seeking to finance tax obligations may need to redeem shares.

Each Fund will distribute substantially all of its net investment income and
realized capital gains, if any. Each Fund expects that its distributions will
primarily consist of ordinary income. The dividends and distributions you
receive may be subject to federal, state and local taxation, depending upon your
tax situation. This is true whether or not such dividends or distributions are
received in additional shares of a Fund. Capital gains distributions may be
taxable at different rates depending on the length of time a Fund holds its
portfolio securities. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.

This summary is based on current tax laws, which may change.

MORE INFORMATION ABOUT TAXES IS IN THE SAI.

19
<PAGE> 20

COMMONFUND
INSTITUTIONAL FUNDS

INVESTMENT MANAGER

Commonfund Asset Management Company, Inc.

DISTRIBUTOR

Commonfund Securities, Inc.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103

More information about Commonfund Institutional Funds is available without
charge through the following:

STATEMENT OF ADDITIONAL INFORMATION ("SAI")
------------------------------------------------------

The SAI dated December 18, 2000, includes more detailed information about
Commonfund Institutional Funds. The SAI is on file with the SEC and is
incorporated by reference into this prospectus. This means that the SAI, for
legal purposes, is a part of this prospectus.

TO OBTAIN MORE INFORMATION ABOUT THE FUNDS:

BY TELEPHONE: Call 1-888-TCF-FUND for the CIF Inflation-Indexed Bond, CIF Low
Duration Bond and CIF Core Plus Bond Funds or 1-888-404-1454 for the CIF Short
Duration Fund

BY MAIL: Write to
Commonfund Institutional Funds
15 Old Danbury Road
P.O. Box 812
Wilton, CT 06897-0812

BY INTERNET: http://www.commonfund.org

FROM THE SEC: You can also obtain the SAI or the Annual or Semi-Annual Reports,
as well as other information about Commonfund Institutional Funds, from the
EDGAR Database on the SEC's website ("http://www.sec.gov"). You may review and
copy documents at the SEC Public Reference Room in Washington, DC (for
information on the operation of the Public Reference Room, call 202-942-8090).
You may request documents by mail from the SEC, upon payment of a duplicating
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-0102. You may also obtain this information, upon
payment of a duplicating fee, by e-mailing the SEC at the following address:
[email protected].

The Company's Investment Company Act registration number is 811-9555.
<PAGE> 21

COMMONFUND
INSTITUTIONAL FUNDS

PROSPECTUS
December 18, 2000

[commonfund LOGO]

------------------------------------------------------------

CIF CORE EQUITY FUND
CIF SMALL CAP GROWTH FUND
CIF SMALL CAP VALUE FUND
CIF INTERNATIONAL EQUITY FUND

INVESTMENT MANAGER
Commonfund Asset Management Company, Inc.

DISTRIBUTOR
Commonfund Securities, Inc.

The Securities and Exchange Commission has not approved or
disapproved the Funds' shares or determined whether this
prospectus is accurate or complete. It is a crime for anyone
to tell you otherwise.

<PAGE> 22

COMMONFUND INSTITUTIONAL FUNDS
--------------------------------------------------------------------------------

HOW TO READ THIS PROSPECTUS
--------------------------------------------------------------------------------

The Company offers a number of separate investment portfolios (each a "Fund"
and, collectively, the "Funds"). Each Fund has individual investment goals and
strategies. This prospectus gives you important information about the CIF Core
Equity, CIF Small Cap Growth, CIF Small Cap Value and CIF International Equity
Funds that you should know before investing. This prospectus has been arranged
into different sections so that you can easily review this important
information. Please read this prospectus and keep it for future reference.

THE EQUITY FUNDS
--------------------------------------------------------------------------------

The Equity Funds invest in a portfolio of common stocks and other equity
securities of U.S. and foreign issuers. Investments in equity securities are
subject to market risks, such as the risk that stock prices will fall over short
or extended periods of time. Historically, the equity markets have moved in
cycles. In addition, investment in equity securities is subject to company
specific risk. Individual portfolio companies may report poor results or be
negatively affected by industry or economic trends and developments, and the
prices of securities issued by such companies may suffer a decline in response.
Investments in securities in foreign countries may be more volatile than
investments in U.S. companies since events unique to a country or region will
affect those markets and their issuers. As a result of changes in the prices of
a Fund's portfolio securities, the value of shares in a Fund may fluctuate
drastically from day-to-day over a particular period. Equity funds may
underperform funds that invest primarily in other asset classes, such as fixed
income funds.

CIF Core Equity Fund......................................................... 3

CIF Small Cap Growth Fund.................................................... 6

CIF Small Cap Value Fund..................................................... 9

CIF International Equity Fund............................................... 11

Portfolio Management......................................................... 14

Purchasing and Redeeming Shares.............................................. 20

Dividends, Distributions and Taxes........................................... 22

To obtain more information about the Company please refer to the Back Cover of
the Prospectus.

2
<PAGE> 23

CIF CORE EQUITY FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

Long-term capital appreciation

INVESTMENT FOCUS
------------------------------------------------------

A portfolio of common stocks of large and medium capitalization U.S. companies

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF Core Equity Fund invests at least 65% of the value of its total assets,
under normal market conditions, in a diversified portfolio of common stocks and
securities convertible into common stocks of large and medium capitalization
U.S. companies. Generally, these issuers will have a market capitalization in
the range of the companies in the S&P 500 Composite Index which is the benchmark
index for the Fund. The Fund is designed to add value over its benchmark
primarily through stock selection, rather than sector or style variance, with
volatility similar to that of its benchmark index.

The Fund seeks to achieve its investment objective through the construction of
"core" and "satellite" portfolios that emphasize stock selection rather than
sector or style variance. The "core" portfolio, which ordinarily will comprise
approximately 40% of the Fund, utilizes a single Sub-Adviser to track the S&P
500 Composite Index in terms of sector, industry and capitalization, while
adding value through stock selection. The remainder of the Fund is comprised of
several "satellite" portfolios whose Sub-Advisers apply specific investment
strategies, such as growth or value, which may deviate from the benchmark in
terms of volatility and sector selection. The Fund may use derivative
instruments for both hedging and non-hedging purposes.

The Investment Manager allocates the Fund's assets among selected Sub-Advisers,
who in turn manage the assets on a day-to-day basis, subject to oversight by the
Investment Manager. The initial Sub-Advisers are Advanced Investment Technology,
Inc. ("AIT"), Iridian Asset Management LLC ("Iridian"), John A. Levin & Co.,
Inc. ("John A. Levin"), Marsico Capital Management LLC ("Marsico Capital") and
State Street Global Advisors, Inc. ("SSgA"). Each Sub-Adviser selects
investments for its portion of the Fund based on its own investment style and
strategy. AIT, subject to the supervision of SSgA manages a portion of the Fund
that focuses on very large capitalization companies included in the benchmark
index. Iridian employs a value strategy in selecting stocks of medium
capitalization companies based on in-depth company analysis. John A. Levin
selects stocks of large capitalization companies based on fundamental analysis
with attention to defensive factors designed to provide protection in value
driven environments. Marsico Capital employs a growth strategy designed to
succeed in growth driven environments. SSgA manages the "core" portfolio in a
style that emphasizes individual stock selection, but is neutral to the Fund's
benchmark in style, sector and capitalization. For liquidity purposes, SSgA
manages a portion of the Fund in an indexing strategy.

OTHER INVESTMENTS
------------------------------------------------------

PRINCIPAL RISKS
------------------------------------------------------

3
<PAGE> 24

sometimes called volatility, may be larger or smaller depending on the types of
securities the Fund owns and the markets in which they trade. Generally, the
prices of equity securities are more volatile than those of fixed income
securities.

In addition, at times the Fund's market sector, securities of large and medium
capitalization U.S. companies, may underperform relative to other sectors.

RISKS OF HOLDING CERTAIN SECURITIES

Equity Securities. Equity securities represent ownership interests in a company
or corporation, and include common stock, preferred stock, and warrants and
other rights to acquire such instruments. Investments in equity securities are
subject to market risks that may cause their prices to fluctuate over time. The
value of convertible equity securities is also affected by prevailing interest
rates, the credit quantity of the issuer and any call provisions. Fluctuations
in the value of equity securities will not necessarily affect cash income
derived from these securities, but will affect the Fund's net asset value.

4
<PAGE> 25

PRIOR PERFORMANCE INFORMATION

As of the date of this prospectus, the Fund had not yet commenced operations,
and did not have a performance history.

FUND FEES AND EXPENSES
------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES (expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees.......... 0.45%
Distribution (12b-1) Fees......... None
Other Expenses*................... 0.20%
TOTAL ANNUAL FUND OPERATING
EXPENSES........................ 0.65%
Fee waivers and expense
reimbursements.................. 0.10%
NET ANNUAL FUND OPERATING
EXPENSES........................ 0.55%**
-------------------------------------------
</TABLE>

* OTHER EXPENSES WERE ESTIMATED ASSUMING AVERAGE DAILY NET ASSETS OF THE FUND
OF $100 MILLION.

** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 0.55% OF AVERAGE
DAILY NET ASSETS PER YEAR. THIS FEE WAIVER AND EXPENSE REIMBURSEMENT
AGREEMENT MAY BE AMENDED OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF
DIRECTORS.

EXAMPLE

<TABLE>
<S> <C>
1 Year $ 56*
3 Years $176*
</TABLE>

------------------------------------------------------

* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (0.55%).

5
<PAGE> 26

CIF SMALL CAP GROWTH FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

Long-term capital appreciation

INVESTMENT FOCUS
------------------------------------------------------

A portfolio of growth oriented common stocks of smaller capitalization U.S.
companies

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF Small Cap Growth Fund invests at least 65% of the value of its total
assets, under normal conditions, in growth oriented equity securities of small
U.S. companies. Generally, these issuers will have a market capitalization in
the range of the companies in the Russell 2000 Growth Index which is the
benchmark index for the Fund. The Fund is designed to add value primarily
through stock selection, rather than sector or style variance, with volatility
similar to that of its benchmark index.

The Fund seeks to achieve its objective by emphasizing investment in companies
that the Sub-Advisers believe have strong earnings momentum, dominant market
share in growing industries, and positive changes in analysts' expectations or
better than anticipated earnings reports. The Fund is constructed around three
principal strategies: aggressive, core and defensive. The aggressive strategy
generally is more volatile and provides for greater sector variances than the
Russell 2000 Growth Index. The defensive strategy is designed to have lower
volatility and add value primarily during down markets. The core strategy
generally will have risk and portfolio characteristics similar to the Russell
2000 Growth Index. The Fund may use derivative instruments for both hedging and
non-hedging purposes.

The Investment Manager allocates the Fund's assets among Sub-Advisers, who in
turn manage the Fund's assets on a day-to-day basis, subject to oversight by the
Investment Manager. The initial Sub-Advisers are Artisan Partners, L.P.
("Artisan"), CapitalWorks Investment Partners ("CapitalWorks Investment"),
Constitution Research & Management, Inc. ("Constitution Research"), GlobeFlex
Capital, L.P. ("GlobeFlex Capital"), Veredus Asset Management, LLC ("Veredus")
and State Street Global Advisors, Inc. ("SSgA"). Each Sub-Adviser selects
investments for its portion of the Fund based on its own investment style and
strategy. Artisan manages the defensive portion of the Fund to provide downside
protection in value driven environments. CapitalWorks Investment manages the
aggressive portion of the Fund. Constitution Research and Veredus manage
combination aggressive-core portions of the Fund. For liquidity purposes, SSgA
manages its portion of the Fund in a small company growth indexing strategy.

OTHER INVESTMENTS
------------------------------------------------------

The Fund also may invest in other securities, use other strategies and/or engage
in other investment practices, which are not principal investments and
strategies. These other investments and strategies, as well as those described
in this prospectus, are described in greater detail in the Fund's Statement of
Additional Information (SAI).

PRINCIPAL RISKS
------------------------------------------------------

The value of an investment in the Fund is based on the market value of the
securities the Fund holds. These prices change daily in response to a number of
different factors. In particular, prices of equity securities will respond to
events that affect entire financial markets or industries (changes in inflation
or consumer demand, for example) and to events that affect particular issues
(news about the success or failure of a new product, for example). These price
movements, sometimes called volatility, may be larger or smaller depending on
the types of securities the Fund owns and the markets in which they trade.
Generally, the prices of equity securities are more volatile than those of fixed
income securities.

6
<PAGE> 27

The risk of investing in equity securities is intensified in the case of the
small companies in which the Fund will invest. Market prices for such companies'
equity securities tend to be more volatile than those of larger, more
established companies and such companies may themselves be more vulnerable to
economic or company specific problems. Because of high valuations placed on
companies with growth prospects within certain sectors, such as technology,
biotechnology and internet, the Fund may own securities of companies that have
significant market capitalizations despite a general lack of operating history
and/or positive earnings.

In addition, at times the Fund's market sector, growth oriented equity
securities of small companies, may underperform relative to other sectors.

RISKS OF HOLDING CERTAIN SECURITIES

Equity Securities. Equity securities represent ownership interests in a company
or corporation, and include common stock, preferred stock, and warrants and
other rights to acquire such instruments. Investments in equity securities are
subject to market risks that may cause their prices to fluctuate over time.
Fluctuations in the value of equity securities will not necessarily affect cash
income derived from these securities, but will affect the Fund's net asset
value.

7
<PAGE> 28

PRIOR PERFORMANCE INFORMATION

As of the date of this prospectus, the Fund had not yet commenced operations,
and did not have a performance history.

FUND FEES AND EXPENSES
------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES (expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees.......... 0.90%
Distribution (12b-1) Fees......... None
Other Expenses*................... 0.20%
TOTAL ANNUAL FUND OPERATING
EXPENSES........................ 1.10%
Fee waivers and expense
reimbursements.................. 0.10%
NET ANNUAL FUND OPERATING
EXPENSES........................ 1.00%**
-------------------------------------------
</TABLE>

* OTHER EXPENSES WERE ESTIMATED ASSUMING AVERAGE DAILY NET ASSETS OF THE FUND
OF $100 MILLION.

** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.00% OF AVERAGE
DAILY NET ASSETS PER YEAR. THIS FEE WAIVER AND EXPENSE REIMBURSEMENT
AGREEMENT MAY BE AMENDED OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF
DIRECTORS.

EXAMPLE

<TABLE>
<S> <C>
1 Year $102*
3 Years $318*
</TABLE>

------------------------------------------------------

* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (1.00%).

8
<PAGE> 29

CIF SMALL CAP VALUE FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

Long-term capital appreciation

INVESTMENT FOCUS
------------------------------------------------------

A portfolio of value oriented common stocks of smaller capitalization U.S.
companies

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF Small Cap Value Fund invests at least 65% of the value of its total
assets, under normal market conditions, in value oriented securities of small
U.S. companies. Generally, these issuers will have a market capitalization in
the range of companies in the Russell 2000 Value Index which is the benchmark
index for the Fund. The Fund is designed to add value primarily through stock
selection, rather than sector or style rotation, and to exhibit volatility
similar to that of its benchmark index.

The Fund seeks to achieve its objective by emphasizing investment in companies
that exhibit traditional value characteristics, such as below average
price-to-earnings, price-to-book value and price-to-cash flow ratios. The Fund
is constructed using multiple strategies designed to select different types of
companies in the benchmark index. The Fund may use derivative instruments for
both hedging and non-hedging purposes.

The Investment Manager allocates the Fund's assets among selected Sub-Advisers,
who in turn manage the Fund's assets on a day-to-day basis, subject to oversight
by the Investment Manager. The initial Sub-Advisers are High Rock Capital LLC
("High Rock Capital"), Martingale Asset Management, L.P. ("Martingale"),
NorthPointe Capital LLC ("NorthPointe"), Shapiro Capital Management Company,
Inc. ("Shapiro Capital"), Skyline Asset Management, L.P. ("Skyline"), and State
Street Global Advisors, Inc. ("SSgA"). Each Sub-Adviser selects investments for
its portion of the Fund based on its own investment style and strategy. High
Rock Capital's investment strategy emphasizes research of issuers' business
quality, business valuation and business catalysts. Martingale utilizes a
quantitative strategy designed to minimize the impact of the Fund's largest
holdings and reduce tracking error against the benchmark. NorthPointe invests in
securities that it believes are undervalued and have good earnings growth
potential. Shapiro Capital concentrates on a portfolio of securities selling at
a substantial discount to normalized earnings power. Skyline focuses on
attractively priced securities, such as those with below average price-to-
earnings ratios, with increasing earnings. For liquidity purposes, SSgA manages
its portion of the Fund in a small company value indexing strategy.

OTHER INVESTMENTS
------------------------------------------------------

PRINCIPAL RISKS
------------------------------------------------------

9
<PAGE> 30

larger, more established companies. Such companies may themselves be more
vulnerable to economic or company specific problems.

In addition, at times the Fund's market sector, value oriented equity securities
of small companies, may underperform relative to other sectors.

RISKS OF HOLDING CERTAIN SECURITIES

Equity Securities. Equity securities represent ownership interests in a company
or corporation, and include common stock, preferred stock, and warrants and
other rights to acquire such instruments. Investments in equity securities are
subject to market risks that may cause their prices to fluctuate over time.
Fluctuations in the value of equity securities will not necessarily affect cash
income derived from these securities, but will affect the Fund's net asset
value.

PRIOR PERFORMANCE INFORMATION

As of the date of this prospectus, the Fund had not yet commenced operations,
and did not have a performance history.

FUND FEES AND EXPENSES
------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES
(expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees.......... 0.90%
Distribution (12b-1) Fees......... None
Other Expenses*................... 0.20%

TOTAL ANNUAL FUND OPERATING
EXPENSES........................ 1.10%
Fee waivers and expense
reimbursements.................. 0.10%

NET ANNUAL FUND OPERATING
EXPENSES........................ 1.00%**
</TABLE>

------------------------------------------------------

* OTHER EXPENSES WERE ESTIMATED ASSUMING AVERAGE DAILY NET ASSETS OF THE FUND
OF $100 MILLION.

** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.00% AND EXPENSE
REIMBURSEMENT AGREEMENT OF AVERAGE DAILY NET ASSETS PER YEAR. THIS FEE WAIVER
MAY BE AMENDED OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF DIRECTORS.

EXAMPLE

<TABLE>
<S> <C>
1 Year $102*
3 Years $318*
</TABLE>

------------------------------------------------------

* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (1.00%).

10
<PAGE> 31

CIF INTERNATIONAL EQUITY FUND
------------------------------------------------------

INVESTMENT GOAL
------------------------------------------------------

Long-term capital appreciation

INVESTMENT FOCUS
------------------------------------------------------

A portfolio of equity securities of non-U.S. issuers

PRINCIPAL INVESTMENT STRATEGY
------------------------------------------------------

The CIF International Equity Fund invests at least 65% of the value of its total
assets, under normal market conditions, in common stocks and other equity
securities of foreign companies. The Fund generally invests in equity securities
of non-U.S. issuers represented in the MSCI EAFE (Europe, Australasia, Far East)
Index, which is the benchmark of the Fund and which includes most developed
countries in those regions. The Fund also may invest up to 10% of its assets in
equity securities of issuers located in emerging markets. The Fund may also
enter into forward and futures contracts to hedge currency exposure.

The Fund seeks to achieve its investment objective through the construction of
"core" and "satellite" portfolios. The "core" portfolio, which ordinarily will
comprise approximately 50% of the Fund, utilizes a market-oriented Sub-Adviser
with a strong bottom-up stock selection and sector allocation style that favors
both value and growth stocks. Up to 50% of the Fund will be comprised of
"satellite" portfolios whose Sub-Advisers apply a more targeted investment
strategy, such as growth or value, and which may deviate more from the benchmark
in terms of volatility and stock selection. The Fund may invest up to 10% of its
assets in a passively managed international equity index strategy.

