OLD WESTBURY FUNDS INC, 497, 1999-03-01

OLD WESTBURY FUNDS INC
497, 1999-03-01

Previous: AMERICAN SEPARATE ACCOUNT NO 2, N-30D, 1999-03-01

Next: NATIONS GOVERNMENT INCOME TERM TRUST 2003 INC, NSAR-B, 1999-03-01

OLD WESTBURY
FUNDS, INC.

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

Prospectus
February 28, 1999

Bessemer Trust

------------------------------------
I N V E S T M E N T A D V I S O R

OLD WESTBURY FUNDS, INC.

Prospectus
February 28, 1999

Old Westbury Core Equities Fund
Old Westbury Growth Opportunity Fund

Old Westbury International Fund
Old Westbury Fixed Income Fund

Old Westbury Municipal Bond Fund

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.

CONTENTS

Fund Goals, Strategies, Risks and Performance................................ 1
Summary of Fund Expenses..................................................... 6
Principal Securities in Which the Funds Invest............................... 7
Specific Risks of Investing in the Funds..................................... 9
What Do Shares Cost?......................................................... 13
How Do I Purchase Shares?.................................................... 14
How Do I Redeem Shares?...................................................... 15
How Do I Exchange Shares?.................................................... 17
Account and Share Information................................................ 17
Who Manages the Funds?....................................................... 18
Distribution of Fund Shares.................................................. 20
Financial Information........................................................ 21

FUND GOALS, STRATEGIES, RISKS AND PERFORMANCE

The Old Westbury Funds offers five portfolios, including three equity funds
and two income funds. The following describes the investment goals, strategies,
and principal risks of each Fund. There can be no assurance that a Fund will
achieve its goal.

The investment objective of each Fund described in this section may only be
changed upon the approval of the holders of a majority of the outstanding shares
of the Fund that would be affected by such a change. The investment strategies
are not fundamental and may be changed without shareholder approval.

Equity Funds

Old Westbury Core Equities Fund

Goal: The Fund's goal is to seek above-average long-term capital
appreciation.

Strategy: The Fund invests in a diversified portfolio of large-sized
companies that have potential for above-average earnings growth. The Fund seeks
to invest primarily in companies which are traded on a recognized national stock
exchange and which, in the Adviser's opinion, will be able to increase their net
income by 15%-20% or more annually over a five year period. The Fund will also
invest in "opportunistic" companies that the Adviser believes have strong
earnings prospects for a limited time period as a result of an economic or new
product cycle or company restructuring. The Fund will invest at least 65% of its
total assets in equity securities of companies with market capitalizations of at
least $4 billion.

Old Westbury Growth Opportunity Fund

Goal: The Fund's goal is to seek capital appreciation.

Strategy: The Fund invests in a diversified portfolio of small- and
medium-sized U.S. and, to a lesser extent, Canadian companies which are traded
on a recognized national or Canadian stock exchange and which, in the opinion of
the Adviser, have potential to become industry leaders. The Fund seeks to invest
primarily in equity securities of companies whose market capitalizations are
less than $4 billion and which, in the Adviser's opinion, will be able to
increase their rate of growth as a result of a catalyst, such as new products,
changes in consumer preferences, new management or changes in the economy.

Old Westbury International Fund

Goal: The Fund's goal is to seek long-term growth of capital.

Strategy: The Fund invests in a diversified portfolio of foreign companies
located outside of the U.S., at least 85% of which are listed on recognized
foreign securities exchanges. The Fund will invest at least 65% of its assets in
equity securities of companies representing at least three foreign countries.
The Fund may invest 25% or more of its assets in the securities of a single
country. The Fund may invest up to 50% of its assets in securities of companies
in emerging market countries. Securities are selected for investment based upon
the Adviser's analysis of (i) the economic prospects for a particular
geographical region or country; (ii) the prospects of a particular industrial
sector within the selected geographical area; and (iii) the prospects of a
particular company within the selected industrial sector.

Income Funds

Old Westbury Fixed Income Fund

Goal: The Fund's goal is to seek total return (consisting of current income
and capital appreciation).

Strategy: The Fund invests in a diversified portfolio of investment grade
bonds and notes. The Fund will invest at least 65% of its total assets in fixed
income securities including corporate, asset-backed, mortgage-backed, and U.S.
government securities. The Adviser attempts to manage the Fund's "total return"
(which includes both changes in principal value of the Fund's securities and
income earned) by lengthening or shortening the average maturity of the Fund's
securities according to whether the Adviser expects market interest rates to
increase or decline.

Old Westbury Municipal Bond Fund

Goal: The Fund's goal is to provide dividend income that is exempt from
regular Federal income tax.

Strategy: The Fund invests in a diversified portfolio of investment-grade
municipal securities, which includes tax-free debt securities of states,
territories and possessions of the U.S., and in political subdivisions and
taxing authorities of these entities. At least 80% of the Fund's income from
investments in municipal securities will be exempt from regular Federal income
tax. Interest from the Fund's investments may be subject to the Federal
alternative minimum tax for individuals and corporations.

Principal Risks of the Funds

Core Growth Fixed
Equities Opportunity International Income Municipal

Fund Fund Fund Fund Bond Fund

-------- ----------- ------------- ------ ---------
<S> <C> <C> <C> <C> <C>
Equity Securities Risks X X X

- -------------------------------------------------------------------------------
Foreign Securities Risks X X

- -------------------------------------------------------------------------------
Emerging Markets Risks X

- -------------------------------------------------------------------------------
Fixed Income

Securities Risks X X

- -------------------------------------------------------------------------------
Municipal Securities Risks X

- -------------------------------------------------------------------------------
Asset-Backed/Mortgage-

Backed Securities Risks X

- -------------------------------------------------------------------------------
Futures and Options Risks X X X X

- -------------------------------------------------------------------------------
Risks Relating to

Company Size X

- -------------------------------------------------------------------------------
Securities Lending Risks X X X X X

- -------------------------------------------------------------------------------
</TABLE>

A complete description of the risks can be found in "Specific Risks of Investing
in the Funds" herein.

Loss of money is a risk of investing in any of the Old Westbury Funds. An
investment in any of the Old Westbury Funds is not a deposit or obligation of a
bank, is not endorsed or guaranteed by a bank and is not insured or guaranteed
by the U.S. Government Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other government agency.

Performance Bar Chart and Total Return--Growth Opportunity Fund

The bar chart and table shown below provide an indication of the risks of
investing in the Old Westbury Growth Opportunity Fund by showing changes in the
Fund's performance over a 1-year period and by showing how the Fund's average
annual returns since inception and for one year compared to those of Russell
2500 Index, a broad based securities market index which measures the performance
of U.S. companies. While past performance does not necessarily predict future
performance, this information provides you with historical performance
information so that you can analyze whether the Fund's investment risks are
balanced by its potential rewards.

[CHART APPEARS HERE-SEE APPENDIX]

During the 1-year period shown in the bar chart, the highest return for a
quarter was 18.86% (quarter ended 12/31/98) and the lowest return for a quarter
was (18.67)% (quarter ended 9/30/98).

Average Annual Total Returns
(for the calendar year Past Since
ended 12/31/98) One Year Inception*

- --------------------------------------------
<S> <C> <C>
Growth Opportunity Fund (1.65)% 9.98%

- --------------------------------------------
Russell 2500 Index 0.04% 12.10%
- --------------------------------------------
</TABLE>

*Inception date of 2/28/97.

Performance Bar Chart and Total Return--International Fund

The bar chart and table shown below provide an indication of the risks of
investing in the Old Westbury International Fund by showing changes in the
Fund's performance from year to year over a 5-year period and by showing how the
Fund's average annual returns since inception, and for one and five years
compared to those of MSCI EAFE Index, a broad-based securities market index of
foreign securities. While past performance does not necessarily predict future
performance, this information provides you with historical performance
information so that you can analyze whether the Fund's investment risks are
balanced by its potential rewards.

[CHART APPEARS HERE-SEE APPENDIX]

During the 5-year period shown in the bar chart, the highest return for a
quarter was 16.95% (quarter ended 12/31/98) and the lowest return for a quarter
was (17.93)% (quarter ended 9/30/98).

Average Annual Total Returns

(for the calendar year ended Past Past Since
12/31/98) One Year 5 Years Inception*

- ---------------------------------------------------------
<S> <C> <C> <C>
International Fund (1.14)% 1.35% 3.31%

- ---------------------------------------------------------
MSCI EAFE Index 25.12% 10.02% 9.30%
- ---------------------------------------------------------
</TABLE>

*Inception date of 10/22/93.

