1933 Act File No. 33-66528
1940 Act File No. 811-7912
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ....................
Post-Effective Amendment No. 9 ...................... X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 10_...................................... X
OLD WESTBURY FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
c/o Edgewood Services, Inc.
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-8160
(Registrant's Telephone Number)
Robert C. Elliott Copies To: Michael R. Rosella, Esquire
Bessemer Trust Company, N.A. Battle Fowler LLP
630 Fifth Avenue 75 East 55th Street
New York, New York 10111 New York, New York 10022
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
_ 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)
X 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.
<PAGE>
OLD WESTBURY FUNDS, INC.
Registration Statement on Form N-1A
CROSS-REFERENCE SHEET
Pursuant to Rule 404(c)
This Amendment to the Registration Statement of Old Westbury Funds, Inc.,
which consists of five portfolios including: (1) Old Westbury International
Fund, (2) Old Westbury Growth Opportunity Fund, (3) Old Westbury Core Equities
Fund, (4) Old Westbury Intermediate Income Fund, and (5) Old Westbury Municipal
Bond Fund, relates only to portfolios (3), (4) and (5), and is comprised of the
following:
Part A
ITEM NO. PROSPECTUS HEADING
1. Cover Page................................................. Cover Page
2. Synopsis.......................................Prospectus Summary (1-5);
Summary of Fund Expenses (1-5)
3 Condensed Financial Information...............Financial Highlights (1-3)
4. General Description of Registrant...................Investment Objective
and Policies (1-5); Portfolio
Investments and Strategies (1-5);
Investment Restrictions (1-5)
5. Management of the Fund.....................Management of the Fund (1-5);
The Administrator (1-5); Custodian (1-5);
Transfer Agent and Dividend Agent (1-5);
5A. Management's Discussion of Fund Performance...............Not Applicable
6. Capital Stock and Other Securities Redemption of Shares (1-5);
Exchange of Shares (1-5);
Retirement Plans (1-5); Dividends (1-5);
Distributions and Taxes (1-5);
Calculation of Investment (1-5);
Calculation of Investment Performance (1-5);
General Information (1-5)
7. Purchase of Securities Being Offered...........Purchase of Shares (1-5);
Net Asset Value (1-5);
Distribution and Service Plan (1-5)
8. Redemption or Repurchase......................Redemption of Shares (1-5)
9. Legal Proceedings.........................................Not Applicable
<PAGE>
Part B Caption in Statement of
ITEM NO. Additional Information
10. Cover Page............................................. Cover Page (1-5)
11. Table of Contents................................Table of Contents (1-5)
12. General Information and History..........Description of Each Portfolio's
Investment Securities and Risk Factors (1-5);
13. Investment Objectives and Policies..............Investment Objective and
.........................................................Policies (1-5);
Investment Restrictions (1-5)
14. Management of the
Fund.....Adviser
(1-5); Administrator
(1-5); Directors and
Officers (1-5)
15. Control Persons and Principal
Holders of Securities.......................Directors and Officers (1-5)
16. Investment Advisory and Other Services....................Adviser (1-5);
Administrator (1-5);Distribution and
Service Plan (1-5); Custodian (1-5);
Transfer Agent and Dividend Agent (1-5);
Counsel and Independent Auditors (1-5)
17. Brokerage Allocation..............Brokerage and Portfolio Turnover (1-5)
18. Capital Stock and Other Securities....Description of Common Stock (1-5);
Description of Corporate Debt Ratings(1-5)
19. Purchase, Redemption and Pricing of
Securities Being Offered........Purchase and Redemption of Shares (1-5);
Net Asset Value (1-5)
20. Tax Status..............................................Tax Status (1-5)
21. Underwriters.........................Distribution and Service Plan (1-5)
22. Calculation of Fund Performance........................Performance (1-5)
23. Financial Statements........To be filed by amendment.
OLD WESTBURY FUNDS, INC.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE: (800) 607-2200
=============================================================
PROSPECTUS
FEBRUARY _____, 1998
Old Westbury Funds, Inc. (the "Fund") is an open-end, diversified,
management investment company. The Fund has the following five separate
investment portfolios (each portfolio individually referred to as a "Portfolio"
and collectively as the "Portfolios"). Each Portfolio offers its own shares and
has a distinct investment goal to meet specific investor needs.
OLD WESTBURY CORE EQUITIES FUND
OLD WESTBURY GROWTH OPPORTUNITY FUND
OLD WESTBURY INTERNATIONAL FUND
OLD WESTBURY FIXED INCOME FUND
OLD WESTBURY MUNICIPAL BOND FUND
This Prospectus contains the information you should read and know before you
invest in any of the Portfolios. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated
_______________, 1998, with the Securities and Exchange Commission ("SEC"). The
information contained in the Statement of Additional Information is incorporated
by reference into this prospectus. You may request a copy of the Statement of
Additional Information or a paper copy of this prospectus, if you have received
your prospectus electronically, free of charge, obtain other information, or
make inquiries about the Portfolios by writing to the Portfolios or calling
1-800-607-2200. The Statement of Additional Information, material incorporated
by reference into this document, and other information regarding the Portfolios
are maintained electronically with the SEC at Internet Web site
(http://www.sec.gov).
Bessemer Trust Company, N.A. ("Bessemer") is the investment adviser to the
Portfolios. Edgewood Services, Inc. ("Edgewood") is the distributor of the
Portfolios' shares and Federated Administrative Services ("Federated") is the
administrator of the Portfolios. Bessemer is a national banking association.
Edgewood is a registered broker-dealer and member of the National Association of
Securities Dealers, Inc.
THE SHARES OFFERED BY THIS PROSPECTUS 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<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 five portfolios (each, a
"Portfolio").
THE PORTFOLIOS: Set forth below is the name of each portfolio and its
objective:
o OLD WESTBURY CORE EQUITIES FUND ("Core Equities Fund")--seeks long-term
capital appreciation by investing primarily in a diversified portfolio
of equity securities of large capitalization companies with a market
capitalization of at least $2.5 billion;
o OLD WESTBURY GROWTH OPPORTUNITY FUND ("Growth Opportunity Fund")--seeks
capital appreciation by investing primarily in a diversified portfolio
of equity securities of small and medium sized companies that have the
potential to become industry leaders. Such companies will be based in
the United States and Canada;
o OLD WESTBURY INTERNATIONAL FUND ("International Fund")--seeks long-term
growth of capital by investing in a diversified portfolio of marketable
equity securities of issuers domiciled outside of the United States;
o OLD WESTBURY FIXED INCOME FUND ("Fixed Income Fund")--seeks total return
(current income and capital appreciation) by investing in a diversified
portfolio of securities consisting primarily of bonds and notes; and
o OLD WESTBURY MUNICIPAL BOND FUND ("Municipal Bond Fund")--seeks a high
level of current income exempt from federal regular income tax by
investing in a diversified portfolio of municipal securities that
generate such income.
There is no assurance that any Portfolio will achieve its investment objective.
The investment objective of each 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 "Adviser") serves as the
investment adviser and is compensated for its services and its related expenses
at an annual rate equal to the following percentages of each Portfolio's average
daily net assets: For Core Equities Fund, 0.70% of the first $100 million, 0.65%
of the second $100 million, and 0.60% thereafter; for Growth Opportunity Fund
and International Fund, 0.80% of the first $100 million; 0.75% of the second
$100 million, and 0.70% thereafter; for Fixed Income Fund and Municipal Bond
Fund, 0.45% of the first $100 million, 0.40% of the second $100 million, and
0.35% thereafter.
Edgewood Services, Inc. (the "Distributor") acts as distributor for each
Portfolio's shares. Each Portfolio has a distribution and service plan (the
"Plan") which permits it to pay (1) 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 (2) 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 Adviser will act as a shareholder servicing agent for the
Portfolio, pursuant to which each Portfolio is permitted to pay the Adviser 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 and other financial
institutions (the Adviser 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 a
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 Adviser
will only be paid by a Portfolio with respect to the value of shares of the
Portfolio represented by the clients of the Adviser and the other Shareholder
Servicing Agents that have agreements with the Adviser. Therefore, the total
service fees in the aggregate payable to the Distributor and the Adviser
(collectively, the "Shareholder Servicing Fees") for shareholder servicing will
not exceed 0.25% per annum of the average daily net assets of a 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 each 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. Shares of
each 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 Portfolios may be
purchased only in those states where they may lawfully be sold.
HOW TO SELL SHARES: Shares of each 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 a 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 a Portfolio
will pay any dividends or realize any capital gains. However, each Portfolio
currently intends to pay dividends and capital gains distributions, if any, on a
quarterly basis. See "Dividends, Distributions and Taxes."
RISK CONSIDERATIONS: Investors should be aware of the following general
considerations relating to the types of investments of one or more of the
Portfolios. The market value of fixed-income securities may vary inversely in
response to changes in prevailing interest rates. Domestic equity securities are
subject to the volatility and unpredictability of the U.S. stock market. The
securities of smaller-capitalized companies present special risks in that such
securities have historically been more volatile than stocks of larger companies.
Foreign securities, including securities of issuers based in emerging markets,
are subject to certain risks (i.e., greater price volatility and illiquidity
than U.S. equity securities; greater political, legal and economic risks;
currency exchange fluctuations; and different regulatory schemes with less
publicly available information) in addition to those inherent in U.S.
investments. High yield securities are typically subject to greater market
fluctuations than investment grade bonds. Asset-backed and mortgage-backed
securities are subject to higher prepayment risks than other types of debt
instruments. The Portfolios may make other investments and employ certain
investment techniques that involve other risks, including lending portfolio
securities, entering into futures contracts and related options as hedges, and
entering into repurchase agreements. For a description of these investments,
strategies and other risks, please see "Portfolio Objective and Policies,"
"Portfolio Investments and Strategies," and "Additional Investment Risks."
<PAGE>
SUMMARY OF FUND EXPENSES
TO BE ADDED
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of each Portfolio appear below. The
investment objective of each Portfolio is fundamental and may not be changed
without shareholder approval. While a Portfolio cannot assure that it will
achieve its investment objective, it attempts to do so by following the
investment policies described below.
Unless indicated otherwise, the investment policies of a Portfolio may be
changed by the Board of Directors ("Directors") without shareholder approval.
However, shareholders will be notified before any material change in these
policies becomes effective. Additional information about investments, investment
limitations and strategies, and certain investment policies appears in the
"Portfolio Investments and Strategies" section of this Prospectus and in the
Statement of Additional Information.
OLD WESTBURY CORE EQUITIES FUND
The investment objective of the Core Equities Fund is to seek above-average
long-term capital appreciation. The Portfolio pursues this objective by
investing primarily in a diversified portfolio of equity securities of large
capitalization companies with a market capitalization of at least $2.5 billion
that are growing their earnings substantially faster than overall corporate
profits are rising. The Portfolio's investment philosophy is based on the belief
that the price of a company's stock correlates with the direction and
rate-of-change of the company's earnings. In line with this, the Portfolio seeks
to invest in companies which are increasing their net income by 15-20% or more
annually. The portfolio manager looks for long-term economic trends where there
are prospects for substantial growth that will enable the leading companies to
achieve prospective earnings goals. Corporations which will be able to meet the
investment objective for a sustained period of time (5 years) represent the
Portfolio's "core" holdings. These are supplemented by "opportunistic" stocks
which are companies that appear to have strong earnings prospects for a more
limited time period, most typically as a result of an economic or new product
cycle or a major corporate restructuring. Under normal circumstances, the
Portfolio generally will invest at least 65% of its total assets in companies
with market capitalizations of at least $2.5 billion.
PERMITTED INVESTMENTS
Permitted investments include the following:
o common stocks of U.S companies that are listed on the New York or
American Stock Exchange, or other domestic exchange, or traded in
over-the-counter markets, preferred stocks of such companies, warrants,
and preferred stock convertible into common stocks of such companies;
o convertible bonds of domestic issuers that are rated in the top four
categories by a nationally recognized statistical rating organization
("NRSRO") such as BBB or better by Standard & Poor's ("S&P") and Fitch
Investors Service, Inc. ("Fitch"), or Baa or better by Moody's Investors
Services, Inc. ("Moody's") or, if unrated, are of comparable quality as
determined by the Portfolio's Adviser;
o U.S. government securities;
o debt obligations (including bonds, notes and debentures) denominated in
U.S. dollars issued by U.S. corporations that are rated in the top four
categories by an NRSRO or, if unrated, are of comparable quality as
determined by the Portfolio's Adviser;
o options and futures;
o Money market instruments, including obligations of the U.S. government
and its agencies and instrumentalities, other short-term debt
securities, commercial paper, bank obligations and money market mutual
funds (collectively, "Money Market Instruments"). For detailed
information about these Money Market Instruments, see "Description of
Each Portfolio's Investment Securities" in the Statement of Additional
Information;
o repurchase agreements; and
o shares of other investment companies.
For additional information on these permitted investments and a description of
the other investment techniques and strategies of the Core Equities Fund, see
the "Portfolio Investments and Strategies" section below.
OLD WESTBURY GROWTH OPPORTUNITY FUND
The investment objective of the Growth Opportunity Fund is to seek capital
appreciation. The Portfolio seeks to achieve this objective by investing
primarily in a diversified portfolio of equity securities of small and
medium-sized companies that have the potential to become industry leaders. These
United States and Canadian based companies will generally offer special
opportunities for growth and capital appreciation without regard to current
income and with earnings growth that over time would be well above the growth
rate of the overall economy and the rate of inflation. Additionally, these
companies will have a rate of growth that is expected to accelerate as a result
of a catalyst, such as new products, changes in customer preferences, new
management or changes or improvements in the economy. Under normal
circumstances, the Portfolio generally will invest at least 65% to 85% of its
total assets in companies with market capitalizations of under $3 billion.
Although it is not the Portfolio's policy to invest or trade for short-term
gains, the Portfolio may, from time to time, sell a security regardless of the
length of time that it has been held in order to realize a profit or to avoid
anticipated or further loss.
PERMITTED INVESTMENTS
Permitted investments include the following:
o common stocks of U.S. and Canadian companies that are listed on the New
York or American Stock Exchange, or other domestic or Canadian exchange,
or traded in the over-the-counter market, preferred stocks of such
companies, warrants, and preferred stocks convertible into common stocks
of such companies;
o convertible bonds of domestic and Canadian issuers that are rated in the
top four categories by an NRSRO or, if unrated, are of comparable
quality as determined by the Portfolio's Adviser;
o U.S. government securities;
o debt obligations (including bonds, notes and debentures) issued by U.S.
and Canadian corporations and governments that are denominated in U.S.
dollars issued by U.S. and Canadian corporations and governments that
are rated in the top four categories by an NRSRO or, if unrated, are of
comparable quality as determined by the Portfolio's Adviser;
o options and futures;
o Money Market Instruments;
o repurchase agreements; and
o shares of other investment companies.
For additional information on these permitted investments and a description of
the other investment techniques and strategies of the Growth Opportunity Fund,
see the "Portfolio Investments and Strategies" section below. For a description
of certain risks associated with the ownership of foreign securities, see "Old
Westbury International Fund-Foreign Securities" below.
SMALL AND MID CAPITALIZATION STOCKS
Small market capitalization companies ("Small-Cap Companies") are those with
market capitalizations of $1 billion or less at the time of the Portfolio's
investment. Many Small-Cap Companies will have had their securities publicly
traded, if at all, for only a short period of time and will not have had the
opportunity to establish a reliable trading pattern through economic cycles.
Investing in small and mid capitalization stocks may involve greater risk than
investing in large capitalization stocks and more established companies, since
they can be subject to greater volatility. The price volatility of Small-Cap
Companies is relatively higher than larger, more mature companies. The greater
price volatility of Small-Cap Companies may result from the fact that there may
be less market liquidity, less information publicly available or few investors
who monitor the activities of these companies. Further, in addition to
exhibiting greater volatility, the stocks of Small-Cap Companies may, to some
degree, fluctuate independently of the stocks of large companies. That is, the
stocks of Small-Cap Companies may decline in price as the price of large company
stocks rise or vice versa. In addition, the market prices of these securities
may exhibit more sensitivity to changes in industry or general economic
conditions. Some Small-Cap Companies will not have been in existence long enough
to experience economic cycles or to know whether they are sufficiently well
managed to survive downturns or inflationary periods. Further, a variety of
factors may affect the success of a company's business beyond the ability of its
management to prepare or compensate for them, including domestic and
international political developments, government trade and fiscal policies,
patterns of trade and war or other military conflict which may affect particular
industries or markets or the economy generally.
Mid capitalization companies ("Mid-Cap Companies") are those with market
capitalizations between $1 billion and $3 billion. The risks associated with
investments in Mid-Cap Companies are similar to those associated with Small-Cap
Companies as discussed above.
EMERGING GROWTH COMPANIES
The nature of investing in emerging growth companies involves a greater level of
risk than would be associated when investing in more established seasoned
companies. Emerging growth companies are beyond their initial start-up periods
but have not yet reached a state of established growth or maturity. The rate of
growth of such companies may at times be dramatic; such companies often provide
new products or services that enable them to capture a dominant or important
market position, or have a special area of expertise, or are able to take
advantage of changes in demographic factors in a more profitable way than other
companies. These companies may have limited product lines, markets or financial
resources and may lack management depth since they have not been tested by time
or the marketplace. The securities of emerging growth companies often have
limited marketability and may be subject to more volatile market movements than
securities of larger, more established growth companies or the market averages
in general. Shares of the Portfolio, therefore, may be subject to greater
fluctuation in value than funds investing entirely in proven growth stocks.
CANADIAN COMPANIES
The Portfolio may invest more than 10% of its total assets in Canadian
securities. Canadian securities are sensitive to conditions within Canada, but
also tend to follow the U.S. market. The country's economy relies strongly on
the production and processing of natural resources. Also, the government has
attempted to reduce restrictions against foreign investment, and its trade
agreements with the U.S. and Mexico are expected to increase trade. Also, demand
by many citizens in the Province of Quebec for secession from Canada may
significantly impact the Canadian economy. In addition, the value in U.S.
dollars of the Portfolio's assets denominated in Canadian currency may be
affected by changes in exchange rates and regulations. For further disclosure
and risk factors regarding investment in foreign securities generally, see
"Foreign Securities" in the Statement of Additional Information.
OLD WESTBURY INTERNATIONAL FUND
The investment objective of the International Fund is to seek long-term growth
of capital. The Portfolio pursues this 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.
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% or more of its assets in the securities of a single
country. See "Investment Restrictions." Particular securities are selected for
investment based upon criteria established by the Adviser, 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 Adviser, 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 Adviser, 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.
PERMITTED INVESTMENTS
Permitted investments include the following:
o common stocks of issuers domiciled outside of the United States,
preferred stocks of such companies, warrants, and preferred stocks
convertible into common stocks of such companies;
o convertible bonds of issuers domiciled outside of the United States that
are rated in the top four categories by Moody's or S&P or, if unrated,
are of comparable quality as determined by the Portfolio's Adviser;
o debt obligations (including bonds, notes and debentures) issued by
issuers domiciled outside of the United States and foreign governments
that are rated in the top four categories by Moody's or S&P or, if
unrated, are of comparable quality as determined by the Portfolio's
Adviser (investments in obligations of foreign governments or their
political subdivisions are limited to direct government obligations and
government-guaranteed securities);
o options and futures;
o foreign and domestic prime commercial paper;
o Money Market Instruments;
o repurchase agreements; and
o shares of other investment companies.
For additional information on these permitted investments and a description of
the other investment techniques and strategies of the International Fund, see
the "Portfolio Investments and Strategies" section below.
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 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 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.
OPTIONS ON FOREIGN CONTRACTS; FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
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 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.
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 Adviser 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
Adviser 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's
intention to qualify as such. See "Dividends, Distributions and Taxes."
For additional information on these permitted investments and a description of
the other investment techniques and strategies of the International Fund, see
the "Portfolio Investments and Strategies" section below.
OLD WESTBURY FIXED INCOME FUND
The investment objective of the Fixed Income Fund is to seek total return
(consisting of current income and capital appreciation.) The Portfolio pursues
this objective by investing primarily in a diversified portfolio of investment
grade bonds and notes. The maturity of the Portfolio will be adjusted based on
the outlook for the trend in interest rates. The Portfolio will invest, under
normal circumstances, at least 65% of the value of its total assets in fixed
income securities. Investment grade debt obligations at the time of purchase
must be rated in the top four categories by at least one NRSRO (such as BBB or
better by S&P or Fitch, or Baa or better by Moody's), or if unrated, of
comparable quality as determined by the Adviser. See "Ratings" in the "Portfolio
Investments and Strategies" section. The Portfolio may invest up to 5% of its
assets in debt obligations rated below investment grade but not lower than B by
S&P, Fitch or Moody's, or of comparable quality, which are sometime referred to
as high-yield debt obligations. For a description of these types of securities
and the additional risks associated with them, see "Risk Factors-Lower Rated
Fixed Income Securities" in the Statement of Additional Information.
PERMITTED INVESTMENTS
Permitted investments include the following:
o debt obligations (including bonds, notes and debentures) of domestic and
foreign issuers that, at the time of purchase, are rated in the top four
categories by at least one NRSRO or, if unrated, are of comparable
quality as determined by the Portfolio's Adviser (except that up to 5%
of the Portfolio's assets may be rated as low as the sixth highest
category);
o convertible securities of foreign and domestic issuers that, at the time
of purchase, are rated in the top four categories by an NRSRO or, if
unrated, are of comparable quality as determined by the Portfolio's
Adviser (except that up to 5% of the Portfolio's assets may be rated as
low as the sixth highest category);
o U.S. government securities;
o structured fixed income securities, including mortgage-backed
securities, adjustable rate mortgage securities ("ARMS"), collateralized
mortgage obligations ("CMO's"), and asset-backed securities;
o zero coupon obligations;
o options and futures;
o Money Market Instruments; and
o shares of other investment companies.
For additional information on these permitted investments and a description of
the other investment techniques and strategies of the Fixed Income Fund, see the
"Portfolio Investments and Strategies" section below. In addition, the following
is a description of the structured fixed income securities referred to above.
MORTGAGE-BACKED SECURITIES. Some of the U.S. Government Securities in which the
Fund will invest can represent an undivided interest in a pool of residential
mortgages or may be collateralized by a pool of residential mortgages
("Mortgage-backed securities"). Mortgage-backed securities have yield and
maturity characteristics corresponding to the underlying mortgages.
Distributions to holders of Mortgage-backed securities include both interest and
principal payments. Principal payments represent the amortization of the
principal of the underlying mortgages and any prepayments of principal due to
prepayment, refinancing, or foreclosure of the underlying mortgages. Although
maturities of the underlying mortgage loans may range up to 30 years,
amortization and prepayments substantially shorten the effective maturities of
Mortgage-backed securities. Due to these features, Mortgage-backed securities
are less effective as a means of "locking-in" attractive long-term interest
rates than fixed-income securities which pay only a stated amount of interest
until maturity, when the entire principal amount is returned. Prepayments, which
become more likely as mortgage interest rates decline, create a need to reinvest
distribution of principal at then-current lower rates. Since comparatively high
interest rates cannot be effectively "locked in," Mortgage-backed securities may
have less potential for capital appreciation during periods of declining
interest rates than other non-callable fixed-income government securities of
comparable stated maturities. However, Mortgage-backed securities may experience
less pronounced declines in value during periods of rising interest rates.
Mortgage-backed securities utilizing ARMs may fluctuate less in value and suffer
fewer prepayments than Mortgage-backed securities utilizing fixed rate
mortgages.
