OLD WESTBURY FUNDS INC, N-30D, 1998-12-30

OLD WESTBURY FUNDS INC
N-30D, 1998-12-30

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OLD WESTBURY FUNDS, INC.

Annual Report

October 31, 1998

Bessemer Trust
- ------------------
Investment Advisor

OLD WESTBURY CORE EQUITIES FUND
INVESTMENT ADVISOR'S REPORT
November 1998
- -------------------------------------------------------------------------------
On a total return basis, the Old Westbury Core Equities Fund was up 0.1%*
since its inception on March 2, 1998 through October 31, 1998, compared to a
5.7% increase in the Standard & Poor's ("S&P") 500 Index.** Because the Fund
is so small, performance is easily distorted by the flow of monies into the
Fund. In particular, large share purchases made near an interim peak in the
stock market can negatively affect a small fund over a short time period
should the market subsequently decline as it did in the July-September
quarter. Going forward, these problems should now be behind us.

The fourth calendar quarter of 1998 began on a sour note with U.S. equities
testing their lows of late August. While it appeared this test would be
successful, an unexpected interest rate cut by the Federal Reserve Board
("Fed") on October 15, 1998, changed the whole dynamics. Any concerns that
investors might have had about a near term recession had to be shelved and the
stock market immediately responded by climbing to new highs in the ensuing
weeks.

The Fed's aggressive moves to lower interest rates caused us to
substantially revise our thinking. Near term prospects of a domestic slowdown
had to be discarded and prospects for a renewed surge in consumer spending
rose significantly. At the same time, our on-going conversations with
corporations revealed that while capital spending for bricks and mortar would
decline in 1999, spending for technology was only being reduced in a few
isolated instances and was actually being increased for many companies as the
Year 2000 came even closer. We concluded that spending for personal computers,
data processing, and telephone infrastructure would remain strong.
Consequently, we reversed ourselves and poured money into technology stocks
taking our positions up to 20% of the portfolio. In a nutshell, our dominant
investment move of 1998 was to switch out of financial stocks and into
technology companies.

Looking ahead to 1999, we are more optimistic than most observers. We expect
the momentum of the fourth calendar quarter to carry over into
- -----------
* Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. 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 S&P 500 Index is an unmanaged index comprised of stocks in industry,
transportation, financial and public utility companies. Investments cannot
be made in an index.

OLD WESTBURY CORE EQUITIES FUND
INVESTMENT ADVISOR'S REPORT
November 1998 (Continued)
- -------------------------------------------------------------------------------

the initial three months of the coming year. While many anticipate a worldwide
slowdown next year, we think just the opposite may occur. Domestically, this
long lasting economic expansion rolls along. Even as corporate restructurings
continue to result in layoffs, demand for workers, particularly in the service
sector, booms and non-farm payrolls steadily move higher. We are forecasting
solid growth from Europe and a resulting strong demand for U.S. products. In
the Far East, things may not be great, but they are not getting any worse. The
recovery of the Pacific Rim countries may be slow and arduous, but it has
started. Latin America, especially Brazil, remains troublesome; however, we
believe this region will hold together.

Today, it is fashionable to forecast corporate profits to be flat-to-down in
the next twelve months. We do not share this view. Some special factors
account for the recent decline in overall corporate profitability.
Specifically, the banks and brokerage companies took large writedowns in their
trading positions as world financial markets tumbled over the summer, the
energy companies had sharp declines in earnings as oil fell $9/barrel year-
over-year, and General Motors' bottom line suffered from its long strike. We
would expect the first and third of these three factors to be absent next year
and oil should not drop another $9/barrel. With the dollar having weakened
against the major currencies, the multinationals should begin to see currency
changes adding to, rather than subtracting from, their earnings. At this time,
we are anticipating a 5-7% gain in S&P earnings in 1999.

The sharp recovery of the stock market from the autumn lows ought to be
sustained as investors remain confident and funds flow into 401(K)s and other
savings plans as the new year begins. We think that market leadership will
remain narrow with those companies that are able to show strong earnings
growth moving toward higher valuations. Characteristically, these companies
are most likely to dominate their industries, be the low cost producer, have
the best technology, or have the freedom to raise prices. These types of
companies epitomize our portfolio. Despite everything that occurred the
average earnings increase of our portfolio in the third quarter was 20%--in
line with what we have achieved for some time. We feel that this same rate of
profit growth is sustainable into the new year.

We appreciate your support of this Fund and believe everyone should be well
rewarded over time as the earnings dynamics ought to lead to higher
valuations. The initial start-up pains are now behind us, and the Fund has
reached sufficient size that purchases and sales of its shares should no
longer have a disproportional impact on performance.

OLD WESTBURY CORE EQUITIES FUND
INVESTMENT ADVISOR'S REPORT
October 31, 1998 (Concluded)
- --------------------------------------------------------------------------------

See Appendix A.1.

AVERAGE TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1998*

<TABLE>
<CAPTION>
OLD WESTBURY CORE EQUITIES FUND
-------------------------------
<S> <C>
Since Inception (March 2, 1998).......................................... 0.1%

S&P 500 INDEX
-------------
(March 1, 1998 to October 31, 1998)...................................... 5.7%
</TABLE>

*Performance quoted represents past performance and is not indicative of future
results. 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 with dividends and capital gains reinvested. The S & P 500 Index also
includes the reinvestment of dividends but does not include fees and expenses
associated with an investment in the Portfolio.

OLD WESTBURY GROWTH OPPORTUNITY FUND
INVESTMENT ADVISOR'S REPORT
November 1998
- -------------------------------------------------------------------------------
The equity market the past several months has experienced dramatic changes
in price level which has resulted in a roller coaster effect in investor
sentiment. During April through July while the Dow Jones Industrials and
Standard & Poor's ("S&P") 500 Index* made new highs investors were quite
optimistic even as the broad market as measured by breadth (issues advancing
versus issues declining) began to deteriorate. Beginning in April the stocks
within the Old Westbury Growth Opportunity Fund ("Growth Opportunity")
reflected this weakening which was not surprising given that the portfolio had
appreciated over 40% the previous twelve months. Through a process of reducing
positions in stocks that were overvalued or whose fundamentals were
deteriorating, the cash component of the portfolio increased from low single
digits to over 20% in August. Beginning in July the broad market experienced a
very significant decline, and by October the average stock had declined almost
50% from its recent high. The Dow Jones Industrials and the S&P 500 were down
also but less than 20% from their high. This disparity in performance
highlights two factors. First, the S&P 500 and the Nasdaq indices are poor
proxies for the broad market because they are market weighted and reflect the
movement of the largest stocks. Second, investors continue to favor large
capitalization stocks over small caps. The preference for larger stocks in
fact has been so strong that two of the three worst periods of
underperformance of small caps versus large caps have occurred in the past 30-
months. For the twelve months ending October 8, 1998, the Russell 2000 Index**
(small cap index) had underperformed the S&P 500 by over 33 percentage points.
Although small cap stocks have performed better since October 8, the Russell
2000 remains more than 30 percentage points behind the S&P 500 for the year to
date.

As a result of these two periods of underperformance, the valuation of small
cap stocks has never been more attractive compared to the S&P 500. Seldom do
small cap stocks sell at lower earnings multiples than the S&P 500 stocks, as
they now do. As a result of the sharp decline in prices Growth
- -----------
* The S&P 500 Index is an unmanaged index comprised of stocks in industry,
transportation, financial and public utility companies. Investments cannot
be made in an index.

** Russell 2000 Index is a broadly diversified unmanaged index consisting of
approximately 2,000 small capitalization common stocks that can be used to
compare the total return of funds whose portfolios are invested primarily
in small capitalization stocks. Investments cannot be made in an index.

OLD WESTBURY GROWTH OPPORTUNITY FUND
INVESTMENT ADVISOR'S REPORT
November 1998 (Continued)
- -------------------------------------------------------------------------------

Opportunity now has over a dozen new positions. The theme common among most of
these companies is that they have above average margins, high returns, low
debt and have grown earnings at high rates. Additionally, most of the stocks
were initially purchased at price earnings multiples which were at the low end
of the five year P/E range.

Investor sentiment by late November had risen from the depths of fear
recorded in September and October to challenge the very high readings of July.
Just as in April through July the breadth of the market has begun to turn
down. It is impossible to know if this deterioration is the result of end of
year tax loss selling or something more basic and serious which may cause a
test of the lows the market recorded in August through early October. The cash
within the portfolio has declined from 25% to about 6% of net assets currently
as the attractively valued stocks entered the portfolio. Given the breadth of
deterioration any major changes within the portfolio will occur after the New
Year. At that time it will be easier to assess the strength of the market and
the correct implications of the recent weakness in breadth.

Regardless of the near term market action the quality of the companies
within Growth Opportunity is very good. We believe earnings growth for 1999
should be well above the market and the portfolio average price earnings
multiple is below the market. The portfolio is therefore well positioned
relative to its benchmark. Your continued confidence in our efforts is greatly
appreciated.

OLD WESTBURY GROWTH OPPORTUNITY FUND
INVESTMENT ADVISOR'S REPORT
October 31, 1998 (Concluded)
- --------------------------------------------------------------------------------

See Appendix A.2.

AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1998*

<TABLE>
<CAPTION>
OLD WESTBURY GROWTH OPPORTUNITY FUND
------------------------------------
<S> <C>
1 Year................................................................ (10.1)%
Since Inception (February 28, 1997)................................... 3.7%

RUSSELL 2500 INDEX
------------------
1 Year................................................................ 7.7%
(February 28, 1997 to October 31, 1998)............................... 6.3%
</TABLE>

The chart above illustrates the total value of a $10,000 investment
(excluding sales charge) from inception with dividends and capital gains
reinvested. The Russell 2500 Index also includes the reinvestment of dividends
but does not include fees and expenses associated with an investment in the
Portfolio.

