Annual Report
October 31, 1996
OLD WESTBURY
INTERNATIONAL FUND
------------------
[LOGO OF BESSEMER TRUST]
OLD WESTBURY INTERNATIONAL FUND
INVESTMENT ADVISOR'S REPORT
November 1996
- --------------------------------------------------------------------------------
The outlook for growth and interest rates in the United States has been the
main focus of attention during the period under review. Concern during the
summer was followed by increasing certainty that interest rates would not be
raised, at least not until after the elections in the United States, allowing
international markets to respond to positive domestic influences. We continue to
see possibilities for further appreciation.
PERFORMANCE
The Old Westbury International Fund's (the "Fund") total return rose by
3.5% in the six month period ending October 31, 1996.* This compares with a fall
of 2.5% in the Morgan Stanley Capital International: Europe, Australia and Far
East Index** ("EAFE") over the same period while the Morgan Stanley Capital
International Emerging Markets Free Index** ("MSCI") which measures the
performance of the "free" emerging markets fell by 6.0%. Many of the markets in
which the Fund has overweighted positions performed well including: Hong Kong,
Canada, Ireland, Brazil and Peru. Japan in which the Fund has no investments)
fell over 15%. The Fund's total return rose 16.9% before fees and expenses, in
the year as a whole.* This compares with a rise of 10.5% in the EAFE index and
6.5% in the MSCI index. The Fund benefited from positive asset allocation and
stock selection.
PORTFOLIO COMPOSITION
The balance of the portfolio changed modestly over the period. The cash
position was used to increase the exposure in continental Europe. The Fund made
a number of investments in Germany to take advantage of the
- ------------------
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
** Morgan Stanley Capital International: Europe, Australia and Far East Index is
a market capitalization weighted foreign securities index, which is widely
used to measure the performance of European, Australian and New Zealand and
Far Eastern stock markets. Morgan Stanley Capital International Emerging
Markets Free Index is an arithmetic, market value-weighted average of the
performance of over 500 securities listed on the stock exchange of 13
countries in the Pacific and Asian regions. These indices are unmanaged, and
investments may not be made in an index.
OLD WESTBURY INTERNATIONAL FUND
INVESTMENT ADVISOR'S REPORT
November 1996 (Continued)
- --------------------------------------------------------------------------------
improving outlook of corporate earnings as well as initiated positions in Norway
and Portugal. The Fund has had no exposure to Japan.
CONCLUSION
The Fund has performed well but we expect further rises in both the
developed and emerging markets. We believe that interest rates are more likely
to be cut than increased in Europe and Australia and earnings are set to
recover, which should support these markets. Emerging markets could continue to
offer good value.
OLD WESTBURY INTERNATIONAL FUND
INVESTMENT ADVISOR'S REPORT
November 1996 (Continued)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1996+
`Graphic representation ``A'' omitted. See Appendix.''
<TABLE>
<CAPTION>
SINCE
OLD WESTBURY INTERNATIONAL FUND 1 YEAR INCEPTION**
<S> <C> <C>
Without sales charge................................... 15.5% 4.5%
With 4.5% sales charge................................. 10.3% 2.9%
</TABLE>
- ------------------
** October 22, 1993
+Performance quoted represents past performance. Investment return and principal
value will fluctuate, so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
The chart above illustrates the total value of a $10,000 investment from
inception (assuming a 4.5% sales charge) with dividends and capital gains
reinvested. The EAFE index is a weighted index comprised of approximately 1,100
securities listed on the stock exchanges of Europe, Australia and the Far East.
The EAFE index also includes the reinvestment of dividends, net of withholding
taxes, but does not include fees and expenses associated with an investment in
the Fund. The MSCI Index is a weighted index comprised of approximately 1,100
securities in 20 "free" emerging markets. A free market is defined as a market
with no restrictions on foreign investors. The MSCI Index includes the
reinvestment of gross dividends, but does not include fees and expenses
associated with an investment in the Fund.
OLD WESTBURY INTERNATIONAL FUND
INVESTMENT ADVISOR'S REPORT
November 1996 (Continued)
- --------------------------------------------------------------------------------
JAPAN
The Fund has had no exposure to Japan. The economy seems to be slowly
recovering and since industry tends to have high fixed costs, an increase in
demand can produce a strong recovery in profits. Also, some companies are at
last beginning to cut costs and provide a little more information for
shareholders. This could provide opportunities although rising interest rates
and the high valuations placed on equities are likely to restrain the market.
PACIFIC BASIN
Australia and Hong Kong appear to be emerging from periods of slow growth
and should benefit from accelerating earnings as their economies recover. The
rest of the Pacific Rim has suffered as high interest rates were imposed to
moderate inflation and current account deficits. Export demand also slowed
sharply. Interest rates should be able to drop now and a recovery in demand for
electronics and other important industries for Asia should support earnings in
1997.
