As filed with the Securities and Exchange Commission on February 28, 1996
Registration No. 33-66528
811-7912
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 3
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4
OLD WESTBURY FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
c/o Signature Broker-Dealer Services, Inc.
6 St. James Avenue
BOSTON, MASSACHUSETTS 02116
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 423-0800
THOMAS M. LENZ, ESQ. and ROBERT C. ELLIOTT
Signature Broker-Dealer Services, Inc. Bessemer Trust Company, N.A.
6 St. James Avenue 630 Fifth Avenue
Boston, Massachusetts 02116 New York, New York 10111
(Name and Address of Agent for Service)
Copy to: MICHAEL R. ROSELLA, Esq.
Battle Fowler
280 Park Avenue
New York, New York l00l7
It is proposed that this filing will become effective (check appropriate box):
[x] immediately upon filing pursuant to paragraph (b)
[ ] on _________________ pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on _____________ pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant declares that an indefinite amount of its common stock (par value
$.001 per share) is being registered by this Registration Statement pursuant to
Section 24(f) under the Investment Company Act of 1940, as amended, and Rule
24f-2 thereunder. Registrant filed the notice required by Rule 24f-2 on December
27, 1995 for Registrant's fiscal year ending October 31, 1995.
<PAGE>
OLD WESTBURY FUNDS, INC.
Registration Statement on Form N-1A
--------------------------
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c)
---------------------------
Part A
ITEM NO. PROSPECTUS HEADING
1. Cover Page.............................Cover Page
2. Synopsis...............................Prospectus Summary; Table of Fees
and Expenses
3. Condensed Financial
Information............................Financial Highlights
4. General Description
of Registrant..........................Investment Objectives, Policies and
Risks; Investment Restrictions
5. Management of the Fund.................Management of the Fund; The
Administrator; Custodian, Transfer
Agent and Dividend Agent;
Distribution and Service Plan
5A. Management's Discussion
of Fund Performance . . ...............Not Applicable
6. Capital Stock and
Other Securities.......................Purchase of Shares; Redemption of
Shares; Exchange of Shares;
Retirement Plans; Dividends,
Distributions and Taxes; Calculation
of Investment Performance; General
Information
7. Purchase of Securities
Being Offered..........................Purchase of Shares; Net Asset Value;
Distribution and Service Plan
8. Redemption or Repurchase...............Redemption of Shares
9. Legal Proceedings......................Not Applicable
<PAGE>
Part B Caption in Statement of Additional
ITEM NO. Information
10. Cover Page............................Cover Page
11. Table of Contents.....................Table of Contents
12. General Information
and History..........................Description of Portfolio's
Investment Securities; Advisor;
Administrator; Directors and
Officers
13. Investment Objectives
and Policies.........................Investment Objectives, Policies and
Risks; Investment Restrictions
14. Management of the
Fund ................................Advisor; Administrator; Directors
and Officers
15. Control Persons and
Principal Holders of
Securities...........................Directors and Officers
16. Investment Advisory
and Other Services...................Advisor; Administrator; Distribution
and Service Plan; Custodian,
Transfer Agent and Dividend Agent;
Counsel and Independent Auditors
17. Brokerage Allocation................. Brokerage and Portfolio Turnover
18. Capital Stock and
Other Securities.....................Description of Common Stock;
Description of Corporate Debt
Ratings
19. Purchase, Redemption
and Pricing of
Securities Being
Offered..............................Purchase and Redemption of Shares;
Net Asset Value
20. Tax Status............................Tax Status
21. Underwriters..........................Distribution and Service Plan
22. Calculation of Fund
Performance..........................Performance
23. Financial Statements..................Financial Statements
<PAGE>
OLD WESTBURY INTERNATIONAL FUND
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
TELEPHONE: (617) 423-0800
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PROSPECTUS
February 28, 1996
Old Westbury Funds, Inc. (the 'Fund') is a diversified, open-end management
investment company currently consisting of the Old Westbury International Fund
portfolio (the 'Portfolio'). The Portfolio is a fund whose investment objective
is to seek long-term growth of capital primarily through investment in a
diversified portfolio of marketable equity securities of issuers domiciled
outside of the United States. There can be no assurance that the Portfolio will
achieve its objective. See 'Investment Objectives, Policies and Risks.'
------------------------
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Portfolio. A Statement of Additional
Information, dated February 28, 1996, containing additional and more complete
information about the Portfolio has been filed with the Securities and Exchange
Commission and is incorporated in its entirety by reference into this
Prospectus. For a free copy, write or call the Portfolio at the telephone number
or address set forth above.
------------------------
Bessemer Trust Company, N.A. ('Bessemer') is the advisor of the Portfolio.
Signature Broker-Dealer Services, Inc. ('Signature') is the distributor of the
Portfolio's shares and the administrator of the Portfolio. Bessemer is a
national banking association. Signature is a registered broker-dealer and member
of the National Association of Securities Dealers, Inc.
SHARES OF THE PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THE PORTFOLIO MAY INVEST IN SECURITIES OF ISSUERS BASED IN EMERGING MARKETS
WHICH MAY PRESENT INCREASED RISK. INVESTORS SHOULD CAREFULLY CONSIDER THESE
RISKS PRIOR TO INVESTING. SEE 'INVESTMENT OBJECTIVES, POLICIES AND RISKS:
FOREIGN SECURITIES' ON PAGE 7.
------------------------
THIS PROSPECTUS SHOULD BE RETAINED
BY INVESTORS FOR FUTURE REFERENCE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing in this Prospectus.
THE FUND: Old Westbury Funds, Inc. is an open-end, diversified, management
investment company currently consisting of the Old Westbury International Fund
portfolio (the 'Portfolio').
INVESTMENT OBJECTIVE: The Portfolio's investment objective is to seek long-
term growth of capital. The Portfolio seeks to achieve its investment objective
primarily through investment in a diversified portfolio of marketable equity
securities of issuers domiciled outside of the United States. The Portfolio's
assets will usually consist of issues listed on recognized foreign securities
exchanges. The Portfolio is, however, free to hold securities that are not so
listed, and may invest up to 15% of its net assets in such securities. There is
no assurance that the Portfolio will achieve its investment objective. The
investment objective of the Portfolio and its investment restrictions described
in the Statement of Additional Information are fundamental and may not be
changed without shareholder approval.
MANAGEMENT AND FEES: Bessemer Trust Company, N.A. (the 'Advisor') serves as
the Portfolio's investment advisor and is compensated for its services and its
related expenses at an annual rate of 0.80% of the first $100 million of the
Portfolio's average daily net assets, 0.75% of the second $100 million of the
Portfolio's average daily net assets and 0.70% of the Portfolio's average daily
net assets exceeding $200 million. The Portfolio's advisory fee is higher than
that paid by most other mutual funds. Signature Broker-Dealer Services, Inc.
(the 'Distributor') will act as distributor for the Portfolio's shares. The
Portfolio has a distribution and service plan (the 'Plan') which permits it to
pay the Distributor a service fee of up to 0.25% per annum of the Portfolio's
average daily net assets to permit it to compensate broker-dealers whose clients
are Fund shareholders for providing shareholder services and reimbursements of
up to 0.15% per annum of the Portfolio's average daily net assets for
distribution and marketing expenses. In addition, under the Plan the Advisor
will act as a shareholder servicing agent for the Portfolio pursuant to which
the Portfolio is permitted to pay the Advisor a service fee of a maximum of
0.25% per annum of the Portfolio's average daily net assets to compensate it and
to permit it to compensate banks, savings and loans or other financial
institutions (the Advisor with such other institutions, each a 'Shareholder
Servicing Agent') whose clients are Fund shareholders for providing shareholder
services. The service fees payable to the Distributor will only be paid by the
Portfolio with respect to the value of shares of the Portfolio represented by
the clients of broker-dealers that have agreements with the Distributor (each a
'Broker-Dealer,' or just 'Dealer'), and the service fees payable to the Advisor
will only be paid by the Portfolio with respect to the value of shares of the
Portfolio
2
<PAGE>
represented by the clients of the Advisor and the other Shareholder Servicing
Agents that have agreements with the Advisor. Therefore, the total service fees
in the aggregate payable to the Distributor and the Advisor (collectively, the
'Shareholder Servicing Fees') for shareholder servicing will not exceed 0.25%
per annum of the average daily net assets of the Portfolio. However, the maximum
amount payable under the Plan is 0.40% per annum of the average daily net assets
of the Portfolio. (See 'Distribution and Service Plan').
HOW TO PURCHASE SHARES: Shares of the Portfolio may be purchased at the net
asset value per share next determined after receipt of an order by the
Portfolio's Distributor or transfer agent in proper form with accompanying check
or other bank wire payment arrangements satisfactory to the Portfolio plus a
sales load of up to 4.5%. Shares of the Portfolio may be purchased only through
a Shareholder Servicing Agent, Dealer, or the Distributor. The minimum initial
investment is $1,000. See 'Purchase of Shares' and 'Retirement Plans.' Shares of
the Portfolio may be purchased only in those states where they may lawfully be
sold.
HOW TO SELL SHARES: Shares of the Portfolio may be redeemed by the
shareholder at any time at the net asset value per share next determined after
the redemption request is received by the Portfolio's Distributor or transfer
agent in proper order. See 'Redemption of Shares.'
DIVIDENDS AND REINVESTMENT: Each dividend and capital gains distribution,
if any, declared by the Portfolio on its outstanding shares will, unless a
shareholder elects otherwise, be paid on the payment date in additional shares
of the Portfolio having an aggregate net asset value as of the ex-dividend date
of such dividend or distribution equal to the cash amount of such distribution.
Shareholders may change this election by notifying their Shareholder Servicing
Agent or Broker-Dealer in writing at any time prior to the record date for a
particular dividend or distribution. There are no sales or other charges in
connection with the reinvestment of dividends and capital gains distributions.
There is no fixed dividend rate, and there can be no assurance that the
Portfolio will pay any dividends or realize any capital gains. However, the
Portfolio currently intends to pay dividends and capital gains distributions, if
any, at least on an annual basis. See 'Dividends, Distributions and Taxes.'
RISK FACTORS: Investors should consider the risks associated with investing
in foreign equity securities including securities of issuers based in emerging
market countries. In general, less information is publicly available about
foreign companies than is available about companies in the United States. Most
foreign companies are not subject to uniform audit and financial reporting
standards, practices and requirements comparable to those in the United States.
For a more detailed description of the risks associated with these securities,
see 'Investment Objectives, Policies and Risks.' The Portfolio may also use
forward foreign currency exchange contracts and purchase and sell options on
foreign currencies. (See 'Investment Objectives, Policies and Risks--Foreign
Securities' herein.)
3
<PAGE>
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales load imposed on purchases.............................. 4.5%
ANNUAL FUND OPERATING EXPENSES:
(Percent of average net assets)
Advisory Fee (after waiver).......................................... 0.70%
12b-1 Expenses....................................................... 0.25%
Other Expenses ...................................................... 0.55%
Administrative Services Fees...................................... 0.15%
Other Expenses ................................................... 0.40%
---------
Total Operating Expenses (after waivers)............................. 1.50%
---------
---------
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
You would pay the following expenses
on a $1,000 investment, assuming a
5% annual return and redemption at
the end of each time period......... $ 60 $ 90 $ 123 $ 216
--- --- ----------- -----------
</TABLE>
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The foregoing table is to assist you in understanding the various costs and
expenses that an investor in the Portfolio will bear directly or indirectly. The
sales load is a one-time charge paid at the time of purchase of the shares. An
investor may be entitled to a reduction in such sales loads. For more
information concerning the reduction in sales loads, see 'Purchase of Shares.'
Under the Plan, the Portfolio may bear up to 0.15% in 'asset based sales
charges' (in addition to the Plan's shareholder servicing fees) and, therefore,
long-term shareholders may pay more in total sales charges than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. (See 'Distribution and Service Plan').
For the fiscal year ended October 31, 1995 the Advisor waived a portion of its
advisory fees. Absent such waivers, the Advisory Fee and Total Operating
Expenses would have been 0.80% and 1.60% of average daily net assets,
respectively. Investors purchasing or redeeming shares through Shareholder
Servicing Agents and Dealers may be charged a fee in connection with such
service and, therefore, the net return to such investors may be less than the
net return by investing in the Portfolio directly. For a further discussion of
these fees see 'Management of the Fund' and 'Distribution and Service Plan'
herein. The expense amounts contained in this example may increase if the fee
waivers are discontinued. THE FIGURES REFLECTED IN THIS EXAMPLE SHOULD NOT BE
CONSIDERED AS A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY
BE GREATER OR LESSER THAN THOSE SHOWN ABOVE.
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4
<PAGE>
FINANCIAL HIGHLIGHTS
The following information on Financial Highlights with respect to the
fiscal periods ended October 31, 1995 has been audited by Deloitte & Touche LLP,
Independent Auditors, whose report thereon was unqualified. This information
should be read in conjunction with the financial statements and notes thereto
which are included in the Statement of Additional Information.
The Portfolio's Annual Report includes a discussion of those factors,
strategies and techniques that materially affected its performance during the
period of the report, as well as certain related information. A copy of the
Portfolio's Annual Report will be made available without charge upon request.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED OCTOBER 22, 1993
OCTOBER 31, (COMMENCEMENT OF
---------------------- OPERATIONS) TO
1995 1994 OCTOBER 31, 1993
---------- ---------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period..... $ 10.81 $ 10.14 $ 10.00
Income from investment operations:
Net investment income.................. 0.04 0.07 --
Net realized and unrealized gain (loss)
on investments and foreign
currencies.......................... (0.97) 0.60 0.14
---------- ---------- -----------------
Total from investment operations....... (0.93) 0.67 0.14
---------- ---------- -----------------
Dividends to shareholders:
From net investment income............. (0.08) -- --
---------- ---------- -----------------
Net asset value, end of period........... $ 9.80 $ 10.81 $ 10.14
---------- ---------- -----------------
---------- ---------- -----------------
Total return*............................ (8.6%) 6.6% 1.4%
Ratios/Supplemental data:
Net assets, end of period (in 000's)... $ 104,194 $ 104,529 $ 11,957
Ratio of expenses to average net assets
before waiver of expenses........... 1.60% 1.70% 2.50%**+
Ratio of expenses to average
net assets.......................... 1.50% 1.50% 1.50%**
Ratio of net investment income (loss)
to average net assets............... 1.40% 0.90% (0.91%)**
Portfolio turnover rate................ 32% 23% 0%
</TABLE>
- ------------------
* Total return is calculated without a sales charge assuming a purchase of
shares on the first day and a sale on the last day of the period.
** Annualized.
+ The calculation takes state expense limitations into consideration.
5
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Fund is an open-end, diversified, management investment company
organized as a Maryland corporation on August 26, 1993. The Portfolio is a fund
whose investment objective is to seek long-term growth of capital. The Portfolio
seeks to achieve its objective primarily through investment in a diversified
portfolio of marketable equity securities of issuers domiciled outside of the
United States. The Portfolio's assets will usually consist of issues listed on
recognized foreign securities exchanges. The Portfolio is, however, free to hold
securities that are not so listed, and may invest up to 15% of its assets in
such securities. There is no assurance that the Portfolio will achieve its
investment objective. The investment objective of the Portfolio and its
investment restrictions, which are described herein and in the Statement of
Additional Information, are fundamental and may not be changed without
shareholder approval. The Portfolio's other investment policies indicated below
may be changed by the Board of Directors without shareholder approval.
The Portfolio will normally invest its assets primarily in common stocks.
Common stocks represent the residual ownership interest in the issuer and are
entitled to the income and increase in the value of the assets and business of
the entity after all of its obligations and preferred stocks are satisfied.
Common stocks generally have voting rights. The Portfolio may, in seeking its
objective of long-term capital growth, increase its holdings in equity
securities other than common stocks (including preferred stocks, warrants and
securities convertible into common or preferred stock) or in debt securities if
the Advisor believes that the potential capital appreciation of other equity
securities or debt securities will equal or exceed the potential appreciation of
common stocks. Investments in debt securities are consistent with the
Portfolio's investment objective because they could result in capital
appreciation due to an increase in the value of such securities caused by
changes in interest rates and currency values. For the risks associated with
these investments see 'Investment Objectives, Policies and Risks' in the
Statement of Additional Information. Debt securities that the Portfolio may
invest in include obligations of foreign governments and their political
subdivisions, and bonds, notes and other debt securities issued by companies
domiciled outside of the United States which are rated in the top four
categories published by Moody's Investors Service, Inc. ('Moody's') or by
Standard & Poor's Corporation ('Standard & Poor's' or 'S&P') (Aaa, Aa, A or Baa
by Moody's or AAA, AA, A or BBB by Standard & Poor's) or, if unrated, are of
comparable quality as determined by the Advisor. Investments in obligations of
foreign governments or their political subdivisions are limited to direct
government obligations and government-guaranteed securities.
The Portfolio diversifies investments by issuer and does not concentrate in
any one industry. In addition, the Portfolio allocates its investments among
geographic regions and individual countries and, normally, will have 65% of its
total assets invested in at least three different foreign countries. The
Portfolio may invest 25%
6
<PAGE>
or more of its assets in the securities of a single country. See 'Investment
Restrictions.' Particular securities are selected for investment based upon
criteria with which the Advisor evaluates including: (i) the relative economic
prospects for various geographic regions and countries; (ii) the relative
economic prospects of particular industrial sectors within those regions and
countries; and (iii) the characteristics of particular issuers within those
industrial sectors.
Investments are made primarily in those regions and countries where, in the
opinion of the Advisor, there are opportunities to achieve superior investment
returns relative to other investment opportunities available outside the United
States. The Portfolio does not, however, generally invest in debt or equity
securities of U.S. issuers. The Portfolio emphasizes those industrial sectors of
the world's market which, in the opinion of the Advisor, offer the most
attractive risk/reward relationship. Securities of any given issuer are
evaluated on the basis of such measures as price/earnings ratios, price/book
ratios, cash flows and dividends and interest income.
Due to the changing nature of national economies and of market and
political conditions, the Portfolio may, temporarily for defensive purposes,
without limitation as to the amount of Portfolio assets which may be so
invested, hold United States and foreign short-term money market instruments
including government obligations, time deposits, bankers acceptances,
certificates of deposit, commercial paper, and short-term corporate debt
securities, which are rated in the top two categories published by Moody's or by
Standard & Poor's or, if unrated, are of comparable quality as determined by the
Advisor.
FOREIGN SECURITIES
Investors should realize that investing in securities of foreign issuers
involves considerations not typically associated with investing in securities of
companies organized and operated in the United States. Investors should realize
that the value of the Portfolio's investments in foreign securities may be
adversely affected by changes in political or social conditions, diplomatic
relations, confiscatory taxation, expropriation, nationalization, limitation on
the removal of funds or assets, or imposition of (or change in) exchange control
or tax regulations in those foreign countries. In addition, changes in
government administrations or economic or monetary policies in the United States
or abroad could result in appreciation or depreciation of portfolio securities
and could favorably or unfavorably affect the Portfolio's operations.
Furthermore, the economies of individual foreign nations may differ from the
U.S. economy, whether favorably or unfavorably, in areas such as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position; it may also be more difficult
to obtain and enforce a judgment against a foreign issuer. In general, less
information is publicly available with respect to foreign issuers than is
available with respect to U.S. companies. Most foreign companies are also not
subject to the uniform accounting and financial reporting requirements
applicable to issuers in the United States. Any foreign investments made by the
Portfolio must be made in compliance
7
<PAGE>
with U.S. and foreign currency restrictions and tax laws restricting the amounts
and types of foreign investments.
The Portfolio may invest up to 50% of its net assets in securities of
issuers in emerging markets countries, including Eastern Europe. A company in an
emerging market is one that: (i) has its principal securities trading market in
an emerging market country; (ii) is organized under the laws of, and with a
principal office in, an emerging market; or (iii) (alone or on a consolidated
basis) the issuer and all of its subsidiaries derive 50% or more of its total
revenue from either goods produced, sales made or services performed in emerging
markets. 'Emerging markets' include any country which is generally considered to
be an emerging or developing country by the World Bank, the International
Finance Corporation, the United Nations or its authorities. These countries
generally include every country in the world except Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
Mexico, Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, United
Kingdom and United States. Investments in securities of issuers in emerging
markets countries may involve a high degree of risk and many may be considered
speculative. These investments carry all of the risks of investing in securities
of foreign issuers outlined in this section to a heightened degree. These
heightened risks include: (i) greater risks of expropriation, confiscatory
taxation, nationalization, and less social, political and economic stability;
(ii) the small current size of the markets for securities of emerging markets
issuers and the currently low or non-existent volume of trading, resulting in
lack of liquidity and in price volatility; (iii) certain national policies which
may restrict the Portfolio's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant national
interests; and (iv) in the case of Eastern Europe, the absence of developed
legal structures governing private or foreign investment and private property
and the possibility that recent favorable economic and political developments
could be slowed or reversed by unanticipated events.
So long as the Communist Party continues to exercise a significant or, in
some countries, dominant role in Eastern European countries, investments in such
countries will involve risk of nationalization, expropriation and confiscatory
taxation. The Communist governments of a number of Eastern European countries
expropriated large amounts of private property in the past, and in many cases
without adequate compensation, and there is no assurance that such expropriation
will not occur in the future. In the event of such expropriation, the Portfolio
could lose a substantial portion of any investments it has made in the affected
countries. Finally, even though certain eastern European currencies may be
convertible into U.S. dollars, the conversion rates may be artificial in
relation to the actual market values and may be adverse to Portfolio
shareholders.
Foreign stock markets are generally not as developed or efficient as those
in the United States. In most foreign markets volume and liquidity are less than
in the United States and, at times, volatility of price can be greater than in
the United
8
<PAGE>
States. Fixed commission on foreign stock exchanges are generally higher than
the negotiated commissions on United States exchanges. There is generally less
government supervision and regulation of foreign stock exchanges, brokers and
companies than in the United States. The settlement periods for foreign
securities, which are often longer than those for securities of U.S. issuers,
may affect portfolio liquidity.
The dividends and interest payable on certain of the Portfolio's foreign
portfolio securities may be subject to foreign withholding taxes, thus reducing
the net amount available for distribution to the Portfolio shareholders.
Investors should understand that the expense ratios of the Portfolio can be
expected to be higher than those of investment companies investing in domestic
securities due to the additional cost of custody of foreign securities. A more
detailed description of the costs of operation of the Fund is contained under
'Management of the Fund' and in the Statement of Additional Information.
Portfolio securities which are listed on foreign exchanges may be traded on
days that the Portfolio does not value its securities, such as Saturdays and the
customary United States business holidays on which the New York Stock Exchange
('NYSE') is closed. As a result, the net asset value of the shares of the
Portfolio may be significantly affected on days when shareholders do not have
access to the Fund.
A change in the value of a foreign currency relative to the U.S. dollar
will result in a corresponding change in the U.S. dollar value of the
Portfolio's assets denominated in that currency. Accordingly, the value of the
assets of the Portfolio as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations. In addition, the Portfolio may incur costs in connection with
conversions between various currencies. In order to protect against uncertainty
in the level of future foreign exchange rates, the Portfolio is authorized to
and may occasionally use forward foreign currency exchange contracts and
purchase and write (sell) options on foreign currencies. A forward foreign
currency exchange contract is an obligation to purchase or sell a specific
currency at a future date at a price set at the time of the contract and such
contracts are traded directly between currency traders (usually large commercial
banks with assets and deposits of over $1 billion) and their customers. A
foreign currency call option gives the purchaser the right to buy, and the
writer (seller) the obligation to sell, the underlying foreign currency at the
exercise price during the option period. A foreign currency put option gives the
purchaser the right to sell, and the writer the obligation to buy, the
underlying foreign currency at the exercise price during the option period.
If the Portfolio is the covered call writer, during the option period it
gives up most of the potential for capital appreciation above the exercise price
should the foreign currency rise in value. If the Portfolio is the secured put
writer, during the option period it retains the risk of loss should the foreign
currency decline in value. For the covered call writer, substantial appreciation
in the value of the foreign
9
<PAGE>
currency would result in the foreign currency being 'called away.' For the
secured put writer, substantial depreciation in the value of the foreign
currency would result in the foreign currency being 'put to' the writer. If the
Portfolio is the writer and a covered call option expires unexercised, it
realizes a gain in the amount of the premium. If the Portfolio is the buyer and
a covered call option expires unexercised, it realizes a loss in the same
amount. If the Portfolio as the covered call option writer has to sell the
foreign currency because of the exercise of a call option, it realizes a gain or
loss from the sale of the foreign currency, with the proceeds being increased by
the amount of the premium.