The Investment Manager allocates the Fund's assets among selected Sub-Advisers,
who in turn manage the Fund's assets on a day-to-day basis, subject to oversight
by the Investment Manager. The initial Sub-Advisers are Capital Guardian Trust
Company ("Capital Guardian"), Grantham, Mayo, Van Otterloo & Co., LLC ("GMO"),
TT International Investment Management ("TT International") and State Street
Global Advisors, Inc. ("SSgA"). Each Sub-Adviser selects investments for its
portion of the Fund's assets based on its own investment style and strategy.
Capital Guardian manages the "core" portfolio by applying a market-oriented
approach that includes bottom up stock selection and sector allocation. Country
allocation is a by-product of the stock selection process. GMO applies a value
oriented approach to selecting investments. TT International uses a growth
oriented approach to stock selection coupled with geo-political country
analysis. For liquidity purposes, SSgA manages its portion of the Fund in an
international equity indexing strategy.

OTHER INVESTMENTS
------------------------------------------------------

PRINCIPAL RISKS
------------------------------------------------------

11
<PAGE> 32

In addition, at times the Fund's market sector, equity securities of foreign
issuers, may underperform relative to other sectors.

RISKS OF HOLDING CERTAIN SECURITIES

Emerging Market Risks. The Fund may invest in emerging market countries, which
are countries that major international financial institutions, such as the World
Bank, generally consider to be less economically mature than developed nations,
such as the United States or most nations in Western Europe. Emerging market
countries can include every nation in the world except the United States,
Canada, Japan, Australia, New Zealand, and most countries located in Western
Europe. Emerging market countries may be more likely to experience political
turmoil or rapid changes in economic conditions than more developed countries,
and the financial condition of issuers in emerging market countries may be more
precarious than in other countries. These characteristics result in greater risk
of price volatility in emerging market countries, which may be heightened by
currency fluctuations relative to the U.S. dollar.

12
<PAGE> 33

PRIOR PERFORMANCE INFORMATION

As of the date of this prospectus, the Fund had not yet commenced operations,
and did not have a performance history.

FUND FEES AND EXPENSES

------------------------------------------------------

This table describes the Fund's fees and expenses that you will pay if you buy
and hold shares of the Fund.

ANNUAL FUND OPERATING EXPENSES
(expenses deducted from Fund assets)

<TABLE>
<S> <C>
Investment Advisory Fees........... 0.70%
Distribution (12b-1) Fees.......... None
Other Expenses*.................... 0.20%

TOTAL ANNUAL FUND OPERATING
EXPENSES......................... 0.90%
Fee waivers and expense
reimbursements................... 0.10%

NET ANNUAL FUND OPERATING
EXPENSES......................... 0.80%**
</TABLE>

--------------------------------------------

* OTHER EXPENSES WERE ESTIMATED ASSUMING AVERAGE DAILY NET ASSETS OF THE FUND
OF $100 MILLION.

** THE INVESTMENT MANAGER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES, SO LONG AS IT SERVES AS INVESTMENT MANAGER TO THE FUND,
IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 0.80% OF AVERAGE
DAILY NET ASSETS PER YEAR. THIS FEE WAIVER AND EXPENSE REIMBURSEMENT
AGREEMENT MAY BE AMENDED OR TERMINATED ONLY WITH THE CONSENT OF THE BOARD OF
DIRECTORS.

EXAMPLE

<TABLE>
<S> <C>
1 Year $ 82*
3 Years $255*
</TABLE>

------------------------------------------------------

* EXPENSES ARE CALCULATED BASED ON NET ANNUAL FUND OPERATING EXPENSES AFTER THE
INVESTMENT MANAGER'S FEE WAIVERS AND EXPENSE REIMBURSEMENTS (0.80%).

13
<PAGE> 34

INVESTMENT MANAGER
------------------------------------------------------

COMMONFUND ASSET MANAGEMENT COMPANY, INC. is an indirect, wholly-owned
subsidiary of The Common Fund for Nonprofit Organizations ("Commonfund").
Employees of the Investment Manager also are responsible for Commonfund's
investment program, which is comprised of more than 40 funds with more than $22
billion in assets and is conducted in a "manager of managers" format. Each Fund
will pay the Investment Manager an annual fee based on the average net assets
for its services, as follows:

<TABLE>
<S> <C>
CIF Core Equity Fund 0.45%
CIF Small Cap Growth Fund 0.90%
CIF Small Cap Value Fund 0.90%
CIF International Equity Fund 0.70%
</TABLE>

The Investment Manager acts as a "manager of managers" for the Fund, and
supervises adherence by the Sub-Advisers with each Fund's investment policies
and guidelines. The Investment Manager can also recommend the appointment of
additional or replacement Sub-Advisers to the Company's Board of Directors. The
Fund and the Investment Manager have applied for exemptive relief from the
Securities and Exchange Commission (the "SEC") to permit the Investment Manager
and the Company to add or terminate Sub-Advisers without shareholder approval.

The Investment Manager employs a team to supervise the Sub-Advisers, which
includes the following members:

Elizabeth E. Schaefer, Senior Vice President and Head of Domestic Equity. Ms.
Schaefer assumed the position of Senior Vice President, Head of Domestic
Equities of the Investment Manager as of August 1999. From February 1996 until
July 1999 she served as Senior Vice President, Head of Domestic Equities for
Commonfund. Prior to joining Commonfund, Ms. Schaefer was Vice President and
Assistant Portfolio Manager/Analyst for the Multi-Manager Equity fund at
Evaluation Associates, Inc., where she was also responsible for the day-to-day
monitoring of client portfolios. Ms. Schaefer holds a B.A. from the College of
New Rochelle and an M.B.A. from Iona College.

Curt R. Tobey, Senior Vice President, Head of International Equity. Mr. Tobey
assumed the position of Senior Vice President, Head of International Equities of
the Investment Manager as of August 1999. From June 1983 until July 1999 he
served as Senior Vice President, Head of International Equities for Commonfund.
Prior to joining Commonfund, Mr. Tobey served as portfolio analyst at ITB
Management Company in Boston and assistant investment manager of Wellesley
College's endowment. He has a B.A. from the University of Vermont and an M.B.A.
from the Kellogg School of Northwestern University.

Lawrence M. Goldsmith, Managing Director/Fund Manager and a member of the
Domestic Equity Team. Mr. Goldsmith joined the Investment Manager in 1999. Prior
to joining Commonfund in 1999, he served as Director -- Trust Investments of
Fluor Corporation. Prior to joining Fluor in 1994, Mr. Goldsmith served as the
manager of Toyota's U.S.A. headquarters-based retirement plans. He has a B.S.
and an M.B.A. from the University of Pennsylvania's Wharton School of Business.

Safia Mehta, Managing Director and Fund Manager of Emerging and International
Markets. Ms. Mehta joined the Investment Manager in 1999. She joined Commonfund
from Hospitals of Ontario Pension Plan Investment Management Limited (HOOPP).
She has over 15 years of financial industry experience. Ms. Mehta is a graduate
of the University of Toronto and is a Chartered Accountant (Canada).

INVESTMENT SUB-ADVISERS AND PORTFOLIO MANAGERS
------------------------------------------------------

CIF CORE EQUITY FUND

- Advanced Investment Technology, Inc. ("AIT"), subject to the supervision of
State Street Global Advisors, Inc., its parent company, serves as Sub-Adviser
to the CIF Core Equity Fund. AIT, located at 311 Park Place Boulevard, Suite
250, Clearwater, FL 33759, provides investment advi-

14
<PAGE> 35

sory services to individuals, public funds and other institutional investors.
Established in 1996, AIT has $875 million in assets under management as of
September 30, 2000.

Douglas Case, CFA, serves as portfolio manager to the CIF Core Equity Fund.
Mr. Case is President and Chief Investment Officer of AIT. Mr. Case has been
with the firm since 1994 and has over 12 years of investment experience.

- Iridian Asset Management LLC ("Iridian") serves as Sub-Adviser to the CIF Core
Equity Fund. Iridian, located at 276 Post Road West, Westport, CT 06880,
provides investment advisory services to individuals, investment companies,
and other institutions. Established in 1995, Iridian has $9.48 billion in
assets under management as of September 30, 2000.

David L. Cohen and Harold J. Levy serve as portfolio managers to the CIF Core
Equity Fund. Both are a Principal/Portfolio Manager and have been with Iridian
since its inception in November 1995. Mr. Cohen and Mr. Levy each have over 20
years of investment experience.

- John A. Levin & Co., Inc. ("John A. Levin") serves as Sub-Adviser to the CIF
Core Equity Fund. John A. Levin, located at One Rockefeller Plaza, 25th Floor,
New York, NY 10020, provides investment advisory services to individuals,
investment companies, and other institutions. Established in 1982, John A.
Levin has $10.5 billion in assets under management as of September 30, 2000.

An investment team headed by John A. Levin provides investment advice for the
CIF Core Equity Fund. Mr. Levin is Chairman, Chief Executive Officer and has
been with John A. Levin since its founding in 1982. Mr. Levin has over 37
years of investment experience.

- Marsico Capital Management LLC ("Marsico Capital") serves as Sub-Adviser to
the CIF Core Equity Fund. Marsico Capital, located at 1200 Seventeenth Street,
Suite 1300, Denver, CO 80202, provides investment advisory services to
individuals, investment companies, and other institutions. Established in
1997, Marsico Capital has $15.5 billion in assets under management as of
September 30, 2000.

An investment team headed by Thomas F. Marsico provides investment advice for
the CIF Core Equity Fund. Mr. Marsico is Chairman, Chief Executive Officer and
Senior Portfolio Manager and has been with Marsico Capital since its founding
in 1997. Prior to joining Marsico Capital, Mr. Marsico was a portfolio manager
with Janus Capital Corporation from 1986-1997. Mr. Marsico has over 14 years
of investment experience.

- State Street Global Advisors, Inc. ("SSgA") serves as Sub-Adviser to the CIF
Core Equity Fund. SSgA, located at One International Place, Boston, MA 02110,
provides investment advisory services to corporations, public funds and other
institutional investors. Established in 1994, SSgA has $741.2 billion in
assets under management as of September 30, 2000.

An investment team at SSgA's Enhanced Strategies division headed by Douglas
Holmes provides investment advice for the index plus strategy of the CIF Core
Equity Fund. Mr. Holmes is head of SSgA's Enhanced Strategies division and has
been with the firm since 1984. Mr. Holmes has over 20 years of investment
experience.

The cash management strategy which will provide liquidity for the CIF Core
Equity Fund, is managed by an investment team at SSgA's Structured Products
Division.

CIF SMALL CAP GROWTH FUND

- Artisan Partners, L.P. ("Artisan") serves as Sub-Adviser to the CIF Small Cap
Growth Fund. Artisan, located at 1000 North Water Street, Suite 1770,
Milwaukee, WI 53202, provides investment advisory services to corporations,
public funds and other institutional investors. Established in 1994, Artisan
has $10.6 billion in assets under management as of September 30, 2000.

An investment team headed by Carlene M. Ziegler and Marina T. Carlson provides
investment advice for the CIF Small Cap Growth Fund. Ms. Ziegler is a Managing
Partner and has been with Artisan since its inception in January, 1995. Ms.
Ziegler has over 20 years of investment experience. Ms. Carlson has been with
Artisan since April 1999 and has over 14 years experience in the investment
business. Prior to joining Artisan, Ms. Carlson was a portfolio

15
<PAGE> 36

manager with Strong Capital Management, Inc. from 1991-1999.

- CapitalWorks Investment Partners ("CapitalWorks Investment") serves as
Sub-Adviser to the CIF Small Cap Growth Fund. CapitalWorks, located at 401
West A Street, Suite 1675, San Diego, CA 92101, provides investment advisory
services to individuals, investment companies and other institutions.
Established in 1998, CapitalWorks Investment has $1.18 billion in assets under
management as of September 30, 2000.

John C. Marshall, Jr. and John D. Wylie serve as portfolio managers to the CIF
Small Cap Growth Fund. Both are Managing Principals/Portfolio Managers and
have been with CapitalWorks since its inception in March 1998. Prior to
joining CapitalWorks, Mr. Marshall was a portfolio manager with
Nicholas-Applegate Capital Management from 1989-1998 and Mr. Wylie was
President of Nicholas-Applegate Capital Management from 1987-1996. Mr.
Marshall and Mr. Wylie each has over 13 years investment experience.

- Constitution Research & Management, LLC ("Constitution Research") serves as
Sub-Adviser to the CIF Small Cap Growth Fund. Constitution Research, located
at One Financial Center, 23rd Floor, Boston, MA 02111, provides investment
advisory services to individuals, investment companies and other institutions.
Established in 1989, Constitution Research has $653 million in assets under
management as of September 30, 2000.

Wallace W. Wadman and Richard M. Drury serve as portfolio managers to the CIF
Small Cap Growth Fund. Mr. Wadman is Chairman of Constitution Research and has
been with the firm since November 1989. He has over 35 years of investment
experience. Mr. Drury is President of Constitution Research and has been with
the firm since October 1992. He has over 28 years of investment experience.

- GlobeFlex Capital, L.P. ("GlobeFlex Capital") serves as Sub-Adviser to the CIF
Small Cap Growth Fund. GlobeFlex Capital, located at 4365 Executive Drive,
Suite 720, San Diego, CA 92121, provides investment advisory services to
individuals, investment companies, and other institutions. Established in
1994, GlobeFlex Capital has $1.02 billion in assets under management as of
September 30, 2000.

An investment team headed by Robert J. Anslow, Jr. provides investment advice
for the CIF Small Cap Growth Fund. Mr. Anslow is Chief Investment Officer of
GlobeFlex Capital, and has been with the firm since its inception in January
1994. Mr. Anslow has over 19 years of investment experience.

- State Street Global Advisors, Inc. ("SSgA") serves as Sub-Adviser to the CIF
Small Cap Growth Fund. Information about SSgA is included under the CIF Core
Equity Fund listed above.

The cash management strategy which will provide liquidity for the CIF Small
Cap Growth Fund, is managed by an investment team at SSgA's Structured
Products Division.

- Veredus Asset Management, LLC ("Veredus") serves as Sub-Adviser to the CIF
Small Cap Growth Fund. Veredus, located at 6060 Dutchmans Lane, Suite 320,
Louisville, KY 40205, provides investment advisory services to individuals,
investment companies, and other institutions. Established in 1998, Veredus has
$546 million in assets under management as of September 30, 2000.

An investment team headed by B. Anthony Weber provides investment advice for
the CIF Small Cap Growth Fund. Mr. Weber is Chief Investment Officer and has
been with the firm since its inception in April 1998. Prior to joining
Veredus, Mr. Weber was President of SMC Capital, Inc. from 1993-1998. Mr.
Weber has over 19 years of investment experience.

CIF SMALL CAP VALUE FUND

- High Rock Capital LLC ("High Rock Capital") serves as Sub-Adviser to the CIF
Small Cap Value Fund. High Rock Capital, located at 28 State Street, Boston,
MA 02109 provides investment advisory services to individuals, investment
companies, and other institutions. Established in 1997, High Rock Capital has
$1.95 billion in assets under management as of September 30, 2000.

An investment team headed by David L. Diamond provides investment advice for
the CIF Small Cap Value Fund. Mr. Diamond is Chief

16
<PAGE> 37

Investment Officer of High Rock Capital and has been with the firm since its
inception in November 1997. Prior to joining High Rock Capital, Mr. Diamond
was a portfolio manager with the Boston Company Asset Management, Inc. from
1991-1997. Mr. Diamond has over 14 years of investment experience.

- Martingale Asset Management, LLC ("Martingale") serves as Sub-Adviser to the
CIF Small Cap Value Fund. Martingale, located at 222 Berkely Street, Boston,
MA 02116, provides investment advisory services to corporations, public funds
and other institutional investors. Established in 1987, Martingale has $1.41
billion in assets under management as of September 30, 2000.

An investment team headed by William E. Jacques provides investment advice for
the CIF Small Cap Value Fund. Mr. Jacques is Chief Investment Officer of
Martingale and has been with the firm since its inception in June 1987. Mr.
Jacques has over 24 years of investment experience.

- NorthPointe Capital LLC ("NorthPointe") serves as Sub-Adviser to the CIF Small
Cap Value Fund. NorthPointe, located at 201 West Big Beaver, Columbia Center
One, 10th Floor, Suite 1000, Troy, MI 48084, provides investment advisory
services to corporations, public funds and other institutional investors.
Established in 1999, NorthPointe has $381 million in assets under management
as of September 30, 2000.

Jeffrey C. Petherick and Mary C. Champagne serve as portfolio managers to the
CIF Small Cap Value Fund. Both have been with NorthPointe since January 2000.
Prior to joining NorthPointe, Mr. Petherick and Ms. Champagne were portfolio
managers with Loomis, Sayles & Company, LLP from 1990-2000 and 1993-2000,
respectively. Mr. Petherick and Ms. Champagne each has over 15 years of
investment experience.

- Shapiro Capital Management Company, Inc. ("Shapiro Capital") serves as
Sub-Adviser to the CIF Small Cap Value Fund. Shapiro Capital, located at One
Buckhead Plaza Suite 650, 3060 Peachtree Rd. NW, Atlanta, GA 30305, provides
investment advisory services to individual investment companies and other
institutions. Established in 1989, Shapiro Capital has $1.01 billion in assets
under management as of September 30, 2000.

An investment team led by Samuel R. Shapiro provides investment advice for the
CIF Small Cap Value Fund. Mr. Shapiro is President and Chief Executive Officer
of Shapiro Capital, and has been with the firm since its inception in December
1989. Mr. Shapiro has over 23 years of investment experience.

- Skyline Asset Management, L.P. ("Skyline") serves as Sub-Adviser to the CIF
Small Cap Value Fund. Skyline, located at 311 South Wacker Dr., Suite 4500,
Chicago, IL 60606, provides investment advisory services to individuals,
investment companies and other institutions. Established in 1995, Skyline has
$654 million in assets under management as of September 30, 2000.

An investment team led by William M. Dutton provides investment advice for the
CIF Small Cap Value Fund. Mr. Dutton is Chief Investment Officer of Skyline
and has been with the firm since its inception in June 1995. Mr. Dutton has
over 13 years of investment experience.

- State Street Global Advisors, Inc. ("SSgA"), serves as Sub-Adviser to the CIF
Small Cap Value Fund. Information about SSgA is included under the CIF Core
Equity Fund listed above.

The cash management strategy which will provide liquidity for the CIF Small
Cap Value Fund, is managed by an investment team at SSgA's Structured Products
Division.

CIF INTERNATIONAL EQUITY FUND

- Capital Guardian Trust Company ("Capital Guardian") serves as Sub-Adviser to
the CIF International Equity Fund. Capital Guardian, located at 630 Fifth
Ave., 36th Floor, New York, NY 10111, provides investment advisory services to
institutional and private clients. Established in 1931, Capital Guardian has
$125 billion in assets under management as of September 30, 2000.

An investment team at Capital Guardian's International Active Division headed
by David I. Fisher provides investment advice for the CIF International Equity
Fund. Mr. Fisher has been with Capital Guardian since December 1971 and has
over 34 years of investment experience.

17
<PAGE> 38

- Grantham, Mayo, Van Otterloo & Co., LLC ("GMO") serves as Sub-Adviser to the
CIF International Equity Fund. GMO, located at 40 Rowes Wharf, Boston, MA
02110, provides investment advisory services to individuals, investment
companies and other institutions. Established in 1977, GMO has $22.4 billion
in assets under management as of September 30, 2000.

Ann M. Spruill and Jui L. Lai serve as portfolio managers to the CIF
International Equity Fund. Ms. Spruill and Ms. Lai have been with GMO since
1990 and 1998, respectively. Ms. Spruill and Ms. Lai each has over 12 years of
investment experience.

- TT International Investment Management ("TT International") serves as
Sub-Adviser to the CIF International Equity Fund. TT International, located at
Martin House, 5 Martin Lane, London, EC4R ODP, England, provides investment
advisory services to corporations, public funds and other institutional
clients. Established in 1993, TT International has $7.65 billion in assets
under management as of September 30, 2000.