EUROPE
With growth still weak in Germany, interest rates should remain stable in
all countries except the UK where demand tends to be more buoyant. This should
continue to support the stock markets. Moves by European companies to
restructure their operations and increased focus on shareholder value should
enhance profits.
LATIN AMERICA
Latin America has recovered well from the economic downturn in 1995 and we
are looking for a modest acceleration of growth in 1997. We believe that
inflation is under control and interest rates should remain around current
levels. Valuations continue to look attractive relative to expected earnings
growth.
CURRENCY IMPACT
The apparent desire of the Japanese and various European countries to
improve their competitiveness relative to the United States has reinforced the
impact of the trend in interest rates and benefited the dollar. We have reduced
the hedge and will seek to progressively reduce it further into strength.
OLD WESTBURY INTERNATIONAL FUND
INVESTMENT OUTLOOK
November 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GEOGRAPHICAL AREA PORTFOLIO ALLOCATION AT EAFE
10/31/96 4/30/96 10/31/95 INDEX
<S> <C> <C> <C> <C>
Australia.............................. 11.4% 10.4% 9.8% 2.7%
Hong Kong.............................. 9.5 9.6 8.6 3.3
Rest of Asia........................... 15.8 17.6 21.6 4.0
UK..................................... 8.9 7.3 8.6 16.2
France................................. 6.4 6.6 6.2 6.5
Spain.................................. 4.8 4.2 3.5 1.9
Germany................................ 4.0 -- -- 6.6
Netherlands............................ 3.6 3.3 3.4 4.0
Switzerland............................ 2.4 2.3 2.9 5.8
Italy.................................. 1.3 2.2 2.4 2.4
Rest of Europe......................... 11.6 10.4 10.7 5.5
Latin America.......................... 10.8 11.6 13.3 --
South Africa........................... 3.0 4.1 4.4 --
Canada................................. 2.1 2.4 2.4 --
Japan.................................. -- -- -- 41.1
Other assets and
liabilities, net*.................... 4.4 8.0 2.2 --
----------- --------- ----------- ---------
100.0% 100.0% 100.0% 100.0%
----------- --------- ----------- ---------
----------- --------- ----------- ---------
</TABLE>
- ------------------
* Includes cash, unrealized gains/losses on forward foreign currency contracts,
pending trades and fund share transactions, interest and dividends receivable
and accrued expenses payable.
OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY VALUE
- ----------- ---------------------------------------------------- ----------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS--95.6%
ARGENTINA--2.8%
178,174 Banco De Galicia Y Buenos Aires (Banks) $ 814,394
237,337 Perez Companc--Class 'B' (Energy) 1,500,225
110,000 Telefonica De Argentina ORD--Class 'B' (Services) 253,043
53,370 YPF Sociedad Anunima--Class 'D' (Energy) 1,219,711
--------------
TOTAL ARGENTINA 3,787,373
--------------
AUSTRALIA--11.4%
263,000 Amcor Ltd. (Customer Goods) 1,631,391
95,900 Brambles Industries, Ltd. (Services) 1,585,810
127,900 Broken Hill Properties ORD (Diversified) 1,695,008
482,000 CSR Ltd. (Materials) 1,616,960
117,969 Lend Lease Corporation Ltd.
(Financial Services & Property) 1,996,480
57,450 National Australia Bank Ltd. (Banks) 629,544
253,777 News Corporation Ltd. (Services) 1,441,660
323,185 Western Mining Corporation (Materials) 2,027,733
271,000 Westpac Banking Corporation (Banks) 1,543,789
584,600 Woolworth Ord--Class 'C' Shares (Consumer Goods) 1,345,978
--------------
TOTAL AUSTRALIA 15,514,353
--------------
BRAZIL--3.8%
4,688 Electrobas (1,000 shares) (Utilities)* 1,528,745
53,000 Elevadores Atlas (Capital Goods)* 577,826
41,343 Telebras (1,000 shares) Preferred (Services)* 3,058,563
--------------
TOTAL BRAZIL 5,165,134
--------------
CANADA--2.1%
32,812 Canadian Imperial Bank of Commerce (Banks) 1,365,941
36,500 Canadian Pacific Ltd. (Diversified) 927,504
40,380 MacMillan Bloedel Ltd. (Materials) 567,372
--------------
TOTAL CANADA 2,860,817
--------------
</TABLE>
OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY VALUE
- ----------- ---------------------------------------------------- ----------------
<C> <S> <C>
EASTERN EUROPE--0.4%