ARMS. ARMS are Mortgage-backed securities representing interests in adjustable
rather than fixed interest rate mortgages. The Fund invests in ARMS issued by
the GNMA, the FNMA, the FHLMC, and by non-government and private entities and
are actively traded. The underlying mortgages which collateralize ARMS issued by
GNMA are fully guaranteed by the Federal Housing Administration ("FHA") or
Veterans Administration ("VA"), while those collateralizing ARMs issued by FHLMC
or FNMA are typically conventional residential mortgages conforming to strict
underwriting size and maturity constraints.
CMOS. CMOs are debt obligations collateralized by mortgage loans or
Mortgage-backed securities. Typically, CMOs are collateralized by GNMA, FNMA or
FHLMC certificates, but may be collateralized by whole loans or private
mortgage-backed securities. The Fund will only invest in CMOs which are rated
AAA by a Rating Agency, and which may be: (a) collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of principal and
interest by an agency or instrumentality of the U.S. government; (b)
collateralized by pools of mortgages in which payment of principal and interest
is guaranteed by the issuer and such guarantee is collateralized by U.S.
Government Securities; (c) securities in which the proceeds of the issuance are
invested in mortgage securities and the payment of the principal and interest is
supported by the credit of an agency or instrumentality of the U.S. government;
or (d) collateralized by pools of mortgages or Mortgage-backed securities not
guaranteed by the U.S. government or any government agency.
ASSET-BACKED SECURITIES. Asset-backed securities are obligations of trusts or
special purpose corporations that directly or indirectly represent a
participation in, or are secured by and payable from various types of assets. At
the present time, automobile and credit card receivables are among the most
common collateral supporting asset-backed securities. In general, the collateral
supporting asset-backed securities is of shorter maturity than mortgage loans
and is less likely to experience substantial prepayments. As with
Mortgage-backed securities, asset-backed securities are often backed by a pool
of assets representing the obligations of a number of different parties and use
similar credit enhancement techniques. Asset-backed securities present certain
risks that are not presented by Mortgage-backed securities. Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to set off certain amounts owed on the credit cards,
thereby reducing the balance due. Most issuers of asset-backed securities backed
by automobile receivables permit the services of such receivables to retain
possession of the underlying obligations. If the servicer were to sell these
obligations to another party, there is a risk that the purchaser would acquire
an interest superior to that of the holders of the related asset-backed
securities. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of asset-backed securities backed by automobile receivables may not
have a recorded security interest in all of the obligations backing such
receivables. Therefore, there is a possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities.
In general, issues of asset-backed securities are structured to include
additional collateral and/or additional credit support to protect against the
risk that a portion of the collateral supporting the asset-backed securities may
default and/or may suffer from these defects. In evaluating the strength of
particular issues of asset-backed securities, the Adviser considers any rating
given to such securities, the financial strength of the provider of credit
support, the type and extent of credit enhancement provided, as well as the
documentation and structure of the issue itself and the credit support.
INVERSE FLOATERS. Certain securities issued by agencies of the U.S. government
("agency securities") that include a class bearing a floating rate of interest
also may include a class whose yield floats inversely against a specified index
rate. These "inverse floaters" are more volatile than conventional fixed or
floating rate classes of an agency security and the yield thereon, as well as
the value thereof, will fluctuate in inverse proportion to changes in the index
on which interest rate adjustments are based. As a result, the yield on an
inverse floater class of an agency security will generally increase when market
yields (as reflected by the index) decrease and decrease when market yields
increase. The extent of the volatility of inverse floaters depends on the extent
of anticipated changes in market rates of interest. Generally, inverse floaters
provide for interest rate adjustments based upon a multiple of the specified
interest index, which further increases their volatility. The degree of
additional volatility will be directly proportional to the size of the multiple
used in determining interest rate adjustments.
RESETS OF INTEREST. The interest rates paid on certain agency securities in
which the Fund invests generally are readjusted at intervals of one year or less
to an increment over some predetermined interest rate index. There are two main
categories of indices: those based on U.S. Treasury securities and those derived
from a calculated measure, such as a cost of funds index or a moving average of
mortgage rates. Commonly utilized indices include the one-year and five-year
constant maturity Treasury note rates, the three-month Treasury bill rate, the
180-day Treasury bill rate, rates on longer-term Treasury securities, the
National Media Cost of Funds, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a specific bank, or commercial paper
rates. Some indices, such as the one-year constant maturity Treasury note rate,
closely mirror changes in market interest rate levels.
To the extent that the adjusted interest rate on the agency security reflects
current market rates, the market value of an adjustable rate agency security
will tend to be less sensitive to interest rate changes than a fixed rate debt
security on the same stated maturity. For additional information on these
permitted investments and a description of the other investment techniques and
strategies of the Fixed Income Fund, see the "Portfolio Investments and
Strategies" section below.
OLD WESTBURY MUNICIPAL BOND FUND
The investment objective of Municipal Bond Fund is to provide dividend income
that is exempt from federal regular income tax. Interest income of Municipal
Bond Fund that is exempt from federal regular income tax retains its tax-free
status when distributed to Municipal Bond Fund's shareholders. Municipal Bond
Fund pursues its investment objective by investing in municipal securities. As a
matter of investment policy, which may not be changed without shareholder
approval, under normal circumstances, Municipal Bond Fund will be invested so
that at least 80% of the income from investments will be exempt from federal
regular income tax or that at least 80% of its net assets are invested in
obligations, the interest from which is exempt from federal regular income tax.
PERMITTED INVESTMENTS
The municipal securities in which Municipal Bond Fund invests are:
o debt obligations and municipal leases issued by or on behalf of any
state, territory, or possession of the United States, including the
District of Columbia, or any political subdivision of any of them;
o participation interests, as described below, in any of the above
obligations, the interest from which is, in the opinion of bond counsel
for the issuers or in the opinion of officers of Municipal Bond Fund
and/or the Adviser, exempt from federal regular income tax;
o options and futures;
o Money Market Instruments; and
o shares of other investment companies.
CHARACTERISTICS
The municipal securities in which Municipal Bond Fund invests are:
o rated in the top four categories by an NRSRO or, if unrated, are of
comparable quality as determined by the Portfolio's Adviser;
o guaranteed at the time of purchase by the U.S. government, its agencies or
instrumentalities, as to the payment of principal and interest;
o fully collateralized by an escrow of U.S. government or other securities
acceptable to the Adviser;
o rated at the time of purchase within Moody's highest short-term municipal
obligation rating (MIG1/VMIG1) or Moody's highest municipal commercial
paper rating (P-1) or S&P's highest short-term municipal commercial paper
rating (SP-1) or Fitch's highest tax-exempt municipal obligation rating
(FIN-1);
o unrated if, at the time of purchase, longer term municipal securities of
the issuer are rated in the top four categories by an NRSRO (however,
investments in unrated securities will not exceed 20% of Municipal Bond
Fund's total assets); or
o determined by the Adviser to be equivalent to municipal securities which
are rated in the top four categories by an NRSRO.
For additional information on these permitted investments and a description of
the other investment techniques and strategies of the Municipal Bond Fund, see
the "Portfolio Investments and Strategies" section below. In addition, the
following is a description of certain securities described above.
PARTICIPATION INTERESTS. Municipal Bond Fund may purchase participation
interests from financial institutions such as commercial banks, savings
associations, and insurance companies. These participation interests give
Municipal Bond Fund an undivided interest in municipal securities. The financial
institutions from which Municipal Bond Fund purchases participation interests
frequently provide or secure irrevocable letters of credit or guarantees to
assure that the participation interests are of high quality. The Trustees will
determine that participation interests meet the prescribed quality standards for
Municipal Bond Fund.
VARIABLE RATE MUNICIPAL SECURITIES. Municipal Bond Fund may purchase municipal
securities that have variable interest rates. Variable interest rates are
ordinarily stated as a percentage of a published interest rate, interest rate
index, or some similar standard, such as the 91-day U.S. Treasury bill rate.
Many variable rate municipal securities are subject to payment of principal on
demand by Municipal Bond Fund, usually in not more than seven days. All variable
rate municipal securities will meet the quality standards for Municipal Bond
Fund.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, or a conditional sales contract.
OTHER INVESTMENT TECHNIQUES. Municipal Bond Fund may purchase a right to sell a
security held by it back to the issuer or to another party at an agreed upon
price at any time during a stated period or on a certain date. These rights may
be referred to as "liquidity puts" or "standby commitments."
MUNICIPAL SECURITIES. Municipal securities are generally issued to finance
public works such as airports, bridges, highways, housing, hospitals, mass
transportation projects, schools, streets, and water and sewer works. They are
also issued to repay outstanding obligations, to raise funds for general
operating expenses, and to make loans to other public institutions and
facilities.
Municipal securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.
The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.
INVESTMENT RISKS. Yields on municipal securities depend on a variety of factors,
including: the general conditions of the money market and the taxable and
municipal bond markets; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of Municipal Bond Fund to
achieve its investment objective also depends on the continuing ability of the
issuers of municipal securities and participation interests, or the guarantors
of either, to meet their obligations for the payment of interest and principal
when due.
PORTFOLIO INVESTMENTS AND STRATEGIES
BORROWING. Each of the Portfolios is permitted as a fundamental investment
policy to borrow money for temporary purposes from banks or through reverse
repurchase agreements (arrangements in which a Portfolio sells a portfolio
instrument for a percentage of its cash value with an agreement to buy it back
on a set date) in amounts of up to one-third of its total assets, and pledge
some assets as collateral. This policy cannot be changed without the approval of
holders of a majority of the Portfolios' outstanding shares.
COMMON AND PREFERRED STOCKS. Since certain of the Portfolios contain common
stocks of foreign and domestic issuers, an investment in shares of the Portfolio
should be made with an understanding of the risks inherent in any investment in
common stocks including the risk that the financial condition of the issuers of
the securities may become impaired or that the general condition of the stock
market may worsen (both of which may contribute directly to a decrease in the
value of the securities and thus in the value of the shares). Additional risks
include risks associated with the right to receive payments from the issuer
which is generally inferior to the rights of creditors of, or holders of debt
obligations or preferred stock issued by, the issuer. Holders of common stocks
have a right to receive dividends only when, if, and in the amounts declared by
the issuer's board of directors and to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preferred stocks usually have the
right to receive dividends at a fixed rate when and as declared by the issuer's
board of directors, normally on a cumulative basis. Dividends on cumulative
preferred stock must be paid before any dividends are paid on common stock and
any cumulative preferred stock dividend which has been omitted is added to
future dividends payable to the holders of such cumulative preferred stock.
Preferred stocks are also usually entitled to rights on liquidation which are
senior to those of common stocks. For these reasons, preferred stocks generally
entail less risk than common stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Portfolio thus may be expected to fluctuate over the life of the
Portfolio.
CONVERTIBLE SECURITIES. The convertible securities in which certain of the
Portfolios may invest include any debt securities or preferred stock which may
be converted into common stock or which carry the right to purchase common
stock. Convertible securities entitle the holder to exchange the securities for
a specified number of shares of common stock, usually of the same company, at
specified prices within a certain period of time. Convertible securities
generally have paid dividends or interest at rates higher than common stocks but
lower than non-convertible securities. They usually participate to a lesser
degree in the appreciation or the depreciation of the underlying stock into
which they are convertible. The convertible securities in which the Portfolios
may invest must be rated, at the time of purchase, BBB or higher by Standard &
Poor's Ratings Group ("S&P") or Baa or higher by Moody's Investors Service, Inc.
("Moody's"), or, if unrated, be of comparable quality as determined by the
Portfolio's Adviser. (If a security's rating is reduced below the required
minimum after the Portfolio has purchased it, the Portfolio is not required to
sell the security, but may consider doing so.) Bonds rated BBB by S&P or Baa by
Moody's have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to weakened capacity to make
principal and interest payments than higher rated bonds.
WARRANTS. Certain of the Portfolios may invest in warrants, which entitle the
holder to buy common stock from the issuer at a specific price (the strike
price) for a specific period of time (generally two or more years). The strike
price of warrants sometimes is much lower than the current market price of the
underlying securities, yet warrants are subject to similar price fluctuations.
As a result, warrants may be more volatile investments than the underlying
securities.
Warrants do not entitle the holder to dividends or voting rights with respect to
the underlying securities and do not represent any rights in the assets of the
issuing company. Also, the value of the warrant does not necessarily change with
the value of the underlying securities and a warrant ceases to have value if it
is not exercised prior to the expiration date.
DEBT OBLIGATIONS. The Portfolios may invest in debt obligations, including
bonds, notes, and debentures of corporate issuers or governments, which may have
floating or fixed rates of interest.
FIXED RATE DEBT OBLIGATIONS. The Portfolios may invest in fixed rate debt
obligations, including fixed rate debt securities with short-term
characteristics. Fixed rate securities with short-term characteristics are
long-term debt obligations but are treated in the market as having short
maturities because call features of the securities may make them callable
within a short period of time. A fixed rate security with short-term
characteristics would include a fixed income security priced close to call
or redemption price or fixed income security approaching maturity, where
the expectation of call or redemption is high.
Fixed rate securities exhibit more price volatility during times of rising
or falling interest rates than securities with floating rates of interest.
This is because floating rate securities, as described below, behave like
short-term instruments in that the rate of interest they pay is subject to
periodic adjustments based on a designated interest rate index. Fixed rate
securities pay a fixed rate of interest and are more sensitive to
fluctuating interest rates. In periods of rising interest rates the value
of a fixed rate security is likely to fall. Fixed rate securities with
short-term characteristics are not subject to the same price volatility as
fixed rate securities without such characteristics. Therefore, they behave
more like floating rate securities with respect to price volatility.
FLOATING RATE DEBT OBLIGATIONS. The Portfolios may invest in floating rate
debt obligations, including increasing rate securities. Floating rate
securities are generally offered at an initial interest rate which is at or
above prevailing market rates. The interest rate paid on these securities
is then reset periodically (commonly every 90 days to an increment over
some predetermined interest rate index). Commonly utilized indices include
the three-month Treasury bill rate, the 180-day Treasury bill rate, the
one-month or three-month London Interbank Offered Rate (LIBOR), the prime
rate of a bank, the commercial paper rates, or the longer-term rates on
U.S. Treasury securities. Increasing rate securities' rates are reset
periodically at different levels on a predetermined scale. These levels of
interest are ordinarily set at progressively higher increments over time.
Some increasing rate securities may, by agreement, revert to a fixed rate
status. These securities may also contain features which allow the issuer
the option to convert the increasing rate of interest to a fixed rate under
such terms, conditions, and limitations as are described in each issuer's
prospectus.
DEPOSITARY RECEIPTS. The International Fund may invest in foreign issuers by
purchasing Depositary Receipts (sponsored or unsponsored ADRs, GDRs and EDRs).
ADRs are depositary receipts typically issued by a U.S. bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. EDRs and GDRs are typically issued by foreign banks or trust
companies, although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either a foreign or a
United States corporation. Generally, Depositary Receipts in registered form are
designed for use in the U.S. securities market and Depositary Receipts in bearer
form are designed for use in securities markets outside the United States.
Depositary Receipts may not necessarily be denominated in the same currency as
the underlying securities into which they may be converted. Ownership of
unsponsored Depositary Receipts may not entitle a Portfolio to financial or
other reports from the issuer of the underlying security, to which it would be
entitled as the owner of sponsored Depositary Receipts. Depositary Receipts also
involve the risks of other investments in foreign securities.
DERIVATIVES. Certain of the Portfolios may invest in various instruments that
are commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset, or market index. There are in fact many different types of
derivatives and many different ways to use them. Such derivative transactions
may be used to adjust the risk and return characteristics of a Portfolio or to
adjust the overall exposure to certain markets. However, these techniques or
investments may result in a loss, regardless of whether the intent was to reduce
risk or increase return, with unexpected changes in market conditions or if the
counterparty to the transaction does not perform as promised. Additionally,
these techniques or investments may increase volatility of a Portfolio and may
involve a small investment of cash relative to the magnitude of the risk
assumed. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or for cash management purposes as a low cost method of
gaining exposure to a particular securities market without investing directly in
those securities. The Portfolios may use derivatives for hedging purposes, cash
management purposes and as a substitute for investing directly in equity
instruments or other securities. A description of the derivatives that the
Portfolios may use and some of their associated risks follows.
ILLIQUID INVESTMENTS; PRIVATELY PLACED AND OTHER UNREGISTERED SECURITIES. The
Portfolios may not acquire any illiquid securities if, as a result thereof, more
than 15% of the market value of the Portfolios' net assets would be in illiquid
investments. Subject to this non-fundamental policy limitation, the Portfolios
may acquire investments that are illiquid or have limited liquidity, such as
private placements or investments that are not registered under the Securities
Act of 1933 (the "1933 Act") and cannot be offered for public sale in the United
States without first being registered under the 1933 Act. An illiquid investment
is any investment that cannot be disposed of within seven days in the normal
course of business at approximately the amount at which it is valued by the
Portfolios. The price the Portfolios pay for illiquid securities or receives
upon resale may be lower than the price paid or received for similar securities
with a more liquid market. Accordingly the valuation of these securities will
reflect any limitations on their liquidity.
The Portfolios may also purchase Rule 144A securities sold to institutional
investors without registration under the 1933 Act. These securities may be
determined to be liquid in accordance with guidelines established by the Adviser
and approved by the Directors. The Directors will monitor the Adviser's
implementation of these guidelines on a periodic basis.
The Portfolios may invest in securities listed on a securities exchange or
traded in an over-the-counter market, and may invest in certain restricted or
unlisted securities.
INVESTMENT COMPANY SECURITIES. The Portfolios may invest their assets in
securities of other investment companies as an efficient means of carrying out
their investment policies. It should be noted that investment companies incur
certain expenses, such as management fees, and, therefore, any investment by the
Portfolios in shares of other investment companies may be subject to such
duplicate expenses. LENDING PORTFOLIO SECURITIES. In order to generate
additional income, each of the Portfolios is permitted as a fundamental
investment policy to lend portfolio securities on a short-term or long-term
basis, or both, up to one-third of the value of their respective total assets to
broker/dealers, banks, or other institutional borrowers of securities. The
Portfolios will only enter into loan arrangements with broker/dealers, banks, or
other institutions which the Adviser has determined are creditworthy under
guidelines established by the Directors and will receive collateral in the form
of cash or U.S. government securities equal to at least 100% of the value of the
securities loaned. Collateral received in the form of cash may be invested in
highly liquid investments, including repurchase agreements and other money
market instruments. There is the risk that when lending portfolio securities,
the securities may not be available to the Portfolios on a timely basis and the
Portfolios may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of securities would
file for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
OPTIONS AND FUTURES TRANSACTIONS. The Growth Opportunity Fund, Core Equities
Fund and Fixed Income Fund may use financial futures contracts, options on
futures contracts, call and put options on securities and financial indices
(collectively, "futures and options"). Futures contracts provide for the sale by
one party and purchase by another party of a specified amount of a specific
security at a specified future time and price. An option is a legal contract
that gives the holder the right to buy or sell a specified amount of the
underlying security or futures contract at a fixed or determinable price upon
the exercise of the option. A call option conveys the right to buy and a put
option conveys the right to sell a specified quantity of the underlying
instrument.
The use of options and futures is a highly specialized activity which involves
investment strategies and risks different from those associated with ordinary
portfolio securities transactions, and there can be no guarantee that their use
will increase a Portfolio's return. While the use of these instruments by the
Portfolios may reduce certain risks associated with owning its portfolio
securities, these techniques themselves entail certain other risks. If the
Adviser applies a strategy at an inappropriate time or judges market conditions
or trends incorrectly, options and futures strategies may lower the Portfolios'
return. Certain strategies limit the Portfolios' potential to realize gains as
well as limit its exposure to losses. The Portfolios could also experience
losses if the prices of its options and futures positions were poorly correlated
with its other investments. There can be no assurance that a liquid market will
exist at a time when a Portfolio seeks to close out a futures contract or a
futures option position. Most futures exchanges and boards of trade limit the
amount of fluctuation permitted in futures contract prices during a single day;
once the daily limit has been reached on a particular contract, no trades may be
made that day at a price beyond that limit. In addition, certain of these
instruments are relatively new and without a significant trading history. As a
result, there is no assurance that an active secondary market will develop or
continue to exist. Lack of a liquid market for any reason may prevent the
Portfolios from liquidating an unfavorable position and the Portfolios would
remain obligated to meet margin requirements until the position is closed. In
addition, the Portfolios will incur transaction costs, including trading
commissions and options premiums, in connection with its futures and options
transactions, and these transactions could significantly increase the
Portfolios' turnover rate.
The Portfolios will not enter into futures contracts or options thereon to the
extent that its outstanding obligations to purchase securities under these
contracts in combination with its outstanding obligations with respect to
options transactions would exceed 35% of its total assets. The Portfolios will
use financial futures contracts and related options only for "bona fide hedging"
purposes, as such term is defined in applicable regulations of the Commodity
Futures Trading Commission, or, with respect to positions in financial futures
and related options that do not qualify as "bona fide hedging" positions, will
enter such non-hedging positions only to the extent that assets committed to
initial margin deposits on such instruments, plus premiums paid for open futures
options positions, less the amount by which any such positions are
"in-the-money", do not exceed 5% of the Portfolios' net assets. The Portfolios
will segregate assets or "cover" their positions consistent with requirements
under the 1940 Act.
PORTFOLIO TURNOVER. Purchases and sales are made for the Portfolios whenever
necessary, in the Adviser's opinion, to meet the Portfolios' objectives. The
estimated portfolio turnover rate for the Core Equities Fund, Fixed Income Fund
and Municipal Bond Fund should not exceed 50%, 70% and 25%, respectively.
Portfolio turnover may involve the payment by the Portfolios' of dealer spreads
or underwriting commissions, and other transaction costs, on the sale of
securities, as well as on the investment of the proceeds in other securities.
The greater the portfolio turnover the greater the transaction costs to the
Portfolios which could have an effect on the Portfolios' total rate of return.
RATINGS. Securities rated in the fourth highest investment grade category (Baa
by Moody's, or BBB by S&P and Fitch) have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than higher rated
securities. The Appendix to the Statement of Additional Information contains a
complete description of ratings.
The Portfolios' Adviser will evaluate downgraded securities on a case-by-case
basis. The Adviser will determine whether or not the security continues to be a
permitted investment. If not, the security will be sold.
REPURCHASE AGREEMENTS. The securities in which the Portfolios invest may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell U.S. government securities or other securities to a Portfolio
and agree at the time of sale to repurchase them at a mutually agreed upon time
and price. To the extent that the original seller does not repurchase the
securities from a Portfolio, the Portfolio could receive less than the
repurchase price on any sale of such securities.
SHORT SALES. The Core Equities Fund may make short sales. A short sale occurs
when a borrowed security is sold in anticipation of a decline in its price. If
the decline occurs, shares equal in number to those sold short can be purchased
at the lower price. If the price increases, the higher price must be paid. The
purchased shares are then returned to the original lender. Risk arises because
no loss limit can be placed on the transaction. When the Portfolio enters into a
short sale, assets equal to the market price of the securities sold short or any
lesser price at which the Portfolio can obtain such securities, are segregated
on the Portfolio's records and maintained until the Portfolio meets its
obligations under the short sale.
TEMPORARY INVESTMENTS. Each portfolio may maintain up to 100% of its assets in
Money Market Instruments for temporary, defensive purposes. This reserve
position provides flexibility in meeting redemptions, expenses, and the timing
of new investments, and serves as a short-term defense during periods of unusual
market volatility. The Money Market Instruments for the Core Equities, Growth
Opportunity and Fixed Income Funds include obligations of the U.S. government
and its agencies and instrumentalities, other short-term debt securities which
are rated in the two top categories by Moody's or S&P or, if unrated, are of
comparable quality as determined by the Adviser, commercial paper, bank
obligations and money market mutual funds. The Money Market Instruments for
International Fund include domestic and foreign government obligations, bank
obligations, commercial paper and short-term securities which are rated in the
top two categories by Moody's or S&P or, if unrated, are of comparable quality
as determined by the Adviser. The money market investments for Municipal Bond
Fund include taxable or tax-exempt obligations of the U.S. government and its
agencies and instrumentalities, short-term debt securities of municipal or
corporate issuers, domestic and foreign government obligations, bank
obligations, commercial paper and short-term securities which are rated in the
two top categories by Moody's or S&P or, if unrated of comparable quality as
determined by the Adviser. Although Municipal Bond Fund is permitted to make
temporary, taxable investments, there is no current intention of generating
income subject to federal regular income tax.