An investment team headed by Timothy A. Tacchi provides investment advice for
the CIF International Equity Fund. Mr. Tacchi is Senior Partner and has been
with the firm since its inception in July 1993. Mr. Tacchi has over 17 years
of investment experience.

- State Street Global Advisors, Inc. ("SSgA") serves as Sub-Adviser to the CIF
International Equity Fund. Information about SSgA is included under the CIF
Core Equity Fund listed above.

The cash management strategy which will provide liquidity for the CIF
International Equity Fund, is managed by an investment team at SSgA's
Structured Products Division.

PRIOR PERFORMANCE OF SUB-ADVISERS

Performance results below reflect the deduction of net annual fund operating
expenses after the Investment Manager's fee waivers.

CIF Core Equity Fund

Historical Performance for Periods Ended September 30, 2000

Average Annual Total Return

<TABLE>
<CAPTION>
Past Past Past Past
one three five ten
year years years years
<S> <C> <C> <C> <C>
AIT 17.58% N/A N/A N/A
Iridian 7.63% 13.17% 19.07% 22.06%
John A. Levin 24.37% 17.20% 20.24% 18.89%
Marsico Capital 31.02% N/A N/A N/A
SSgA 12.96% 16.52% 21.92% N/A
S&P 500 Composite
Index 13.32% 16.47% 21.69% 19.44%
</TABLE>

CIF Small Cap Growth Fund

Historical Performance for Periods Ended September 30, 2000

Average Annual Total Return

<TABLE>
<CAPTION>
Past Past Past Past
one three five ten
year years years years
<S> <C> <C> <C> <C>
Artisan 19.74% 8.82% N/A N/A
CapitalWorks
Investment 74.19% N/A N/A N/A
Constitution Research 94.71% 44.09% 35.76% 30.42%
GlobeFlex Capital 31.85% N/A N/A N/A
Veredus 74.39% 36.90% 27.81% 27.32%
Russell 2000 Growth
Index 29.66% 8.94% 12.40% 16.26%
</TABLE>

18
<PAGE> 39

CIF Small Cap Value Fund

Historical Performance for Periods Ended September 30, 2000

Average Annual Total Return

<TABLE>
<CAPTION>
Past Past Past Past
one three five ten
year years years years
<S> <C> <C> <C> <C>
High Rock Capital N/A N/A N/A N/A
Martingale N/A N/A N/A N/A
NorthPointe 34.05% 6.85% 17.10% N/A
Shapiro Capital 2.19% -1.09% 11.94% N/A
Skyline 14.94% -2.82% 11.64% 18.56%
Russell 2000 Value
Index 15.35% 2.11% 11.49% 16.97%
</TABLE>

CIF International Equity Fund

Historical Performance for Periods Ended September 30, 2000

Average Annual Total Return

<TABLE>
<CAPTION>
Past Past Past Past
one three five ten
year years years years
<S> <C> <C> <C> <C>
Capital Guardian 13.37% 16.07% 17.19% 15.37%
GMO 2.11% 6.59% 10.78% 12.25%
TT International 28.87% 16.16% 21.03% N/A
MSCI EAFE Index 3.20% 7.39% 8.58% 9.63%
</TABLE>

19
<PAGE> 40

INVESTING IN THE COMMONFUND INSTITUTIONAL FUNDS -- A SUMMARY:
---------------------------------------------------------

In order to open a new account, you must complete and mail the New Account
Application that you receive with this prospectus to:

Commonfund Institutional Funds
15 Old Danbury Road
P.O. Box 812
Wilton, CT 06897-0812

The minimum initial investment for each Fund is $1,000,000 for institutions and
$1,000 for Eligible Individuals. The minimum subsequent investment is $1,000,
except that no minimum applies to reinvestments from dividends and
distributions. The minimum initial investment may be waived by the Investment
Manager.
---------------------------------------------------------
Once you are a shareholder of the Commonfund Institutional Funds you can do the
following:

* Via Internet -- Shareholders can request a transaction by logging on to
www.commonfund.org.

* Purchase or redeem Fund shares by phone:

Call 1-888-TCF-FUND to place a trade.

* Purchase Fund shares by wiring federal funds or by electronically
transferring funds through ACH to:

Investors Bank & Trust Company

ABA #011001438

Account #020103345

Further Credit: Fund name, shareholder name and shareholder account number
must be specified.

PURCHASING AND REDEEMING COMMONFUND INSTITUTIONAL FUNDS SHARES
------------------------------------------------------

This section tells you how to purchase and redeem shares of a Fund.

PURCHASING SHARES

WHEN CAN YOU PURCHASE SHARES?

You may purchase shares of each Fund on any day that the New York Stock Exchange
("NYSE") and the Federal Reserve System are both open for business (a "Business
Day").

To open an account:

Please call the Funds to let us know that you intend to make an investment.
You will need to instruct your bank to wire federal funds or to
electronically transfer funds through ACH to: Investors Bank Trust Company,
ABA #011001438; Account #020103345; Further Credit: Fund name, shareholder
name and shareholder account number must be specified.

HOW ARE FUND SHARE PRICES CALCULATED?

NET ASSET VALUE

ACCEPTANCE OF SUBSCRIPTIONS

In order for your purchase to be processed on the trade date, your order must be
in good order prior to the time the Fund determines its NAV. To be in good
order, a Fund must receive funds by 3:00 p.m. Eastern time. A Fund may reject
any purchase order if it is determined that accepting the order would not be in
the best interests of the Fund or its shareholders.

20
<PAGE> 41

PURCHASING ADDITIONAL SHARES

Current shareholders are eligible to purchase shares by phone by calling
1-888-TCF-FUND if they have requested that privilege by checking the appropriate
box on the New Account Application.

PURCHASES BY ELIGIBLE INDIVIDUALS

Eligible Individuals may purchase shares by mail at the address of Commonfund
Institutional Funds. The purchase price may be tendered by personal check. We do
not accept third party checks or cash.

TELEPHONE TRANSACTIONS

REDEEMING SHARES

You may redeem your shares on any Business Day by contacting us directly by mail
or telephone. The redemption price of each share will be the NAV next determined
after a Fund receives your request.

SIGNATURE GUARANTEES

METHODS FOR REDEEMING SHARES

* Via Internet -- Shareholders can request a transaction by logging on to
www.commonfund.org.

* By Phone -- When filling out your New Account Application, you are given the
opportunity to establish telephone redemption privileges.

* Systematic Withdrawal Plan -- Under the plan you may arrange monthly,
quarterly, semi-annual or annual automatic withdrawals.

SUSPENSION OF YOUR RIGHT TO REDEEM SHARES -- A Fund may suspend your right to
redeem your shares if the NYSE restricts trading, the SEC declares an emergency
or for such other periods as the SEC may by order permit.

INVOLUNTARY SALES OF YOUR SHARES -- If your account balance drops below the
required minimum of $1,000,000 for institutions or $1,000 for Eligible
Individuals as a result of shareholder redemptions, a Fund may redeem your
shares. You will always be given at least 60 days' written notice to give you
time to add to your account and avoid redemption of your shares.

RECEIVING YOUR MONEY

21
<PAGE> 42

DISTRIBUTION OF FUND SHARES
------------------------------------------------------

Commonfund Securities, Inc. is the distributor of the Funds and receives no
compensation from the Funds for that service.

DIVIDENDS, DISTRIBUTIONS AND TAXES
------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

The Funds declare and pay dividends quarterly. The Funds make distributions of
capital gains, if any, at least annually.

Shareholders will receive dividends and distributions in the form of additional
shares. Dividends generally are not paid in cash.

TAXES

The Funds are managed without regard to tax consequences to shareholders.
Shareholders seeking to finance tax obligations may need to redeem shares.

Each Fund will distribute substantially all of its net investment income and
realized capital gains, if any. The dividends and distributions you receive may
be subject to federal, state and local taxation, depending upon your tax
situation. This is true whether or not such dividends or distributions are
received in cash or are reinvested in additional shares of a Fund. Capital gains
distributions may be taxable at different rates depending on the length of time
a Fund holds its portfolio securities. EACH SALE OR EXCHANGE OF FUND SHARES IS A
TAXABLE EVENT.

This summary is based on current tax laws, which may change.

MORE INFORMATION ABOUT TAXES IS IN THE SAI.

22
<PAGE> 43

[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 44

COMMONFUND

INSTITUTIONAL FUNDS

INVESTMENT MANAGER

Commonfund Asset Management Company, Inc.

DISTRIBUTOR

Commonfund Securities, Inc.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

More information about Commonfund Institutional Funds is available without
charge through the following:

STATEMENT OF ADDITIONAL INFORMATION ("SAI")

------------------------------------------------------

TO OBTAIN MORE INFORMATION ABOUT THE FUND:

BY TELEPHONE: Call 1-888-TCF-FUND

BY MAIL:Write to

Commonfund Institutional Funds

15 Old Danbury Road

P.O. Box 812

Wilton, CT 06897-0812

BY INTERNET: http://www.commonfund.org

The Company's Investment Company Act registration number is 811-9555.
<PAGE> 45
COMMONFUND INSTITUTIONAL FUNDS

CIF INFLATION-INDEXED BOND FUND
CIF SHORT DURATION FUND
CIF LOW DURATION BOND FUND
CIF CORE PLUS BOND FUND
CIF CORE EQUITY FUND
CIF SMALL CAP GROWTH FUND
CIF SMALL CAP VALUE FUND
CIF INTERNATIONAL EQUITY FUND

INVESTMENT MANAGER
COMMONFUND ASSET MANAGEMENT COMPANY, INC.

INVESTMENT SUB-ADVISERS

ADVANCED INVESTMENT TECHNOLOGY, INC.
ARTISAN PARTNERS, L.P.
CAPITAL GUARDIAN TRUST COMPANY
CAPITALWORKS INVESTMENT PARTNERS
CONSTITUTION RESEARCH & MANAGEMENT, LLC
GLOBEFLEX CAPITAL, L.P.
GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC
HIGH ROCK CAPITAL LLC
IRIDIAN ASSET MANAGEMENT LLC
JOHN A. LEVIN & CO. INC.
MARSICO CAPITAL MANAGEMENT LLC
MARTINGALE ASSET MANAGEMENT, L.P.
METROPOLITAN WEST ASSET MANAGEMENT
NORTHPOINTE CAPITAL LLC
PACIFIC INVESTMENT MANAGEMENT COMPANY
SEIX INVESTMENT ADVISORS
SHAPIRO CAPITAL MANAGEMENT COMPANY, INC.
SKYLINE ASSET MANAGEMENT, L.P.
STATE STREET GLOBAL ADVISORS, INC.
TT INTERNATIONAL INVESTMENT MANAGEMENT
VEREDUS ASSET MANAGEMENT, LLC
WELLINGTON MANAGEMENT COMPANY, LLP
WESTERN ASSET MANAGEMENT COMPANY

DISTRIBUTOR
COMMONFUND SECURITIES, INC.

This Statement of Additional Information ("SAI") is not a prospectus and relates
only to the CIF Inflation-Indexed Bond, CIF Short Duration, CIF Low Duration
Bond, CIF Core Plus Bond, CIF Core Equity Fund, CIF Small Cap Growth, CIF Small
Cap Value and CIF International Equity Funds (each a "Fund" and collectively the
"Funds"). The SAI is intended to provide additional information regarding the
activities and operations of the Commonfund Institutional Funds (the "Company")
and should be read in conjunction with the Funds' prospectuses dated December
18, 2000. The prospectuses may be obtained without charge by calling
1-888-TCF-FUND (except for the CIF Short Duration Fund which may be obtained by
calling 1-888-404-1454).

December 18, 2000

1
<PAGE> 46
TABLE OF CONTENTS

<TABLE>
<S> <C>
THE COMPANY................................................................ 3

INVESTMENT OBJECTIVES AND POLICIES......................................... 3

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS...................... 10

INVESTMENT LIMITATIONS..................................................... 28

THE INVESTMENT MANAGER..................................................... 30

FUND ADMINISTRATION........................................................ 34

CUSTODIAN.................................................................. 34

EXPERTS.................................................................... 34

LEGAL COUNSEL.............................................................. 34

DISTRIBUTION............................................................... 35

DIRECTORS AND OFFICERS OF THE COMPANY...................................... 35

COMPUTATION OF YIELD AND TOTAL RETURN...................................... 39

PURCHASE AND REDEMPTION OF SHARES.......................................... 39

DETERMINATION OF NET ASSET VALUE........................................... 40

TAXES...................................................................... 40

PORTFOLIO TRANSACTIONS..................................................... 43

CODE OF ETHICS............................................................. 43

VOTING..................................................................... 44

5% SHAREHOLDERS............................................................ 44

FINANCIAL STATEMENTS....................................................... 46

APPENDIX .................................................................. A-1
</TABLE>

2
<PAGE> 47
THE COMPANY

This SAI is not a prospectus and relates only to the CIF Inflation-Indexed Bond
Fund, CIF Short Duration Fund, CIF Low Duration Bond Fund, CIF Core Plus Bond
Fund, CIF Core Equity Fund, CIF Small Cap Growth Fund, CIF Small Cap Value Fund,
and CIF International Equity Fund (each a "Fund" and collectively the "Funds").
Each Fund is a separate series of Commonfund Institutional Funds (the
"Company"), an open-end management investment company established as a Delaware
business trust under an Agreement and Declaration of Trust dated August 7, 1999.
The Agreement and Declaration of Trust permits the Company to offer separate
series of units of beneficial interest ("shares"), and separate classes of
shares within the Funds. Each Fund share represents an equal proportionate
interest in its respective Fund.

INVESTMENT OBJECTIVES AND POLICIES

Each Fund may invest in various instruments or utilize varying strategies to
achieve its investment objective. The permissible instruments or strategies for
each Fund are described below. There can be no assurance that the Funds will
achieve their investment objective.

CIF INFLATION-INDEXED BOND FUND - The Fund seeks to maximize real return to the
extent consistent with preservation of capital and liquidity.

The CIF Inflation-Indexed Bond Fund invests primarily in U.S. Treasury
Securities whose principal value is periodically adjusted to the U.S. Consumer
Price Index. Up to 25% of the Fund may be invested in investment grade
securities that are not indexed to inflation. Investment grade securities are
those rated in one of the four highest categories at the time of investment, or
determined by a Sub-Adviser to be of equivalent quality. The Fund will normally
maintain effective duration within(+/-) 1.5 years of the Lehman Brothers U.S.
TIPS Index.

Please consult the text under the following captions in the "Description of
Permitted Investments and Risk Factors" section to review features of various
instruments in which the Fund may invest and of various investment strategies
that may be used by the Fund:

3
<PAGE> 48
<TABLE>
<S> <C> <C>
Asset-Backed Securities Bankers' Acceptances and Bank Borrowing
Obligations

Certificates of Deposit Corporate Bonds Derivatives

Fixed Income Securities Floaters and Inverse Floaters Futures Contracts and Options on
Futures Contracts

High Yield Securities Investment Company Loan Participation and
Securities Assignments

Money Market Instruments Mortgage-Related Securities Municipals

Options Portfolio Turnover Repurchase Agreements

Rights Rule 144A Securities Securities Lending

Temporary Investments U.S. Government Securities Variable and Floating Rate
Instruments

When-Issued and Delayed Yankee Dollars Zero Coupons
Delivery Securities
</TABLE>

CIF SHORT DURATION FUND - The Fund seeks to provide current interest income with
some price appreciation, each as consistent with liquidity and safety of
principal.

The CIF Short Duration Fund invests in a diversified portfolio of securities
issued or guaranteed by the U.S. Government and its agencies and
instrumentalities, obligations of U.S. and foreign commercial banks, corporate
debt securities, including commercial paper, and fully-collateralized repurchase
agreements with highly rated counterparties. The fixed income securities
acquired by the Fund may include mortgage-backed and asset-backed securities.
The Fund's investment strategies are designed to produce a total rate of return
that exceeds the total return on 90 day U.S. Treasury bills. The net asset value
of the Fund is expected to fluctuate modestly in response to changes in interest
rates. The Fund seeks to minimize fluctuation in net asset value by maintaining
high credit quality standards and employing a relatively short effective
duration. This effective duration generally will not exceed one year, and the
maximum remaining maturity of any individual security will be five and one-half
years, except for certain mortgage-related and asset-backed securities.

The Fund will purchase the following types of securities if, at the time of
purchase, such securities either have been rated in one of the three highest
rating categories by a nationally recognized statistical rating organization
("NRSRO"), except as noted below, or are determined by Commonfund Asset
Management Company Inc. (the "Investment Manager") or a Sub-Adviser to be of
comparable quality, and are otherwise eligible for investment: (i) obligations
issued or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities; (ii) corporate bonds and debentures of U.S. or
foreign issuers and denominated in U.S. dollars; (iii) private mortgage-backed
securities; (iv) asset-backed securities; (v) commercial paper rated in one of
the two highest rating categories; (vi) obligations of U.S. and foreign
commercial banks rated in one of the two highest rating sub-categories; and
(vii) fully collateralized repurchase agreements. If a security is

4
<PAGE> 49
downgraded to below the minimum quality level specified above, the Investment
Manager and the Sub-Adviser(s) involved will review the situation and take
appropriate action.

<TABLE>
<S> <C> <C>
Asset-Backed Securities Bankers' Acceptances and Borrowing
Bank Obligations

Certificates of Deposit Corporate Bonds Derivatives

Fixed Income Securities Futures Contracts and Illiquid Securities
Options on Futures
Contracts
Money Market Instruments Mortgage-Related Securities Options

Portfolio Turnover Repurchase Agreements Rights

Rule 144A Securities Securities Lending Temporary Investments

U.S. Government Securities Variable and Floating Rate When-Issued and Delayed Delivery
Instruments Securities
Yankee Dollars Zero Coupons
</TABLE>

CIF LOW DURATION BOND FUND - The Fund seeks to preserve capital and provide
higher total return than is generally obtainable from money market instruments.

The CIF Low Duration Bond Fund invests primarily in a diversified portfolio of
dollar denominated investment grade bonds, including obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, as well
as corporate, asset-backed and mortgage-backed securities. Investment grade
securities are those rated in one of the four highest categories at the time of
investment, or determined by a Sub-Adviser to be of equivalent quality. The Fund
also may invest up to 20% of its assets in non-dollar denominated and securities
rated below investment grade at the time of purchase. The Fund will maintain an
average portfolio duration of between one and three years.

5
<PAGE> 50
<TABLE>
<S> <C> <C>
Asset-Backed Securities Bankers' Acceptances and Borrowing
Bank Obligations

Certificates of Deposit Corporate Bonds Derivatives

Eurodollar Obligations Fixed Income Securities Floaters and Inverse Floaters

Foreign Securities Futures Contracts and Options High Yield Securities
on Futures Contracts
Investment Company Investment Grade Securities Loan Participation and Assignments
Securities

Money Market Instruments Mortgage-Related Securities Municipals

Options Portfolio Turnover Repurchase Agreements

Rights Rule 144A Securities Securities Lending

Temporary Investments U.S. Government Securities Variable and Floating Rate Instruments

When-Issued and Yankee Dollars
Delayed Delivery
Securities
</TABLE>

CIF CORE PLUS BOND FUND - The Fund seeks to provide high current income and
price appreciation.

The CIF Core Plus Bond Fund primarily invests in investment grade bonds and
other fixed income securities in an attempt to outperform the broad U.S. bond
market. Investment grade securities are those rated in one of the four highest
categories at the time of investment, or determined by a Sub-Adviser to be of
equivalent quality. The Fund also may invest up to 10% of its assets in
securities rated below investment grade, but in one of the six highest rating
categories, and up to 20% of its assets in non-dollar denominated issuers. The
Sub-Advisers may invest in certain derivatives and may use certain techniques,
such as currency hedging in order to outperform the broad market. The Fund will
maintain an average portfolio duration of between three and six years.