* * * * *

Performance bar charts and total returns for Core Equities Fund, Fixed
Income Fund and Municipal Bond Fund are not provided since these Funds have not
been in operation for a full calendar year. The total returns for these Funds
from inception through October 31, 1998, are provided under the section
"Financial Information" herein.

SUMMARY OF FUND EXPENSES

This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund.

Core Growth Fixed Municipal
Equities Opportunity International Income Bond

Fund Fund Fund Fund Fund

-------- ----------- ------------- ------ ---------
<S> <C> <C> <C> <C> <C>

Shareholder Fees
Fees Paid Directly From
Your Investment

Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of

offering price)........... None None None None None
Annual Fund Operating Expenses(1)
Expenses That are Deducted
From Fund Assets

Management Fee(2).......... 0.70% 0.79% 0.78% 0.45% 0.45%
Distribution (12b-1) Fee... 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses(3).......... 1.28% 0.53% 0.50% 6.43% 3.25%
Total Annual Fund
Operating Expenses....... 2.23% 1.57% 1.53% 7.13% 3.95%
- -----------
(1) Although not contractually obligated to do so, the adviser and
administrator waived and reimbursed certain amounts. These are shown below
along with the net expenses the Funds actually paid for the fiscal year
ended October 31, 1998.

Waiver/Reimbursement of

Fund Expenses............ 0.98% 0.07% 0.03% 6.08% 2.90%
Total Actual Annual Fund
Operating Expenses
(After Waivers and

Reimbursements).......... 1.25% 1.50% 1.50% 1.05% 1.05%
</TABLE>

(2) The adviser voluntarily waived a portion of the management fee. The adviser
can terminate this voluntary waiver at any time. The management fees paid
(after the voluntary waiver) were 0.00%, 0.74%, 0.78%, 0.00% and 0.00% for
the Core Equities, Growth Opportunity, International Fixed Income and
Municipal Bond Funds, respectively, for the year ended October

31, 1998.

(3) The administrator voluntarily waived a portion of the administrative fee
and the Adviser waived and reimbursed certain other operating expenses.
Other Expenses (after the voluntary waiver and reimbursements) were 1.00%,
0.49%, 0.46%, 0.81% and 0.81% for the Core Equities, Growth Opportunity,
International, Fixed Income and Municipal Bond Funds, respectively, for the
year ended October 31, 1998.

Example

The following Example is intended to help you compare the cost of investing
in each Fund's Shares with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in each Fund's Shares for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that each Fund's Shares operating expenses are before waivers and
reimbursements as estimated above and remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

Core Growth Fixed Municipal
Equities Opportunity International Income Bond

Fund Fund Fund Fund Fund

-------- ----------- ------------- ------ ---------
<S> <C> <C> <C> <C> <C>
1 Year...................... $ 226 $ 160 $ 156 $ 705 $ 397
3 Years..................... $ 697 $ 496 $ 483 $2,071 $1,204
5 Years..................... $1,195 $ 855 $ 834 $3,380 $2,028
10 Years.................... $2,565 $1,867 $1,824 $6,415 $4,164
</TABLE>

PRINCIPAL SECURITIES IN WHICH THE FUNDS INVEST

Equity Securities

Equity securities represent a share of an issuer's earnings and assets,
after the issuer pays its liabilities. Funds purchasing equity securities cannot
predict the income they will receive from equity securities because issuers
generally have discretion as to the payment of any dividends or distributions.
However, equity securities offer greater potential for appreciation than many
other types of securities, because their value increases directly with the value
of the issuer's business.

Common Stocks

Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.

Fixed Income Securities

Fixed income securities pay interest, dividends or distributions at a
specified rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.

Tax Exempt Securities

Tax exempt securities are fixed income securities that pay interest that is
not subject to regular federal income taxes. Typically, states, counties, cities
and other political subdivisions and authorities issue tax exempt securities.
The market categorizes tax exempt securities by their source of repayment.

Municipal Notes

Municipal notes are short-term tax exempt securities. Many municipalities
issue such notes to fund their current operations before collecting taxes or
other municipal revenues. Municipalities may also issue notes to fund capital
projects prior to issuing long-term bonds. The issuers typically repay the notes
at the end of their fiscal year, either with taxes, other revenues or proceeds
from newly issued notes or bonds.

Foreign Securities

Foreign securities are securities of issuers based outside the United
States. The Funds consider an issuer to be based outside the United States if:

. it is organized under the laws of, or has a principal office located
in, another country;

. the principal trading market for its securities is in another country;

. it (or its subsidiaries) derived in its most current fiscal year at least
50% of its total assets, capitalization, gross revenue or profit from
goods produced, services performed, or sales made in another country.

Foreign securities are primarily denominated in foreign currencies. Along
with the risks normally associated with domestic securities of the same type,
foreign securities are subject currency risks and risks of foreign investing.

SPECIFIC RISKS OF INVESTING IN THE FUNDS

Equity Securities Risks

The EQUITY FUNDS are subject to fluctuations in the stock markets, which have
periods of increasing and decreasing values. Stocks have greater volatility than
debt securities. While greater volatility increases risks, it offers the
potential for greater reward.

Equity risk is also related to the size of the company issuing stock.
Companies may be categorized as having a small, medium, or large capitalization
(market value). The potential risks are higher with small- and medium-
capitalization companies and lower with large-capitalization companies.
Therefore, you should expect that investments in GROWTH OPPORTUNITY FUND will be
more volatile than broad stock market indices such as the S&P 500 or funds that
invest in large-capitalization companies such as CORE EQUITIES FUND.

Foreign Securities Risks

Foreign securities pose additional risks over U.S.-based securities for a
number of reasons. Because INTERNATIONAL FUND invests primarily in foreign
securities, and GROWTH OPPORTUNITY FUND can invest in Canadian securities, you
should expect that these factors may adversely affect the value of an investment
in these Funds. Foreign economic, governmental, and political systems may be
less favorable than those of the U.S. Foreign governments may exercise greater
control over their economies, industries, and citizens' rights. Specific risk
factors related to foreign securities include: inflation, structure and
regulation of financial markets, liquidity and volatility of investments,
taxation policies, currency exchange rates and regulations, and accounting
standards. INTERNATIONAL FUND and GROWTH OPPORTUNITY FUND may incur higher costs
and expenses when making foreign investments, which will affect the Funds' total
return.

Foreign securities may be denominated in foreign currencies. Therefore, the
value of a Fund's assets and income in U.S. dollars may be affected by changes
in exchange rates and regulations, since exchange rates for foreign currencies
change daily. The combination of currency risk and market risk tends to make
securities traded in foreign markets more volatile than securities traded
exclusively in the U.S. Although INTERNATIONAL FUND and GROWTH OPPORTUNITY FUND
value their assets daily in U.S. dollars, they will not convert their holdings
of foreign currencies to U.S. dollars daily. Therefore, the Funds may be exposed
to currency risks over an extended period of time.

Emerging Market Securities Risks

INTERNATIONAL FUND may invest up to 50% of its assets in developing or
emerging market securities. Investments in developing or emerging market
securities are subject to higher risks than those in developed market countries
because there is greater uncertainty in less established markets and economies.
These risks include political, social or economic systems, smaller securities
markets, lower trading volume, and substantial rates of inflation.

Fixed Income Securities Risks

Risks of fixed income securities will affect the INCOME FUNDS.

Prices of fixed-rate debt securities generally move in the opposite
direction of interest rates. The interest payments on fixed-rate debt securities
do not change when interest rates change. Therefore, since the price of these
securities can be expected to decrease when interest rates increase, you can
expect that the value of investments in a Fund may go down. Although the Adviser
attempts to anticipate interest rate movements, there is no guarantee that it
will be able to do so.

Fixed income securities may be subject to maturity risks. Longer-term debt
securities will experience greater price volatility than debt securities with
shorter maturities. You can expect the net asset values of a Fund to fluctuate
accordingly.

Fixed income securities also have credit risks. The credit quality of a debt
security is based upon the issuer's ability to repay the security. If payments
on a debt security are not made when due, that may cause the net asset value of
a Fund holding the security to go down.

Fixed income securities may also be subject to call risk. If interest rates
decline, an issuer may repay (or "call") a debt security held by a Fund prior to
its maturity. If this occurs, the Adviser may have to reinvest the proceeds in
debt securities paying lower interest rates. If this happens, a Fund may have a
lower yield.

In addition, FIXED INCOME FUND may invest in "inverse floaters," which are a
form of "derivative" debt security, and whose price may be subject to extreme
fluctuation in the event of interest rate movements.

Municipal Securities Risks

An investment in MUNICIPAL BOND FUND will be affected by municipal
securities risks. Local political and economic factors may adversely affect the
value and liquidity of municipal securities held by a Fund. The value of
municipal securities also may be affected more by supply and demand factors or
the creditworthiness of the issuer than by market interest rates. Repayment of
municipal securities depends on the ability of the issuer or project backing
such securities to generate taxes or revenues. There is a risk that the interest
on an otherwise tax-exempt municipal security may be subject to federal income
tax.