U.S. GOVERNMENT SECURITIES. The Portfolios may invest in U.S. government
securities which include:
o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
o notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;
o notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
o notes, bonds, and discount notes of other U.S. government instrumentalities
supported by the credit of the instrumentalities.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These instrumentalities are supported by:
o the issuer's right to borrow an amount limited to a specific line of credit
from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
o the credit of the agency or instrumentality.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolios may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take as long as a month or more after the date of the
purchase commitment. The value of these securities is subject to market
fluctuation during this period and for fixed income investments no interest
accrues to the Portfolios until settlement. At the time of settlement, a
when-issued security may be valued at less than its purchase price. The
Portfolios maintain with the custodian a separate account with a segregated
portfolio of securities in an amount at least equal to these commitments. When
entering into a when-issued or delayed delivery transaction, the Portfolios will
rely on the other party to consummate the transaction; if the other party fails
to do so, the Portfolios may be disadvantaged. It is the current policy of the
Portfolios not to enter into when-issued commitments exceeding in the aggregate
15% of the market value of the Portfolios' total assets less liabilities other
than the obligations created by these commitments.
ZERO COUPON SECURITIES. The Fixed Income Fund may invest in zero coupon bonds.
The Portfolio may invest in zero coupon bonds in order to receive the rate of
return through the appreciation of the bond. This application is extremely
attractive in a falling rate environment as the price of the bond rises rapidly
in value as opposed to regular coupon bonds. A zero coupon bond makes no
periodic interest payments and the entire obligation becomes due only upon
maturity.
Zero coupon securities are debt securities which are issued at a discount to
their face amount and do not entitle the holder to any periodic payments of
interest prior to maturity. Rather, interest earned on zero coupon securities
accretes at a stated yield until the security reaches its face amount at
maturity. In addition, zero coupon securities usually have put features that
provide the holder with the opportunity to sell the bonds back to the issuer at
a stated price before maturity.
Generally, the price of zero coupon securities are more sensitive to
fluctuations in interest than are conventional bonds and convertible securities.
In addition, federal tax law requires the holder of a zero coupon security to
recognize income from the security prior to the receipt of cash payments. To
maintain its qualification as a regulated investment company and to avoid
liability of federal income taxes, the Portfolio will be required to distribute
income accrued from zero coupon securities which it owns, and may have to sell
portfolio securities (perhaps at disadvantageous times) in order to generate
cash to satisfy these distribution requirements.
ADDITIONAL INVESTMENT RISKS
DEBT MARKET. In the debt market, prices move inversely to interest rates. A
decline in market interest rates results in a rise in the market prices of
outstanding debt obligations. Conversely, an increase in market interest rates
results in a decline in market prices of outstanding debt obligations. In either
case, the amount of change in market prices of debt obligations in response to
changes in market interest rates generally depends on the maturity of the debt
obligations: the debt obligations with the longest maturities will experience
the greatest market price changes.
The market value of debt obligations, and therefore each Portfolio's net asset
value, will fluctuate due to changes in economic conditions and other market
factors such as interest rates which are beyond the control of the Portfolios'
Adviser. The Portfolios' Adviser could be incorrect in its expectations about
the direction or extent of these market factors. Although debt obligations with
longer maturities offer potentially greater returns, they have greater exposure
to market price fluctuation. Consequently, to the extent a Portfolio is
significantly invested in debt obligations with longer maturities, there is a
greater possibility of fluctuation in a Portfolio's net asset value.
HIGH YIELD DEBT OBLIGATIONS. Debt obligations that are not determined to be
investment grade are high-yield, high-risk bonds, typically subject to greater
market fluctuations and greater risk of loss of income and principal due to an
issuer's default. To a greater extent than investment-grade bonds, lower-rated
bonds tend to reflect short-term corporate, economic and market developments, as
well as investor perceptions of the issuer's credit quality. In addition,
lower-rated bonds may be more difficult to dispose of or to value than
higher-rated, lower-yielding bonds.
STOCK MARKET. As with other mutual funds that invest primarily in equity
securities, the Growth Opportunity Fund, International Fund and Core Equities
Fund are subject to market risks. That is, the possibility exists that common
stocks will decline over short or even extended periods of time, and the United
States equity market tends to be cyclical, experiencing both periods when stock
prices generally increase and periods when stock prices generally decrease.
Stocks in the small and medium capitalization sector of the United States equity
market tend to be slightly more volatile in price than larger capitalization
stocks, such as those included in the S&P 500. This is because, among other
things, small-and medium-sized companies have less certain growth prospects than
larger companies, have a lower degree of liquidity in the equity market, and
tend to have a greater sensitivity to changing economic conditions. Further, in
addition to exhibiting slightly higher volatility, the stocks of small- and
medium-sized companies may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stocks of small-and medium-sized
companies may decline in price as the price of large company stocks rises or
vice versa.
INVESTMENT RESTRICTIONS
As a diversified investment company, 75% of the total assets of each of the
Portfolios is 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.
Each of the Portfolios 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, each of the Portfolios 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 (ii) below. However,
although not a fundamental policy of International Fund, as a matter of
operating policy in order to comply with certain state statutes,
International Fund will not pledge its assets in excess of an amount
equal to 10% of net assets; or
(ii) 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 (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. Each of the
Portfolios will not:
(a) 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
(b) purchase securities while borrowings exceed 5% of its total assets.
If a percentage restriction (except (ii) 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
Adviser of the Portfolios. The Adviser 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 Adviser
supervises all aspects of the Portfolios' operations and provides investment
advice and portfolio management services to the Portfolios. Subject to the
supervision of the Fund's Board of Directors, the Adviser makes the Portfolios'
day-to-day investment decisions with respect to all purchases and sales,
arranges for the execution of portfolio transactions and generally manages the
Portfolios' investments. The Adviser also provides supervisory personnel who are
responsible for supervising the performance of the Portfolios' administrator.
However, the administrator, Federated Administrative Services (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 International Fund. Mr. Trott joined the Adviser in 1992, and
was a chief investment officer for Klienwort Benson International Investment
LTD. since 1988, where he managed investments for clients with similar
objectives to those of the Portfolio.
Mr. Harry P. Rekas is primarily responsible for the day-to-day investment
management of the Growth Opportunity Fund. Mr. Rekas has been managing equity
portfolios since 1981, when he joined Oppenheimer Capital Corporation. Most
recently he managed the Capital Appreciation portfolio at AIG Investment
Management Corporation. The portfolio had assets in excess of $300 million and
was focused on small and mid capitalization equities. In addition to his
investment management experience, Mr. Rekas has been a commercial lender with
Fidelity Bank and assistant treasurer with Computer Science Corporation. Mr.
Rekas graduated from the Wharton School of the University of Pennsylvania, where
he majored in Finance, and he earned an MBA degree from Pepperdine University.
Mr. John D. Chadwick is primarily responsible for the day-to-day investment
management of the Core Equities Fund. Prior to joining Bessemer, Mr. Chadwick
served as Senior Vice President and Senior Portfolio Manager at Kidder Peabody &
Co. from 1985 through 1994. His previous experience includes serving as a Vice
President and Senior Portfolio Manager with Citibank, N.A.'s Institutional
Investment Division and, prior to that, Senior Investment Analyst with Union
Carbide Corp. Mr. Chadwick received a B.A. in Economics from Harvard University
and an M.B.A. in Industrial Management from the Wharton School of Finance &
Commerce of the University of Pennsylvania.
Mr. Harold S. Woolley is primarily responsible for the day-to-day
investment management of the Fixed Income Fund. Mr. Woolley has headed the fixed
income investments group at Bessemer since 1985. Prior to joining Bessemer in
1985, Mr. Woolley was a managing director and head of fixed income investments
for the Equitable Investment Management Corp. and a Vice President of the
Equitable Life Assurance Society of the U.S. Mr. Woolley graduated with an A.B.
from Bucknell University, and holds an M.B.A. from the Amos Tuck School of
Graduate Business, Dartmouth College. Mr. Woolley is a Chartered Financial
Analyst.
Mr. Bruce A. Whiteford is primarily responsible for the day-to-day
investment management of the Municipal Bond Fund. Prior to joining Bessemer in
1996, Mr. Whiteford oversaw $5 billion in fixed income investments as Vice
President, Manager-U.S. Fixed Income Funds Group, Chase Asset Management, a
division of Chase Manhattan Bank, N.A. from 1986 to 1996. From 1980 to 1986, Mr.
Whiteford worked at U.S. Trust Company where he was a Vice President, Portfolio
manager in the fixed income department. Prior to joining U.S. Trust, Mr.
Whiteford worked for Moody's Investor Service as a statistical credit analyst.
Mr. Whiteford graduated from the University of South Carolina with a B.S. in
Finance.
Due to the services performed by the Adviser 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.
The Adviser, along with its associated entities, 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
Adviser's business, the Bessemer banks at present provide investment, fiduciary
and personal banking services to approximately 900 clients with total assets
under management of about $14.9 billion, approximately $1.7 billion of which is
represented by investments in foreign securities, and $840 million of which is
represented by investments in emerging growth securities. The banks have offices
in New York, New York; Washington, D.C.; Woodbridge, New Jersey; Palm Beach,
Florida; Miami, Florida; Naples, Florida; Chicago, Illinois; Los Angeles,
California; San Francisco, California; London, England and Grand Cayman, Cayman
Islands B.W.I. The Adviser's address is 630 Fifth Avenue, New York, New York
10111. As of December 2, 1997, Bessemer Trust Company, Woodbridge, New Jersey,
held 98.37% of the voting securities of the Growth Opportunity Fund and 94.03%
of the voting securities of the International Fund under the nominee name Naidot
& Co. for its customers, and therefore, may, for certain purposes, be deemed to
control the Growth Opportunity Fund and International Fund and be able to affect
the outcome of certain matters presented for a vote of shareholders.
The Adviser may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with the Portfolios. 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 Adviser to allocate advisory recommendations and the placing of
orders in a manner which is deemed equitable by the Adviser to the accounts
involved, including the Portfolios. When two or more of the clients of the
Adviser, including a 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 Portfolios. Under
those provisions, subject to applicable law and procedures adopted by the Board
of Directors, the Adviser 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 Adviser to be useful or desirable for its
investment management of the Portfolios and/or other advisory accounts of itself
and any investment adviser affiliated with it; and (ii) consider the sales of
shares of the Portfolios 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 Adviser,
the Portfolios pay the Adviser a fee, computed daily and payable monthly, in
accordance with the following schedule:
The Core Equities Fund - .70% of the first $100 million of Portfolio's average
net assets, .65% of the second $100 million of the Portfolio's average net
assets; and .60% of the Portfolio's average net assets exceeding $200 million;
The Growth Opportunity Fund and International Fund - .80% of the first $100
million of the Portfolios' average net assets, .75% of the second $100 million
of the Portfolios' average net assets, and .70% of the Portfolio's average net
assets exceeding $200 million; and
The Fixed Income Fund and Municipal Bond Fund - .45% of the first $100 million
of the Portfolios' average net assets, .40% of the second $100 million of the
Portfolios' average net assets, and .35% of the Portfolio's average net assets
exceeding $200 million.
The Statement of Additional Information contains further information about the
Advisory Contract including a more complete description of the advisory and
expense arrangements.
Pursuant to the Portfolios' Distribution and Service Plan, the Adviser will also
act as a shareholder servicing agent for the Portfolios pursuant to which the
Portfolios are permitted to pay the Adviser a maximum of 0.25% per annum of the
Portfolios' average daily net assets to compensate it and to permit the Adviser
to compensate banks and other financial institutions (the Adviser 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 Adviser 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 Portfolios, compensating others, including
banks, broker-dealers and other organizations whose customers or clients are
shareholders of the Portfolios for providing assistance in distributing the
Portfolios' shares and defraying the cost of shareholder servicing and other
promotional activities. See "Distribution and Service Plan."
The Portfolios are responsible for payment of their expenses, including, without
limitation, the following types of expenses: fees payable to the Adviser,
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 Adviser, the Administrator
or their affiliates; costs of other personnel providing administrative and
clerical services; costs of shareholder services, including charges and expenses
of persons providing confirmations of transactions in the Portfolios' shares,
periodic statements to shareholders and recordkeeping services and costs of
shareholders' 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 1940 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 Portfolios' shares and for the printing of the Portfolios'
prospectus 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" herein and in the Statement of Additional Information.
THE ADMINISTRATOR
Federated Administrative Services, the Administrator, has its principal office
at Federated Tower, Pittsburgh, Pennsylvania 15222-3779.
Pursuant to the Administrative Services Agreement with the Portfolios, the
Administrator provides the overall administration of the Portfolios, 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
Portfolios; the preparation and filing of all documents required for compliance
by the Portfolios with applicable laws and regulations; providing equipment and
clerical personnel necessary for maintaining the organization of the
Portfolios'; preparation of certain documents in connection with meetings of the
Board of Directors and shareholders; and the maintenance of books and records of
the Portfolios. 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 each Portfolio a fee accrued daily and paid monthly
at an annual rate equal to:
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE FUND
.15% on the first $250 million
.125% on the next $250 million
.10% on the next $250 million
.075% on assets in excess of $750 million
The administrative services fee received during any fiscal year shall be at
least $75,000 per Portfolio. Federated Administrative Services may choose to
voluntarily waive a portion of its fee at any time.
DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 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 Portfolios' and, pursuant to
the Plan, the Portfolios have entered into a Distribution Agreement and a
Shareholder Servicing Agreement with the Distributor and a Shareholder Servicing
Agreement with the Adviser.For its services under its Shareholder Servicing
Agreement, the Distributor is permitted to receive payments from the Portfolios
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 Portfolios' average
daily net assets attributable to the clients of these Broker-Dealers. For its
services under its Shareholder Servicing Agreement, the Adviser is permitted to
receive a payment from the Portfolios of 0.25% per annum of the Portfolios'
average daily net assets attributable to the clients of the Adviser (and its
affiliates) to compensate it for providing shareholder services to such clients.
In addition, the Shareholder Servicing Agreement provides that the Adviser is
permitted to receive payments from the Portfolios (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 Portfolios' 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 Adviser will not exceed 0.25% of the net assets of the Portfolios.
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 Portfolios may be effected and certain other matters pertaining to the
Portfolios; 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 Portfolios) monthly and year-end statements and
confirmation of purchases and redemptions; transmit, on behalf of the
Portfolios, proxy statements, annual reports, updating prospectuses and other
communications from the Portfolios to shareholders of the Portfolios; receive,
tabulate and transmit to the Portfolios proxies executed by shareholders with
respect to meeting of shareholders of the Portfolios; and provide such other
related services as the Portfolios 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 Adviser) receives
a fee, which may be paid periodically, on an annual basis equal to 0.25% of the
average daily net assets of the Portfolios 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 Portfolios
for its distribution, promotional and advertising costs incurred in connection
with the distribution of the Portfolios' shares in an amount not to exceed 0.10%
per annum of each Portfolio's average daily net assets (the "Distribution
Reimbursement").
Under the Distribution Agreement, the Distributor, for nominal consideration and
as agent for the Portfolios, will solicit orders for the purchase of the
Portfolios' shares, provided that any subscriptions and orders will not be
binding on the Portfolios until accepted by the Portfolios 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 Portfolios 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
Adviser under its Shareholder Servicing Agreement, and (ii) typesetting,
printing and delivering the Portfolios' prospectus to existing shareholders of
the Portfolios 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 Portfolios' average daily net assets.
The maximum amount payable under the Plan is 0.40% per annum of the average net
assets of each Portfolio.
The Plan, the Shareholder Servicing Agreements and the Distribution Agreement
each provide that the Adviser 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 Adviser has entered into written
agreements, for performing shareholder servicing and related administrative
functions on behalf of the Portfolios; to compensate certain financial
intermediaries for providing assistance in distributing the Portfolios' shares;
to pay the costs of printing and distributing the Portfolios' 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
Portfolios' shares. The Distributor or the Adviser, 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 Portfolios are required to pay to the Distributor
or Adviser 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
Portfolios directly may impose charges, limitations, minimums and restrictions
in addition to or different from those applicable to shareholders who invest in
the Portfolios directly. Accordingly, the net yield to investors who invest
through Shareholder Servicing Agents and Broker-Dealers may be less than by
investing in the Portfolios 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 Portfolios or their shareholders.
PURCHASE OF SHARES
Shares of the Portfolios may be purchased at net asset value 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 New York Stock Exchange ("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 Portfolios. The Portfolios or the Distributor 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 Portfolios.
HOW TO PURCHASE SHARES
All funds received by the Portfolios are invested in full and fractional shares
of the Portfolios. 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
accounts and each shareholder receives a statement of transactions, holdings and
dividends. The Portfolios reserve the right to reject any purchase. Shares of
the Portfolios 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 Portfolios. 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 7 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 Portfolios 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.
Shareholders wishing to purchase shares of the Portfolios through the
Distributor must complete a Purchase Application accompanying this Prospectus
and mail it together with a check payable to the name of the Portfolio to:
Old Westbury Funds, Inc.
P.O. Box 926
New York, NY 10159-0926
Subsequent investments in the Portfolios 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
Services, 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 a 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.
REDEMPTION OF SHARES
Upon receipt by the Portfolios of a redemption request in proper form, shares of
the Portfolios will be redeemed at their next determined net asset value. 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.
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 7 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 Portfolios 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 a Portfolio to employ such procedures may cause a
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
more than one owner of the shares, all must sign). In cases where the amount
redeemed exceeds $50,000, 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 Portfolios' 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 Portfolios
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 a Portfolio
at:
Old Westbury Funds, Inc.
P.O. Box 926
New York, NY 10159-0926
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 Portfolios; 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 Portfolios not reasonably practicable.
To minimize expenses, the Portfolios reserve the right to redeem, upon not less
than 30 days written notice to shareholders, all shares of the Portfolios 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
Portfolios. 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 tax
purposes.
EXCHANGE OF SHARES
An investor may, without cost, exchange shares of any Portfolio of the Fund into
any other Portfolio of the Fund, subject to the $1,000 minimum initial
investment requirement for each 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 Portfolios' 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 all Portfolios except the Municipal Bond Fund. Because of the
Municipal Bond Fund's tax-free nature, it may not be a suitable investment for
retirement plans. 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. 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 $4,000 annually to either or both IRAs 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
800-607-2200.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the Portfolios
on their 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
Portfolios 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 Portfolios in writing at any time prior to the record date for a
particular dividend or distribution. There are no 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 Portfolios will pay any dividends or realize any capital gains. The
Portfolios anticipate paying income and capital gains distributions, if any, on
a quarterly 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
Portfolios. 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 Portfolios intend to qualify for and elect the special tax treatment
applicable to "regulated investment companies." To qualify as a regulated
investment company, the Portfolios must meet certain complex tests concerning
its investments and distributions. It is anticipated that the Portfolios 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.
However, shareholders of the Municipal Bond Fund are not required to pay the
federal regular income tax on any dividends received from the Municipal Bond
Fund that represent net interest on tax-exempt municipal bonds; but, under the
Tax Reform Act of 1986, dividends representing net interest earned on certain
"private-activity" municipal bonds may be included in calculating the federal
individual alternative minimum tax or the federal alternative minimum tax for
corporations. Dividends of the Municipal Bond Fund representing net interest
income earned on some temporary taxable investments and any realized net
short-term gains are taxed 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 gains. 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 Portfolios appreciate in
value, purchasers of shares of the Portfolios 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. Distributions may also be
subject to state and local taxation and shareholders should consult their own
tax advisers in this regard.
The Portfolios are 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 Portfolios may from time to time include their yield, total return, average
annual total return, and, with respect to the Municipal Bond Fund, its
tax-equivalent yield in advertisements or information furnished to present or
prospective shareholders. The Portfolios 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
Portfolios may be compared to the Standard & Poor's 500 Stock Index, Dow Jones
Industrial Average, Wilshire 2000, Lipper General Municipal Bond Index, Lehman
Government/Corporate Bond Index, and the Europe, Australia and Far East Index.
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 a 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 Portfolios includes three steps: (1)
adding to the total number of shares purchased by the hypothetical investment in
a Portfolio of $1,000 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 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 Portfolios compute 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. A
Portfolio's yield will vary from time to time depending upon market conditions,
the composition of a Portfolio and operating expenses of a Portfolio. The
tax-equivalent yield is calculated similarly to the yield, but is adjusted to
reflect the taxable yield that the Municipal Bond Fund would have had to earn to
equal its actual yield, assuming a specific tax rate.
Total return, yield and tax-equivalent yield may be stated with or without
giving effect to any expense limitations in effect for the Portfolios.
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on August 26,
1993 and 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 each Portfolio and which are sent to
shareholders.
As a general matter, the Fund will not hold annual or other meetings of the
Portfolios' shareholders. This is because the By-laws of the Fund provide for
meetings only: (a) for the election of directors as required by the 1940 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 1940 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 ten percent of all the votes entitled to be cast
at such meeting. The Portfolios' 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 Portfolios. 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 1940 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 Portfolios 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
Shares of the Portfolios are sold at net asset value without a sales charge. The
net asset value of the Portfolios' 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 Portfolios' net
assets (i.e., the value of a Portfolio's 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 Portfolios are valued in such manner as the Board
of Directors in good faith deems appropriate to reflect their fair value.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Bessemer Trust Company (New Jersey) is custodian for the Portfolios' cash and
securities. The Portfolios' custodian does not assist in, and is not responsible
for, investment decisions involving assets of the Portfolios. Fundamental
Shareholder Services, Inc., whose principal address is 11 West 25th Street, 7th
Floor, New York, NY 10010-2001, is the Portfolios' transfer and dividend
disbursing agent.
<PAGE>
OLD WESTBURY FUNDS, INC.
Old Westbury Core Equities Fund
Old Westbury Growth Opportunity Fund
Old Westbury International Fund
Old Westbury Fixed Income Fund
Old Westbury Municipal Bond Fund
Prospectus
February ____, 1998
Adviser:
Bessemer Trust Company, N.A
630 Fifth Avenue
New York, New York 10111
(212) 708-9100
Administrator:
Federated Administrative Services
Federated Investors Tower
Pittsburgh, Pennsylvania 15222
(412) 288-1900
Distributor:
Edgewood Services, Inc.
Federated Tower
Pittsburgh, Pennsylvania
(412) 288-1900
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 Adviser, 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.
TABLE OF CONTENTS (To be added)
OLD WESTBURY FUNDS, INC.
Old Westbury Core Equities Fund
Old Westbury International Fund
Old Westbury Growth Opportunity Fund
Old Westbury Fixed Income Fund
Old Westbury Municipal Bond Fund
(each a "Portfolio" and collectively the "Portfolios")
Federated Tower
Pittsburgh, Pennsylvania 15222-3779
Telephone: (800) 607-2200
Statement of Additional Information
February __, 1998
This Statement of Additional Information is not a prospectus and is only
authorized for distribution when preceded or accompanied by the prospectuses
(each a "Prospectus") for the Portfolios listed above. The prospectus for each
portfolio is dated February __, 1998. 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
Portfolios at the address and telephone number set forth above.