OLD WESTBURY INTERNATIONAL FUND
INVESTMENT ADVISOR'S REPORT
November 1998
- -------------------------------------------------------------------------------
International markets suffered sharp declines in the second half of the Old
Westbury International Fund's ("International Fund") fiscal year with emerging
markets taking a particularly hard hit+. The continuing problems in Asia
raised risk premiums for other emerging markets and pushed down commodity
prices on which many depended. The sudden default of Russia on August 17,
1998, caused a flight to quality from which even developed markets were not
immune. Central bankers in many leading economies responded with interest rate
cuts designed to boost growth. Lower rates combined with initiatives to assist
emerging markets and a stronger yen have helped markets to stabilize and
rebound in October.

PERFORMANCE

The International Fund was hard hit by the exposure to emerging markets. It
fell 17.0%* over the six months ended October 31, 1998. This compares with a
fall in the Morgan Stanley Capital International: Europe, Australia, and Far
East Index ("EAFE")** of 5.0% and in the emerging market Morgan Stanley
Capital International Emerging Markets Free Index ("EMF")** of 33.4%. The
International Fund fell 10.2%* during the fiscal year ended October 31, 1998,
compared to a rise in the EAFE Index of 9.6% and a fall in the EMF Index of
31.0%.

PORTFOLIO COMPOSITION

In response to the continuing collapse of confidence in Asia and concern
that this would spill over to other areas, the decision was made in July to
sell virtually all of the International Fund's investments in the world's
emerging markets (including Hong Kong/China). Holdings in the emerging markets
have been reduced from 28% to 6% of the Fund's portfolio. Our intention is to
maintain significant exposure to only one emerging market, Poland. This is
because Poland's economy is now much more influenced by conditions in Western
Europe than by Russia or the rest of Central
- -----------
* Performance quoted is based on net asset value, represents past performance
and is not indicative of future results. 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. Total return does not reflect
the sales charge that was in effect prior to March 1, 1998.
** 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 EMF 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. These indices are
unmanaged, and investments cannot be made in an index.
+ Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.

OLD WESTBURY INTERNATIONAL FUND
INVESTMENT ADVISOR'S REPORT
November 1998 (Continued)
- -------------------------------------------------------------------------------

Europe. The International Fund has also sold its holdings in Australia, which
is sensitive both to declining commodity prices and to events in Asia as a
whole.

Due to the extreme uncertainty in international markets, the bulk of the
proceeds was invested in short term reserves during August and most of
September and then reinvested in Japan and Europe. The weighting in Japan was
raised from 11% to 18% and the exposure to domestic sectors was increased. The
weighting in the developed markets of Europe was increased from 54% to 69%.

The European portfolio was also restructured in July and August to reflect a
more cautious stance on emerging markets and global growth. The exposure to
global banks, cyclical companies and companies relying on emerging markets for
growth was reduced. Many of these subsequently issued disappointing results or
trading statements resulting in falls of 30-40% in market value. A number of
these have been repurchased. The International Fund has also strengthened its
holdings in companies underpinned by solid domestic (meaning European)
consumption.

CONCLUSION

We are encouraged by recent actions taken by governments and central bankers
of the developed world in an attempt to promote growth and stabilize the world
financial system and consider that equities in Europe and Japan provide
attractive opportunities at this time. European economies--outside the UK--are
emerging from a period of subdued growth and should be supported by strong
domestic consumption and restructuring. In Japan the economy has been
continuing to deteriorate. But, the Japanese government seems at last to be
taking steps which should provide support to the banking sector and the
economy and there are increasing signs of corporate restructuring.

OLD WESTBURY INTERNATIONAL FUND
INVESTMENT ADVISOR'S REPORT
October 31, 1998 (Concluded)
- --------------------------------------------------------------------------------

See Appendix A.3.

AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1998*

<TABLE>
<CAPTION>
OLD WESTBURY INTERNATIONAL FUND
-------------------------------
<S> <C>
1 Year................................................................ (10.2)%
Since Inception (October 22, 1993).................................... 1.8%

EAFE INDEX
----------
1 Year................................................................ 9.6%
(October 22, 1993 to October 31, 1998)................................ 6.80%
</TABLE>

The chart above illustrates the total value of a $10,000 investment
(excluding sales charge) from inception with dividends and capital gains
reinvested. 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 Portfolio.

OLD WESTBURY INTERNATIONAL FUND
INVESTMENT OUTLOOK
November 1998
- -------------------------------------------------------------------------------
EMERGING MARKETS

In the third quarter of 1998, the scale of the problems in South East Asia
was emphatically confirmed. Indonesia reported a fall of 17% in Gross Domestic
Product ("GDP") for the second quarter; Thailand and Korea also announced
sharp falls. Even in China growth fell short of expectations. With the
possibility of swift recoveries in these economies highly unlikely, an
immediate future of great volatility was guaranteed.

The associated falls in commodity prices and rising risk premia undermined
the prospects for growth in other emerging markets. The collapse of the ruble
and effective default by Russia on August 17, 1998, less than a month after a
package was agreed by the International Monetary Fund, emphasized the
seriousness of the structural economic difficulties in the former Soviet
Union. Some of the same risks attach to Brazil.

Recently the rebound in the yen and interest rate cuts in many developed
economies, combined with better domestic policies, have helped to stabilize
things in parts of Asia and Brazil. We have seen substantial falls in all of
these markets and more recently sharp rebounds, but we consider the structural
transformations required will take a long time and the long-term risks still
outweigh the potential (and almost certainly short-term) rewards.

Poland has substantially restructured its economy. It is now much more
closely linked to developments in Continental Europe than to Russia. It has
received approval to join the European Union in 2003 and has already fulfilled
all the economic requirements for European Monetary Unit ("EMU"). Poland has
managed seven years of strong steady growth and we believe the Polish economy
should expand output by approximately 4.5% in 1998 and 1999.

JAPAN

The Japanese economy continues to be extremely weak. But, recent statistics
suggest that the rate of deterioration is slowing. Industrial production and
housing start-ups appear to have bottomed; inventory levels fell sharply in
September; and a rise of 20% in public works orders suggests that the spending
from April's budget is finally starting to feed through.

A number of government initiatives in early October are encouraging. The
bank bill could provide up to $500 billion from the United States for

OLD WESTBURY INTERNATIONAL FUND
INVESTMENT OUTLOOK
November 1998 (Continued)
- -------------------------------------------------------------------------------

the sector. This should at the very least help to restore confidence in the
banking system by addressing capital adequacy. The $200 billion United States
package of investment and tax cuts should support consumer confidence while
the recent strength of the yen provides scope for the government to increase
liquidity without threatening a collapse of the yen. At the company level,
reform is progressing slowly and at an uneven pace. We retain a highly
concentrated portfolio but have been increasing our investments in Japanese
companies that we believe can benefit from any domestic recovery.

EUROPE

Europe, apart from the UK, is in the relatively early stages of a cyclical
recovery. The recovery was led by exports but this has started to feed through
into domestic consumption. Forecasts for GNP have been reduced as investors
attempt to assess the impact of a deteriorating external environment. Trade
and investment is already slowing but consumer confidence outside the UK is
strong and unemployment continues to fall. Interest rates have not been cut in
France or Germany but EMU convergence at 3.3% has involved substantial cuts
elsewhere. With inflation for the Continent likely to come in below 1% in
1998, there is scope to reduce rates further if necessary. European
governments led by the new socialist government in Germany are stridently in
favor of growth so fiscal policies are likely to be supportive. We anticipate
growth of 2.5% in 1998 and 2% in 1999 should be possible. Europe also has the
benefit of a large external surplus equivalent to 1.5% of GDP.

Corporate profits should be supported by lower interest charges, lower
commodity prices and continued restructuring benefits. We believe growth
approaching 10% in 1998 and 1999 looks possible and valuations on this basis
still look reasonable. We particularly like France, Holland and Italy, which
should see the strongest earnings growth and offer a diversified range of
investments. We have also increased the exposure to Germany where valuations
of consumer cyclicals, particularly car companies, are at historic lows.

OLD WESTBURY INTERNATIONAL FUND
INVESTMENT OUTLOOK
November 1998 (Concluded)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
GEOGRAPHICAL AREA PORTFOLIO ALLOCATION AT
- ----------------- -------------------------------- EAFE
10/31/1998 10/31/1997 10/31/1996 INDEX
---------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Australia............................... -- 7.3% 11.4% 2.7%
Hong Kong............................... 0.3% 7.3 9.5 2.4
Rest of Asia............................ 0.9 7.9 15.8 0.9
UK...................................... 18.9 11.7 8.9 21.9
France.................................. 12.3 6.2 6.4 9.4
Germany................................. 8.2 4.2 4.0 10.4
Netherlands............................. 9.0 3.6 3.6 5.4
Switzerland............................. 7.6 3.4 2.4 8.3
Spain................................... 1.9 3.1 4.8 3.4
Italy................................... 8.5 1.4 1.3 4.8
Rest of Europe.......................... 8.0 9.3 11.6 8.9
Latin America........................... 0.3 12.8 10.8 --
South Africa............................ -- 2.1 3.0 --
Canada.................................. -- -- 2.1 --
Japan................................... 18.5 13.5 -- 21.5
Other assets and
liabilities, net*..................... 5.6 6.2 4.4 --
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====
</TABLE>
- -----------
* Includes cash and short term investments, unrealized gains/losses on forward
foreign currency contracts, pending trades and fund share transactions, in-
terest and dividends receivable and accrued expenses payable.

OLD WESTBURY FIXED INCOME FUND
INVESTMENT ADVISOR'S REPORT
November 1998
- -------------------------------------------------------------------------------

The total return of the Old Westbury Fixed Income Fund since its inception on
March 12, 1998 through October 31, 1998, was 9.3%,* versus 6.7% for the Lehman
Brothers Government/Corporate Bond Total Index.**

We plan to keep the portfolio's duration somewhat longer than the benchmark.
This strategy is consistent with the view that yields are high relative to
inflation and that U.S. fiscal and monetary policies are still leaning against
the risk of rising inflation. In the past several months we took steps to
diversify the portfolio by selling treasury securities and purchasing
corporate and municipal securities with the proceeds. This shift was made
because the yield advantage on corporates and municipals had widened
substantially from levels earlier in the year. We will continue to look for
opportunities in these sectors to improve returns.