51,000 First N.I.S. Regional Fund (Mutual Fund)* $ 548,250
--------------
TOTAL EASTERN EUROPE 548,250
--------------
FINLAND--1.2%
14,100 Metra--Class 'B' (Capital Goods) 785,023
9,900 Nokia--Class 'A' (Electronics & Electrical Equipment) 456,417
17,410 UPM Kymmenc (Capital Goods)* 352,475
--------------
TOTAL FINLAND 1,593,915
--------------
FRANCE--6.4%
5,624 Accor (Services) 704,853
2,184 Carrefour (Consumer Goods) 1,209,567
3,371 Cetelem (Financial Services & Property) 717,962
40,802 Christian Dior--Warrants (Consumer Goods)* 848,299
11,510 Lafarge Coppee (Materials) 689,344
14,200 Michelin (Capital Goods) 683,319
3,610 Pinault au Printemps (Consumer Goods)* 1,358,727
26,093 Schneider (Capital Goods) 1,273,450
4,492 Television Francais 1 (Services) 477,042
11,879 Valeo (Consumer Goods) 711,465
--------------
TOTAL FRANCE 8,674,028
--------------
GERMANY--4.0%
9,491 Adidas (Consumer Goods) 811,496
12,630 Daimler-Benz (Consumer Goods)* 739,613
19,068 Deutsche Bank AG (Banks) 880,989
26,180 Hoechst AG (Health Care)* 982,117
1,574 Linde AG (Capital Goods) 972,021
19,345 Siemens (Electronics & Electrical
Equipment)* 997,132
--------------
TOTAL GERMANY 5,383,368
--------------
</TABLE>
OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY VALUE
- ----------- ---------------------------------------------------- ----------------
<C> <S> <C>
HONG KONG--9.5%
1,085,168 ASM Pacific Technology Ltd. (Electronics & Electrical
Equipment) $ 814,037
868,800 Cafe De Coral Ltd. (Consumer Goods)* 255,635
1,243,700 China Merchants Hai Hong (Capital Goods) 402,138
1,191,000 China Overseas (Financial Services &
Property) 442,863
2,252,300 China Travel (Services) 699,128
275,500 Citic Pacific Ltd. (Diversified) 1,339,766
2,316,400 Gold Peak (Consumer Goods) 1,438,051
54,869 HSBC Holdings Ltd. (Banks) 1,117,704
486,400 Jardine Matheson Holdings (Singapore
Registered Diversified) 2,748,160
406,849 Swire Pacific Ltd.--Class 'A' (Diversified) 3,591,330
--------------
TOTAL HONG KONG 12,848,812
--------------
INDIA--1.1%
58,000 Indian Rayon Industries GDR (Materials) 449,500
103,467 Mahindra & Mahindra GDR (Capital Goods) 1,086,400
--------------
TOTAL INDIA 1,535,900
--------------
INDONESIA--2.4%
1,238,000 Asahimas Flat Glass (Capital Goods) 704,527
168,030 Indofood Sukses Makmur (Consumer Goods) 353,626
10,300 Indonesia Satellite Corporate ADRS
(Services) 309,000
316,000 Semen Gresik (Materials) 902,547
246,300 Tigaraska Satria (Consumer Goods) 439,009
334,000 Trias Sentosa (Materials) 507,462
--------------
TOTAL INDONESIA 3,216,171
--------------
IRELAND--4.0%
147,619 Allied Irish Banks (Banks) 934,630
113,200 Bank of Ireland (Banks) 930,434
64,350 Cement Roadstone Holdings (Materials) 659,837
51,400 Greencore Group PLC (Consumer Goods) 293,642
250,100 Irish Life (Financial Services & Property) 1,070,575
302,112 Smurfit (Jefferson) Group (Materials) 816,251
</TABLE>
OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY VALUE
- ----------- ---------------------------------------------------- ----------------
<C> <S> <C>
IRELAND (Continued)
561,950 Waterford Wedgwood (Consumer Goods) $ 685,972
--------------
TOTAL IRELAND 5,391,341
--------------
ITALY--1.3%
325,400 Fiat--Preferred (Consumer Goods) 461,765
395,300 Stet (Services) 1,368,947
--------------
TOTAL ITALY 1,830,712
--------------
KOREA--0.5%
21,200 Korea Electric Power (Energy) 625,194
--------------
MALAYSIA--1.9%
720,100 Sime Darby (Diversified) 2,550,918
--------------
MEXICO--2.1%
260,289 Cementos Astsk--Class 'B' (Materials) 948,289
70,500 Empresas Ica Sociedad Controladora
(Materials)* 925,534
137,436 Nadro--Class 'L' (Health Care) 394,524
341,673 Soriana--Class 'B' (Consumer Goods) 613,810
--------------
TOTAL MEXICO 2,882,157
--------------
NETHERLANDS--3.6%
14,395 ABN Amro Holdings (Banks) 811,761
35,536 IHC Caland (Consumer Goods) 1,978,866
27,800 K.L.M. NLG 20 (Services) 660,426
11,585 Wolters Klower (Consumer Goods) 1,485,763
--------------
TOTAL NETHERLANDS 4,936,816
--------------
NEW ZEALAND--2.3%
403,100 Air New Zealand--Class 'B' (Services) 982,526
120,272 Air New Zealand--Class 'B' Rights
(Services)* 123,210
376,100 New Zealand Telecommunications (Services) 1,953,002
--------------
TOTAL NEW ZEALAND 3,058,738
--------------
</TABLE>
OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY VALUE