Asset-Backed/Mortgage-Backed Securities Risks

An investment in FIXED INCOME FUND will be subject to asset-backed and
mortgage-backed securities risks which includes prepayment when interest rates
fall because many borrowers refinance mortgages to take advantage of more
favorable rates. Prepayments on mortgage-backed securities are also affected by
other factors, such as the volume of home sales. The Fund's yield will be
reduced if cash from prepaid securities is reinvested in securities with lower
interest rates. The risk of prepayment may also decrease the value of
mortgage-backed securities.

Asset-backed securities may have a higher level of default and recovery risk
than mortgage-backed securities. However, both of these types of securities may
decline in value because of mortgage foreclosures or defaults on the underlying
obligations.

Futures and Options Risks

GROWTH OPPORTUNITY FUND, CORE EQUITIES FUND, and FIXED INCOME FUND may use
financial and stock index futures and options primarily to protect against
adverse changes to the value of portfolio securities due to anticipated changes
in interest rates or market conditions. Similarly, INTERNATIONAL FUND may use
foreign currency futures and options to protect against adverse changes to the
value of portfolio securities due to anticipated changes in foreign currency
rates. The successful use of futures, options and other derivative instruments
is based on the Adviser's ability to correctly anticipate market movements. When
the direction of the prices of a Fund's securities does not correlate with the
changes in the value of these transactions, or when the trading market for
derivatives becomes illiquid, a Fund could lose money.

Risks Related to Company Size

Generally, the smaller the market capitalization of a company, the fewer the
number of shares its trade daily, the less liquid its stock and the more
volatile its price. Market capitalization is determined by multiplying the
number of its outstanding shares by the current market price per share.

Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to capital.
These factors also increase risks and make these companies more likely to fail
than larger, well capitalized companies.

Securities Lending Risks

When a Fund lends its portfolio securities, it may not be able to get them
back from the borrower on a timely basis. If this occurs, the Fund may lose
certain investment opportunities. The Funds are also subject to the risks
associated with the investment of cash collateral, usually fixed-income
securities risk.

Temporary Defensive Investments

To minimize potential losses and maintain liquidity necessary to meet
shareholder redemptions during adverse market conditions, each of the Old
Westbury Funds may temporarily depart from its principal investment strategy by
investing up to 100% of Fund assets in cash or short-term, high quality money
market instruments (e.g. commercial paper, repurchase agreements, etc.). This
may cause a Fund to temporarily forego greater investment returns for the safety
of principal.

Investments in Other Investment Companies

The Funds may invest their assets in securities of other investment
companies as an efficient means of carrying out their investment policies.
Investment companies incur certain expenses such as management fees, and,
therefore, any investment by the Funds in shares of other investment companies
may be subject to such duplicate expenses.

Investment Ratings

Some securities in which the Funds invest will be rated in the lowest
investment grade category (e.g. BBB or Baa). Securities rated BBB by Standard
and Poor's or Baa by Moody's Investors Services, Inc. have speculative
characteristics. Unrated securities will be determined by the Adviser to be of
like quality and may have greater risk (but a potentially higher yield) than
comparable rated securities. If a security is downgraded, the Adviser will
re-evaluate the security and determine whether or not the security is an
acceptable investment.

Portfolio Turnover

Each Fund does not intend to invest for the purpose of seeking short-term
profits. Securities will be sold without regard to the length of time they have
been held when the Funds' Adviser believes it is appropriate to do so in light
of each Fund's investment goal. A higher portfolio turnover rate involves
greater transaction expenses which must be borne directly by a Fund (and thus,
indirectly by its shareholders), and affects Fund performance. In addition, a
high rate of portfolio turnover may result in the realization of larger amounts
of capital gains which, when distributed to that Fund's shareholders, are
taxable to them.

Year 2000 Readiness

The "Year 2000" problem is the potential for computer errors or failures
because certain computer systems may be unable to interpret dates after December
31, 1999. The Year 2000 problem may cause systems to process information
incorrectly and could disrupt businesses that rely on computers, like the Funds.

While it is impossible to determine in advance all of the risks to the
Funds, the Funds could experience interruptions in basic financial and
operational functions. Fund shareholders could experience errors or disruptions
in Fund share transactions or Fund communications. The Funds' service providers
are making changes to their computer systems to attempt to fix any Year 2000
problems. In addition, they are working to gather information from third-party
providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Funds' investments.
To assess the potential effect of the Year 2000 problem, the investment adviser
is reviewing information regarding the Year 2000 readiness of issuers of
securities the Fund may purchase. However, this may be difficult with certain
issuers. For example, funds dealing with foreign service providers or investing
in foreign securities will have difficulty determining the Year 2000 readiness
of those entities. This is especially true of entities or issuers in emerging
markets.

The financial impact of these issues for the Funds is still being
determined. There can be no assurance that potential Year 2000 problems will not
have a material adverse effect on the Funds.

WHAT DO SHARES COST?

You can buy shares of a Fund at net asset value (NAV), without a sales
charge, on any day the New York Stock Exchange (NYSE) is open for business. NAV
is determined at the end of regular trading (normally 4 p.m., Eastern time) each
day the NYSE is open. Your purchase order must be received in proper form by
4:00 p.m. (Eastern time) in order to receive that day's NAV.

Each Fund's NAV is computed by dividing the value of the Fund's net assets
(i.e., the value of a Fund's securities and other assets less its liabilities,
including expenses payable or accrued but excluding capital stock and surplus)
by the total number of shares outstanding. Portfolio securities for which market
quotations are readily available are valued at market value. All other
investment assets of the Funds are valued in such manner as the Board of
Directors in good faith deems appropriate to reflect their fair value. Since
International Fund has portfolio securities that are primarily listed on foreign
exchanges that may trade on weekends or other days when the Fund does not price
its shares, the NAV for International Fund may change on days when shareholders
will not be able to purchase or redeem the Fund's shares.

To open an account with one of the Funds, your first investment must be at
least $1,000. However, you can add to your account for as little as $100. In
special circumstances, these minimums may be waived or lowered at the Funds'
discretion.

HOW DO I PURCHASE SHARES?

Shares of each Portfolio may be purchased by mail or by wire through the
Distributor (Edgewood Services Inc.) or through a Shareholder Servicing Agent or
Broker-Dealer that has an agreement with the Distributor (Authorized Dealer)

or with the Adviser.

If you purchase shares directly from the Distributor, your account will be
maintained by the transfer agent of the Funds, FSSI (Transfer Agent). For
account balance information and shareholder services, you may call FSSI at (800)
607-2200.

By Mail

Through an Authorized Dealer

Contact your Authorized Dealer for instructions. Shares will be issued upon
receipt of payment by the Funds.

Through the Distributor

. Complete the Purchase Application which accompanies this
Prospectus; and

. Mail it together with a check payable to name of the Fund to:

Old Westbury Funds, Inc.
P.O. Box 926
New York, NY 10159-0926

Subsequent investments in a Fund do not require a Purchase Application;
however, the shareholder's account number must be clearly marked on the check to
ensure proper credit.

Subsequent investments may also be made by sending a check with the
detachable coupon that regularly accompanies the confirmation of a previous
transaction.

By Wire

Investments may be made directly through the use of wire transfers of
federal funds. Shares purchased by wire will be effected at the public offering
price next determined after acceptance of the order by the Distributor.

Through an Authorized Dealer

Contact your Authorized Dealer for instructions.

Through the Distributor

If you do not have a relationship with an Authorized Dealer, you may
purchase shares directly from the Distributor by federal funds wire.

Investors making initial investments by wire must promptly complete the
Purchase Application accompanying this Prospectus and forward it to the Funds'
Transfer Agent. No Purchase Application is required for subsequent investments.

Complete applications should be directed to:

Old Westbury Funds, Inc.
P.O Box 926
New York, NY 10159-0926

Please contact FSSI at (800) 607-2200 for complete instructions.

HOW DO I REDEEM SHARES?

Shares of each Fund may be redeemed by mail or by wire through an Authorized
Dealer or through the Funds' Transfer Agent.

Redemptions will only be made on days when a Fund computes its NAV. When
your redemption request is received in proper form shares of the Fund will be
redeemed at its next determined NAV.

Redemption requests must be received by 4:00 p.m. (Eastern time) in order
for shares to be redeemed at that day's NAV. Redemption proceeds will normally
be mailed the following business day, but in no event more than seven days,
after the request is made.