TABLE OF CONTENTS
PAGE
INVESTMENT OBJECTIVE AND POLICIES 1
DESCRIPTION OF EACH PORTFOLIO'S INVESTMENT SECURITIES AND RISK FACTORS 1
INVESTMENT RESTRICTIONS 12
DIRECTORS AND OFFICERS 14
ADVISER..... 15
ADMINISTRATOR 17
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT 18
DISTRIBUTION AND SERVICE PLAN 19
BROKERAGE AND PORTFOLIO TURNOVER 22
COUNSEL AND INDEPENDENT AUDITORS 23
PURCHASE AND REDEMPTION OF SHARES 23
DESCRIPTION OF COMMON STOCK 23
PERFORMANCE. 24
NET ASSET VALUE 24
TAX STATUS . 25
DESCRIPTION OF CORPORATE DEBT RATINGS 29
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Old Westbury Core Equities Fund ("Core Equities Fund"), Old Westbury
Growth Opportunities Fund ("Growth Opportunities Fund") and Old Westbury
International Fund ("International Fund") each 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 Adviser believes it is advisable to do so. Each such
Portfolio may also invest in debt securities as described in their respective
Prospectus. Investments in debt securities are consistent with the Portfolios'
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. Old Westbury Fixed Income Fund ("Fixed Income Fund") will
normally invest in debt securities, and Old Westbury Municipal Bond Fund
("Municipal Bond Fund") will normally invest in municipal securities.
Each Portfolio intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). Each Portfolio will be restricted in that, at the close of each quarter
of the taxable year, at least 50% of the value of each 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 each 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 each
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 EACH PORTFOLIO'S INVESTMENT SECURITIES AND RISK FACTORS
The following discussion is additional disclosure that supplements the
Portfolios' Prospectus and should be read in conjunction with the current
Prospectus. The material relating to the risk factors pertaining to the
securities invested by each Portfolio set forth in its Prospectus is herein
incorporated by reference. Capitalized terms not otherwise defined herein have
the meanings accorded to them in the Portfolios' Prospectus. The Fund's
executive offices are located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779.
Foreign Securities.
Investments are made primarily in those regions where, in the opinion of the
Portfolios' Adviser, there are opportunities to achieve superior investment
returns relative to other investment opportunities outside the United States.
The International Fund does not, however, generally invest in debt or equity
securities of U.S. issuers. The International Fund emphasizes those industrial
sectors of the world's market which, in the opinion of its Adviser, 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.
Since investments in foreign securities may involve foreign currencies, the
value of a Portfolio's assets as measured in U.S. dollars may be affected
favorably or unfavorably by changes in currency rates and exchange control
regulations, including currency blockage. The International Fund may enter into
forward commitments for the purchase or sale of foreign currencies in connection
with the settlement of foreign securities transactions or to manage the
International Fund's currency exposure related to foreign investments as
described in the the Prospectus.
The Portfolios, other than the Municipal Bond Fund, may invest in certain
foreign securities; however, the only foreign securities the Growth Opportunity
Fund may invest in are securities of Canadian based companies (see "Canadian
Companies" in the Prospectus). Investment in securities of foreign issuers and
in obligations of foreign branches of domestic banks involves somewhat different
investment risks from those affecting securities of U.S. domestic issuers. There
may be limited publicly available information with respect to foreign issuers,
and foreign issuers are not generally subject to uniform accounting, auditing
and financial standards and requirements comparable to those applicable to
domestic companies. Dividends and interest paid by foreign issuers may be
subject to withholding and other foreign taxes which may decrease the net return
on foreign investments as compared to dividends and interest paid to the
Portfolios by domestic companies.
Investors should realize that the value of the Portfolios' 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 Portfolios' 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. Any foreign investments made by the Portfolios must be made in
compliance with U.S. foreign currency restrictions and tax laws restricting the
amounts and types of foreign investments.
In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of domestic security exchanges. Accordingly, the Portfolios' foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. Moreover, the settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. In buying and selling
securities on foreign exchanges, purchasers normally pay fixed commissions that
are generally higher than the negotiated commissions charged in the United
States. In addition, there is generally less government supervision and
regulation of securities exchanges, brokers and issuers located in foreign
countries than in the United States.
The International Fund may invest in American Depositary Receipts ("ADRs"),
European Depositary Receipts ("EDRs") or other similar securities of foreign
issuers. These securities may not necessarily be dominated in the same currency
as the securities they represent. ADRs are receipts typically issued by a U.S.
bank or trust company evidencing ownership of the underlying foreign securities.
Certain such institutions issuing ADRs may not be sponsored by the issuer of the
underlying foreign securities. A non-sponsored depository may not provide the
same shareholder information that a sponsored depository is required to provide
under its contractual arrangements with the issuer of the underlying foreign
securities. EDRs are receipts issued by a European financial institution
evidencing a similar arrangement. Generally, ADRs, in registered form, are
designed for use in the U.S. securities markets, and EDRs, in bearer form, are
designed for use in European securities markets.
<PAGE>
Money Market Instruments
As discussed in each Portfolio's respective Prospectus, each Portfolio may
invest in money market instruments to the extent consistent with its investment
objective and policies. A description of the various types of money market
instruments that may be purchased by a Portfolio appears below.
U.S. Treasury Securities
The Portfolios may invest in direct obligations of the U.S. Treasury,
including Treasury bills, notes and bonds, all of which are backed as to
principal and interest payments by the full faith and credit of the United
States.
Additional U.S. Government Obligations
The Portfolios may invest in obligations issued or guaranteed by U.S.
Government agencies or instrumentalities. These obligations may or may not be
backed by the "full faith and credit" of the United States. In the case of
securities not backed by the full faith and credit of the United States, the
Portfolios must look principally to the federal agency issuing or guaranteeing
the obligation for ultimate repayment, and may not be able to assert a claim
against the United States itself in the event the agency or instrumentality does
not meet its commitments. Securities in which the Portfolios may invest that are
not backed by the full faith and credit of the United States include, but are
not limited to, obligations of the Federal Home Loan Mortgage Corporation and
the U.S. Postal Service, each of which has the right to borrow from the U.S.
Treasury to meet its obligations. Securities in which the Portfolios may invest
that are not backed by the full faith and credit of the United States include
obligations of the Federal Farm Credit System and the Federal Home Loan Banks,
both of whose obligations may be satisfied only by the individual credits of
each issuing agency. Securities which are backed by the full faith and credit of
the United States include obligations of the Government National Mortgage
Association, the Farmers Home Administration, and the Export-Import Bank.
Bank Obligations
The Portfolios, unless otherwise noted in their Prospectus or below, may
invest in negotiable certificates of deposit, time deposits and bankers'
acceptances of (i) banks, savings and loan associations and savings banks which
have more than $2 billion in total assets (the "Asset Limitation") and are
organized under the laws of the United States or any state, (ii) foreign
branches of these banks or of foreign banks of equivalent size (Euros) and (iii)
U.S. branches of foreign banks of equivalent size (Yankees). The Portfolios will
not invest in obligations for which the Adviser, or any of its affiliated
persons, is the ultimate obligor or accepting bank. The Portfolios may also
invest in obligations of international banking institutions designated or
supported by national governments to promote economic reconstruction,
development or trade between nations (e.g., the European Investment Bank, the
Inter-American Development Bank, or the World Bank).
Commercial Paper
The Portfolios may invest in commercial paper, including master demand
obligations. Master demand obligations are obligations that provide for a
periodic adjustment in the interest rate paid and permit daily changes in the
amount borrowed. The commercial paper in which the Portfolios may invest must be
rated A-1 or A-2 by Standard & Poor's Rating Group ("S&P"), Prime-1 or Prime-2
by Moody's Investors Service, Inc. ("Moody's"), or F-1 or F-2 by Fitch Investors
Service, Inc. Master demand obligations are governed by agreements between the
issuer and Bessemer Trust Company, N.A., acting as agent, for no additional fee,
in its capacity as investment advisor to the Portfolios and as fiduciary for
other clients for whom it exercises investment discretion. The monies loaned to
the borrower come from accounts managed by the Adviser or its affiliates,
pursuant to arrangements with such accounts. Interest and principal payments are
credited to such accounts. The Adviser, acting as a fiduciary on behalf of its
clients, has the right to increase or decrease the amount provided to the
borrower under an obligation. The borrower has the right to pay without penalty
all or any part of the principal amount then outstanding on an obligation
together with interest to the date of payment. Since these obligations typically
provide that the interest rate is tied to the Federal Reserve commercial paper
composite rate, the rate on master demand obligations is subject to change.
Repayment of a master demand obligation to participating accounts depends on the
ability of the borrower to pay the accrued interest and principal of the
obligation on demand which is continuously monitored by the Adviser. Since
master demand obligations typically are not rated by credit rating agencies, the
Portfolios may invest in such unrated obligations only if at the time of an
investment the obligation is determined by the Adviser to have a credit quality
which satisfies the Portfolios' quality restrictions. Although there is no
secondary market for master demand obligations, such obligations are considered
by the Portfolios to be liquid because they are payable upon demand. The
Portfolios do not have any specific percentage limitation on investments in
master demand obligations.
Money Market Mutual Funds
The Portfolios, other than International Fund, may invest in securities of
money market mutual funds. See "Investment Company Securities" below.
Foreign Government Obligations
The International Fund, Growth Opportunity Fund and Fixed Income Fund,
subject to their applicable investment policies, may also invest in short-term
obligations of foreign sovereign governments or of their agencies,
instrumentalities, authorities or political subdivisions. These securities may
be denominated in the U.S. dollar or in another currency.
Foreign Currency Exchange Transactions and Options
Because the International Fund may buy and sell securities and receive
interest and dividends in currencies other than the U.S. dollar, the Portfolio
may from time to time enter into foreign currency exchange transactions. The
Portfolio either enters into these transactions on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market or uses forward
contracts to purchase or sell foreign currencies. The cost of the Portfolio's
spot currency exchange transactions is generally the difference between the bid
and offer spot rate of the currency being purchased or sold.
A forward foreign currency exchange contract is an obligation by a
Portfolio 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. Forward foreign currency
exchange contracts establish an exchange rate at a future date. These contracts
are derivative instruments, as their value derives from the spot exchange rates
of the currencies underlying the contract. These contracts are entered into in
the interbank market directly between currency traders (usually large commercial
banks) and their customers. A foreign currency exchange contract generally has
no deposit requirement and is traded at a net price without commission. The
Portfolios will not enter into forward contracts for speculative purposes.
Neither spot transactions nor forward foreign currency exchange contracts
eliminate fluctuations in the prices of a Portfolio's securities or in foreign
exchange rates, or prevent loss if the prices of these securities should
decline.
A Portfolio may enter into foreign currency exchange transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or
anticipated securities transactions. A Portfolio may also enter into forward
contracts to hedge against a change in foreign currency exchange rates that
would cause a decline in the value of existing investments denominated or
principally traded in a foreign currency. To do this, a Portfolio would enter
into a forward contract to sell the foreign currency in which the investment is
denominated or principally traded in exchange for the U.S. dollar or in exchange
for another foreign currency. A Portfolio will only enter into forward contracts
to sell a foreign currency in exchange for another foreign currency if the
Adviser expects the foreign currency purchased to appreciate against the U.S.
dollar.
Although these transactions are intended to minimize the risk of loss due
to a decline in the value of the hedged currency, at the same time they limit
any potential gain that might be realized should the value of the hedged
currency increase. In addition, forward contracts that convert a foreign
currency into another foreign currency will cause the Portfolio to assume the
risk of fluctuations in the value of the currency purchased vis a vis the hedged
currency and the U.S. dollar. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies will change as
a consequence of market movements in the value of such securities between the
date the forward contract is entered into and the date it matures. The
projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.
In using options as a hedge against changes in the value of foreign
currencies relative to the U.S. dollar, each Portfolio may trade exchange-traded
options on foreign currencies. A 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 a 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 a 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 a 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 a
Portfolio.
Warrants and Rights
The Growth Opportunity Fund, International Fund and Core Equities Fund may
invest in warrants. 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. Each Portfolio does not intend to purchase warrants and rights in
excess of 5% of each Portfolio's total assets.
Convertible Securities
Growth Opportunity Fund, International Fund and Core Equities Fund 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 S&P or "Baa" by Moody's or, if unrated, judged by the Adviser 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 capacity to pay interest and repay principal than are higher rated
debt securities.
In selecting convertible securities for each Portfolio, the Adviser 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. Each Portfolio will purchase
the convertible securities of highly leveraged issuers only when, in the
judgment of the Adviser, the risk of default is outweighed by the potential for
capital appreciation. Each Portfolio does not intend to purchase convertible
securities in excess of 5% of each Portfolio's total assets.
Risk Factors-Lower Rated Fixed Income Securities
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 Adviser has no control, whether or not based on
fundamental analysis, may decrease the market price and liquidity of such
investments. Although the Adviser will attempt to avoid exposing each 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 International Fund and Fixed Income Fund will not purchase or
hold more than 5% of its net assets in securities rated below investment grade.
The Growth Opportu nity Fund, Core Equities Fund and Municipal Bond Fund will
not invest 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 each Portfolio in the
disposal of such nonrated securities. There is no established secondary market
for many of these securities. The Adviser 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 each Portfolio upon such sale. Such sale may result in a
loss to each 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 S&P and Moody's.
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 each 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.
Corporate Reorganizations
Each Portfolio may invest in securities for which a tender or 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 Adviser, 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 Portfolios.
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 Adviser 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, each 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 Portfolios thereby increasing its
brokerage and other transaction expenses as well as make it more difficult for
the Portfolios 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 Adviser 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. Each Portfolio does not
intend to purchase these securities in excess of 5% of that Portfolio's total
assets.
Repurchase Agreements
Each Portfolio except Municipal Bond Fund 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., a 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. A 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. A 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 "1940 Act"), repurchase agreements are considered loans.
Repurchase agreements usually are for short periods, such as one week or less,
but could be longer. The Portfolios 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 that Portfolio's net assets would be so invested.
Under normal market conditions, the Portfolios do not intend to purchase
repurchase agreements in excess of 5% of that Portfolio's net assets.
Loans of Portfolio Securities
To increase income, the International Fund 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
rights in collateral should the borrower of the securities fail financially. The
International Fund does not currently intend to lend portfolio securities in
excess of 5% of its total assets. The Growth Fund does not currently intend to
lend portfolio securities.
Privately Placed and Certain Unregistered Securities
The Portfolios may invest in privately placed, restricted, Rule 144A or
other unregistered securities as described in the Prospectus.
As to illiquid investments, a Portfolio is subject to a risk that should
the Portfolio decide to sell them when a ready buyer is not available at a price
the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely affected. Where an illiquid security must be
registered under the Securities Act of 1933, as amended (the "1933 Act") before
it may be sold, a Portfolio may be obligated to pay all or part of the
registration expenses, and a considerable period may elapse between the time of
the decision to sell and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, a Portfolio might obtain a less
favorable price than prevailed when it decided to sell.
Short Sales
The Core Equities Fund will not sell securities short unless the Portfolio
(1) owns, or has a right to acquire, an equal amount of such securities, or (2)
has segregated an amount of its other assets equal to the lesser of the market
value of the securities sold short or the amount required to acquire such
securities. The segregated amount will not exceed 25% of the Portfolio's net
assets. While in a short position, the Portfolio will retain the securities,
rights, or segregated assets.
When-Issued and Delayed Delivery Transactions
These transactions are made to secure what is considered to be an
advantageous price or yield for the Portfolios. Settlement dates may be a month
or more after entering into these transactions, and the market values of the
securities purchased may vary from the purchase prices. No fees or other
expenses, other than normal transaction costs, are incurred. However, liquid
assets of a Portfolio sufficient to make payment for the securities to be
purchased are segregated on a Portfolio's records at the trade date. These
assets are marked to market daily and are maintained until the transaction has
been settled.
Mortgage-Backed Securities
Fixed Income Fund may invest in mortgage-backed securities. The following
is additional information about mortgage-backed securities.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). The following example
illustrates how mortgage cash flows are prioritized in the case of CMOs -
most of the CMOs in which the Fixed Income Fund invests use the same basic
structure: (1) Several classes of securities are issued against a pool of
mortgage collateral. A common structure may contain four classes of
securities. The first three (A, B, and C bonds) pay interest at their
stated rates beginning with the issue date, and the final class (Z bond)
typically receives any excess income from the underlying investments after
payments are made to the other classes and receives no principal or
interest payments until the shorter maturity classes have been retired, but
then receives all remaining principal and interest payments; (2) The cash
flows from the underlying mortgages are applied first to pay interest and
then to retire securities; (3) The classes of securities are retired
sequentially. All principal payments are directed first to the
shortest-maturity class (or A bond). When those securities are completely
retired, all principal payments are then directed to the next
shortest-maturity security (or B bond). This process continues until all of
the classes have been paid off.
Because the cash flow is distributed sequentially instead of pro rata, as
with pass-through securities, the cash flows and average lives of CMOs are
more predictable, and there is a period of time during which the investors
in the longer-maturity classes receive no principal paydowns. The interest
portion of these payments is distributed by the Portfolios as income, and
the capital portion is reinvested.
Asset-Backed Securities
Fixed Income Fund may invest in asset-backed securities. Asset-backed
securities are bonds or notes backed by loans or accounts receivable originated
by banks, or other credit providers or financial institutions. Asset-Backed
Securities may be pooled and then divided into classes of securities, known as
tranches, and resold. Each tranche has a specified interest rate and maturity.
The cash flows from the underlying pool of Asset-Backed Securities are applied
first to pay interest and then to retire securities. All principal payments are
directed first to the shortest-maturity tranche. When those securities are
completely retired, all principal payments are then directed to the
next-shortest-maturity tranche. This process continues until all of the tranches
have been completely retired.
Municipal Securities
Municipal Bond Fund invests in municipal securities. Examples of municipal
securities include, but are not limited to: tax and revenue anticipation notes
("TRANs") issued to finance working capital needs in anticipation of receiving
taxes or other revenues; tax anticipation notes ("TANs") issued to finance
working capital needs in anticipation of receiving taxes; revenue anticipation
notes ("RANs") issued to finance working capital needs in anticipation of
receiving revenues; bond anticipation notes ("BANs") that are intended to be
refinanced through a later issuances of longer-term bonds; municipal commercial
paper and other short-term notes; variable rate demand notes; municipal bonds
(including bonds having serial maturities and pre-refunded bonds) and leases;
construction loan notes insured by the Federal Housing Administration and
financed by the Federal or Government National Mortgage Associations; and
participation, trust and partnership interests in any of the foregoing
obligations. The Municipal Bond Fund's investments will consist of issues of
municipal securities representative of various areas of the U.S. and general
obligations of states, cities and school districts as well as some revenue
issues which meet the Portfolio's acceptable quality criteria.
MUNICIPAL LEASES. The Municipal Bond Fund may purchase municipal securities
in the form of participation interests that represent an undivided
proportional interest in lease payments by a governmental or nonprofit
entity. The lease payments and other rights under the lease provide for and
secure payments on the certificates. Lease obligations may be limited by
municipal charter or the nature of the appropriation for the lease. In
particular, lease obligations may be subject to periodic appropriation. If
the entity does not appropriate funds for future lease payments, the entity
cannot be compelled to make such payments. Furthermore, a lease may provide
that the participants cannot accelerate lease obligations upon default. The
participants would only be able to enforce lease payments as they became
due. In the event of a default or failure of appropriation, unless the
participation interests are credit enhanced, it is unlikely that the
participants would be able to obtain an acceptable substitute source of
payment.
Under the criteria currently established by the Directors, the Portfolio's
Adviser must consider the following factors in determining the liquidity of
municipal lease securities: (1) the frequency of trades and quotes for the
security; (2) the volatility of quotations and trade prices for the
security; (3) the number of dealers willing to purchase or sell the
security and the number of potential purchasers; (4) dealer undertakings to
make a market in the security; (5) the nature of the security and the
nature of the marketplace trades; (6) the rating of the security and the
financial condition and prospects of the issuer of the security; (7) such
other factors as may be relevant to the Funds' ability to dispose of the
security; (8) whether the lease can be terminated by the lessee; (9) the
potential recovery, if any, from a sale of the leased property upon
termination of the lease; (10) the lessee's general credit strength; (11)
the likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential to
its operations; and (12) any credit enhancement or legal recourse provided
upon an event of nonappropriation or other termination of the lease.
VARIABLE RATE MUNICIPAL SECURITIES. Variable interest rates generally
reduce changes in the market value of Municipal Securities from their
original purchase prices. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is less
for variable rate Municipal Securities than for fixed income obligations.
Many Municipal Securities with variable interest rates purchased by a Fund
are subject to repayment of principal (usually within seven days) on the
Municipal Bond Fund's demand. For purposes of determining the Portfolio's
average maturity, the maturities of these variable rate demand Municipal
Securities (including participation interests) are the longer of the
periods remaining until the next readjustment of their interest rates or
the periods remaining until their principal amounts can be recovered by
exercising the right to demand payment. The terms of these variable rate
demand instruments require payment of principal and accrued interest from
the issuer of the municipal obligations, the issuer of the participation
interests, or a guarantor of either issuer.
Municipal Bond Insurance
The Municipal Bond Fund may purchase municipal securities covered by
insurance which guarantees the timely payment of principal at maturity and
interest on such securities ("Policy" or "Policies"). These insured municipal
securities are either (1) covered by an insurance policy applicable to a
particular security, whether obtained by the issuer of the security or by a
third party ("Issuer-Obtained Insurance") or (2) insured under master insurance
policies issued by municipal bond insurers, which may be purchased by the
Portfolio. The premiums for the Policies may be paid by the Portfolio and the
yield on the Portfolio's investments may be reduced thereby.
The Portfolio may require or obtain municipal bond insurance when
purchasing municipal securities which would not otherwise meet the Portfolio's
quality standards. The Portfolio may also require or obtain municipal bond
insurance when purchasing or holding specific municipal securities, when, in the
opinion of the Portfolio's Adviser, such insurance would benefit the Portfolio
(for example, through improvement of portfolio quality or increased liquidity of
certain securities).
Issuer-Obtained Insurance policies are noncancellable and continue in
force as long as the municipal securities are outstanding and their respective
insurers remain in business. If a municipal security is covered by
Issuer-Obtained Insurance, then such security need not be insured by the
Policies purchased by a Fund.
The Portfolio may purchase two types of Policies issued by municipal bond
insurers. One type of Policy covers certain municipal securities only during the
period in which they are in the Portfolio's portfolio. In the event that a
municipal security covered by such a Policy is sold from the Portfolio, the
insurer of the relevant Policy will be liable for those payments of interest and
principal which are due and owing at the time of the sale.
The other type of Policy covers municipal securities not only while they
remain in the Portfolio's portfolio but also until their final maturity if they
are sold out of the portfolio, so that the coverage may benefit all subsequent
holders of those municipal securities. The Portfolio will obtain insurance which
covers municipal securities until final maturity even after they are sold out of
the Portfolio's portfolio only if, in the judgment of the Adviser, the Portfolio
would receive net proceeds from the sale of those securities, after deducting
the cost of such permanent insurance and related fees, in excess of the proceeds
the Portfolio would receive if such municipal securities were sold without
insurance. Payments received from municipal bond insurers may not be tax-exempt
income to shareholders of the Portfolio.
The Portfolio may purchase municipal securities insured by Policies from
MBIA Corp. ("MBIA"), AMBAC Indemnity Corporation ("AMBAC"), Financial Guaranty
Insurance Company ("FGIC"), or any other municipal bond insurer which is rated
AAA by S&P or Aaa by Moody's. Each Policy guarantees the payment of principal
and interest on those municipal securities it insures. The Policies will have
the same general characteristics and features. A municipal security will be
eligible for coverage if it meets certain requirements set forth in the Policy.