- ----------- ---------------------------------------------------- ----------------
<C> <S> <C>
NORWAY--0.5%
215,500 Norske Bank (Banks)* $ 710,688
----------------
PERU--2.1%
875,634 Edegel New Shares (Utilities) 442,068
158,162 Minsur--Class 'T' (Materials) 1,421,920
698 Talleres Moyopampa--Class 'B' (Utilities) 520
387,459 Telefonica De Peru--Class 'B' (Services) 821,564
12,500 Telefonica De Peru--ADS (Services) 257,812
----------------
TOTAL PERU 2,943,884
----------------
PHILIPPINES--2.8%
442,800 Ayala Corporation (Diversified) 421,875
183,633 Bacnotan Consolidated Industries--Class 'B'
(Materials) 769,805
104,000 Jardine Davies Inc. (Diversified)* 352,744
28,640 Philippine Long Distance Telephone
(Services) 1,719,055
43,834 Philippine National Bank (Banks)* 505,323
----------------
TOTAL PHILIPPINES 3,768,802
----------------
POLAND--2.1%
12,000 Bank Slaski (Banks) 1,108,860
3,810 Debica (Consumer Goods)* 77,183
134,202 Elektrim (Capital Goods) 1,120,854
219,820 Mostostal Export (Capital Goods) 558,593
219,820 Mostostal Export--Rights (Capital Goods)* 9,610
----------------
TOTAL POLAND 2,875,100
----------------
PORTUGAL--0.9%
49,200 Portugal Telecom (Services)* 1,270,960
----------------
SINGAPORE--3.7%
349,320 City Developments (Financial Services & Property) 2,751,918
195,945 Oversea Chinese Bank--Class 'F' (Banks) 2,238,974
----------------
TOTAL SINGAPORE 4,990,892
----------------
</TABLE>
OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY VALUE
- ----------- ---------------------------------------------------- ----------------
<C> <S> <C>
SOUTH AFRICA--3.0%
86,531 Free State Consolidated Gold Mines Ltd. (Materials) $ 756,048
58,400 Kloof Gold Mining Company Ltd.
(Materials) 541,375
191,800 Murray & Roberts--ORD (Materials) 651,936
75,863 Sasol (Energy) 925,551
52,900 South African Pulp and Paper Industries (Materials) 467,842
48,345 Western Areas Gold Mining (Materials) 746,939
--------------
TOTAL SOUTH AFRICA 4,089,691
--------------
SPAIN--4.8%
48,742 Aumar (Services) 694,461
34,400 Enher (Utilities) 675,935
162,500 Sevillana De Electricidad (Utilities) 1,551,981
113,020 Telefonica De Espanol (Services) 2,265,001
67,235 Vallehermoso (Financial Services &
Property) 1,326,383
--------------
TOTAL SPAIN 6,513,761
--------------
SWEDEN--1.2%
44,000 Nobel Biocare (Health Care)* 742,294
53,500 Sparbanken Sverige (Banks) 845,644
--------------
TOTAL SWEDEN 1,587,938
--------------
SWITZERLAND--2.4%
1,077 ABB AG (Capital Goods) 1,327,878
844 Ciba Geigy--Bearer Shares (Health Care) 1,033,279
3,406 SBC--Registered (Banks) 653,553
533 Sulzer--Registered (Capital Goods) 302,302
--------------
TOTAL SWITZERLAND 3,317,012
--------------
THAILAND--1.1%
94,800 Alphatec Electronics (Electronics &
Electrical Equipment) $ 743,238
97,400 Thai Farmers Bank FS (Banks) 740,713
21,912 Thai Farmers Bank--Warrants (Banks)* 32,426
--------------
TOTAL THAILAND 1,516,377
--------------
</TABLE>
OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES SECURITY VALUE
- ----------- ---------------------------------------------------- ----------------
<C> <S> <C>
TURKEY--1.3%
4,912,800 AK Bank (Banks) 599,931
4,889,585 NETAS (Consumer Goods) 1,181,489
----------------
TOTAL TURKEY 1,781,420
----------------
UNITED KINGDOM--8.9%
86,600 Allied Domecq (Consumer Goods) 669,184
37,950 BAT Industries ORD (Consumer Goods) 264,235
77,200 British Energy--Partly Paid (Utilities)* 148,195
199,510 Cable & Wireless PLC (Electronics &
Electrical Equipment) 1,587,112
207,518 Carlton Communications PLC (Electronics & Electrical
Equipment) 1,660,940
119,080 Grand Metropolitan PLC (Consumer Goods) 897,889
58,000 Pace Micro Technology (Consumer Goods)* 213,241
126,300 Penninsula & Oriental DFD (Diversified) 1,239,980
300,900 Royal Sun Alliance ORD (Financial Services and
Property) 2,063,260
119,467 Siebe PLC (Diversified) 1,873,524
145,858 The Boots Company PLC (Health Care) 1,487,757
----------------
TOTAL UNITED KINGDOM 12,105,317
----------------
TOTAL INVESTMENTS--95.6%
(Identified Cost $112,825,858)(a) 129,875,839
----------------
CASH AND OTHER ASSETS NET OF
LIABILITIES--4.4% 5,918,613
----------------
NET ASSETS--100.0% $ 135,794,452
----------------
----------------
</TABLE>
* Non-income producing security.