If the Portfolio is the writer and a secured put option expires
unexercised, the Portfolio realizes a gain in the amount of the premium. If the
Portfolio is the buyer and a secured put option expires unexercised, the
Portfolio realizes a loss in the same amount. If the Portfolio as the secured
put writer has to buy the underlying foreign currency because of the exercise of
a put option, it incurs an unrealized loss to the extent that the current market
value of the foreign currency is less than the exercise price of the put option,
minus the premium received. Options purchased and sold other than on an exchange
in private transactions also impose on the Portfolio the credit risk that the
counterparty will fail to honor its obligations and with the assets of the
Portfolio used to cover its options positions are deemed illiquid securities for
purpose of 'Investment Restriction (i).' The Portfolio will not purchase options
if, as a result, the aggregate cost of all outstanding options exceeds 5% of the
Portfolio's total assets and the Portfolio will not write (sell) options
exceeding 25% of the Portfolio's total assets.
The Portfolio may use such forward contracts and options only under two
circumstances. First, when the Portfolio enters into a contract for the purchase
or sale of a security denominated in a foreign currency, it may desire to 'lock
in' the U.S. dollar price of the security (a 'transaction hedge'). Second, when
the Advisor believes that the currency of a particular foreign country may
suffer or enjoy a substantial movement against the U.S. dollar, it may enter
into a forward contract to sell or buy the amount of the foreign currency or
options approximating the value of some or all of the Portfolio's portfolio
securities denominated in such foreign currency or in currencies believed by the
Advisor to bear a substantial correlation to the value of such currency (a
'cross hedge'). (See 'Foreign Currency Exchange Transactions and Options' in The
Statement of Additional Information.)
The extent to which the Portfolio may enter into transactions involving
options and forward contracts may be limited by the Internal Revenue Code's
requirements for qualification as a regulated investment company and the
Portfolio intention to qualify as such. See 'Dividends, Distributions and
Taxes.'
PORTFOLIO TURNOVER
Purchases and sales are made for the Portfolio whenever necessary, in the
Advisor's opinion, to meet the Portfolio's objective. Portfolio turnover may
involve the payment by the Portfolio of dealer spreads or underwriting
commissions, and
10
<PAGE>
other transaction costs, on the sale of securities, as well as on the
reinvestment of the proceeds in other securities. The greater the portfolio
turnover the greater the transaction costs to the Portfolio which could have an
effect on the Portfolio's total rate of return. In order to qualify as a
regulated investment company, less than 30% of the Portfolio's gross income must
be derived from the sale or other disposition of stock, securities or certain
other investments held for less than three months. Although increased portfolio
turnover (over 100%) may increase the likelihood of additional capital gains for
the Portfolio, the Portfolio expects to satisfy the 30% income test. For the
fiscal year ended October 31, 1995, the turnover of the Portfolio was 32%.
INVESTMENT RESTRICTIONS
As a diversified investment company, 75% of the total assets of the
Portfolio are subject to the following limitations: (a) the Portfolio may not
invest more than 5% of its total assets in the securities of any one issuer and
(b) the Portfolio may not own more than 10% of the outstanding voting securities
of any one issuer. The classification of the Fund as a diversified investment
company is a fundamental policy of the Fund and may be changed only, with
respect to the Portfolio, with the approval of the holders of a majority of the
outstanding shares of the Portfolio. As used in this Prospectus, the term
'majority of the outstanding shares of the Portfolio' means, respectively, the
vote of the lesser of (i) 67% or more of the shares of the Portfolio present at
a meeting, if more than 50% of the outstanding shares of the Portfolio are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of the Portfolio.
The Portfolio also operates under certain investment restrictions which are
deemed fundamental policies of the Portfolio and also may be changed only with
the approval of the holders of a majority of the Portfolio's outstanding shares.
In addition to other restrictions listed in the Statement of Additional
Information, the Portfolio may not (except where specified):
(i) mortgage, pledge or hypothecate any assets except that the
Portfolio may pledge not more than one-third of its total assets to secure
borrowings made in accordance with paragraph (iii) below. However, although
not a fundamental policy of the Portfolio, as a matter of operating policy
in order to comply with certain state statutes, the Portfolio will not
pledge its assets in excess of an amount equal to 10% of net assets;
(ii) lend portfolio securities of value exceeding in the aggregate
one-third of the market value of the Portfolio's total assets less
liabilities other than obligations created by these transactions; or
(iii) purchase securities on margin or borrow money, except from banks
for extraordinary or emergency purposes (not for leveraging or investment),
provided that such securities in the aggregate do not exceed an amount
equal to one-third of the value of the total assets of the Portfolio less
its liabilities
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<PAGE>
(not including the amount borrowed) at the time of the borrowing, and
further provided that 300% asset coverage is maintained at all times.
The following are investment restrictions, in addition to other
restrictions in the Statement of Additional Information, that may be changed by
a vote of the majority of the Board of Directors. The Portfolio will not:
(i) invest more than 15% of the market value of the Portfolio's net
assets in illiquid investments including time deposits and repurchase
agreements of over seven days' duration; or
(ii) purchase securities while borrowings exceed 5% of its total
assets.
If a percentage restriction (except (iii) above) is adhered to at the time
an investment is made, a later change in percentage resulting from changes in
the value of the Portfolio's investment securities will not be considered a
violation of the Portfolio's restrictions.
For a more detailed discussion of these investment restrictions, see
'Investment Restrictions' in the Statement of Additional Information.
MANAGEMENT OF THE FUND
The Fund's Board of Directors, which has overall responsibility for the
management of the Fund, has employed Bessemer Trust Company, N.A. to serve as
Advisor of the Portfolio. The Advisor is a national bank engaged primarily in
investment management, trust, fiduciary and other financial services which it
provides to individuals of high net worth and institutions. The Advisor
supervises all aspects of the Portfolio's operations and provides investment
advice and portfolio management services to the Portfolio. Subject to the
supervision of the Fund's Board of Directors, the Advisor makes the Portfolio's
day-to-day investment decisions with respect to all purchases and sales,
arranges for the execution of portfolio transactions and generally manages the
Portfolio's investments. The Advisor also provides supervisory personnel who are
responsible for supervising the performance of the Portfolio's administrator.
However, the administrator, Signature Broker-Dealer Services, Inc. (the
'Administrator'), provides personnel to perform the operational components of
all administrative services.
Mr. John Trott is primarily responsible for the day-to-day investment
management of the Portfolio. A description of Mr. Trott's business experience is
set forth under 'Management--Directors and Officers' in the Statement of
Additional Information. The Portfolio's Annual Report contains information
regarding the Portfolio's performance and, will be provided without charge, upon
request.
Due to the services performed by the Advisor and the Administrator, the
Fund currently has no employees and its officers are not required to devote
their full time to the affairs of the Fund. The Statement of Additional
Information contains general background information regarding each Director and
principal officer of the Fund.
12
<PAGE>
The Advisor, along with the associated banks, Bessemer Trust Company (New
Jersey) and Bessemer Trust Company of Florida, is a subsidiary of The Bessemer
Group, Incorporated, a registered bank holding company in the State of New
Jersey, which is wholly owned by trusts for the benefit of the descendants of
Henry Phipps, a founder of the Carnegie Steel Company. In addition to services
provided to the Phipps family, which now account for less than 20% of the
Advisor's business, the Bessemer banks at present provide investment, fiduciary
and personal banking services to 800 clients with total assets under management
of about $10.5 billion, approximately $1.5 billion of which is represented by
investments in foreign securities. The banks have offices in New York, New York;
Washington, D.C.; Woodbridge, New Jersey; Palm Beach, Florida; Miami, Florida;
Chicago, Illinois; Naples, Florida; Los Angeles, California; London, England and
Grand Cayman, Cayman Islands B.W.I. Bessemer has not advised any registered
investment company other than the Fund and, formerly, Flag Investors
International Trust. The Advisor's address is 630 Fifth Avenue, New York, New
York.
The Advisor may, from time to time, make recommendations which result in
the purchase or sale of a particular security by its other clients
simultaneously with the Portfolio. If transactions on behalf of more than one
client during the same period increase the demand for securities being purchased
or the supply of securities being sold, there may be an adverse effect on price.
It is the policy of the Advisor to allocate advisory recommendations and the
placing of orders in a manner which is deemed equitable by the Advisor to the
accounts involved, including the Portfolio. When two or more of the clients of
the Advisor, including the Portfolio, are purchasing the same security in a
given day from the same broker-dealer, such transactions may be averaged as to
price.
The Advisory Contract contains provisions relating to the selection of
securities brokers to effect the portfolio transactions of the Portfolio. Under
those provisions, subject to applicable law and procedures adopted by the Board
of Directors, the Advisor may (i) pay commissions to brokers which are higher
than might be charged by another qualified broker to obtain brokerage and/or
research services considered by the Advisor to be useful or desirable for its
investment management of the Portfolio and/or other advisory accounts of itself
and any investment advisor affiliated with it; and (ii) consider the sales of
shares of the Portfolio by brokers as a factor in its selection of brokers of
Portfolio transactions.
As compensation for its services and the related expenses borne by the
Advisor, the Portfolio pays the Advisor a fee, computed daily and payable
monthly, in accordance with the following schedule: 0.80% of the first $100
million of the Portfolio's average net assets, 0.75% of the second $100 million
of the Portfolio's average net assets and 0.70% of the Portfolio's average net
assets exceeding $200 million. For the fiscal year ended October 31, 1995, the
Advisor received 0.70% of the Portfolio's average net assets in advisory fees.
The Statement of Additional Information contains further information about the
Advisory Contract including a
13
<PAGE>
more complete description of the advisory and expense arrangements. Pursuant to
the Portfolio's Distribution and Service Plan, the Advisor will also act as a
shareholder servicing agent for the Portfolio pursuant to which the Portfolio is
permitted to pay the Advisor a maximum of 0.25% per annum of the Portfolio's
average daily net assets to compensate it and to permit the Advisor to
compensate banks, savings and loans and other financial institutions (the
Advisor with such other institutions, each a 'Shareholder Servicing Agent')
whose clients are Fund shareholders for providing shareholder services. In
addition, the Plan provides that the Advisor may use the advisory fee or its own
resources for distribution and servicing purposes including defraying the costs
of performing shareholder servicing functions on behalf of the Portfolio,
compensating others, including banks, broker-dealers and other organizations
whose customers or clients are shareholders of the Portfolio for providing
assistance in distributing the Portfolio's shares and defraying the cost of
shareholder servicing and other promotional activities. See 'Distribution and
Service Plan.'
The Portfolio is responsible for payment of its expenses, including,
without limitation, the following types of expenses: fees payable to the
Advisor, Distributor, Administrator, custodian, transfer agent and dividend
agent; brokerage and commission expenses; foreign, federal, state or local
taxes, including issuance and transfer taxes incurred by or levied on them;
commitment fees, certain insurance premiums and membership fees and dues in
investment company organizations; interest charges on borrowings;
telecommunications expenses; recurring and nonrecurring legal, accounting,
recordkeeping and auditing expenses; costs of organizing and maintaining the
Fund's existence as a corporation; compensation, including Directors' fees, of
any Directors, officers or employees who are not officers or employees of the
Advisor, the Administrator or their affiliates; costs of other personnel
providing administrative and clerical services; costs of stockholders' service,
including charges and expenses of persons providing confirmations of
transactions in the Portfolio's shares, periodic statements to stockholders and
recordkeeping services and costs of stockholders' reports, proxy solicitations,
and corporate meetings; fees and expenses of registering their shares under the
appropriate federal securities laws and of qualifying their shares under
applicable state securities laws, including expenses attendant upon the initial
registration and qualification of these shares and attendant upon renewals of,
or amendments to, those registrations and qualifications; any other distribution
or promotional expenses contemplated by an effective plan adopted by the Fund
pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the
'Act'); and expenses of preparing, printing and delivering the initial
registration statement and of preparing, printing and delivering the Prospectus
to existing shareholders and of printing shareholder application forms for
shareholder accounts. The Distributor pays the promotional and advertising
expenses related to the distribution of the Portfolio's shares and for the
printing of all Portfolio prospectuses used in connection with the distribution
and sale of Portfolio shares
14
<PAGE>
for which it may be reimbursed under the Plan. See 'Distribution and Service
Plan.' See 'Management of Fund' in the Statement of Additional Information. The
Advisor has agreed to a reduction in the amounts payable to it and to reimburse
the Portfolio, as necessary, if in any fiscal year the sum of the Portfolio's
expenses exceeds the limits set by applicable regulations of state securities
commissions.
THE ADMINISTRATOR
Signature Broker-Dealer Services, Inc., the Administrator, has its
principal office at 6 St. James Avenue, Boston, Massachusetts 02116, and is a
registered broker-dealer and a member of the National Association of Securities
Dealers, Inc. The Administrator is a wholly-owned subsidiary of Signature
Financial Group, Inc., a Delaware corporation. The Administrator serves as
administrator and distributor of other mutual funds. The Portfolio will not
invest in these funds or in any other fund which may in the future be affiliated
with the Administrator or any of its affiliates, including funds affiliated with
Signature Financial Group, Inc. through separately owned subdivisions.
Pursuant to the Administrative Services Agreement with the Portfolio, the
Administrator provides the overall administration of the Portfolio, subject to
the supervision of the Fund's Board of Directors including, among other
responsibilities, the negotiation of contracts and fees with, and the monitoring
of performance and billings of, the independent contractors and agents of the
Portfolio; the preparation and filing of all documents required for compliance
by the Portfolio with applicable laws and regulations; providing equipment and
clerical personnel necessary for maintaining the organization of the Portfolio;
preparation of certain documents in connection with meetings of the Board of
Directors and shareholders; and the maintenance of books and records of the
Portfolio. The Administrator provides persons satisfactory to the Board of
Directors of the Fund to serve as officers and directors of the Fund, as the
case may be. Such officers, as well as certain other employees and directors of
the Fund, may be directors, officers or employees of the Administrator or its
affiliates. For providing these services and for bearing the related expenses,
the Administrator receives from the Portfolio a fee accrued daily and paid
monthly at an annual rate equal to 0.15% of the average daily net assets of the
Portfolio up to $100 million of assets; 0.10% of such assets from $100 million
to $250 million; and 0.05% of such assets over $250 million. For the fiscal year
ended October 31, 1995, the Administrator received 0.15% of the Portfolio's
average daily net assets in administrative fees.
DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the Act, the Securities and Exchange
Commission has required that an investment company which bears any direct or
indirect expense of distributing its shares must do so only in accordance with a
plan permitted by Rule 12b-1. The Fund's Board of Directors has adopted a
distribution and service plan (the 'Plan') for the Portfolio and, pursuant to
the Plan, the
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<PAGE>
Portfolio has entered into a Distribution Agreement and a Shareholder Servicing
Agreement with the Distributor and a Shareholder Servicing Agreement with the
Advisor.
For its services under its Shareholder Servicing Agreement, the Distributor
is permitted to receive payments from the Portfolio to permit it to make
payments to broker-dealers, with which it has written agreements and whose
clients are Fund shareholders (each a 'Broker-Dealer'), for providing
shareholder services up to 0.25% per annum of the Portfolio's average daily net
assets attributable to the clients of these Broker-Dealers. For its services
under its Shareholder Servicing Agreement, the Advisor is permitted to receive a
payment from the Portfolio of 0.25% per annum of the Portfolio's average daily
net assets attributable to the clients of the Advisor (and its affiliates) to
compensate it for providing shareholder services to such clients. In addition,
the Shareholder Servicing Agreement provides that the Advisor is permitted to
receive payments from the Portfolio (together with the Distributor's fee the
'Shareholder Servicing Fee') to actually permit it to make payments to banks,
savings and loans and other financial institutions with which it has written
agreements and whose clients are Fund shareholders (each institution, a
'Shareholder Servicing Agent') for providing shareholder services up to 0.25%
per annum of the Portfolio's average daily net assets attributable to the
clients of the other Shareholder Servicing Agents. Therefore, the total of the
Shareholder Servicing Fees in the aggregate payable to the Distributor and the
Advisor will not exceed 0.25% of the net assets of the Portfolio.
Each Shareholder Servicing Agent and Broker-Dealer will, as agent for its
customers, among other things; answer customer inquiries regarding account
status and history, the manner in which purchases and redemptions of shares of
the Portfolio may be effected and certain other matters pertaining to the
Portfolio; assist shareholders in designating and changing dividend options,
account designations and addressees; provide necessary personnel and facilities
to establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds; transmit
and receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder designated accounts;
furnish (either separately or on an integrated basis with other reports sent to
a shareholder by the Portfolio) monthly and year-end statements and confirmation
of purchases and redemptions; transmit, on behalf of the Portfolio, proxy
statements, annual reports, updating prospectuses and other communications from
the Portfolio to shareholders of the Portfolio; receive, tabulate and transmit
to the Portfolio proxies executed by shareholders with respect to meeting of
shareholders of the Portfolio; and provide such other related services as the
Portfolio or a shareholder may request. As set forth in the preceding paragraph,
for these services, each Shareholder Servicing Agent and Broker-Dealer (either
directly or from the Distributor or Advisor) receives a fee, which may be paid
periodically, on an annual basis equal to 0.25%
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<PAGE>
of the average daily net assets of the Portfolio represented by shares owned
during the period for which payment is being made by investors with whom such
Shareholder Servicing Agent or Broker-Dealer maintains a servicing relationship.
Shareholder Servicing Agents and Broker-Dealers may waive all or a portion of
their Shareholder Servicing Fees. In addition, the Distribution Agreement with
the Distributor provides for reimbursement to the Distributor by the Portfolio
for its distribution, promotional and advertising costs incurred in connection
with the distribution of the Portfolio's shares in an amount not to exceed 0.10%
per annum of the Portfolio's average daily net assets (the 'Distribution
Reimbursement').
Under the Distribution Agreement, the Distributor, for nominal
consideration and as agent for the Portfolio, will solicit orders for the
purchase of the Portfolio's shares, provided that any subscriptions and orders
will not be binding on the Portfolio until accepted by the Portfolio as
principal. The Plan, the Distribution Agreement and the Shareholder Servicing
Agreement with the Distributor provide that, in addition to the Shareholder
Servicing Fee and the Distribution Reimbursement, the Portfolio will pay for (i)
telecommunications expenses including the cost of dedicated lines and CRT
terminals incurred by the Distributor in carrying out its obligations under the
Distribution Agreement and the Shareholder Servicing Agreement and by the
Advisor under its Shareholder Servicing Agreement, and (ii) typesetting,
printing and delivering the Portfolio's prospectus to existing shareholders of
the Portfolio and preparing and printing subscription application forms for
shareholder accounts. The expenses enumerated in this paragraph shall not exceed
an amount equal to 0.05% per annum of the Portfolio's average daily net assets.
The maximum amount payable under the Plan is 0.40% per annum of the average
net assets of the Portfolio.
The Plan, the Shareholder Servicing Agreements and the Distribution
Agreement each provide that the Advisor and the Distributor may make payments
from time to time from their own resources, which may include past profits for
the following purposes: to defray the costs of and to compensate others,
including financial intermediaries with whom the Distributor or Advisor has
entered into written agreements, for performing shareholder servicing and
related administrative functions on behalf of the Portfolio; to compensate
certain financial intermediaries for providing assistance in distributing the
Portfolio's shares; to pay the costs of printing and distributing the
Portfolio's prospectus to prospective investors; and to defray the cost of the
preparation and printing of brochures and other promotional materials, mailings
to prospective shareholders, advertising, and other promotional activities,
including the salaries and/or commissions of sales personnel in connection with
the distribution of the Portfolio's shares. The Distributor or the Advisor, as
the case may be, in their sole discretion, will determine the amount of such
payments made pursuant to the Plan with the Shareholder Servicing Agents and
Broker-Dealers they have contracted with, provided that such payments made
pursuant to the Plan will not increase the amount which the Portfolio is
required to
17
<PAGE>
pay to the Distributor or Advisor for any fiscal year under the Shareholder
Servicing Agreements or otherwise.
Shareholder Servicing Agents and Broker-Dealers may charge investors a fee
in connection with their use of specialized purchase and redemption procedures
offered to investors by the Shareholder Servicing Agents and Broker-Dealers. In
addition, Shareholder Servicing Agents and Broker-Dealers offering purchase and
redemption procedures similar to those offered to shareholders who invest in the
Portfolio directly may impose charges, limitations, minimums and restrictions in
addition to or different from those applicable to shareholders who invest in the
Portfolio directly. Accordingly, the net yield to investors who invest through
Shareholder Servicing Agents and Broker-Dealers may be less than by investing in
the Portfolio directly. An investor should read this Prospectus in conjunction
with the materials provided by the Shareholder Servicing Agent and Broker-Dealer
describing the procedures under which Portfolio shares may be purchased and
redeemed through the Shareholder Servicing Agent and Broker-Dealer.
The Glass-Steagall Act limits the ability of a depository institution to
become an underwriter or distributor of securities. However, it is the Fund's
position that banks are not prohibited from acting in other capacities for
investment companies, such as providing administrative and shareholder account
maintenance services and receiving compensation from the Distributor for
providing such services. However, this is an unsettled area of the law and if a
determination contrary to the Fund's position is made by a bank regulatory
agency or court concerning shareholder servicing and administration payments to
banks from the Distributor, any such payments will be terminated and any shares
registered in the banks' names, for their underlying customers, will be
re-registered in the name of the customers at no cost to the Portfolio or its
shareholders. In addition, state securities laws on this issue may differ from
the interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law.
PURCHASE OF SHARES
Shares of the Portfolio may be purchased only through a Shareholder
Servicing Agent or through a broker-dealer that has an agreement with the
Distributor. The minimum initial investment is $1,000. Initial investments may
be made in any amount equal to or in excess of the minimum. The minimum amount
for subsequent investments is $100. Orders received as of the earlier of 4:00
p.m., New York time, or the close of regular trading on any day on which the
NYSE is open for trading ('Fund Business Day') will be executed at the public
offering price determined on that day. Orders received after the earlier of 4:00
p.m., New York time, or the close of the NYSE on any Fund Business Day, will be
executed at the public offering price determined on the next Fund Business Day.
Shares will be issued upon receipt of payment by the Portfolio. The Portfolio or
the Distributor
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<PAGE>
each reserves the right to reject any subscription for its shares. Certificates
for Portfolio shares will not be issued to those who invest in the Portfolio.
The price paid for shares of the Portfolio is the public offering price,
that is, the next determined net asset value of the shares plus a sales load.
The sales load is a one-time charge paid at the time of purchase of shares, most
of which ordinarily goes to the investor's broker-dealer to compensate him or
her for the services provided the investor.
Sales loads are determined in accordance with the following sales load
schedule:
<TABLE>
<CAPTION>
SALES LOAD DEALER DISCOUNT
AMOUNT OF SALES AS % OF AS % OF
PURCHASE LOAD NET AMOUNT INVESTED OFFERING PRICE
- ---------------------------------- ----------- ----------------------- -----------------
<S> <C> <C> <C>
Less than $50,000................. 4.50% 4.71% 4.00%
$50,000 up to $99,999............. 3.50% 3.63% 3.00%
$100,000 up to $249,999........... 2.50% 2.56% 2.00%
$250,000 up to $499,999........... 2.00% 2.04% 1.50%
$500,000 up to $999,999........... 1.50% 1.52% 1.25%
$1,000,000 and over............... .00% .00% .00%
</TABLE>
The Distributor reserves the right to change the dealer's concession from time
to time. Dealers who receive 90% or more of the sales load may be deemed to be
underwriters under the Securities Act of 1933. On sales of $1 million or more,
the Distributor or the Advisor may make payment, out of its own resources to
compensate the dealer for such sale, provided that the dealer has an executed
dealer agreement with respect to the Portfolio with the Distributor.
HOW TO PURCHASE SHARES
All funds received by the Portfolio are invested in full and fractional
shares of the Portfolio. Certificates for shares are not issued. The Fund
maintains records of each shareholder's holdings of Portfolio shares, and each
Shareholder Servicing Agent and Broker-Dealer maintains records of each of their
customer's account and each shareholder receives a statement of transactions,
holdings and dividends. The Portfolio reserves the right to reject any purchase.
Shares of the Portfolio may be purchased only in those states where they may
lawfully be sold.
An investment may be made using any of the following methods:
By Mail. Contact your Shareholder Servicing Agent or Broker-Dealer for
further instructions. Checks are accepted subject to collection at full value.
Shares will be issued upon receipt of payment by the Portfolio. If shares are
purchased by check and redeemed before the check has cleared, the transmittal of
redemption proceeds will be delayed until funds are collected, which may take up
to 15 days from the date of purchase.
For shareholders who do not maintain a relationship with a Shareholder
Servicing Agent or Broker-Dealer, shares of the Portfolio may be purchased
directly from the Distributor. Purchase orders will be effected at the public
offering price next determined after acceptance of the order by the Distributor.