6
<PAGE> 51
<TABLE>
<S> <C> <C>
Asset-Backed Securities Bankers' Acceptances and Bank Borrowing
Obligations

Certificates of Deposit Corporate Bonds Derivatives

Eurodollar Obligations Fixed Income Securities Floaters and Inverse Floaters

Foreign Securities Futures Contracts and Options on High Yield Securities
Futures Contracts

Investment Company Investment Grade Securities Loan Participation and
Securities Assignments

Money Market Instruments Mortgage-Related Securities Municipals

Options Portfolio Turnover Repurchase Agreements

Rights Rule 144A Securities Securities Lending

Temporary Investments U.S. Government Securities Variable and Floating Rate Instruments

When-Issued and Yankee Dollars Zero Coupons, Pay-In-Kind
Delayed Delivery Securities or Deferred Payment
Securities Securities
</TABLE>

CIF CORE EQUITY FUND - The Fund seeks to provide long-term capital appreciation.

The CIF Core Equity Fund invests primarily in a diversified portfolio of common
stocks and securities convertible into common stocks of large and medium
capitalization U.S. companies. Generally, these issuers will have a market
capitalization in the range of the companies in the S&P 500 Composite Index. The
Fund is designed to add value primarily through stock selection, rather than
sector or style variance, with volatility similar to that of its benchmark
index.

The Fund seeks to achieve its investment objective through the construction of
"core" and "satellite" portfolios that emphasize stock selection rather than
sector or style variance. The "core" portfolio, which ordinarily will comprise
approximately 40% of the Fund, utilizes a single Sub-Adviser to track the S&P
500 Composite Index in terms of sector, industry and capitalization, while
adding value through stock selection. The remainder of the Fund is comprised of
multiple "satellite" portfolios whose Sub-Advisers apply a specific investment
strategy, such as growth or value, and may deviate from the benchmark in terms
of volatility and sector selection.

7
<PAGE> 52
Please consult the text under the following captions in the "Description of
Permitted Investments and Risk Factors" section to review features of various
instruments in which the Fund may invest and of various investment strategies
that may be used by the Fund:

<TABLE>
<S> <C> <C>
Common Stocks Convertible Securities Corporate Bonds

Depositary Receipts Derivatives Fixed Income Securities

Foreign Securities Futures Contracts and Options on Investment Grade Securities
Futures Contracts

Money Market Options Portfolio Turnover
Instruments

Preferred Stocks Rights Securities Lending

U.S. Government Variable and Floating Rate
Securities Instruments
</TABLE>

CIF SMALL CAP GROWTH FUND - The Fund seeks to provide long-term capital
appreciation.

The CIF Small Cap Growth Fund invests primarily in growth oriented equity
securities of small U.S. companies. Generally, these issuers will have a market
capitalization in the range of the companies in the Russell 2000 Growth Index.
The Fund is designed to add value primarily through stock selection, rather than
sector or style variance, with volatility similar to that of its benchmark
index.

The Fund seeks to achieve its objective by emphasizing investment in companies
that the Sub-Advisers believe have strong earnings momentum, dominant market
share in growing industries and positive changes in analysts' expectations or
better than anticipated earnings reports. The Fund is constructed around three
principal strategies: aggressive, core and defensive. The aggressive strategy
generally is more volatile and provides for greater sector variances as compared
to the Russell 2000 Growth Index. The defensive strategy is designed to have
lower volatility and add value primarily during down markets. The core strategy
generally will have similar risk and portfolio characteristics as compared to
the Russell 2000 Growth Index.

8
<PAGE> 53
<TABLE>
<S> <C> <C>
Common Stocks Convertible Securities Corporate Bonds

Depositary Receipts Derivatives Fixed Income Securities

Foreign Securities Futures Contracts and Investment Grade Securities
Options on Futures
Contracts

Money Market Options Portfolio Turnover
Instruments

Preferred Stocks Rights Securities Lending

U.S. Government Variable and Floating
Securities Rate Instruments
</TABLE>

CIF SMALL CAP VALUE FUND - The Fund seeks to provide long-term capital
appreciation.

The CIF Small Cap Value Fund invests primarily in value oriented securities of
small U.S. companies. Generally, these issuers will have a market capitalization
in the range of companies in the Russell 2000 Value Index. The Fund is designed
to add value primarily through stock selection, rather than sector or style
variance, with volatility similar to that of its benchmark index.

The Fund seeks to achieve its objective by emphasizing investments in companies
that exhibit traditional value characteristics, such as below average
price-to-earnings, price-to-book value and price-to-cashflow ratios. The Fund is
constructed using multiple strategies designed to select different types of
companies in the benchmark index.

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<PAGE> 54
<TABLE>
<S> <C> <C>
Common Stocks Convertible Securities Corporate Bonds

Depositary Receipts Derivatives Fixed Income Securities

Foreign Securities Futures Contracts and Investment Grade Securities
Options on Futures
Contracts

Money Market Options Portfolio Turnover
Instruments

Preferred Stocks Rights Securities Lending

U.S. Government Variable and Floating
Securities Rate Instruments
</TABLE>

CIF INTERNATIONAL EQUITY FUND - The Fund seeks to provide long-term capital
appreciation.

The CIF International Equity Fund invests primarily in common stocks and other
equity securities of foreign companies. The Fund generally invests in equity
securities of non-U.S. issuers represented in the MSCI EAFE (Europe,
Australasia, Far East) Index, which includes most developed countries in those
regions. The Fund also may invest up to 10% of its assets in equity securities
of issuers located in emerging markets. The Fund may also enter into forward and
futures contracts to hedge currency exposure.

The Fund seeks to achieve its investment objective through the construction of
"core" and "satellite" portfolios. The "core" portfolio, which ordinarily will
comprise approximately 50% of the Fund, utilizes a market-oriented Sub-Adviser
with a strong bottom-up stock selection and sector allocation style that favors
both value and growth stocks. Up to 50% of the Fund will be comprised of
"satellite" portfolios whose Sub-Advisers apply more targeted investment
strategies, such as growth or value, and which may deviate more from the
benchmark in terms of volatility and stock selection.

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<PAGE> 55
<TABLE>
<S> <C> <C>
Common Stocks Convertible Securities Corporate Bonds

Depositary Receipts Derivatives Eurodollar Obligations

Fixed Income Securities Foreign Securities Floaters

Futures Contracts and Illiquid Securities Investment Company Securities
Options on Futures
Contracts

Investment Grade Limited Partnerships Loan Participation and
Securities Assignments

Money Market Instruments Options Preferred Stocks

Portfolio Turnover Repurchase Agreements Rights

Rule 144A Securities Variable and Floating Rate When-Issued and Delayed Delivery
Instruments Securities

Warrants Yankee Dollars Zero Coupons, Pay-In-Kind
Securities or Deferred Payment
Securities
</TABLE>

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

ASSET-BACKED SECURITIES

Asset-backed securities are secured by non-mortgage assets such as company
receivables, truck and auto loans, leases and credit card receivables. Such
securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets.
Asset-backed securities also may be issued as debt instruments, which are also
known as collateralized obligations and are generally issued as the debt of a
special purpose entity, such as a trust, organized solely for the purpose of
owning such assets and issuing such debt.

Asset-backed securities are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and for a certain
period by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities. The
purchase of asset-backed securities presents risk considerations specific to the
financing of the instruments underlying such securities. For example, there is a
risk that another party could acquire an interest in the underlying assets
superior to that of the holders of the asset-backed securities. There also is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. Asset-backed
securities also entail prepayment risk, which may vary depending on the type of
asset, but is generally less than the prepayment risk

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<PAGE> 56
associated with mortgage-backed securities. Credit card receivables are
unsecured obligations of card holders.

BANKERS' ACCEPTANCES AND BANK OBLIGATIONS

Bankers' Acceptances or notes are fixed income instruments evidencing a bank's
obligation to pay a draft drawn on it by a customer. These instruments represent
the obligation of the bank and of the drawer to pay the full amount of the
instrument upon maturity. The Funds will only purchase obligations of banks that
are rated in the top two categories by a major rating agency.

BORROWING

Borrowing may exaggerate changes in the net asset value of a Fund's shares and
in the return on that Fund's portfolio. Although the principal of any borrowing
will be fixed, a Fund's assets may change in value during the time the borrowing
is outstanding. A Fund may then be required to segregate liquid assets in an
amount sufficient to meet its obligations in connection with such borrowings. A
Fund may be required to liquidate portfolio securities at a time when it would
be disadvantageous to do so in order to make payments with respect to any
borrowing.

CERTIFICATES OF DEPOSIT

Certificates of Deposit or time deposits are obligations issued against funds
deposited in a banking institution for a specified period of time at a specified
interest rate.

COMMON STOCKS

Common Stocks represent an ownership interest in a corporation, entitling the
stockholder to voting rights and receipt of dividends paid based on
proportionate ownership.

CONVERTIBLE SECURITIES

Convertible Securities are securities that may be exchanged under certain
circumstances for a fixed number of shares of common stock or other equity
securities. Convertible Securities generally represent a feature of some other
type of security, such as a fixed income security or preferred stock, so that,
for example, a convertible fixed income security would be a fixed income
security that is convertible into common stock. Convertible Securities may be
viewed as an investment in the current security or the security into which the
convertible securities may be exchanged and, therefore, are included in both the
definition of equity security and fixed income security.

CORPORATE BONDS

Corporates are fixed income securities issued by private businesses. Holders, as
creditors, have a prior legal claim over holders of equity securities of the
issuer as to both income and assets for the principal and interest due the
holder.

DEPOSITARY RECEIPTS

Depositary Receipts represent an ownership interest in securities of foreign
companies (an "underlying issuer") that are deposited with a depositary.
Depositary Receipts are not necessarily

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<PAGE> 57
denominated in the same currency as the underlying securities. Depositary
Receipts include American Depositary Receipts ("ADRs"), Global Depositary
Receipts ("GDRs") and other types of Depositary Receipts (which, together with
ADRs and GDRs, are hereinafter collectively referred to as "Depositary
Receipts"). ADRs are dollar-denominated Depositary Receipts typically issued by
a U.S. financial institution which evidence an ownership interest in a security
or pool of securities issued by a foreign issuer. ADRs are listed and traded in
the United States. GDRs and other types of Depositary Receipts are typically
issued by foreign banks or trust companies, although they also may be issued by
U.S. financial institutions, and evidence ownership interests in a security or
pool of securities issued by either a foreign or a U.S. corporation. Generally,
Depositary Receipts in registered form are designed for use in the U.S.
securities market and Depositary Receipts in bearer form are designed for use in
securities markets outside the United States.

Depositary Receipts may be "sponsored" or "unsponsored." Sponsored Depositary
Receipts are established jointly by a depositary and the underlying issuer,
whereas unsponsored Depositary Receipts may be established by a depositary
without participation by the underlying issuer. Holders of unsponsored
Depositary Receipts generally bear all the costs associated with establishing
unsponsored Depositary Receipts. In addition, the issuers of the securities
underlying unsponsored Depository Receipts are not obligated to disclose
material information in the United States and, therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the Depositary Receipts. For
purposes of a Fund's investment policies, the Fund's investments in Depositary
Receipts will be deemed to be an investment in the underlying securities, except
that ADRs may be deemed to be issued by a U.S. issuer.

DERIVATIVES

Derivatives are instruments that derive their value from other securities,
baskets of securities, financial instruments or indices (for each derivative
instrument, this is sometimes referred to as the "underlying"). One category of
derivatives ("Derivative Instruments") are instruments such as futures
contracts, options, forward contracts, and swaps. Derivative Instruments are
used to establish market positions without transacting in the securities by
which their value is measured. Derivative Instruments often are used to adjust
the risk characteristics of a portfolio of securities investments. A second
category of derivatives ("Derivative Securities") are securities that carry
rights to other securities, such as, for example, a security convertible into
some other security. The following are Derivative Instruments: financial
futures, options (e.g., puts and calls) on financial futures, options on
securities, and swap agreements. The following are Derivative Securities:
convertible securities, certain mortgage-backed securities (e.g., CMOs),
when-issued securities, floating and variable rate securities and "stripped"
U.S. Treasury securities (e.g., STRIPs). See elsewhere in the "Description of
Permitted Investments" for discussions of these various derivatives.

EURODOLLAR OBLIGATIONS

Eurodollar bank obligations are dollar-denominated certificates of deposit and
time deposits issued outside the U.S. capital markets by foreign branches of
U.S. banks and by foreign banks. Eurodollar obligations are subject to the same
risks as domestic issues but Eurodollar obligations are also subject to certain
risks arising because they are issued in a foreign sovereign country. One such
risk is the possibility that a sovereign country might prevent capital, in the
form of dollars, from flowing across its borders. Other risks include adverse
political and economic developments; the extent and quality

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<PAGE> 58
of government regulations of financial markets and institutions; the imposition
of foreign withholding taxes; and the expropriation or nationalization of
foreign issuers.

FIXED INCOME SECURITIES

The market values of fixed income investments change in response to interest
rate changes and other factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally rise. Conversely, during
periods of rising interest rates, the values of such securities generally
decline. Moreover, while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are also subject to
greater price fluctuations as a result of changes in interest rates. Changes by
recognized agencies in the rating of any fixed income security and in the
ability of an issuer to make payments of interest and principal also affect the
value of these investments. Changes in the value of these securities will not
necessarily affect cash income derived from these securities, but will affect a
Fund's net asset value. Duration is a measure of a security"s expected price
volatility or risk associated with changes in the interest rate. Duration is not
static, and responds inversely to changes in interest rates, so that duration
shortens when rates rise and lengthens when rates fall. These changes may be
magnified in a low yield environment. For example, a 30 year, 10% coupon
non-callable bond has a 7.2 year duration in a 15% yield environment, a 9.9 year
duration in a 10% yield environment, and a 14 year duration in a 5% yield
environment. Effective duration is a measure of risk and sensitivity to interest
rate changes of bonds with implied call options, such as callable or putable
bonds and mortgage-backed securities. The calculation of the effective duration
of a security takes into consideration the possibility of early redemption or
extension of these options.

FLOATERS

Floaters are fixed income securities with a rate of interest that varies with
changes in specified market rates or indices, such as the prime rate, or at
specified intervals. Certain Floaters may carry a demand feature that permits
the holder to tender them back to the issuer of the underlying instrument, or to
a third party, at par value prior to maturity. When the demand feature of
certain Floaters represents an obligation of a foreign entity, the demand
feature will be subject to certain risks discussed under "Foreign Securities."

FOREIGN SECURITIES

Investing in Foreign Securities involves certain special considerations which
are not typically associated with investing in the equity securities or fixed
income securities of U.S. issuers. Foreign issuers are not generally subject to
accounting, auditing and financial reporting standards comparable to those
existing in the United States. As a result, there may be less information
available about foreign issuers than about domestic issuers. Securities of some
foreign issuers are often less liquid and more volatile than securities of
comparable domestic issuers. There is generally less government supervision and
regulation of stock exchanges, brokers and listed issuers than in the United
States. Foreign securities trading markets often offer less liquidity and
greater price volatility than United States markets and at times reflect the
consequences of government intervention. In addition, with respect to certain
foreign countries, there is a possibility of expropriation or confiscatory
taxation, political and social instability, or diplomatic developments which
could affect U.S. investments in those countries. The costs of investing in
foreign countries frequently is higher than the costs of investing in the United
States. Although Sub-Advisers can be expected to seek favorable execution

14
<PAGE> 59
costs in portfolio transactions, fixed commissions on many foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges.

The foregoing types of risk are often accentuated in "emerging" or less
developed countries.

Investments in securities of foreign issuers generally are denominated in
foreign currencies. Accordingly, the value of a Fund's assets, as measured in
U.S. dollars may be affected favorably or unfavorably by changes in currency
exchange rates and in exchange control regulations. A Fund may incur costs in
connection with conversions between various currencies. Certain foreign
governments levy withholding or other taxes on dividend and interest income.
Although in some countries a portion of these taxes are recoverable, the
non-recovered portion of foreign withholding taxes will reduce the income
received from investments in such countries. The Funds may be able to claim a
credit for U.S. tax purposes with respect to any such foreign taxes.

The Investment Manager considers an issuer to be from a particular country if
(i) its principal securities trading market is in that country; (ii) alone or on
a consolidated basis it derives 50% or more of its annual revenue from either
goods produced, sales made or services performed in that country; or (iii) it is
organized under the laws of, or has a principal office in that country. By
applying these tests, it is possible that a particular company could be deemed
to be from more than one country.

Foreign Currency Transactions: The U.S. dollar value of the assets of the Funds,
to the extent they invest in securities denominated in foreign currencies, may
be affected favorably or unfavorably by changes in foreign currency exchange
rates and exchange control regulations, and the Funds may incur costs in
connection with conversions between various currencies. The Funds may conduct
their foreign currency exchange transactions on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market. The Funds also may
manage their foreign currency transactions by entering into foreign currency
forward contracts to purchase or sell foreign currencies or by using other
instruments and techniques described under "Derivatives" above.

Under normal circumstances, consideration of the prospect for changes in the
values of currency will be incorporated into the long-term investment decisions
made with regard to overall diversification strategies. However, the Investment
Manager believes that it is important to have the flexibility to use such
derivative products when Sub-Advisers determine that it is in the best interests
of a Fund. It may not be practicable to hedge foreign currency risk in all
markets, particularly emerging markets.

Foreign currency warrants: Foreign currency warrants entitle the holder to
receive from the issuer an amount of cash (generally, for warrants issued in the
U.S., in U.S. dollars) which is calculated pursuant to a predetermined formula
and based on the exchange rate between a specified foreign currency and the U.S.
dollar as of the exercise date of the warrant. Foreign currency warrants
generally are exercisable upon their issuance and expire as of a specified date
and time.

Foreign currency warrants have been issued in connection with U.S.
dollar-denominated debt offerings by major corporate issuers in an attempt to
reduce the foreign currency exchange risk which, from the point of view of
prospective purchasers of the securities, is inherent in the international
fixed-income marketplace. Foreign currency warrants may tend to reduce the
foreign exchange risk assumed by purchasers of a security by, for example,
providing for a supplemental payment in the event that the U.S. dollar
depreciates against the value of a major foreign currency

15
<PAGE> 60
such as the Japanese Yen or the Euro. The formula used to determine the amount
payable upon exercise of a foreign currency warrant may make the warrant
worthless unless the applicable foreign currency exchange rate moves in a
particular direction (e.g., unless the U.S. dollar appreciates or depreciates
against the particular foreign currency to which the warrant is linked or
indexed). Foreign currency warrants are severable from the debt obligations with
which they may be offered, and may be listed on exchanges.

Foreign currency warrants may be exercisable only in certain minimum amounts,
and an investor wishing to exercise warrants who possesses less than the minimum
number required for exercise may be required either to sell the warrants or to
purchase additional warrants, thereby incurring additional transaction costs. In
the case of any exercise of warrants, there may be a delay between the time a
holder of warrants gives instructions to exercise and the time the exchange rate
relating to exercise is determined, during which time the exchange rate could
change significantly, thereby affecting both the market and cash settlement
values of the warrants being exercised. The expiration date of the warrants may
be accelerated if the warrants should be delisted from an exchange or if their
trading should be suspended permanently, which would result in the loss of any
remaining "time value" of the warrants (i.e., the difference between the current
market value and the exercise value of the warrants), and, in the case where the
warrants were "out-of-the-money," in a total loss of the purchase price of the
warrants.

Foreign currency warrants are generally unsecured obligations of their issuers
and are not standardized foreign currency options issued by the Options Clearing
Corporation ("OCC"). Unlike foreign currency options issued by the OCC, the
terms of foreign exchange warrants generally will not be amended in the event of
governmental or regulatory actions affecting exchange rates or in the event of
the imposition of other regulatory controls affecting the international currency
markets. The initial public offering price of foreign currency warrants is
generally considerably in excess of the price that a commercial user of foreign
currencies might pay in the interbank market for a comparable option involving
significantly larger amounts of foreign currencies. Foreign currency warrants
are subject to complex political or economic factors.