By Telephone

Through your Authorized Dealer

Contact your Authorized Dealer for complete instructions. Your Authorized
Dealer may accept your redemption request if you have previously elected this
service.

Through the Transfer Agent

For shareholders whose accounts are maintained by the Transfer Agent, if you
have authorized the telephone redemption privilege in your Purchase Application,
you may redeem shares by calling the Transfer Agent at (800) 607-2200.

By Mail

Through your Authorized Dealer

Send a letter to your Authorized Dealer, indicating your name, the Fund
name, your account number, and the number of shares or dollar amount you want to
redeem. Your request must be signed in exactly the same way the account is
registered (if there is more than one owner of the shares, all must sign).

Shareholders may also redeem Fund shares through participating organizations
holding such shares who have made arrangements with the Funds permitting them to
redeem such shares by telephone or facsimile transmission and who may charge a
fee for this service.

Through the Transfer Agent

For shareholders whose accounts are maintained by the Transfer Agent,
redemptions may be made by sending a written redemption request indicating your
name, the Fund name, your account number, and the number of shares or the dollar
amount you want to redeem to:

Old Westbury Funds, Inc.
P.O. Box 926
New York, NY 10159-0926

For additional assistance, call (800) 607-2200.

Additional Conditions

Signature Guarantees

You must have a signature guarantee on written redemption requests:

. when you are requesting a redemption of $50,000 or more;

. when you want a redemption to be sent to an address other than the one
you have on record with the Fund; or

. when you want the redemption payable to someone other than the
shareholder of record.

A signature guarantee is designed to protect your account from fraud. Obtain
a signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee.

Limitations on Redemption Proceeds

Redemption proceeds normally are mailed within one business day after
receiving a request in proper form. However, payment may be delayed up to seven
days:

. to allow your purchase payment to clear;

. during periods of market volatility; or

. when a shareholder's trade activity or amount adversely impacts a
Fund's ability to manage its assets.

HOW DO I EXCHANGE SHARES?

You may exchange shares of a Fund for shares of any of the other Funds free
of charge, provided you meet the $1,000 minimum investment requirement. An
exchange is treated as a redemption and subsequent purchase, and is therefore a
taxable transaction. Signatures must be guaranteed if you request and exchange
into another Fund with a different shareholder registration. The Funds will
provide shareholders with 60 days' written notice prior to any modification of
this exchange privilege.

ACCOUNT AND SHARE INFORMATION

Confirmations and Account Statements

You will receive confirmation of purchases, redemptions and exchanges. In
addition, you will receive periodic statements reporting all account activity,
including dividends and capital gains paid.

Dividends and Capital Gains

Dividends (if any) are paid to shareholders invested in the Funds on the
record date. In addition, each Fund intends to pay dividends and capital gains
distributions, if any, on a quarterly basis. Your dividends and capital gains
distributions will be automatically reinvested in additional shares unless you
elect cash payments.

If you purchase shares just before a Fund declares a dividend or capital
gain distribution, you will pay the full price for the shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in shares. Therefore, you should consider the tax
implications of purchasing shares shortly before the Fund declares a dividend or
capital gain.

Tax Information

The Funds send you an annual statement of your account activity to assist
you in completing your Federal, state and local tax returns. Fund distributions
of dividends and capital gains are taxable to you whether paid in cash or
reinvested in a Fund. Dividends are taxable as ordinary income; exempt-interest
dividends are exempt from regular Federal income tax and, capital gains are
taxable at long-term capital gains rates.

Fund distributions for Core Equities Fund, Growth Opportunity Fund and
International Fund are expected to be primarily capital gains. Fund
distributions for the Fixed Income Fund are expected to be primarily dividends.
Redemptions and exchanges are taxable sales. Fund distributions from Municipal
Bond Fund are expected to be primarily exempt-interest dividends.

Please consult your tax adviser regarding your Federal, state, and local tax
liability.

Municipal Bond Fund

The Fund sends you a timely statement of your account activity to assist you
in completing your Federal, state and local tax returns. It is anticipated that
Fund distributions will be primarily dividends that are exempt from Federal
income tax, although a portion of the Fund's dividends may not be exempt.
Whether or not dividends are exempt from federal income tax, they may be subject
to state and local taxes. You may have to include certain dividends as taxable
income if the Federal alternative minimum tax applies to you. Capital gains and
non-exempt dividends are taxable whether paid in cash or reinvested in the Fund.
Redemptions and exchanges are taxable sales.

WHO MANAGES THE FUNDS?

The Board of Directors governs the Funds. The Board selects and oversees
the Adviser, Bessemer Trust Company, N.A. (Bessemer). The Adviser manages the
Funds' assets, including buying and selling portfolio securities. The Adviser's
address is 630 Fifth Avenue, New York, New York 10111.

The Adviser is a subsidiary of The Bessemer Group, Incorporated. The
Adviser, and other subsidiaries of The Bessemer Group, Incorporated, advise or
provide investment, fiduciary and personal banking services to approximately
1,048 clients with total assets under supervision of over $23 billion as of
December 31, 1998.

For its services under an Advisory Contract, the Adviser receives an
advisory Fee from each Fund, computed daily and payable monthly, in accordance
with the following schedule:

First $100 Second $100 Average
million of million of net assets

average average exceeding
net assets net assets $200 million

---------- ----------- ------------
<S> <C> <C> <C>
Core Equities Fund.......................... 0.70% 0.65% 0.60%
Growth Opportunity Fund..................... 0.80% 0.75% 0.70%
International Fund.......................... 0.80% 0.75% 0.70%
Fixed Income Fund........................... 0.45% 0.40% 0.35%
Municipal Bond Fund......................... 0.45% 0.40% 0.35%
</TABLE>

Mr. John D. Chadwick, Executive Vice President and Portfolio Manager, is
primarily responsible for the day-to-day investment management of Core Equities
Fund. Mr. Chadwick has managed the Fund since its inception. Prior to joining
Bessemer in 1994, Mr. Chadwick served as Senior Vice President and Senior
Portfolio Manager at Kidder Peabody & Co. from 1985 through 1994 where he
started the Equity Income Fund and managed certain index funds. Mr. Chadwick
received a B.A. in Economics from Harvard University and an M.B.A. in
Industrial Management from the Wharton School of Finance & Commerce of the
University of Pennsylvania.

Mr. Harry P. Rekas, Senior Vice President and Portfolio Manager, is
primarily responsible for the day-to-day investment management of Growth
Opportunity Fund. Mr. Rekas has managed the Fund since its inception. Prior to
joining Bessemer in 1996, Mr. Rekas managed the capital appreciation portfolio
of AIG Investment Management Corporation. Mr. Rekas graduated from the Wharton
School of the University of Pennsylvania, where he majored in Finance, and he
earned an MBA degree from Pepperdine University.

Ms. Hermione Davies, Senior Vice President and Portfolio Manager, is in
charge of Bessemer's International Equity Investments and is primarily
responsible for the day-to-day investment management of International Fund.
Ms. Davies has managed the Fund since July, 1998. She is a member of the
Bessemer Investment Policy and Strategy Committee. Prior to joining Bessemer in
1986, Ms. Davies was with Guinness Mahon and Co. Ltd., responsible for
Japanese investments and management of the offshore unit trust Pacific Fund.
Ms. Davies holds a B.A. from Oxford University in 1981 and a Postgraduate
Diploma in Economics from Birkbeck College, University of London in 1984.

Mr. Harold S. Woolley, Executive Vice President and Portfolio Manager, is
primarily responsible for the day-to-day investment management of Fixed Income
Fund. Mr. Woolley has managed the Fund since its inception. Mr. Woolley has
headed the fixed income investments group at Bessemer, N.A. since 1985. Prior
to joining Bessemer in 1985, Mr. Woolley was a managing director and head of
fixed income investments for the Equitable Investment Management Corp. and a
Vice President of the Equitable Life Assurance Society of the U.S. Mr. Woolley
graduated with an A.B. from Bucknell University, and holds an M.B.A. from the
Amos Tuck School of Graduate Business, Dartmouth College. Mr. Woolley is a
Chartered Financial Analyst.

Mr. Bruce A. Whiteford, Senior Vice President and Portfolio Manager, is
primarily responsible for the day-to-day investment management of Municipal
Bond Fund. Mr. Whiteford has managed the Fund since its inception. Prior to
joining Bessemer in 1996, Mr. Whiteford oversaw $5 billion in fixed income
investments as Vice President, Manager--U.S. Fixed Income Funds Group, Chase
Asset Management, a division of Chase Manhattan Bank, N.A. from 1986 to 1996.
Mr. Whiteford graduated from the University of South Carolina with a B.S. in
Finance.