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<PAGE>
Shareholders wishing to purchase shares of the Portfolio through the
Distributor must complete a Purchase Application accompanying this Prospectus
and mail it together with a check payable to 'Old Westbury Funds, Inc.' to:
Old Westbury Funds, Inc.
P.O. Box 119
New York, NY 10274-0119
Subsequent investments in the Portfolio do not require a Purchase
Application, however, the shareholder's account number must be clearly marked on
the check to ensure proper credit. Subsequent purchases may also be made by
sending a check with the detachable coupon that regularly accompanies the
confirmation of a previous transaction.
Accounts of Shareholders who purchase shares directly from the Distributor
will be maintained by the transfer agent for the Fund, Fundamental Shareholder
Service, Inc. ('FSSI' or the 'Transfer Agent'). For account balance information
and shareholder services, shareholders may call FSSI at (800) 607-2200.
By Wire. Investments may be made directly through the use of wire transfers
of federal funds. Shares purchased by wire will be effected at the public
offering price next determined after acceptance of the order by the Distributor.
Contact your bank and request it to wire federal funds to the Portfolio. In most
cases, your bank will either be a member of the Federal Reserve Banking System
or have a relationship with a bank that is. Your bank will normally charge you a
fee for handling the transaction. Contact your Shareholder Servicing Agent or
Broker-Dealer for further instructions.
For Shareholders who do not maintain a relationship with a Shareholder
Servicing Agent or Broker-Dealer, shares may be purchased directly from the
Distributor by federal funds wire. Please contact the Transfer Agent at (800)
607-2200 for specific instructions.
Investors making initial investments by wire must promptly complete the
Purchase Application accompanying this Prospectus and forward it to FSSI, the
Fund's Transfer Agent. No Purchase Application is required for subsequent
purchases. Completed applications should be directed to the address listed above
under 'How to Purchase Shares--By Mail.' The application may also be sent by
facsimile. Please contact FSSI at (800) 607-2200 for complete instructions.
REDUCTION OR ELIMINATION OF SALES LOAD
Volume Discounts. Volume discounts are provided if the total amount being
invested in shares of the Portfolio reaches the levels indicated in the above
sales load schedule. Volume discounts are also available to investors making
sufficient additional purchases of Portfolio shares. The applicable sales charge
may be determined by adding to the total current value of shares already owned
in the Portfolio the value of new purchases computed at net asset value on the
day the additional purchase is made. For example, if an investor previously
purchased, and still holds, shares of the Portfolio worth $95,000 at the current
net asset value and purchases an additional $5,000 worth of shares of the
Portfolio, the sales charge
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<PAGE>
applicable to the new purchase would be that applicable to the $100,000 to
$249,999 bracket in the above sales load schedule. For the purposes of
determining volume discounts, (i) an investment adviser who is registered with
the Securities and Exchange Commission or appropriate state authorities and who
purchases shares of the Portfolio for more than one account may aggregate all
such accounts, (ii) a bank, trust company or thrift institution which is acting
as fiduciary with respect to more than one account may aggregate all such
accounts and (iii) a financial planner who purchases shares of the Portfolio for
more than one account may aggregate all such accounts. The Shareholder Servicing
Agent or Broker-Dealer must be notified at the time of purchase that the
purchase is entitled to a reduced sales charge which will be granted subject to
confirmation of the purchaser's holdings. The volume discount option may be
modified or discontinued at any time and may not be available through all
Shareholder Servicing Agents or Broker-Dealers.
Reinvestment of Dividends and Distributions. There is no sales load on
purchases of Portfolio shares made by reinvestment of dividends and
distributions paid by the Portfolio. Reinvestment will be made at net asset
value as of the ex-dividend date (i.e., without the imposition of a sales load)
on the day on which the dividend or distribution is payable.
Letter of Intent. Any investor may sign a Letter of Intent, available from
the Distributor, stating an intention to make purchases of shares totaling a
specified amount within a period of thirteen months. Purchases within the
thirteen-month period can be made at the reduced sales load applicable to the
total amount of the intended purchase noted in the Letter of Intent. If a larger
purchase is actually made during the period, then a downward adjustment will be
made to the sales charge based on the actual purchase size. Any shares purchased
within 90 days preceding the actual signing of the Letter of Intent are eligible
for the reduced sales charge and the appropriate price adjustment will be made
on those share purchases. A number of shares equal to 4.5% of the dollar amount
of intended purchases specified in the Letter of Intent may be held in escrow by
the Distributor in the form of shares registered in the purchaser's name until
the Letter of Intent is completed. Escrowed shares are not available for
redemption or transfer until the Letter of Intent is completed, or the higher
sales charge is paid. Any redemptions made by the purchaser during the thirteen
month period will be subtracted from the amount of the purchases for purposes of
determining whether the Letter of Intent has been completed. Dividends and
distributions on the escrowed shares are paid to the investor. Dividends and
distributions taken in additional shares of the Portfolio will not apply toward
completion of the Letter of Intent. If the intended purchases are not completed
during the Letter of Intent period, the investor is required to pay the
Distributor an amount equal to the difference between the regular sales load
applicable to a single purchase of the number of shares actually purchased and
the sales load actually paid. If such payment is not made within 20 days after
written request by the Distributor, then the Distributor has the right to redeem
a sufficient
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<PAGE>
number of escrowed shares to effect payment of the amount due. Any remaining
escrowed shares are released to the investor's account. Agreeing to a Letter of
Intent does not obligate you to buy, or the Portfolio to sell, the indicated
amount of shares. You should read the Letter of Intent carefully before signing.
The Letter of Intent option may not be available through all Shareholder
Servicing Agents or Broker-Dealers.
Directors of the Fund, Employees and Clients of the Advisor. Directors of
the Fund, Employees (and their relatives) of Bessemer Trust Company, N.A., the
Shareholder Servicing Agents and Broker-Dealers, and their affiliates, may also
purchase shares of the Portfolio at no sales load. In addition, clients of the
Advisor and its affiliates may purchase shares of the Portfolio at no sales
load. The absence of a sales load reflects the reduced sales effort required to
sell shares to this group of investors.
REDEMPTION OF SHARES
Upon receipt by the Portfolio of a redemption request in proper form,
shares of the Portfolio will be redeemed at their next determined net asset
value. Checks for redemption proceeds will be mailed to the shareholder's
address of record within seven days, but will not be mailed until all checks in
payment for the purchase of the shares to be redeemed have been honored, which
may take up to 15 days. The proceeds of a redemption may be more or less than
the amount invested and, therefore, a redemption may result in gain or loss for
income tax purposes.
By Telephone. Redemptions may be made by calling your Shareholder Servicing
Agent or Broker-Dealer. The Shareholder Servicing Agents or Broker-Dealers may
accept telephone redemption requests from any person with respect to accounts of
shareholders who have previously elected this service and thus such shareholders
risk possible loss of principal and interest in the event of a telephone
redemption not authorized by them. The Portfolio will employ reasonable
procedures to confirm that telephone redemption instructions are genuine and
will require that shareholders electing such option provide a form of personal
identification. The failure by the Portfolio to employ such procedures may cause
the Portfolio to be liable for any losses incurred by investors due to telephone
redemptions based upon unauthorized or fraudulent instructions. The telephone
redemption option may be modified or discounted at any time upon 60-days notice
to shareholders and may not be available through all Shareholder Servicing
Agents or Broker-Dealers.
For Shareholders whose accounts are maintained by the Transfer Agent and
who have previously selected the telephone redemption option, telephone
redemptions may be made by calling (800) 607-2200.
By Mail. Redemption requests may be made by letter to the Shareholder
Servicing Agents or Broker-Dealers, specifying the name of the Portfolio, the
dollar amount or number of shares to be redeemed, and the account number. The
request must be signed in exactly the same way the account is registered (if
there is
22
<PAGE>
more than one owner of the shares, all must sign). In all cases, all the
signatures on a redemption request must be guaranteed by an eligible guarantor
institution which includes a domestic bank, a domestic savings and loan
institution, a domestic credit union, a member bank of the Federal Reserve
System or a member firm of a national securities exchange; pursuant to the
Portfolio's transfer agent's standards and procedures. (Guarantees by notaries
public are not acceptable.) Further documentation, such as copies of corporate
resolutions and instruments of authority, may be requested from corporations,
administrators, executors, personal representatives, trustees or custodians to
evidence the authority of the person or entity making the redemption request.
Shareholders may also redeem Portfolio shares through participating
organizations holding such shares who have made arrangements with the Portfolio
permitting them to redeem such shares by telephone or facsimile transmission and
who may charge a fee for this service.
For Shareholders whose accounts are maintained by the Transfer Agent,
redemptions may be made by sending a written redemption request to:
Old Westbury Funds, Inc.
P.O. Box 119
New York, NY 10274-0119
The redemption request must be signature guaranteed as noted above.
The right of redemption may not be suspended or the date of payment upon
redemption postponed for more than seven days after the shares are tendered for
redemption, except for any period when (i) trading on the NYSE is restricted or
the NYSE is closed, other than customary weekend and holiday closing; (ii) the
Securities and Exchange Commission has by order permitted such suspension for
the protection of the shareholders of the Portfolio; or (iii) an emergency, as
defined by rules of the Securities and Exchange Commission, exists making
disposal of portfolio investments or determination of the value of the net
assets of the Portfolio not reasonably practicable.
To minimize expenses, the Portfolio reserves the right to redeem, upon not
less than 30 days written notice to shareholders, all shares of the Portfolio in
an account (other than an Individual Retirement Account) which has a value below
$500 caused by reason of a redemption by a shareholder of shares of the
Portfolio. However, a shareholder will be allowed to make additional investments
prior to the date fixed for redemption to avoid liquidation of the account.
The proceeds of a redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for federal income
purposes.
EXCHANGE OF SHARES
When and if additional portfolios of the Fund are created, an investor may,
without cost, exchange shares of the Portfolio of the Fund into any other
portfolio of the Fund, subject to the $1,000 minimum initial investment
requirement for the
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<PAGE>
Portfolio. See 'Purchase of Shares.' The Fund will provide shareholders with 60
days' written notice prior to any modification of the exchange privilege. Shares
are exchanged on the basis of relative net asset value per share. Exchanges are
in effect redemptions from one portfolio and purchases of another portfolio; and
the Portfolio's purchase and redemption procedures and requirements are
applicable to exchanges. An exchange pursuant to this exchange privilege is
treated for federal income tax purposes as a sale on which a shareholder may
realize a taxable gain or loss. See 'Purchase of Shares' and 'Redemption of
Shares.'
RETIREMENT PLANS
The Fund has available a form of Individual Retirement Account ('IRA') for
investment in Portfolio shares. Self-employed investors may purchase shares of
the Portfolio through tax-deductible contributions to existing retirement plans
for self-employed persons, known as Keogh or H.R. 10 plans. The Portfolio does
not currently act as sponsor to such plans. Portfolio shares may also be a
suitable investment for other types of qualified pension or profit-sharing plans
which are employer-sponsored, including deferred compensation or salary
reduction plans known as '401(k) Plans' which give participants the right to
defer portions of their compensation for investment on a tax-deferred basis
until distributions are made from the plans.
The minimum initial investment for all such retirement plans is $1,000. The
minimum for all subsequent investments is $100.
Under the Internal Revenue Code of 1986, as amended (the 'Code'),
individuals may make wholly or partly tax deductible IRA contributions of up to
$2,000 annually, depending on whether they are active participants in an
employer-sponsored retirement plan and on their income level. However, dividends
and distributions held in the account are not taxed until withdrawn in
accordance with the provisions of the Code. An individual with a non-working
spouse may establish a separate IRA for the spouse under the same conditions and
contribute a combined maximum of $2,250 annually to either or both IRA's
provided that no more than $2,000 may be contributed to the IRA of either
spouse.
Investors should be aware that they may be subject to penalties or
additional tax on contributions or withdrawals from IRAs or other retirement
plans which are not permitted by the applicable provisions of the Code, and,
prior to a withdrawal, shareholders may be required to certify their age and
awareness of such restrictions in writing. Persons desiring information
concerning investments through IRAs or other retirement plans should write or
telephone his or her Shareholder Servicing Agent or Broker-Dealer. For
Shareholders who do not maintain a relationship with a Shareholder Servicing
Agent or Broker-Dealer, information on an IRA account may be obtained by calling
the Distributor at (800) 545-1074.
24
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the
Portfolio on its outstanding shares will, at the election of each shareholder,
be paid on the payment date fixed by the Board of Directors in additional shares
of the Portfolio having an aggregate net asset value as of the ex-dividend date
of such dividend or distribution equal to the cash amount of such dividend or
distribution. An election to receive dividends and distributions in cash or
shares is made at the time shares are subscribed for and may be changed by
notifying the Portfolio in writing at any time prior to the record date for a
particular dividend or distribution. There are no sales or other charges in
connection with the reinvestment of dividends and capital gains distributions.
Shareholders may change this election by notifying their Shareholder Servicing
Agent or Broker-Dealer. There is no fixed dividend rate, and there can be no
assurance that the Portfolio will pay any dividends or realize any capital
gains. The Portfolio anticipates paying income and capital gains distributions,
if any, on at least an annual basis.
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of shares of the
Portfolio. The summary is limited to investors who hold the shares as 'capital
assets' (generally, property held for investment), and to whom special
categories of rules do not apply, such as foreign investors and tax-exempt
investors. Shareholders should consult their tax advisers in determining the
federal, state, local and any other tax consequences of the purchase, ownership
and disposition of shares.
The Portfolio intends to qualify for and elect the special tax treatment
applicable to 'regulated investment companies.' To qualify as a regulated
investment company, the Portfolio must meet certain complex tests concerning its
investments and distributions. It is anticipated that the Portfolio will not be
subject to federal income or excise tax.
Dividends from net investment income and distributions of realized
short-term capital gains will be taxable to the recipient shareholders as
ordinary income. In the case of corporate shareholders, distributions
attributable to dividends received from foreign corporations will not be
eligible for the dividends-received deduction. Distributions of long-term
capital gains will be taxable to shareholders as long-term capital gain. If an
investor purchases shares shortly before a distribution date, the distribution
may be taxable to the investor as income, even though, in effect, it is a return
of principal.
A shareholder may recognize a taxable gain or loss if the shareholder sells
or redeems his shares. If the securities held by the Portfolio appreciate in
value, purchasers of shares of the Portfolio after the occurrence of such
appreciation will acquire such shares subject to the tax obligation that may be
incurred in the future when there is a sale of such securities.
The federal tax status of each year's distributions will be reported to
shareholders and to the Internal Revenue Service. If more than 50% of the value
of the Portfolio's total assets at the close of the taxable year consists of
stock or
25
<PAGE>
securities in foreign corporations, the Portfolio may elect to pass through to
shareholders the right to take a foreign tax credit or deduction for foreign
taxes paid by the Portfolio. Distributions may also be subject to state and
local taxation and shareholders should consult their own tax advisers in this
regard.
The Portfolio is required by federal law to withhold 31% of reportable
payments paid to certain shareholders who have not complied with Internal
Revenue Service regulations. In connection with this withholding requirement, a
shareholder will be asked to certify on his application that the social security
or tax identification number provided is correct and that the shareholder is not
subject to the 31% backup withholding for previous underreporting to the
Internal Revenue Service.
CALCULATION OF INVESTMENT PERFORMANCE
The Portfolio may from time to time include its yield, total return, and
average annual total return in advertisements or information furnished to
present or prospective shareholders. The Advisor may also include performance
information in such advertisements or information furnished to current or
prospective shareholders regarding the Advisor's investment performance since
John Trott, the Portfolio's portfolio manager, joined the Advisor in 1992. The
Portfolio may also from time to time include in advertisements the ranking of
those performance figures relative to such figures for groups of mutual funds
categorized by the Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc., Morningstar Inc., Wiesenberger Investment Company Service,
Barron's, Business Week, Changing Times, Financial World, Forbes, Fortune,
Money, Personal Investor, Bank Rate Monitor, and The Wall Street Journal as
having the same investment objectives. The performance of the Portfolio may also
be compared to the Europe, Australia and Far East Index, an unmanaged standard
foreign securities index monitored by Capital International, S.A. and to the
Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average, both of
which are recognized indices of domestic stocks' performance.
Average annual total return is a measure of the average annual compounded
rate of return of $1,000 invested at the maximum public offering price over a
specified period, which assumes that any dividends or capital gains
distributions are automatically reinvested in the Portfolio rather than paid to
the investor in cash. Total return is calculated with the same assumptions and
shows the aggregate return on an investment over a specified period.
The formula for total return used by the Portfolio includes three steps:
(1) adding to the total number of shares purchased by the hypothetical
investment in the portfolio of $1,000 (assuming the investment is made at a
public offering price that includes the current maximum sales load of 4.5%) all
additional shares that would have been purchased if all dividends and
distributions paid or distributed during the period had been automatically
reinvested; (2) calculating the value of the hypothetical initial investment as
of the end of the period by multiplying the total
26
<PAGE>
number of shares owned at the end of the period by the net asset value per share
on the last trading day of the period; and (3) dividing this account value for
the hypothetical investor by the amount of the initial investment and
annualizing the result for periods of less than one year. The Portfolio's
average annual total returns (including sales load of 4.5%) for the period
October 22, 1993 (commencement of operations) to October 31, 1995 and the fiscal
year ended October 31, 1995 were -2.8% and -12.7%, respectively.
The Portfolio computes yield by annualizing net investment income per share
for a recent 30-day period and dividing that amount by a Portfolio's share's
maximum public offering price (reduced by any undeclared earned income expected
to be paid shortly as a dividend) on the last trading day of that period. The
Portfolio's yield will vary from time to time depending upon market conditions,
the composition of the Portfolio and operating expenses of the Portfolio.
Total return and yield may be stated with or without giving effect to any
expense limitations in effect for the Portfolio.
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on August
26, 1993 and it is registered with the Securities and Exchange Commission as a
diversified, open-end, management investment company.
The Fund prepares semi-annual unaudited and annual audited reports which
include a list of investment securities held by the Portfolio and which are sent
to shareholders.
As a general matter, the Fund will not hold annual or other meetings of the
Portfolio's shareholders. This is because the By-laws of the Fund provide for
meetings only (a) for the election of directors as required by the Act, (b) for
approval of revised investment advisory contracts with respect to a particular
class or series of stock, (c) for approval of revisions to the Fund's
distribution plan as required by the Act with respect to a particular class or
series of stock, and (d) upon the written request of holders of shares entitled
to cast not less than twenty-five percent of all the votes entitled to be cast
at such meeting. The Portfolio's shareholders retain the right to remove
directors. Furthermore, the Fund will assist in shareholder communications.
The Fund's Board of Directors is authorized to divide the unissued shares
into separate series of stock, each series representing a separate, additional
investment portfolio. Shares of all series will have identical voting rights,
except where, by law, certain matters must be approved by a majority of the
shares of the affected series. Each share of any series of shares when issued
has equal dividend, distribution, liquidation and voting rights within the
series for which it was issued, and each fractional share has those rights in
proportion to the percentage that the fractional share represents of a whole
share. Shares will be voted in the aggregate. There are no conversion or
preemptive rights in connection with any shares of the
27
<PAGE>
Portfolio. (See 'Description of Common Stock' in the Statement of Additional
Information.)
Annual and other meetings may be required with respect to such additional
matters relating to the Fund as may be required by the Act, any registration of
the Fund with the Securities and Exchange Commission or any state, or as the
Directors may consider necessary or desirable. Each Director serves until the
next meeting of the shareholders called for the purpose of considering the
election or reelection of such Director or of a successor to such Director, and
until the election and qualification of his or her successor, elected at such a
meeting, or until such Director sooner dies, resigns, retires or is removed by
the vote of the shareholders.
For further information with respect to the Portfolio and the shares
offered hereby, reference is made to the Fund's registration statement filed
with the Securities and Exchange Commission, including the exhibits thereto. The
Registration Statement and the exhibits thereto may be examined at the
Commission and copies thereof may be obtained upon payment of certain
duplicating fees.
NET ASSET VALUE
The net asset value of the Portfolio's shares is determined as of the
earlier of 4:00 p.m., New York time, or as of the close of regular trading on
the NYSE on each Fund Business Day. Fund Business Day means any day on which the
NYSE is open for business. It is computed by dividing the value of the
Portfolio's net assets (i.e., the value of its securities and other assets less
its liabilities, including expenses payable or accrued but excluding capital
stock and surplus) by the total number of shares outstanding. Portfolio
securities for which market quotations are readily available are valued at
market value. All other investment assets of the Portfolio are valued in such
manner as the Board of Directors in good faith deems appropriate to reflect
their fair value. Any assets and liabilities initially expressed in foreign
currency values will be translated into U.S. dollar values at the prevailing
market rates of such currencies against U.S. dollars at the time of valuation.
CUSTODIAN, TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Bessemer Trust Company (New Jersey) is custodian for the Portfolio's cash
and securities. The Portfolio's custodian does not assist in, and is not
responsible for, investment decisions involving assets of the Portfolio. Morgan
Guaranty Trust Company of New York has been retained to act as sub-custodian of
the Fund's assets held outside of the United States. Fundamental Shareholder
Services, Inc., whose principal address 29 Dogwood Drive, Chester, New Jersey
07930 is the Portfolio's transfer and dividend disbursing agent.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Prospectus Summary.................... 2
Table of Fees and Expenses............ 4
Financial Highlights.................. 5
Investment Objectives, Policies
and Risks........................... 6
Investment Restrictions............... 11
Management of the Fund................ 12
The Administrator..................... 15
Distribution and Service Plan......... 15
Purchase of Shares.................... 18
Redemption of Shares.................. 22
Exchange of Shares.................... 23
Retirement Plans...................... 24
Dividends, Distributions
and Taxes........................... 25
Calculation of Investment
Performance......................... 26
General Information................... 27
Net Asset Value....................... 28
Custodian, Transfer Agent and Dividend
Disbursing Agent.................... 28
</TABLE>
------------------------------------------
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus, and if given or made, such information and representation may not be
relied upon as authorized by the Fund, its Advisor, Distributor or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a solicitation
of any offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such offer in such state.
------------------------------------------
OLD WESTBURY
FUNDS, INC.
OLD WESTBURY
INTERNATIONAL
FUND
PROSPECTUS
FEBRUARY 28, 1996
Advisor:
Bessemer Trust Company, N.A.
630 Fifth Avenue
New York, New York 10111
(212) 708-9100
Distributor and Administrator:
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
(617) 423-0800
<PAGE>
Part B
OLD WESTBURY INTERNATIONAL FUND
(the "Portfolio")
6 St. James Avenue
Boston, Massachusetts 02116
Telephone: (617) 423-0800
Statement of Additional Information
February 28, 1996
This Statement of Additional Information is not a prospectus and is
only authorized for distribution when preceded or accompanied by the Portfolio's
prospectus dated February 28, 1996 (the "Prospectus"). This Statement of
Additional Information contains additional and more detailed information than
that set forth in the Prospectus and should be read in conjunction with the
Prospectus, additional copies of which may be obtained without charge by writing
or telephoning the Portfolio at the address and telephone number set forth
above.
TABLE OF CONTENTS
INVESTMENT OBJECTIVES, POLICIES AND RISKS..................................2
DESCRIPTION OF THE PORTFOLIO'S INVESTMENT SECURITIES.......................2
INVESTMENT RESTRICTIONS....................................................6
DIRECTORS AND OFFICERS ....................................................8
ADVISOR ..................................................................10
ADMINISTRATOR.............................................................11
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT .............................13
DISTRIBUTION AND SERVICE PLAN.............................................13
BROKERAGE AND PORTFOLIO TURNOVER .........................................16
COUNSEL AND INDEPENDENT AUDITORS .........................................17
PURCHASE AND REDEMPTION OF SHARES.........................................17
DESCRIPTION OF COMMON STOCK...............................................17
PERFORMANCE...............................................................18
NET ASSET VALUE...........................................................19
TAX STATUS ...............................................................19
DESCRIPTION OF CORPORATE DEBT RATINGS.....................................22
FINANCIAL STATEMENTS .....................................................25
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RISKS
The Portfolio will normally invest its assets primarily in common
stocks, but may, however, increase its holdings in equity securities other than
common stocks including convertible securities, preferred stock and warrants
when the Advisor
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believes it is advisable to do so. The Portfolio may also invest in debt
securities as described in the Prospectus. Investments in debt securities are
consistent with the Portfolio's investment objective because they could result
in capital appreciation due to an increase in the value of such securities
caused by changes in interest rates and currency values.
The Portfolio intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, as amended (the "Code"). The
Portfolio will be restricted in that, at the close of each quarter of the
taxable year, at least 50% of the value of the Portfolio's total assets must be
represented by cash, Government securities, investment company securities and
other securities limited in respect of any one issuer to not more than 5% in
value of the total assets of the Portfolio and to not more than 10% of the
outstanding voting securities of such issuer. In addition, at the close of each
quarter of its taxable year, not more than 25% in value of the Portfolio's total
assets may be invested in the securities of one issuer other than Government
securities. The limitations described in this paragraph regarding qualifications
as a "regulated investment company" are not fundamental policies and may be
revised to the extent applicable federal income tax requirements are revised.