Principal exchange rate linked securities. Principal exchange rate linked
securities are debt obligations the principal on which is payable at maturity in
an amount that may vary based on the exchange rate between the U.S. dollar and a
particular foreign currency at or about that time. The return on "standard"
principal exchange rate linked securities is enhanced if the foreign currency to
which the security is linked appreciates against the U.S. dollar, and is
adversely affected by increases in the foreign exchange value of the U.S.
dollar; "reverse" principal exchange rate linked securities are like the
"standard" securities, except that their return is enhanced by increases in the
value of the U.S. dollar and adversely impacted by increases in the value of
foreign currency. Interest payments on the securities are generally made in U.S.
dollars at rates that reflect the degree of foreign currency risk assumed or
given up by the purchaser of the notes (i.e., at relatively higher interest
rates if the purchaser has assumed some foreign currency risk).

Brady Bonds: Brady Bonds are fixed income securities that are created through
the exchange of existing commercial bank loans to foreign entities for new
obligations in connection with debt restructuring under a plan introduced by
Nicholas F. Brady when he was the U.S. Secretary of the Treasury. They may be
collateralized or uncollateralized and issued in various currencies (although
most are U.S. dollar-denominated) and they are actively traded in the
over-the-counter secondary market. The Funds will invest in Brady Bonds only if
they are consistent with the Fund's quality

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<PAGE> 61
specifications. However, Brady Bonds should be viewed as speculative in light of
the history of defaults with respect to commercial bank loans by public and
private entities of countries issuing Brady Bonds.

Investment Funds or Intermediaries: Some emerging market countries have laws and
regulations that currently preclude direct investment or make it undesirable to
invest directly in the securities of their companies. However, indirect
investment in the securities of companies listed and traded on the stock
exchanges in these countries is permitted by certain emerging market countries
through Investment Funds or other intermediary companies that have been
specifically authorized. The Funds may invest in these Investment Funds subject
to the provisions of the Investment Company Act of 1940, as amended (the "1940
Act"), as applicable, and other applicable laws. An investment in an
intermediary is not an investment in the securities held by the intermediary and
is subject to the risks of the business of the intermediary.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

Futures Contracts provide for the future sale or purchase by a party of a
specified amount of a specific underlying at a specified future time and at a
specified price. An option on a futures contract gives the purchaser the right,
in exchange for a premium, to assume a position in a futures contract at a
specified exercise price during the term of the option. A Fund may use Futures
Contracts and related options for bona fide hedging purposes, to offset changes
in the value of securities held or expected to be acquired or be disposed of, to
minimize fluctuations in foreign currencies, or to gain exposure to a particular
market or instrument. If a Fund does use Futures Contracts, it will seek to
minimize the risk that it will be unable to close out a futures contract by only
entering into Futures Contracts which are traded on recognized futures
exchanges.

No price is paid upon entering into Futures Contracts. Instead, a Fund is
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a Futures Contract.

Futures and options on futures can be volatile instruments and involve certain
risks that could negatively impact the Fund's return. These risks include the
following: (1) the success of a hedging strategy may depend on an ability to
predict movements in the prices of the individual underlying securities,
fluctuations in markets and movements in interest rates; (2) there may be an
imperfect or no correlation between the changes in market value of the
underlying securities held by the Fund and the prices of futures and options on
futures; (3) there may not be a liquid secondary market for a futures contract
or option; (4) trading restrictions or limitations may be imposed by an
exchange; and (5) government regulations may restrict trading in Futures
Contracts and options on futures.

A Fund may enter into Futures Contracts and options on Futures Contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
as long as, to the extent that such transactions are not for "bona fide" hedging
purposes or risk management, the aggregate initial margin and premiums on such
positions (excluding the amount by which such options are in the money) do not
exceed 5% of the Fund's net assets. The Fund may buy and sell Futures Contracts
and related options to manage its exposure to changing interest rates and
securities prices. Some strategies reduce the Fund's exposure to price
fluctuations, while others tend to increase its market exposure.

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<PAGE> 62
HIGH YIELD SECURITIES

High Yield Securities are generally considered to include fixed income
securities rated below the four highest rating categories at the time of
purchase (e.g., Ba through C by Moody's or BB through D by S&P) and unrated
securities considered by the Investment Manager to be of equivalent quality.
High Yield Securities are not investment grade.

While High Yield Securities offer higher yields, they carry a high degree of
credit risk and are considered speculative by the major credit rating agencies.
High Yield Securities are often issued by smaller, less credit worthy issuers,
or by highly leveraged (indebted) issuers that are generally less able than more
established or less leveraged issuers to make scheduled payments of interest and
principal. In comparison to Investment Grade Securities, the price movement of
these securities is influenced less by changes in interest rates and more by the
financial and business position of the issuer. The values of High Yield
Securities are more volatile and may react with greater sensitivity to market
changes.

ILLIQUID SECURITIES

Illiquid Securities are securities that cannot be disposed of within seven
business days at approximately the price at which they are being carried on its
Fund's books. Illiquid Securities include demand instruments with demand notice
periods exceeding seven days, securities for which there is no active secondary
market, and Repurchase Agreements with maturities over seven days in length.
Each Fund will limit its investments in illiquid securities to 15% of its net
assets.

INVERSE FLOATERS

Inverse floating rate obligations ("Inverse Floaters") are fixed income
securities that have coupon rates that vary inversely at a multiple of a
designated floating rate, such as LIBOR (London Inter-Bank Offered Rate). Any
rise in the reference rate of an Inverse Floater (as a consequence of an
increase in interest rates) causes a drop in the coupon rate while any drop in
the reference rate of an Inverse Floater causes an increase in the coupon rate.
Inverse Floaters may exhibit substantially greater price volatility than fixed
rate obligations having similar credit quality, redemption provisions and
maturity, and Inverse Floater CMOs exhibit greater price volatility than the
majority of other mortgage-related securities.

INVESTMENT COMPANY SECURITIES

Investment Company Securities are securities of other open-end or closed-end
investment companies. The 1940 Act, generally prohibits an investment company
from acquiring more than 3% of the outstanding voting shares of an investment
company and limits such investments to no more than 5% of the Fund's total
assets in any one investment company and no more than 10% in any combination of
investment companies. A Fund may invest in Investment Company Securities of
investment companies managed by the Investment Manager or its affiliates to the
extent permitted under the 1940 Act or as otherwise authorized by the Securities
and Exchange Commission ("SEC"). To the extent a Fund invests a portion of its
assets in Investment Company Securities, those assets will be subject to the
risks of the purchased investment company's portfolio securities. The Fund also
will bear its proportionate share of the expenses of the purchased investment
company in addition to its own expenses.

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INVESTMENT GRADE SECURITIES

Investment Grade Securities are fixed income securities rated by one or more of
the rating agencies in one of the four highest rating categories at the time of
purchase (e.g., AAA, AA, A or BBB by Standard & Poor's Ratings Group ("S&P") or
Fitch, Inc. ("Fitch"), or Aaa, Aa, A or Baa by Moody's Investors Service, Inc.
("Moody's")) or determined to be of equivalent quality by the Investment
Manager. Securities rated BBB or Baa represent the lowest of four levels of
Investment Grade Securities and are regarded as borderline between sound
obligations and those in which the speculative element begins to predominate.
Ratings assigned to fixed income securities represent only the opinion of the
rating agency assigning the rating and are not dispositive of the credit risk
associated with the purchase of a particular Fixed Income Security. Moreover,
market risk also will affect the prices of even the highest rated fixed income
securities so that their prices may rise or fall even if the issuer's capacity
to repay its obligations remains unchanged.

LIMITED PARTNERSHIPS

A Limited Partnership interest entitles a Fund to participate in the investment
return of the partnership's assets as defined by the agreement among the
partners. As a limited partner, a Fund generally is not permitted to participate
in the management of the partnership. However, unlike a general partner whose
liability is not limited, a limited partner's liability generally is limited to
the amount of its commitment to the partnership.

LOAN PARTICIPATION AND ASSIGNMENTS

Loan Participations are interests in loans or other direct debt instruments
("Loans") relating to amounts owed by a corporate, governmental or other
borrower to another party. Loans may represent amounts owed to lenders or
lending syndicates, to suppliers of goods or services (trade claims or other
receivables), or to other parties ("Lenders") and may be fixed rate or floating
rate. Loans also may be arranged through private negotiations between an issuer
of sovereign debt obligations and Lenders.

A Fund's investments in Loans are expected in most instances to be in the form
of a participation in Loans ("Participations") and assignments of all or a
portion of Loans ("Assignments") from third parties. In the case of a
Participation, a Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In the event of an insolvency of the Lender selling a Participation, a
Fund may be treated as a general creditor of the Lender and may not benefit from
any set-off between the Lender and the borrower. Certain Participations may be
structured in a manner designed to avoid purchasers of Participations being
subject to the credit risk of the Lender with respect to the Participation. Even
under such a structure, in the event of a Lender's insolvency, the Lender's
servicing of the Participation may be delayed and the assignability of the
Participation may be impaired. A Fund will acquire Participations only if the
Lender interpositioned between a Fund and the borrower is determined by the
Investment Manager to be creditworthy.

When a Fund purchases Assignments from Lenders it will acquire direct rights
against the borrower on the Loan. However, because Assignments are arranged
through private negotiations between

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potential assignees and potential assignors, the rights and obligations acquired
by a Fund as the purchaser of an Assignment may differ from, and be more limited
than, those held by the assigning Lender. Because there is no liquid market for
such securities, it is likely that such securities could be sold only to a
limited number of institutional investors. The lack of a liquid secondary market
may have an adverse impact on the value of such securities and a Fund's ability
to dispose of particular Assignments or Participations when necessary to meet a
Fund's liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for a Fund to assign a value to these securities for purposes of
valuing a Fund's securities and calculating its net asset value.

Loan Participations and Assignments involve a risk of loss in case of default or
insolvency of the borrower. In addition, they may offer less legal protection to
a Fund in the event of fraud or misrepresentation and may involve a risk of
insolvency of the Lender. Certain Loan Participations and Assignments may also
include standby financing commitments that obligate the investing Fund to supply
additional cash to the borrower on demand. Participations involving emerging
market country issuers may relate to Loans as to which there has been or
currently exists an event of default or other failure to make payment when due,
and may represent amounts owed to Lenders that are themselves subject to
political and economic risks, including the risk of currency devaluation,
expropriation, or failure. Such Loan Participations and Assignments present
additional risk of default or loss.

MONEY MARKET INSTRUMENTS

Money Market Instruments are high quality short-term fixed income securities.
Money Market Instruments may include obligations of governments, government
agencies, banks, corporations and special purpose entities and Repurchase
Agreements relating to these obligations. Certain Money Market Instruments may
be denominated in a foreign currency.

MORTGAGE-RELATED SECURITIES

A Mortgage-Related Security is an interest in a pool of mortgage loans. Most
Mortgage-Related Securities are pass-through securities, which means that
investors receive payments consisting of a pro rata share of both principal and
interest (less servicing and other fees), as well as unscheduled prepayments, as
mortgages in the underlying mortgage pool are paid off by borrowers.

Agency-Mortgage-Related Securities: The dominant issuers or guarantors of
Mortgage-Related Securities today are the Government National Mortgage
Association ("GNMA"), Fannie Mae and the Federal Home Loan Mortgage Corporation
("FHLMC"). GNMA creates pass-through securities from pools of U.S. government
guaranteed or insured (such as by the Federal Housing Authority or Veterans
Administration) mortgages originated by mortgage bankers, commercial banks and
savings associations. Fannie Mae and FHLMC issue pass-through securities from
pools of conventional and federally insured and/or guaranteed residential
mortgages obtained from various entities, including savings associations,
savings banks, commercial banks, credit unions and mortgage bankers.

Fannie Mae Securities: Fannie Mae is a federally chartered and privately owned
corporation established under the Federal National Mortgage Association Charter
Act. Fannie Mae provides funds to the mortgage market primarily by purchasing
home mortgage loans from local lenders,

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thereby providing them with funds for additional lending. Fannie Mae uses its
funds to purchase loans from investors that may not ordinarily invest in
mortgage loans directly, thereby expanding the total amount of funds available
for housing.

Each Fannie Mae pass-through security represents a proportionate interest in one
or more pools of loans, including conventional mortgage loans (that is, mortgage
loans that are not insured or guaranteed by any U.S. Government agency). The
pools consist of one or more of the following types of loans: (1) fixed-rate
level payment mortgage loans; (2) fixed-rate growing equity mortgage loans; (3)
fixed-rate graduated payment mortgage loans; (4) variable rate mortgage loans;
(5) other adjustable rate mortgage loans; and (6) fixed-rate mortgage loans
secured by multifamily projects.

Federal Home Loan Mortgage Corporation Securities: The operations of FHLMC
currently consist primarily of the purchase of first lien, conventional,
residential mortgage loans and participation interests in mortgage loans and the
resale of the mortgage loans in the form of mortgage-backed securities.

The mortgage loans underlying FHLMC securities typically consist of fixed-rate
or adjustable rate mortgage loans with original terms to maturity of between 10
to 30 years, substantially all of which are secured by first liens on
one-to-four-family residential properties or multifamily projects. Each mortgage
loan must be whole loans, participation interests in whole loans and undivided
interests in whole loans or participation in another FHLMC security.

Government National Mortgage Association Securities: GNMA is a wholly-owned
corporate instrumentality of the U.S. Government within the Department of
Housing and Urban Development. In order to meet its obligations under a
guarantee, GNMA is authorized to borrow from the U.S. Treasury with no
limitations as to amount.

GNMA pass-through securities may represent a proportionate interest in one or
more pools of the following types of mortgage loans: (1) fixed-rate level
payment mortgage loans; (2) fixed-rate graduated payment mortgage loans; (3)
fixed-rate growing equity mortgage loans; (4) fixed-rate mortgage loans secured
by manufactured (mobile) homes; (5) mortgage loans on multifamily residential
properties under construction; (6) mortgage loans on completed multifamily
projects; (7) fixed-rate mortgage loans as to which escrowed funds are used to
reduce the borrower's monthly payments during the early years of the mortgage
loans ("buydown" mortgage loans); (8) mortgage loans that provide for
adjustments on payments based on periodic changes in interest rates or in other
payment terms of the mortgage loans; and (9) mortgage-backed serial notes.

The principal and interest on GNMA pass-through securities are guaranteed by
GNMA and backed by the full faith and credit of the U.S. Government. Fannie Mae
guarantees full and timely payment of all interest and principal, while FHLMC
guarantees timely payment of interest and ultimate collection of principal, of
its pass-through securities. Fannie Mae and FHLMC securities are not backed by
the full faith and credit of the United States; however, they are generally
considered to present minimal credit risks. The yields provided by these
mortgage-related securities historically have exceeded the yields on other types
of U.S. government securities with comparable maturities in large measure due to
the risks associated with prepayment.

Adjustable rate mortgage securities ("ARMs") are a form of pass-through security
representing interests in pools of mortgage loans, the interest rates of which
are adjusted from time to time. The adjustments usually are determined in
accordance with a predetermined interest rate index and may

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be subject to certain limits. The adjustment feature of ARMs tends to make their
values less sensitive to interest rate changes. As the interest rates on the
mortgages underlying ARMs are reset periodically, yields of such portfolio
securities will gradually align themselves to reflect changes in market rates.
Unlike fixed-rate mortgages, which generally decline in value during periods of
rising interest rates, ARMs allow the Funds to participate in increases in
interest rates through periodic adjustments in the coupons of the underlying
mortgages, resulting in both higher current yields and low price fluctuations.
Furthermore, if prepayments of principal are made on the underlying mortgages
during periods of rising interest rates, the Funds may be able to reinvest such
amounts in securities with a higher current rate of return. During periods of
declining interest rates, of course, the coupon rates may readjust downward,
resulting in lower yields to the Funds. Further, because of this feature, the
values of ARMs are unlikely to rise during periods of declining interest rates
to the same extent as fixed rate instruments.

Collateralized mortgage obligations ("CMOs") are Mortgage-Related Securities
that separate the cash flows of mortgage pools into different components called
classes or "tranches." Each class of a CMO is issued at a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal prepayments on the collateral pool may cause the various classes of a
CMO to be retired substantially earlier than their stated maturities or final
distribution dates. The principal of, and interest on, the collateral pool may
be allocated among the several classes of a CMO in a number of different ways.
Generally, the purpose of the allocation of the cash flow of a CMO to the
various classes is to obtain a more predictable cash flow to some of the
individual tranches than exists with the underlying collateral of the CMO. As a
general rule, the more predictable the cash flow is on a CMO tranche, the lower
the anticipated yield will be on that tranche at the time of issuance relative
to prevailing market yields on mortgage-related securities. Certain classes of
CMOs may have priority over others with respect to the receipt of prepayments on
the mortgages.

The Funds considers GNMA-, Fannie Mae-, and FHLMC-issued pass-through
certificates, CMOs, and other mortgage-related securities to be U.S. Government
securities for purposes of each Fund's investment policies.

Privately Issued Mortgage-Related Securities: Mortgage-Related Securities
offered by private issuers include pass-through securities for pools of
conventional residential mortgage loans; mortgage pay-through obligations and
mortgage-backed bonds, which are considered to be obligations of the institution
issuing the bonds and are collateralized by mortgage loans; and bonds and CMOs
which are collateralized by mortgage-related securities issued by GNMA, Fannie
Mae, FHLMC or by pools of conventional mortgages. The Funds limit their
investments in privately issued mortgage-related securities to "mortgage related
securities" within the meaning of the Secondary Mortgage Market Enhancement Act
of 1984, as amended.

The Fund may invest in, among other things, "parallel pay" CMOs, Planned
Amortization Class CMOs ("PAC Bonds") and REMICs. A REMIC is a CMO that
qualifies for special tax treatment under the Internal Revenue Code of 1986 (the
"Code") and invests in certain mortgages principally secured by interests in
real property. Investors may purchase beneficial interests in REMICS, which are
known as "regular" interests, or "residual" interests. The Funds will not invest
in residual REMICs. Guaranteed REMIC pass-through certificates (REMIC
Certificates) issued by Fannie Mae, FHLMC or GNMA represent beneficial ownership
interests in a REMIC trust consisting principally of mortgage loans or Fannie
Mae, FHLMC or GNMA-guaranteed mortgage pass-through certificates. For FHLMC
REMIC Certificates, FHLMC guarantees the timely payment of interest, and also
guarantees the payment of principal as payments are required to be made on the
underlying mortgage

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<PAGE> 67
participation certificates. Fannie Mae REMIC Certificates are issued and
guaranteed as to timely distribution of principal and interest by Fannie Mae.
GNMA REMIC certificates are supported by the full faith and credit of the U.S.
Treasury.

Parallel pay CMOs, as well as REMICs, are structured to provide payments of
principal on each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated maturity date or final
distribution date of each class, which like the other CMO structures, must be
retired by its stated maturity date or final distribution date but may be
retired earlier. PAC Bonds are parallel pay CMOs that generally require payments
of a specified amount of principal on each payment date; the required principal
payment on PAC Bonds have the highest priority after interest has been paid to
all classes.

Mortgage-Related Securities created by private issuers generally offer a higher
rate of interest (and greater credit and interest rate risk) than U.S.
Government and U.S. Government Mortgage-Related Securities because they offer no
direct or indirect government guarantees of payments. However, many issuers or
servicers of mortgage-related securities guarantee, or provide insurance for,
timely payment of interest and principal on such securities.