- -----------
* Performance quoted represents past performance, and is not indicative of
future results. 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.

** Lehman Brothers Government/Corporate Bond Total Index is composed of all
bonds that are investment grade-i.e., rated Baa or higher by Moody's or BBB
or higher by Standard & Poor's, if unrated by Moody's. Issues must have at
least one year to maturity. Total return comprises price
appreciation/depreciation and income as a percentage of the original
investment. This index is unmanaged and investments cannot be made in an
index.

OLD WESTBURY FIXED INCOME FUND
INVESTMENT ADVISOR'S REPORT
October 31, 1998 (Concluded)
- -------------------------------------------------------------------------------

See Appendix A.4.

AVERAGE TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1998*

<TABLE>
<CAPTION>
OLD WESTBURY FIXED INCOME FUND
------------------------------
<S> <C>
Since Inception (March 12, 1998)......................................... 9.3%

LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND TOTAL INDEX
-----------------------------------------------------
(March 12, 1998 to October 31, 1998)..................................... 6.7%
</TABLE>

*Performance quoted represents past performance and is not indicative of
future results. 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 with dividends and capital gains reinvested. The Lehman Brothers
Government/Corporate Bond Total Index also includes the reinvestment of
interest but does not include fees and expenses associated with an investment
in the Portfolio.

OLD WESTBURY MUNICIPAL BOND FUND
INVESTMENT ADVISOR'S REPORT
November 1998
- -------------------------------------------------------------------------------

The total return of the Old Westbury Municipal Bond Fund since its inception
on March 6, 1998 through October 31, 1998, was 6.2%.* This compared to the
Lehman Brothers Municipal Bond Index** which had a total return for the same
period of 4.7%.

The municipal market has primarily benefited from weak foreign economies that
resulted in low U.S. inflation and declining U.S. interest rates. Looking
forward, investments in municipal securities look attractive for two reasons.
First, we anticipate interest rates to continue declining in 1999 as worldwide
needs for goods fall short of capacity to produce goods. Second, yields on
municipal bonds have not fallen to the extent that yields on U.S. Treasury
securities have. Long term high quality municipal bonds currently yield almost
as much as U.S. Treasury securities despite the tax exemption that municipal
bonds enjoy+; tax free bonds presently yield 97% of the 30 year Treasury bond
yield. We view this relationship as an aberration and one that, in time, will
change in favor of municipal bonds. A shift back to more of a historically
normal Treasury/municipal relationship would provide significant capital
appreciation for municipal bonds holders.

Given a favorable future outlook for interest rates and significant embedded
value in municipal securities we anticipate maintaining a longer average
maturity structure to capture higher return.

- -----------
* Performance quoted represents past performance, and is not indicative of
future results. 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.

** Lehman Brothers Municipal Bond Index is a broad market performance
benchmark for the tax-exempt bond market. To be included in the Lehman
Brothers Municipal Bond Index, bonds must have a minimum credit rating of
at least Baa. They must have an outstanding par value of at least $3
million and be issued as part of a transaction of at least $50 million. The
Index includes both zero coupon bonds and bonds subject to the alternative
minimum tax. This index is unmanaged, and investments cannot be made in an
index.

+ Income may be subject to the federal alternative minimum tax and state and
local taxes.

OLD WESTBURY MUNICIPAL BOND FUND
INVESTMENT ADVISOR'S REPORT
October 31, 1998 (Concluded)
- -------------------------------------------------------------------------------

See Appendix A.5.

AVERAGE TOTAL RETURNS
FOR THE PERIOD ENDED OCTOBER 31, 1998*

<TABLE>
<CAPTION>
OLD WESTBURY MUNICIPAL BOND FUND
--------------------------------
<S> <C>
Since Inception (March 6, 1998).......................................... 6.2%

LEHMAN BROTHERS MUNICIPAL BOND INDEX
------------------------------------
(March 1, 1998 to October 31, 1998)...................................... 4.7%
</TABLE>

*Performance quoted represents past performance and is not indicative of
future results. 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 with dividends and capital gains reinvested. The Lehman Brothers
Municipal Bond Index also includes the reinvestment of interest but does not
include fees and expenses associated with an investment in the Portfolio.