DISTRIBUTION OF FUND SHARES

Edgewood Services, Inc., a subsidiary of Federated Investors, Inc., is the
principal Distributor for shares of the Funds and a number of other investment
companies.

The Adviser acts as a Shareholder Servicing Agent to the Funds.

Rule 12b-1 Plan

The Funds have adopted a Rule 12b-1 Plan which allows them to pay marketing
and shareholder servicing fees to the Distributor, the Adviser, and financial
intermediaries for the sale, distribution and customer servicing of the Funds'
shares. Because these shares pay marketing fees on an ongoing basis, your
investment cost may be higher over time than shares with different sales charges
and marketing fees.

FINANCIAL INFORMATION

Financial Highlights

The following financial highlights are intended to help you understand each
Fund's financial performance for its past five fiscal years, or since inception,
if the life of a Fund is shorter. Some of the information is presented on a per
share basis. Total returns represent the rate an investor would have earned (or
lost) on an investment in a Fund, assuming reinvestment of all dividends and
distributions.

This information has been audited by Deloitte & Touche LLP, whose report,
along with the Funds' audited financial statements, is included in the Annual
Report which is available upon request free of charge.

OLD WESTBURY FUNDS, INC.
FINANCIAL HIGHLIGHTS

October 31, 1998

- -------------------------------------------------------------------------------
(For a share outstanding throughout each period)

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.

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

Note: Per share values calculated using average shares outstanding.

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

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 CORE EQUITIES FUND
OLD WESTBURY GROWTH OPPORTUNITY FUND

OLD WESTBURY INTERNATIONAL FUND
OLD WESTBURY FIXED INCOME FUND

OLD WESTBURY MUNICIPAL BOND FUND

Portfolios of Old Westbury Funds, Inc.

A Statement of Additional Information (SAI), is incorporated by reference
into this prospectus. Additional information about each Fund's investments is
available in the Funds' annual and semi-annual reports to shareholders. The
annual report discusses market conditions and investment strategies that
significantly affected each Fund's performance during their last fiscal year. To
obtain the SAI, the annual and semi-annual reports and other information without
charge call (800) 607-2200.

You can obtain information about the Funds by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, DC
20549-6009 or from the Commission's Internet site at http://www.sec.gov. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.

SEC File No. 811-7912

NOTES

Distributor:
Edgewood Services, Inc.
Federated Investors Tower
Pittsburgh, PA 15222-3779

Administrator:
Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222-3779

Cusip 680414307 Cusip 680414208 Cusip 680414109 Cusip 680414406 Cusip 680414505
G02009-05 (2/99)

OLD WESTBURY FUNDS, INC.

STATEMENT OF ADDITIONAL INFORMATION

FEBRUARY 28, 1999

OLD WESTBURY CORE EQUITIES FUND

OLD WESTBURY GROWTH OPPORTUNITY FUND

OLD WESTBURY INTERNATIONAL FUND

OLD WESTBURY FIXED INCOME FUND

OLD WESTBURY MUNICIPAL BOND FUND

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectus for the Funds dated February 28, 1999.
This SAI incorporates by reference the Funds' Annual Report. You may obtain the
prospectus or Annual Report without charge by calling (800) 607-2200.

CONTENTS

HOW ARE THE FUNDS ORGANIZED?...................................1

SECURITIES IN WHICH THE FUNDS INVEST...........................1

SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS..................2

INVESTMENT RESTRICTIONS........................................14

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?................15

HOW DO THE FUNDS MEASURE PERFORMANCE?..........................19

ACCOUNT INFORMATION AND PRICING OF SHARES......................21

HOW ARE THE FUNDS TAXED?.......................................22

FINANCIAL INFORMATION..........................................25

APPENDIX.......................................................25

HOW ARE THE FUNDS ORGANIZED?

Old Westbury Funds, Inc. (Corporation) is an open-end, management investment
company that was established under the laws of the State of Maryland on August
26, 1993.

The Funds are diversified portfolios of the Corporation. The Corporation may
offer separate series of shares representing interests in separate portfolios of
securities.

SECURITIES IN WHICH THE FUNDS INVEST

Following is a table that indicates which types of securities are a: o.......P =
PRINCIPAL investment of a Fund (shaded in chart); o A = ACCEPTABLE (but not
principal) investment of a Fund; or o N = NOT AN ACCEPTABLE investment of a
Fund.

- ----------------------------------------- ------------ -------------- ------------- ---------- ------------
SECURITIES CORE GROWTH INTERNATIONAL FIXED MUNICIPAL
EQUITIES OPPORTUNITY FUND INCOME BOND FUND

FUND FUND FUND
<S> <C> <C> <C> <C> <C>
- ----------------------------------------- ------------ -------------- ------------- ---------- ------------
- ----------------------------------------- ------------ -------------- ------------- ---------- ------------
AMERICAN DEPOSITARY RECEIPTS N N A N N

- -----------------------------------------
- ----------------------------------------- ------------ -------------- ------------- ---------- ------------
COMMERCIAL PAPER A A A A A

TRANSACTIONS

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

</TABLE>

SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS

The following describes securities, techniques and risks used by the Funds in
addition to those described in the prospectus.

ASSET BACKED SECURITIES. Asset-Backed Securities are issued by non-governmental
entities and carry no direct or indirect government guarantee. Asset-Backed
Securities represent an interest in a pool of assets such as car loans and
credit card receivables. These securities may be in the form of pass-through
instruments or asset-backed bonds.

Payments on asset-backed securities depend upon assets held by the issuer and
collections of the underlying loans. The value of these securities depends on
many factors, including changing interest rates, the availability of information
about the pool and its structure, the credit quality of the underlying assets,
the market's perception of the servicer of the pool, and any credit enhancement
provided. Also, these securities may be subject to prepayment risk.

BANK OBLIGATIONS. Bank Obligations include negotiable certificates of deposit,
time deposits and bankers acceptances. The Funds will invest in bank instruments
(i) that have been issued by banks and savings and loans and savings banks that
have more than $2 billion in total assets and are organized under the laws of
the United States or any state; (ii) of foreign branches of these banks or of
foreign banks of equivalent size; and (iii) of U.S. branches of foreign banks of
equivalent size. The Funds will not invest in obligations for which the Adviser,
or any of its affiliated persons, is the ultimate obligor or accepting bank. The
Funds may also invest in obligations of the European Investment Bank, the
Inter-American Development Bank or the World Bank and other such similar
institutions.

BORROWING. The Funds may borrow money from banks or through reverse repurchase
agreements in amounts up to one-third of total assets and pledge some assets as
collateral. A Fund that borrows will pay interest on borrowed money and may
incur other transaction costs. These expenses can exceed the income received or
capital appreciation realized by the Fund from any securities purchased with
borrowed money. With respect to borrowings, the Funds are required to maintain
continuous asset coverage to 300% of the amount borrowed. If the coverage
declines to less than 300%, the Fund must sell sufficient portfolio securities,
even at a loss, to restore the coverage.

COMMERCIAL PAPER. The Funds may invest in commercial paper, including master
demand obligations. Master demand obligations provide for a periodic adjustment
in the interest rate paid and permit daily changes in the amount borrowed. The
commercial paper in which the Funds may invest must be rated A-1 or A-2 by
Standard & Poor's (S&P), Prime-1 or Prime-2 by Moody's Investors Service, Inc.
(Moody's), or F-1 or F-2 by Fitch IBCA, Inc. (Fitch). Master demand obligations
are governed by agreements between the issuer and Bessemer Trust Company, N.A.,
acting as agent, for no additional fee, in its capacity as investment adviser to
the Funds and as fiduciary for other clients for whom it exercises investment
discretion. The monies loaned to the borrower come from accounts managed by the
Adviser or its affiliates, pursuant to arrangements with such accounts. Interest
and principal payments are credited to such accounts. The Adviser, acting as a
fiduciary on behalf of its clients, has the right to increase or decrease the
amount provided to the borrower under an obligation. The borrower has the right
to pay without penalty all or any part of the principal amount then outstanding
on an obligation together with interest to the date of payment. Since these
obligations typically provide that the interest rate is tied to the Federal
Reserve commercial paper composite rate, the rate on master demand obligations
is subject to change. Repayment of a master demand obligation to participating
accounts depends on the ability of the borrower to pay the accrued interest and
principal of the obligation on demand which is continuously monitored by the
Adviser. Since master demand obligations typically are not rated by credit
rating agencies, the Funds may invest in such unrated obligations only if at the
time of an investment the obligation is determined by the Adviser to have a
credit quality which satisfies the Funds' quality restrictions. Although there
is no secondary market for master demand obligations, such obligations are
considered by the Funds to be liquid because they are payable upon demand. The
Funds do not have any specific percentage limitation on investments in master
demand obligations.