Additional Risk Factors: Due to the possibility of prepayments of the underlying
mortgage instruments, mortgage-backed securities generally do not have a known
maturity. In the absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate is a function of an
assumption regarding anticipated prepayment patterns, based upon current
interest rates, current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus different market
participants can produce different average life estimates with regard to the
same security. There can be no assurance that estimated average life will be a
security's actual average life. Like fixed income securities in general,
mortgage-related securities will generally decline in price when interest rates
rise. Rising interest rates also tend to discourage refinancing of home
mortgages, with the result that the average life of mortgage-related securities
held by a Fund may be lengthened. As average life extends, price volatility
generally increases. For that reason, extension of average life causes the
market price of the mortgage-related securities to decrease further when
interest rates rise than if the average lives were fixed. Conversely, when
interest rates fall, mortgages may not enjoy as large a gain in market value due
to prepayment risk. Prepayments in mortgages tend to increase, average life
tends to decline and increases in value are correspondingly moderated.

MUNICIPALS

Municipal securities ("Municipals") are debt obligations issued by local, state
and regional governments that provide interest income that is exempt from
Federal income taxes and in certain instances, from state and local taxes.
Municipals include both municipal bonds (those securities with maturities of
five years or more) and municipal notes (those securities with maturities of
less than five years). Municipal bonds are issued for a wide variety of reasons:
to construct public facilities, such as airports, highways, bridges, schools,
hospitals, mass transportation, streets, water and sewer works; to obtain funds
for operating expenses; to refund outstanding municipal obligations; and to loan
funds to various public institutions and facilities. Certain industrial
development bonds are also considered municipal bonds if their interest is
exempt from federal income taxes. Industrial development bonds are issued by or
on behalf of public authorities to obtain funds for various privately-operated
manufacturing facilities, housing, sports arenas, convention centers, airports,
mass transportation systems and water, gas or sewer works. Industrial
development bonds are ordinarily

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dependent on the credit quality of a private user, not the public issuer.
Because interest on Municipals is exempt from Federal income tax, interest
payments are lower than those otherwise paid. Of course, tax exempt investors
take the lower interest rate without a corresponding income tax benefit.

OPTIONS

Options give the holder of the option the right to buy or sell an underlying at
an agreed price, while obligating the writer of the option to buy or sell at the
agreed price if exercised by the buyer. A put option gives the purchaser of the
option the right to sell, and the writer of the option the obligation to buy,
the underlying security at any time during the option period. A call option
gives the purchaser of the option the right to buy, and the writer of the option
the obligation to sell, the underlying security at any time during the option
period. The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The initial purchase (sale) of an option
contract is an "opening transaction." The writer of an option may close out an
option position that it has written, by entering into a "closing transaction,"
which is simply the purchase of an option contract on the same security with the
same exercise price and expiration date as the option contract originally
opened. If the writer is unable to effect a closing transaction, it will be
obligated to honor the option until the option expires or it delivers the
underlying upon exercise. When the Fund writes an option, it will "cover" its
obligation by holding the underlying (in the case of a call option) or
segregating or earmarking cash (in the case of a put option) needed to satisfy
its obligation until it enters into a closing transaction, the option expires,
or the Fund delivers the underlying security upon exercise by the option holder.

The Funds may purchase put and call options to protect against declines in the
market values of the securities in its portfolio, or in anticipation of
movements in the market values of securities subject to the option. When a Fund
purchases put and call options it pays a premium. If price movements in the
underlying securities are such that exercise of the option would not be
profitable, the Fund's loss will equal the amount of the premium. In the case of
a put option, where a Fund already holds the underlying security, the loss of
the premium may be offset by an increase in the value of the security. In the
case of a call option, where a Fund acquires the underlying security in a
separate transaction, the loss of the premium may be offset by a decrease in the
cost of acquisition of the security.

The Funds may write covered call and put options as a means of increasing the
yield on its portfolio. When a Fund writes an option, if the underlying
securities do not increase or decrease to a price that would make the exercise
of the option by the option holder profitable, the holder generally will allow
the option to expire without being exercised. In such a situation, the Fund will
have realized as profit the premium received for writing the option. When a call
option written by a Fund is exercised, the Fund will be required to sell the
underlying securities to the option holder at the strike price. This price
generally will be lower than the price the Fund could have received if it sold
the underlying at the market price. When a put option written by a Fund is
exercised, the Fund will be required to purchase the underlying securities from
the option holder at the strike price. This price generally will be higher than
the price the Fund would have paid if it bought the underlying at the market
price.

The Funds may purchase and write options on an exchange or over the counter.
Over the counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
counterparty. OTC options are available for a greater variety of securities and
for a wider range of expiration dates and exercise prices than are available for
exchange-traded

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options. Because OTC options are not traded on an exchange, pricing normally is
determined by reference to information provided by a market maker. OTC options
generally are considered to be illiquid.

Risk Factors: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options.

PREFERRED STOCKS

Preferred Stocks are securities that evidence ownership in a corporation and pay
a fixed or variable stream of dividends. Preferred Stocks have a preference over
Common Stocks in the event of the liquidation of an issuer and usually do not
carry voting rights. Because Preferred Stocks pay a fixed or variable stream of
dividends they have many of the characteristics of a Fixed Income Security and
are, therefore, included in both the definition of Equity Security and Fixed
Income Security.

PORTFOLIO TURNOVER

The Investment Manager will use a multimanager approach for each Fund. As a
result, one manager may purchase certain securities at the same time another
manager sells these securities resulting in duplicative transaction costs. The
annual portfolio turnover rate may be in excess of 100%. Higher portfolio
turnover may result in higher transaction costs, including brokerage costs and
taxable gains being passed through to all shareholders, but its impact is to
taxable shareholders.

REPURCHASE AGREEMENTS

Repurchase Agreements are agreements by which a Fund obtains a security in
exchange for cash and simultaneously commits to return the security to the
seller (typically, a member bank of the Federal Reserve System or primary
securities dealer as recognized by the Federal Reserve Bank of New York) at an
agreed upon price (including principal and interest) on an agreed upon date
within a number of days (usually not more than seven) from the date of purchase.
The resale price reflects the purchase price plus an agreed upon market rate of
interest, which is unrelated to the coupon rate or maturity of the underlying
security. A Repurchase Agreement involves the obligation of the seller to pay
the agreed upon price, which obligation is, in effect, secured by the value of
the underlying security.

Repurchase Agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by the Fund will
provide that the underlying security at all times shall have a value at least
equal to the resale price stated in the agreement. Under all repurchase
agreements entered into by the Fund, the Company's Custodian or its agent must
take possession of the underlying collateral. However, if the seller defaults,
the investing Fund could realize a loss on the sale of the underlying security
to the extent that the proceeds of sale, including accrued interest, are less
than the resale price provided in the agreement including interest. In addition,
even though the Bankruptcy Code provides protection for most repurchase
agreements, if the seller should be involved in bankruptcy or insolvency
proceedings, the Fund may experience delays and incur costs in selling the
underlying security, or may suffer a loss of principal and interest

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if the Fund is treated as an unsecured creditor and is required to return the
underlying security to the seller's estate.

RIGHTS

Rights represent the right, but not the obligation, for a fixed period of time
to purchase additional shares of an issuer's Common Stock at the time of a new
issuance, usually at a price below the initial offering price of the Common
Stock and before the Common Stock is offered to the general public. Rights are
usually freely transferable. The risk of investing in a Right is that the Right
may expire prior to the market value of the Common Stock exceeding the price
fixed by the Right.

RULE 144A SECURITIES

Rule 144A securities are securities exempt from registration on resale pursuant
to Rule 144A under the Securities Act of 1933, as amended (the "1933 Act"). Rule
144A securities are traded in the institutional market pursuant to this
registration exemption, and, as a result, may not be as liquid as
exchange-traded securities since they may only be resold to certain qualified
institutional investors. Due to the relatively limited size of this
institutional market, these securities may affect a Fund's liquidity to the
extent that qualified institutional buyers become, for a time, uninterested in
purchasing such securities. Nevertheless, Rule 144A securities may be treated as
liquid securities pursuant to guidelines adopted by the Company's Board of
Directors.

SECURITIES LENDING

In order to generate additional income, the Funds may lend their securities
pursuant to agreements requiring that the loan be continuously secured by
collateral consisting of cash or securities of the U.S. Government or its
agencies equal to at least 100% of the market value of the loaned securities.
The Funds continues to receive interest on the loaned securities while
simultaneously earning interest on the investment of cash collateral. Collateral
is marked to market daily. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially or become insolvent.

TEMPORARY INVESTMENTS

When the Investment Manager believes that changes in economic, financial or
political conditions make it advisable, each Fund may invest up to 100% of its
assets in cash and certain short- and medium-term fixed income securities for
temporary defensive purposes. These Temporary Investments may consist of
obligations of the U.S. or foreign governments, their agencies or
instrumentalities; Money Market Instruments; and instruments issued by
international development agencies.

U.S. GOVERNMENT SECURITIES

U.S. Government Securities: U.S. Government securities are bills, notes and
bonds issued by the U.S. Government and backed by the full faith and credit of
the United States.

U.S. Treasury Obligations: U.S. Treasury Obligations are bills, notes and bonds
issued by the U.S. Treasury, and separately traded interest and principal
component parts of such obligations that are

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transferable through the Federal book-entry system known as Separately Traded
Registered Interest and Principal Securities ("STRIPS").

U.S. Government Agency Obligations: Agencies are fixed income securities which
are not guaranteed by, or backed by the full faith and credit of the U.S.
Government, but which are issued, sponsored or guaranteed by a federal agency or
federally sponsored agency. Certain Federal agencies, such as the GNMA, have
been established as instrumentalities of the U.S. Government to supervise and
finance certain types of activities. Issues of these agencies, while not direct
obligations of the U.S. Government, are either backed by the full faith and
credit of the United States (e.g., GNMA securities) or supported by the issuing
agencies' right to borrow from the Treasury. The issues of other agencies are
supported by the credit of the instrumentality (e.g., Fannie Mae securities).

VARIABLE AND FLOATING RATE INSTRUMENTS

Certain obligations may carry variable or floating rates of interest, and may
involve a conditional or unconditional demand feature. Such instruments bear
interest at rates which are not fixed, but which vary with changes in specified
market rates or indices. The interest rates on these securities may be reset
daily, weekly, quarterly or some other reset period, and may have a floor or
ceiling on interest rate changes. There is a risk that the current interest rate
on such obligations may not accurately reflect existing market interest rates. A
demand instrument with a demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

When-Issued or Delayed Delivery Securities are subject to market fluctuations
due to changes in market interest rates and it is possible that the market value
at the time of settlement could be higher or lower than the purchase price if
the general level of interest rates has changed. When a Fund agrees to purchase
When-Issued or Delayed Delivery Securities, it will earmark or segregate cash or
liquid securities in an amount equal to the Funds' commitment to purchase these
securities. Although the Funds may purchase securities on a when-issued (or
forward commitment) basis with the intention of actually acquiring securities
for its investment portfolio, it may dispose of a When-Issued Security or
forward commitment prior to settlement if it deems appropriate.

YANKEE DOLLARS

The Funds may invest in certain fixed income securities known as Yankee dollars,
which are dollar-denominated obligations issued by foreign banks in the U.S.
markets.

ZERO COUPONS, PAY-IN-KIND SECURITIES OR DEFERRED PAYMENT SECURITIES

Zero Coupon, Pay-In-Kind and Deferred Payment Securities are all types of fixed
income securities on which the holder does not receive periodic cash payments of
interest or principal. Generally, these securities are subject to greater price
volatility and lesser liquidity in the event of adverse market conditions than
comparably rated securities paying cash interest at regular intervals. Although
a Fund will not receive cash periodic coupon payments on these securities, the
Fund may be deemed to have received interest income, or "phantom income" during
the life of the obligation. The Fund may have to pay taxes on or distribute this
phantom income to shareholders, although it has not received any cash payment.

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Zero Coupons: Zero Coupons are fixed income securities that do not make regular
interest payments. Instead, Zero Coupons are sold at a discount from their face
value. The difference between a Zero Coupon's issue or purchase price and its
face value represents the imputed interest an investor will earn if the
obligation is held until maturity. Zero Coupons may offer investors the
opportunity to earn a higher yield than that available on ordinary
interest-paying obligations of similar credit quality and maturity.

Pay-In-Kind Securities: Pay-In-Kind Securities are securities that have interest
payable by delivery of additional securities. Upon maturity, the holder is
entitled to receive the aggregate par value of the securities.

Deferred Payment Securities: Deferred Payment Securities are securities that
remain Zero Coupons until a predetermined date, at which time the stated coupon
rate becomes effective and cash interest becomes payable at regular intervals.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations are fundamental policies of the Funds which
cannot be changed with respect to the Funds without the consent of the holders
of a majority of the Funds' outstanding shares. The term "majority of the
outstanding shares" means the vote of (i) 67% or more of the Funds' shares
present at a meeting, if more than 50% of the outstanding shares of the Funds
are present or represented by proxy, or (ii) more than 50% of the Funds'
outstanding shares, whichever is less.

The Funds may not:

1. Purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements involving such securities) if, as a result,
(i) more than 5% of the total assets of a Fund would be invested in the
securities of such issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer. This restriction
applies to 75% of a Fund's total assets.

2. Purchase any securities which would cause 25% or more of the total
assets of a Fund to be invested in the securities of one or more
issuers conducting their principal business activities in the same
industry, provided that this limitation does not apply to investments
in obligations issued or guaranteed by the U.S. Government or its
agencies and instrumentalities and repurchase agreements involving such
securities.

3. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate a Fund to purchase securities or
require the Fund to segregate assets are not considered to be
borrowings.

4. Make loans if, as a result, more than 33 1/3% of its total assets would
be lent to other parties, except that a Fund may, without regard to
this limitation (i) purchase or hold debt instruments

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in accordance with its investment objective and policies; (ii) enter
into repurchase agreements; and (iii) lend its securities.

5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that the Funds may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and
(ii) commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.

6. Issue senior securities (as defined in 1940 Act) except as permitted by
rule, regulation or order of the SEC.

7. Act as an underwriter of securities of other issuers, except as it may
be deemed an underwriter in selling a portfolio security.

8. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.

The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs immediately after or as a result
of a purchase of such security. For the purposes of fundamental restriction
number 2, finance companies are not considered a single industry, but are
grouped instead according to their services.

NON-FUNDAMENTAL POLICIES

The following investment limitations are non-fundamental policies of the Funds
and may be changed with respect to the Funds by the Board of Directors.

The Funds may not:

1. Pledge, mortgage or hypothecate assets, except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing. A transfer
of assets under a repurchase agreement is not considered a pledge or
hypothecation subject to this restriction.

2. Invest in companies for the purpose of exercising control.

3. Purchase securities on margin or effect short sales, except that the
Fund may (i) obtain short-term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin
payments in connection with transactions involving futures contracts
and options on such contracts; and (iii) make short sales "against the
box" or in compliance with the SEC's position regarding the asset
segregation requirements imposed by Section 18 of the 1940 Act.

4. Invest its assets in securities of any investment company except as
permitted by the 1940 Act, except, as a non-fundamental policy, the
CIF Short Duration Fund may not invest its assets in any investment
companies.

5. Purchase or hold illiquid securities (i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less)
if, in the aggregate, more than 15% of its net assets would be invested
in illiquid securities. Unregistered securities sold in reliance on

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the exemption from registration in Section 4(2) of the 1933 Act and
securities exempt from registration on re-sale pursuant to Rule 144A of
the 1933 Act may be treated as liquid securities under procedures
adopted by the Board of Directors.

6. Borrow money, except for temporary or emergency circumstances in
amounts not to exceed 5% of a Fund's net assets. For example, the Fund
may borrow for temporary defensive purposes or to meet shareholder
redemptions when it would not be in the best interests of the Fund to
liquidate portfolio holdings. The Fund will not make additional
purchases of securities when the Fund's borrowings exceed 5% of total
assets.

THE INVESTMENT MANAGER

Commonfund Asset Management Company, Inc. is an indirect, wholly owned
subsidiary of The Common Fund for Nonprofit Organizations ("Commonfund").
Employees of the Investment Manager are responsible for Commonfund's investment
programs. For its investment advisory services, the Company will pay the
Investment Manager an annual fee shown as a percentage of average net assets of
each Fund:
<TABLE>
<S> <C>
CIF Inflation-Indexed Bond Fund 0.15 - 0.35%*
CIF Short Duration Fund 0.19%
CIF Low Duration Bond Fund 0.30%
CIF Core Plus Bond Fund 0.35%
CIF Core Equity Fund 0.45%
CIF Small Cap Growth Fund 0.90%
CIF Small Cap Value Fund 0.90%
CIF International Equity Fund 0.70%
</TABLE>

*The Investment Advisory Fees vary with Fund performance. The total
advisory fee payable by the Fund will be 0.25% (25 basis points) per
annum of assets under management if the return on the Fund is 50 basis
points above the Lehman U.S. TIPS Index for the prior twelve months
("fulcrum point"), and will vary upwards or downwards by an amount
equal to 20% of any performance above or below the fulcrum point. In no
event will the fee exceed 35 basis points or decline below 15 basis
points.

The Investment Manager serves as the investment adviser for the Funds under an
investment advisory agreement (the "Advisory Agreement"). Under the Advisory
Agreement, and subject to the supervision of, and policies established by, the
Company's Board of Directors, the Investment Manager determines the investment
structure and strategy of each Fund, selects Sub-Advisers to implement those
strategies, and supervises adherence by the Sub-Advisers with the Funds'
investment policies and guidelines. The Investment Manager also recommends the
appointment of additional or replacement Sub-Advisers to the Company's Board of
Directors. The Investment Manager makes recommendations to the Board of
Directors with respect to the appropriate allocation of assets to each of the
Sub-Advisers. The Funds and the Investment Manager have applied for exemptive
relief from the SEC necessary to permit the Investment Manager to add or
terminate Sub-Advisers without shareholder approval. The Advisory Agreement
provides that the Investment Manager shall not be protected against any
liability to the Company or its shareholders by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard of its obligations or duties thereunder.

The continuance of the Advisory Agreement after the first two years must be
specifically approved at least annually (i) by the vote of the Board of
Directors or by a vote of the shareholders of the Funds,

30
<PAGE> 75
and (ii) by the vote of a majority of the Board of Directors who are not parties
to the Advisory Agreement or "interested persons" of any party thereto (the
"Independent Directors"), cast in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreement will terminate automatically in
the event of its assignment, and is terminable at any time without penalty by
the Board of Directors of the Company or, with respect to a Fund, by a majority
of the outstanding shares of the Fund, on not less than 30 days' nor more than
60 days' written notice to the Investment Manager, or by the Investment Manager
on 90 days' written notice to the Company.

THE SUB-ADVISERS

The Funds currently have twenty-three sub-advisers (each a "Sub-Adviser and,
collectively, the "Sub-Advisers"), which are listed below. Each Sub-Adviser will
manage the portion of the Funds' assets allocated to it, which allocation is
determined by the Directors upon the recommendation of the Investment Manager.
Each Sub-Adviser makes the investment decisions for its portion of the allocated
assets of its Fund subject to the supervision of, and in accordance with
policies established by, the Board of Directors. The percentage of assets of
each Fund allocated to each Sub-Adviser is described in more detail below.

ADVANCED INVESTMENT TECHNOLOGY, INC. ("AIT") acts as Sub-Adviser to the CIF Core
Equity Fund. As of September 30, 2000, AIT had approximately $875 million in
assets under management. For its services, AIT is entitled to receive a fee from
the CIF Core Equity Fund, equal to the following percentage of the average
daily net assets of the Fund allocation to it: 0.28% for the first $250
million, 0.24% for the next $250 million and 0.22% thereafter.

ARTISAN PARTNERS, L.P. ("Artisan") acts as Sub-Adviser to the CIF Small Cap
Growth Fund. As of September 30, 2000, Artisan had approximately $10.6 billion
in assets under management. For its services, Artisan is entitled to receive a
fee from the CIF Small Cap Growth Fund, which is calculated daily and paid
quarterly, at an annual rate of 0.75% of the average daily net assets of the
Fund allocated to it.