OLD WESTBURY CORE EQUITIES FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
------ ------------------------------------------ -----------
<C> <S> <C>
COMMON STOCKS--94.69%
CAPITAL GOODS--6.72%
12,150 General Electric Co. $ 1,063,125
18,800 Tyco Intl., Ltd. New 1,164,425
-----------
TOTAL 2,227,550
-----------
COMMUNICATION SERVICES--10.26%
17,650 Chancellor Media Corp. 677,319
15,980 Clear Channel Communications, Inc. 728,089
22,708 MCI Worldcom, Inc. 1,254,617
19,500 Tele-Communications, Inc. "A' Liberty Med. 742,219
-----------
TOTAL 3,402,244
-----------
CONSUMER CYCLICAL--21.04%
29,600 Carnival Corp. 958,300
13,200 Costco Companies, Inc. 749,100
19,250 Dayton-Hudson Corp. 815,719
41,850 Family Dollar Stores Inc. 758,531
27,700 Home Depot Inc. 1,204,950
25,450 Kohl's Corp. 1,216,828
17,400 Omnicom Group Inc. 860,212
6,000 Wal-Mart Stores, Inc. 414,000
-----------
TOTAL 6,977,640
-----------
CONSUMER STAPLES--24.95%
8,350 Clorox Co. 912,238
10,200 Coca-Cola Company 689,775
5,650 Colgate-Palmolive Co. 499,319
23,200 CVS Corp. 1,059,950
9,900 Gillette Co. 444,881
18,350 Kroger Co. 1,018,425
30,300 Safeway Inc. 1,448,719
11,300 Time Warner, Inc. 1,048,781
23,700 Walgreen Co. 1,153,894
-----------
TOTAL 8,275,982
-----------
FINANCE--3.11%
14,550 Federal National Mortgage Association 1,030,322
-----------
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY CORE EQUITIES FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Concluded)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
------ ------------------------------------------- -----------
<C> <S> <C>
HEALTHCARE--14.45%
12,500 American Home Products $ 609,375
3,000 Cardinal Health 283,686
1,500 Guidant Corp. 114,750
28,150 Health Management Association Inc., Class A 501,422
14,800 Medtronic Inc. 962,000
5,750 Merck & Co. 777,688
8,650 Pfizer Inc. 928,253
12,400 Quintiles Transnational Corp. 561,100
1,000 Watson Pharmaceutical 55,625
-----------
TOTAL 4,793,899
-----------
TECHNOLOGY--11.81%
3,000 America Online, Inc. 381,187
8,600 Cisco Systems Inc. 541,800
8,400 EMC Corp. 540,750
33,500 HBO & Co. 879,375
5,200 Intel Corp. 463,775
3,200 International Business Machines 475,000
4,200 Microsoft Corp. 444,675
3,000 Texas Instruments, Inc 191,813
-----------
TOTAL 3,918,375
-----------
UTILITIES--2.35%
14,750 Enron Corp. Oregon 778,063
-----------
TOTAL COMMON STOCKS
(cost $30,030,538) 31,404,075
OTHER INVESTMENTS--3.32%
10,000 S & P 500 Depository Receipts
(cost $985,744) 1,101,250
-----------
TOTAL INVESTMENTS--98.01%
(cost $31,016,282)(b) 32,505,325
CASH AND OTHER ASSETS NET OF LIABILITIES--1.99% 659,014
-----------
NET ASSETS--100% $33,164,339
===========
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY GROWTH OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS--80.94%
BASIC MATERIALS--4.25%
165,000 Crompton & Knowles Corp. $ 2,650,312
67,000 OM Group, Inc. 2,185,875
------------
TOTAL 4,836,187
------------
CAPITAL GOODS--4.15%
5,137 Alliant Techsystems, Inc. 359,590
88,962 Martin Marietta Material Corp. 4,364,698
------------
TOTAL 4,724,288
------------
COMMUNICATION SERVICES--8.08%
39,088 Comsat Corp. 1,541,533
39,000 Global Crossing, Ltd. 1,121,250
88,680 Teleglobe, Inc. 2,438,700
178,000 (a)Vanguard Cellular Systems, Inc. 4,094,000
------------
TOTAL 9,195,483
------------
CONSUMER CYCLICAL--11.83%
40,000 Ball Corp. 1,687,500
252,636 Casey's General Stores, Inc. 3,536,904
65,458 Dollar Tree Stores 2,524,240
48,800 (a)Promus Hotel Corporation 1,555,500
73,638 (a)Royal Group Techs Ltd. Sub. Vtg. 1,468,157
39,000 Russell Corp. 957,938
107,000 Southam, Inc. 1,733,636
------------
TOTAL 13,463,875
------------
CONSUMER STAPLES--7.66%
19,855 Citadel Communications Co. 407,027
22,000 Dean Foods Company 1,031,250
124,000 Hormel Foods Corp. 4,037,750
110,000 (a)Univision Communications, Inc., Class A 3,245,000
------------
TOTAL 8,721,027
------------
ENERGY--5.95%
39,954 Devon Energy Corp. Oklahoma 1,353,442
58,000 Ensco International, Inc. 764,875
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY GROWTH OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------------------------------------- ------------
<C> <S> <C>
85,255 McDermott International, Inc. $ 2,499,037
265,000 (a)Santa Fe Energy Resources 2,153,125
------------
TOTAL 6,770,479
------------
FINANCE--12.86%
31,313 Allmerica Financial Corp. 1,565,650
240,000 Comdisco, Inc. 3,705,000
8,500 (c)Fairfax Financial Holding Ltd. 2,534,025
34,000 Financial Security Assurance 1,693,625
75,000 Finova Group, Inc. 3,656,250
51,000 Provident Cos., Inc. 1,482,187
------------
TOTAL 14,636,737
------------
HEALTHCARE--9.18%
43,000 Biogen, Inc. 2,988,500
94,200 HCR Manor Care, Inc. 3,061,500
86,600 Pathogenesis Corp. 3,464,000
37,826 Sybron Intl Corp. 936,193
------------
TOTAL 10,450,193
------------
MISCELLANEOUS--5.18%
30,092 G & K Svcs, Inc. 1,376,709
72,395 Stewart Enterprises, Inc., Class A 1,669,610
104,000 Viad Corp. 2,853,500
------------
TOTAL 5,899,819
------------
TECHNOLOGY--8.87%
24,200 Fiserv, Inc. 1,125,300
29,125 Information Resources, Inc. 231,180
29,899 L3 Communications Holdings 1,285,657
212,968 Maxtor Corp. 2,262,785
62,392 Networks Associates, Inc. 2,651,660
39,680 (a)Sterling Commerce, Inc. 1,398,720
23,000 Uniphase Corp. 1,138,500
------------
TOTAL 10,093,802
------------
TRANSPORTATION--2.93%
32,000 Expeditors International of Washington Inc. 1,084,000
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY GROWTH OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Concluded)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES/
PRINCIPAL
AMOUNT VALUE
----------- ----------------------------------------- ------------
<C> <S> <C> <C>
106,500 Southwest Airlines Co. $ 2,249,814
------------
TOTAL 3,333,814
------------
TOTAL COMMON STOCKS
(cost $92,704,872) 92,125,704
------------
CONVERTIBLE BONDS--2.35%
$2,677,000 (c)Candescent Technology, 7.00%, 5/1/2003
(cost $2,677,000) 2,677,000
------------
OTHER INVESTMENTS--4.54%
80,000 S & P Midcap 400 Trust
(cost $4,972,076) 5,165,000
------------
U.S. GOVERNMENT AGENCIES--14.87%
FEDERAL HOME LOAN MORTGAGE CORPORATION
("FHLMC")
$12,000,000 FHLMC 5.12%, 11/4/98 11,951,854
5,000,000 FHLMC 5.16%, 11/13/98 4,978,875
------------
TOTAL U.S. GOVERNMENT AGENCIES (amortized cost
$16,930,729) 16,930,729
------------
TOTAL INVESTMENTS--102.70% (cost $117,284,677)(b) 116,898,433
CASH AND OTHER ASSETS NET OF LIABILITIES--(2.70)% (3,073,519)
------------
NET ASSETS--100% $113,824,914
============
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS--94.39%
ARGENTINA--0.12%
10,093 Disco SA Spons ADR (Consumer Goods) $ 148,241
------------
BRAZIL--0.21%
39,248 Bompreco Supermercados GDR (Consumer Goods) 255,112
------------
EASTERN EUROPE--0.05%
965 Baltic Republics Fund Ltd. Preferred (Mutual Fund) 56,935
------------
FINLAND--0.56%
7,555 Nokia--Class A (Electronics & Electrical Equipment) 689,769
------------
FRANCE--12.26%
17,686 Alcatel (Electronics & Electrical Equipment) 1,975,037
36,758 Banque National De Paris (Banks) 2,333,599
12,741 Banque Paribas ORD A (Financial Services & Property) 938,738
15,246 Elf Aquitaine (Energy) 1,768,569
18,187 Lafarge SA (Materials) 1,863,616
20,564 Pinault au Printemps (Consumer Goods) 3,450,211
31,949 Valeo (Consumer Goods) 2,772,410
------------
TOTAL FRANCE 15,102,180
------------
GERMANY--8.20%
11,033 Allianz AG Holdings--Class D (Financial Services &
Property) 3,789,299
2,155 BMW AG (Consumer Goods) 1,514,442
14,630 Daimler Chrysler AG (Capital Goods) 1,149,134
26,960 Deutsche Bank AG ORD (Banks) 1,679,091
20,049 Mannesmann AG (Services) 1,976,047
------------
TOTAL GERMANY 10,108,013
------------
HONG KONG--0.29%
13,929,882 Champion Technology (Electronics & Electrical
Equipment) 314,725
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
---------- --------------------------------------------------- ------------
<C> <S> <C>
2,500,819 Kantone Holdings Ltd. ORD (Electronics & Electrical
Equipment) $ 48,430
------------
TOTAL HONG KONG 363,155
------------
HUNGARY--0.08%
2,975 Gedeon Richter GDR "S' (Health Care) 99,663
------------
INDIA--0.85%
37,290 State Bank of India GDR (Banks) 298,320
71,718 Videsh Sanchar Nigam Ltd. GDR (Services) 753,039
------------
TOTAL INDIA 1,051,359
------------
IRELAND--2.26%
193,061 Allied Irish Banks PLC (Banks) 2,789,822
------------
ITALY--8.50%
286,200 ENI (Utilities) 1,714,217
499,439 Fiat SPA (Consumer Goods) 1,422,988
110,645 Istituto San Paulo (Banks) 1,650,720
734,766 Istituto Naz Delle (Services) 2,040,766
501,150 Telecom Italia SPA (Services) 3,639,867
------------
TOTAL ITALY 10,468,558
------------
JAPAN--18.51%
195,936 Bank of Tokyo Mitsubishi Bank (Banks) 1,826,708
985 DDI Corporation (Services) 2,888,314
382,947 Fujitsu Ltd. ORD (Electronics and Electrical
Equipment) 4,095,337
683 Nippon Telephone & Telegraph Co. (Services) 5,372,109
35 NTT Mobile Communications (Services) 1,270,806
80,147 Sony Corporation (Electronics & Electrical
Equipment) 5,115,031
68,682 Takeda Chemical Industries (Health Care) 2,244,974
------------
TOTAL JAPAN 22,813,279
------------
NETHERLANDS--9.01%
120,103 ABN Amro Holdings NV (Banks) 2,255,395
21,337 Akzo Nobel NV (Health Care) 831,133
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
---------- ------------------------------------------------ ------------
<C> <S> <C>
8,502 KLM NV (Services) $ 257,277
27,898 Laurus NV (Consumer Goods) 703,507
28,632 Philips Electric NV (Electronics & Electrical
Equipment) 1,526,999
39,854 Vendex NV NLG (Consumer Goods) 1,015,702
42,003 VNU NV (Consumer Goods) 1,455,840
15,742 Wolters Klower CVA (Consumer Goods) 3,057,519
------------
TOTAL NETHERLANDS 11,103,372
------------
POLAND--3.72%
18,926 Bank Slaski S.A. ORD (Banks) 944,926
228,902 Elektrim S.A. ORD (Capital Goods) 2,724,233
198,000 KGHM Polska Miedz (Materials) 706,938
10,000 Powszechny Bank Kredytowy (Banks) 208,999
------------
TOTAL POLAND 4,585,096
------------
PORTUGAL--0.60%
15,727 Portugal Telecom S.A. ORD (Services) 742,623
------------
ROMANIA--0.32%
11,287 Societe Generale Romania Fund Ltd. (Mutual Fund) 395,045
------------
RUSSIA--0.18%
48,872 First N.I.S. Regional Fund (Mutual Fund) 226,033
------------
SPAIN--1.91%
189,625 Vallehermoso SA (Financial Services & Property) 2,347,879
------------
SWITZERLAND--7.62%
1,990 Novartis Reg S.A. ORD (Health Care) 3,594,078
287 Roche Holdings AG (Health Care) 3,356,477
8,891 UBS AG (Banks) 2,444,861
------------
TOTAL SWITZERLAND 9,395,416
------------
TURKEY--0.27%
12,000,000 IS Bankasi C TRL 1000 (Banks) 331,237
------------
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Concluded)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES/
PRINCIPAL
AMOUNT VALUE
---------- ---------------------------------------------------- ------------
<C> <S> <C>
UNITED KINGDOM--18.87%
210,200 British Airways ORD (Services) $ 1,528,049
235,070 British Sky Broadcasting (Services) 1,917,525
214,484 Carlton Communications PLC ORD (Electronics &
Electrical Equipment) 1,544,821
123,470 Diageo PLC (Consumer Goods) 1,333,939
86,760 Land Securities ORD (Financial Services & Property) 1,224,346
230,000 Peninsula & Oriental (Diversified) 2,400,107
331,252 Royal Sun Alliance ORD (Financial Services &
Property) 3,035,014
323,500 Scottish Power ORD (Utilities) 3,186,151
627,710 Siebe PLC (Diversified) 2,575,965
166,207 The Boots Company PLC ORD (Health Care) 2,497,219
52,212 Zeneca Group PLC (Health Care) 2,006,220
------------
TOTAL UNITED KINGDOM 23,249,356
------------
TOTAL COMMON AND PREFERRED STOCKS (cost $108,218,767) 116,322,143
U.S. GOVERNMENT AGENCIES--2.43%
$3,000,000 Federal Home Loan Bank, 4.77%, 11/19/1998 (amortized
cost $2,988,075) 2,988,075
------------
TOTAL INVESTMENTS--96.82% (cost $111,206,842)(b) 119,310,218
CASH AND OTHER ASSETS NET OF LIABILITIES--3.18% 3,921,726
------------
NET ASSETS--100% $123,231,944
============
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ------------------------------------------------- ----------
<C> <S> <C>
BONDS--95.34%
U.S. GOVERNMENT SECURITIES--87.49%
$2,880,000 U.S. Treasury Notes, 5.875%, 11/15/2005 $3,119,400
980,000 U.S. Treasury Notes, 5.875%, 11/30/2001 1,022,262
500,000 U.S. Treasury Bonds, 6.00%, 02/15/2026 545,469
200,000 U.S. Treasury Bonds, 6.25%, 02/28/2002 211,188
----------
TOTAL 4,898,319
----------
OTHER BONDS--7.85%
25,000 Associates Corp. NA, 5.96%, 05/15/2037 26,355
250,000 Maricopa County Unit School District 80, 4.70%,
07/01/2012 255,213
100,000 New England Power, 8.00%, 08/01/2022, Defeased to
08/01/2002 109,597
25,000 Private Export Funding CP, 6.90%, 01/31/2003 26,945
20,000 Xerox Corp., 5.875%, 06/15/2037 21,159
----------
TOTAL 439,269
----------
TOTAL INVESTMENTS--95.34% (cost $5,083,623)(b) 5,337,588
CASH AND OTHER ASSETS NET OF LIABILITIES--4.66% 261,070
----------
NET ASSETS--100% $5,598,658
==========
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
LONG-TERM MUNICIPAL BONDS--97.84%
ARIZONA--4.83%
$500,000 Maricopa County Unit School District 80, 5.20%,
07/01/2013 $ 533,370
-----------
FLORIDA--3.17%
200,000 Jacksonville Florida Electric Authority, 5.00%,
10/01/2019 200,146
150,000 Titusville Florida Water & Sewer, 4.80%, 10/01/2015 150,120
-----------
TOTAL 350,266
-----------
ILLINOIS--14.07%
200,000 Chicago Illinios AMBAC, 6.00%, 01/01/2011 221,300
400,000 Chicago Illinois Board Education GO AMBAC, 6.75%,
12/01/2008 481,316
100,000 Chicago Park District Illinois GO UT Refunding Bonds,
5.10% (Original Issue Yield: 5.200%), 1/1/2011 (AMBAC
INS) 104,232
400,000 Eastern Illinois University Rev, 4.85%, 10/01/2011 409,096
100,000 Illinois Health Facs Authority, 5.25%, 11/15/2021 100,497
210,000 Kane County Community Unit School District Number 304
GO UT Refunding Bonds, 6.10%, 6/1/2006 (FGIC INS) 238,014
-----------
TOTAL 1,554,455
-----------
MICHIGAN--12.43%
310,000 East China School District Michigan, 5.00%, 05/01/2014 314,213
100,000 Lincoln Park School District Michigan, 5.05%,
05/01/2012 103,308
100,000 Michigan Municipal Bond Authority Revenue Refunding
Bonds (Series A), 5.00%, 10/1/2000 102,862
100,000 Michigan State Hospital Finance Authority Revenue
Refunding Bonds, 5.00% (Original Issue Yield: 5.150%),
2/15/2012 (MBIA INS) 101,895
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ---------------------------------------------------- -----------
<C> <S> <C>
$460,000 Parchment School District Michigan GO, 5.00%,
05/01/2025 $ 467,470
100,000 Petoskey Michigan Public School District, 5.25%
(Original Issue Yield: 5.300%), 5/1/2006 106,351
175,000 St. Johns Michigan Public Schools, 5.00%, 05/01/2021 177,130
-----------
TOTAL 1,373,229
-----------
NEW JERSEY--3.77%
100,000 Chathams District NJ GO Board Education, 6.10%,
08/01/2009 111,861
300,000 Mercer County NJ Impt Authority, 4.875%, 12/01/2013 304,485
-----------
TOTAL 416,346
-----------
NEW YORK--17.87%
250,000 Long Island Power Authority NY, 5.00%, 12/01/2018 250,643
80,000 New York City NY GO UT (Series 95D), 6.00% (Original
Issue Yield: 6.200%), 2/15/2020 85,522
20,000 New York City NY Rfd (Series 95D), 6.00% (Original
Issue Yield: 6.200%), 2/15/2020 22,348
250,000 New York City NY MBIA, 4.625%, 08/01/2010 253,383
100,000 NY ST Dorm Authority Columbia, 5.00%, 07/01/2015 102,034
100,000 New York St. Environmental Facility Corp. Pollution
Control Revenue Bonds (Series A), 4.70%, 2/15/2004 103,738
100,000 North Hempstead NY GO UT (Series A), 5.00% (Original
Issue Yield: 5.150%), 1/15/2014 (FGIC INS) 101,885
350,000 Orange Co New York, 5.00%, 07/15/2019 350,588
500,000 Triborough Bridge & Tunnel, 5.00%, 01/01/2017 502,090
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
$200,000 Triborough Bridge & Tunnel, 5.20%, 01/01/2022 $ 202,666
-----------
TOTAL 1,974,897
-----------
PENNSYLVANIA--4.27%
240,000 Altoona Pennsylvania GO MBIA, 4.35%, 09/01/2010 238,320
100,000 Montgomery County Pennsylvania GO UT (Series A), 6.10%
(Original Issue Yield: 6.150%), 10/15/2025 105,010
125,000 Trinity Area School District Pennsylvania, 5.00%,
11/01/2011 128,973
-----------
TOTAL 472,303
-----------
SOUTH CAROLINA--1.00 %
100,000 Piedmont Municipal Power Agency SC, Electric Revenue
Refunding Bonds, 6.30% (Original Issue Yield: 6.490%),
1/1/2022 (MBIA INS) 111,382
-----------
TENNESSEE--1.37%
140,000 Memphis Tennessee San Sewer, 5.75%, 10/01/2014 150,952
-----------
TEXAS--4.60%
125,000 Mission Texas Independent School District GO UT, 4.50%
(Original Issue Yield: 5.450%), 2/15/2018 118,350
100,000 North Central Texas Health, 5.75%, 06/01/2026 110,455
285,000 Victoria ISD Texas GO PSF, 5.00%,02/15/2023 279,867
-----------
TOTAL 508,672
-----------
UTAH--7.62%
400,000 Conroe Ind School District Utah GO, 5.25%, 02/15/2012 429,740
400,000 Intermountain Power Agency, Utah, 5.25%, 07/01/2015 412,504
-----------
TOTAL 842,244
-----------
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1998 (Concluded)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
WASHINGTON--11.53%
$300,000 King County Washington Sewer GO/Rev, 6.25%, 01/01/2035 $ 335,133
300,000 Seattle Washington Muni Light & Power, 5.00%,
07/01/2016 301,707
400,000 Seattle Washington Muni Met, 6.25%, 01/01/2017 443,944
180,000 Washington State GO DD - 14&B, 6.00%, 09/01/2019 193,234
-----------
TOTAL 1,274,018
-----------
WISCONSIN--4.78%
125,000 Milwaukee Wisconsin UT GO Refunding Bonds, 4.80%
(Original Issue Yield: 4.950%), 12/1/2000 128,397
400,000 Waupun Wisconsin School District, 4.85%, 04/01/2014 400,244
-----------
TOTAL 528,641
-----------
PUERTO RICO--6.53%
100,000 Puerto Rico Commonwealth Aqueduct & Sewer Authority
Revenue Refunding Bonds, 6.00%, 7/1/2009 (AMBAC GTD) 115,101
100,000 Puerto Rico Commonwealth UT GO, 5.75% (Original Issue
Yield: 4.820), 7/1/2012 (MBIA INS) 113,640
500,000 Puerto Rico Electric Power Authority, 4.75%,
07/01/2017 492,665
-----------
TOTAL 721,406
-----------
TOTAL INVESTMENTS--97.84%
(cost $10,593,445)(b) 10,812,181
CASH AND OTHER ASSETS NET OF LIABILITIES--2.16% 238,200
-----------
NET ASSETS--100.0% $11,050,381
===========
</TABLE>