(a) The aggregate cost for Federal income tax purposes at October 31, 1996 was
$112,146,672. The aggregate gross unrealized appreciation was $23,438,155
and the aggregate gross unrealized depreciation was $6,388,174, resulting in
net unrealized appreciation of $17,049,981.
ADR: American Depositary Receipts
GDR: Global Depositary Receipts
ORD: Ordinary Shares
Note: Company descriptions have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
OLD WESTBURY INTERNATIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (identified cost $112,825,858)..... $ 129,875,839
Cash............................................................ 7,214,077
Receivables for:
Dividends................................................. 331,530
Interest.................................................. 24,383
Withholding taxes--dividends.............................. 196,375
Deferred organization expense................................... 35,964
Prepaid insurance............................................... 244
----------------
Total assets.............................................. 137,678,412
----------------
LIABILITIES:
Net unrealized depreciation on foreign currency................. 351,838
Payables for:
Investments purchased..................................... 1,272,566
Fund shares redeemed...................................... 25,387
Accrued expenses............................................. 234,169
----------------
Total liabilities......................................... 1,883,960
----------------
NET ASSETS APPLICABLE TO 12,165,931.731 SHARES OF
BENEFICIAL INTEREST OUTSTANDING................................. $ 135,794,452
----------------
----------------
Net Assets consist of:
Paid-in capital................................................. $ 126,622,295
Undistributed net investment income............................. 1,276,175
Accumulated net realized loss on investments and
foreign currency translations................................ (8,806,606)
Net unrealized appreciation on investments and
foreign currency translations................................ 16,702,588
----------------
NET ASSETS........................................................ $ 135,794,452
----------------
----------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($135,794,452 /
12,165,931.731 SHARES OF BENEFICIAL INTEREST OUTSTANDING)....... $11.16
MAXIMUM OFFERING PRICE PER SHARE ($11.16 / .955).................. $11.69
</TABLE>
See Notes to Financial Statements.
OLD WESTBURY INTERNATIONAL FUND
STATEMENT OF OPERATIONS
For the fiscal year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$377,155)........................................ $ 3,100,732
Interest............................................ 292,895
--------------
Total income.................................. $ 3,393,627
--------------
EXPENSES:
Investment Advisory................................. 990,632
Custody............................................. 252,394
Administration...................................... 175,182
Shareholder Servicing............................... 309,850
Registration........................................ 26,140
Amortization of organization costs.................. 19,315
Distribution........................................ 9,479
Printing and Postage................................ 26,685
Legal............................................... 13,158
Audit............................................... 43,500
Insurance........................................... 14,214
Transfer Agent...................................... 26,364
Directors........................................... 14,750
Miscellaneous....................................... 641
--------------
Total expenses................................ 1,922,304
Less fees waived by Advisor......................... (29,346)
--------------
Net expenses.................................. 1,892,958
--------------
NET INVESTMENT INCOME............................... 1,500,669
--------------
NET REALIZED AND UNREALIZED GAIN/(LOSS):
NET REALIZED GAIN/(LOSS) ON:
Investments...................................... (3,789,756)
Foreign currency transactions.................... 1,680,811 (2,108,945)
-------------- --------------
NET CHANGE IN UNREALIZED APPRECIATION ON:
Investments...................................... 18,270,804
Translations of assets and liabilities in foreign
currencies and foreign currency contracts........ (602,839) 17,667,965
-------------- --------------
NET REALIZED AND UNREALIZED GAIN...................... 15,559,020
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.......................................... $ 17,059,689
--------------
--------------
</TABLE>
See Notes to Financial Statements.
OLD WESTBURY INTERNATIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
OCTOBER 31,
1996 1995
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income......................... $ 1,500,669 $ 1,348,195
Net realized loss on investments and foreign
currency transactions...................... (2,108,945) (4,939,089)
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency translations...................... 17,667,965 (5,283,692)
---------------- ----------------
Net increase/(decrease) in net assets from
operations................................. 17,059,689 (8,874,586)
---------------- ----------------
DISTRIBUTION TO SHAREHOLDERS:
From net investment income.................... (1,459,800) (755,605)
---------------- ----------------
FROM CAPITAL STOCK TRANSACTIONS:
Net proceeds from sale of capital
stock...................................... 45,618,132 26,859,241
Reinvestment of dividends..................... 1,100,982 751,802
Net cost of capital stock redeemed............ (30,719,037) (18,315,186)
---------------- ----------------
Net increase in net assets resulting from
capital stock transactions................. 16,000,077 9,295,857
---------------- ----------------
NET INCREASE/(DECREASE) IN NET
ASSETS..................................... 31,599,966 (334,334)
NET ASSETS:
Beginning of period........................... 104,194,486 104,528,820
---------------- ----------------
End of period (including undistributed net
investment income of $1,276,175 in 1996 and
distributions in excess of net investment
income of ($113,533) in 1995............... $ 135,794,452 $ 104,194,486
---------------- ----------------
---------------- ----------------
</TABLE>
See Notes to Financial Statements.