In the event interest or principal on an insured municipal security is not paid
when due, the insurer covering the security will be obligated under its Policy
to make such payment not later than 30 days after it has been notified by the
Portfolio that such non-payment has occurred. MBIA, AMBAC, and FGIC will not
have the right to withdraw coverage on securities insured by their Policies so
long as such securities remain in the Portfolio' portfolio, nor may MBIA, AMBAC,
or FGIC cancel their Policies for any reason except failure to pay premiums when
due.
MBIA, AMBAC, and FGIC will reserve the right at any time upon 90 days'
written notice to the s to refuse to insure any additional municipal securities
purchased by the Portfolio after the effective date of such notice. The
Portfolio reserves the right to terminate any of the Policies if they determine
that the benefits to the Portfolio of having its portfolio insured under such
Policy are not justified by the expense involved.
Additionally, the reserve the right to enter into contracts with insurance
carriers other than MBIA, AMBAC, or FGIC if such carriers are rated AAA by S&P
or Aaa by Moody's.
INVESTMENT RESTRICTIONS
Each Portfolio has adopted the following investment restrictions which may not
be changed without the approval of the "majority of the outstanding shares" of
that Portfolio (as defined in the Prospectus). Under such fundamental
restrictions, each 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 a 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, and except that a deposit or payment by such Portfolio
of initial or variation margin in connection with futures contracts or related
options transactions is not considered the purchase of a security on margin.
2. Lend portfolio securities of value exceeding in the aggregate one-third of
the market value of a 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. With respect to Core Equities Fund, Growth
Opportunity Fund, Fixed Income Fund and Municipal Bond Fund initial or variation
margin for futures contracts will not be deemed to be pledges of a Portfolio's
assets.
4. Act as an underwriter of securities of other issuers, except insofar as a
Portfolio may be deemed an underwriter under the 1933 Act 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
International Fund may purchase and write options on foreign currencies or enter
into forward delivery contracts for foreign currencies and may also purchase
foreign index contracts, and Core Equities Fund, Growth Opportunity Fund Fixed
Income Fund and Municipal Bond Fund may enter into financial futures contracts.
7. Issue senior securities, except insofar as the Portfolios may be deemed to
have issued a senior security in connection with any permitted borrowing;
8. Core Equities Fund, Growth Oppportunities Fund, Fixed Income Fund and
Municipal Bond Fund will not Invest 25% or more of the value of its total assets
in any particular industry or groups of related industries; and Municipal Bond
Fund will not invest 25% or more of its total assets in any one industry or in
industrial development bonds or other securities, the interest on which is paid
from reverse as of similar type projects.
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. Each Portfolio will not:
1. Invest more than 15% of the market value of the Portfolios' net assets in
illiquid investments including repurchase agreements maturing in more than seven
days;
2. Invest in securities of other investment companies, except (a) with respect
to International Fund, 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 1940 Act; and (b) with respect to Core Equities Fund,
Growth Opportunity Fund, Fixed Income Fund and Municipal Bond Fund, (i) not more
than 5% of the value of the Portfolio's total assets will be invested in the
securities of any one investment company, (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group, and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Portfolio, unless the
Portfolio is permitted to exceed these limitations by the Securities and
Exchange Commission. Growth Opportunity Fund will limit its investments in the
securities of other investment companies consistent with the Portfolio's
investment policies.
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 a Portfolio's investment securities will
not be considered a violation of a Portfolio's restrictions.
<PAGE>
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 1940 Act are indicated by
an asterisk. Unless otherwise indicated below, the address of each Director and
officer is Old Westbury Funds, Inc. c/o Federated Administrative Services,
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779.
ROBERT M. KAUFMAN (age 68) - Director.
Chairman of the Board and Director; Partner, Proskauer Rose LLP, Attorneys at
Law. His principal address is 1585 Broadway, New York, NY 10036.
JOHN KEVIN KENNY (age 60) - Director.
Director; President and Chief Executive Officer, Christina Holdings, Inc.
(since June 1995); Principal, Real Estate Investments (since 1992); President
and Chief Executive Officer, J.J. Kenny Co., Inc. Kenny Information Services,
Inc. (from 1961 to 1992). His principal address is 2000 PGA Boulevard, Suite
3220, P.O. Box 13076, North Palm Beach, FL 33408.
HOWARD D. GRAVES (age 57) - Director.
Director; Chairman of the Board, Recycling Holdings, Inc. (since 1996);
Director, Recycling Holdings, Inc. (from 1995 to 1996); and Superintendent,
United States Military Academy, West Point, New York (Lieutenant General, U.S.
Army) (from 1991 to 1996). His principal address is 2101 Kings Mill Court, Falls
Church, VA 22043.
EDWARD C. GONZALES (age 67) - President, Treasurer and Principal Financial
Officer.
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated Research
Corp., Federated Global Research Corp. and Passport Research, Ltd.; Executive
Vice President and Director, Federated Securities Corp.; Trustee, Federated
Shareholder Services Company; Trustee or Director of funds distributed by
Federated Securities Corp. and Edgewood Services, Inc.; President, Executive
Vice President and Treasurer of funds distributed by Federated Securities Corp.
and Edgewood Services, Inc.
C. CHRISTINE THOMSON (age 40) - Vice President and Assistant Treasurer.
Vice President and Assistant Treasurer of funds distributed by Federated
Securities Corp. and Edgewood Services, Inc.
C. GRANT ANDERSON (age 57) - Secretary.
Corporate Counsel, Federated Investors.
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
Pension or Total
Retirement Compensation
Aggregate Benefits Estimated From
Compensation Accrued as Annual Fund and Fund
Name of from part of Portfolio Benefits Upon Complex Paid
Director the Fund Expenses Retirement to Directors
<S> <C> <C> <C> <C>
Howard D. Graves _______ _______ _______ _______
Robert M. Kaufman _______ _______ _______ _______
John Kevin Kenny _______ _______ _______ _______
</TABLE>
The compensation table above reflects the fees received by the Directors from
the Fund for fiscal year ended October 31, 1997. All the Directors are not
"interested persons" (as defined in the 1940 Act) of the Fund and each will
receive an annual retainer of $5,000 to be paid in quarterly installments of
$1,250 and $500 per meeting, plus reasonable expenses.
As of December 2, 1997, all Directors and officers as a group owned less than 1%
of each Portfolio's outstanding shares.
As of December 2, 1997, the following shareholders of record owned more than 5%
of the Portfolios' outstanding shares: Bessemer Trust Company, 100 Woodbridge
Center Drive, Woodbridge, New Jersey 07095-1191 held approximately 4,841,974
shares (98.37%) of the Growth Opportunity Fund under the nominee name Naidot &
Co. for its customers.
Bessemer Trust Company, 100 Woodbridge Center Drive, Woodbridge, New Jersey
07095-1191 held approximately 13,459,934 shares (94.03%) of the International
Fund under the nominee name Naidot & Co. for its customers.
ADVISER
The Adviser to each Portfolio is Bessemer Trust Company, N.A., a national
banking association. Pursuant to the Advisory Contract for each Portfolio, the
Adviser 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 Adviser also provides each Portfolio with
supervisory personnel who are responsible for supervising the performance of the
Portfolios' 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 Adviser, of its affiliates or of other
organizations. The Advisory Contracts for the International Fund and for the
Growth Opportunity Fund were approved by their shareholders at meetings held on
October 12, 1993 and January 31, 1997, respectively, and the continuance of the
Advisory Contract for the International Fund was approved on August 8, 1996 by
the Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Adviser.
The Advisory Contract for the Growth Fund was approved on August 8, 1996 by the
Board of Directors, including a majority of the disinterested directors. The
Advisory Contract for the Core Equities Fund, Fixed Income Fund and Municipal
Bond Fund was approved on ____________, 1997 by the Board of Directors,
including a majority of the disinterested directors. The Advisory Contract for
the Core Equities Fund, Fixed Income Fund and Municipal Bond Fund was approved
by their shareholders at a meeting held on ________________.
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 a 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 Adviser on sixty days'
written notice, and will automatically terminate in the event of an "assignment"
(as defined in the 1940 Act). The Advisory Contract provides that in the absence
of willful misfeasance, bad faith or gross negligence on the part of the
Adviser, or of reckless disregard of its obligations thereunder, the Adviser
shall not be liable for any action or failure to act in accordance with its
duties thereunder.
Each Portfolio has, under the Advisory Contract, confirmed its obligation for
payment of all its other expenses, including without limitation: fees payable to
the Adviser, 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 Adviser, 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 1940 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 each 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." Each Portfolio also reimburses the Adviser for
all of that Portfolio's operating costs, including rent, depreciation of
equipment and facilities, interest and amortization of loans financing equipment
used by a Portfolio and all the expenses incurred to conduct that Portfolio's
affairs. The amounts of such reimbursements must be agreed upon between each
Portfolio and the Adviser. The Adviser at its discretion may voluntarily waive
all or a portion of the advisory fee and the operating expense reimbursement.
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 Adviser receives from each
Portfolio an advisory fee, computed daily and payable monthly, in accordance
with the following schedule:
The Core Equities Fund - .70% of the first $100 million of the Portfolio's
average net assets, .65% of the second $100 million of the Portfolio's average
net assets; and .60% of the Portfolio's average net assets exceeding $200
million;
The Growth Opportunity Fund and International Fund - .80% of the first $100
million of the Portfolios' average net assets, .75% of the second $100 million
of the Portfolios' average net assets; and .70% of the Portfolio's average net
assets exceeding $200 million; and
The Fixed Income Fund and Municipal Bond Fund - .45% of the first $100 million
of the Portfolios' average net assets, .40% of the second $100 million of the
Portfolios' average net assets; and .35% of the Portfolio's average net assets
exceeding $200 million.
For the fiscal years ended October 31, 1995, 1996, and 1997, the International
Fund accrued $771,294, $990,632, and $_____________, respectively, in advisory
fees, of which $91,974, $29,346, and $________________ respectively, were
permanently and irrevocably waived.
For the period from January 31, 1997 (commencement of operations) to October 31,
1997, the Growth Opportunity Fund accrued $______________ in advisory fees, of
which $____________________ was permanently and irrevocably waived.
Any portion of the total fees received by the Adviser may be used by the Adviser
to provide distribution, shareholder and administrative services. Pursuant to
the Fund's Distribution and Service Plan, the Adviser will also act as a
shareholder servicing agent for each Portfolio pursuant to which the Portfolios
are permitted to pay the Adviser a maximum of 0.25% per annum of that
Portfolio's average daily net assets to compensate it and to permit the Adviser
to compensate banks, savings and loans and other financial institutions (the
Adviser with such other institutions, each a "Shareholder Servicing Agent")
whose clients are Fund shareholders for providing shareholder services. The
Adviser 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 each Portfolio, compensating others, including banks, broker-dealers
and other organizations whose customers or clients are shareholders of the
Portfolios for providing assistance in distributing each 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 each Portfolio is Federated Administrative Services
("Federated" or the "Administrator"), which has its principal office at
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The
Administrator serves as administrator of other mutual funds. 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 Portfolios, the
Administrator provides all management and administrative services reasonably
necessary for each Portfolio, other than those provided by the Adviser, subject
to the supervision of the Fund's Board of Directors. Because of the services
rendered each Portfolio by the Administrator and the Portfolios' Adviser, 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 each Portfolio
by the Administrator, the Portfolios pays the Administrator a fee as described
in the prospectus.
For the fiscal years ended October 31, 1995 and 1996, the International Fund
accrued $143,716, and $175,182, respectively, in administrative services with
the former Administrator, Signature Broker-Dealer Services, Inc. ("Signature"),
of which, $84, and $0, respectively, was permanently and irrevocably waived. For
the fiscal year ended October 31, 1997, the International Fund accrued
$______________ in administrative services with Federated, of which
$_____________ was permanently and irrevocable waived. For the period from
January 31, 1997 (commencement of operations) to October 31, 1997, the Growth
Opportunity Fund accrued $__________ in administrative services with Federated,
of which $________________ was permanently and irrevocably waived.
Under the Administrative Services Agreement with the Portfolios, 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 each Portfolio, including maintaining certain books and
records described in Rule 31a-1 under the 1940 Act (except for those records
maintained by each Portfolio's Shareholder Servicing Agents or each Portfolio's
transfer agent), and reconciling account information and balances among each
Portfolio's custodian and Adviser; (ii) oversees the performance of
administrative and professional services to each Portfolio by others, including
each 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 Portfolios' 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 each 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 1940 Act to be acted upon by the Board;
(vi) monitors daily and periodic compliance with respect to all requirements and
restrictions of the 1940 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 after August 31, 1998, without the payment of any penalty, by a vote of
the majority of the Fund's shareholders, by the Fund on behalf of the Portfolios
or the Administrator on six month's written notice. After August 31, 1998, 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 Portfolios' custodian. Pursuant to a Custodian
Agreement with the Portfolios, it is responsible for maintaining the books and
records of each Portfolio's securities and cash. Subject to the supervision of
the Adviser and Administrator, the custodian maintains each Portfolio's
accounting and portfolio transaction records. Fundamental Shareholder Services,
Inc., whose principal address is 11 West 25th Street, 7th Floor, New York, NY
10010-2001, is the Portfolios' 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 1940 Act (the "Rule") for the Portfolios. 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 each Portfolio may bear certain expenses and costs which in
the aggregate are subject to a maximum of 0.40% per annum of that Portfolio's
average daily net assets. Pursuant to the Plan, the Portfolios entered into a
Distribution Agreement and a Shareholder Servicing Agreement with Edgewood
Services, Inc. (the "Distributor") and the Portfolios also entered into a
Shareholder Servicing Agreement with the Adviser. For its services under its
Shareholder Servicing Agreement, the Distributor is permitted to receive
payments from each Portfolio up to 0.25% per annum of the average daily net
assets of that 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 Adviser is permitted to receive a payment
from each Portfolio equal to 0.25% per annum of that Portfolio's average daily
net assets attributable to the clients of the Adviser (and its affiliates) to
compensate it for providing shareholder services to such clients. In addition,
the Shareholder Servicing Agreement provides that the Adviser is permitted to
receive payments from each 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 that 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
Adviser will not exceed 0.25% of the total net assets of that Portfolio. For the
fiscal years ended October 31, 1995, and 1996, the International Fund accrued
$237,518 and $309,850, respectively, in shareholder servicing fees with
Signature. For the fiscal year ended October 31, 1997, the International Fund
accrued $______________ in shareholder servicing fees with the Distributor. For
the period from January 31, 1997 (commencement of operations) to October 31,
1997, the Growth Opportunity Fund accrued $___________________ in shareholder
servicing fees with the Distributor.
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
each Portfolio may be effected and certain other matters pertaining to each
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 a 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 each Portfolio, proxy statements,
annual reports, updating the prospectus and other communications from each
Portfolio to shareholders of that Portfolio; receive, tabulate and transmit to
each Portfolio proxies executed by shareholders with respect to meeting of
shareholders of that Portfolio; and provide such other related services as each
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 Adviser) receives a fee, which may be paid periodically, on an
annual basis equal to 0.25% of the average daily net assets of that 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 that Portfolio for its distribution, promotional and advertising
costs incurred in connection with the distribution of that Portfolio's shares in
an amount not to exceed 0.10% per annum of that Portfolio's average daily net
assets (the "Distribution Reimbursement"). For the fiscal years ended October
31, 1995, and 1996, the International Fund paid $7,002, and $5,739,
respectively, under the former Distribution Agreement with Signature. For the
fiscal year ended October 31, 1997, the International Fund paid $_____________
under the Distribution Agreement with Edgewood Services, Inc. For the period
from January 31, 1997 (commencement of operations) to October 31, 1997, the
Growth Opportunity Fund paid $_______________ under the Distribution Agreement
with Edgewood Services, Inc.
Under the Distribution Agreement and Shareholder Servicing Agreement, the
Distributor, for nominal consideration and as agent for each Portfolio, will
solicit orders for the purchase of each Portfolio's shares, provided that any
subscriptions and orders will not be binding on a Portfolio until accepted by
that 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, each 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
Adviser under its Shareholder Servicing Agent and (ii) preparing, printing and
delivering the Portfolios' prospectus to existing shareholders of the Portfolios
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 that Portfolio's average daily net assets. For the
fiscal years ended October 31, 1995, and 1996, the International Fund paid
$3,740, and $3,740, respectively, for such expenses with Signature. For the
fiscal year ended October 31, 1997, the International Fund paid $_____________
for such expenses with Federated. For the period from January 31, 1997
(commencement of operations) to October 31, 1997, the Growth Opportunity Fund
paid $________________ for such expenses with Federated.
The Plan, the Shareholder Servicing Agreements and the Distribution Agreement
each provide that the Adviser 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 Adviser has entered into written
agreements, for performing shareholder servicing and related administrative
functions on behalf of a Portfolio; to compensate certain financial
intermediaries for providing assistance in distributing a Portfolio's shares; to
pay the costs of printing and distributing the Portfolios' 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 a
Portfolio's shares. The Distributor or the Adviser, 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 a Portfolio is required to pay to the Distributor or
the Adviser 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 a
Portfolio directly may impose charges, limitations, minimums and restrictions in
addition to or different from those applicable to shareholders who invest in a
Portfolio directly. Accordingly, the net yield to investors who invest through
Shareholder Servicing Agents and Broker-Dealers may be less than by investing in
a Portfolio directly. An investor should read the respective 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 a Portfolio or its shareholders.
In accordance with the Rule, the Plan provides that all written agreements
relating to the Plan entered into by each Portfolio, the Distributor or the
Adviser, 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 each Portfolio and the Distributor to prepare, at
least quarterly, written reports setting forth all amounts expended for
distribution purposes by each 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 of the International Fund
approved the Plan at a meeting held on October 12, 1993. The Board of Directors
approved the continuation of the Plan and amended it to include the Growth Fund
on August 8, 1996. In addition, the Board of Directors approved an amendment and
restatement of the Plan to reflect the Distributor, Edgewood Services, Inc., at
a special meeting held on October 18, 1996. The shareholders of the
International Fund approved the Plan at a meeting held on October 12, 1993. The
Board of Directors most recently approved the continuation of the Plan and
amended it to include the Core Equities Fund, Fixed Income Fund and Municipal
Bond Fund at a meeting held on _______________, 1997. The shareholders of Core
Equites Fund, Fixed Income Fund and Municipal Bond Fund approved the
continuation of the Plan at a meeting held on ___________. The Plan further
provides that it may not be amended to increase materially the costs which may
be spent by a 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
each Portfolio or the shareholders.
From time to time, the Adviser and the Distributor may voluntarily assume
certain expenses of a 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 Adviser makes each 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 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 Adviser or portfolio transactions
may be effected by the Adviser. Neither a Portfolio nor the Adviser 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 Adviser for use
in rendering investment advice to a Portfolio, such information may be supplied
at no cost to the Adviser and, therefore, may have the effect of reducing the
expenses of the Adviser in rendering advice to that Portfolio. While it is
impossible to place an actual dollar value on such investment information, its
receipt by the Adviser probably does not reduce the overall expenses of the
Adviser 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 Adviser may consider sales of shares of a Portfolio as a
factor in the selection of brokers to execute portfolio transactions for the
Portfolios.
For the fiscal years ended October 31, 1995, 1996, and 1997, the aggregate
commissions paid from the International Fund were $325,787, $462,315, and
$_____________, respectively. For the period from January 31, 1997 (commencement
of operations) to October 31, 1997, the aggregate commissions paid from the
Growth Opportunity Fund were $_____________________.
The investment information provided to the Adviser is of the type described in
Section 28(e) of the Securities Exchange Act of 1934 and is designed to augment
the Adviser's own internal research and investment strategy capabilities.
Research services furnished by brokers through which each Portfolio effects
securities transactions are used by the Adviser 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 Adviser 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 Adviser
may consider the sale of shares of a Portfolio by brokers including the
Distributor as a factor in its selection of brokers of Portfolio transactions.
A 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, that 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,
each Portfolio will attempt to negotiate best execution.
Portfolio Turnover
Each 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 not expected to
exceed 100%. Purchases and sales are made for each Portfolio whenever necessary
in the Adviser's opinion, to meet that Portfolio's objective. Increased
portfolio turnover (over 100%) may increase the likelihood of additional capital
gains for a Portfolio. For the fiscal years ended October 31, 1996 and 1997, the
portfolio turnover rate for the International Fund was 55% and ______%,
respectively. For the period from January 31, 1997 (commencement of operations)
to October 31, 1997, the portfolio turnover rate for the Growth Opportunity Fund
was _____%.
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 each Portfolio.
PURCHASE AND REDEMPTION OF SHARES
The material relating to the purchase and redemption of shares in each
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 the State of 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. The
Growth Fund was designated as a separate series of the Fund on January 23, 1997,
by the filing of Articles Supplementary in the State of Maryland. The Core
Equities Fund, Fixed Income Fund and Muncipal Bond Fund were designated as
separate series of the Fund on ______________, by the filing of Articles
Supplementary in the State of Maryland. 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 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 each 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 1940 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 10 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 1940 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 Portfolios' performance in the Prospectus is herein
incorporated by reference. The Adviser may also include performance information
in such advertisements or information furnished to current or prospective
shareholders not only regarding the Adviser's performance since John Trott, the
International Fund's portfolio manager, joined the Adviser in 1992, but also
regarding Mr. Trott's personal investment performance since 1988 when, as chief
investment officer for Klienwort Benson International Investment LTD., he
managed investments for clients with similar objectives to those of the
International Fund. In addition, the Adviser may also include performance
information regarding the Adviser's performance since Harry Rekas, the Growth
Opportunity Fund's portfolio manager, joined the Adviser in 1996, but also
regarding Mr. Rekas' personal investment performance since 1993 when he managed
the Capital Appreciation portfolio of AIG Investment Management Corporation, a
portfolio which was focused on small and mid-capitalization equities. Also, the
Adviser may include performance information regarding the Adviser's performance
since John D. Chadwick, the Core Equities Fund's portfolio manager, Harold S.
Woolley, the Fixed Income Fund's portfolio manager and Bruce A. Whiteford, the
Municipal Bond Fund's portfolio manager joined the Adviser, but also regarding
Mr. Chadwick's personal investment performance while at Kidder Peabody & Co.,
Mr. Woolley's personal investment performance while at Equitable Investment
Management Corp., and Mr. Whiteford's personal investment performance while at
Chase Manhattan Bank, N.A.
NET ASSET VALUE
For purposes of determining each Portfolio's net asset value per share, readily
marketable portfolio securities listed on an 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 Adviser 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 each
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, Martin Luther King 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 federal income tax consequences
of the purchase, ownership and disposition of shares of a 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 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.
A Portfolio intends to qualify for and elect the special tax treatment
applicable to "regulated investment companies" under Sections 851-855 of the
Code. If a 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 a 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. It is anticipated that each Portfolio
will not be subject to federal income tax or the excise tax. Distribution of
each 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 each
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.
Each 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 each 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 each 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 that substantially all of the distributions of each Portfolio's
taxable income (other than net capital gain distributions) will be taxable as
ordinary income to Shareholders.
Distributions of each Portfolio's net capital gain (designated as capital gain
dividends by that 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 each Portfolio with
respect to stock held by that 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 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 that 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 each Portfolio from foreign issuers will in
most cases be subject to foreign withholding taxes. A 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 that
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 a Portfolio and to the tax
treatment of distributions by that Portfolio to U.S. Shareholders. Shareholders
who are not United States citizens or residents should be aware that
distributions from each 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 a 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 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
a Portfolio and gain from the sale of Shares in that Portfolio or that
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 each 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 a Portfolio; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of a
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 a Portfolio.
TAX-EQUIVALENT YIELD (MUNICIPAL BOND FUND ONLY)
The tax-equivalent yield of the Municipal Bond Fund is calculated similarly to
the yield, but is adjusted to reflect the taxable yield that this Portfolio
would have had to earn to equal its actual yield, assuming a 39.6% tax rate (the
maximum marginal federal rate for individuals) and assuming that income is 100%
tax-exempt.