See Notes to Portfolios of Investments on Page 31.

OLD WESTBURY FUNDS, INC.
NOTES TO PORTFOLIOS OF INVESTMENTS
October 31, 1998
- -------------------------------------------------------------------------------

(a) Non-income producing security.

(b) At October 31, 1998, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes.

<TABLE>
<CAPTION>
NET AGGREGATE AGGREGATE
UNREALIZED GROSS GROSS
APPRECIATION/ UNREALIZED UNREALIZED
(DEPRECIATION) APPRECIATION DEPRECIATION
OLD WESTBURY FOR FEDERAL FOR FEDERAL FOR FEDERAL TOTAL NET
FUNDS, INC. TAX PURPOSES TAX PURPOSES TAX PURPOSES ASSETS
----------------------- -------------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
Core Equities Fund $1,489,043 $ 2,238,749 $ 749,706 $ 33,164,339
Growth Opportunity Fund (386,244) 7,412,442 7,798,686 113,824,914
International Fund 8,103,376 17,635,709 9,532,333 123,231,944
Fixed Income Fund 253,965 255,695 1,730 5,598,658
Municipal Bond Fund 218,736 220,523 1,787 11,050,381
</TABLE>

(c) Denotes a restricted security which is subject to restrictions on resale
under Federal and International Securities laws. At the end of the period,
these securities amounted to $5,211,025, which represents 4.6% of Growth
Opportunity Fund's net assets. See Note 1H to Financial Statements.

The following abbreviations are used in these Portfolios of Investments:

ADR--American Depositary Receipts
AMBAC--American Municipal Bond Assurance Company
DD--Disqualifying Dispositions
FGIC--Financial Guaranty Insurance Company
GO--General Obligation
GDR--Global Depository Receipts
GTD--Guaranty
INS--Insured
MBIA--Municipal Bond Investors Assurance
ORD--Ordinary Shares
PLC--Public Limited Company
UT--Unlimited Tax

See Notes to Financial Statements.