COMMON STOCKS. Common stocks are the most prevalent type of equity security.
Common stockholders receive the residual value of the issuer's earnings and
assets after the issuer pays its creditors and any preferred stockholders. As a
result, changes in an issuer's earnings directly influence the value of its
common stock.

CONVERTIBLE SECURITIES. Certain Funds may, as an interim alternative to
investment in common stocks, purchase investment grade convertible debt
securities having a rating of, or equivalent to, at least "BBB" by S&P or "Baa"
by Moody's, or if unrated, judged by the Adviser to be of comparable quality.
Securities rated BBB or Baa have speculative characteristics. Convertible
securities may include convertible preferred stock, convertible bonds and
convertible bonds of foreign issues. Although lower rated bonds generally have
higher yields, they are more speculative and subject to a greater risk of
default with respect to the issuer's capacity to pay interest and repay
principal than are higher rated debt securities.

In selecting convertible securities, the Adviser relies primarily on its own
evaluation of the issuer and the potential for capital appreciation through
conversion. It does not rely on the rating of the security or sell because of a
change in the rating absent a change in its own evaluation of the underlying
common stock and the ability of the issuer to pay principal and interest or
dividends when due without disrupting its business goals. Interest or dividend
yield is a factor only to the extent it is reasonably consistent with prevailing
rates for securities of similar quality and thereby provides a support level for
the market price of the security. The Funds will purchase the convertible
securities of highly leveraged issuers only when, in the judgment of the
Adviser, the risk of default is outweighed by the potential for capital
appreciation. The Funds do not intend to purchase convertible securities in
excess of 5% of the Fund's total assets.

CORPORATE REORGANIZATIONS. Each Fund may invest in securities for which a tender
or exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or reorganization proposal has been
announced if, in the judgment of the Adviser, there is reasonable prospect of
capital appreciation significantly greater than the brokerage and other
transaction expenses involved. The primary risk of such investments is that if
the contemplated transaction is abandoned, revised, delayed or becomes subject
to unanticipated uncertainties, the market price of the securities may decline
below the purchase price paid by the Funds.

In general, securities which are the subject of such an offer or proposal sell
at a premium to their historic market price immediately prior to the
announcement of the offer or proposal. However, the increased market price of
such securities may also discount what the stated or appraised value of the
security would be if the contemplated transaction were approved or consummated.
Such investments may be advantageous when the discount significantly overstates
the risk of the contingencies involved; significantly undervalues the
securities, assets or cash to be received by shareholders of the prospective
portfolio company as a result of the contemplated transaction; or fails
adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Adviser which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction, but also the financial resources and
business motivation of the offerer as well as the dynamics of the business
climate when the offer or proposal is in process.

In making such investments, each Fund will not violate any of its
diversification requirements or investment restrictions (see "Investment
Restrictions") including the requirement that, with respect to 75% of its total
assets, not more than 5% of its total assets may be invested in the securities
of any one issuer. Since such investments are ordinarily short term in nature,
they will increase the turnover ratio of the Funds thereby increasing its
brokerage and other transaction expenses. The Adviser intends to select
investments of the type described which, in its view, have a reasonable prospect
of capital appreciation which is significant in relation to both the risk
involved and the potential of available alternate investments as well as monitor
the effect of such investments on the tax qualification tests of the Code. Each
Fund does not intend to purchase these securities in excess of 5% of that Fund's
total assets.

CREDIT QUALITY. The fixed income securities in which a Fund invests will be
rated at least investment grade by a nationally recognized statistical ratings
organization (NRSRO). Investment grade securities have received one of an
NRSRO's four highest ratings. Securities receiving the fourth highest rating
(Baa by Moody's or BBB by S&P or Fitch) have speculative characteristics and
changes in the market or the economy are more likely to affect the ability of
the issuer to repay its obligations when due. The Adviser will evaluate
downgraded securities and will sell any security determined not to be an
acceptable investment. International Fund, Core Equities Fund, Growth
Opportunity Fund and the Fixed Income Fund may invest up to 5% of their net
assets in securities rated below investment grade, but not below the sixth
highest rating category (commonly known as "junk bonds"). The Growth Opportunity
Fund, Core Equities Fund and Municipal Bond Fund will not invest in securities
rated below investment grade. (See "High Yield Securities")

DEBT OBLIGATIONS. The Funds may invest in the following type of debt
obligations, including bonds, notes, and debentures of corporate issuers or
governments, which may have fixed or floating rates of interest.

FIXED RATE DEBT OBLIGATIONS. Fixed rate debt obligations include fixed
rate debt securities with short-term characteristics. Fixed rate
securities with short-term characteristics are long-term debt obligations
but are treated in the market as having short maturities because call
features of the securities may make them callable within a short period of
time. A fixed rate security with short-term characteristics includes a
fixed income security priced close to call or redemption price or a fixed
income security approaching maturity, where the expectation of call or
redemption is high.

Fixed rate securities exhibit more price volatility during times of rising
or falling interest rates than securities with floating rates of interest.
This is because floating rate securities, as described below, behave like
short-term instruments in that the rate of interest they pay is subject to
periodic adjustments based on a designated interest rate index. Fixed rate
securities pay a fixed rate of interest and are more sensitive to
fluctuating interest rates. In periods of rising interest rates the value
of a fixed rate security is likely to fall. Fixed rate securities with
short-term characteristics are not subject to the same price volatility as
fixed rate securities without such characteristics. Therefore, they behave
more like floating rate securities with respect to price volatility.

FLOATING RATE DEBT OBLIGATIONS. The Funds may invest in floating rate debt
obligations including increasing rate securities. Floating rate securities
are generally offered at an initial interest rate which is at or above
prevailing market rates. The interest rate paid on these securities is
then reset periodically (commonly every 90 days to an increment over some
predetermined interest rate index). Commonly utilized indices include the
three-month Treasury bill rate, the 180-day Treasury bill rate, the
one-month or three-month London Interbank Offered Rate (LIBOR), the prime
rate of a bank, the commercial paper rates, or the longer-term rates on
U.S. Treasury securities. Increasing rate securities' rates are reset
periodically at different levels on a predetermined scale. These levels of
interest are ordinarily set at progressively higher increments over time.
Some increasing rate securities may, by agreement, revert to a fixed rate
status. These securities may also contain features which allow the issuer
the option to convert the increasing rate of interest to a fixed rate
under such terms, conditions, and limitations as are described in each
issuer's prospectus.

DERIVATIVE CONTRACTS AND SECURITIES. The term derivative has traditionally been
applied to certain contracts (futures, forward, option and swap contracts) that
derive their value from changes in the value of an underlying security,
currency, commodity or index. Derivatives also refer to securities that
incorporate the performance characteristics of these contracts and securities
derived from the cash flows from underlying securities, mortgages or other
obligations. While the response of certain derivatives to market changes may
differ from traditional investments like stocks and bonds, they do not
necessarily present greater market risks than traditional investments.
Derivative contracts and securities can be used to reduce or increase the
volatility of an investment portfolio's total performance.

Depending upon how a Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to market and
currency risks, and may also expose the Fund to liquidity and leverage risks.
Over-the-Counter contracts also expose the Fund to credit risks in the event
that a counterparty defaults on the contract. (See "Foreign Currency
Transactions" and "Futures and Options Transactions" herein for more
information.)

DEPOSITARY RECEIPTS. American Depositary Receipts (ADRs) are receipts, issued by
a U.S. bank, that represent an interest in shares of a foreign-based
corporation. ADRs provide a way to buy shares of foreign-based companies in the
U.S. rather than in overseas markets. European Depositary Receipts (EDRs) and
Global Depositary Receipts (GDRs) are receipts, issued by foreign banks or trust
companies, or foreign branches of U.S. banks, that represent an interest in
shares of either a foreign or U.S. corporation. Depositary Receipts may not be
denominated in the same currency as the underlying securities into which they
may be converted, and are subject to currency risks. Depositary Receipts involve
many of the same risks of investing directly in foreign securities.

EMERGING GROWTH COMPANIES. Emerging Growth Companies are companies that are
beyond their initial start-up periods but have not yet reached a state of
established growth or maturity. The nature of investing in emerging growth
companies involves a greater level of risk than would be associated when
investing in more established seasoned companies. The rate of growth of such
companies may at times be dramatic; such companies often provide new products or
services that enable them to capture a dominant or important market position, or
have a special area of expertise, or are able to take advantage of changes in
demographic factors in a more profitable way than other companies. These
companies may have limited product lines, markets or financial resources and may
lack management depth since they have not been tested by time or the
marketplace. The securities of emerging growth companies often have limited
marketability and may be subject to more volatile market movements than
securities of larger, more established growth companies or the market averages
in general. Shares of the Growth Opportunity Fund, therefore, may be subject to
greater fluctuation in value than funds investing entirely in proven growth
stocks.