CAPITAL GUARDIAN TRUST COMPANY ("Capital Guardian") acts as Sub-Adviser to the
CIF International Equity Fund. As of September 30, 2000, Capital Guardian had
approximately $125 billion in assets under management. For its services, Capital
Guardian is entitled to receive a fee from the CIF International Equity Fund,
which is calculated daily and paid quarterly, at an annual rate of 0.356% of
the average daily net assets of the Fund allocated to it.

CAPITALWORKS INVESTMENT PARTNERS ("CapitalWorks") acts as Sub-Adviser to the CIF
Small Cap Growth Fund. As of September 30, 2000, CapitalWorks had approximately
$1.18 billion in assets under management. For its services, CapitalWorks is
entitled to receive a fee from the CIF Small Cap Growth Fund, equal to the
following percentage of the average daily net assets of the Fund allocated to
it: 0.75% for the first $50 million and 0.65% thereafter.

CONSTITUTION RESEARCH & MANAGEMENT, INC. ("Constitution Research") acts as
Sub-Adviser to the CIF Small Cap Growth Fund. As of September 30, 2000,
Constitution Research had approximately $653 million in assets under management.
For its services, Constitution Research is entitled to receive a fee from the
CIF Small Cap Growth Fund, equal to the following percentage of the average
daily net assets of the Fund allocated to it: 0.75% for the first $50 million
and 0.60% thereafter.

31
<PAGE> 76
GLOBEFLEX CAPITAL, L.P. ("GlobeFlex Capital") acts as Sub-Adviser to the CIF
Small Cap Growth Fund. As of September 30, 2000, GlobeFlex Capital had
approximately $1.02 billion in assets under management. For its services,
GlobeFlex Capital is entitled to receive a fee from the CIF Small Cap Growth
Fund, equal to the following percentage of the average daily net assets of the
Fund allocated to it: 0.75% for the first $25 million and 0.70% thereafter.

GRANTHAM, MAYO, VAN OTTERLOO & CO. LLC ("GMO") acts as Sub-Adviser to the CIF
International Equity Fund. As of September 30, 2000, GMO had approximately $22.4
billion in assets under management. For its services, GMO is entitled to receive
a fee from the CIF International Equity Fund, which is calculated daily and paid
quarterly, at an annual rate of 0.69% of the average daily net assets of the
Fund allocated to it.

HIGH ROCK CAPITAL LLC ("High Rock Capital") acts as Sub-Adviser to the CIF Small
Cap Value Fund. As of September 30, 2000, High Rock Capital had approximately
$1.95 billion in assets under management. For its services, High Rock Capital is
entitled to receive a fee from the CIF Small Cap Value Fund, equal to the
following percentage of the average daily net assets of the Fund allocated to
it: 1.00% for the first $50 million and 0.95% thereafter.

IRIDIAN ASSET MANAGEMENT LLC ("Iridian") acts as Sub-Adviser to the CIF Core
Equity Fund. As of September 30, 2000, Iridian had approximately $9.48 billion
in assets under management. For its services, Iridian is entitled to receive a
fee from the CIF Core Equity Fund, equal to the following percentage of the
average daily net assets of the Fund allocated to it: 0.85% for the first $20
million, and 0.50% thereafter.

JOHN A. LEVIN & CO., INC. ("John A. Levin") acts as Sub-Adviser to the CIF Core
Equity Fund. As of September 30, 2000, John A. Levin had approximately $10.5
billion in assets under management. For its services, John A. Levin is entitled
to receive a fee from the CIF Core Equity Fund, which is calculated daily and
paid quarterly, at an annual rate of 0.375% of the average daily net assets of
the Fund allocated to it.

MARSICO CAPITAL MANAGEMENT LLC ("Marsico Capital") acts as Sub-Adviser to the
CIF Core Equity Fund. As of September 30, 2000, Marsico Capital had
approximately $15.5 billion in assets under management. For its services,
Marsico Capital is entitled to receive a fee from the CIF Core Equity Fund,
equal to the following percentage of the average daily net assets of the Fund
allocated to it: 0.50% for the first $300 million, 0.45% for the next $100
million and 0.40% thereafter.

MARTINGALE ASSET MANAGEMENT, L.P. ("Martingale") acts as Sub-Adviser to the CIF
Small Cap Value Fund. As of September 30, 2000, Martingale had approximately
$1.41 billion in assets under management. For its services, Martingale is
entitled to receive a fee from the CIF Small Cap Value Fund, which is calculated
daily and paid quarterly, at an annual rate of 0.30% of the average daily net
assets of the Fund allocated to it.

METROPOLITAN WEST ASSET MANAGEMENT ("MetWest") serves as Sub-Adviser to the CIF
Low Duration Bond Fund. As of September 30, 2000, MetWest had approximately
$9.23 billion in assets under management. For its services, MetWest is entitled
to receive a fee from the CIF Low

32
<PAGE> 77
Duration Bond Fund, equal to the following percentage of the average daily net
assets of the Fund allocated to it: 0.188% for the first $100 million and 0.15%
thereafter.

NORTHPOINTE CAPITAL LLC ("NorthPointe") serves as Sub-Adviser to the CIF Small
Cap Value Fund. As of September 30, 2000, NorthPointe had approximately $381
million in assets under management. For its services, NorthPointe is entitled to
receive a fee from the CIF Small Cap Value Fund, equal to the following
percentage of the average daily net assets of the Fund allocated to it: 0.75%
for the first $30 million and 0.60% thereafter.

PACIFIC INVESTMENT MANAGEMENT COMPANY ("PIMCO") acts as Sub-Adviser for the CIF
Inflation-Indexed Bond Fund and the CIF Core Plus Bond Fund. As of September 30,
2000, PIMCO had approximately $207.3 billion in assets under management. For its
services to the CIF Inflation-Indexed Bond Fund, PIMCO is entitled to receive a
base fee at an annual rate of 0.05% of the average daily net assets of the Fund,
which is calculated daily and paid quarterly, and an incentive fee. The
incentive fee is equal to 20% of any performance in excess of 50 basis points
above the Lehman U.S. TIPS Index for the prior twelve months, but shall not
cause the total fee payable to exceed 0.25% (25 bpts) annually. For its services
to the CIF Core Plus Bond Fund, PIMCO is entitled to receive a fee, equal to the
following percentage of the average daily net assets of the Fund allocated to
it: 0.05% for the first $25 million, 0.225% for the next $75 million and 0.135%
thereafter.

SEIX INVESTMENT ADVISORS ("SEIX") serves as a Sub-Adviser to the CIF Low
Duration Bond Fund. As of September 30, 2000, SEIX had approximately $7.23
billion in assets under management. For its services, SEIX is entitled to
receive a fee from the CIF Small Cap Value Fund, equal to the following
percentage of the average daily net assets of the Fund allocated to it: 0.218%
for the first $150 million, 0.20% for the next $100 million, 0.15% for the next
$100 million and 0.10% thereafter.

SHAPIRO CAPITAL MANAGEMENT COMPANY, INC. ("Shapiro Capital") acts as Sub-Adviser
to the CIF Small Cap Value Fund. As of September 30, 2000, Shapiro Capital had
approximately $1.01 billion in assets under management. For its services,
Shapiro Capital is entitled to receive a fee from the CIF Small Cap Value Fund,
which is calculated daily and paid quarterly, at an annual rate of 0.75% of the
average daily net assets of the Fund allocated to it.

SKYLINE ASSET MANAGEMENT, L.P. ("Skyline") acts as Sub-Adviser to the CIF Small
Cap Value Fund. As of September 30, 2000, Skyline had approximately $654 million
in assets under management. For its services, Skyline is entitled to receive a
fee from the CIF Small Cap Value Fund, which is calculated daily and paid
quarterly, at an annual rate of 1.00% of the average daily net assets of the
Fund allocated to it.

STATE STREET GLOBAL ADVISORS, INC. ("SSgA") acts as Sub-Adviser to the CIF Core
Equity Fund, CIF Small Cap Growth Fund, CIF Small Cap Value Fund and CIF
International Equity Fund. As of September 30, 2000, SSgA had approximately
$741.2 billion in assets under management. For its services, SSgA is entitled to
receive a fee from the CIF Core Equity Fund, which is calculated daily and paid
quarterly, at an annual rate of 0.150%, of the average daily net assets of the
Fund allocated to it.

TT INTERNATIONAL INVESTMENT MANAGEMENT ("TT International") acts as Sub-Adviser
to the CIF International Equity Fund. As of September 30, 2000, TT International
had approximately $7.65 billion in assets under management. For its services, TT
International is entitled to receive a fee from the CIF International Equity
Fund, equal to the following percentage of the average daily net assets of the
Fund allocated to it: 0.60% for the first $100 million, 0.40% for the next $200
million and 0.35% thereafter.

33
<PAGE> 78
VEREDUS ASSET MANAGEMENT, LLC ("Veredus") acts as Sub-Adviser to the CIF Small
Cap Growth Fund. As of September 30, 2000, Veredus had approximately $546
million in assets under management. For its services, Veredus is entitled to
receive a fee from the CIF Small Cap Growth Fund, which is calculated daily and
paid quarterly, at an annual rate of 0.75% of the average daily net assets of
the Fund allocated to it.
WELLINGTON MANAGEMENT COMPANY, LLP ("Wellington Management") acts as Sub-Adviser
to the CIF Short Duration Fund. As of September 30, 2000, Wellington Management
had approximately 266.8 billion in assets under management. For its services,
Wellington Management is entitled to receive a fee from the CIF Short Duration
Fund, equal to the following percentage of the average daily net assets of the
Fund allocated to it: 0.10% for the first $100 million, 0.075% for the next $100
million, and 0.055% thereafter.

WESTERN ASSET MANAGEMENT COMPANY ("WAMCO") acts as Sub-Adviser to the CIF
Inflation-Indexed Bond Fund, CIF Short Duration Fund and CIF Core Plus Bond
Fund. As of September 30, 2000, WAMCO had approximately $71.1 billion in assets
under management. For its services to the CIF Inflation-Indexed Bond Fund, WAMCO
is entitled to receive a base fee at an annual rate of 0.05% of the average
daily net assets of the Fund, which is calculated daily and paid quarterly, and
an incentive fee. The incentive fee is equal to 20% of any performance in excess
of 50 basis points above the Lehman U.S. TIPS Index for the prior twelve months,
but shall not cause the total fee payable to exceed 0.25% (25 bpts) annually.
For its services, to the CIF Short Duration Fund and CIF Core Plus Bond Fund,
WAMCO is entitled to receive a fee which is calculated daily and paid quarterly,
at an annual rate of 0.055% and 0.135% of the average daily net assets of the
Fund allocated to it, respectively.

FUND ADMINISTRATION

The Company and Investors Bank & Trust Company ("IBT Co.") have entered into an
administration agreement (the "Administration Agreement"), a custodian agreement
and a transfer agency and service agreement, pursuant to which IBT Co. will
provide general fund administration services to the Funds including, Fund
Administration, Fund Accounting, Custody and Transfer Agent services. For the
services rendered by IBT Co., the Company will pay IBT an aggregate fee, which
is calculated daily and paid monthly, equal to the following percentages of the
average daily net assets of the Funds and the Commonfund funds allocated to it:
.0725% for $10 billion or less, .055% for the next $10 billion and .040% for
over $20 billion.

The Administration Agreement provides that IBT Co. shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which the Administration Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Administrator in the performance of its duties or from
reckless disregard by it of its duties and obligations thereunder.

The Administration Agreement has an initial term of three years and is
automatically renewed for an additional three year term unless terminated by
either party on 90 days prior notice. Either party may terminate the
Administration Agreement in the event of a material breach of the Administration
Agreement that is not cured within 90 days of notice thereof, and the Company
may terminate this Administrative Agreement in the event that IBT Co fails to
cure identified deficiencies within 30 days after a written notice thereof.

CUSTODIAN

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<PAGE> 79
IBT Co., 200 Clarendon Street, Boston, MA, 02116, acts as the custodian of the
Company. The Custodian holds cash, securities and other assets of the Company as
required by the 1940 Act.

EXPERTS

The Independent Accountants for the Company are PricewaterhouseCoopers LLP
located at 1177 Avenue of the Americas, New York, NY 10036.

LEGAL COUNSEL
Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, Pennsylvania
19103, serves as counsel to the Company.

DISTRIBUTION

Commonfund Securities, Inc. (the "Distributor"), an indirect, wholly-owned
subsidiary of Commonfund, serves as the distributor of interests in the Company
under a Distribution Agreement. The Distribution Agreement shall remain in
effect for a period of two years after the effective date of the agreement and
is renewable annually thereafter with the approval of a majority of the Board of
Directors and a majority of the Independent Directors. The Distribution
Agreement may be terminated by the Distributor, by a majority vote of the
Directors who are not interested persons and have no financial interest in the
Distribution Agreement or by a majority vote of the outstanding securities of
the Company upon not more than 60 days' written notice by either party or upon
assignment by the Distributor. The Distributor receives no compensation from the
Funds. The Investment Manager pays the Distributor, from its own assets, an
annual fee equal to the costs it incurs in distributing shares of the Funds,
plus 5% of such costs.

DIRECTORS AND OFFICERS OF THE COMPANY

The management and affairs of the Company are supervised by the Directors under
the laws of the State of Delaware. The Directors have approved contracts under
which, as described above, certain companies provide essential management
services to the Company. The Directors and executive officers of the Company and
their principal occupations for the last five years are set forth below. Each
may have held other positions with the named companies during that period.
Unless otherwise noted, the business address of each Director and each Executive
Officer is c/o Commonfund Institutional Fund, 15 Old Danbury Road, P.O. Box 812,
Wilton, CT 06897-0812.

DIRECTORS

Robert L. Bovinette* - 60

Mr. Bovinette has served as President and Chief Executive Officer of Commonfund
since January, 1996. Prior to that time, he served as President and Chief
Executive Officer of Albuquerque Academy in Albuquerque, New Mexico, a private
day school with a substantial endowment.

John B. Carroll - 65

35
<PAGE> 80
Mr. Carroll was President of GTE (Verizon) Investment Management Corporation
from 1984-1997, and Vice President of Investment Management for GTE (Verizon)
Corporation from 1984 to 2000, at which time total asset responsibility was in
excess of $80 billion.

Prior to 1984, Mr. Carroll was Executive Vice President and Director of
Consulting for Evaluation Associates, Inc. (EAI), an investment consulting firm.
Prior to EAI, Mr. Carroll was Vice President and Head of Pension Investment
Consulting at Chemical Bank of New York (now The Chase Manhattan Bank).

Mr. Carroll is also a Director of iShares and the J.P. Morgan Private Equity
Fund. He is a former member of the Institutional Investment Committee of the New
York Stock Exchange, a past Vice Chairman of CIEBA and a past Chairman of the
Noyes Foundation. He was also a former Trustee and Member of the Executive
Committee of the Common Fund. He resides in Ridgefield, CT and Kerry, Ireland.

David M. Lascell, Esq.* - 59

David M. Lascell is a partner in the law firm of Harter, Secrest & Emery, LLP.
Mr. Lascell received his A.B. from Hamilton College, his Bachelor of Laws Degree
from Cornell University Law School, and has been practicing law since 1966. He
is a Fellow of the American College of Trial Lawyers, the American Law Institute
and the Defense Research Institute.

Mr. Lascell has served on the Board of Trustees of Commonfund since 1990 and is
currently the Chair. He is a Trustee of Grove City College in Pennsylvania and
is its Treasurer. Mr. Lascell has been a Director of United Insurance Management
Company since 1991. He also is a part owner, Director, Vice President and
General Counsel of AWH Corporation, a privately held corporation that finishes
the interiors of ships in major shipyards around the world, and manufactures
interior fixtures for convenience stores and the petroleum industry in the
United States.

Mr. Lascell served as Chairman of the Board of Trustees of Wells College from
1977 to 1989, and is now an Honorary Trustee of the College. From 1986 to 1988
he was a Director of the American Council on Education and served as a Trustee
of Rochester Area Colleges from 1980 to 1981, a consortium of public and private
colleges in upstate New York. From 1980 through 1991, he was a Director of the
Association of Governing Boards of Universities and Colleges, serving two terms
as its Chairperson, from 1986 to 1988. For eleven years beginning in 1988, Mr.
Lascell was a Director of the National Center for Non-Profit Boards and was its
first Chairman.

Mr. Lascell was a founding Director of SCUUL, Ltd in 1986, an offshore
for-profit stock insurance company that acts as a reinsurer and also writes
various liability coverages. From 1989 to 1993 he was also Chairman of the Board
of United Educators Insurance Risk Retention Group, the leading provider of
liability coverages for colleges, universities, and independent schools in the
United States. He has published material dealing with trustees' fiduciary
duties, legal guidelines for college and university administrators, and
comparing nonprofit and business corporation boards of directors.

Louis W. Moelchert - 58

36
<PAGE> 81
Mr. Moelchert is a registered investment adviser and has been President & Owner
of Private Advisor, LLC since 1996. Since 1975 he has been employed by the
University of Richmond, first as Vice President for Business and Finance from
1975 through 1997, and since 1997 as Vice President for Investments.

Mr. Moelchert served on the Investment Advisory Committee of the Virginia State
Retirement System, first as Vice Chairman from 1996 through 1997, and as
Chairman from 1998-2000. He serves on the investment advisory and/or valuation
committees of approximately ten private capital investment funds, on the Boards
of Directors of Venture Lending and Leasing II and the Mentor Family of Funds.
He is President of the Endowment Fund of the River Road Baptist Church.

From 1986 to 1998, Mr. Moelchert was a member of the Board of Trustees of the
Commonfund, serving as Vice Chairman from 1991 through 1993 and as Chairman from
1994 through 1998. Mr. Moelchert resides in Richmond, Virginia.

Jerald L. Stevens - 59

Since 1985, Mr. Stevens has been a consultant in the areas of investment and
financial management to a range of clients including American Express,
Rockefeller & Company, James Wolfenson & Co., Indiana University and Xerox
Financial Services where he served as Executive Vice President and Chief of
Staff from 1988 through 1990. From 1983 through 1985 he was President and Chief
Operating Officer of Vanguard Group, and from 1978 through 1983 he served as
Vice President, Finance and Administration, and Treasurer of Yale University
where he had overall responsibility for all investment activities where major
initiatives were launched in real estate, venture capital, index investing and
international markets.

Mr. Stevens was Secretary of Human Services and Commissioner of Public Welfare
for the Commonwealth of Massachusetts from 1975 through 1978, Senior Vice
President of the Boston Company, from 1973 through 1975, and Senior Vice
President and Director of Wellington Management Company from 1967 through 1973.

Mr. Stevens has served as Trustee of Bryn Mawr College 1984-1994 and has been a
Board Member of the Long Wharf Theatre 1991-1993, University City Science Center
1983-1988, Thomas Jefferson University 1983-1988 and Yale New Haven Hospital
1978-1983. He was a trustee of the Hospital Fund, Inc. from 1991 through 1999,
serving as Chairman from 1995 through 1999. Mr. Stevens resides in Chester, VT.

*Messrs. Bovinette and Lascell are "interested persons" within the
meaning of the 1940 Act.

OFFICERS

President - Robert L. Bovinette - see above.

Secretary - John W. Auchincloss - 42

Mr. Auchincloss is General Counsel and Secretary of Commonfund. He joined that
organization as Assistant General Counsel in July 1996. Prior to that time, he
was of Counsel to the Westport, Connecticut law firm of Levett, Rockwood &
Sanders, P.C. which he joined in the Spring of 1994

37
<PAGE> 82
after serving as an Assistant United States Attorney in the Office of the United
States Attorney for the Southern District of New York.

Assistant Secretary - Susan C. Mosher - 45

Ms. Mosher is a Director of Mutual Fund Administration at IBT Co. She has been
employed by the organization in such capacity since 1995. Prior to joining IBT
Co., Ms. Mosher served as Associate Counsel to 440 Financial Group, Inc., a
subsidiary of Allmerica Financial, from 1992 to 1995.