OLD WESTBURY FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CORE GROWTH FIXED MUNICIPAL
EQUITIES OPPORTUNITY INTERNATIONAL INCOME BOND
FUND FUND FUND FUND FUND
----------- ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at market value. $32,505,325 $116,898,433 $119,310,218 $5,337,588 $10,812,181
Cash......................... 1,783,201 985,718 7,234,984 119,150 886,799
Receivable for fund
shares sold................ 46,500 5,500 5,505 34,500 --
Accrued income receivable.... 34,839 198,312 276,585 117,078 155,405
Receivable for
investments sold........... 324,697 141,092 639,157 -- --
Receivable for withholding
taxes--dividends........... -- -- 228,869 -- --
Deferred organization
expense.................... 16,285 19,372 -- 16,378 16,316
Other receivables............ -- -- -- 38,646 22,753
----------- ------------ ------------ ---------- -----------
Total assets............... 34,710,847 118,248,427 127,695,318 5,663,340 11,893,454
----------- ------------ ------------ ---------- -----------
LIABILITIES:
Operating expenses payable... 63,245 624,491 885,779 -- --
Organization costs........... 18,786 -- -- 18,786 18,786
Payable for fund
shares redeemed............ -- -- 1,273,180 -- --
Payable for investments
purchased.................. 1,464,477 3,799,022 2,304,415 45,896 824,287
----------- ------------ ------------ ---------- -----------
Total liabilities.......... 1,546,508 4,423,513 4,463,374 64,682 843,073
----------- ------------ ------------ ---------- -----------
NET ASSETS.................... $33,164,339 $113,824,914 $123,231,944 $5,598,658 $11,050,381
=========== ============ ============ ========== ===========
Net Assets consist of:
Paid in capital.............. $34,041,241 $128,282,044 $134,111,791 $5,219,893 $10,652,888
Undistributed net
investment income.......... -- -- 787,020 83,426 131,951
Accumulated net realized
gain/(loss) on investments
and foreign currency
translations............... (2,365,945) (14,070,886) (19,781,971) 41,374 46,806
Net unrealized
appreciation/(depreciation)
on investments and foreign
currency translations...... 1,489,043 (386,244) 8,115,104 253,965 218,736
----------- ------------ ------------ ---------- -----------
NET ASSETS.................... $33,164,339 $113,824,914 $123,231,944 $5,598,658 $11,050,381
=========== ============ ============ ========== ===========
NET ASSET VALUE, MAXIMUM
OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE........... $ 10.01 $ 10.63 $ 9.74 $ 10.93 $ 10.62
----------- ------------ ------------ ---------- -----------
SHARES OF CAPITAL STOCK
OUTSTANDING.................. 3,312,513 10,706,336 12,649,817 512,140 1,040,078
----------- ------------ ------------ ---------- -----------
INVESTMENTS, AT COST.......... $31,016,282 $117,284,677 $111,206,842 $5,083,623 $10,593,445
----------- ------------ ------------ ---------- -----------
</TABLE>

See Notes to Financial Statements.

OLD WESTBURY FUNDS, INC.
STATEMENTS OF OPERATIONS
For the Period Ended October 31, 1998
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CORE GROWTH
EQUITIES OPPORTUNITY INTERNATIONAL
FUND(A) FUND FUND
---------- ------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................... $ 76,104 $ 372,796 $ 3,728,381(b)
Interest........................... 74,602 541,081 534,148
---------- ------------ ------------
Total income....................... $ 150,706 $ 913,877 $ 4,262,529
---------- ------------ ------------
EXPENSES:
Investment advisory................ 86,185 800,868 1,207,449
Custody............................ 24,624 200,232 309,247
Administration..................... 18,469 150,174 231,936
Shareholder servicing.............. 30,785 250,274 386,545
Registration....................... 29,832 41,650 14,332
Amortization of organization costs. 2,500 5,957 18,293
Distribution....................... 6,330 4,134 13,988
Printing and postage............... 10,000 14,929 20,057
Legal.............................. 10,000 18,964 38,076
Audit.............................. 35,000 34,917 40,104
Transfer agent..................... 17,600 26,356 36,087
Directors.......................... 4,770 8,076 7,644
Miscellaneous...................... 1,000 17,539 35,848
---------- ------------ ------------
Total expenses..................... 277,095 1,574,070 2,359,606
Less fees waived and reimbursed:
Waiver of investment advisory fee.. (86,185) (64,114) --
Waiver of administration fee....... (1,343) (30,043) (52,373)
Reimbursement of other operating
expenses......................... (35,064) -- --
---------- ------------ ------------
Total waivers and reimbursements... (122,592) (94,157) (52,373)
---------- ------------ ------------
Net expenses....................... 154,503 1,479,913 2,307,233
---------- ------------ ------------
NET INVESTMENT INCOME/(LOSS)........ (3,797) (566,036) 1,955,296
---------- ------------ ------------
NET REALIZED AND UNREALIZED LOSS:
Net realized loss on investments... (2,365,945) (13,681,337) (20,093,506)
Net realized loss on foreign
currency transactions............ -- -- (30,245)
Net change in unrealized
appreciation/(depreciation)
on investments................... 1,489,043 (1,535,666) 4,250,623
Net change in unrealized
appreciation on translations of
assets and liabilities in foreign
currencies....................... -- -- 17,598
---------- ------------ ------------
NET REALIZED AND UNREALIZED LOSS.... (876,902) (15,217,003) (15,855,530)
---------- ------------ ------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................... $ (880,699) $(15,783,039) $(13,900,234)
========== ============ ============
</TABLE>
(a)For the period March 2, 1998 (commencement of operations) to October 31,
1998.
(b)Net of foreign withholding tax of $318,377.

See Notes to Financial Statements.

OLD WESTBURY FUNDS, INC.
STATEMENTS OF OPERATIONS
For the Period Ended October 31, 1998 (Concluded)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED MUNICIPAL
INCOME BOND
FUND(A) FUND(B)
-------- ---------
<S> <C> <C>
INVESTMENT INCOME:
Interest.................................................. $103,077 $172,912
-------- --------
Total income.............................................. 103,077 172,912
-------- --------
EXPENSES:
Investment advisory....................................... 8,353 17,420
Custody................................................... 3,712 7,742
Administration............................................ 2,784 5,807
Shareholder servicing..................................... 4,641 9,681
Registration.............................................. 26,370 26,470
Amortization of organization costs........................ 2,408 2,470
Distribution.............................................. 6,240 5,550
Printing and postage...................................... 10,000 10,000
Legal..................................................... 10,000 10,000
Audit..................................................... 35,000 35,000
Transfer agent............................................ 17,600 17,600
Directors................................................. 4,770 4,770
Miscellaneous............................................. 1,000 1,000
-------- --------
Total expenses............................................ 132,878 153,510
Less fees waived and reimbursed:
Waiver of investment advisory fee......................... (8,353) (17,420)
Waiver of administration fee.............................. (158) (408)
Reimbursement of other operating expenses................. (104,716) (94,721)
-------- --------
Total waivers and reimbursements.......................... (113,227) (112,549)
-------- --------
Net expenses.............................................. 19,651 40,961
-------- --------
NET INVESTMENT INCOME...................................... 83,426 131,951
-------- --------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments.......................... 41,374 46,806
Net unrealized appreciation on investments................ 253,965 218,736
-------- --------
NET REALIZED AND UNREALIZED GAIN........................... 295,339 265,542
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $378,765 $397,493
======== ========
</TABLE>
(a)For the period March 12, 1998 (commencement of operations) to October 31,
1998.
(b)For the period March 6, 1998 (commencement of operations) to October 31,
1998.

See Notes to Financial Statements.

OLD WESTBURY FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CORE
EQUITIES GROWTH
FUND OPPORTUNITY FUND
----------- -------------------------
PERIOD YEAR PERIOD
ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998(A) 1998 1997(B)
----------- ------------ -----------
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment loss................... $ (3,797) $ (566,036) $ (80,958)
Net realized loss on investments...... (2,365,945) (13,681,337) (389,549)
Net change in unrealized
appreciation/(depreciation)
on investments...................... 1,489,043 (1,535,666) 1,149,422
----------- ------------ -----------
Net increase/(decrease) in net assets
from operations..................... (880,699) (15,783,039) 678,915
----------- ------------ -----------
FROM CAPITAL STOCK TRANSACTIONS:
Net proceeds from sale of capital
stock............................... 37,724,214 108,442,049 50,921,316
Net cost of capital stock redeemed.... (3,679,176) (30,361,846) (72,481)
----------- ------------ -----------
Net increase in net assets resulting
from
capital stock transactions.......... 34,045,038 78,080,203 50,848,835
----------- ------------ -----------
NET INCREASE IN NET ASSETS............ 33,164,339 62,297,164 51,527,750
----------- ------------ -----------
NET ASSETS:
Beginning of period................... -- 51,527,750 --
----------- ------------ -----------
End of period......................... $33,164,339 $113,824,914 $51,527,750
=========== ============ ===========
</TABLE>

(a) For the period March 2, 1998 (commencement of operations) to October 31,
1998.
(b) For the period February 28, 1997 (commencement of operations) to October
31, 1997.

See Notes to Financial Statements.

OLD WESTBURY FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
(Concluded)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FIXED MUNICIPAL
INCOME BOND
INTERNATIONAL FUND FUND FUND
-------------------------- ----------- -----------
YEAR YEAR PERIOD PERIOD
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER31, OCTOBER 31, OCTOBER 31,
1998 1997 1998(A) 1998(B)
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income.... $ 1,955,296 $ 1,739,956 $ 83,426 $ 131,951
Net realized gain/(loss)
on investments and
foreign currency
transactions........... (20,123,751) 18,327,726 41,374 46,806
Net change in unrealized
appreciation/
depreciation on
investments and foreign
currency translations.. 4,268,221 (12,855,684) 253,965 218,736
------------ ------------ ---------- -----------
Net increase/(decrease)
in net assets from
operations............. (13,900,234) 7,211,998 378,765 397,493
------------ ------------ ---------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................. (2,302,398) (1,851,779) -- --
From capital gains....... (9,209,591) -- -- --
------------ ------------ ---------- -----------
Net decrease in net
assets
from distributions..... (11,511,989) (1,851,779) -- --
------------ ------------ ---------- -----------
FROM CAPITAL STOCK TRANSACTIONS:
Net proceeds from sale of
capital stock.......... 55,256,898 57,423,331 7,429,200 11,257,900
Reinvestment of
dividends.............. 8,611,100 1,347,247 -- --
Net cost of capital stock
redeemed............... (89,017,239) (26,131,841) (2,209,307) (605,012)
------------ ------------ ---------- -----------
Net increase/(decrease)
in net assets resulting
from capital stock
transactions........... (25,149,241) 32,638,737 5,219,893 10,652,888
------------ ------------ ---------- -----------
NET INCREASE/(DECREASE)
IN NET ASSETS.......... (50,561,464) 37,998,956 5,598,658 11,050,381
------------ ------------ ---------- -----------
NET ASSETS:
Beginning of period...... 173,793,408 135,794,452 -- --
------------ ------------ ---------- -----------
End of period............ $123,231,944 $173,793,408 $5,598,658 $11,050,381
============ ============ ========== ===========
Undistributed net
investment income
included in net assets at
end of period............ $ 817,726 $ 1,164,367 $ 83,426 $ 131,951
============ ============ ========== ===========
</TABLE>

(a) For the period March 12, 1998 (commencement of operations) to October 31,
1998.
(b) For the period March 6, 1998 (commencement of operations) to October 31,
1998.