DESCRIPTION OF THE PORTFOLIO'S INVESTMENT SECURITIES
The material relating to the risk factors pertaining to the securities
invested in by the Portfolio set forth in the Prospectus is herein incorporated
by reference. The following discussion is additional disclosure that supplements
the Prospectus.
FOREIGN SECURITIES
Investments are made primarily in those regions and countries where, in
the opinion of the Portfolio's investment advisor, there are opportunities to
achieve superior investment returns relative to other investment opportunities
outside the United States. The Portfolio does not, however, generally invest in
debt or equity securities of U.S. issuers. The Portfolio emphasizes those
industrial sectors of the world's market which, in the opinion of the
Portfolio's investment advisor, offer the most attractive risk/reward
relationships. Securities of any given issuer are evaluated on the basis of such
measures as price/earnings ratios, price/book ratios, cash flows and dividends
and interest income.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS AND OPTIONS
The Portfolio may conduct its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to purchase or sell
foreign currencies. A
-3-
<PAGE>
forward foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are traded directly between currency
traders (usually large commercial banks with assets and deposits of over $1
billion) and their customers.
In using options as a hedge against changes in the value of foreign
currencies relative to the U.S. dollar, the Portfolio may trade exchange-traded
options on foreign currencies. The Portfolio may write (sell) covered call
options and secured put options on up to 25% of net assets and may purchase put
and call options provided that no more than 5% of net assets may be invested in
premiums on such options.
A separate account of the Portfolio will be established with the
Portfolio's custodian consisting of cash or U.S. Government or other high-grade
liquid debt obligations equal to the amount of the Portfolio's assets that could
be required to consummate forward contracts or put options entered into to hedge
against movements in the value of foreign currencies with respect to the
Portfolio's portfolio positions. For the purpose of determining the adequacy of
the securities in the account, the deposited securities will be valued at market
or fair value. If the market or fair value of such securities declines,
additional cash or high grade liquid debt securities will be placed in the
account daily so that the value of the account will equal the amount of such
commitments by the Portfolio.
INVESTMENTS IN WARRANTS AND RIGHTS
Warrants basically are options to purchase equity securities at a
specified price valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities. Rights are
similar to warrants, but normally have a short duration and are distributed
directly by the issuer to its shareholders. Rights and warrants have no voting
rights, receive no dividends and have no rights with respect to the assets of
the issuer. The Portfolio does not intend to purchase warrants and rights in
excess of 5% of the Portfolio's total assets.
CONVERTIBLE SECURITIES
The Portfolio may, as an interim alternative to investment in common
stocks, purchase investment grade convertible debt securities having a rating
of, or equivalent to, at least "BBB" by Standard & Poor's Corporation ("S&P") or
"Baa" by Moody's Investors Service, Inc. ("Moody's") or, if unrated, judged by
the Advisor to be of comparable quality. Securities rated BBB or Baa have
speculative characteristics. Although lower rated bonds generally have higher
yields, they are more speculative and subject to a greater risk of default with
respect to the issuer's
-4-
<PAGE>
capacity to pay interest and repay principal than are higher rated debt
securities.
In selecting convertible securities for the Portfolio, the Advisor
relies primarily on its own evaluation of the issuer and the potential for
capital appreciation through conversion. It does not rely on the rating of the
security or sell because of a change in rating absent a change in its own
evaluation of the underlying common stock and the ability of the issuer to pay
principal and interest or dividends when due without disrupting its business
goals. Interest or dividend yield is a factor only to the extent it is
reasonably consistent with prevailing rates for securities of similar quality
and thereby provides a support level for the market price of the security. The
Portfolio will purchase the convertible securities of highly leveraged issuers
only when, in the judgment of the Advisor, the risk of default is outweighed by
the potential for capital appreciation. The Portfolio does not intend to
purchase convertible securities in excess of 5% of the Portfolio's total assets.
The issuers of debt obligations having speculative characteristics may
experience difficulty in paying principal and interest when due in the event of
a downturn in the economy or unanticipated corporate developments. The market
prices of such securities may become increasingly volatile in periods of
economic uncertainty. Moreover, adverse publicity or the perceptions of
investors over which the Advisor has no control, whether or not based on
fundamental analysis, may decrease the market price and liquidity of such
investments. Although the Advisor will attempt to avoid exposing the Portfolio
to such risks, there is no assurance that it will be successful or that a liquid
secondary market will continue to be available for the disposition of such
securities. The Portfolio will not purchase or hold more that 5% of its net
assets in securities rated below investment grade.
The market for unrated securities may not be as liquid as the market
for rated securities, which may result in depressed prices for the Portfolio in
the disposal of such nonrated securities. There is no established secondary
market for many of these securities. The Advisor cannot anticipate whether these
securities could be sold other than to institutional investors. There is
frequently no secondary market for the resale of those debt obligations that are
in default. The limited market for these securities may affect the amount
actually realized by the Portfolio upon such sale. Such sale may result in a
loss to the Portfolio. There are certain risks involved in applying credit
ratings as a method of evaluating high yield securities. For example, while
credit rating agencies evaluate the safety of principal and interest payments,
they do not evaluate the market risk of the securities and the securities may
decrease in value as a result of credit developments. See "Description of
Corporate Debt Ratings" for a comparison of investment grade and speculative
ratings issued by Standard & Poor's and Moody's.
-5-
<PAGE>
Lower rated and nonrated securities tend to offer higher yields than
higher rated securities with the same maturities because the creditworthiness of
the obligors of lower rated securities may not have been as strong as that of
other issuers. Since there is a general perception that there are greater risks
associated with the lower-rated securities in the Portfolio, the yields and
prices of such securities tend to fluctuate more with changes in the perceived
quality of the credit of their obligors.
In addition, the market value of high yield securities may fluctuate
more than the market value of higher rated securities since high yield
securities tend to reflect short-term market developments to a greater extent
than higher rated securities, which fluctuate primarily in response to the
general level of interest rates, assuming that there has been no change in the
fundamental credit quality of such securities. High yield securities are also
more sensitive to adverse economic changes and events affecting specific issuers
than are higher rated securities. Periods of economic uncertainty can be
expected to result in increased market price volatility of the high yield
securities. High yield securities may also be directly and adversely affected by
variables such as interest rates, unemployment rates, inflation rates and real
growth in the economy and may be more susceptible to variables such as adverse
publicity and negative investor perception than are more highly rated
securities, particularly in a limited secondary market. Lower rated securities
generally involve greater risks of loss of income and principal than higher
rated securities. The obligors of lower rated securities possess less
creditworthy characteristics than the obligors of higher rated securities, as is
evidenced by those securities that have experienced a downgrading in rating or
that are in default. The evaluation of the price of such securities is highly
speculative and volatile. As such, these evaluations are very sensitive to the
latest available public information relating to developments concerning such
securities.
INVESTMENTS IN SMALL, UNSEASONED COMPANIES
The securities of small, unseasoned companies (i.e., issuers, which
including predecessors, have been in business less than three years) may have a
limited trading market, which may adversely affect their disposition and can
result in their being priced lower than might otherwise be the case. If other
investment companies and investors who invest in such issuers trade the same
securities when the Portfolio attempts to dispose of its holdings, the Portfolio
may receive lower prices than might otherwise be obtained. The Portfolio does
not intend to purchase securities of small, unseasoned companies in excess of 5%
of the Portfolio's net assets.
CORPORATE REORGANIZATIONS
The Portfolio may invest in securities for which a tender or
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<PAGE>
exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or reorganization proposal has been
announced if, in the judgment of the Advisor, there is reasonable prospect of
capital appreciation significantly greater than the brokerage and other
transaction expenses involved. The primary risk of such investments is that if
the contemplated transaction is abandoned, revised, delayed or becomes subject
to unanticipated uncertainties, the market price of the securities may decline
below the purchase price paid by the Portfolio.
In general, securities which are the subject of such an offer or
proposal sell at a premium to their historic market price immediately prior to
the announcement of the offer or proposal. However, the increased market price
of such securities may also discount what the stated or appraised value of the
security would be if the contemplated transaction were approved or consummated.
Such investments may be advantageous when the discount significantly overstates
the risk of the contingencies involved; significantly undervalues the
securities, assets or cash to be received by shareholders of the prospective
portfolio company as a result of the contemplated transaction; or fails
adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Advisor which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction, but also the financial resources and
business motivation of the offerer as well as the dynamics of the business
climate when the offer or proposal is in process.
In making such investments, the Portfolio will not violate any of its
diversification requirements or investment restrictions (see below, "Investment
Restrictions") including the requirement that, with respect to 75% of its total
assets not more than 5% of its total assets may be invested in the securities of
any one issuer. Since such investments are ordinarily short term in nature, they
will increase the turnover ratio of the Portfolio thereby increasing its
brokerage and other transaction expenses as well as make it more difficult for
the Portfolio to meet the tests for favorable tax treatment as a "Regulated
Investment Company" specified by the Code (see the Prospectus, "Dividends,
Distributions and Taxes"). The Advisor intends to select investments of the type
described which, in its view, have a reasonable prospect of capital appreciation
which is significant in relation to both the risk involved and the potential of
available alternate investments as well as monitor the effect of such
investments on the tax qualification tests of the Code. The Portfolio does not
intend to purchase these securities in excess of 5% of the Portfolio's total
assets.
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<PAGE>
REPURCHASE AGREEMENTS
The Portfolio may engage in repurchase agreements with U.S. sellers as
set forth in the Prospectus. A repurchase agreement is an instrument under which
the purchaser (i.e., the Portfolio) acquires a debt security and the seller
agrees, at the time of the sale, to repurchase the obligation at a mutually
agreed upon time and price, thereby determining the yield during the purchaser's
holding period. This results in a fixed rate of return insulated from market
fluctuations during such period. The underlying securities are ordinarily U.S.
Treasury or other government obligations or high quality money market
instruments. The Portfolio will require that the value of such underlying
securities, together with any other collateral held by the Portfolio, always
equals or exceeds the amount of the repurchase obligations of the vendor. While
the maturities of the underlying securities in repurchase agreement transactions
may be more than one year, the term of such repurchase agreement will always be
less than one year. The Portfolio's risk is primarily that, if the seller
defaults, the proceeds from the disposition of underlying securities and other
collateral for the seller's obligation are less than the repurchase price. If
the seller becomes bankrupt, the Portfolio might be delayed in selling the
collateral. Under the Investment Company Act of 1940, as amended (the "Act"),
repurchase agreements are considered loans. Repurchase agreements usually are
for short periods, such as one week or less, but could be longer. The Portfolio
will not enter into repurchase agreements of a duration of more than seven days
if, taken together with other illiquid securities, more than 15% of the
Portfolio's net assets would be so invested. Under normal market conditions, the
Portfolio does not intend to purchase repurchase agreements in excess of 5% of
the Portfolio's net assets.
LOANS OF PORTFOLIO SECURITIES
To increase income, the Portfolio may lend its securities to securities
broker-dealers or financial institutions if (1) the loan is collateralized in
accordance with applicable regulatory requirements including collateralization
continuously at no less than 100% by marking to market daily, (2) the loan is
subject to termination by the Portfolio at any time, (3) the Portfolio receives
reasonable interest or fee payments on the loan, (4) the Portfolio is able to
exercise all voting rights with respect to the loaned securities and (5) the
loan will not cause the value of all loaned securities to exceed one-third of
the value of the Portfolio's assets.
If the borrower fails to maintain the requisite amount of collateral,
the loan automatically terminates and the Portfolio could use the collateral to
replace the securities while holding the borrower liable for any excess of
replacement cost over the value of the collateral. As with any extension of
credit, there are risks of delay in recovery and in some cases even loss of
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<PAGE>
rights in collateral should the borrower of the securities fail financially. The
Portfolio does not intend to lend portfolio securities in excess of 5% of the
Portfolio's total assets.
INVESTMENT RESTRICTIONS
The Portfolio has adopted the following investment restrictions which
may not be changed without the approval of the "majority of the outstanding
shares" of the Portfolio (as defined in the Prospectus). Under such fundamental
restrictions, the Portfolio may not:
1. Purchase securities on margin or borrow money, except (a) from banks
for extraordinary or emergency purposes (not for leveraging or
investment) or (b) by engaging in reverse repurchase agreements,
provided that (a) and (b) in the aggregate do not exceed an amount
equal to one-third of the value of the total assets of the Portfolio
less its liabilities (not including the amount borrowed) at the time of
the borrowing, and further provided that 300% asset coverage is
maintained at all times;
2. Lend portfolio securities of value exceeding in the aggregate one-third
of the market value of the Portfolio's total assets less liabilities
other than obligations created by these transactions;
3. Mortgage, pledge or hypothecate any assets except that a Portfolio may
pledge not more than one-third of its total assets to secure borrowings
made in accordance with paragraph 1 above. However, although not a
fundamental policy of the Portfolio, as a matter of operating policy in
order to comply with certain state statutes, no Portfolio will pledge
its assets in excess of an amount equal to 10% of total net assets;
4. Act as an underwriter of securities of other issuers, except insofar as
the Portfolio may be deemed an underwriter under the Securities Act of
1933 in disposing of a portfolio security;
5. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests, including limited partnership interests,
in oil, gas or other mineral exploration, leasing or development
programs;
6. Purchase or acquire commodities, commodity contracts or futures except
that the Portfolio may purchase and write options on foreign currencies
or enter into forward delivery contracts for foreign currencies and may
also purchase foreign index contracts;
7. Issue senior securities, except insofar as the Portfolio may be deemed
to have issued a senior security in connection
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<PAGE>
with any permitted borrowing;
8. Invest 25% or more of the value of its total assets in any particular
industry or groups of related industries; and
9. Participate on a joint, or a joint and several, basis in any securities
trading account.
The following are investment restrictions that may be changed by a vote
of the majority of the Board of Directors. The Portfolio will not:
1. Invest more than 15% of the market value of the Portfolio's net assets
in illiquid investments including repurchase agreements maturing in
more than seven days;
2. Invest in securities of other investment companies, except the
Portfolio may purchase securities of other investment companies which
meet the investment objectives of the Portfolio and then only up to 5%
of the Portfolio's net assets, except as they may be acquired as part
of a merger, consolidation or acquisition of assets and further except
as permitted by Section 12(d) of the Act.
3. Purchase securities while borrowings exceed 5% of its total assets;
4. Invest in companies for the purpose of exercising control.
If a percentage restriction (except paragraph 3 of the fundamental
restrictions) is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the value of the Portfolio's investment
securities will not be considered a violation of the Portfolio's restrictions.
DIRECTORS AND OFFICERS
The Directors and principal officers of the Fund, their age and
principal occupations for the past five years, are listed below. Directors
deemed to be "interested persons" of the Fund for purposes of the Act are
indicated by an asterisk. Unless otherwise indicated below, the address of each
Director and officer is Old Westbury Funds, Inc. c/o Signature Broker-Dealer
Services, Inc., 6 St. James Avenue, Boston, Massachusetts 02116.
PHILIP W. COOLIDGE* (age 44) - Director and President; Chairman, Chief Executive
Officer and President, Signature Financial Group, Inc. (since December 1988) and
Signature Broker-Dealer Services,
Inc. (since April 1989).
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<PAGE>
ROBERT M. KAUFMAN (age ) - Chairman of the Board and Director; Partner,
Proskauer Rose Goetz & Mendelsohn, Attorneys at Law. His principal address is
1585 Broadway, New York, NY 10036 .
JOHN KEVIN KENNY (age ) - Director; Principal, Real Estate Development (since
1992); President and Chief Executive Officer, J.J. Kenny Co., Inc. Kenny
Information Services, Inc. (from 1991 to 1992)
His principal address is 2000 PGA Boulevard, Suite 3220, P.O. Box 13076, North
Palm Beach, FL 33408.
JOHN R. ELDER (age 47) - Treasurer ; Vice President, Signature Financial Group,
Inc. (since April, 1995); Treasurer, Phoenix Family of Mutual Funds (prior to
April, 1995).
DAVID G. DANIELSON (age 31) - Assistant Treasurer; Assistant Manager, Signature
Financial Group, Inc. (since May 1991); Graduate Student, Northeastern
University (from April 1990 to March 1991); Tax Accountant & Systems Analyst
with Putnam Companies (prior to March 1990).
DANIEL E. SHEA (age 33) - Assistant Treasurer; Assistant Manager of Fund
Administration, Signature Financial Group, Inc. (since November 1993);
Supervisor and Senior Technical Advisor, Putnam Companies, Inc. (prior to
November 1993).
THOMAS M. LENZ (age 37) - Secretary; Senior Vice President and Associate General
Counsel, Signature Financial Group, Inc. (since November 1989); Assistant
Secretary, Signature Broker-Dealer Services, Inc. (since February 1991) .
LINDA T. GIBSON (age 30) - Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature Financial Group, Inc. (since May 1992); Assistant
Secretary, Signature Broker-Dealer Services, Inc. (since October 1992); Student,
Boston University School of
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<PAGE>
Law (from September 1989 to May 1992) .
MOLLY S. MUGLER (age 44) - Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature Financial Group, Inc. (since December 1988); Assistant
Secretary, Signature Broker-Dealer
Services, Inc. (since April 1989).
ANDRES E. SALDANA (age 33) - Assistant Secretary; Legal Counsel, Signature
Financial Group, Inc. (since November 1992); Attorney, Ropes & Gray (from
September 1990 to November 1992) .
Messrs. Coolidge, Danielson, Elder, Lenz, Saldana and Shea and Mss. Gibson and
Mugler also hold similar positions for other investment companies for which
Signature Broker-Dealer Services, Inc. or an affiliate serves as the principal
underwriter.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension Total
Retirement Compensation
Benefits Estimated From
Aggregate Accrued as Annual Fund and Fund
Compensation Part of Portfolio Benefits upon Complex Paid
from the Fund Expenses Retirement to Directors
<S> <C> <C> <C> <C>
Philip W.
Coolidge none none none none
Robert M.
Kaufman $5,000 none none $5,000
John Kevin
Kenny $5,000 none none $5,000
</TABLE>
The compensation table above reflects the fees received by the
Directors from the Corporation for fiscal year ended October 31, 1995. The
Directors who are not "interested persons" (as defined in the Act) of the Fund
will receive an annual retainer of $5,000 to be paid in quarterly installments
of $1,250 plus reasonable expenses.
As of January 31, 1996, all Directors and officers as a group owned
less than 1% of the Portfolio's outstanding shares. As of the same date, the
following shareholders of record owned more than 5% of the Portfolio's
outstanding shares: Bessemer Trust Company (Cayman) Limited, P.O. Box 694,
Edward Street, Grand Cayman, Cayman Islands, B.W.I., 9.4%. Bessemer Trust
Company, 100 Woodbridge Center Drive, Woodbridge, New Jersey 07095-1191 held
94.0% of the outstanding shares of the Portfolio under the nominee name Naidot &
Co. for its customers. Bessemer Trust Company (Cayman) Limited is a subsidiary
of The Bessemer Group Incorporated.
ADVISOR
The Advisor to the Portfolio is Bessemer Trust Company, N.A., a
national banking association. Pursuant to the Advisory Contract for the
Portfolio, the Advisor manages the portfolio of securities and makes decisions
with respect to the purchase and sale of investments, subject to the general
control of the Board of Directors of the Fund.
The Advisor also provides the Portfolio with supervisory personnel who
are responsible for supervising the performance of the Portfolio's
Administrator. The Administrator will provide personnel who will be responsible
for performing the operational components of such supervisory services and who
may be employees of the Advisor, of its affiliates or of other organizations.
The Advisory Contract for the Portfolio was approved by the shareholders at a
meeting held on October 12, 1993 and most recently approved on August 9, 1995 by
the Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the Act) of the Fund or the Advisor.
The Advisory Contract will be continued in force for successive
twelve-month periods beginning each October 1, provided that such continuance is
specifically approved annually by a vote of a "majority of the outstanding
shares" of the Portfolio (as defined in the Prospectus) or by the Fund's Board
of Directors, and in either case by a majority of the directors who are not
parties to the Advisory Contract or interested persons of any such party, by
votes cast in person at a meeting called for the purpose of voting on such
matter.
The Advisory Contract is terminable without penalty by the
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Portfolio on sixty days' written notice when authorized either by a vote of a
"majority of the outstanding shares" of the Portfolio (as defined in the
Prospectus) or by a vote of a majority of the Fund's Board of Directors, or by
the Advisor on sixty days' written notice, and will automatically terminate in
the event of an "assignment" (as defined in the Act). The Advisory Contract
provides that in the absence of willful misfeasance, bad faith or gross
negligence on the part of the Advisor, or of reckless disregard of its
obligations thereunder, the Advisor shall not be liable for any action or
failure to act in accordance with its duties thereunder.
The Portfolio has, under the Advisory Contract, confirmed its
obligation for payment of all its other expenses, including without limitation:
fees payable to the Advisor, Administrator, Custodian, Transfer Agent and
Dividend Agent; brokerage and commission expenses; foreign, federal, state or
local taxes, including issuance and transfer taxes incurred by or levied on it;
commitment fees, certain insurance premiums and membership fees and dues in
investment company organizations; interest charges on borrowings;
telecommunications expenses; recurring and nonrecurring legal, accounting and
record-keeping expenses; costs of organizing and maintaining the Fund's
existence as a corporation; compensation, including directors' fees, of any
directors, officers or employees who are not also officers or employees of the
Advisor, the Administrator or their affiliates and costs of other personnel
providing administrative and clerical services; costs of stockholders' services
and costs of stockholders' reports, proxy solicitations, and corporate meetings;
fees and expenses of registering its shares under the appropriate federal
securities laws and of qualifying its shares under applicable state securities
laws, including expenses attendant upon the initial registration and
qualification of these shares and attendant upon renewals of, or amendments to,
those registrations and qualifications; any other distribution or promotional
expenses contemplated by an effective plan adopted by the Fund pursuant to Rule
12b-1 under the Act; and expenses of preparing, printing and delivering the
Prospectus to existing shareholders and of printing shareholder application
forms for shareholder accounts. The Distributor pays the promotional and
advertising expenses related to the distribution of the Portfolio's shares and
for the printing of all Portfolio prospectuses used in connection with the
distribution and sale of Portfolio shares for which it may be reimbursed under
the Plan. See "Distribution and Service Plan." The Portfolio also reimburses the
Advisor for all of the Portfolio's operating costs, including rent, depreciation
of equipment and facilities, interest and amortization of loans financing
equipment used by the Portfolio and all the expenses incurred to conduct the
Portfolio's affairs. The amounts of such reimbursements must be agreed upon
between the Portfolio and the Advisor. The Advisor at its discretion may
voluntarily waive all or a portion of the advisory fee and the operating expense
reimbursement.
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<PAGE>
The Fund may from time to time hire its own employees or contract to
have management services performed by third parties, and the management of the
Fund intends to do so whenever it appears advantageous to the Fund. The Fund's
expenses for employees and for such services are among the expenses subject to
the expense limitation described below under "Distribution and Service Plan."
For its services under the Advisory Contract, the Advisor receives from
the Portfolio an advisory fee, computed daily and payable monthly, in accordance
with the following schedule: (i) 0.80% of the first $100 million of the
Portfolio's average net assets; (ii) 0.75% of the second $100 million of the
Portfolio's average net assets; and (iii) 0.70% of the Portfolio's average net
assets exceeding $200 million. For the period October 22, 1993 (commencement of
operations) to October 31, 1993 the Portfolio accrued $1,046 , all of which were
permanently and irrevocably waived. For the fiscal years ended October 31, 1994
and 1995, the Portfolio accrued $570,189 and $771,294, respectively, in advisory
fees, of which $134,868 and $91,974, respectively, were permanently and
irrevocably waived.
Any portion of the total fees received by the Advisor may be used by
the Advisor to provide distribution, shareholder and administrative services.
Pursuant to the Portfolio's Distribution and Service Plan, the Advisor will also
act as a shareholder servicing agent for the Portfolio pursuant to which the
Portfolio is permitted to pay the Advisor a maximum of 0.25% per annum of the
Portfolio's average daily net assets to compensate it and to permit the Advisor
to compensate banks, savings and loans and other financial institutions (the
Advisor with such other institutions, each a "Shareholder Servicing Agent")
whose clients are Fund shareholders for providing shareholder services. The
Advisor may irrevocably waive its rights to any portion of the advisory fees and
may use any portion of the advisory fee for distribution and servicing purposes
including defraying the costs of performing shareholder servicing functions on
behalf of the Portfolio, compensating others, including banks, broker-dealers
and other organizations whose customers or clients are shareholders of the
Portfolio for providing assistance in distributing the Portfolio's shares and
defraying the costs of shareholder servicing and other promotional activities.