OLD WESTBURY INTERNATIONAL FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
1996 1995 1994 1993(A)
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 9.80 $ 10.81 $ 10.14 $ 10.00
Income from investment operations:
Net investment income............. 0.13 0.14 0.10 0.00
Net realized and unrealized gain
(loss) on investments.......... 1.37 (1.07) 0.57 0.14
---------- ---------- ---------- ---------
Total from investment
operations........................ 1.50 (0.93) 0.67 0.14
---------- ---------- ---------- ---------
Less distributions:
Distributions from net investment
income......................... (0.14) (0.08) -- --
---------- ---------- ---------- ---------
Net asset value, end of period...... $ 11.16 $ 9.80 $ 10.81 $ 10.14
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Total return*..................... 15.5% (8.6%) 6.6% 1.4%
Ratios/Supplemental data:
Net assets, end of period (in
000's)......................... $ 135,794 $ 104,194 $ 104,529 $ 11,957
Ratio of expenses to average net
assets before waiver of
expenses....................... 1.52% 1.60% 1.70% 2.50%**+
Ratio of expenses to average net
assets......................... 1.50% 1.50% 1.50% 1.50%**
Ratio of net investment income
(loss) to average net assets... 1.19% 1.40% 0.90% (0.91%)**
Portfolio turnover rate........... 55% 32% 23% 0%
Average Commission rate paid...... 0.0080 0.0100 -- --
</TABLE>
- ------------------
* Total return is calculated without a sales charge assuming a purchase of
shares on the first day and a sale on the last day of the period.
** Annualized.
The calculation takes state expense limitations into consideration.
(a) For the period October 22, 1993 (commencement of operations) to October 31,
1993.
Note: Per share values calculated using average shares outstanding.
See Notes to Financial Statements.
OLD WESTBURY INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. Old Westbury International
Fund (the "Portfolio") is a separate series of Old Westbury Funds, Inc. (the
"Fund"), a Maryland corporation registered under the Investment Company Act of
1940 (the "Act"), as a diversified, open-end management investment company. The
Fund's Articles of Incorporation permit the Directors to create an unlimited
number of series, each of which is a separate class of shares. At October 31,
1996, the Portfolio was the only series of the Fund. The Fund was incorporated
under the laws of the state of Maryland on August 26, 1993 and commenced
operations on October 22, 1993.
The following is a summary of the significant accounting policies followed
by the Portfolio:
A. VALUATION OF INVESTMENTS. 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. If no bid or asked
prices are quoted, 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 exchange representing the principal market
for such securities.
Securities traded in the over-the-counter market, including listed
securities whose primary market is believed by Bessemer Trust Company, N.A.
("Bessemer"), the Portfolio's investment advisor (the "Advisor"), to be
over-the-counter, are valued at the mean of the last reported bid and asked
prices from such sources as the Board of Directors deems appropriate to reflect
their fair value.
Debt instruments having 60 days or less remaining until maturity are valued
at amortized cost. Debt instruments having a greater remaining maturity will be
valued at the 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 Board
of Directors designed to reflect in good faith the fair value of such
securities.
OLD WESTBURY INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
B. FOREIGN CURRENCY TRANSLATION. The books and records of the Fund are
maintained in United States dollars. Foreign currency amounts are translated
into United States dollars on the following basis:
(i) value of investment securities, other assets and liabilities--at
the current rates of exchange.
(ii) purchases and sales of investment securities, income and
expenses--at the rates of exchange prevailing on the respective dates of
such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and values at the close of the period, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the value
of securities held at the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the value of portfolio securities sold during the
period.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of U.S. companies
as a result of, among other factors, the level of governmental supervision and
regulation of foreign securities markets and the possibility of political and
economic instability.
C. FORWARD FOREIGN CURRENCY CONTRACTS. The Fund enters into forward foreign
currency contracts in order to hedge its exposure to changes in foreign currency
exchange rates on its foreign portfolio holdings. A forward foreign currency
contract is a commitment to purchase or sell a foreign currency at a future date
at a negotiated forward rate. Risks may arise upon entering into these contracts
from the potential inability of the counterparties to meet the terms of their
contracts. Forward foreign currency contracts open at October 31, 1996 were as
follows:
<TABLE>
<CAPTION>
FORWARD DELIVER UNREALIZED
CONTRACTS SALE DATE VALUE PROCEEDS DEPRECIATION
<C> <S> <C> <C> <C> <C>
19,331,742 ECU......... 6/30/97 $24,651,838 $24,300,000 ($351,838)
</TABLE>
- ------------------
ECU: European Currency Units
D. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME.