See Notes to Financial Statements.

[This Page Intentionally Left Blank]

OLD WESTBURY FUNDS, INC.
FINANCIAL HIGHLIGHTS
October 31, 1998
- -------------------------------------------------------------------------------
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
NET REALIZED
AND
UNREALIZED
NET ASSET NET GAIN/(LOSS) ON DISTRIBUTIONS DISTRIBUTIONS
PERIOD VALUE, INVESTMENT INVESTMENTS, TOTAL FROM FROM NET FROM
ENDED BEGINNING INCOME/ AND FOREIGN INVESTMENT INVESTMENT CAPITAL
OCTOBER 31, OF PERIOD (LOSS) CURRENCIES OPERATIONS INCOME GAINS
- ----------- --------- ---------- -------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
CORE EQUITIES FUND
1998 (a) $10.00 (0.01) 0.02 0.01 -- --
GROWTH OPPORTUNITY FUND
1997 (b) $10.00 (0.06) 1.88 1.82 -- --
1998 $11.82 (0.07) (1.12) (1.19) -- --
INTERNATIONAL FUND
1994 $10.14 0.10 0.57 0.67 -- --
1995 $10.81 0.14 (1.07) (0.93) (0.08) --
1996 $ 9.80 0.13 1.37 1.50 (0.14) --
1997 $11.16 0.12 0.62 0.74 (0.15) --
1998 $11.75 0.14 (1.25) (1.11) (0.18) (0.72)
FIXED INCOME FUND
1998 (c) $10.00 0.28 0.65 0.93 -- --
MUNICIPAL BOND FUND
1998 (d) $10.00 0.21 0.41 0.62 -- --
- ---------------------------------------------------------------------------------------
</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.
(a) For the period from March 2, 1998 (commencement of operations) to October
31, 1998.
(b) For the period from February 28, 1997 (commencement of operations) to
October 31, 1997.
(c) For the period from March 12, 1998 (commencement of operations) to October
31, 1998.
(d) For the period from March 6, 1998 (commencement of operations) to October
31, 1998.

Note: Per share values calculated using average shares outstanding.

See Notes to Financial Statements.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
---------------------------------
EXPENSES
BEFORE
WAIVER
AND NET ASSETS,
NET ASSET REIM- NET END PORTFOLIO
TOTAL VALUE, END TOTAL BURSE- NET INVESTMENT OF PERIOD TURNOVER
DISTRIBUTIONS OF PERIOD RETURN* MENTS EXPENSES INCOME/(LOSS) (000 OMITTED) RATE
- ------------- ---------- ------- -------- -------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
-- $10.01 0.1% 2.23%** 1.25%** (0.03)%** $ 33,164 56%
-- $11.82 18.2% 2.58%** 1.50%** (0.79%)** $ 51,528 46%
-- $10.63 (10.1%) 1.57% 1.48% (0.57%) $113,825 140%
-- $10.81 6.6% 1.70% 1.50% 0.90% $104,529 23%
(0.08) $ 9.80 (8.6%) 1.60% 1.50% 1.40% $104,194 32%
(0.14) $11.16 15.5% 1.52% 1.50% 1.19% $135,794 55%
(0.15) $11.75 6.6% 1.52% 1.50% 0.98% $173,793 58%
(0.90) $ 9.74 (10.2%) 1.53% 1.49% 1.27% $123,232 129%
-- $10.93 9.3% 7.13%** 1.05%** 4.48%** $ 5,599 30%
-- $10.62 6.2% 3.95%** 1.05%** 3.40%** $ 11,050 40%
- --------------------------------------------------------------------------------------------
</TABLE>

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998
- -------------------------------------------------------------------------------

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. 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 Board of Directors
("Directors") to create an unlimited number of series, each of which is a
separate class of shares. At October 31, 1998, the Fund consisted of five
separate investment portfolios (each portfolio individually referred to as a
"Portfolio" and collectively as the "Portfolios") which are presented herein:

<TABLE>
<S> <C>
PORTFOLIO NAME INVESTMENT OBJECTIVE
Old Westbury Core Equities Fund Long-term capital appreciation.
("Core Equities Fund")
Old Westbury Growth Opportunity Fund Capital appreciation.
("Growth Opportunity Fund")
Old Westbury International Fund Long-term growth of capital.
("International Fund")
Old Westbury Fixed Income Fund Total return.
("Fixed Income Fund")
Old Westbury Municipal Bond Fund High level of current income
("Municipal Bond Fund") exempt from federal regular
income tax.
</TABLE>

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 Portfolios:

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 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,

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

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 Directors deem 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 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
Directors designed to reflect in good faith the fair value of such securities.

B. FOREIGN CURRENCY TRANSLATION. The books and records of the International
Fund are maintained in United States dollars. Foreign currency amounts are
translated into United States dollars on the following basis:

(i) value on 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 International Fund are presented at the
foreign exchange rates and values at the close of the period, the
International 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 the securities held at the
end of the period. Similarly, the International 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 stability.

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

C. FORWARD FOREIGN CURRENCY CONTRACTS. The International 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. There were no forward
foreign currency contracts open at October 31, 1998.

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. 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 Portfolios are
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,
including amortization of premiums and discounts, is accrued daily.

E. DEFERRED ORGANIZATION EXPENSES. Expenses incurred by each Portfolio 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's 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 each 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.

At October 31, 1998, the International Fund and the Core Equities Fund, for
federal income tax purposes, had capital loss carryforwards of $19,893,506 and
$2,267,543, respectively, which will expire in the year 2006. At October 31,
1998, the Growth Opportunity Fund, for federal income tax purposes, had a
capital loss carryforward of $12,080,369 which will expire in the year 2006
and a capital loss carryforward of $367,778

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

which will expire in the year 2005. The capital loss carryforward will reduce
the Portfolios' taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Code, and thus will reduce
the amount of the distributions to shareholders which would otherwise be
necessary to relieve the Portfolios of any liability for federal tax.

G. DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. The Portfolios anticipate
paying income and capital gains dividends on a quarterly 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 Portfolio.

H. RESTRICTED SECURITIES. Restricted securities are securities that may only
be resold upon registration under federal securities laws or in transactions
exempt from such registration. In some cases, the issuer of restricted
securities has agreed to register such securities for resale, at the issuer's
expense either upon demand by the Fund or in connection with another
registered offering of the securities. Many restricted securities may be
resold in the secondary market in transactions exempt from registration. Such
restricted securities may be determined to be liquid under criteria
established by the Board of Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee.

Additional information on each restricted security held in Growth
Opportunity Fund at October 31, 1998 is as follows:

<TABLE>
<CAPTION>
SECURITY ACQUISITION DATE ACQUISITION COST
-------- ---------------- ----------------
<S> <C> <C>
Fairfax Financial Holding Ltd. 3/20/1998-3/26/1998 $2,890,925
Candescent Technology 4/17/1998 2,677,000
</TABLE>

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

I. ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that may affect the reported amounts in the financial
statements. Actual results could differ from these estimates.

2. TRANSACTIONS WITH AFFILIATES.

A. INVESTMENT ADVISORY FEES. Pursuant to an advisory contract, the Fund has
retained Bessemer to make investment decisions for the Portfolios. The
investment advisory fee paid to the advisor is computed daily and paid monthly
in accordance with the following schedule:

Core Equities Fund--0.70% of the first $100 million of the Portfolio's
average net assets, 0.65% of the second $100 million of such assets and
0.60% of such assets exceeding $200 million.

Growth Opportunity Fund and International Fund--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.

Fixed Income Fund and Municipal Bond Fund--0.45% of the first $100
million of the Portfolio's average net assets, 0.40% of the second $100
million of such assets and 0.35% of such assets exceeding $200 million.

B. ADMINISTRATION FEES. Federated Administrative Services ("FAS") serves as
administrator. Edgewood Services, Inc. serves as distributor and shareholder
servicing agent. FAS provides administrative services necessary for the
overall administration of the Portfolios 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 personnel necessary for maintaining the organization
of the Portfolios; preparation of certain documents in connection with
meetings of the Directors and shareholders; the maintenance of books and
records of the Portfolios; and paying the compensation of the Portfolio's
officers and Directors affiliated with FAS. For providing these services, FAS
received from the Portfolios a fee accrued daily and paid monthly at an annual
rate equal to 0.15% of the average daily net assets of the Fund up to $250
million; 0.125% on the next

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

$250 million of such assets; 0.10% on the next $250 million of such assets;
and 0.075% of such assets over $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.

C. DISTRIBUTION AND SERVICE PLAN AND DISTRIBUTION REIMBURSEMENT FEES. The
Directors adopted a distribution and service plan (the "Plan") for the
Portfolios pursuant to Rule 12b-1 of the Act, and pursuant to the Plan, the
Portfolios entered into a distribution agreement and a shareholder servicing
agreement with Edgewood Services, Inc. and a shareholder servicing agreement
with Bessemer. Under its shareholder servicing agreement, Bessemer received
payments from the Portfolios to permit it to make payments to broker-dealers
for providing shareholder services. Under its shareholder servicing agreement,
Edgewood Services, Inc. receives payments for the Portfolios 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 Portfolios 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 to Edgewood Services, Inc. and Bessemer will not exceed
0.25% per annum of the Portfolios average daily net assets.

The distribution agreement with Edgewood Services, Inc. provides for
reimbursement to Edgewood Services, Inc. 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 plus $1,500
per meeting and is reimbursed for out-of-pocket expenses incurred in
connection with committee or board meetings.