See "Distribution and Service Plan." There can be no assurance that such fees
will be waived in the future.
ADMINISTRATOR
The Administrator for the Portfolio is Signature
Broker-Dealer Services, Inc. ("Signature" or the
"Administrator"), which has its principal office at 6 St. James
Avenue, Boston, Massachusetts 02116, and is a registered
broker-dealer and a member of the National Association of
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<PAGE>
Securities Dealers, Inc. The Administrator is a wholly owned subsidiary of
Signature Financial Group, Inc., a Delaware corporation. The Administrator
serves as administrator and distributor of other mutual funds. The Portfolio
will not invest in these funds or in any other fund which may in the future be
affiliated with the Administrator or any of its affiliates. In addition, the
Administrator provides persons satisfactory to the Board of Directors of the
Fund to serve as officers and directors of the Fund, as the case may be. Such
officers, as well as certain other employees and directors of the Fund, may be
directors, officers or employees of the Administrator or its affiliates.
Pursuant to the Administrative Services Agreement for the Portfolio,
the Administrator provides all management and administrative services reasonably
necessary for the Portfolio, other than those provided by the Advisor, subject
to the supervision of the Fund's Board of Directors. Because of the services
rendered the Portfolio by the Administrator and the Portfolio's Advisor, the
Fund itself may not require any employees other than its officers, none of whom
receive compensation from the Fund. For the services rendered to the Portfolio
by the Administrator, the Portfolio pays the Administrator a fee, accrued daily
and payable monthly, equal, on an annual basis, to 0.15% of the average daily
net assets of the Portfolio, up to $100 million of assets; 0.10% of such assets
from $100 million to $250 million; and 0.05% of such assets over $250 million.
For the period October 22, 1993 (commencement of operations) to October 31, 1993
the Portfolio accrued $196 in administrative services fees, all of which was
permanently and irrevocably waived. For the fiscal years ended October 31, 1994
and 1995 the Portfolio accrued $106,932 and $143,716, respectively, in
administrative services, of which $5,989 and $84, respectively, was permanently
and irrevocably waived.
Under the Administrative Services Agreement with the Portfolio, the
Administrator provides all administrative services including, without
limitation: (i) provides services of persons competent to perform such
administrative and clerical functions as are necessary to provide effective
administration of the Portfolio, including maintaining certain books and records
described in Rule 31a-1 under the Act (except for those records maintained by
the Portfolio's Shareholder Servicing Agents or the Portfolio's transfer agent),
and reconciling account information and balances among the Portfolio's Custodian
and Advisor; (ii) oversees the performance of administrative and professional
services to the Portfolio by others, including the Portfolio's Custodian; (iii)
prepares, but does not pay for, the periodic updating of the Fund's Registration
Statement, Prospectus and Statement of Additional Information in conjunction
with Fund counsel, including the printing or reproduction of such documents for
the purpose of filings with the Securities and Exchange Commission and state
securities administrators, prepares the Fund's tax returns, and prepares reports
to the Portfolio's
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<PAGE>
shareholders and the Securities and Exchange Commission; (iv) prepares in
conjunction with Fund counsel, but does not pay for, all filings under the
securities or "Blue Sky" laws of such states or countries as are designated by
the Distributor, which may be required to register or qualify, or continue the
registration or qualification, of the Fund and/or the Portfolio's shares under
such laws; (v) prepares (but does not pay for reproduction or mailing costs)
notices and agendas for meetings of the Fund's Board of Directors and minutes of
such meetings in all matters required by the Act to be acted upon by the Board;
(vi) monitors daily and periodic compliance with respect to all requirements and
restrictions of the Act, the Code and the Prospectus; and (vii) monitors and
evaluates daily income and expense accruals, and sales and redemptions of shares
of the Portfolios.
The Administrative Services Agreement is terminable at any time,
without the payment of any penalty, by a vote of the majority of the Portfolio's
shareholders, by the Fund on behalf of the Portfolio or the Administrator on
sixty days' written notice and automatically in the event of an "assignment" as
defined by the Act. The Administrative Services Agreement shall remain in effect
for the same periods as the Advisory Contract subject to annual approval by the
Fund's Board of Directors. The Administrative Services Agreement provides that
in the absence of willful misfeasance, bad faith or gross negligence on the part
of the Administrator, or reckless disregard of its obligations thereunder, the
Administrator shall not be liable for any action or failure to act in accordance
with its duties thereunder.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
Bessemer Trust Company (New Jersey), 100 Woodbridge Center Drive,
Woodbridge, New Jersey 07095, is the Portfolio's Custodian. Pursuant to a
Custodian Agreement with the Portfolio, it is responsible for maintaining the
books and records of the Portfolio's securities and cash. Subject to the
supervision of the Advisor and Administrator, the Custodian maintains the
Portfolio's accounting and portfolio transaction records. Fundamental
Shareholder Services, Inc. whose principal address is 29 Dogwood Drive, Chester,
New Jersey 07930 is the Portfolio's transfer and dividend disbursing agent.
DISTRIBUTION AND SERVICE PLAN
The Fund has adopted a distribution and service plan, pursuant to Rule
12b-1 under the Act (the "Rule") for the Portfolio. The Rule provides that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by the Rule. The
Plan provides that the Portfolio may bear certain expenses and costs which in
the aggregate are subject to a maximum of 0.40% per annum of the Portfolio's
average daily net assets.
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<PAGE>
Pursuant to the Plan, the Portfolio entered into a Distribution Agreement and a
Shareholder Servicing Agreement with Signature Broker-Dealer Services, Inc. (the
"Distributor") and the Portfolio also entered into a Shareholder Servicing
Agreement with the Advisor. For its services under its Shareholder Servicing
Agreement, the Distributor is permitted to receive payments from the Portfolio
up to 0.25% per annum of the average daily net assets of the Portfolio to permit
it to make payments to broker-dealers with which it has written agreements and
whose clients are Fund shareholders (each a "Broker-Dealer"), for providing
shareholder services. For its service under its Shareholder Servicing Agreement,
the Advisor is permitted to receive a payment from the Portfolio equal to 0.25%
per annum of the Portfolio's average daily net assets attributable to the
clients of the Advisor (and its affiliates) to compensate it for providing
shareholder services to such clients. In addition, the Shareholder Servicing
Agreement provides that the Advisor is permitted to receive payments from the
Portfolio (together with the Distributor's fee, the "Shareholder Servicing Fee")
to actually permit it to make payments made to banks, savings and loans and
other financial institutions with which it has written agreements and whose
clients are Fund shareholders (each institution, a "Shareholder Servicing
Agent") for providing shareholder services up to 0.25% per annum of the
Portfolio's average daily net assets attributable to the clients of the other
Shareholder Servicing Agents. Therefore, the total of the Shareholder Servicing
Fees in the aggregate payable to the Distributor and the Advisor will not exceed
0.25% of the total net assets of the Portfolio. For the period October 22, 1993
(commencement of operations) to October 31, 1993, the Portfolio accrued $327 in
shareholder servicing fees, all of which was permanently and irrevocably waived.
For the fiscal years ended October 31, 1994 and 1995, the Portfolio accrued
$176,227 and $237,518, respectively, in shareholder servicing fees.
Each Shareholder Servicing Agent and Broker-Dealer will, as agent for
its customers, among other things; answer customer inquiries regarding account
status and history, the manner in which purchases and redemptions of shares of
the Portfolio may be effected and certain other matters pertaining to the
Portfolio; assist shareholders in designating and changing dividend options,
account designations and addresses; provide necessary personnel and facilities
to establish and maintain shareholder accounts and records; assist in processing
purchase and redemption transactions; arrange for the wiring of funds; transmit
and receive funds in connection with customer orders to purchase or redeem
shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder designated accounts;
furnish (either separately or on an integrated basis with other reports sent to
a shareholder by the Portfolio) monthly and year-end statements and
confirmations of purchases and redemptions, as required by Rule 10b-10 under the
Securities Exchange Act of 1934; transmit, on behalf of the
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Portfolio, proxy statements, annual reports, updating prospectuses and other
communications from the Portfolio to shareholders of the Portfolio; receive,
tabulate and transmit to the Portfolio proxies executed by shareholders with
respect to meeting of shareholders of the Portfolio; and provide such other
related services as the Portfolio or a shareholder may request. As set forth
herein for these services, each Shareholder Servicing Agent and Broker-Dealer
(either directly or from the Distributor or Advisor) receives a fee, which may
be paid periodically, on an annual basis equal to 0.25% of the average daily net
assets of the Portfolio represented by shares owned during the period for which
payment is being made by investors with whom such Shareholder Servicing Agent or
Broker-Dealer maintains a servicing relationship. Shareholder Servicing Agents
and Broker-Dealers may waive all or a portion of their Shareholder Servicing
Fees. In addition, the Distribution Agreement with the Distributor provides for
reimbursement to the Distributor by the Portfolio for its distribution,
promotional and advertising costs incurred in connection with the distribution
of the Portfolio's shares in an amount not to exceed 0.10% per annum of the
Portfolio's average daily net assets (the Distribution Reimbursement"). For the
period October 22, 1993 (commencement of operations) to October 31, 1993, no
fees were paid under the Distribution Agreement. For the fiscal years ended
October 31, 1994 and 1995, the Portfolio paid $16,100 and $7,002, respectively,
under the Distribution Agreement.
Under the Distribution and Shareholder Servicing Agreement, the
Distributor, for nominal consideration and as agent for the Portfolio, will
solicit orders for the purchase of the Portfolio's shares, provided that any
subscriptions and orders will not be binding on the Portfolio until accepted by
the Portfolio as principal. The Plan, the Distribution Agreement and the
Shareholder Servicing Agreement provide that, in addition to the Shareholder
Servicing Fee and the Distribution Reimbursement, the Portfolio will pay for (i)
telecommunications expenses, including the cost of dedicated lines and CRT
terminals, incurred by the Distributor in carrying out its obligations under the
Distribution Agreement and the Shareholder Servicing Agreement, and by the
Advisor under its Shareholder Servicing Agent and (ii) preparing, printing and
delivering the Portfolio's prospectus to existing shareholders of the Portfolio
and preparing and printing subscription application forms for shareholder
accounts. The expenses enumerated in this paragraph shall not exceed an amount
equal to 0.05% per annum of the Portfolio's average daily net assets. For the
fiscal years ended October 31, 1994 and 1995, the Portfolio paid $26,566 and
$4,080, respectively, for such expenses.
The Plan, the Shareholder Servicing Agreements and the Distribution
Agreement each provide that the Advisor and the Distributor may make payments
from time to time from their own resources which may include past profits for
the following
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purposes: to defray the costs of and to compensate others, including financial
intermediaries with whom the Distributor or Advisor has entered into written
agreements, for performing shareholder servicing and related administrative
functions on behalf of the Portfolio; to compensate certain financial
intermediaries for providing assistance in distributing the Portfolio's shares;
to pay the costs of printing and distributing the Portfolio's prospectus to
prospective investors; and to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective shareholders,
advertising, and other promotional activities, including the salaries and/or
commissions of sales personnel in connection with the distribution of the
Portfolio's shares. The Distributor or the Advisor, as the case may be, in their
sole discretion, will determine the amount of such payments made pursuant to the
Plan with the Shareholder Servicing Agents and Broker-Dealers they have
contracted with, provided that such payments made pursuant to the Plan will not
increase the amount which the Portfolio is required to pay to the Distributor or
the Advisor for any fiscal year under the Shareholder Servicing Agreements or
otherwise.
Shareholder Servicing Agents and Broker-Dealers may charge investors a
fee in connection with their use of specialized purchase and redemption
procedures offered to investors by the Shareholder Servicing Agents and
Broker-Dealers. In addition, Shareholder Servicing Agents and Broker-Dealers
offering purchase and redemption procedures similar to those offered to
shareholders who invest in the Portfolio directly may impose charges,
limitations, minimums and restrictions in addition to or different from those
applicable to shareholders who invest in the Portfolio directly. Accordingly,
the net yield to investors who invest through Shareholder Servicing Agents and
Broker-Dealers may be less than by investing in the Portfolio directly. An
investor should read the Prospectus in conjunction with the materials provided
by the Shareholder Servicing Agent and Broker-Dealer describing the procedures
under which Portfolio shares may be purchased and redeemed through the
Shareholder Servicing Agent and Broker-Dealer.
The Glass-Steagall Act limits the ability of a depository institution
to become an underwriter or distributor of securities. However, it is the Fund's
position that banks are not prohibited from acting in other capacities for
investment companies, such as providing administrative and shareholder account
maintenance services and receiving compensation from the Distributor for
providing such services. However, this is an unsettled area of the law and if a
determination contrary to the Fund's position is made by a bank regulatory
agency or court concerning shareholder servicing and administration payments to
banks from the Distributor, any such payments will be terminated and any shares
registered in the banks' names, for their underlying customers, will be
re-registered in the name of the customers at no cost to the Portfolio or its
shareholders. In
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addition, state securities laws on this issue may differ from the interpretation
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law.
In accordance with the Rule, the Plan provides that all written
agreements relating to the Plan entered into by the Portfolio, the Distributor
or the Advisor, and the Shareholder Servicing Agents, Broker-Dealers, or other
organizations must be in a form satisfactory to the Fund's Board of Directors.
In addition, the Plan requires the Portfolio and the Distributor to prepare, at
least quarterly, written reports setting forth all amounts expended for
distribution purposes by the Portfolio and the Distributor pursuant to the Plan
and identifying the distribution activities for which those expenditures were
made.
The Plan provides that it may continue in effect for successive annual
periods provided it is approved by the shareholders or by the Board of
Directors, including a majority of directors who are not interested persons of
the Fund and who have no direct or indirect interest in the operation of the
Plan or in the agreements related to the Plan. The shareholders approved the
Plan at a meeting held on October 12, 1993. The Board of Directors most recently
approved the Plan on August 9, 1995. The Plan further provides that it may not
be amended to increase materially the costs which may be spent by the Portfolio
for distribution pursuant to the Plan without shareholder approval, and the
other material amendments must be approved by the directors in the manner
described in the preceding sentence. The Plan may be terminated at any time by a
vote of a majority of the disinterested directors of the Portfolio or the
shareholders.
The Advisor has agreed to reimburse the Portfolio for its expenses
(exclusive of interest, taxes, brokerage, and extraordinary expenses) which in
any year exceed the limits on investment company expenses prescribed by any
state in which the Portfolio's shares are qualified for sale. For the purpose of
this obligation to reimburse expenses, the Portfolio's annual expenses are
estimated and accrued daily, and any appropriate estimated payments are made to
it on a monthly basis. From time to time, the Advisor and the Distributor may
voluntarily assume certain expenses of the Portfolio. This would have the effect
of lowering the overall expense ratio of that Portfolio and of increasing yield
to investors in that Portfolio.
BROKERAGE AND PORTFOLIO TURNOVER
BROKERAGE
The Advisor makes the Portfolio's portfolio decisions and determines
the broker to be used in each specific transaction with the objective of
negotiating a combination of the most
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favorable commission and the best price obtainable on each transaction
(generally defined as best execution). When consistent with the objective of
obtaining best execution, brokerage may be directed to persons or firms
supplying investment information to the Advisor or portfolio transactions may be
effected by the Advisor. Neither the Portfolio nor the Advisor has entered into
agreements or understandings with any brokers regarding the placement of
securities transactions because of research services they provide. To the extent
that such persons or firms supply investment information to the Advisor for use
in rendering investment advice to the Portfolio, such information may be
supplied at no cost to the Advisor and, therefore, may have the effect of
reducing the expenses of the Advisor in rendering advice to the Portfolio. While
it is impossible to place an actual dollar value on such investment information,
its receipt by the Advisor probably does not reduce the overall expenses of the
Advisor to any material extent. Consistent with the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., and subject to seeking
best execution, the Advisor may consider sales of shares of the Portfolio as a
factor in the selection of brokers to execute portfolio transactions for the
Portfolio.
For the period from October 22, 1993 (commencement of operations) to
October 31, 1993 and for the fiscal years ended October 31, 1994 and 1995, the
aggregate commissions paid from the Portfolio were $0, $516,020 and $325,787,
respectively.
The investment information provided to the Advisor is of the type
described in Section 28(e) of the Securities Exchange Act of 1934 and is
designed to augment the Advisor's own internal research and investment strategy
capabilities. Research services furnished by brokers through which the Portfolio
effects securities transactions are used by the Advisor in carrying out its
investment management responsibilities with respect to all its clients'
accounts. There may be occasions where the transaction cost charged by a broker
may be greater than that which another broker may charge if the Advisor
determines in good faith that the amount of such transaction cost is reasonable
in relation to the value of brokerage and research services provided by the
executing broker. The Advisor may consider the sale of shares of the Portfolio
by brokers including the Distributor as a factor in its selection of brokers of
Portfolio transactions.
The Portfolio may deal in some instances in securities which are not
listed on a national securities exchange but are traded in the over-the-counter
market. It may also purchase listed securities through the third market. Where
transactions are executed in the over-the-counter market or third market, the
Portfolio will seek to deal with the primary market makers; but when necessary
in order to obtain best execution, it will utilize the services of others. In
all cases the Portfolio will attempt to negotiate best execution.
PORTFOLIO TURNOVER
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The Portfolio's average annual portfolio turnover rate, i.e., the ratio
of the lesser of sales or purchases to the monthly average value of the
portfolio (excluding from both the numerator and the denominator all securities
with maturities at the time of acquisition of one year or less) is expected to
be high. Purchases and sales are made for the Portfolio whenever necessary in
the Advisor's opinion, to meet the Portfolio's objective. In order to qualify as
a regulated investment company, less than 30% of the Portfolio's gross income
(including tax exempt income) must be derived from the sale or other disposition
of stock, securities or certain investments held for less than three months.
Although increased Portfolio turnover (over 100%) may increase the likelihood of
additional capital gains for the Portfolio, the Portfolio expects to satisfy the
30% income test.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters for the Fund are passed upon by Battle Fowler LLP, 75
East 55th Street, New York, New York 10022.
Deloitte & Touche LLP, Two World Financial Center, New York, New York
10281, have been selected as independent auditors for the Portfolio.
PURCHASE AND REDEMPTION OF SHARES
The material relating to the purchase and redemption of shares in the
Prospectus is herein incorporated by reference.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Fund, which was incorporated on
August 26, 1993 in Maryland, consists of twenty billion shares of stock having a
par value of one tenth of one cent ($.001) per share. The Fund's Board of
Directors is authorized to divide the unissued shares into separate series of
stock, each series representing a separate, additional investment portfolio.
Shares of all series will have identical voting rights, except where, by law,
certain matters must be approved by a majority of the shares of the affected
series. Each share of any series of shares when issued has equal dividend,
distribution, liquidation and voting rights within the series for which it was
issued, and each fractional share has those rights in proportion to the
percentage that the fractional share represents of a whole share. Shares will be
voted in the aggregate. There are no conversion or preemptive rights in
connection with any shares of the Fund. All shares, when issued in accordance
with the terms of the offering, will be fully paid and nonassessable. Shares are
redeemable at net asset value, at the option of the shareholder.
Under its Articles of Incorporation, the Fund has the right
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to redeem for cash shares of stock owned by any shareholder to the extent and at
such times as the Fund's Board of Directors determines to be necessary or
appropriate to prevent an undue concentration of stock ownership which would
cause the Fund to become a "personal holding company" for federal income tax
purposes. In this regard, the Fund may also exercise its right to reject
purchase orders.
The shares of the Portfolio have noncumulative voting rights, which
means that the holders of more than 50% of the shares outstanding voting for the
election of directors can elect 100% of the directors if the holders choose to
do so, and, in that event, the holders of the remaining shares will not be able
to elect any person or persons to the Board of Directors. The Fund will not
issue certificates evidencing Fund shares.
As a general matter, the Fund will not hold annual or other meetings of
the Fund's shareholders. This is because the By-laws of the Fund provide for
annual meetings only (a) for the election of directors, (b) for approval of the
revised investment advisory contracts with respect to a particular class or
series of stock, (c) for approval of revisions to the Fund's distribution plan
as required by the Act with respect to a particular class or series of stock,
and (d) upon the written request of holders of shares entitled to cast not less
than 25 percent of all the votes entitled to be cast at such meeting. Annual and
other meetings may be required with respect to such additional matters relating
to the Fund as may be required by the Act, any registration of the Fund with the
Securities and Exchange Commission or any state, or as the Directors may
consider necessary or desirable. Each Director serves until the next meeting of
the shareholders called for the purpose of considering the election or
re-election of such Director or of a successor to such Director, and until the
election and qualification of his or her successor, elected at such a meeting,
or until such Director sooner dies, resigns, retires or is removed by the vote
of the shareholders.
PERFORMANCE
The material relating to the Portfolio's performance in the Prospectus
is herein incorporated by reference. The Advisor may also include performance
information in such advertisements or information furnished to current or
prospective shareholders not only regarding the Advisor's performance since John
Trott, the Portfolio's portfolio Manager, joined the Advisor in 1992, but also
regarding Mr. Trott's personal investment performance since 1988 when, as chief
investment officer for Klienwart Benson International Investment LTD., he
managed investments for clients with similar objectives to those of the
Portfolio.
NET ASSET VALUE
For purposes of determining the Portfolio's net asset value per share,
readily marketable portfolio securities listed on an
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exchange are valued, except as indicated below, at the last sale price reflected
at the close of the regular trading session of the exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
on such day. If no bid or asked prices are quoted on such day, then the security
is valued by such method as the Board of Directors shall determine in good faith
to reflect its fair market value. Portfolio securities traded on more than one
national securities exchange are valued at the last sale price on the business
day as of which such value is being determined as reflected on the tape at the
close of the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by the Advisor to
be over-the-counter are valued at the mean of the current bid and asked prices
from such sources as the Board of Directors deems appropriate to reflect their
fair value.
United States Government obligations and other debt instruments having
sixty days or less remaining until maturity are stated at amortized cost. Debt
instruments having a greater remaining maturity will be valued at the highest
bid price obtained from a dealer maintaining an active market in that security
or on the basis of prices obtained from a pricing service approved as reliable
by the Board of Directors. All other investment assets, including restricted and
not readily marketable securities, are valued under procedures established by
and under the general supervision and responsibility of the Fund's Board of
Directors designed to reflect in good faith the fair value of such securities.
As indicated in the Prospectus, the net asset value per share of the
Portfolio's shares will be determined as of the close of the regular trading
session of the New York Stock Exchange (the "NYSE") on each day that the NYSE is
open for trading. The NYSE annually announces the days on which it will not be
open for trading; the most recent announcement indicates that it will not be
open on the following days: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
However, the NYSE may close on days not included in that announcement.
TAX STATUS
The following is a general discussion of certain of the federal income
tax consequences of the purchase, ownership and disposition of shares of the
Portfolio (the "Shares") and holders of the Shares (the "Shareholders"). The
summary is limited to investors who hold the Shares as "capital assets"
(generally, property held for investment) within the
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meaning of Section 1221 of the Code . Shareholders should consult their tax
advisers in determining the federal, state, local and any other tax consequences
of the purchase, ownership and disposition of Shares.
The Portfolio intends to qualify for and elect the special tax
treatment applicable to "regulated investment companies" under Sections 851-855
of the Code. If the Portfolio qualifies as a "regulated investment company" and
distributes to Shareholders 90% or more of its investment company taxable income
(without regard to its net capital gain, i.e., the excess of its net long-term
capital gain over its net short-term capital loss), it will not be subject to
federal income tax on the portion of its investment company taxable income
(including any net capital gain) it distributes to Shareholders in a timely
manner. In addition, to the extent the Portfolio distributes to Shareholders in
a timely manner at least 98% of its taxable income (including any net capital
gain) it will not be subject to the 4% excise tax on certain undistributed
income of a regulated investment company. In order to maintain its status as a
regulated investment company, the Portfolio must derive less than 30% of its
gross income from the sale or other disposition of securities held less than
three months. It is anticipated that the Portfolio will not be subject to
federal income tax or the excise tax. Distribution of the Portfolio's investment
company taxable income (including any net capital gain) is expected to occur in
a timely manner. Although all or a portion of the Portfolio's taxable income
(including any net capital gain) for a calendar year may be distributed shortly
after the end of the calendar year, such a distribution will be treated for
federal income tax purposes as having been received by Shareholders during the
calendar year.
The Portfolio intends to qualify as a publicly offered regulated
investment company and as such will not be subject to the 2% limitation on
itemized expense deductions. Thus, distributions will take into account all of
the itemized expenses incurred by the Portfolio. Additionally, Section 68 of the
Code, which limits the amount of allowable itemized deductions of individuals
with an adjusted gross income in excess of specified amounts, does not appear to
apply to indirect deductions incurred by a pass through entity, such as a
regulated investment company.