TAX-EQUIVALENCY TABLE
The Municipal Bond Fund may also use a tax-equivalency table in advertising and
sales literature. The interest earned by the municipal bonds in the Portfolio's
portfolio generally remains free from federal income tax* and is often free from
state and local taxes as well. As the table on the next page indicates, a
"tax-free" investment is an attractive choice for investors, particularly in
times of narrow spreads between tax-free and taxable yields.
(TAX EQUIVALENCY TABLE FOR 1998 TO BE ADDED)
<PAGE>
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
edged." 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 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 Service, Inc.'s
publications. 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 RATINGS GROUP AAA: Bonds rated AAA have the highest
rating assigned by Standard & Poor's Ratings Group("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.
Cusip 680414109 Cusip 680414208 Cusip __________ Cusip __________ Cusip
__________ G02009-04 (2/98)
OLD WESTBURY FUNDS, INC.
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. To be filed be amendment.
(b) Exhibits.
(1) Form of Articles of Incorporation of the Registrant.
(2) Copy of By-laws of the Registrant; 3.
(3) Not applicable.
(4) Not applicable.
(5)(i) Conformed copy of Advisory Contract between the Registrant,
on behalf of the International Fund, and Bessemer Trust
Company, N.A.; 3.
(ii) Conformed copy of Advisory Contract between the Registrant, on
behalf of the Growth Opportunity Fund, and Bessemer Trust Company,
N.A.; +.
(iii) Form of Advisory Contract between the Registrant, on behalf of the
Core Equities Fund, and Bessemer Trust Company,N.A.;+
(iv) Form of Advisory Contract between the Registrant, on behalf of the
Fixed Income Fund, and Bessemer Trust Company,N.A.;+
(v)Form of Advisory Contract between the Registrant, on behalf of the
Municipal Bond Fund, and Bessemer Trust Company,N.A.;+
(6)(i) See Conformed copy of Distribution Agreement filed as Exhibit
15(iii) herein; 5.
(7) Not applicable.
(8) Conformed copy of Custody Agreement between the Registrant
and Bessemer Trust Company (New Jersey); 1.
(9) Conformed copy of Administrative Services Agreement between the
Registrant and Federated Administrative Services for the Fund, on
behalf of the International Fund and Growth Opportunity Fund; 5.
(10) Conformed copy of 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; 1.
(11) Conformed copy of Consent of Independent Auditors; 5.
(12) Not applicable.
+ All exhibits have been filed electronically.
1. Incorporated herein by reference from Pre-Effective Amendment No. 1 to this
Registration Statement as filed with the SEC on October 5, 1993.
3 Incorporated herein by reference from Post-Effective Amendment No. 3 to
this Registration Statement as filed with the SEC on February 28, 1996.
4. Incorporated herein by reference from the Post-Effective Amendment No. 5 to
this Registration Statement as filed with the SEC on November 26, 1996.
5. Incorporated by reference from the Post-Effective Amendment No. 7 to this
Registration Statement as filed with the SEC on February 26, 1997.
<PAGE>
(13) Conformed copy of 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; 1.
(14) Not applicable.
(15)(i) Copy of Amended and Restated Distribution and Service Plan adopted
by the Registrant, on behalf of the International Fund, pursuant to
Rule 12b-1 under the Investment Company Act of 1940; 4.
(ii) Copy of Distribution and Service Plan adopted by the Registrant,
on behalf of the Growth Opportunity Fund, pursuant to Rule 12b-1
under the Investment Company Act of 1940; 4.
(iii) Copy of Distribution and Service Plan adopted by the Registrant,
on behalf of the Core Equities Fund, pursuant to Rule 12b-1 under
the Investment Company Act of 1940; +.
(iv) Copy of Distribution and Service Plan adopted by the Registrant,
on behalf of the Fixed Income Fund, pursuant to Rule 12b-1 under the
Investment Company Act of 1940; +.
(v) Copy of Distribution and Service Plan adopted by the Registrant,
on behalf of the Municipal Bond Fund, pursuant to Rule 12b-1 under
the Investment Company Act of 1940; +.
(vi) Conformed copy of Distribution Agreement between the
Registrant and Edgewood Services, Inc, on behalf of the
International Fund (Ex. A), and Growth Opportunity Fund
(Ex. B); 5.
(a) Form of Exhibit C to Distribution Agreement on behalf of Fixed
Income Fund; + (b) Form of Exhibit D to Distribution Agreement on
behalf of Core Equities Fund; + (c) Form of Exhibit E to Distribution
Agreement on behalf of Municipal Bond Fund; +
(vii) Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the International Fund, and Bessemer Trust
Company, N.A.; 1.
(viii) Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Growth Opportunity Fund, and Bessemer
Trust Company, N.A.; +.
(ix)Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Core Equities Fund, and Bessemer Trust
Company, N.A.; +.
+ All exhibits have been filed electronically.
1. Incorporated herein by reference from Pre-Effective Amendment No. 1 to this
Registration Statement as filed with the SEC on October 5, 1993.
4. Incorporated herein by reference from the Post-Effective Amendment No. to
this Registration Statement as filed with the SEC on November 26, 1996.
5. Incorporated by reference from the Post-Effective Amendment No. 7 to this
Registration Statement as filed with the SEC on February 26, 1997.
<PAGE>
(x) Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Fixed Income Fund, and Bessemer Trust
Company, N.A.; +.
(xi) Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Municipal Bond Fund, and Bessemer Trust
Company, N.A.; +.
(xii) Conformed copy of Amended and Restated Shareholder Servicing
Agreement between the Registrant, on behalf of the International
Fund, and Edgewood Services, Inc.; 4.
(xiii)Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Growth Opportunity Fund, and Edgewood
Services, Inc.; +.
(xiv) Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Core Equities Fund, and Edgewood
Services, Inc.; +.
(xv) Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Fixed Income Fund, and Edgewood
Services, Inc.; +.
(xvi) Conformed copy of Shareholder Servicing Agreement between the
Registrant, on behalf of the Municipal Bond Fund, and Edgewood
Services, Inc.; +.
(16)(i) Copy of Schedules of Computation of Performance Quotations;2.
(ii) Copy of Schedule of Computation of Fund Performance for Old
Westbury Growth Opportunity Fund; 6.
(17) Copy of Financial Data Schedules; 5.
(18) Not Applicable.
(19) Conformed copy of Power of Attorney; 5.
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 December 2, 1997
Common Stock
(par value $0.001)
Old Westbury International Fund 52
Old Westbury Growth Opportunity Fund 10
Old Westbury Large Cap Fund Not yet effective
Old Westbury Intermediate Income Fund Not yet effective
Old Westbury Municipal Bond Fund Not yet effective
+ All exhibits have been filed electronically.
4. Incorporated herein by reference from the Post-Effective Amendment No. 5 to
this Registration Statement as filed with the SEC on November 26, 1996.
5. Incorporated by reference from the Post-Effective Amendment No. 7 to this
Registration Statement as filed with the SEC on February 26, 1997.
6. Incorporated by reference from the Post-Effective Amendment No. 8 to this
Registration Statement as filed with the SEC on June 26, 1997.
<PAGE>
ITEM 27. INDEMNIFICATION. (5)
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.
- -----------------
5. Incorporated by reference from the Post-Effective Amendment No. 7 to this
Registration Statement as filed with the SEC on February 26, 1997.
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME INVESTMENT ADVISOR OTHER BUSINESS CONNECTIONS
<S> <C> <C>
Stuart S. Janney, III Chairman of Managing Director & Head of
the Board 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 Pres. Senior Vice President, Fleet Investment Services, Rhode Island
Brooks Carey Senior Vice Pres. Vice President, T. Rowe Price
John D. Chadwick Executive Vice Pres. Senior Vice President and President
Senior Portfolio Manager, Kidder Peabody & Co.
W. David Dary Senior Vice Pres. 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 Pres. Client Account Manager, Bankers Trust Company
Glenn E. Gray Vice President Area Manager - Corporate Finance, Finova Capital Corporation
Robert J. Hughes Vice President Vice President and Assistant Department Head, Fiduciary Special Services, Inc.
Timothy J. Morris Senior Exec. Vice Pres. CEO and Chief President Investment Officer, The Portfolio Group
Jane Reilly Vice President Vice President, U.S. Trust
Frederick H. Sandstrom Senior Vice Pres. Executive Vice President and Managing Director, Fleet Financial Group
</TABLE>
<PAGE>
Item 29. Principal Underwriters:
(a) Edgewood Services, Inc. the Distributor for shares of the
Registrant, acts as principal underwriter for the following
open-end investment companies, including the Registrant: BT
Advisor Funds, BT Institutional Funds, BT Investment Funds, BT
Pyramid Mutual Funds, Excelsior Funds, Excelsior Funds, Inc.,
(formerly, UST Master Funds, Inc.), Excelsior Institutional
Trust, Excelsior Tax-Exempt Funds, Inc. (formerly, UST Master
Tax-Exempt Funds, Inc.), Deutsche Portfolios, FTI Funds,
FundManager Portfolios, Great Plains Funds, Marketvest Funds,
Marketvest Funds, Inc., Robertsons Stephens Investment Trust,
WesMark Funds and WCT Funds.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Lawrence Caracciolo Director, President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
J. Christopher Donahue Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Schmitt Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Sholes Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas J. Ward Assistant Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Kenneth W. Pegher, Jr. Treasurer, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
<PAGE>
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Fundamental Shareholder 11 West 25th Street, 7th Floor
Services, Inc. New York, NY 10010-2001
("Transfer Agent and Dividend
Disbursing Agent")
Federated Administrative Services Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
Bessemer Trust Company, N.A. 630 Fifth Avenue
("Adviser") New York, NY 10111
Bessemer Trust Company(New Jersey) 100 Woodbridge Center
("Custodian") Woodbridge, NJ 07095
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Registrant hereby undertakes to file a post-effective amendment
on behalf of Old Westbury Core Equities Fund, Old Westbury Intermediate Income
Fund and Old Westbury Municipal Bond Fund ("Portfolios"), using financial
statements for the Portfolios which need not be certified, within four to six
months of the effective date of this Post Effective Amendment No. 9.
(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.
(e) Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, OLD WESTBURY FUNDS, INC. has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Pittsburgh
and Commonwealth of Pennsylvania, on the 8th day of December, 1997.
OLD WESTBURY FUNDS, INC.
By: /s/ C. Grant Anderson
C. Grant Anderson, Secretary
Attorney in Fact for Edward C. Gonzales
December 8, 1997
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.
NAME TITLE DATE
Edward C. Gonzales* President and Treasurer December 8, 1997
(Chief Executive Officer and
Principal Financial and
Accounting Officer)
Howard D. Graves* Director
Robert M. Kaufman* Director
John Kevin Kenny* Director
*By: /s/ C. GRANT ANDERSON
C. Grant Anderson
As Attorney-in-fact for Edward C. Gonzales
Exhibit 5(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADVISORY CONTRACT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Core Equities Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
1997
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 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 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 service 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: .70% of
the first $100 million of the Portfolio's average net assets; .65% of the second
$100 million of the Portfolio's average net assets; and .60% 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 month for which those
expenses are accrued, at the same time as we pay 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 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 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 , 1998 and shall continue in
effect until , 1999 and thereafter for successive twelve-month periods (computed
from each ), 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 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 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, 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 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, you will kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
OLD WESTBURY FUNDS, INC.
Old Westbury Core Equities Fund
By:
Name:
Title:
ACCEPTED: , 1998
BESSEMER TRUST COMPANY, N.A.
By:
Name:
Title:
Exhibit 5(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADVISORY CONTRACT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Emerging Growth Fund (the "Portfolio")
6 St. James Avenue
Boston, Massachusetts 02116
August 8, 1996
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 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 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 service 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 month for which those
expenses are accrued, at the same time as we pay 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 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 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 August 8, 1996 and shall
continue in effect until August 8, 1998 and thereafter for successive
twelve-month periods (computed from each August 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
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
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, 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 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, you will kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
OLD WESTBURY FUNDS, INC.
Old Westbury Emerging Growth Fund
By:/s/ Thomas M. Lenz
Name: Thomas M. Lenz
Title: Secretary
ACCEPTED: August 8, 1996
BESSEMER TRUST COMPANY, N.A.
By: /s/ Robert C. Elliott
Name: Robert C. Elliott
Title: Senior Executive Vice President
Exhibit 5(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADVISORY CONTRACT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Fixed Income Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
1997
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 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 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 service 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: .45% of
the first $100 million of the Portfolio's average net assets; .40% of the second
$100 million of the Portfolio's average net assets; and .35% 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 month for which those
expenses are accrued, at the same time as we pay 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 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 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 , 1998 and shall continue in
effect until , 1999 and thereafter for successive twelve-month periods (computed
from each ), 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 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 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, 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 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, you will kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
OLD WESTBURY FUNDS, INC.
Old Westbury Fixed Income Fund
By:
Name:
Title:
ACCEPTED: , 1998
BESSEMER TRUST COMPANY, N.A.
By:
Name:
Title:
Exhibit 15(vi)(b) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT D
DISTRIBUTION AGREEMENT
OLD WESTBURY FUNDS, INC.
OLD WESTBURY CORE EQUITIES FUND (THE "PORTFOLIO")
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated the 2nd day of December, 1996, between Old Westbury
Funds, Inc., on behalf of the Portfolio, and Edgewood Services, Inc. ("ESI"):
1.....The Portfolio hereby appoints ESI, as its agent, to offer, and to
solicit offers to subscribe to, the unsold balance of shares of the series of
common stock represented by the Portfolio as shall then be effectively
registered under the 1933 Act ("Shares"). All subscriptions for Shares obtained
by ESI shall be directed to for acceptance and shall not be binding on the
Portfolio until accepted by the Portfolio. ESI shall have no authority to made
binding subscriptions on the Portfolio's behalf. The Portfolio reserves the
right to sell Shares directly to investors through subscriptions received by the
Portfolio at its principal office. The right given to ESI under this agreement
shall not apply to any Shares issued in connection with (a) the merger or
consolidation of any other investment company with the Portfolio, (b) the
Portfolio's acquisition by purchase or otherwise of all or substantially all of
the assets or stock of any other investment company, or (c) the reinvestment in
Shares by Portfolio stockholders of dividends or other distributions or any
other offering by the Fund of securities to its stockholders.
2.....The Fund will reimburse ESI in an amount not to exceed .10% per
annum of the Portfolio's average daily net assets for ESI's cost incurred:
(i) to compensate broker-dealers with whom ESI has contracts for
providing assistance in distribution Shares ; and
(ii) to pay 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 ESI and other sales
personnel, and of printing and distribution the Portfolio's
prospectus to prospective investors in connection with the
distribution of its shares.
3. ESI may sell Shares to or through qualified brokers, dealers and
financial institutions under selling and servicing agreements provided that no
dealer, financial institution or other person shall be appointed or authorized
to act as the Portfolio's agent without its written consent. The Portfolio
acknowledges that, pursuant to a Shareholder Servicing Agreement with the
Portfolio, ESI may arrange for broker-dealers (each a "Broker-Dealer") whose
customers or clients are Portfolio shareholders to enter into agreements with
ESI as the Distributor pursuant to which the Broker-Dealers will be compensated
directly by the Distributor for the performance of shareholder servicing and
related administrative functions not performed by the Advisor or its Shareholder
Servicing Agents, the Distributor, the Administrator or the Transfer Agent. Such
payments will be made only pursuant to written agreements approved in form and
substance by the Board of Directors to be entered into by the Distributor and
the Broker-Dealers. It is recognized that the Portfolio shall have no obligation
or liability to ESI, or any Broker-Dealer for any such payments under the
agreements with Broker-Dealers. The Portfolio's obligation is solely to make
payments to the Advisor under the Advisory Agreement and the Shareholder
Servicing Agreement and to the Distributor under the Distribution Agreement and
Shareholder Servicing Agreement.
4. The Portfolio and ESI will cooperate with each other in taking such
action as may be necessary to qualify Shares for sale under the securities laws
of such states as the Portfolio may designate, provided, that ESI shall not be
required to register as a broker-dealer or file a consent to service of process
in any such state where it is not now so registered. Pursuant to an Advisory
Agreement dated
between the Portfolio and the Advisor, the Portfolio will pay all fees and
expenses of registering shares of all series of Common Stock under the 1933 Act
and of qualification of shares of all series of Common Stock, and to the extent
necessary, qualification under applicable state securities laws. ESI will pay
all expenses relating to its broker-dealer qualification.
5. ESI will prepare reports to the Board of Directors of the Portfolio on
a quarterly basis showing amounts expended hereunder, including amounts paid to
Broker-Dealers and the purpose of such payments.
In consideration of the mutual convenants set forth in the Distribution
Agreement dated December 2, 1996 between Old Westbury Funds, Inc. and Edgewood
Services, Inc., Old Westbury Funds, Inc. executes and delivers this Exhibit on
behalf of the Funds, and with respect to the separate Classes of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this day of , 1998.
OLD WESTBURY FUNDS, INC.
By:
Name:
Title:
EDGEWOOD SERVICES, INC.
By:
Name:
Title:
Exhibit 15(vi)(a) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT C
DISTRIBUTION AGREEMENT
OLD WESTBURY FUNDS, INC.
OLD WESTBURY FIXED INCOME FUND (THE "PORTFOLIO")
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated the 2nd day of December, 1996, between Old Westbury
Funds, Inc., on behalf of the Portfolio, and Edgewood Services, Inc. ("ESI"):
1.....The Portfolio hereby appoints ESI, as its agent, to offer, and to
solicit offers to subscribe to, the unsold balance of shares of the series of
common stock represented by the Portfolio as shall then be effectively
registered under the 1933 Act ("Shares"). All subscriptions for Shares obtained
by ESI shall be directed to for acceptance and shall not be binding on the
Portfolio until accepted by the Portfolio. ESI shall have no authority to made
binding subscriptions on the Portfolio's behalf. The Portfolio reserves the
right to sell Shares directly to investors through subscriptions received by the
Portfolio at its principal office. The right given to ESI under this agreement
shall not apply to any Shares issued in connection with (a) the merger or
consolidation of any other investment company with the Portfolio, (b) the
Portfolio's acquisition by purchase or otherwise of all or substantially all of
the assets or stock of any other investment company, or (c) the reinvestment in
Shares by Portfolio stockholders of dividends or other distributions or any
other offering by the Fund of securities to its stockholders.
2.....The Fund will reimburse ESI in an amount not to exceed .10% per
annum of the Portfolio's average daily net assets for ESI's cost incurred:
(i) to compensate broker-dealers with whom ESI has contracts for
providing assistance in distribution Shares ; and
(ii) to pay 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 ESI and other sales
personnel, and of printing and distribution the Portfolio's
prospectus to prospective investors in connection with the
distribution of its shares.
3. ESI may sell Shares to or through qualified brokers, dealers and
financial institutions under selling and servicing agreements provided that no
dealer, financial institution or other person shall be appointed or authorized
to act as the Portfolio's agent without its written consent. The Portfolio
acknowledges that, pursuant to a Shareholder Servicing Agreement with the
Portfolio, ESI may arrange for broker-dealers (each a "Broker-Dealer") whose
customers or clients are Portfolio shareholders to enter into agreements with
ESI as the Distributor pursuant to which the Broker-Dealers will be compensated
directly by the Distributor for the performance of shareholder servicing and
related administrative functions not performed by the Advisor or its Shareholder
Servicing Agents, the Distributor, the Administrator or the Transfer Agent. Such
payments will be made only pursuant to written agreements approved in form and
substance by the Board of Directors to be entered into by the Distributor and
the Broker-Dealers. It is recognized that the Portfolio shall have no obligation
or liability to ESI, or any Broker-Dealer for any such payments under the
agreements with Broker-Dealers. The Portfolio's obligation is solely to make
payments to the Advisor under the Advisory Agreement and the Shareholder
Servicing Agreement and to the Distributor under the Distribution Agreement and
Shareholder Servicing Agreement.
4. The Portfolio and ESI will cooperate with each other in taking such
action as may be necessary to qualify Shares for sale under the securities laws
of such states as the Portfolio may designate, provided, that ESI shall not be
required to register as a broker-dealer or file a consent to service of process
in any such state where it is not now so registered. Pursuant to an Advisory
Agreement dated
between the Portfolio and the Advisor, the Portfolio will pay all fees and
expenses of registering shares of all series of Common Stock under the 1933 Act
and of qualification of shares of all series of Common Stock, and to the extent
necessary, qualification under applicable state securities laws. ESI will pay
all expenses relating to its broker-dealer qualification.
5. ESI will prepare reports to the Board of Directors of the Portfolio on
a quarterly basis showing amounts expended hereunder, including amounts paid to
Broker-Dealers and the purpose of such payments.
In consideration of the mutual convenants set forth in the Distribution
Agreement dated December 2, 1996 between Old Westbury Funds, Inc. and Edgewood
Services, Inc., Old Westbury Funds, Inc. executes and delivers this Exhibit on
behalf of the Funds, and with respect to the separate Classes of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this day of , 1998.
OLD WESTBURY FUNDS, INC.
By:
Name:
Title:
EDGEWOOD SERVICES, INC.
By:
Name:
Title:
Exhibit 15(vi)(c) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT E
DISTRIBUTION AGREEMENT
OLD WESTBURY FUNDS, INC.
OLD WESTBURY MUNICIPAL BOND FUND (THE "PORTFOLIO")
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated the 2nd day of December, 1996, between Old Westbury
Funds, Inc., on behalf of the Portfolio, and Edgewood Services, Inc. ("ESI"):
1.....The Portfolio hereby appoints ESI, as its agent, to offer, and to
solicit offers to subscribe to, the unsold balance of shares of the series of
common stock represented by the Portfolio as shall then be effectively
registered under the 1933 Act ("Shares"). All subscriptions for Shares obtained
by ESI shall be directed to for acceptance and shall not be binding on the
Portfolio until accepted by the Portfolio. ESI shall have no authority to made
binding subscriptions on the Portfolio's behalf. The Portfolio reserves the
right to sell Shares directly to investors through subscriptions received by the
Portfolio at its principal office. The right given to ESI under this agreement
shall not apply to any Shares issued in connection with (a) the merger or
consolidation of any other investment company with the Portfolio, (b) the
Portfolio's acquisition by purchase or otherwise of all or substantially all of
the assets or stock of any other investment company, or (c) the reinvestment in
Shares by Portfolio stockholders of dividends or other distributions or any
other offering by the Fund of securities to its stockholders.
2.....The Fund will reimburse ESI in an amount not to exceed .10% per
annum of the Portfolio's average daily net assets for ESI's cost incurred:
(i) to compensate broker-dealers with whom ESI has contracts for
providing assistance in distribution Shares ; and
(ii) to pay 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 ESI and other sales
personnel, and of printing and distribution the Portfolio's
prospectus to prospective investors in connection with the
distribution of its shares.
3. ESI may sell Shares to or through qualified brokers, dealers and
financial institutions under selling and servicing agreements provided that no
dealer, financial institution or other person shall be appointed or authorized
to act as the Portfolio's agent without its written consent. The Portfolio
acknowledges that, pursuant to a Shareholder Servicing Agreement with the
Portfolio, ESI may arrange for broker-dealers (each a "Broker-Dealer") whose
customers or clients are Portfolio shareholders to enter into agreements with
ESI as the Distributor pursuant to which the Broker-Dealers will be compensated
directly by the Distributor for the performance of shareholder servicing and
related administrative functions not performed by the Advisor or its Shareholder
Servicing Agents, the Distributor, the Administrator or the Transfer Agent. Such
payments will be made only pursuant to written agreements approved in form and
substance by the Board of Directors to be entered into by the Distributor and
the Broker-Dealers. It is recognized that the Portfolio shall have no obligation
or liability to ESI, or any Broker-Dealer for any such payments under the
agreements with Broker-Dealers. The Portfolio's obligation is solely to make
payments to the Advisor under the Advisory Agreement and the Shareholder
Servicing Agreement and to the Distributor under the Distribution Agreement and
Shareholder Servicing Agreement.