FOREIGN CURRENCY TRANSACTIONS. Foreign currency transactions are generally used
to obtain foreign currencies to settle securities transactions. They can also be
used as a hedge to protect assets against adverse changes in foreign currency
exchange rates or regulations. When the Fund uses foreign currency exchanges as
a hedge, it may also limit potential gain that could result from an increase in
the value of such currencies. The Fund may be affected either favorably or
unfavorably by fluctuations in the relative rates of exchange between the
currencies of different nations.

FOREIGN CURRENCY HEDGING TRANSACTIONS. Foreign currency hedging
transactions are used to protect against foreign currency exchange rate
risks. These transactions include: forward foreign currency exchange
contracts, foreign currency futures contracts, and purchasing put or
call options on foreign currencies.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Forward Foreign Currency
Exchange Contracts (Forward Contracts) are used to minimize the risks
associated with changes in the relationship between the U.S. dollar and
foreign currencies. They are used to lock in the U.S. dollar price of a
foreign security. A Forward Contract is a commitment to purchase or sell a
specific currency for an agreed price at a future date.

If the Adviser believes a foreign currency will decline against the U.S.
dollar, a Forward Contract may be used to sell an amount of the foreign
currency approximating the value of a Fund's security that is
denominated in the foreign currency. The success of this hedging
strategy is highly uncertain due to the difficulties of predicting the
values of foreign currencies, of precisely matching Forward Contract
amounts, and because of the constantly changing value of the securities
involved. The Fund will not enter into Forward Contracts for hedging
purposes in a particular currency in an amount in excess of the Fund's
assets denominated in that currency. Conversely, if the Adviser believes
that the U.S. dollar will decline against a foreign currency, a Forward
Contract may be used to buy that foreign currency for a fixed dollar
amount, otherwise known as cross-hedging.

In these transactions, the Fund will segregate assets with a market
value equal to the amount of the foreign currency purchased. Therefore,
the Fund will always have cash, cash equivalents or high quality debt
securities available to cover Forward Contracts or to limit any
potential risk. The segregated assets will be priced daily.

Forward Contracts may limit potential gain from a positive change in the
relationship between the U.S. dollar and foreign currencies.
Unanticipated changes in currency prices may result in poorer overall
performance for a Fund than if it had not engaged in such contracts.

PURCHASING AND WRITING PUT AND CALL OPTIONS. Purchasing and writing put
and call options on foreign currencies are used to protect the Fund's
portfolio against declines in the U.S. dollar value of foreign portfolio
securities and against increases in the dollar cost of foreign
securities to be acquired. Writing an option on foreign currency
constitutes only a partial hedge, up to the amount of the premium
received. The Fund could lose money if it is required to purchase or
sell foreign currencies at disadvantageous exchange rates. If exchange
rate movements are adverse to the Fund's position, the Fund may forfeit
the entire amount of the premium plus related transaction costs. These
options are traded on U.S. and foreign exchanges or over-the-counter.
The Fund may write (sell) covered call options and secured put options
on up to 25% of net assets and may purchase put and call options
provided that no more than 5% of net assets may be invested in premiums
on such options.

FOREIGN SECURITIES. The Funds, other than the Municipal Bond Fund, may invest in
certain foreign securities; however, the only foreign securities the Growth
Opportunity Fund may invest in are securities of Canadian based companies.
Investment in securities of foreign issuers and in obligations of foreign
branches of domestic banks involves somewhat different investment risks from
those affecting securities of U.S. domestic issuers. There may be limited
publicly available information with respect to foreign issuers, and foreign
issuers are not generally subject to uniform accounting, auditing and financial
standards and requirements comparable to those applicable to domestic companies.
Dividends and interest paid by foreign issuers may be subject to withholding and
other foreign taxes which may decrease the net return on foreign investments as
compared to dividends and interest paid to the Funds by domestic companies.

Investors should realize that the value of the Funds' investments in foreign
securities may be adversely affected by changes in political or social
conditions, diplomatic relations, confiscatory taxation, expropriation,
nationalization, limitation on the removal of funds or assets, or imposition of
(or change in) exchange control or tax regulations in those foreign countries.
In addition, changes in government administrations or economic or monetary
policies in the United States or abroad could result in appreciation or
depreciation of portfolio securities and could favorably or unfavorably affect
the Funds' operations. Furthermore, the economies of individual foreign nations
may differ from the U.S. economy, whether favorably or unfavorably, in areas
such as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position; it may
also be more difficult to obtain and enforce a judgment against a foreign
issuer. Any foreign investments made by the Funds must be made in compliance
with U.S. foreign currency restrictions and tax laws restricting the amounts and
types of foreign investments.

Investments are made primarily in those regions where, in the opinion of the
Funds' Adviser, there are opportunities to achieve superior investment returns
relative to other investment opportunities outside the United States. The
International Fund does not, however, generally invest in debt or equity
securities of U.S. issuers. The International Fund emphasizes those industrial
sectors of the world's market which, in the opinion of its Adviser, offer the
most attractive risk/reward relationships. Securities of any given issuer are
evaluated on the basis of such measures as price/earnings ratios, price/book
ratios, cash flows and dividend and interest income.

Since investments in foreign securities may involve foreign currencies, the
value of a Fund's assets as measured in U.S. dollars may be affected favorably
or unfavorably by changes in currency rates and exchange control regulations,
including currency blockage.

In addition, while the volume of transactions effected on foreign stock
exchanges has increased in recent years, in most cases it remains appreciably
below that of domestic security exchanges. Accordingly, the Funds' foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. Moreover, the settlement
periods for foreign securities, which are often longer than those for securities
of U.S. issuers, may affect portfolio liquidity. In buying and selling
securities on foreign exchanges, purchasers normally pay fixed commissions that
are generally higher than the negotiated commissions charged in the United
States. In addition, there is generally less government supervision and
regulation of securities exchanges, brokers and issuers located in foreign
countries than in the United States.

CANADIAN COMPANIES. The Growth Opportunity Fund may invest more than 10%
of its total assets in Canadian Securities. Canadian securities are
sensitive to conditions within Canada, but also tend to follow the U.S.
market. The country's economy relies strongly on the production and
processing of natural resources. Also, the government has attempted to
reduce restrictions against foreign investment, and its trade agreements
with the U.S. and Mexico are expected to increase trade. Also, demand by
many citizens in the Province of Quebec for secession from Canada may
significantly impact the Canadian economy. In addition, the value in
U.S. dollars of the Fund's assets denominated in Canadian currency may
be affected by changes in exchange rates and regulations.

FUTURES AND OPTIONS TRANSACTIONS. As a means of reducing fluctuations in its net
asset value, a Fund may buy and sell futures contracts and options on futures
contracts, and buy put and call options on portfolio securities and securities
indices to hedge its portfolio. A Fund may also write covered put and call
options on portfolio securities to attempt to increase its current income or to
hedge its portfolio. There is no assurance that a liquid secondary market will
exist for any particular futures contract or option at any particular time. The
Fund's ability to establish and close out futures and options positions depends
on this secondary market.

FUTURES CONTRACTS. A futures contract is a commitment by two parties under
which one party agrees to make delivery of an asset (seller) and another
party agrees to take delivery of the asset at a certain time in the
future. A futures contract may involve a variety of assets including
commodities (such as oil, wheat, or corn) or a financial asset (such as a
security). A Fund may purchase and sell financial futures contracts to
hedge against anticipated changes in the value of its portfolio without
necessarily buying or selling the securities. Although some financial
futures contracts call for making or taking delivery of the underlying
securities, in most cases these obligations are closed out before the
settlement date. The closing of a futures contract is accomplished by
purchasing or selling an identical offsetting futures contract. Other
financial futures contracts call for cash settlements.

A Fund may purchase and sell stock index futures contracts to hedge
against anticipated price changes with respect to any stock index traded
on a recognized stock exchange or board of trade. A stock index futures
contract is an agreement in which two parties agree to take or make
delivery of an amount of cash equal to the difference between the price of
the original contract and the value of the index at the close of the last
trading day of the contract. No physical delivery of the underlying
securities in the index is made. Settlement is made in cash upon
termination of the contract.

MARGIN IN FUTURES TRANSACTIONS. Since a Fund does not pay or receive money
upon the purchase or sale of a futures contract, it is required to deposit
an amount of initial margin in cash, U.S. government securities or
highly-liquid debt securities as a good faith deposit. The margin is
returned to the Fund upon termination of the contract. Initial margin in
futures transactions does not involve borrowing to finance the
transactions.