However, regulations may be promulgated in the future that could alter this
result.
Distributions to Shareholders of the Portfolio's taxable income (other
than its net capital gain) for a year will be taxable as ordinary income to
Shareholders. To the extent that distributions to a Shareholder in any year are
not taxable as ordinary income, they will be treated as a return of capital and
will reduce the Shareholder's basis in his Shares and, to the extent that they
exceed his basis, will be treated as a gain from the sale of his Shares as
discussed below. It is anticipated
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that substantially all of the distributions of the Portfolio's taxable income
(other than net capital gain distributions) will be taxable as ordinary income
to Shareholders.
Distributions of the Portfolio's net capital gain (designated as
capital gain dividends by the Portfolio) will be taxable to Shareholders as
long-term capital gain, regardless of the length of time the Shares have been
held by a Shareholder. A Shareholder may recognize a taxable gain or loss if the
Shareholder sells or redeems his Shares. Any gain or loss arising from (or
treated as arising from) the sale or redemption of Shares will be a capital gain
or loss, except in the case of a dealer in securities. The excess of net
long-term capital gains over net short-term capital losses may be taxed at a
lower rate than ordinary income for certain noncorporate taxpayers. A capital
gain or loss is long-term if the asset is held for more than one year and
short-term if held for one year or less. To the extent that a capital gain
dividend with respect to the Shares is afforded long-term capital gain
treatment, a Shareholder who realizes a capital loss upon the sale of such
Shares that were owned for six months or less must treat the loss as long-term.
The deduction of capital losses is subject to limitations. If the securities
appreciate in value, purchasers of Shares after the occurrence of such
appreciation will acquire their Shares subject to the tax obligation that may be
incurred in the future when there is a sale of such Shares. If a Shareholder
incurs a load charge in acquiring a Share and a reinvestment right and disposes
of the Share within 90 days and subsequently acquires an interest in a regulated
investment company for no load charge, any loss recognized on the first
disposition will be disallowed to the extent of the load charge.
Distributions that are taxable as ordinary income to Shareholders will
constitute dividends for federal income tax purposes but will be eligible for
the dividends-received deduction for corporations (other than corporations such
as "S" corporations that are not eligible for such deduction because of their
special characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding company tax) only to the
extent of dividends received from domestic issuers by the Portfolio with respect
to stock held by the Portfolio for more than 45 days and only if the Shareholder
has held his Shares for more than 45 days. The requirement that dividends must
be received from domestic issuers in order to qualify for the dividends received
deduction will reduce, or eliminate, the availability of this deduction to
Shareholders. The dividends-received deduction is currently 70%.
However, Congress from time to time considers proposals to reduce the rate, and
enactment of such a proposal would adversely affect the after-tax return to
investors who can take advantage of the deduction. Sections 246 and 246A of the
Code contain limitations on the eligibility of dividends for the corporate
dividends-received deduction (in addition to the limitations discussed above).
Depending upon the corporate Shareholder's
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circumstances (including whether it has a more than 45-day holding period for
its Shares and whether its Shares are debt financed), these limitations may be
applicable to dividends received by a corporate Shareholder from the Portfolio
that would otherwise qualify for the dividends-received deduction under the
principles discussed above. Accordingly, Shareholders should consult their own
tax advisers in this regard. A corporate Shareholder should be aware that the
receipt of dividend income for which the dividends-received deduction is
available may give rise to an alternative minimum tax liability (or increase an
existing liability) because the dividend income will be included in the
corporation's "adjusted current earnings" for purposes of the adjustment to
alternative minimum taxable income required by Section 56(g) of the Code.
Dividends and interest received by the Portfolio from foreign issuers
will in most cases be subject to foreign withholding taxes. The Portfolio may
qualify to make an election that will enable Shareholders to credit foreign
withholding taxes against their federal income tax liability on distributions by
the Portfolio.
The federal tax status of each year's distributions will be reported to
Shareholders and to the Internal Revenue Service. The foregoing discussion
relates only to the federal income tax status of the Portfolio and to the tax
treatment of distributions by the Portfolio to U.S. Shareholders.
Shareholders who are not United States citizens or residents should be aware
that distributions from the Portfolio will generally be subject to a withholding
tax of 30%, or a lower treaty rate, and should consult their own tax advisers to
determine whether an investment in the Portfolio is appropriate. Distributions
may also be subject to state and local taxation and Shareholders should consult
their own tax advisers in this regard.
Sections 1291-1297 of the Code impose certain additional taxes and
interest on Shareholders of a "passive foreign investment company," defined as a
foreign corporation 75% or more of the gross income of which is from passive
investments or at least 50% of the adjusted basis of the assets of which are
assets that produce passive income. The additional tax and interest are imposed
on the Shareholders of the passive foreign investment company in the event of a
distribution of accumulated earnings or the holder's recognition of gain from
the sale of stock of the company. In the case of a "regulated investment
company" that is the Shareholder, this tax and interest will be imposed on the
"regulated investment company," not on the Shareholders of the "regulated
investment company."
Entities that generally qualify for an exemption from federal income
tax, such as many pension trusts, are nevertheless taxed under Section 511 of
the Code on "unrelated business taxable income." Unrelated business taxable
income is
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income from a trade or business regularly carried on by the tax-exempt entity
that is unrelated to the entity's exempt purpose. Unrelated business taxable
income generally does not include dividend or interest income or gain from the
sale of investment property, unless such income is derived from property that is
debt-financed or is dealer property. A tax-exempt entity's dividend income from
the Portfolio and gain from the sale of Shares in the Portfolio or the
Portfolio's sale of securities is not expected to constitute unrelated business
taxable income to such tax-exempt entity unless the acquisition of the Shares
itself is debt-financed or constitutes dealer property in the hands of the
tax-exempt entity.
Before investing in the Portfolio, the trustee or investment manager of
an employee benefit plan (e.g., a pension or profit sharing retirement plan)
should consider among other things (a) whether the investment is prudent under
the Employee Retirement Income Security Act of 1974 ("ERISA"), taking into
account the needs of the plan and all of the facts and circumstances of the
investment in the Portfolio; (b) whether the investment satisfies the
diversification requirement of Section 404(a)(1)(C) of ERISA; and (c) whether
the assets of the Portfolio are deemed "plan assets" under ERISA and the
Department of Labor regulations regarding the definition of "plan assets."
Prospective tax-exempt investors are urged to consult their own tax
advisers prior to investing in the Portfolio.
DESCRIPTION OF CORPORATE DEBT RATINGS
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present
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which suggest a susceptibility to impairment sometime in the
future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Unrated: Where no rating has been assigned or where a
rating has been suspended or withdrawn, it may be for reasons
unrelated to the quality of the issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities
that are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the
issue or issuer.
4. The issue was privately placed, in which case the rating
is not published in Moody's Investors Services, Inc.'s
publications.
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Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there is no
longer available reasonable up-to-date data to permit a judgment to be formed;
if a bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols Aa-1, A-1, Baa-1 and B-1.
STANDARD & POOR'S CORPORATION
AAA: Bonds rated AAA have the highest rating assigned by
Standard & Poor's Corporation ("S&P"). Capacity to pay interest
and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in the highest rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of this obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, they are outweighed by large uncertainties of major risk
exposures to adverse conditions.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
D: Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
NR: Indicates that no rating has been requested, that there
is insufficient information on which to base a rating, or that
S&P does not rate a particular type of obligation as a matter of policy.
-31-
<PAGE>
FINANCIAL STATEMENTS
The Annual Report of the Portfolio dated October 31, 1995 has been
filed with the Securities and Exchange Commission pursuant to Section 30(b) of
the 1940 Act and Rule 30b2-1 thereunder and is hereby incorporated herein by
reference. A copy of such Annual Report will be provided, without charge, to
each person receiving this Statement of Additional Information.
BTC040C
-32-
<PAGE>
OLD WESTBURY FUNDS, INC.
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) Financial Statements.
(1) Portfolio of Investments, dated October 31, 1995
(2) Statement of Assets and Liabilities, dated October 31, 1995.
(3) Statement of Operations for the fiscal year ended October 31,
1995.
(4) Statement of Changes in Net Assets for the fiscal years ended
October 31, 1995 and October 31, 1994.
(5) Financial Highlights for the fiscal years ended October 31,
1995 and October 31, 1994 and the period October 22, 1993
(commencement of operations) through October 31, 1993.
(6) Notes to Financial Statements, dated October 31, 1995.
(7) Independent Auditors' Report, dated December 11, 1995.
(B) Exhibits.
***(1) Form of Articles of Incorporation of the Registrant.
***(2) By-laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
***(5) Advisory Contract between the Registrant and Bessemer Trust
Company, N.A.
*(6) See Distribution Agreement filed as Exhibit 15.2 to Pre-
effective Amendment No. 1 to this Registration Statement as
filed with the Securities and Exchange Commission (the
"SEC") on October 5, 1993.
(7) Not applicable.
*(8) Custody Agreement between the Registrant and Bessemer Trust
Company (New Jersey)
*(9) Administrative Services Agreement between the Registrant and
Signature Broker-Dealer Services, Inc. for the portfolio of
the Registrant.
*(10) Opinion of Messrs. Battle Fowler, as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the
heading "Dividends, Distributions and Taxes" in the
Prospectus.
***(11) Consent of Independent Auditors.
(12) Not applicable.
*(13) Written assurance of SFG Investors II Limited
Partnership, that its purchase of shares of the
Registrant was for investment purposes without any
present intention of redeeming or reselling.
(14) Not applicable.
*(15.1) Distribution and Service Plan Pursuant to Rule 12b-1 under
the Investment Company Act of 1940.
C-1
<PAGE>
*(15.2) Distribution Agreement between the Registrant and Signature
Broker-Dealer Services, Inc.
*(15.3) Shareholder Servicing Agreement between the Registrant and
Bessemer Trust Company, N.A.
*(15.4) Shareholder Servicing Agreement between the Registrant and
Signature Broker-Dealer Services, Inc.
**(16) Schedules of Computation of Performance Quotations.
***(17) Financial Data Schedule.
**(18) Powers of Attorney.
* Incorporated herein by reference from Pre-Effective Amendment No. 1 to
this Registration Statement as filed with the SEC on October 5, 1993.
** Incorporated herein by reference from Post-Effective Amendment No. 1 to
this Registration Statement as filed with the SEC on March 1, 1994.
*** Incorporated herein.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders
TITLE OF CLASS AS OF FEBRUARY 20, 1996
-------------- -----------------------
Common Stock
(par value $0.001) 60
ITEM 27. INDEMNIFICATION.
In accordance with Section 2-418 of the General
Corporation Law of the State of Maryland, Article EIGHTH of
the Registrant's Articles of Incorporation provides as
follows:
"NINTH: (a) The Corporation shall indemnify (i) its
currently acting and former directors and officers, whether
serving the Corporation or at its request any other entity, to
the fullest extent required or permitted by the General Laws
of the State of Maryland now or hereafter in force, including
the advance of expenses under the procedures and to the
fullest extent permitted by law, and (ii) other employees and
agents to such extent as shall be authorized by the Board of
Directors or the ByLaws and as permitted by law. Nothing
contained herein shall be construed to protect any director or
officer of the Corporation against any liability to the
Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other
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<PAGE>
rights to which those seeking indemnification may be entitled.
The Board of Directors may take such action as is necessary to
carry out these indemnification provisions and is expressly
empowered to adopt, approve and amend from time to time such
by-laws, resolutions or contracts implementing such provisions
or such indemnification arrangements as may be permitted by
law. No amendment of the charter of the Corporation or repeal
of any of its provisions shall limit or eliminate the right of
indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
(b) To the fullest extent permitted by Maryland
statutory or decisional law, as amended or interpreted, and
the Investment Company Act of 1940, no director or officer of
the Corporation shall be personally liable to the Corporation
or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or
officer of the Corporation against any liability to the
Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. No amendment of the
charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the limitation of liability provided
to directors and officers hereunder with respect to any act or
omission occurring prior to such amendment or repeal."
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Securities Act") may be
permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than a
payment by the Registrant of expenses incurred or paid by a
director, officer or the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by
it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
Insofar as the Investment Company Act of 1940 may be
concerned, in the event that a claim for indemnification is
asserted by a director, officer or controlling person of the
Registrant in connection with the securities being registered,
the Registrant will not make such indemnification unless (i)
the Registrant has submitted, before a court or other body,
the
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<PAGE>
question of whether the person to be indemnified was liable by
reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties, and has obtained a final
decision on the merits that such person was not liable by
reason of such conduct or (ii) in the absence of such
decision, the Registrant shall have obtained a reasonable
determination, based upon a review of the facts, that such
person was not liable by virtue of such conduct, by (a) the
vote of a majority of directors who are neither interested
persons as such term is defined in the Investment Company Act
of 1940, nor parties to the proceeding or (b) an independent
legal counsel in a written opinion.
The Registrant will not advance attorneys' fees or
other expenses incurred by the person to be indemnified unless
the Registrant shall have (i) received an undertaking by or on
behalf of such person to repay the advance unless it is
ultimately determined that such person is entitled to
indemnification and one of the following conditions shall have
occurred: (x) such person shall provide security for his
undertaking, (y) the Registrant shall be insured against
losses arising by reason of any lawful advances or (z) a
majority of the disinterested, non-party directors of the
Registrant, or an independent legal counsel in a written
opinion, shall have determined that based on a review of
readily available facts there is reason to believe that such
person ultimately will be found entitled to indemnification.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
The description of Bessemer Trust Company, N.A. under
the caption "Management of the Fund" in the Prospectus and in
the Statement of Additional Information constituting parts A
and B, respectively, of the Registration Statement are
incorporated herein by reference.
To the knowledge of Registrant, none of the directors
or officers of the Investment Advisor, except those set forth
below, is or has been, at any time during the past two fiscal
years employed by any entity other than the Investment
Advisor.
C-4
<PAGE>
<TABLE>
<S> <C> <C>
Position with
Investment
NAME ADVISOR OTHER BUSINESS CONNECTIONS
Stuart S. Janney, III Chairman of the Board Managing Director & Head of
Asset Management, Alex,
Brown & Sons, Inc.
William Acquavella Director President & Owner of
Acquavella Galleries,
Inc./Acquavella
Contemporary Art, Inc.
Partner w/Sotheby's in
Acquavella Modern Art
Stanley C. Bodell, Jr. Senior Vice President Senior Vice President,
Fleet Investment Services,
Rhode Island
Brooks Carey Senior Vice President Vice President, T. Rowe
Price
John D. Chadwick Executive Vice Senior Vice President and
Presidnet Senior Portforlio Manager,
Kidder Peabody & Co.
W. David Dary Senior Vice President Vice President and Senior
Portfolio Manager, Citicorp
Trust, N.A.
Jesse H. Davis Vice President Director Systems and
Programming-Brokerage
Group, ADP
Thomas J. Frank, Jr. Vice President Vice President, U.S. Trust
F. Malcolm Graff, Jr. Senior Vice President Client Account Manager,
Bankers Trust Company
Glenn E. Gray Vice President Area Manager - Corporate
Finance, Finova Capital
Corporation
C-5
<PAGE>
Robert J. Hughes Vice President Vice President and
Assistant Department Head,
Fiduciary Special Services,
Inc.
Timothy J. Morris Senior Executive Vice President, CEO and Chief
President Investment Officer, The
Portfolio Group
Jane Reilly Vice President Vice President, U.S. Trust
Frederick H. Sandstrom Senior Vice President Executive Vice President
and Managing Director,
Fleet Financial Group
</TABLE>
Item 29. PRINCIPAL UNDERWRITERS.
(a) Signature Broker-Dealer Services, Inc. is the Registrant's
distributor.
(b) The following are the directors and officers of the
Distributor. The principal business address of each of
these persons is 6 St. James Avenue, Boston, Massachusetts
02116 unless otherwise noted.
<TABLE>
<S> <C> <C>
Positions & Offices Positions & Offices
NAME WITH DISTRIBUTOR WITH REGISTRANT
Philip W. Coolidge President, Chief President
Executive Officer
and Director
John R. Elder Assistant Treasurer
Treasurer
Barbara M. O'Dette Assistant ----
Treasurer
Linwood C. Downs Treasurer ----
Thomas M. Lenz Assistant Secretary
Secretary
Molly S. Mugler Assistant Assistant Secretary
Secretary
C-6
<PAGE>
Linda T. Gibson Assistant Assistant Secretary
Secretary
Beth A. Remy Assistant ----
Treasurer
Andres E. Saldana Assistant Assistant Secretary
Secretary
Susan Jakuboski Assistant ----
Treasurer
Julie J. Wyetzner Product Management ----
Officer
Robert G. Davidoff Director ----
CMNY Capital, L.P.
135 East 57th Street
New York, NY 10022
Leeds Hackett Director ----
National Credit
Management Corporation
10155 York Road
Cockeysville, MD 21030
Donald S. Chadwick Director ----
Bishop Capital, L.P.
500 Morris Avenue
Springfield, NJ 07081
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
rules promulgated thereunder are maintained in the physical
possession of the Registrant at, Bessemer Trust Company, N.A.,
630 Fifth Avenue, New York, New York 10111, the Registrant's
advisor Signature Broker-Dealer Services, Inc., 6 St. James
Avenue, Boston, Massachusetts 02116, the Registrant's
administrator; and Fundamental Shareholder Services, Inc., 29
Dogwood Drive, Chester, New Jersey 07930, the Registrant's
transfer and dividend disbursing agent.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's annual report, upon request, without
charge.
(d) The Registrant undertakes to call a meeting of the
stockholders for purposes of voting upon the question
of removal of a director or directors, if requested
to do so by the holders of at least 10% of the
Portfolio's outstanding shares, and the Registrant
shall assist in communications with other
stockholders.
BTC042C
C-9
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(1) Form of Articles of Incorporation of Registrant
(2) By-laws of the Registrant
(5) Advisory Contract between the Registrant and
Bessemer Trust Company, N.A.
(11) Consent of Independent Auditors
(17) Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized on the
27th day of February, 1996.
OLD WESTBURY FUNDS, INC.
By: PHILIP W. COOLIDGE
PHILIP W. COOLIDGE
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
its Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
ROBERT M. KAUFMAN* Director and February 27, 1996
Robert M. Kaufman Chairman of the Board
PHILIP W. COOLIDGE Director and President Febraury 27, 1996
Philip W. Coolidge
JOHN KEVIN KENNY* Director February 27, 1996
John Kevin Kenny
JOHN R. ELDER Treasurer and February 27, 1996
John R. Elder Principal Financial and
Accounting Officer
</TABLE>
*By PHILIP W. COOLIDGE
Philip W. Coolidge
as Attorney-in-Fact pursuant
to a Power of Attorney previously filed.
<PAGE>
ARTICLES OF INCORPORATION
OF
OLD WESTBURY FUNDS, INC.
FIRST: (1) The name of the incorporator is
Cristina Paradiso.
(2) The incorporator's post office address
is 280 Park Avenue, New York, New York 10017.
(3) The incorporator is over eighteen years
of age.
(4) The incorporator is forming the
corporation named in these Articles of Incorporation under the General
Corporation Law of the State of Maryland.
SECOND: The name of the corporation (hereinafter
called the "Corporation") is Old Westbury Funds, Inc.
THIRD: The purposes for which the Corporation is
formed are:
(1) to conduct, operate and carry on the
business of an investment company;
(2) to subscribe for, invest in, reinvest
in, purchase or otherwise acquire, hold, pledge, sell, assign,
transfer, exchange, distribute or otherwise dispose of notes,
bills, bonds, debentures and other negotiable or
non-negotiable instruments, obligations and evidences of
indebtedness issued or guaranteed as to principal and interest
by the United States Government, or any agency or
instrumentality thereof, any State or local government, or any
agency or instrumentality thereof, or any other securities of
any kind issued by any corporation or other issuer organized
under the laws of the United States or any State, territory or
possession thereof or any foreign country or any subdivision
thereof or otherwise, to pay for the same in cash or by the
issue of stock, including treasury stock, bonds and notes of
the Corporation or otherwise; and to exercise any and all
rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and
description, including and without limitation, the right to
consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or
corporations to exercise any of
<PAGE>
said rights, powers and privileges in respect of any
said investments;
(3) to conduct research and investigations
in respect of securities, organizations, business and general
business and financial conditions in the United States of
America and elsewhere for the purpose of obtaining information
pertinent to the investment and employment of the assets of
the Corporation and to procure any and all of the foregoing to
be done by others as independent contractors and to pay
compensation therefor;
(4) to borrow money or otherwise obtain
credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the
Corporation, and to endorse, guarantee or undertake the
performance of any obligation, contract or engagement of any
other person, firm, association or corporation;
(5) to issue, sell, distribute, repurchase,
redeem, retire, cancel, acquire, hold, resell, reissue,
dispose of, transfer, and otherwise deal in, shares of stock
of the Corporation, including shares of stock of the
Corporation in fractional denominations, and to apply to any
such repurchase, redemption, retirement, cancellation or
acquisition of shares of stock of the Corporation, any funds
or property of the Corporation, whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by
the laws of the State of Maryland and by these Articles of
Incorporation;
(6) to conduct its business, promote its
purposes, and carry on its operations in any and all of its
branches and maintain offices both within and without the
State of Maryland, in any and all States of the United States
of America, in the District of Columbia, and in any or all
commonwealths, territories, dependencies, colonies,
possessions, agencies, or instrumentalities of the United
States of America and of foreign governments;
(7) to carry out all or any part of the
foregoing purposes or objects as principal or agent, or in
conjunction with any other person, firm, association,
corporation or other entity, or as a partner or member of a
partnership, syndicate or joint venture or otherwise, and in
any part of the world to the same extent and as fully as
natural persons might or could do;
-2-
<PAGE>
(8) to have and exercise all of the powers
and privileges conferred by the laws of the State of Maryland
upon corporations formed under the laws of such State; and
(9) to do any and all such further acts and
things and to exercise any and all such further powers and
privileges as may be necessary, incidental, relative,
conducive, appropriate or desirable for the foregoing
purposes.
The enumeration herein of the objects and purposes of the
Corporation shall be construed as powers as well as objects and purposes and
shall not be deemed to exclude by inference any powers, objects or purposes
which the Corporation is empowered to exercise, whether expressly by force of
the laws of the State of Maryland now or hereafter in effect, or impliedly by
the reasonable construction of the said law.
FOURTH: The post office address of the principal
office of the Corporation within the State of Maryland is 11 East
Chase Street, Baltimore City, Maryland 21202.
FIFTH: The resident agent of the Corporation in the
State of Maryland is The Prentice-Hall Corporation System,
Maryland, at 11 East Chase Street, Baltimore, Maryland 21202.
SIXTH: (1) The total number of shares of stock of all classes
and series which the Corporation initially has authority to issue is twenty
billion (20,000,000,000) shares of capital stock (par value of One Tenth of One
Cent $.001 per share), amounting in aggregate par value to $20,000,000. All of
such shares are classified as "Common Stock".
(2) The Board of Directors may classify or reclassify any
unissued shares of capital stock (whether or not such shares have been
previously classified or reclassified) from time to time by setting or changing
in any one or more respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such shares of stock.
(3) Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end management company under the Investment
Company Act of 1940, the Board of Directors shall have the power and authority,
without the approval of the holders of any outstanding shares, to increase or
decrease the number of shares of capital stock or the number of shares of
capital stock of any class or series that the Corporation has authority to
issue.
-3-
<PAGE>
(4) Until such time as the Board of Directors shall provide
otherwise in accordance with Section (2) of this Article SIXTH four billion
(4,000,000,000) shares of the authorize shares of stock of the Corporation shall
be allocated to the following class of Common Stock: Old Westbury International
Fund Common Stock. The balance of sixteen billion (16,000,000,000) shares of
such stock may be issued in this class, or in any new class or classes each
comprising such number of shares and having such designations, limitations and
restrictions thereof as shall be fixed and determined from time to time by
resolution or resolutions providing for the issuance of such stock adopted by
the Board of Directors.
(5) Any series of Common Stock shall be referred to herein
individually as a "Series" and collectively, together with any further series
from time to time established, as the "Series".
(6) The following is a description of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of the shares
of Common Stock of the Corporation (unless provided otherwise by the Board of
Directors with respect to any such additional Series at the time it is
established and designated):
(a) Asset Belonging to Series. All consideration
received by the Corporation from the issue or sale of shares
of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any investment or reinvestment
of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject
only to the rights of creditors, and shall be so recorded upon
the books of account of the Corporation. Such consideration,
assets, income, earnings, profits and proceeds, together with
any General Items allocated to that Series as provided in the
following sentence, are herein referred to collectively as
"assets belonging to" that Series. In the event that there are
any assets, income, earnings, profits or proceeds which are
not readily identifiable as belonging to any particular Series
(collectively, "General Items"), such General Items shall be
allocated by or under the supervision of the Board of
Directors to and among any one or more of the Series
established and designated from time to time in such manner
and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable; and any General
-4-
<PAGE>
Items so allocated to a particular Series shall belong to that
Series. Each such allocation by the Board of Directors shall
be conclusive and binding for all purposes.