4. The Portfolio and ESI will cooperate with each other in taking such
action as may be necessary to qualify Shares for sale under the securities laws
of such states as the Portfolio may designate, provided, that ESI shall not be
required to register as a broker-dealer or file a consent to service of process
in any such state where it is not now so registered. Pursuant to an Advisory
Agreement dated
between the Portfolio and the Advisor, the Portfolio will pay all fees and
expenses of registering shares of all series of Common Stock under the 1933 Act
and of qualification of shares of all series of Common Stock, and to the extent
necessary, qualification under applicable state securities laws. ESI will pay
all expenses relating to its broker-dealer qualification.
5. ESI will prepare reports to the Board of Directors of the Portfolio on
a quarterly basis showing amounts expended hereunder, including amounts paid to
Broker-Dealers and the purpose of such payments.
In consideration of the mutual convenants set forth in the Distribution
Agreement dated December 2, 1996 between Old Westbury Funds, Inc. and Edgewood
Services, Inc., Old Westbury Funds, Inc. executes and delivers this Exhibit on
behalf of the Funds, and with respect to the separate Classes of Shares thereof,
first set forth in this Exhibit.
Witness the due execution hereof this day of , 1998.
OLD WESTBURY FUNDS, INC.
By:
Name:
Title:
EDGEWOOD SERVICES, INC.
By:
Name:
Title:
Exhibit 15(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
OLD WESTBURY FUNDS, INC.
Old Westbury Core Equities Fund
Distribution and Service Plan Pursuant to Rule
12b-1 Under the Investment Company Act of 1940
This Distribution and Service Plan (the "Plan") is adopted by Old Westbury
Funds, Inc. (the "Fund"), on behalf of Old Westbury Core Equities Fund (the
"Portfolio") in accordance with the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act").
The Plan
1. ..The Portfolio and the Edgewood Services, Inc. (The "Distributor")
have entered into a Distribution Agreement, in a form satisfactory to the Fund's
Board of Directors, under which the Distributor will act as distributor of the
Portfolio's shares. Pursuant to the Distribution Agreement, the Distributor, for
nominal consideration and as agent of the Portfolio, will solicit orders for the
purchase of the Portfolio's shares, provided that any subscriptions and orders
for the purchase of the Portfolio's shares will not be binding on the Portfolio
until accepted by the Portfolio as principal.
2. ..(a) The Portfolio and the Distributor have entered into a Shareholder
Servicing Agreement, in a form satisfactory to the Fund's Board of Directors,
which provides that the Distributor is permitted to receive payments from the
Portfolio to permit it to make payments to broker-dealers (each, a
"Broker-Dealer") with which it has written agreements and whose clients are
Portfolio shareholders, for performing shareholder servicing functions on behalf
of the Portfolio.
(b) In addition, the Portfolio and Bessemer Trust Company, N.A. (the
"Adviser") have also entered into a Shareholder Servicing Agreement, in a form
satisfactory to the Fund's Board of Directors, which provides that the Adviser
is permitted to receive a payment from the Portfolio to compensate it for
performing shareholder servicing functions for its clients. In addition, the
Shareholder Servicing Agreement provides that the Adviser is permitted to
receive payments from the Portfolio to permit it to make payments to banks,
savings and loans and other financial institutions with which it has written
agreements and whose clients are Portfolio shareholders (each institution, a
"Shareholder Servicing Agent") for performing shareholder servicing functions on
behalf of the Portfolio.
(c) The Adviser or the Distributor, as the case may be, may make
payments from time to time from their own resources (which may include the
advisory fees of the Adviser) and past profits for the following purposes:
(i) to defray the costs of, and to compensate others,
including financial intermediaries with whom the Distributor or the
Adviser has entered into written agreements, for performing
shareholder servicing and related administrative functions on behalf
of the Portfolio;
(ii) to compensate certain financial intermediaries for
providing assistance in distributing the Portfolio's shares;
(iii) to pay the costs of printing and distributing the
Portfolio's prospectus to prospective investors; and (iv) to
defray the costs of the preparation and printing of brochures
and other promotional materials, mailings to
prospective shareholders, advertising, and other promotional
activities, including salaries and/or commissions of sales personnel
in connection with the distribution of the Portfolio's shares.
Each of the Shareholder Servicing Agreements will further provide that the
Distributor or the Adviser, 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 the Broker-Dealers they have contracted with,
provided that such payments will not increase the amount which the Portfolio is
required to pay to the Distributor or the Adviser for any fiscal year under the
Shareholder Servicing Agreements.
(d) In addition, the Adviser may make payments from time to time
from its fees under the Shareholder Servicing Agreement to Shareholder Servicing
Agents for the purpose enumerated in paragraph (c)(1) above.
3.....The Portfolio will pay for (i) telecommunication expenses, including
the cost of dedicated lines and CRT terminals, incurred by the Distributor and
the Adviser in carrying out their obligations under their respective Shareholder
Servicing Agreements 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.
4.....Payments by the Distributor to Broker-Dealers and payments by the
Adviser to Shareholder Servicing Agents for the purpose of distributing the
Portfolio's shares and providing shareholder servicing are subject to compliance
by them with the terms of written agreements in a form satisfactory to the
Fund's Board of Directors to be entered into between the Distributor and the
Broker-Dealers, and between the Adviser and the Shareholder Servicing Agents.
5.....The Portfolio and the Distributor will prepare and furnish to the
Fund's Board of Directors, at least quarterly, written reports setting forth all
amounts expended for these purposes by the Portfolio, the Distributor and the
Adviser, pursuant to the Plan and identifying the activities for which such
expenditures were made.
6.....The Plan became effective upon approval by (i) a majority of the
outstanding voting securities of the Portfolio (as defined in the Act), and (ii)
a majority of the Board of Directors of the Fund, including a majority of the
Directors who are not interested persons (as defined in the Act) of the
Portfolio and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement entered into in connection with the Plan,
pursuant to a vote cast in person at a meeting called for the purpose of voting
on the approval of the Plan.
7.....The Plan will remain in effect until unless earlier terminated in
accordance with its terms, and thereafter may continue in effect for successive
annual periods if approved each year in the manner described in clause (ii) of
paragraph 6 hereof.
8.....The Plan may be amended at any time with the approval of the Board
of Directors of the Portfolio, provided that (i) any material amendments of the
terms of the Plan will be effective only upon approval as provided in clause
(ii) of paragraph 6 hereof, and (ii) any amendment which increases materially
the amount which may be spent by the Portfolio pursuant to the Plan will be
effective only on the additional approval as provided in clause (i) of paragraph
6 hereof.
9.....The Plan may be terminated without penalty at any time (i) by a vote
of the majority of the entire Board of Directors of the Fund and by a vote of
the majority of the directors of the Fund who are not interested person (as
defined in the Act) of the Portfolio and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or (ii) by a vote of a majority of the outstanding voting securities
of the Portfolio (as defined in the Act).
Exhibit 15(iv) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
OLD WESTBURY FUNDS, INC.
Old Westbury Fixed Income Fund
Distribution and Service Plan Pursuant to Rule
12b-1 Under the Investment Company Act of 1940
This Distribution and Service Plan (the "Plan") is adopted by Old Westbury
Funds, Inc. (the "Fund"), on behalf of Old Westbury Intermediate Income Fund
(the "Portfolio") in accordance with the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act").
The Plan
1. ..The Portfolio and the Edgewood Services, Inc. (The "Distributor")
have entered into a Distribution Agreement, in a form satisfactory to the Fund's
Board of Directors, under which the Distributor will act as distributor of the
Portfolio's shares. Pursuant to the Distribution Agreement, the Distributor, for
nominal consideration and as agent of the Portfolio, will solicit orders for the
purchase of the Portfolio's shares, provided that any subscriptions and orders
for the purchase of the Portfolio's shares will not be binding on the Portfolio
until accepted by the Portfolio as principal.
2. ..(a) The Portfolio and the Distributor have entered into a Shareholder
Servicing Agreement, in a form satisfactory to the Fund's Board of Directors,
which provides that the Distributor is permitted to receive payments from the
Portfolio to permit it to make payments to broker-dealers (each, a
"Broker-Dealer") with which it has written agreements and whose clients are
Portfolio shareholders, for performing shareholder servicing functions on behalf
of the Portfolio.
(b) In addition, the Portfolio and Bessemer Trust Company, N.A. (the
"Adviser") have also entered into a Shareholder Servicing Agreement, in a form
satisfactory to the Fund's Board of Directors, which provides that the Adviser
is permitted to receive a payment from the Portfolio to compensate it for
performing shareholder servicing functions for its clients. In addition, the
Shareholder Servicing Agreement provides that the Adviser is permitted to
receive payments from the Portfolio to permit it to make payments to banks,
savings and loans and other financial institutions with which it has written
agreements and whose clients are Portfolio shareholders (each institution, a
"Shareholder Servicing Agent") for performing shareholder servicing functions on
behalf of the Portfolio.
(c) The Adviser or the Distributor, as the case may be, may make
payments from time to time from their own resources (which may include the
advisory fees of the Adviser) and past profits for the following purposes:
(i) to defray the costs of, and to compensate others,
including financial intermediaries with whom the Distributor or the
Adviser has entered into written agreements, for performing
shareholder servicing and related administrative functions on behalf
of the Portfolio;
(ii) to compensate certain financial intermediaries for
providing assistance in distributing the Portfolio's shares;
(iii) to pay the costs of printing and distributing the
Portfolio's prospectus to prospective investors; and (iv) to
defray the costs of the preparation and printing of brochures
and other promotional materials, mailings to
prospective shareholders, advertising, and other promotional
activities, including salaries and/or commissions of sales personnel
in connection with the distribution of the Portfolio's shares.
Each of the Shareholder Servicing Agreements will further provide that the
Distributor or the Adviser, 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 the Broker-Dealers they have contracted with,
provided that such payments will not increase the amount which the Portfolio is
required to pay to the Distributor or the Adviser for any fiscal year under the
Shareholder Servicing Agreements.
(d) In addition, the Adviser may make payments from time to time
from its fees under the Shareholder Servicing Agreement to Shareholder Servicing
Agents for the purpose enumerated in paragraph (c)(1) above.
3.....The Portfolio will pay for (i) telecommunication expenses, including
the cost of dedicated lines and CRT terminals, incurred by the Distributor and
the Adviser in carrying out their obligations under their respective Shareholder
Servicing Agreements 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.
4.....Payments by the Distributor to Broker-Dealers and payments by the
Adviser to Shareholder Servicing Agents for the purpose of distributing the
Portfolio's shares and providing shareholder servicing are subject to compliance
by them with the terms of written agreements in a form satisfactory to the
Fund's Board of Directors to be entered into between the Distributor and the
Broker-Dealers, and between the Adviser and the Shareholder Servicing Agents.
5.....The Portfolio and the Distributor will prepare and furnish to the
Fund's Board of Directors, at least quarterly, written reports setting forth all
amounts expended for these purposes by the Portfolio, the Distributor and the
Adviser, pursuant to the Plan and identifying the activities for which such
expenditures were made.
6.....The Plan became effective upon approval by (i) a majority of the
outstanding voting securities of the Portfolio (as defined in the Act), and (ii)
a majority of the Board of Directors of the Fund, including a majority of the
Directors who are not interested persons (as defined in the Act) of the
Portfolio and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement entered into in connection with the Plan,
pursuant to a vote cast in person at a meeting called for the purpose of voting
on the approval of the Plan.
7.....The Plan will remain in effect until unless earlier terminated in
accordance with its terms, and thereafter may continue in effect for successive
annual periods if approved each year in the manner described in clause (ii) of
paragraph 6 hereof.
8.....The Plan may be amended at any time with the approval of the Board
of Directors of the Portfolio, provided that (i) any material amendments of the
terms of the Plan will be effective only upon approval as provided in clause
(ii) of paragraph 6 hereof, and (ii) any amendment which increases materially
the amount which may be spent by the Portfolio pursuant to the Plan will be
effective only on the additional approval as provided in clause (i) of paragraph
6 hereof.
9.....The Plan may be terminated without penalty at any time (i) by a vote
of the majority of the entire Board of Directors of the Fund and by a vote of
the majority of the directors of the Fund who are not interested person (as
defined in the Act) of the Portfolio and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or (ii) by a vote of a majority of the outstanding voting securities
of the Portfolio (as defined in the Act).
Exhibit 15(v) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
OLD WESTBURY FUNDS, INC.
Old Westbury Municipal Bond Fund
Distribution and Service Plan Pursuant to Rule
12b-1 Under the Investment Company Act of 1940
This Distribution and Service Plan (the "Plan") is adopted by Old Westbury
Funds, Inc. (the "Fund"), on behalf of Old Westbury Municipal Bond Fund (the
"Portfolio") in accordance with the provisions of Rule 12b-1 under the
Investment Company Act of 1940 (the "Act").
The Plan
1. ..The Portfolio and the Edgewood Services, Inc. (The "Distributor")
have entered into a Distribution Agreement, in a form satisfactory to the Fund's
Board of Directors, under which the Distributor will act as distributor of the
Portfolio's shares. Pursuant to the Distribution Agreement, the Distributor, for
nominal consideration and as agent of the Portfolio, will solicit orders for the
purchase of the Portfolio's shares, provided that any subscriptions and orders
for the purchase of the Portfolio's shares will not be binding on the Portfolio
until accepted by the Portfolio as principal.
2. ..(a) The Portfolio and the Distributor have entered into a Shareholder
Servicing Agreement, in a form satisfactory to the Fund's Board of Directors,
which provides that the Distributor is permitted to receive payments from the
Portfolio to permit it to make payments to broker-dealers (each, a
"Broker-Dealer") with which it has written agreements and whose clients are
Portfolio shareholders, for performing shareholder servicing functions on behalf
of the Portfolio.
(b) In addition, the Portfolio and Bessemer Trust Company, N.A. (the
"Adviser") have also entered into a Shareholder Servicing Agreement, in a form
satisfactory to the Fund's Board of Directors, which provides that the Adviser
is permitted to receive a payment from the Portfolio to compensate it for
performing shareholder servicing functions for its clients. In addition, the
Shareholder Servicing Agreement provides that the Adviser is permitted to
receive payments from the Portfolio to permit it to make payments to banks,
savings and loans and other financial institutions with which it has written
agreements and whose clients are Portfolio shareholders (each institution, a
"Shareholder Servicing Agent") for performing shareholder servicing functions on
behalf of the Portfolio.
(c) The Adviser or the Distributor, as the case may be, may make
payments from time to time from their own resources (which may include the
advisory fees of the Adviser) and past profits for the following purposes:
(i) to defray the costs of, and to compensate others,
including financial intermediaries with whom the Distributor or the
Adviser has entered into written agreements, for performing
shareholder servicing and related administrative functions on behalf
of the Portfolio;
(ii) to compensate certain financial intermediaries for
providing assistance in distributing the Portfolio's shares;
(iii) to pay the costs of printing and distributing the
Portfolio's prospectus to prospective investors; and (iv) to
defray the costs of the preparation and printing of brochures
and other promotional materials, mailings to
prospective shareholders, advertising, and other promotional
activities, including salaries and/or commissions of sales personnel
in connection with the distribution of the Portfolio's shares.
Each of the Shareholder Servicing Agreements will further provide that the
Distributor or the Adviser, 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 the Broker-Dealers they have contracted with,
provided that such payments will not increase the amount which the Portfolio is
required to pay to the Distributor or the Adviser for any fiscal year under the
Shareholder Servicing Agreements.
(d) In addition, the Adviser may make payments from time to time
from its fees under the Shareholder Servicing Agreement to Shareholder Servicing
Agents for the purpose enumerated in paragraph (c)(1) above.
3.....The Portfolio will pay for (i) telecommunication expenses, including
the cost of dedicated lines and CRT terminals, incurred by the Distributor and
the Adviser in carrying out their obligations under their respective Shareholder
Servicing Agreements 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.
4.....Payments by the Distributor to Broker-Dealers and payments by the
Adviser to Shareholder Servicing Agents for the purpose of distributing the
Portfolio's shares and providing shareholder servicing are subject to compliance
by them with the terms of written agreements in a form satisfactory to the
Fund's Board of Directors to be entered into between the Distributor and the
Broker-Dealers, and between the Adviser and the Shareholder Servicing Agents.
5.....The Portfolio and the Distributor will prepare and furnish to the
Fund's Board of Directors, at least quarterly, written reports setting forth all
amounts expended for these purposes by the Portfolio, the Distributor and the
Adviser, pursuant to the Plan and identifying the activities for which such
expenditures were made.
6.....The Plan became effective upon approval by (i) a majority of the
outstanding voting securities of the Portfolio (as defined in the Act), and (ii)
a majority of the Board of Directors of the Fund, including a majority of the
Directors who are not interested persons (as defined in the Act) of the
Portfolio and who have no direct or indirect financial interest in the operation
of the Plan or in any agreement entered into in connection with the Plan,
pursuant to a vote cast in person at a meeting called for the purpose of voting
on the approval of the Plan.
7.....The Plan will remain in effect until August 8, 1997 unless earlier
terminated in accordance with its terms, and thereafter may continue in effect
for successive annual periods if approved each year in the manner described in
clause (ii) of paragraph 6 hereof.
8.....The Plan may be amended at any time with the approval of the Board
of Directors of the Portfolio, provided that (i) any material amendments of the
terms of the Plan will be effective only upon approval as provided in clause
(ii) of paragraph 6 hereof, and (ii) any amendment which increases materially
the amount which may be spent by the Portfolio pursuant to the Plan will be
effective only on the additional approval as provided in clause (i) of paragraph
6 hereof.
9.....The Plan may be terminated without penalty at any time (i) by a vote
of the majority of the entire Board of Directors of the Fund and by a vote of
the majority of the directors of the Fund who are not interested person (as
defined in the Act) of the Portfolio and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or (ii) by a vote of a majority of the outstanding voting securities
of the Portfolio (as defined in the Act).
Exhibit 15(ix) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Core Equities Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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 hereby employ you, pursuant to the Distribution and Service Plan
dated adopted by us in accordance with Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940, as amended (the "Act"), to provide the services
listed below:
(a) You will perform, or arrange for others including banks, savings
and loans and other financial institutions with which you have written
agreements and whose clients are Fund shareholders (each institution a
"Servicing Agent") to perform, all shareholder servicing functions not performed
by us, by the Distributor or Broker-Dealers, or by our Transfer Agent.
(b) In consideration of the foregoing we will pay you a fee at the
annual rate of one quarter of one percent (0.25%) of the Portfolio's average
daily net assets attributable to your clients (and clients of your affiliates)
to compensate you for providing shareholder services to such clients. In
addition, we will pay you up to one quarter of one percent (.25%) per annum of
the Portfolio's average daily net assets attributable to the clients of the
other Shareholder Servicing Agents (together, the "Shareholder Servicing Fees")
to permit you to make payments to such Shareholder Servicing Agents whose
clients are Fund shareholders. Your payment 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 us in
writing. You may waive your right to any fee or payment to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
(c) You may payments from time to time from your Shareholder
Servicing Fee attributable to your clients to defray the costs of, and to
compensate Shareholder Servicing Agents (not already receiving a Shareholder
Servicing Fee from you for which you are reimbursed) for performing shareholder
servicing and related administrative functions on behalf of the Portfolio.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you may from time to time in your sole
discretion increase or decrease the amount of such payments; provided, however,
that no such payment Shareholder will increase the amount which we are required
to pay to you under either this Agreement or any advisory agreement between you
and us, or otherwise.
2. ...Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you the Distributor, the
Broker-Dealers and Shareholder Servicing Agents in rendering such services, and
(ii) the cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3.....(a) The written agreements between you and the Shareholder Servicing
Agents will provide that such Shareholder Servicing Agents receive 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 maintains a servicing relationship, and will, as agents for their
customers perform the following, among other things: answer customer inquiries
regarding account status and history, the manner in which purchases and
redemptions of shares of the Fund may be effected and certain other matters
pertaining to the Fund; assist shareholders in designating and changing dividend
options, account designations and addresses; provided 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 Fund) monthly and year-end statements and confirmation of
purchases and redemptions; transmit, on behalf of the fund, proxy statements,
annual reports, updating prospectuses and other communications from the Fund to
shareholders of the Fund; receive, tabulate and transmit the Fund proxies
executed by shareholders with respect to meeting of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. Shareholder Servicing Agents may waive all or a portion of their
Shareholder Servicing Fees.
(b) Payments to Shareholder Servicing Agents to compensate them for
providing shareholder servicing and related administrative functions are subject
to compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Shareholder Servicing
Agents.
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
shareholders 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.....This Agreement will become effective on the date hereof and will
remain in effect until
...... and thereafter for successive twelve-month periods (computed from
each August 1), provided that such continuation is specifically approved at
least annually by vote of our Board of Directors and of a majority of those of
our directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of our entire
Board of Directors, and by a vote of a majority of our Directors who are not
interested persons (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or by vote of a majority of our outstanding voting securities, as
defined in the Act, on sixty days' written notice to you, or by you on sixty
days' written notice to us.
6.....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, 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
thereunder.
7.....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 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 another 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 Core Equities Fund
By:
Name:
Title:
ACCEPTED: .. , 1998
BESSEMER TRUST COMPANY, N.A.
By: ......
Name:
Title:
Exhibit 15(x) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Fixed Income Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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 hereby employ you, pursuant to the Distribution and Service Plan
dated adopted by us in accordance with Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940, as amended (the "Act"), to provide the services
listed below:
(a) You will perform, or arrange for others including banks, savings
and loans and other financial institutions with which you have written
agreements and whose clients are Fund shareholders (each institution a
"Servicing Agent") to perform, all shareholder servicing functions not performed
by us, by the Distributor or Broker-Dealers, or by our Transfer Agent.
(b) In consideration of the foregoing we will pay you a fee at the
annual rate of one quarter of one percent (0.25%) of the Portfolio's average
daily net assets attributable to your clients (and clients of your affiliates)
to compensate you for providing shareholder services to such clients. In
addition, we will pay you up to one quarter of one percent (.25%) per annum of
the Portfolio's average daily net assets attributable to the clients of the
other Shareholder Servicing Agents (together, the "Shareholder Servicing Fees")
to permit you to make payments to such Shareholder Servicing Agents whose
clients are Fund shareholders. Your payment 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 us in
writing. You may waive your right to any fee or payment to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
(c) You may payments from time to time from your Shareholder
Servicing Fee attributable to your clients to defray the costs of, and to
compensate Shareholder Servicing Agents (not already receiving a Shareholder
Servicing Fee from you for which you are reimbursed) for performing shareholder
servicing and related administrative functions on behalf of the Portfolio.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you may from time to time in your sole
discretion increase or decrease the amount of such payments; provided, however,
that no such payment Shareholder will increase the amount which we are required
to pay to you under either this Agreement or any advisory agreement between you
and us, or otherwise.
2. ...Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you the Distributor, the
Broker-Dealers and Shareholder Servicing Agents in rendering such services, and
(ii) the cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3.....(a) The written agreements between you and the Shareholder Servicing
Agents will provide that such Shareholder Servicing Agents receive 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 maintains a servicing relationship, and will, as agents for their
customers perform the following, among other things: answer customer inquiries
regarding account status and history, the manner in which purchases and
redemptions of shares of the Fund may be effected and certain other matters
pertaining to the Fund; assist shareholders in designating and changing dividend
options, account designations and addresses; provided 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 Fund) monthly and year-end statements and confirmation of
purchases and redemptions; transmit, on behalf of the fund, proxy statements,
annual reports, updating prospectuses and other communications from the Fund to
shareholders of the Fund; receive, tabulate and transmit the Fund proxies
executed by shareholders with respect to meeting of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. Shareholder Servicing Agents may waive all or a portion of their
Shareholder Servicing Fees.