Security transactions are accounted for on the trade date. Realized gains and
losses on security transactions are determined on the identified cost method.
OLD WESTBURY INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
Dividend income and other distributions from portfolio securities are recorded
on the ex-dividend date except that, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as soon as the Portfolio is
informed of the ex-dividend date. Dividend income is recorded net of foreign
taxes withheld where recovery of such taxes is not assured. Interest income is
accrued daily.
E. DEFERRED ORGANIZATION EXPENSES. Expenses incurred by the Fund in
connection with its organization and the initial public offering of the
Portfolio's shares are being amortized on a straight-line basis over a five-year
period. The amount paid by the Portfolio on any redemption of the Portfolio's
initial shares will be reduced by the pro rata portion of any unamortized
organization expense which the number of the initial shares redeemed bears to
the total number of initial shares outstanding immediately prior to such
redemption.
F. FEDERAL TAXES. It is the Portfolio's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income or excise tax provision is required.
For the years ended October 31, 1996, 1995, and 1994 the Fund had for
Federal income tax purposes unused capital loss carryovers of approximately
$2,148,175, $1,878,354, and $3,600,004, which will expire in 2004, 2003, and
2002, respectively.
G. DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. The Portfolio anticipates
paying income dividends on an annual basis. Capital gains distributions, if any,
will be made on an annual basis. The treatment for financial statement purposes
of distributions made during the year from net investment income or net realized
gains may differ from their ultimate treatment for federal income tax purposes.
These differences are caused primarily by: differences in the timing of the
recognition of certain components of income, expense, and capital gain; and the
recharacterization of foreign exchange gains or losses to either ordinary income
or realized capital gain for federal tax purposes. Where such differences are
permanent in nature, they are reclassified in the components of net assets based
on their characterization for federal income tax purposes. Any such
reclassifications will have no effect on net assets, results of operations or
net asset value per share of the Fund.
OLD WESTBURY INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH AFFILIATES.
A. INVESTMENT ADVISORY FEES. Pursuant to an advisory contract, dated
October 12, 1993, the Fund has retained Bessemer to make investment decisions
for the Portfolio. The investment advisory fee paid to the advisor is computed
daily and paid monthly in accordance with the following schedule: 0.80% of the
first $100 million of the Portfolio's average net assets, 0.75% of the second
$100 million of such assets and 0.70% of such assets exceeding $200 million.
B. ADMINISTRATION FEES. Signature Broker-Dealer Services, Inc.
("Signature") served as administrator, distributor and shareholder servicing
agent. Signature provided administrative services necessary for the overall
administration of the Fund 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 Fund; the preparation
and filing of all documents required for compliance by the Portfolio with
applicable laws and regulations; providing equipment and personnel necessary for
maintaining the organization of the Fund; preparation of certain documents in
connection with meetings of the Board of Directors and shareholders; the
maintenance of books and records of the Portfolio; and paying the compensation
of the Fund's officers and Directors affiliated with Signature. For providing
these services, Signature received from the Portfolio a fee accrued daily and
paid monthly at an annual rate equal to 0.15% of the average daily net assets of
the Portfolio up to $100 million; 0.10% of such assets from $100 million to $250
million; and 0.05% of such assets over $250 million.
C. DISTRIBUTION AND SERVICE PLAN AND DISTRIBUTION REIMBURSEMENT FEES. The
Directors adopted a distribution and service plan (the "Plan") for the Portfolio
pursuant to Rule 12b-1 of the Act, and pursuant to the Plan, the Portfolio
entered into a distribution agreement and a shareholder servicing agreement with
Signature and a shareholder servicing agreement with Bessemer. Under its
shareholder servicing agreement, Signature received payments from the Portfolio
to permit it to make payments to broker-dealers for providing shareholder
services. Under its shareholder servicing agreement, Bessemer is permitted (i)
to receive a payment from the portfolio attributable to Bessemer's clients (and
its affiliates) for providing shareholder services to such clients and (ii) to
receive payments to permit it to make payments to other financial institutions
as shareholder servicing agents. The total of shareholder servicing fees in the
aggregate payable
OLD WESTBURY INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
to Signature and Bessemer did not exceed 0.25% per annum of the Portfolio's
average daily net assets.
The distribution agreement with Signature provided for reimbursement to
Signature by the Portfolio for its distribution, promotional and advertising
costs incurred in connection with the distribution of the Portfolio's shares in
an amount not to exceed 0.10% per annum of the Portfolio's average daily net
assets.
In addition, the Portfolio will pay for certain other expenses under the
Plan. These expenses shall not exceed an amount equal to 0.05% per annum of the
Portfolio's average daily net assets.