(b) Liabilities of Series. The assets belonging to
each particular Series shall be charged with the liabilities
of the Corporation in respect of that Series and all expenses,
costs, charges and reserves attributable to that Series, and
any general liabilities, expenses, costs, charges or reserves
of the Corporation which are not readily identifiable as
pertaining to any particular Series, shall be allocated and
charged by or under the supervision of the Board of Directors
to and among any one or more of the Series established and
designated from time to time in such manner and on such basis
as the Board of Directors, in its sole discretion, deems fair
and equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to a Series are herein
referred to collectively as "liabilities of" that Series. Each
allocation of liabilities, expenses, costs, charges and
reserves by or under the supervision of the Board of Directors
shall be conclusive and binding for all purposes.
(c) Dividends and Distributions. Dividends and
capital gains distributions on shares of a particular Series
may be paid with such frequency, in such form and in such
amount as the Board of Directors may determine by resolution
adopted from time to time, or pursuant to a standing
resolution or resolutions adopted only once or with such
frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities of that Series.
All dividends on shares of a particular Series shall be paid
only out of the income belonging to that Series and all
capital gains distributions on shares of a particular series
shall be paid only out of the capital gains belonging to that
Series. All dividends and distributions on shares of a
particular Series shall be distributed pro rata to the holders
of that Series in proportion to the number of shares of that
Series held by such holders at the date and time of record
established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure, the Board of Directors may
determine that no dividend or distribution shall be payable on
shares as to which the stockholder's purchase order and/or
payment have not been received by the time or times
established by the Board of Directors under such program or
procedure.
-5-
<PAGE>
Dividends and distributions may be paid in cash,
property or additional shares of the same or another Series,
or a combination thereof, as determined by the Board of
Directors or pursuant to any program that the Board of
Directors may have in effect at the time for the election by
stockholders of the form in which dividends or distributions
are to be paid. Any such dividend or distribution paid in
shares shall be paid at the current net asset value thereof.
(d) Voting. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one
vote for each share standing in his name on the books of the
Corporation, irrespective of the Series thereof, and all
shares of all Series shall vote as a single class ("Single
Class Voting"); provided, however, that (i) as to any matter
with respect to which a separate vote of any Series is
required by the Investment Company Act of 1940 or by the
Maryland General Corporation Law, such requirement as to a
separate vote by that Series shall apply in lieu of Single
Class Voting; (ii) in the event that the separate vote
requirement referred to in clause (i) above applies with
respect to one or more Series, then, subject to clause (iii)
below, the shares of all other Series shall vote as a single
class; and (iii) as to any matter which does not affect the
interest of a particular Series, including liquidation of
another Series as described in subsection (7) below, only the
holders of shares of the one or more affected Series shall be
entitled to vote.
(e) Redemption by Stockholders. Each holder of shares
of a particular Series shall have the right at such times as
may be permitted by the Corporation to require the Corporation
to redeem all or any part of his shares of that Series, at a
redemption price per share equal to the net asset value per
share or that Series next determined after the shares are
properly tendered for redemption, less such redemption fee or
sales charge, if any, as may be established from time to time
by the Board of Directors in its sole discretion. Payment of
the redemption price shall be in cash; provided, however, that
if the Board of Directors determines, which determination
shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may, to
the extent and in the manner permitted by the Investment
Company Act of 1940, make payment wholly or partly in
securities or other assets belonging to the Series of which
the shares being redeemed are a part,
-6-
<PAGE>
at the value of such securities or assets used in such
determination of net asset value.
Payment by the Corporation for shares of stock of the
Corporation surrendered to it for redemption shall be made by
the Corporation within such period from surrender as may be
required under the Investment Company Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the
Corporation may postpone payment of the redemption price and
may suspend the right of the holders of shares of any Series
to require the Corporation to redeem shares of that Series
during any period or at any time when and to the extent
permissible under the Investment Company Act of 1940.
(f) Redemption by Corporation. The Board of Directors
may cause the Corporation to redeem at their net asset value
the shares of any Series held in an account having, because of
redemptions or exchanges, a net asset value on the date of the
notice of redemption less than the Minimum Amount, as defined
below, in that Series specified by the Board of Directors from
time to time in its sole discretion, provided that at least 30
days prior written notice of the proposed redemption has been
given to the holder of any such account by first class mail,
postage prepaid, at the address contained in the books and
records of the Corporation and such holder has been given an
opportunity to purchase the required value of additional
shares.
(i) The term "Minimum Amount" when used
herein shall mean One Thousand Dollars ($1,000)
unless otherwise fixed by the Board of Directors from
time to time, provided that the Minimum Amount may
not in any event exceed Twenty-Five Thousand Dollars
($25,000). The Board of Directors may establish
differing Minimum Amounts for each class and series
of the Corporation's stock and for holders of shares
of each such class and series of stock based on such
criteria as the Board of Directors may deem
appropriate.
(ii) The Corporation shall be entitled but
not required to redeem shares of stock from any
stockholder or stockholders, as provided in this
subsection (6), to the extent and at such times as
the Board of Directors shall, in its absolute
discretion, determine to be necessary or advisable to
prevent the Corporation from qualifying as a
"personal holding company", within the meaning of
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the Internal Revenue Code of 1986, as amended from
time to time.
(g) Liquidation. In the event of the liquidation of a
particular Series, the stockholders of the Series that is
being liquidated shall be entitled to receive, as a class,
when and as declared by the Board of Directors, the excess of
the assets belonging to that Series over the liabilities of
that Series. The holders of shares of any particular Series
shall not be entitled thereby to any distribution upon
liquidation of any other Series. The assets so distributable
to the stockholders of any particular Series shall be
distributed among such stockholders in proportion to the
number of shares of that Series held by them and recorded on
the books of the Corporation. The liquidation of any
particular Series in which there are shares then outstanding
may be authorized by vote of a majority of the Board of
Directors then in office, subject to the approval of a
majority of the outstanding voting securities of that Series,
as defined in the Investment Company Act of 1940, and without
the vote of the holders of shares of any other Series. The
liquidation of a particular Series may be accomplished, in
whole or in part, by the transfer of assets of such Series to
another Series or by the exchange of shares of Series for the
shares of another Series.
(h) Net Asset Value Per Share. The net asset value
per share of any Series shall be the quotient obtained by
dividing the value of the net assets of that Series (being the
value of the assets belonging to that Series less the
liabilities of that Series) by the total number of shares of
that Series outstanding, all as determined by or under the
direction of the Board of Directors in accordance with
generally accepted accounting principles and the Investment
Company Act of 1940. Subject to the applicable provisions of
the Investment Company Act of 1940, the Board of Directors, in
its sole discretion, may prescribe and shall set forth in the
By-Laws of the Corporation or in a duly adopted resolution of
the Board of Directors such bases and times for determining
the value of the assets belonging to, and the net asset value
per share of outstanding shares of, each Series, or the net
income attributable to such shares, as the Board of Directors
deems necessary or desirable. The Board of Directors shall
have full discretion, to the extent not inconsistent with the
Maryland General Corporation Law and the Investment Company
Act of 1940, to determine which item shall be treated as
income and which items
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as capital and whether any item of expense shall be charged to
income or capital. Each such determination and allocation
shall be conclusive and binding for all purposes.
The Board of Directors may determine to maintain the
net asset value per share of any Series at a designated
constant dollar amount and in connection therewith may adopt
procedures not inconsistent with the Investment Company Act of
1940 for the continuing declaration of income attributable to
that Series as dividends and for the handling of any losses
attributable to that Series. Such procedures may provide that
in the event of any loss, each stockholder shall be deemed to
have contributed to the capital of the Corporation
attributable to that Series his pro rata portion of the total
number of shares required to be canceled in order to permit
the net asset value per share of that Series to be maintained,
after reflecting such loss, at the designated constant dollar
amount. Each stockholder of the Corporation shall be deemed to
have agreed, by his investment in any Series with respect to
which the Board of Directors shall have adopted any such
procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Equality. All shares of each particular Series
shall represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities of that
Series), and each share of any particular Series shall be
equal to each other share of that Series. The Board of
Directors may from time to time divide or combine the shares
of any particular Series into a greater or lesser number of
shares of that series without thereby changing the
proportionate interest in the assets belonging to that Series
or in any way affecting the rights of holders of shares of any
other Series.
(j) Conversion or Exchange Rights. Subject to
compliance with the requirements of the Investment Company Act
of 1940, the Board of Directors shall have the authority to
provide that holders of shares of any Series shall have the
right to convert or exchange said shares into shares of one or
more other Series of shares in accordance with such
requirements and procedures as may be established by the Board
of Directors.
(7) The Board of Directors may, from time to time and without
stockholder action, classify shares of a particular
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Series into one or more additional classes of that Series, the voting, dividend,
liquidation and other rights of which shall differ from the classes of common
stock of that Series to the extent provided in Articles Supplementary for such
additional class, such Articles to be filed for record with the appropriate
authorities of the State of Maryland. Each class so created shall consist, until
further changed, of the lesser of (x) the number of shares classified in Section
(5) of this Article SIXTH or (y) the number of shares that could be issued by
issuing all of the shares of that Series currently or hereafter classified less
the total number of shares of all classes of such Series then issued and
outstanding. Any class of a Series of Common Stock shall be referred to herein
individually as a "Class" and collectively, together with any further class or
classes of such Series from time to time established, as the "Classes".
(8) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights with any other shares
of Common Stock of that Series; provided, however, that notwithstanding anything
in the charter of the Corporation to the contrary:
(a) Any class of shares may be subject to such sales
loads, contingent deferred sales charges, Rule 12b-1 fees,
administrative fees, service fees, or other fees, however
designated, in such amounts as may be established by the Board
of Directors from time to time in accordance with the
Investment Company Act of 1940.
(b) Expenses related solely to a particular Class of
a Series (including, without limitation, distribution expenses
under a Rule 12b-1 plan and administrative expenses under an
administration or service agreement, plan or other
arrangement, however designated) shall be borne by that Class
and shall be appropriately reflected (in the manner determined
by the Board of Directors) in the net asset value, dividends,
distributions and liquidation rights of the shares of that
Class.
(c) As to any matter with respect to which a separate
vote of any Class of a Series is required by the Investment
Company Act of 1940 or by the Maryland General Corporation Law
(including, without limitation, approval of any plan,
agreement or other arrangement referred to in subsection (b)
above), such requirement as to a separate vote by that Class
shall apply in lieu of Single Class Voting, and if permitted
by the Investment Company Act of 1940 or the Maryland General
Corporation Law, the Classes of more than one Series
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shall vote together as a single class on any such matter which
shall have the same effect on each such Class. As to any
matter which does not affect the interest of a particular
Class of a Series, only the holders of shares of the affected
Classes of that Series shall be entitled to vote.
(9) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the words
"share" or "shares" are used in the charter or By-Laws of the Corporation, they
shall be deemed to include fractions of shares where the context does not
clearly indicate that only full shares are intended.
(10) The Corporation shall not be obligated to issue
certificates representing shares of any Class or Series of capital stock. At the
time of issue or transfer of shares without certificates, the Corporation shall
provide the stockholder with such information as may be required under the
Maryland General Corporation Law.
(11) No holder of any shares of stock of the Corporation shall
be entitled as of right to subscribe for, purchase, or otherwise acquire any
such shares which the Corporation shall issue or propose to issue; and any and
all of the shares of stock of the Corporation, whether now or hereafter
authorized, may be issued, or may be reissued or transferred if the same have
been reacquired and have treasury status, by the Board of Directors to such
persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as the Board of Directors in its discretion
may determine, without first offering same, or any thereof, to any said holder.
(12) All persons who shall acquire stock or other securities
of the Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended.
SEVENTH: The number of directors of the Corporation, until
such number shall be increased pursuant to the By-Laws of the Corporation, shall
be two. The number of directors shall never be less than the number prescribed
by the General Corporation Law of the State of Maryland and shall never be more
than twenty. The names of the persons who shall act as directors of the
Corporation until the first annual meeting or until their successors are duly
chosen and qualify are Thomas M. Lenz and James B. Craver.
EIGHTH: The following provisions are inserted for the
purpose of defining, limiting and regulating the powers of the
Corporation and of the Board of Directors and stockholders.
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(1) The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors which shall have and may
exercise all powers of the Corporation except those powers which are by law, by
these Articles of Incorporation or by the By-Laws conferred upon or reserved to
the stockholders. In furtherance and not in limitation of the powers conferred
by law, the Board of Directors shall have power:
(a) to make, alter and repeal the By-Laws of the
Corporation;
(b) to issue and sell, from time to time, shares of
any class or series of the Corporation's stock in such amounts
and on such terms and conditions, and for such amount and kind
of consideration, as the Board of Directors shall determine,
provided that the consideration per share to be received by
the Corporation shall be not less than the greater of the net
asset value per share of that class of stock at such time
computed in accordance with Article SIXTH hereof or the par
value thereof;
(c) from time to time to set apart out of any
assets of the Corporation otherwise available for dividends a
reserve or reserves for working capital or for any other
proper purpose or purposes, and to reduce, abolish or add to
any such reserve or reserves from time to time as said Board
of Directors may deem to be in the best interests of the
Corporation; and to determine in its discretion what part of
the assets of the Corporation available for dividends in
excess of such reserve or reserves shall be declared in
dividends and paid to the stockholders of the Corporation; and
(d) from time to time to determine to what extent
and at what times and places and under what conditions and
regulations the accounts, books and records of the
Corporation, or any of them, shall be open to the inspection
of the stockholders; and no stockholder shall have any right
to inspect any account or book or document of the Corporation,
except as conferred by the laws of the State of Maryland,
unless and until authorized to do so by resolution of the
Board of Directors or of the stockholders of the Corporation.
(2) Notwithstanding any provision of the General Corporation
Law of the State of Maryland requiring a greater proportion than a majority of
the votes of all classes or of any class of the Corporation's stock entitled to
be cast in order to take or authorize any action, any such action may be taken
or authorized upon the concurrence of a majority of the aggregate number of
votes entitled to be cast thereon subject to any
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applicable requirements of the Investment Company Act of 1940, as from time to
time in effect, or rules or orders of the Securities and Exchange Commission or
any successor thereto.
(3) Except as may otherwise be expressly provided by
applicable statutes or regulatory requirements, the presence in person or by
proxy of the holders of one-third of the shares of stock of the Corporation
entitled to vote shall constitute a quorum at any meeting of the stockholders.
(4) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the discretion of the Board of
Directors, as to the amount of the assets, debts, obligations, or liabilities of
the Corporation, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purposes for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall by
then or thereafter required to be paid or discharged), as to the value of or the
method of valuing any investment owned or held by the Corporation, as to the
market value or fair value of any investment or fair value of any other asset of
the Corporation, as to the allocation of any asset of the Corporation to a
particular class or classes of the Corporation's stock, as to the charging of
any liability of the Corporation to a particular class or classes of the
Corporation's stock, as to the number of shares of the Corporation outstanding,
as to the estimated expense to the Corporation in connection with purchases of
its shares, as to the ability to liquidate investments in orderly fashion, or as
to any other matters relating to the issue, sale, purchase and/or other
acquisition or disposition of investments or shares of the Corporation, shall be
final and conclusive and shall be binding upon the Corporation and all holders
of its shares, past, present and future, and shares of the Corporation are
issued and sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid.
(5) Except to the extent prohibited by the Investment Company
Act of 1940, as amended, or rules, regulations or orders thereunder promulgated
by the Securities and Exchange Commission or any successor thereto or by the
By-Laws of the Corporation, a director, officer or employee of the Corporation
shall not be disqualified by his position from dealing or contracting with the
Corporation, nor shall any transaction or contract of the Corporation be void or
voidable by reason of the fact that any director, officer or employee or any
firm of which any director, officer or employee is a member or any corporation
of which any director, officer or employee is a stockholder, officer or
director, is in any way interested in such transaction or
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contract; provided that in case a director, or a firm or corporation of which a
director is a member, stockholder, officer or director, is so interested, such
fact shall be disclosed to or shall have been known by the Board of Directors or
a majority thereof; and any director of the Corporation who is so interested, or
who is a member, stockholder, officer or director of such firm or corporation,
may be counted in determining the existence of a quorum at any meeting of the
Board of Directors of the Corporation which shall authorize any such transaction
or contract, with like force and effect as if he were not such director, or
member, stockholder, officer or director of such firm or corporation.
(6) Specifically and without limitation of the foregoing
subsection (e) but subject to the exception therein prescribed, the Corporation
may enter into management or advisory, underwriting, distribution and
administration contracts and other contracts, and may otherwise do business,
with Reich & Tang L.P., and any parent, subsidiary, partner, or affiliate of
such firm or any affiliates of any such affiliate, or the stockholders,
directors, officers, partners and employees thereof, and may deal freely with
one another notwithstanding that the Board of Directors of the Corporation may
be composed in part of directors, officers, partners or employees of such firm
and/or its parents, subsidiaries or affiliates and that officers of the
Corporation may have been, be or become directors, officers, or employees of
such firm, and/or its parents, subsidiaries or affiliates, and neither such
management or advisory, underwriting, distribution or administration contracts
nor any other contract or transaction between the Corporation and such firm
and/or its parents, subsidiaries or affiliates shall be invalidated or in any
way affected thereby, nor shall any director or officer of the Corporation be
liable to the Corporation or to any stockholder or creditor thereof or to any
person for any loss incurred by it or him under or by reason of such contract or
transaction; provided that nothing herein shall protect any director or officer
of the Corporation against any liability to the Corporation or to its security
holders to which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office; and provided always that such contract or transaction
shall have been on terms that were not unfair to the Corporation at the time at
which it was entered into.
NINTH: (1) The Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the Corporation or at
its request any other entity, to the fullest extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the fullest extent permitted by
law, and (ii) other employees and agents to
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such extent as shall be authorized by the Board of Directors or the By-Laws and
as permitted by law. Nothing contained herein shall be construed to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such by-laws,
resolutions or contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or eliminate the
right of indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, and the Investment Company Act of
1940, no director or officer of the Corporation shall be personally liable to
the Corporation or its stockholders for money damages; provided, however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. No amendment of the charter of the Corporation or repeal of any of
its provisions shall limit or eliminate the limitation of liability provided to
directors and officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in these Articles of Incorporation or
in any amendment hereto in the manner now or hereafter prescribed by the laws of
the State of Maryland and all rights conferred upon stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned, being the incorporator of
the Corporation, has adopted and signed these Articles of Incorporation for the
purpose of forming the corporation described herein pursuant to the General
Corporation
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law of the State of Maryland and does hereby acknowledge that said adoption and
signing are her act.
/s/CRISTINA PARADISO
Cristina Paradiso
Dated: August 25, 1993
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BY-LAWS
OF
OLD WESTBURY FUNDS, INC.
a Maryland corporation
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The
Corporation shall have a principal office in the City of
Baltimore, State of Maryland.
Section 2. Other Offices. The Corporation may have offices
also at such other places within and without the State of Maryland as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stockholders shall be
held at such place, either within the State of Maryland or at such other place
within the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. Annual Meetings. The Corporation shall not be
required to hold an annual meeting of its stockholders in any year in which none
of the following is required to be acted on by the holders of any class or
series of stock under the Investment Company Act of 1940: (a) election of the
directors, (b) approval of the Corporation's investment advisory agreement with
respect to a particular class or series; (c) ratification of the selection of
independent public accountants; and (d) approval of the Corporation's
distribution agreement with respect to a particular class or series. In the
event that the Corporation shall be required to hold an annual meeting of
stockholders by the Investment Company Act of 1940, such meeting of stockholders
shall be held on a date fixed from time to time by the Board of Directors not
less than ninety nor more than one hundred twenty days following the end of such
fiscal year of the Corporation.
Section 3. Notice of Annual Meeting. Written or
printed notice of an annual meeting, stating the place, date and
hour thereof, shall be given to each stockholder entitled to vote
<PAGE>
thereat not less than ten nor more than ninety days before the date of the
meeting.
Section 4. Special Meetings. Special meetings of stockholders
may be called by the chairman, the president or by the Board of Directors and
shall be called by the secretary upon the written request of holders of shares
entitled to cast not less than ten percent of all the votes entitled to be cast
at such meeting. Such request shall state the purpose or purposes of such
meeting and the matters proposed to be acted on thereat. In the case of such
request for a special meeting, upon payment by such stockholders to the
Corporation of the estimated reasonable cost of preparing and mailing a notice
of such meeting, the secretary shall give the notice of such meeting. The
secretary shall not be required to call a special meeting to consider any matter
which is substantially the same as a matter acted upon at any special meeting of
stockholders held within the preceding twelve months unless requested to do so
by the holders of shares entitled to cast not less than a majority of all votes
entitled to be cast at such meeting.
Section 5. Notice of Special Meeting. Written or printed
notice of a special meeting of stockholders, stating the place, date, hour and
purpose thereof, shall be given by the secretary to each stockholder entitled to
vote thereat not less than ten nor more than ninety days before the date fixed
for the meeting.
Section 6. Business of Special Meetings. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice thereof.
Section 7. Quorum. Except as may otherwise be expressly
provided by applicable statutes or regulations, the holders of one-third of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business.
Section 8. Voting. When a quorum is present at any meeting,
the affirmative vote of a majority of the votes cast shall decide any question
brought before such meeting, unless the question is one upon which by express
provision of the Investment Company Act of 1940, as from time to time in effect,
or other statutes or rules or orders of the Securities and Exchange Commission
or any successor thereto or of the Articles of Incorporation, a different vote
is required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Proxies. Each stockholder shall at every
meeting of stockholders be entitled to one vote in person or by
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proxy for each share of the stock having voting power held by such stockholder,
but no proxy shall be voted after eleven months from its date, unless otherwise
provided in the proxy.
Section 10. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, to express consent to corporate action
in writing without a meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date
which shall be not more than ninety days and, in the case of a meeting of
stockholders, not less than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, the Board of Directors may provide that the stock transfer
books shall be closed for a stated period, but not to exceed, in any case,
twenty days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) the record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on which
notice of the meeting of stockholders is mailed or the day thirty days before
the meeting, whichever is the closer date to the meeting; and (2) the record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors, declaring the dividend or
allotment of rights, is adopted, provided that the payment or allotment date
shall not be more than ninety days after the date of the adoption of such
resolution.
Section 11. Inspectors of Election. The directors, in advance
of any meeting, may, but need not, appoint one or more inspectors to act at the
meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not, appoint one or
more inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his or her
ability. The inspectors, if any, shall determine the number of shares
outstanding and the voting power
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of each, the shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the person presiding at the meeting
or any stockholder, the inspector or inspectors, if any, shall make a report in
writing of any challenge, question or matter determined by him or her or them
and execute a certificate of any fact found by him or her or them.
Section 12. Informal Action by Stockholders. Except to the
extent prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of directors shall
be fixed at no less than two nor more than twenty. Within the limits specified
above, the number of directors shall be fixed from time to time by the Board of
Directors, but the tenure of office of a director in office at the time of any
decrease in the number of directors shall not be affected as a result thereof.
The directors shall be elected to hold office at the annual meeting of
stockholders, except as provided in Section 2 of this Article, and each director
shall hold office until the next annual meeting of stockholders or until his
successor is elected and qualified. Any director may resign at any time upon
written notice to the Corporation. Any director may be removed, either with or
without cause, at any meeting of stockholders duly called and at which a quorum
is present by the affirmative vote of the majority of the votes entitled to be
cast thereon, and the vacancy in the Board of Directors caused by such removal
may be filled by the stockholders at the time of such removal. Directors need
not be stockholders.
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Section 2. Vacancies and Newly Created Directorships. Any
vacancy occurring in the Board of Directors for any cause, including an increase
in the number of directors, may be filled by the stockholders or by a majority
of the remaining members of the Board of Directors even if such majority is less
than a quorum. So long as the Corporation is a registered investment company
under the Investment Company Act of 1940, vacancies in the Board of Directors
may be filled by a majority of the remaining members of the Board of Directors
only if, immediately after filing any such vacancy, at least two-thirds of the
directors then holding office shall have been elected to such office at a
meeting of stockholders. A director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual meeting of
stockholders or until his successor is elected and qualifies.
Section 3. Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors which shall
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
By-Laws conferred upon or reserved to the stockholders.