Treasurer - Marita K. Wein - 38

Ms. Wein is Senior Vice President and Treasurer of Commonfund. She has been
employed by that organization for 14 years in the fund accounting area and,
since her appointment to her present position in June 1997, she has been
responsible for general investor accounting and reporting functions of the
company.

Assistant Treasurer - Timothy F. Osborne - 33

Mr. Osborne serves as a Director of Mutual Fund Administration at IBT Co., a
position he assumed in 1998. Mr. Osborne joined IBT Co. in 1995 as a Manager.
Prior to that time, Mr. Osborne was an Account Supervisor at Chase Global Funds
Services Company from 1992 to 1995.

COMPENSATION OF DIRECTORS AND OFFICERS

The Officers of the Company serve without compensation as such. The Company pays
Mr. Carroll, Mr. Lascell, Mr. Moelchert, and Mr. Stevens each an annual fee of
$8,000, plus reasonable out-of-pocket expenses.

The Directors and officers of the Company own less than 1% of the outstanding
shares of the Funds.

Compensation Table*
<TABLE>
<CAPTION>
Director Aggregate Pension or Estimated Annual Total Compensation
Compensation From Retirement Benefits Benefits Upon From Funds and Fund
Funds Accrued As Part of Retirement Complex Paid to
Funds Expenses Directors
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert L. Bovinette, None None None None
Director

John B. Carroll, Director $8,000 None None $8,000

David M. Lascell $8,000 None None $8,000
-----------------------------------------------------------------------------------------------------------------
</TABLE>

38
<PAGE> 83
<TABLE>

<S> <C> <C> <C> <C>
Louis W. Moelchert, $8,000 None None $8,000
Director

-----------------------------------------------------------------------------------------------------------------
Jerald L. Stevens, $8,000 None None $8,000
Director
</TABLE>

* The compensation figures are based on estimates of future payments for
the current fiscal year.

COMPUTATION OF YIELD AND TOTAL RETURN

From time to time the Company may advertise yield and total return of the Funds.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of the Funds refers to the annualized income
generated by an investment in a Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated 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 any reimbursement); c =
the current daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share on
the last day of the period.

The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including but not limited
to, the period from which that particular Fund commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period. In particular, total return will be calculated according to the
following formula: P (1 + T)(n) = ERV, where P = a hypothetical initial payment
of $1,000; T = average annual total return; n = number of years; and ERV =
ending redeemable value, as of the end of the designated time period, of a
hypothetical $1,000 payment made at the beginning of the designated time period.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through Investors Bank & Trust Company
(the "Transfer Agent") on days when the Federal Reserve System and the New York
Stock Exchange ("NYSE") are both open for business. Currently, the weekdays on
which the Funds are closed for business are: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. Shares of
the Fund are offered on a continuous basis.

It is currently the Company's policy to pay all redemptions in cash. The Company
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by the Fund in
lieu of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.

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<PAGE> 84
The Company reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the NYSE is restricted, or during the existence of an emergency (as determined
by the SEC by rule or regulation) as a result of which disposal or valuation of
the Fund's securities is not reasonably practicable, or for such other periods
as the SEC has by order permitted. The Company also reserves the right to
suspend sales of shares of the Fund for any period during which the NYSE, the
Investment Manager, the Administrator, the Transfer Agent and/or the Custodian
are not open for business.

DETERMINATION OF NET ASSET VALUE

The securities of the Funds are valued by the Investors Bank & Trust Company
(the "Custodian"), with assistance of the Sub-Advisers, under the general
supervision of a Valuation Committee appointed by the Board of Directors. The
Custodian may use an independent pricing service to obtain valuations of
securities. The pricing service relies primarily on prices of actual market
transactions as well as on trade quotations obtained from third parties.
However, the pricing service may use a matrix system to determine valuations of
fixed income securities. This system considers such factors as security prices,
yields, maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures used by the pricing service
and its valuation are reviewed by the officers of the Company under the general
supervision of the Board of Directors. If there is no readily ascertainable
market value for a security, the Investment Manager may make a good faith
determination as to the "fair value" of the security in accordance with
procedures adopted by the Board of Directors and a Valuation Committee.

Securities with remaining maturities of 60 days or less will be valued by the
amortized cost method, unless it is determined not to represent fair value in
accordance with procedures adopted by the Board of Directors. The amortized cost
method involves valuing a security at its cost on the date of purchase and
thereafter (unless amortized cost is determined in accordance with procedures
approved by the Board of Directors not to represent fair value) assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuations in general market rates of interest on the value of the
instrument. While this method provides certainty in valuation, it may result in
periods during which value, as determined by this method, is higher or lower
than the price the Fund would receive if it sold the instrument.

TAXES

The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisors
with specific reference to their own tax situations, including their state and
local tax liabilities.

FEDERAL INCOME TAX

The following is only a summary of certain additional federal tax considerations
generally affecting the Funds that are not discussed in the Funds' prospectuses.
No attempt is made to present a detailed explanation of the federal, state or
local tax treatment of the Funds or their shareholders and the discussion here
and in the Funds' prospectuses is not intended as a substitute for careful tax
planning.

The discussion of federal income tax consequences is based on the Code and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as

40
<PAGE> 85
well as administrative changes or court decisions, may significantly change the
conclusions expressed herein, and may have a retroactive effect with respect to
the transactions contemplated herein.

The Funds intend to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, the Funds
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.

In order to qualify for treatment as a RIC under the Code, the Funds must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Funds' gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (ii) at the close of each
quarter of the Funds' taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other securities
limited, in respect to any one issuer, to an amount that does not exceed 5% of
the value of that Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iii) at the close of each
quarter of a Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer, or of two or more issuers which are
engaged in the same, similar or related trades or business if that Fund owns at
least 20% of the voting power of such issuer.

Notwithstanding the Distribution Requirement described above, which requires
only that the Funds distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), the
Funds will be subject to a nondeductible 4% federal excise tax to the extent it
fails to distribute by the end of any calendar year 98% of its ordinary income
for that year and 98% of its capital gain net income (the excess of short- and
long-term capital gains over short-and long-term capital losses) for the
one-year period ending on October 31 of that year, plus certain other amounts.

The Funds intend to make sufficient distributions to avoid liability for the
federal excise tax. The Funds may in certain circumstances be required to
liquidate their investments in order to make sufficient distributions to avoid
federal excise tax liability at a time when the Investment Manager or
Sub-Adviser might not otherwise have chosen to do so, and liquidation of
investments in such circumstances may affect the ability of the Funds to satisfy
the requirements for qualification as a RIC.

Any gain or loss recognized on a sale, exchange or redemption of shares of the
Funds by a taxable shareholder who is not a dealer in securities will generally,
for individual shareholders, be treated as a long-term capital gain or loss if
the shares have been held for more than twelve months, and otherwise will be
treated as short-term capital gain or loss. However, if shares on which a
taxable shareholder has received a net capital gain distribution are
subsequently sold, exchanged or redeemed and such shares have been held for six
months or less, any loss recognized will be treated as a long-term capital loss
to the extent of the net capital gain distribution.

41
<PAGE> 86
Generally, shareholders should include all dividends as income in the year of
payment. However, dividends declared payable to shareholders of record in
October, November or December of one year, but paid in January of the following
year, will be deemed for tax purposes to have been received by the shareholder
and paid by the Fund in the year in which the dividends were declared.

In certain cases, a Fund will be required to withhold, and remit to the U.S.
Treasury, 31% of any distributions paid to a shareholder who (1) has failed to
provide a correct taxpayer identification number, (2) is subject to backup
withholding by the Internal Revenue Service, or (3) has not certified to that
Fund that such shareholder is not subject to backup withholding.

If a Fund fails to qualify as a RIC for any taxable year, it will be taxable at
regular corporate rates. In such an event, all distributions (including capital
gains distributions) will be taxable as ordinary dividends to the extent of the
Funds' current and accumulated earnings and profits, and such distributions may
generally be eligible for the corporate dividends-received deduction. The Board
reserves the right to cause a Fund not to qualify for a RIC for a taxable year
if it determines that it would be beneficial to the Fund's shareholders.

STATE TAXES

The Funds are not liable for any income or franchise tax in Delaware if they
qualify as a RIC for federal income tax purposes. Distributions by the Funds to
shareholders and the ownership of shares may be subject to state and local
taxes.

PORTFOLIO TRANSACTIONS

The Sub-Advisers are authorized to select brokers and dealers to effect
securities transactions for their respective Funds. The Sub-Advisers will seek
to obtain the most favorable net results by taking into account various factors,
including price, commission, if any, size of the transactions and difficulty of
executions, the firm's general execution and operational facilities and the
firm's risk in positioning the securities involved. While the Sub-Advisers
generally seek reasonably competitive spreads or commissions, the Funds will not
necessarily be paying the lowest spread or commission available. The
Sub-Advisers seek to select brokers or dealers that offer their Fund best price
and execution and other services which are of benefit to the Fund.

The Sub-Advisers may, consistent with the interests of their Fund, consider
research services that a broker or a dealer provides in selecting brokers and
dealers for the Fund. Such services may include analyses of the business or
prospects of a company, industry or economic sector, or statistical and pricing
services. Information so received by the Sub-Advisers will be in addition to and
not in lieu of the services required to be performed by them under their
Sub-Advisory Agreements. If, in the judgment of a Sub-Adviser, the Fund or other
accounts managed by the Sub-Adviser will be benefited by supplemental research
services, the Sub-Adviser is authorized to pay brokerage commissions to a broker
furnishing such services which are in excess of commissions which another broker
may have charged for effecting the same transaction. These research services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. The expenses of the Sub-Adviser will not necessarily be reduced as a

42
<PAGE> 87
result of the receipt of such supplemental information, such services may not be
used exclusively with respect to the Fund or account generating the brokerage,
and there can be no guarantee that the Sub-Adviser will find all of such
services of value in advising the Fund.

CODE OF ETHICS

The Board of Directors of the Company has adopted a Code of Ethics pursuant to
Rule 17j-1 under the 1940 Act. In addition, the Investment Adviser,
Sub-Advisers, and Distributor have adopted Codes of Ethics pursuant to Rule
17j-1. These Codes of Ethics apply to the personal investing activities of
directors, officers and certain employees ("access persons"). Rule 17j-1 and the
Codes are designed to prevent unlawful practices in connection with the purchase
or sale of securities by access persons. Under each Code of Ethics, access
persons are permitted to engage in personal securities transactions, but are
required to report their personal securities transactions for monitoring
purposes. In addition, certain access persons are required to obtain approval
before investing in initial public offerings or private placements. Copies of
these Codes of Ethics are on file with SEC, and are available to the public.

VOTING

Each share held entitles the shareholder of record to one vote. Shares issued by
the Funds have no preemptive, conversion, or subscription rights. Each whole
share shall be entitled to one vote and each fractional share shall be entitled
to a proportionate fractional vote. The Funds, as separate series of the
Company, vote separately on matters affecting only the Funds. Voting rights are
not cumulative. Shareholders of each Class of any Fund will vote separately on
matters pertaining solely to that Class. As a Delaware business trust, the
Company is not required to hold annual meetings of shareholders, but approval
will be sought for certain changes in the operation of the Company and for the
election of Directors under certain circumstances.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of funds
and shares thereof. Each share of the Funds represent an equal proportionate
interest in the Funds with each other share. Shares are entitled upon
liquidation to a pro rata share in the net assets of the Funds. Shareholders
have no preemptive rights. The Declaration of Trust provides that the Directors
of the Company may create additional series of shares or separate classes of
funds. All consideration received by the Company for shares of any fund or
separate class and all assets in which such consideration is invested would
belong to that fund or separate class and would be subject to the liabilities
related thereto. Share certificates representing shares will not be issued.

5% SHAREHOLDERS

As of November 30, 2000, the following shareholders owned 5% or more of each
Fund's outstanding shares:
<TABLE>
<CAPTION>

CIF Short Duration Fund
<S> <C>
MAINE HOSPITAL ASSOCIATION 6.2%
150 Capital Street
</TABLE>

43
<PAGE> 88
<TABLE>
<S> <C>
Augusta, ME 04101-6847

NEW LONDON HOSPITAL ASSOCIATION 9.2%
270 County Road
New London, NH 03257-4570

SCUULnet, INC. d.b.a. CAMPUSFIRST 5.9%
Two Wisconsin Circle, Suite 1040
Chevy Chase, MD 20815

UNITED CHURCH OF CHRIST RETIREMENT 11.3%
COMMUNITY d.b.a.
HAVENWOOD HERITAGE HEIGHTS
33 Christian Avenue
Concord, NH 03301

THE COMMONFUND FOR
NONPROFIT ORGANIZATIONS 59.3%
15 Old Danbury Road
P.O. Box 812
Wilton, CT 06897-0812
</TABLE>

FINANCIAL STATEMENT

The CIF Short Duration Fund's audited Statement of Assets and Liabilities as of
April 30, 2000 is included in this Statement of Additional Information below.

COMMONFUND INSTITUTIONAL FUNDS

CIF SHORT DURATION FUND

STATEMENT OF ASSETS & LIABILITIES

APRIL 30, 2000

<TABLE>
<CAPTION>
<S> <C>
ASSETS:

Cash $ 100,000
</TABLE>

44
<PAGE> 89
<TABLE>
<S> <C>
Receivable for shares sold 10,100,000

-----------
Total Assets $10,200,000
-----------

LIABILITIES:

-----------
Total Liabilities $ 0
-----------

$10,200,000
NET ASSETS
===========

Shares outstanding (unlimited shares
authorized, $.001 par value) 1,020,000
===========

Net Asset Value, offering and redemption price
per share $ 10.00
===========
</TABLE>

See Notes to Financial Statement

COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND SHORT DURATION FUND
NOTES TO FINANCIAL STATEMENT
APRIL 30, 2000

Note 1 - General

Commonfund Institutional Funds (the "Company") was established as a Delaware
business trust under an Agreement and Declaration of Trust dated August 7, 1999
and is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end, diversified management investment company. The
Company currently consists of one series, Commonfund Short Duration Fund (the
"Fund").

The Fund seeks current income from interest and price appreciation consistent
with liquidity and capital preservation by investing in short duration fixed
income securities.

Commonfund Asset Management Company ("COMANCO"), an indirect wholly owned
subsidiary of The Commonfund for Nonprofit Organizations ("Commonfund"), serves
as investment manager to the Company. Investors Bank & Trust Company ("IBT")
serves as the custodian, fund accounting agent, administrator, transfer agent
and dividend disbursing agent to the Fund. Commonfund Securities, Inc.
("Commonfund Securities"), an indirect wholly owned subsidiary of Commonfund,
serves as distributor to the Fund.

45
<PAGE> 90
The Company has had no operations through April 30, 2000, other than those
relating to organizational matters, the sale of 10,000 shares of common stock to
COMANCO and the sale of 1,010,000 shares to investors. Of 1,010,000 shares sold
to investors, 1,000,000 shares were sold to an affiliate of COMANCO.
Organization expenses incurred in connection with the organization and initial
registration of the Company were paid by COMANCO.

Note 2 - Agreements

The Company has retained the services of COMANCO as investment manager. COMANCO
exercises overall responsibility for supervision of the investment management
program for the Fund but has contracted out the day-to-day management of the
investment operations of the Fund to sub-advisers. As compensation for the
services rendered by COMANCO under the investment advisory agreement with the
Company, COMANCO receives a fee from the Fund, which is computed daily and paid
monthly, equal to an annual fee of 0.19% of the Fund's average daily net assets.

COMANCO has retained the services of Wellington Management Company, LLP and
Western Asset Management Company as investment sub-advisers to the Fund. As
compensation for their services, each sub-adviser receives a fee paid from
COMANCO that is based on the average daily net assets of the Fund.

The Company has retained the services of IBT as the transfer agent, dividend
disbursing agent, custodian and fund accounting agent for the Fund. For these
services, IBT will receive a fee from the Fund, which is computed daily and paid
monthly, at an annual rate of 0.0235% of the average daily net assets of the
Fund up to $10 billion and 0.0185% of such net assets in excess of $10 billion.
In addition, the Company has retained IBT as administrator of the Fund. For its
services as administrator, IBT will receive a fee from the Fund, which is
computed daily and paid monthly, at an annual rate of 0.05% of the average daily
net assets of the Fund up to $10 billion and 0.025% of such net assets in excess
of $10 billion. Certain officers of the Company are also officers of IBT.

The Company has entered into a distribution agreement with Commonfund
Securities, an affiliate of COMANCO, to serve as principal distributor for
shares of the Fund. COMANCO has agreed to pay Commonfund Securities for services
rendered to the Company.

46
<PAGE> 91
COMMONFUND SHORT DURATION FUND
NOTES TO FINANCIAL STATEMENT (CONTINUED)

APRIL 30, 2000

Note 2 - Agreements (continued)

COMANCO has contractually agreed that it will waive its fee or reimburse the
Fund for expenses through at least October 31, 2001, to the extent necessary to
maintain the Fund's total operating expenses at not more than 0.25% of the
average daily net assets of the Fund. Such waiver and/or reimbursement is
determined on an annual basis. COMANCO has undertaken to pay all organizational
expenses of the Company.

The Fund will pay each director, other than Robert L. Bovinette, who is Chair of
the Board of Directors of the investment adviser, an annual fee of $8,000 plus
reimbursement of out-of-pocket expenses.

Note 3 - Income Taxes

The Fund intends to comply with the requirements of the Internal Revenue Code
necessary to qualify as a regulated investment company and make the requisite
distributions of taxable income to its shareholders which will be sufficient to
relieve it from all or substantially all federal income and excise taxes.

47
<PAGE> 92
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Trustees
and Shareholders of
Commonfund Institutional Funds

In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Commonfund
Institutional Funds - Short Duration Fund (the "Fund") at April 30, 2000, in
conformity with accounting principles generally accepted in the United States of
America. This financial statement is the responsibility of the Fund's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this financial statement
in accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, New York
November 6, 2000

48
<PAGE> 93
APPENDIX

The following descriptions are summaries of published ratings.

DESCRIPTION OF CORPORATE BOND RATINGS

Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from AAA issues only in
small degree. Debt rated A by S&P has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.

Bonds rated Aaa by Moody's are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large, or an exceptionally stable,
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality by all standards. Together with bonds
rated Aaa, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa securities. Bonds rated A by
Moody's possess many favorable investment attributes and are to be considered as
upper-medium grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.

Fitch uses plus and minus signs with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the AAA category. Bonds rated AAA by Fitch are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. Bonds rated AA by
Fitch are considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+. Bonds rated A by Fitch
are considered to be investment grade and of high credit quality. The obligor's
ability to pay interest and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and circumstances
than bonds with higher ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Commercial paper rated A by Standard & Poor's Corporation ("S&P") is regarded by
S&P as having the greatest capacity for timely payment. Issues rated A are
further refined by use of the numbers 1, 1 +, and 2 to indicate the relative
degree of safety. Issues rated A-1+ are those with an "overwhelming degree" of
credit protection. Those rated A-1, the highest rating category, reflect a "very
strong" degree of safety regarding timely payment. Those rated A-2, the second
highest rating category, reflect a satisfactory degree of safety regarding
timely payment but not as high as A-1.
<PAGE> 94
Commercial paper issues rated Prime-1 or Prime-2 by Moody's Investors Service,
Inc. ("Moody's") are judged by Moody's to be of "superior" quality and "strong"
quality respectively on the basis of relative repayment capacity.

F-1+ (Exceptionally Strong) is the highest commercial paper rating Fitch
assigns; paper rated F-1+ is regarded as having the strongest degree of
assurance for timely payment. Paper rated F-1 (Very Strong) reflects an
assurance of timely payment only slightly less in degree than paper rated F-1+.
The rating F-2 (Good) reflects a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues rated F-1+ or
F-1.