D. DIRECTORS' FEES. Each Director who is not an "interested person" (as
defined in the Act) of the Fund receives a $5,000 annual retainer and is
reimbursed for out-of-pocket expenses incurred in connection with committee or
board meetings. Effective June 1, 1996, Directors received an additional $500
meeting fee.
E. CUSTODY FEES. The Fund has retained Bessemer to serve as the Portfolio's
custodian. Bessemer is responsible for maintaining the books and records of the
Portfolio's securities and cash.
For providing these services, Bessemer receives from the Portfolio a fee
accrued and paid monthly at an annual rate equal to 0.20% of the average daily
net assets of the Portfolio.
3. CAPITAL STOCK. The Fund has authorized a total of 20 billion shares of common
stock (par value $0.001 per share) and is permitted to issue 4 billion of the
authorized shares in the Portfolio. Transactions in shares of capital stock were
as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
OCTOBER 31,
<S> <C> <C>
1996 1995
Common stock sold...................................... 4,294,507 2,725,287
Reinvestment of dividends.............................. 108,364 78,231
Common stock redeemed.................................. (2,871,960) (1,842,187)
------------ ------------
Net increase........................................... 1,530,911 961,331
------------ ------------
------------ ------------
</TABLE>
4. PURCHASES AND SALES OF SECURITIES. For the fiscal year ended October 31,
1996, purchases and sales of investment securities other than short-term
investments aggregated $66,389,422 and $52,879,822, respectively.
OLD WESTBURY INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 1996 (Continued)
- --------------------------------------------------------------------------------
5. SUBSEQUENT EVENT. Effective December 2, 1996, Signature resigned as
administrator and distributor, Federated Administrative Services became the
administrator, and Edgewood Services, Inc. became the distributor of the Fund.
6. DISTRIBUTIONS AND FOREIGN TAXES WITHHELD. The following information
summarizes per share distributions to be paid by the Fund for the year ended
October 31, 1996.
<TABLE>
<CAPTION>
NET FOREIGN FOREIGN TAXES
RECORD PAYABLE SOURCE PAID OR LONG TERM
DATE DATE INCOME PER SHARE WITHHELD PER SHARE CAPITAL GAINS
<S> <C> <C> <C> <C>
12/23/96 1/3/97 $0.15 $0.03 None
</TABLE>
The foreign taxes paid or withheld represent taxes incurred by the Fund on
dividends received by the Fund from foreign sources. Foreign taxes paid or
withheld should be included in taxable income with an offsetting deduction from
gross income or as a credit for taxes paid to foreign governments. You should
consult your tax advisor regarding the appropriate treatment of foreign taxes
paid.
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors and the Shareholders of
Old Westbury Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Old Westbury Funds, Inc. (consisting of Old
Westbury International Fund) as of October 31, 1996, the related statements of
operations for the year then ended, and of changes in net assets for each of the
two years then ended and the financial highlights for each of the three years
then ended, and for the period October 22, 1993 (commencement of operations) to
October 31, 1993. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1996 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Old Westbury Funds,
Inc. at October 31, 1996, the results of its operations, the changes in its net
assets for each of the the two years then ended and the financial highlights for
each of the three years then ended, and for the period October 22, 1993 to
October 31, 1993, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
December 12, 1996
INVESTMENT ADVISOR:
Bessemer Trust Company, N.A.
630 Fifth Avenue
New York, New York 10111
(212) 708-9100
DISTRIBUTOR AND SHAREHOLDER
SERVICING AGENT:
Edgewood Services, Inc.
Federated Investors Tower
Pittsburgh, PA 15222-3779
ADMINISTRATOR:
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779
SHAREHOLDER SERVICING AGENT:
Bessemer Trust Company, N.A.
630 Fifth Avenue
New York, New York 10111
(212) 708-9100
G01963-01 (12/96)
A. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed above the graphic
presentation. The Old Westbury International Fund is represented by a solid
line, whereas Morgan Stanley Capital International: Europe, Australia and
Far East Index (`EAFE Index'') is represented by a broken dotted line and
Morgan Stanley Capital International Emerging Markets Free Index (`MSCI
Index') is represented by a dotted line. The line graph is a visual
representation of a comparison of change in value of a hypothetical
investment of $10,000 in Old Westbury International Fund and EAFE Index and
MSCI Index for the period from October 22, 1993 (commencement of
operations) to October 31, 1996. The `y'' axis reflects the cost of the
investment. The `x'' axis reflects computation periods from the ending
value of the hypothetical investment in Old Westbury International Fund as
compared to EAFE Index and MSCI Index. Beneath the line graph are the
following total return data for Old Westbury International Fund: average
annual total return figures for the one-year and since inception to October
31, 1996 are as follows: 15.5% and 4.5%, respectively, without sales
charge and 10.3% and 2.9%, respectively, with 4.5% sales charge.