Section 4. Annual Meeting. The first meeting of each newly
elected Board of Directors shall be held immediately following the adjournment
of the annual meeting of stockholders and at the place thereof. No notice of
such meeting to the directors shall be necessary in order legally to constitute
the meeting, provided a quorum shall be present. In the event such meeting is
not so held, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors.
Section 5. Other Meetings. The Board of Directors of the
Corporation or any committee thereof may hold meetings, both regular and
special, either within or without the State of Maryland. Regular meetings of the
Board of Directors may be held without notice at such time and at such place as
shall from time to time be determined by the Board of Directors. Special
meetings of the Board of Directors may be called by the chairman, the president
or by two or more directors. Notice of special meetings of the Board of
Directors shall be given by the secretary to each director at least three days
before the meeting if by mail or at least 24 hours before the meeting if given
in person or by telephone or by telegraph. The notice need not specify the
business to be transacted.
Section 6. Quorum and Voting. At meetings of the
Board of Directors, two of the directors in office at the time,
but in no event less than one-third of the entire Board of
Directors, shall constitute a quorum for the transaction of
business. When required pursuant to Section 15(c) under the
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Investment Company Act of 1940 or Rule 12b-1 thereunder a quorum shall also
require the presence in person of a majority of directors who are not parties to
a contract or agreement to be voted upon or interested persons of any such
party. The action of a majority of the directors present at a meeting at which a
quorum is present shall be the action of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 7. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, appoint from
among its members an executive committee and other committees of the Board of
Directors, each committee to be composed of two or more of the directors of the
Corporation. The Board of Directors may, to the extent provided in the
resolution, delegate to such committees, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except the power
to declare dividends, to issue stock, to recommend to stockholders any action
requiring stockholders' approval, to amend the By-Laws or to approve any merger
or share exchange which does not require stockholders' approval. Such committee
or committees shall have the name or names as may be determined from time to
time by resolution adopted by the Board of Directors. Unless the Board of
Directors designates one or more directors as alternate members of any
committee, who may replace an absent or disqualified member at any meeting of
the committee, the members of any such committee present at any meeting and not
disqualified from voting may, whether or not they constitute a quorum,
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member of such committee. At
meetings of any such committee, a majority of the members or alternate members
of such committee shall constitute a quorum for the transaction of business and
the act of a majority of the members or alternate members present at any meeting
at which a quorum is present shall be the act of the committee.
Section 8. Minutes of Committee Meetings. The
committees shall keep regular minutes of their proceedings.
Section 9. Informal Action by Board of Directors and
Committees. Any action except approving the Rule 12b-1 Plan and the Advisory
Agreement required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board of Directors or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
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Section 10. Meetings by Conference Telephone. Except
to the extent prohibited by the Investment Company Act of 1940,
as from time to time in effect, or rules or orders of the
Securities and Exchange Commission or any successor thereto, the
members of the Board of Directors or any committee thereof may
participate in a meeting of the Board of Directors or committee
by means of a conference telephone or similar communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time and such
participation shall constitute presence in person at such
meeting.
Section 11. Fees and Expenses. The directors may be paid their
expenses of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and stockholders
mailed to them at their post office addresses appearing on the books of the
Corporation shall be deemed to be given at the time when deposited in the United
States mail.
Section 2. Waiver of Notice. Whenever any notice is required
to be given under the provisions of the statutes, of the Articles of
Incorporation or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed the equivalent of notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE V
Officers
Section 1. General. The officers of the Corporation
shall be chosen by the Board of Directors at its first meeting
after each annual meeting of stockholders and shall be a chairman
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of the Board of Directors, a president, a secretary and a treasurer. The Board
of Directors may also choose such vice presidents and additional officers or
assistant officers as it may deem advisable. Any number of offices, except the
offices of president and vice president, may be held by the same person. No
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law to be executed, acknowledged or
verified by two or more officers.
Section 2. Other Officers and Agents. The Board of Directors
may appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 3. Tenure of Officers. The officers of the Corporation
shall hold office at the pleasure of the Board of Directors. Each officer shall
hold his or her office until his or her successor is elected and qualifies or
until his or her earlier resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Any officer elected or appointed by
the Board of Directors may be removed at any time by the Board of Directors
when, in its judgment, the best interests of the Corporation will be served
thereby. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors.
Section 4. Chairman of the Board of Directors. The chairman of
the Board of Directors shall preside at all meetings of the stockholders and of
the Board of Directors and shall see that all orders and resolutions of the
Board of Directors are carried into effect.
Section 5. President. The president shall, in the absence of
the chairman of the Board of Directors, preside at all meetings of the
stockholders or of the Board of Directors. The president shall be the Chief
Executive Officer of the Corporation, shall have general and active management
of the business of the Corporation and shall see that all orders and resolutions
of the Board of Directors are carried into effect. The president shall execute,
on behalf of the Corporation, and may affix the seal or cause the seal to be
affixed to, all instruments requiring such execution, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Section 6. Vice Presidents. The vice presidents shall
act under the direction of the president and in the absence or
disability of the president shall perform the duties and exercise
the power of the president. They shall perform such other duties
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and have such other powers as the president or the Board of Directors may from
time to time prescribe. The Board of Directors may designate one or more
executive vice presidents or may otherwise specify the order of seniority of the
vice presidents and, in that event, the duties and powers of the president shall
descend to the vice presidents in the specified order of seniority.
Section 7. Secretary. The secretary shall act under the
direction of the president. Subject to the direction of the president, the
secretary shall attend all meetings of the Board of Directors and all meetings
of stockholders and record the proceedings in a book to be kept for that purpose
and shall perform like duties for the committees designated by the Board of
Directors when required. The secretary shall give, or cause to be given, notice
of all meetings of stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the president or the
Board of Directors. The secretary shall keep in safe custody the seal of the
Corporation and shall affix the seal or cause it to be affixed to any instrument
requiring it.
Section 8. Assistant Secretaries. The assistant secretaries in
the order of their seniority, unless otherwise determined by the president or
the Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
Section 9. Treasurer. The treasurer shall act under the
direction of the president. Subject to the direction of the president he shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The treasurer shall disburse the funds of the
Corporation as may be ordered by the president or the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the president and
the Board of Directors, at its regular meetings, or when the Board of Directors
so requires, an account of all his or her transactions as treasurer and of the
financial condition of the Corporation.
Section 10. Assistant Treasurers. The assistant treasurers in
the order of their seniority, unless otherwise determined by the president or
the Board of Directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
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ARTICLE VI
Certificates of Stock
Section 1. General. Every holder of stock of the Corporation
who has made full payment of the consideration for such stock shall be entitled
upon request to have a certificate, signed by, or in the name of the Corporation
by, the president or a vice president and countersigned by the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number and class of whole shares of stock owned by
such holder in the Corporation.
Section 2. Fractional Share Interests or Scrip. The
-----------------------------------
Corporation may, but shall not be obliged to, issue fractions of
a share of stock, arrange for the disposition of fractional
interests by those entitled thereto, pay in cash the fair value
of fractions of a share of stock as of the time when those
entitled to receive such fractions are determined, or issue scrip
or other evidence of ownership which shall entitle the holder to
receive a certificate for a full share of stock upon the
surrender of such scrip or other evidence of ownership
aggregating a full share. Fractional shares of stock shall have
proportionately to the respective fractions represented thereby
all the rights of whole shares, including the right to vote, the
right to receive dividends and distributions and the right to
participate upon liquidation of the Corporation, excluding,
however, the right to receive a stock certificate representing
such fractional shares. The Board of Directors may cause such
scrip or evidence of ownership to be issued subject to the
condition that it shall become void if not exchanged for
certificates representing full shares of stock before a specified
date or subject to the condition that the shares of stock for
which such scrip or evidence of ownership is exchangeable may be
sold by the Corporation and the proceeds thereof distributed to
the holders of such scrip or evidence of ownership, or subject to
any other reasonable conditions which the Board of Director shall
deem advisable, including provision for forfeiture of such
proceeds to the Corporation if not claimed within a period of not
less than three years after the date of the original issuance of
scrip certificates.
Section 3. Signatures on Certificates. Any of or all the
signatures on a certificate may be a facsimile. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
cease to be such officer before such certificate is issued, it may be issued
with the same effect as if he or she were such officer at the date of issue. The
seal of the Corporation or a facsimile thereof may, but need not, be affixed to
certificates of stock.
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Section 4. Lost, Stolen or Destroyed Certificates. The Board
of Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Corporation alleged
to have been lost, stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
Section 5. Transfer of Shares. Upon request by the registered
owner of shares, and if a certificate has been issued to represent such shares
upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, subject to the Corporation's
rights to redeem or purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transactions upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
Section 6. Registered Owners. The Corporation shall be
entitled to recognize the person registered on its books as the owner of shares
to be the exclusive owner for all purposes including, redemption, voting and
dividends, and the Corporation shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
ARTICLE VII
Miscellaneous
Section 1. Reserves. There may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for repairing or maintaining any
property of the Corporation, or for the purchase of additional property, or for
such other purpose as the Board of Directors shall think
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conducive to the interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve.
Section 2. Dividends. Dividends upon the stock of the
Corporation may, subject to the provisions of the Articles of Incorporation and
of the provisions of applicable law, be declared by the Board of Directors at
any time. Dividends may be paid in cash, in property or in shares of the
Corporation's stock, subject to the provisions of the Articles of Incorporation
and of applicable law.
Section 3. Capital Gains Distributions. The amount and number
of capital gains distributions paid to the stockholders during each fiscal year
shall be determined by the Board of Directors. Each such payment shall be
accompanied by a statement as to the source of such payment, to the extent
required by law.
Section 4. Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 6. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words,
"Corporate Seal, Maryland". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in another manner reproduced.
Section 7. Filing of By-Laws. A certified copy of the
By-Laws, including all amendments, shall be kept at the principal
office of the Corporation in the State of Maryland.
Section 8. Annual Report. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each annual fiscal period of the Corporation and at such other
times, if any, as may be directed by the Board of Directors of the Corporation.
Within one hundred and twenty days of the close of each annual fiscal period a
report based upon such examination at the close of that fiscal period shall be
mailed to each stockholder of the Corporation of record at the close of such
annual fiscal period, unless the Board of Directors shall set another record
date, at his address as the same appears on the books of the Corporation. Each
such report shall contain such information as is required to be set forth
therein by the Investment Company Act of 1940 and the rules and regulations
promulgated by the Securities and Exchange Commission thereunder. Such report
shall also be submitted at
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the annual meeting of the stockholders and filed within twenty days thereafter
at the principal office of the Corporation in the State of Maryland.
Section 9. Stock Ledger. The Corporation shall maintain at its
principal office outside of the State of Maryland an original or duplicate stock
ledger containing the names and addresses of all stockholders and the number of
shares of stock hold by each stockholder. Such stock ledger may be in written
form or in any other form capable of being converted into written form within a
reasonable time for visual inspection.
Section 10. Ratification of Accountants by Stockholders. At
every annual meeting of the stockholders of the Corporation otherwise called
there shall be submitted for ratification or rejection the name of the firm of
independent public accountants which has been selected for the current fiscal
year in which such annual meeting is held by a majority of those members of the
Board of Directors who are not investment advisers of, or interested person (as
defined in the Investment Company Act of 1940) of an investment adviser of, or
officers or employees of, the Corporation.
Section 11. Custodian. All securities and similar investments
owned by the Corporation shall be held by a custodian which shall be either a
trust company or a national bank of good standing, having a capital surplus and
undivided profits aggregating not less than two million dollars ($2,000,000), or
a member firm of the New York Stock Exchange, Inc. The terms of custody of such
securities and cash shall include such provisions required to be contained
therein by the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.
Upon the resignation or inability to serve of any such
custodian the Corporation shall (a) use its best efforts to obtain a successor
custodian, (b) require the cash and securities of the Corporation held by the
custodian to be delivered directly to the successor custodian, and (c) in the
event that no successor custodian can be found, submit to the stockholders of
the Corporation, before permitting delivery of such cash and securities to
anyone other than a successor custodian, the question whether the Corporation
shall be dissolved or shall function without a custodian; provided, however,
that nothing herein contained shall prevent the termination of any agreement
between the Corporation and any such custodian by the affirmative vote of the
holders of a majority of all the stock of the Corporation at the time
outstanding and entitled to vote. Upon its resignation or inability to serve and
pending action by the Corporation as set forth in this section, the custodian
may deliver any assets of the Corporation held by it to a qualified bank or
trust company in the City of New York, or to a member
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firm of the New York Stock Exchange, Inc. selected by it, such
assets to be held subject to the terms of custody which governed
such retiring custodian.
Section 12. Investment Advisers. The Corporation may enter
into one or more management or advisory, underwriting, distribution or
administration contract with any person, firm, partnership, association or
corporation but such contract or contracts shall continue in effect only so long
as such continuance is specifically approved annually by a majority of the Board
of Directors or by vote of the holders of a majority of the voting securities of
the Corporation, and in either case by vote of a majority of the directors who
are not parties to such contracts or interested persons (as defined in the
Investment Company Act of 1940) of any such party cast in person at a meeting
called for the purpose of voting on such approval.
ARTICLE VIII
Amendments
The Board of Directors shall have the power, by a majority
vote of the entire Board of Directors at any meeting thereof, to make, alter and
repeal By-Laws of the Corporation.
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ADVISORY CONTRACT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury International Fund (the "Portfolio")
6 St. James Avenue
Boston, Massachusetts 02116
October 12, 1993
Bessemer Trust Company, N.A.
630 Fifth Avenue
New York, New York 10111
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We propose to engage in the business of investing and
reinvesting our assets in securities of the type, and in accordance with the
limitations, specified in our Articles of Incorporation, By-Laws and
Registration Statement filed with the Securities and Exchange Commission under
the Investment Company Act of 1940 (the "1940 Act") and the Securities Act of
1933, including the Prospectus forming a part thereof (the "Registration
Statement"), all as from time to time in effect, and in such manner and to such
extent as may from time to time be authorized by our Board of Directors. We
enclose copies of the documents listed above and will furnish you such
amendments thereto as may be made from time to time.
2. (a) We hereby employ you to manage the investment and
reinvestment of our assets as above specified, and, without limiting the
generality of the foregoing, to provide the management and other services
specified below.
(b) Subject to the general control of our Board of
Directors, you will make decisions with respect to all purchases and sales of
our portfolio securities. To carry out such decisions, you are hereby
authorized, as our agent and attorney-in-fact, for our account and at our risk
and in our name, to place orders for the investment and reinvestment of our
assets. In all purchases, sales and other transactions in our portfolio
securities you are authorized to exercise full discretion and act for us in the
same manner and with the same force and effect as our corporation itself might
or could do with respect to such purchases, sales or other transactions, as well
as with respect to all other things necessary or incidental to the furtherance
or conduct of such purchases, sales or other transactions. In furtherance of
such and subject to applicable law and procedures adopted by the Fund's Board of
Directors, you may (i) pay commissions to brokers other than yourself which are
higher than such that might be charged by another qualified broker to obtain
brokerage and/or research services considered by you to be useful or desirable
for your investment management of the Portfolio and/or other advisory accounts
of yours and any investment advisor affiliated
<PAGE>
with you; and (ii) consider the sales of shares of the Portfolio by brokers
including your affiliates as a factor in your selection of brokers for Portfolio
transactions.
(c) You will report to our Board of Directors at each
meeting thereof all changes in our portfolio since your prior report, and will
also keep us in touch with important developments affecting our portfolio and,
on your own initiative, will furnish us from time to time with such information
as you may believe appropriate for this purpose, whether concerning the
individual entities whose securities are included in our portfolio, the
activities in which such entities engage, Federal income tax policies applicable
to our investments, or the conditions prevailing in the money market or the
economy generally. You will also furnish us with such statistical and analytical
information with respect to our portfolio securities as you may believe
appropriate or as we may reasonably request. In making such purchases and sales
of our portfolio securities, you will comply with the policies set from time to
time by our Board of Directors as well as the limitations imposed by our Amended
Articles of Incorporation, the provisions of the Internal Revenue Code relating
to regulated investment companies and the 1940 Act, and the limitations
contained in the Registration Statement.
(d) It is understood that you will from time to time
employ, subcontract with or otherwise associate yourself with, entirely at your
expense such persons as you believe to be particularly fitted to assist you in
the execution of your duties hereunder.
(e) You or your affiliates will also provide supervisory
personnel who will be responsible for supervising and monitoring the performance
of our Administrator in connection with its duties under our Administrative
Services Agreement and for supervising the performance of other administrative
services, accounting and related services, net asset value and yield
calculations, reports to and filings with regulatory authorities, and services
relating to such functions. Such personnel may be your employees or employees of
your affiliates or of other organizations. It is understood that we have
retained, at our expense, an Administrator to perform the operational components
of the functions and services listed herein.
(f) You or your affiliates will also furnish us such
additional administrative supervision and such office facilities as you may
believe appropriate or as we may reasonably request subject to the requirements
of any regulatory authority to which you may be subject. We will reimburse you
for all of our operating costs incurred by you, including rent, depreciation of
equipment and facilities, interest and amortization of loans financing equipment
used by us and all the expenses incurred to conduct our affairs. The amounts of
such reimbursements shall from time to time be agreed upon between us.
3. We agree, subject to the limitations described below, to be
responsible for, and hereby assume the obligation for payment of, all our
expenses including: (a) brokerage and commission expenses; (b) foreign, federal,
state or local taxes, including issuance and transfer taxes incurred
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<PAGE>
by or levied on us; (c) commitment fees, certain insurance premiums and
membership fees and dues in investment company organizations; (d) interest
charges on borrowings; (e) charges and expenses of our custodian; (f) charges
and expenses relating to the issuance, redemption, transfer and dividend
disbursing functions for us; (g) telecommunications expenses; (h) recurring and
non-recurring legal, accounting and recordkeeping expenses; (i) costs of
organizing and maintaining the Fund's existence as a corporation; (j)
compensation, including directors' fees, of any of our directors, officers or
employees who are not your officers or officers employees of the Administrator
or their affiliates, and costs of other personnel providing administrative and
clerical services to us; (k) costs of providing shareholders' services,
including charges and expenses of persons providing confirmations of
transactions in the Portfolio's shares, periodic statements to shareholders and
recordkeeping services, and costs of shareholders' reports, proxy solicitations,
and corporate meetings; (l) fees and expenses of registering our shares under
the appropriate federal securities laws and of qualifying our shares under
applicable state securities laws, including expenses attendant upon the initial
registration and qualification of these shares and attendant upon renewals of,
or amendment to, those registrations and qualifications; (m) expenses of
preparing, printing and delivering the initial registration statement and of
preparing, printing and delivering the Prospectus to existing shareholders and
of printing shareholder application forms for shareholder accounts; (n) fees and
expenses payable to the Advisor, Distributor, Administrator, custodian, transfer
agent and dividend agent; and (o) any other distribution or promotional expenses
contemplated by an effective plan adopted by us pursuant to Rule 12b-1 under the
Act. Our obligation for the foregoing expenses is limited by your agreement to
be responsible, while this Agreement is in effect, for any amount by which our
annual operating expenses, including distribution expenses, (excluding taxes,
brokerage, interest and extraordinary expenses) exceed the limits on investment
company expenses prescribed by any state in which the Portfolio's shares are
qualified for sale.
4. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our security
holders by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
5. (a) In consideration of the foregoing we will pay you a fee
computed daily and payable monthly, in accordance with the following schedule:
.80% of the first $100 million of the Portfolio's average net assets; .75% of
the second $100 million of the Portfolio's average net assets; and .70% of the
Portfolio's average net assets exceeding $200 million. Your fee will be accrued
by us daily, and will be payable on the last day of each calendar month for
services performed hereunder during that month or on such other schedule as you
shall request of us in writing. You may waive your right to any fee to which you
are entitled hereunder, provided such waiver is delivered to us in writing. Any
reimbursement of our expenses, to which we may become entitled pursuant to
paragraph 3 hereof, will be paid to us at the end of the
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month for which those expenses are accrued, at the same time as we pay you
your fee.
(b) Pursuant to the Portfolio's Distribution and Service
Plan, the Advisor will also act as a shareholder servicing agent for the
Portfolio pursuant to which the Portfolio is permitted to pay the Advisor a
maximum of .25% per annum of the Portfolio's average daily net assets to
compensate it and to permit the Advisor to compensate banks, savings and loans
and other financial institutions (the Advisor with such other institutions, each
a "Shareholder Servicing Agent") whose clients are Portfolio shareholders for
providing shareholder services. In addition, the Advisor may use the advisory
fee for distribution and servicing purposes including defraying the costs of
performing shareholder servicing functions on behalf of the Portfolio,
compensating others, including banks, broker-dealers and other organizations
whose customers or clients are shareholders of the Portfolio for providing
assistance in distributing the Portfolio's shares and defraying the cost of
shareholder servicing and other promotional activities. To the extent that you
or your affiliates directly may make payments to banks, securities dealers and
other third parties who engage in the sale of our shares or who render
shareholder support services, and that such payments may be deemed indirect
financing of an activity primarily intended to result in the sale of shares of
the Portfolio within the context of Rule 12b-1 under the 1940 Act (the "Rule"),
then such payments by you shall be deemed to be authorized under the Portfolio's
Distribution and Service Plan adopted pursuant to the Rule. You, will, in your
sole discretion, determine the amount of such payments and may from time to time
in your sole discretion increase or decrease the amount of such payments;
provided, however, that no such payment will increase the amount the Portfolio
is required to pay you or any person under this Agreement or any agreement. Any
payments made by you for such purposes are subject to compliance with the terms
of written agreements in a form satisfactory to the Fund's Board of Directors to
be entered into by you and the participating organization.
6. This Agreement will become effective on October 12, 1993
and shall continue in effect until October 12, 1995 and thereafter for
successive twelve-month periods (computed from each October 1), provided that
such continuation is specifically approved at least annually by our Board of
Directors or by a majority vote of the holders of our outstanding voting
securities, as defined in the 1940 Act, and, in either case, by a majority of
those of our directors who are neither party to this Agreement nor, other than
by their service as directors of the corporation, interested persons, as defined
in the 1940 Act, of any such person who is party to this Agreement. Upon the
effectiveness of this Agreement, it shall supersede all previous Agreements
between us covering the subject matter hereof. This Agreement may be terminated
at any time, without the payment of any penalty, by vote of a majority of our
outstanding voting securities, as defined in the 1940 Act, or by a vote of a
majority of our entire Board of Directors, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale,
-4-
<PAGE>
hypothecation or pledge by you. The terms "transfer", "assignment" and "sale" as
used in this paragraph shall have the meanings ascribed thereto by governing law
and in applicable rules or regulations of the Securities and Exchange
Commission.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
OLD WESTBURY FUNDS, INC.
Old Westbury International Fund
By:/s/JAMES B. CRAVER
Name: James B. Craver
Title: Treasurer
ACCEPTED: October 12, 1993
BESSEMER TRUST COMPANY, N.A.
By: /S/ROBERT C. ELLIOT
Name: Robert C. Elliott
Title: Senior Executive Vice President
BTC016
-5-
CONSENT OF INDEPENDENT AUDITORS
Old Westbury Funds, Inc.:
We consent to the incorporation by reference in the Statement of Additional
Information in this Post-Effective Amendment No. 3 to Registration Statement No.
33-66528 of our report dated December 11, 1995, appearing in the annual report
to shareholders for the year ended October 31, 1995, and to the reference to us
under the caption "Financial Highlights" in the Prospectus and "Counsel and
Independent Auditors" in the Statement of Additional Information, both of which
are a part of such Registration Statement.
/s/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
New York, New York
February, 28, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Old
Westbury International Annual Report dated October 31, 1995 and is qualified in
its entirety by reference to such annual report.
</LEGEND>
<CIK> 0000909994
<NAME> OLD WESTBURY FUNDS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 103,095,276
<INVESTMENTS-AT-VALUE> 101,872,548
<RECEIVABLES> 545,322
<ASSETS-OTHER> 362,850
<OTHER-ITEMS-ASSETS> 3,540,873
<TOTAL-ASSETS> 106,321,593
<PAYABLE-FOR-SECURITIES> 1,814,290
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 312,817
<TOTAL-LIABILITIES> 2,127,107
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<PAID-IN-CAPITAL-COMMON> 110,622,218
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<DIVIDEND-INCOME> 2,582,047
<INTEREST-INCOME> 214,425
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<REALIZED-GAINS-CURRENT> (4,939,089)
<APPREC-INCREASE-CURRENT> (5,283,692)
<NET-CHANGE-FROM-OPS> (8,874,586)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (755,605)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,725,287
<NUMBER-OF-SHARES-REDEEMED> (1,842,187)
<SHARES-REINVESTED> 78,231
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<GROSS-EXPENSE> 1,540,335
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<PER-SHARE-NAV-BEGIN> 10.81
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</TABLE>