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

E. CUSTODY FEES. The Fund has retained Bessemer to serve as the Portfolios'
custodian. Bessemer is responsible for maintaining the books and records of
the Portfolios' securities and cash. For providing these services, Bessemer
receives from each Portfolio a fee accrued and paid monthly at an annual rate
equal to 0.15% (0.20% for the International Fund) 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 each of the Portfolios. Transactions in shares and
dollars of capital stock were as follows:

<TABLE>
<CAPTION>
CORE EQUITIES FUND
----------------------
FOR THE PERIOD ENDED
OCTOBER 31, 1998(A)
----------------------
SHARES DOLLARS
--------- -----------
<S> <C> <C>
Common stock sold....................................... 3,656,493 $37,724,214
Common stock redeemed................................... (343,980) (3,679,176)
--------- -----------
Net increase............................................ 3,312,513 $34,045,038
========= ===========
</TABLE>

<TABLE>
<CAPTION>
GROWTH OPPORTUNITY FUND
------------------------------------------------
FOR THE YEAR ENDED FOR THE PERIOD ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997(B)
------------------------ ----------------------
SHARES DOLLARS SHARES DOLLARS
---------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Common stock sold............. 8,919,300 $108,442,049 4,366,770 $50,921,316
Common stock redeemed......... (2,573,859) (30,361,846) (5,875) (72,481)
---------- ------------ --------- -----------
Net increase.................. 6,345,441 $ 78,080,203 4,360,895 $50,848,835
========== ============ ========= ===========
</TABLE>

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Continued)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
INTERNATIONAL FUND
--------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
------------------------ ------------------------
SHARES DOLLARS SHARES DOLLARS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Common stock sold........... 5,021,491 $ 55,256,898 4,533,069 $ 57,423,331
Reinvestment of dividends... 803,274 8,611,100 114,953 1,347,247
Common stock redeemed....... (7,960,501) (89,017,239) (2,028,400) (26,131,841)
---------- ------------ ---------- ------------
Net increase/ (decrease).... (2,135,736) $(25,149,241) 2,619,622 $ 32,638,737
========== ============ ========== ============
</TABLE>

<TABLE>
<CAPTION>
FIXED INCOME FUND
---------------------
FOR THE PERIOD ENDED
OCTOBER 31, 1998(C)
---------------------
SHARES DOLLARS
-------- -----------
<S> <C> <C>
Common stock sold........................................ 713,035 $ 7,429,200
Common stock redeemed.................................... (200,895) (2,209,307)
-------- -----------
Net increase............................................. 512,140 $ 5,219,893
======== ===========
</TABLE>

<TABLE>
<CAPTION>
MUNICIPAL BOND FUND
----------------------
FOR THE PERIOD ENDED
OCTOBER 31, 1998(D)
----------------------
SHARES DOLLARS
--------- -----------
<S> <C> <C>
Common stock sold....................................... 1,099,043 $11,257,900
Common stock redeemed................................... (58,965) (605,012)
--------- -----------
Net increase............................................ 1,040,078 $10,652,888
========= ===========
</TABLE>

(a) For the period March 2, 1998 (commencement of operations) to October 31,
1998.

(b) For the period February 28, 1997 (commencement of operations) to October
31, 1997.

(d) For the period March 6, 1998 (commencement of operations) to October 31,
1998.

OLD WESTBURY FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1998 (Concluded)
- -------------------------------------------------------------------------------

4. PURCHASES AND SALES OF SECURITIES. For the period ended October 31, 1998
purchases and sales of investment securities other than short-term investments
were as follows:

<TABLE>
<CAPTION>
FUND PURCHASES SALES
---- ------------ ------------
<S> <C> <C>
Core Equities Fund $ 43,664,854 $ 10,282,627
Growth Opportunity Fund 215,265,770 133,140,694
International Fund 191,217,905 219,148,080
Fixed Income Fund 5,960,688 918,416
Municipal Bond Fund 12,966,953 2,409,789
</TABLE>

5. DISTRIBUTIONS AND FOREIGN TAXES WITHHELD. The following information summa-
rizes per share distributions to be paid by the Portfolios for the year ended
October 31, 1998 (record date and payable date for the distributions were De-
cember 16, 1998 and December 29, 1998, respectively):

<TABLE>
<CAPTION>
FOREIGN TAXES
NET INCOME PAID OR WITHHELD SHORT-TERM
FUND PER SHARE PER SHARE CAPITAL GAINS
---- ---------- ---------------- -------------
<S> <C> <C> <C>
Core Equities Fund $0.01 -- --
International Fund 0.25 $0.03 --
Fixed Income Fund 0.29 -- $0.08
Municipal Bond Fund 0.15 -- 0.04
</TABLE>

The foreign taxes paid or withheld represent taxes incurred by the Portfolio
on dividends received by the Portfolios from foreign sources. Pursuant to IRC
Section 853, the foreign taxes paid or withheld are fully available for credit
and 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.

6. YEAR 2000 (UNAUDITED). Similar to other financial organizations, the Fund
could be adversely affected if the computer systems used by the Fund's service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. The Fund's Advisor and Administrator are
taking measures that they believe are reasonably designed to address the Year
2000 issue with respect to computer systems that they use and to obtain
reasonable assurances that comparable steps are being taken by each of the
Fund's other service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to
the funds.

INDEPENDENT AUDITORS' REPORT
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
OLD WESTBURY FUNDS, INC.:

We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of Core Equities, Growth Opportunity,
International, Fixed Income, and Municipal Bond Funds of Old Westbury Funds,
Inc. as of October 31, 1998, the related statements of operations for the
period ended October 31, 1998 and changes in net assets and financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Funds' 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, 1998, by correspondence with the custodians 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 positions of Core Equities,
Growth Opportunity, International, Fixed Income, and Municipal Bond Funds of
Old Westbury Funds, Inc. as of October 31, 1998, the results of their
operations, the changes in their net assets, and the financial highlights for
the respective stated periods in conformity with generally accepted accounting
principles.

DELOITTE & TOUCHE LLP

New York, New York
December 18, 1998

INVESTMENT ADVISOR: ADMINISTRATOR:
Bessemer Trust Company, N.A. Federated Administrative Services
630 Fifth Avenue Federated Investors Tower
New York, NY 10111 1001 Liberty Avenue
(212) 708-9100

Pittsburgh, PA 15222-3779

DISTRIBUTOR AND SHAREHOLDER SHAREHOLDER SERVICING AGENT:
SERVICING AGENT: Bessemer Trust Company, N.A.
Edgewood Services, Inc. 630 Fifth Avenue
5800 Corporate Drive New York, NY 10111
Pittsburgh, PA 15237-5829

(212) 708-9100

TRANSFER AGENT: INDEPENDENT AUDITORS:
Fundamental Shareholder Deloitte & Touche LLP
Services, Inc. Two World Financial Center
11 West 25th Street--7th Floor New York, NY 10281-1414
New York, NY 10010-2001

CUSTODIAN:
Bessemer Trust Company, N.A.
100 Woodbridge Center Drive
Woodbridge, NJ 07095

Cusip 680414307
Cusip 680414208
Cusip 680414109
Cusip 680414406
Cusip 680414505
G01963-06 (12/98)

Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risks,
including possible loss of principal.

This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus.

A1. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed on the top. Old Westbury
Core Equities Fund is represented by a solid line. The Standard & Poor's 500
Index (the "S&P 500") is represented by a broken line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in Old Westbury Core Equities Fund and the S&P 500. The
"x" axis reflects computation periods from 3/02/98 to 10/31/98. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in Old Westbury Core Equities Fund as compared to
the S&P 500. The ending values were $10,010 and $10.570, respectively.

A2. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed on the top. Old Westbury
Growth Opportunity Fund is represented by a solid line. The Russell 2500 Index
is represented by a broken line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in Old
Westbury Growth Opportunity Fund and the Russell 2500 Index. The "x" axis
reflects computation periods from 2/28/97 to 10/31/98. The "y" axis reflects the
cost of the investment. The right margin reflects the ending value of the
hypothetical investment in Old Westbury Growth Opportunity Fund as compared to
the Russell 2500 Index. The ending values were $10,630 and $10,910,
respectively.

A3. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed on the top. Old Westbury
International Fund is represented by a solid line. The Morgan Stanley Capital
International: Europe, Australia and Far East ("EAFE") Index is represented by a
broken line. The line graph is a visual representation of a comparison of change
in value of a $10,000 hypothetical investment in Old Westbury International Fund
and the EAFE Index. The "x" axis reflects computation periods from 10/22/93 to
10/31/98. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in Old Westbury
International Fund as compared to the EAFE Index. The ending values were $10,933
and $13,885, respectively.

A4. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed on the top. Old Westbury
Fixed Income Fund is represented by a solid line. The Lehman Brothers Government
/Corporate Bond Total Index is represented by a broken line. The line graph is a
visual representation of a comparison of change in value of a $10,000
hypothetical investment in Old Westbury Fixed Income Fund and the Lehman
Brothers Government /Corporate Bond Total Index. The "x" axis reflects
computation periods from 3/12/98 to 10/31/98. The "y" axis reflects the cost of
the investment. The right margin reflects the ending value of the hypothetical
investment in Old Westbury Fixed Income Fund as compared to the Lehman Brothers
Government /Corporate Bond Total Index. The ending values were $10,930 and
$10,670, respectively.

A5. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed on the top. Old Westbury
Municipal Bond Fund is represented by a solid line. The Lehman Brothers
Municipal Bond Index is represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a $10,000 hypothetical
investment in Old Westbury Municipal Bond Fund and the Lehman Brothers Municipal
Bond Index. The "x" axis reflects computation periods from 3/06/98 to 10/31/98.
The "y" axis reflects the cost of the investment. The right margin reflects the
ending value of the hypothetical investment in Old Westbury Municipal Bond Fund
as compared to the Lehman Brothers Municipal Bond Index. The ending values were
$10,620 and $10,470, respectively.