(b) Payments to Shareholder Servicing Agents to compensate them for
providing shareholder servicing and related administrative functions are subject
to compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Shareholder Servicing
Agents.
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
shareholders 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.....This Agreement will become effective on the date hereof and will
remain in effect until
...... and thereafter for successive twelve-month periods (computed from
each August 1), provided that such continuation is specifically approved at
least annually by vote of our Board of Directors and of a majority of those of
our directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of our entire
Board of Directors, and by a vote of a majority of our Directors who are not
interested persons (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or by vote of a majority of our outstanding voting securities, as
defined in the Act, on sixty days' written notice to you, or by you on sixty
days' written notice to us.
6.....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, 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
thereunder.
7.....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 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 another 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 Fixed Income Fund
By:
Name:
Title:
ACCEPTED: .. , 1998
BESSEMER TRUST COMPANY, N.A.
By: ......
Name:
Title:
Exhibit 15(xi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Municipal Bond Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
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 hereby employ you, pursuant to the Distribution and Service Plan
dated adopted by us in accordance with Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940, as amended (the "Act"), to provide the services
listed below:
(a) You will perform, or arrange for others including banks, savings
and loans and other financial institutions with which you have written
agreements and whose clients are Fund shareholders (each institution a
"Servicing Agent") to perform, all shareholder servicing functions not performed
by us, by the Distributor or Broker-Dealers, or by our Transfer Agent.
(b) In consideration of the foregoing we will pay you a fee at the
annual rate of one quarter of one percent (0.25%) of the Portfolio's average
daily net assets attributable to your clients (and clients of your affiliates)
to compensate you for providing shareholder services to such clients. In
addition, we will pay you up to one quarter of one percent (.25%) per annum of
the Portfolio's average daily net assets attributable to the clients of the
other Shareholder Servicing Agents (together, the "Shareholder Servicing Fees")
to permit you to make payments to such Shareholder Servicing Agents whose
clients are Fund shareholders. Your payment 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 us in
writing. You may waive your right to any fee or payment to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
(c) You may payments from time to time from your Shareholder
Servicing Fee attributable to your clients to defray the costs of, and to
compensate Shareholder Servicing Agents (not already receiving a Shareholder
Servicing Fee from you for which you are reimbursed) for performing shareholder
servicing and related administrative functions on behalf of the Portfolio.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you may from time to time in your sole
discretion increase or decrease the amount of such payments; provided, however,
that no such payment Shareholder will increase the amount which we are required
to pay to you under either this Agreement or any advisory agreement between you
and us, or otherwise.
2. ...Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you the Distributor, the
Broker-Dealers and Shareholder Servicing Agents in rendering such services, and
(ii) the cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3.....(a) The written agreements between you and the Shareholder Servicing
Agents will provide that such Shareholder Servicing Agents receive 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 maintains a servicing relationship, and will, as agents for their
customers perform the following, among other things: answer customer inquiries
regarding account status and history, the manner in which purchases and
redemptions of shares of the Fund may be effected and certain other matters
pertaining to the Fund; assist shareholders in designating and changing dividend
options, account designations and addresses; provided 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 Fund) monthly and year-end statements and confirmation of
purchases and redemptions; transmit, on behalf of the fund, proxy statements,
annual reports, updating prospectuses and other communications from the Fund to
shareholders of the Fund; receive, tabulate and transmit the Fund proxies
executed by shareholders with respect to meeting of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. Shareholder Servicing Agents may waive all or a portion of their
Shareholder Servicing Fees.
(b) Payments to Shareholder Servicing Agents to compensate them for
providing shareholder servicing and related administrative functions are subject
to compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Shareholder Servicing
Agents.
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
shareholders 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.....This Agreement will become effective on the date hereof and will
remain in effect until
...... and thereafter for successive twelve-month periods (computed from
each August 1), provided that such continuation is specifically approved at
least annually by vote of our Board of Directors and of a majority of those of
our directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of our entire
Board of Directors, and by a vote of a majority of our Directors who are not
interested persons (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or by vote of a majority of our outstanding voting securities, as
defined in the Act, on sixty days' written notice to you, or by you on sixty
days' written notice to us.
6.....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, 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
thereunder.
7.....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 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 another 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 Municipal Bond Fund
By:
Name:
Title:
ACCEPTED: .. , 1998
BESSEMER TRUST COMPANY, N.A.
By: ......
Name:
Title:
Exhibit 15(xiv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Core Equities Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Edgewood Services, Inc.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Gentlemen:
We herewith confirm our agreement with you as follows:
1. .We hereby employ you, pursuant to the Distribution and Service Plan
adopted by us in accordance with Rule 12b-1 (the "Plan") under the Investment
Company Act of 1940, as amended (the "Act"), to provide the services listed
below:
(a) You will perform, or arrange for others including broker-dealers
with which you have written agreements and whose clients are Fund shareholders
(each a "Broker-Dealer") to perform, all shareholder servicing functions not
performed by us, by the Advisor or its Shareholder Servicing Agents, or by our
Transfer Agent.
(b) In consideration of the foregoing we will pay you up to one
quarter of one percent (0.25%) per annum of the Portfolio's average daily net
assets attributable to the clients of the Broker-Dealers (the "Shareholder
Servicing Fee") to permit you to make payments to the Broker-Dealers for
providing shareholder services. Your payment 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 us in
writing. You may waive your right to any payment to which you are entitled
hereunder, provided such waiver is delivered to us in writing.
(c) You will make payments from time to time from your own resources
and past profits for the following purposes:
(i) to defray the costs of, and to compensate Broker-Dealers for
performing shareholder servicing and related administrative functions on
behalf of the Portfolio;
(ii) to compensate Broker-Dealers for providing assistance in
distributing Portfolio's shares; (iii) to pay the costs of printing
and distributing the Portfolio's prospectus to prospective
investors; and
(iv) 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 salaries and/or
commissions of sales personnel in connection with the distribution of its
Portfolio's shares.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you 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 which we are required to pay to
you under either this Agreement or the distribution agreement between you and
us, or otherwise.
2. Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you, the Advisor, the Shareholder
Servicing Agents and Broker-Dealers in rendering such services, and (ii) the
cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3. (a) The written agreements between you and Broker-Dealers will provide
that such Broker-Dealers receive a fee, which may be paid periodically, on an
annual basis, equal to up 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 Broker-Dealer maintains a servicing
relationship, and will, as agents for their customers, perform the following,
among other things: answer customer inquiries regarding account status and
history, the manner in which purchases and redemptions of shares of the Fund may
be effected and certain other matters pertaining to the Fund; 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 writing 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 Fund) monthly and year-end statements and confirmation of purchases and
redemptions; transmit, on behalf of the Fund, proxy statements, annual reports,
updating prospectuses and other communications from the Fund to shareholders of
the Fund; receive, tabulate and transmit to the Fund proxies executed by
shareholders with respect to meetings of shareholders of the Fund; and provide
such other related services as the Fund or shareholder may request.
Broker-Dealers may waive all or a portion of their Shareholder Servicing Fees.
(b) Payments to Broker-Dealers to compensate them for providing
shareholder servicing and related administrative functions are subject to
compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Broker-Dealers.
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
shareholders 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. This Agreement will become effective on the date hereof and will remain
in effect until
and thereafter for successive twelve-month periods (computed
from each August 1), provided that such continuation is specifically approved at
least annually by vote of our Board of Directors and of a majority of those of
our directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of our entire
Board of Directors, and by a vote of a majority of our Directors who are not
interested persons (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or by vote of a majority of our outstanding voting securities, as
defined in the Act, on sixty days' written notice to you, or by you on sixty
days' written notice to us.
<PAGE>
6. 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,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 thereunder.
7. 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 of other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to another 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 Core Equities Fund
By:
Name:
Title:
ACCEPTED: , 1998
EDGEWOOD SERVICES, INC.
By:
Name
Title
Exhibit 15(xv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Fixed Income Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Edgewood Services, Inc.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Gentlemen:
We herewith confirm our agreement with you as follows:
1. .We hereby employ you, pursuant to the Distribution and Service Plan
adopted by us in accordance with Rule 12b-1 (the "Plan") under the Investment
Company Act of 1940, as amended (the "Act"), to provide the services listed
below:
(a) You will perform, or arrange for others including broker-dealers
with which you have written agreements and whose clients are Fund shareholders
(each a "Broker-Dealer") to perform, all shareholder servicing functions not
performed by us, by the Advisor or its Shareholder Servicing Agents, or by our
Transfer Agent.
(b) In consideration of the foregoing we will pay you up to one
quarter of one percent (0.25%) per annum of the Portfolio's average daily net
assets attributable to the clients of the Broker-Dealers (the "Shareholder
Servicing Fee") to permit you to make payments to the Broker-Dealers for
providing shareholder services. Your payment 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 us in
writing. You may waive your right to any payment to which you are entitled
hereunder, provided such waiver is delivered to us in writing.
(c) You will make payments from time to time from your own resources
and past profits for the following purposes:
(i) to defray the costs of, and to compensate Broker-Dealers for
performing shareholder servicing and related administrative functions on
behalf of the Portfolio;
(ii) to compensate Broker-Dealers for providing assistance in
distributing Portfolio's shares; (iii) to pay the costs of printing
and distributing the Portfolio's prospectus to prospective
investors; and
(iv) 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 salaries and/or
commissions of sales personnel in connection with the distribution of its
Portfolio's shares.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you 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 which we are required to pay to
you under either this Agreement or the distribution agreement between you and
us, or otherwise.
2. Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you, the Advisor, the Shareholder
Servicing Agents and Broker-Dealers in rendering such services, and (ii) the
cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3. (a) The written agreements between you and Broker-Dealers will provide
that such Broker-Dealers receive a fee, which may be paid periodically, on an
annual basis, equal to up 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 Broker-Dealer maintains a servicing
relationship, and will, as agents for their customers, perform the following,
among other things: answer customer inquiries regarding account status and
history, the manner in which purchases and redemptions of shares of the Fund may
be effected and certain other matters pertaining to the Fund; 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 writing 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 Fund) monthly and year-end statements and confirmation of purchases and
redemptions; transmit, on behalf of the Fund, proxy statements, annual reports,
updating prospectuses and other communications from the Fund to shareholders of
the Fund; receive, tabulate and transmit to the Fund proxies executed by
shareholders with respect to meetings of shareholders of the Fund; and provide
such other related services as the Fund or shareholder may request.
Broker-Dealers may waive all or a portion of their Shareholder Servicing Fees.
(b) Payments to Broker-Dealers to compensate them for providing
shareholder servicing and related administrative functions are subject to
compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Broker-Dealers.
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
shareholders 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. This Agreement will become effective on the date hereof and will remain
in effect until
and thereafter for successive twelve-month periods (computed from
each August 1), provided that such continuation is specifically approved at
least annually by vote of our Board of Directors and of a majority of those of
our directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of our entire
Board of Directors, and by a vote of a majority of our Directors who are not
interested persons (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or by vote of a majority of our outstanding voting securities, as
defined in the Act, on sixty days' written notice to you, or by you on sixty
days' written notice to us.
<PAGE>
6. 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,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 thereunder.
7. 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 of other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to another 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 Fixed Income Fund
By:
Name:
Title:
ACCEPTED: , 1998
EDGEWOOD SERVICES, INC.
By:
Name
Title
Exhibit 15(xiii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Growth Opportunity Fund (the "Portfolio")
Federated Tower
Pittsburgh, Pennsylvania 15222-3779
Edgewood Services, Inc.
Federated Tower
Pittsburgh, Pennsylvania 15222-3779
Gentlemen:
We herewith confirm our agreement with you as follows:
1. .We hereby employ you, pursuant to the Distribution and Service Plan
adopted by us in accordance with Rule 12b-1 (the "Plan") under the Investment
Company Act of 1940, as amended (the "Act"), to provide the services listed
below:
(a) You will perform, or arrange for others including broker-dealers
with which you have written agreements and whose clients are Fund shareholders
(each a "Broker-Dealer") to perform, all shareholder servicing functions not
performed by us, by the Advisor or its Shareholder Servicing Agents, or by our
Transfer Agent.
(b) In consideration of the foregoing we will pay you up to one
quarter of one percent (0.25%) per annum of the Portfolio's average daily net
assets attributable to the clients of the Broker-Dealers (the "Shareholder
Servicing Fee") to permit you to make payments to the Broker-Dealers for
providing shareholder services. Your payment 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 us in
writing. You may waive your right to any payment to which you are entitled
hereunder, provided such waiver is delivered to us in writing.
(c) You will make payments from time to time from your own resources
and past profits for the following purposes:
(i) to defray the costs of, and to compensate Broker-Dealers for
performing shareholder servicing and related administrative functions on
behalf of the Portfolio;
(ii) to compensate Broker-Dealers for providing assistance in
distributing Portfolio's shares; (iii) to pay the costs of printing
and distributing the Portfolio's prospectus to prospective
investors; and
(iv) 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 salaries and/or
commissions of sales personnel in connection with the distribution of its
Portfolio's shares.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you 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 which we are required to pay to
you under either this Agreement or the distribution agreement between you and
us, or otherwise.
<PAGE>
2. Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you, the Advisor, the Shareholder
Servicing Agents and Broker-Dealers in rendering such services, and (ii) the
cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3. (a) The written agreements between you and Broker-Dealers will provide
that such Broker-Dealers receive a fee, which may be paid periodically, on an
annual basis, equal to up 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 Broker-Dealer maintains a servicing
relationship, and will, as agents for their customers, perform the following,
among other things: answer customer inquiries regarding account status and
history, the manner in which purchases and redemptions of shares of the Fund may
be effected and certain other matters pertaining to the Fund; 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 writing 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 Fund) monthly and year-end statements and confirmation of purchases and
redemptions; transmit, on behalf of the Fund, proxy statements, annual reports,
updating prospectuses and other communications from the Fund to shareholders of
the Fund; receive, tabulate and transmit to the Fund proxies executed by
shareholders with respect to meetings of shareholders of the Fund; and provide
such other related services as the Fund or shareholder may request.
Broker-Dealers may waive all or a portion of their Shareholder Servicing Fees.
(b) Payments to Broker-Dealers to compensate them for providing
shareholder servicing and related administrative functions are subject to
compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Broker-Dealers.
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
shareholders 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. This Agreement will become effective on the date hereof and will remain
in effect until August 1, 1997 and thereafter for successive twelve-month
periods (computed from each August 1), provided that such continuation is
specifically approved at least annually by vote of our Board of Directors and of
a majority of those of our directors who are not interested persons (as defined
in the Act) and have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan, cast in person at a
meeting called for the purpose of voting on this Agreement. This Agreement may
be terminated at any time, without the payment of any penalty, by vote of a
majority of our entire Board of Directors, and by a vote of a majority of our
Directors who are not interested persons (as defined in the Act) and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan, or by vote of a majority of our outstanding
voting securities, as defined in the Act, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
<PAGE>
6. 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,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 thereunder.
7. 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 of other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to another 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 Growth Opportunityl Fund
By:/s/ Edward C. Gonzales
Name: Edward C. Gonzales
Title: President
ACCEPTED: DECEMBER 2, 1996
EDGEWOOD SERVICES, INC.
By:/s/ Newton Heston, III
Name: Newton Heston, III
Title: Vice President
Exhibit 15(xvi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Municipal Bond Fund (the "Portfolio")
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Edgewood Services, Inc.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Gentlemen:
We herewith confirm our agreement with you as follows:
1. .We hereby employ you, pursuant to the Distribution and Service Plan
adopted by us in accordance with Rule 12b-1 (the "Plan") under the Investment
Company Act of 1940, as amended (the "Act"), to provide the services listed
below:
(a) You will perform, or arrange for others including broker-dealers
with which you have written agreements and whose clients are Fund shareholders
(each a "Broker-Dealer") to perform, all shareholder servicing functions not
performed by us, by the Advisor or its Shareholder Servicing Agents, or by our
Transfer Agent.
(b) In consideration of the foregoing we will pay you up to one
quarter of one percent (0.25%) per annum of the Portfolio's average daily net
assets attributable to the clients of the Broker-Dealers (the "Shareholder
Servicing Fee") to permit you to make payments to the Broker-Dealers for
providing shareholder services. Your payment 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 us in
writing. You may waive your right to any payment to which you are entitled
hereunder, provided such waiver is delivered to us in writing.
(c) You will make payments from time to time from your own resources
and past profits for the following purposes:
(i) to defray the costs of, and to compensate Broker-Dealers for
performing shareholder servicing and related administrative functions on
behalf of the Portfolio;
(ii) to compensate Broker-Dealers for providing assistance in
distributing Portfolio's shares; (iii) to pay the costs of printing
and distributing the Portfolio's prospectus to prospective
investors; and
(iv) 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 salaries and/or
commissions of sales personnel in connection with the distribution of its
Portfolio's shares.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you 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 which we are required to pay to
you under either this Agreement or the distribution agreement between you and
us, or otherwise.
2. Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you, the Advisor, the Shareholder
Servicing Agents and Broker-Dealers in rendering such services, and (ii) the
cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3. (a) The written agreements between you and Broker-Dealers will provide
that such Broker-Dealers receive a fee, which may be paid periodically, on an
annual basis, equal to up 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 Broker-Dealer maintains a servicing
relationship, and will, as agents for their customers, perform the following,
among other things: answer customer inquiries regarding account status and
history, the manner in which purchases and redemptions of shares of the Fund may
be effected and certain other matters pertaining to the Fund; 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 writing 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 Fund) monthly and year-end statements and confirmation of purchases and
redemptions; transmit, on behalf of the Fund, proxy statements, annual reports,
updating prospectuses and other communications from the Fund to shareholders of
the Fund; receive, tabulate and transmit to the Fund proxies executed by
shareholders with respect to meetings of shareholders of the Fund; and provide
such other related services as the Fund or shareholder may request.
Broker-Dealers may waive all or a portion of their Shareholder Servicing Fees.
(b) Payments to Broker-Dealers to compensate them for providing
shareholder servicing and related administrative functions are subject to
compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Broker-Dealers.
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
shareholders 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. This Agreement will become effective on the date hereof and will remain
in effect until
and thereafter for successive twelve-month periods (computed from
each August 1), provided that such continuation is specifically approved at
least annually by vote of our Board of Directors and of a majority of those of
our directors who are not interested persons (as defined in the Act) and have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan, cast in person at a meeting called for the
purpose of voting on this Agreement. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of a majority of our entire
Board of Directors, and by a vote of a majority of our Directors who are not
interested persons (as defined in the Act) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreement related to
the Plan, or by vote of a majority of our outstanding voting securities, as
defined in the Act, on sixty days' written notice to you, or by you on sixty
days' written notice to us.
<PAGE>
6. 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,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 thereunder.
7. 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 of other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to another 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 Municipal Bond Fund
By:
Name:
Title:
ACCEPTED: , 1998
EDGEWOOD SERVICES, INC.
By:
Name
Title
Exhibit 15(viii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICING AGREEMENT
OLD WESTBURY FUNDS, INC. (the "Fund")
Old Westbury Emerging Growth Fund (the "Portfolio")
6 St. James Avenue
Boston, Massachusetts 02116
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 hereby employ you, pursuant to the Distribution and Service Plan
dated adopted by us in accordance with Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940, as amended (the "Act"), to provide the services
listed below:
(a) You will perform, or arrange for others including banks, savings
and loans and other financial institutions with which you have written
agreements and whose clients are Fund shareholders (each institution a
"Servicing Agent") to perform, all shareholder servicing functions not performed
by us, by the Distributor or Broker-Dealers, or by our Transfer Agent.
(b) In consideration of the foregoing we will pay you a fee at the
annual rate of one quarter of one percent (0.25%) of the Portfolio's average
daily net assets attributable to your clients (and clients of your affiliates)
to compensate you for providing shareholder services to such clients. In
addition, we will pay you up to one quarter of one percent (.25%) per annum of
the Portfolio's average daily net assets attributable to the clients of the
other Shareholder Servicing Agents (together, the "Shareholder Servicing Fees")
to permit you to make payments to such Shareholder Servicing Agents whose
clients are Fund shareholders. Your payment 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 us in
writing. You may waive your right to any fee or payment to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
(c) You may payments from time to time from your Shareholder
Servicing Fee attributable to your clients to defray the costs of, and to
compensate Shareholder Servicing Agents (not already receiving a Shareholder
Servicing Fee from you for which you are reimbursed) for performing shareholder
servicing and related administrative functions on behalf of the Portfolio.
You will in your sole discretion determine the amount of any payments made by
you pursuant to this Agreement, and you may from time to time in your sole
discretion increase or decrease the amount of such payments; provided, however,
that no such payment Shareholder will increase the amount which we are required
to pay to you under either this Agreement or any advisory agreement between you
and us, or otherwise.
2. ...Except as otherwise provided herein, you will be responsible for the
payment of all expenses incurred by you in rendering the foregoing services,
except that we will pay (i) telecommunications expenses, including the cost of
dedicated lines and CRT terminals, incurred by you the Distributor, the
Broker-Dealers and Shareholder Servicing Agents in rendering such services, and
(ii) the cost of typesetting, printing and delivering our prospectus to existing
shareholders of the Portfolio and of preparing and printing subscription
application forms for shareholder accounts. Our obligation to be responsible for
the expenses enumerated in this paragraph 2 is limited to an amount equal to
.05% per annum of the Portfolio's average daily net assets.
3.....(a) The written agreements between you and the Shareholder Servicing
Agents will provide that such Shareholder Servicing Agents receive 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 maintains a servicing relationship, and will, as agents for their
customers perform the following, among other things: answer customer inquiries
regarding account status and history, the manner in which purchases and
redemptions of shares of the Fund may be effected and certain other matters
pertaining to the Fund; assist shareholders in designating and changing dividend
options, account designations and addresses; provided 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 Fund) monthly and year-end statements and confirmation of
purchases and redemptions; transmit, on behalf of the fund, proxy statements,
annual reports, updating prospectuses and other communications from the Fund to
shareholders of the Fund; receive, tabulate and transmit the Fund proxies
executed by shareholders with respect to meeting of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request. Shareholder Servicing Agents may waive all or a portion of their
Shareholder Servicing Fees.
(b) Payments to Shareholder Servicing Agents to compensate them for
providing shareholder servicing and related administrative functions are subject
to compliance by them with the terms of written agreements satisfactory to our
Board of Directors to be entered into between you and the Shareholder Servicing
Agents.
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
shareholders 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.....This Agreement will become effective on the date hereof and will
remain in effect until August 8, 1996 and thereafter for successive twelve-month
periods (computed from each August 1), provided that such continuation is
specifically approved at least annually by vote of our Board of Directors and of
a majority of those of our directors who are not interested persons (as defined
in the Act) and have no direct or indirect financial interest in the operation
of the Plan or in any agreements related to the Plan, cast in person at a
meeting called for the purpose of voting on this Agreement. This Agreement may
be terminated at any time, without the payment of any penalty, by vote of a
majority of our entire Board of Directors, and by a vote of a majority of our
Directors who are not interested persons (as defined in the Act) and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreement related to the Plan, or by vote of a majority of our outstanding
voting securities, as defined in the Act, on sixty days' written notice to you,
or by you on sixty days' written notice to us.
6.....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, 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
thereunder.
7.....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 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 another 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 Emerging Growth Fund
By: /s/ Thomas M. Lenz
Name: Thomas M. Lenz
Title: Secretary
ACCEPTED: August 8, 1996
BESSEMER TRUST COMPANY, N.A.
By: /s/ Robert C. Elliott
Name: Robert C. Elliott
Title: Senior Executive Vice President