As the value of the underlying futures contract changes daily, the Fund
pays or receives cash, called variation margin, equal to the daily change
in value of the futures contract. This process is known as marking to
market. Variation margin does not represent a borrowing or loan by the
Fund. It may be viewed as a settlement between the Fund and the broker of
the amount one would owe the other if the futures contract expired. When
the Fund purchases futures contracts, an amount of cash and/or cash
equivalents, equal to the underlying commodity value of the futures
contracts (less any related margin deposits), will be deposited in a
segregated account with the Fund's custodian to collateralize the position
and insure that the use of futures contracts is unleveraged. The Fund is
also required to deposit and maintain margin when it writes call options
on futures contracts.

A Fund will not enter into a futures contract or purchase an option
thereon for other than hedging purposes if immediately thereafter the
initial margin deposits for futures contracts held by it, plus premiums
paid by it for open options on futures contracts, would exceed 5% of the
market value of its net assets, after taking into account the unrealized
profits and losses on those contracts it has entered into. However, in the
case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in computing such 5%.

PUT OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS. A Fund may
purchase listed put options on financial and stock index futures contracts
to protect portfolio securities against decreases in value. Unlike
entering directly into a futures contract, which requires the purchaser to
buy a financial instrument on a set date at a specified price, the
purchase of a put option on a futures contract entitles (but does not
obligate) its purchaser to decide on or before a future date whether to
assume a short position at the specified price.

Generally, if the hedged portfolio securities decrease in value during the
term of an option, the related futures contracts will also decrease in
value and the option will increase in value. In such an event, the Fund
will normally close out its option by selling an identical option. If the
hedge is successful, the proceeds received by the Fund upon the sale of
the second option will be large enough to offset both the premium paid by
the Fund for the original option plus the decrease in value of the hedged
securities.

Alternatively, a Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures contract
of the type underlying the option (for a price less than the strike price
of the option) and exercise the option. The Fund would then deliver the
futures contract in return for payment of the strike price. If the Fund
neither closes out nor exercises an option, the option will expire on the
date provided in the option contract, and only the premium paid for the
contract will be lost.

A Fund may also write (sell) listed put options on financial or stock
index futures contracts to hedge its portfolio against a decrease in
market interest rates or an increase in stock prices. A Fund will use
these transactions to purchase portfolio securities in the future at price
levels existing at the time it enters into the transaction. When a Fund
sells a put on a futures contract, it receives a cash premium in exchange
for granting to the buyer of the put the right to receive from the Fund,
at the strike price, a short position in such futures contract. This is so
even though the strike price upon exercise of the option is greater than
the value of the futures position received by such holder. As market
interest rates decrease or stock prices increase, the market price of the
underlying futures contract normally increases. When the underlying
futures contract increases, the buyer of the put option has less reason to
exercise the put because the buyer can sell the same futures contract at a
higher price in the market. If the value of the underlying futures
position is not such that exercise of the option would be profitable to
the option holder, the option will generally expire without being
exercised. The premium received by the Fund can then be used to offset the
higher prices of portfolio securities to be purchased in the future.

In order to avoid the exercise of an option sold by it, generally a Fund
will cancel its obligation under the option by entering into a closing
purchase transaction, unless it is determined to be in the Fund's interest
to deliver the underlying futures position. A closing purchase transaction
consists of the purchase by the Fund of an option having the same term as
the option sold by the Fund, and has the effect of canceling the Fund's
position as a seller. The premium which the Fund will pay in executing a
closing purchase transaction may be higher than the premium received when
the option was sold, depending in large part upon the relative price of
the underlying futures position at the time of each transaction. If the
hedge is successful, the cost of buying the second option will be less
than the premium received by the Fund for the initial option.

CALL OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS. A Fund may
write (sell) listed and over-the-counter call options on financial and
stock index futures contracts to hedge its portfolio. When the Fund writes
a call option on a futures contract, it undertakes to sell a futures
contract at the fixed price at any time during the life of the option. As
stock prices fall or market interest rates rise, causing the prices of
futures to go down, the Fund's obligation to sell a futures contract costs
less to fulfill, causing the value of the Fund's call option position to
increase. In other words, as the underlying futures price goes down below
the strike price, the buyer of the option has no reason to exercise the
call, so that the Fund keeps the premium received for the option. This
premium can substantially offset the drop in value of the Fund's portfolio
securities.

Prior to the expiration of a call written by a Fund, or exercise of it by
the buyer, the Fund may close out the option by buying an identical
option. If the hedge is successful, the cost of the second option will be
less than the premium received by the Fund for the initial option. The net
premium income of the Fund will then substantially offset the decrease in
value of the hedged securities.

A Fund may buy a listed call option on a financial or stock index futures
contract to hedge against decreases in market interest rates or increases
in stock price. A Fund will use these transactions to purchase portfolio
securities in the future at price levels existing at the time it enters
into the transaction. When a Fund purchases a call on a financial futures
contract, it receives in exchange for the payment of a cash premium the
right, but not the obligation, to enter into the underlying futures
contract at a strike price determined at the time the call was purchased,
regardless of the comparative market value of such futures position at the
time the option is exercised. The holder of a call option has the right to
receive a long (or buyer's) position in the underlying futures contract.
As market interest rates fall or stock prices increase, the value of the
underlying futures contract will normally increase, resulting in an
increase in value of the Fund's option position. When the market price of
the underlying futures contract increases above the strike price plus
premium paid, the Fund could exercise its option and buy the futures
contract below market price. Prior to the exercise or expiration of the
call option, the Fund could sell an identical call option and close out
its position. If the premium received upon selling the offsetting call is
greater than the premium originally paid, the Fund has completed a
successful hedge.

LIMITATION ON OPEN FUTURES POSITIONS. A Fund will not maintain open
positions in futures contracts it has sold or call options it has written
on futures contracts if together the value of the open positions exceeds
the current market value of the Fund's portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the futures
contracts. If this limitation is exceeded at any time, the Fund will take
prompt action to close out a sufficient number of open contracts to bring
its open futures and options positions within this limitation.

PURCHASING PUT AND CALL OPTIONS ON SECURITIES. A Fund may purchase put
options on portfolio securities to protect against price movements in the
Fund's portfolio. A put option gives the Fund, in return for a premium,
the right to sell the underlying security to the writer (seller) at a
specified price during the term of the option. A Fund may purchase call
options on securities acceptable for purchase to protect against price
movements by locking in on a purchase price for the underlying security. A
call option gives the Fund, in return for a premium, the right to buy the
underlying security from the seller at a specified price during the term
of the option.

WRITING COVERED CALL AND PUT OPTIONS ON SECURITIES. A Fund may write
covered call and put options to generate income and thereby protect
against price movements in the Fund's portfolio securities. As writer of a
call option, the Fund has the obligation, upon exercise of the option
during the option period, to deliver the underlying security upon payment
of the exercise price. The Fund may only sell call options either on
securities held in its portfolio or on securities which it has the right
to obtain without payment of further consideration (or has segregated cash
or U.S. government securities in the amount of any additional
consideration). As a writer of a put option, the Fund has the obligation
to purchase a security from the purchaser of the option upon the exercise
of the option. In the case of put options, the Fund will segregate cash or
U.S. Treasury obligations with a value equal to or greater than the
exercise price of the underlying securities.

STOCK INDEX OPTIONS. A Fund may purchase or sell put or call options on
stock indices listed on national securities exchanges or traded in the
over-the-counter market. A stock index fluctuates with changes in the
market values of the stocks included in the index. Upon the exercise of
the option, the holder of a call option has the right to receive, and the
writer of a put option has the obligation to deliver, a cash payment equal
to the difference between the closing price of the index and the exercise
price of the option. The effectiveness of purchasing stock index options
will depend upon the extent to which price movements in the Fund's
portfolio correlate with price movements of the stock index selected. The
value of an index option depends upon movements in the level of the index
rather than the price of a particular stock. Accordingly, successful use
by a Fund of options on stock indices will be subject to the Adviser
correctly predicting movements in the directions of the stock market
generally or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual stocks.

OVER-THE-COUNTER OPTIONS. Over-the-counter options are two-party contracts
with price and terms negotiated between buyer and seller. In contrast,
exchange-traded options are third-party contracts with standardized strike
prices and expiration dates and are purchased from a clearing corporation.
Exchange-traded options have a continuous liquid market while
over-the-counter options may not. A Fund may generally purchase and write
over-the-counter options on portfolio securities or securities indices in
negotiated transactions with the buyers or writers of the options when
options on the Fund's portfolio securities or securities indices are not
traded on an exchange. The Fund purchases and writes options only with
investment dealers and other financial institutions deemed creditworthy by
the Adviser.

RISKS. When a Fund uses futures and options on futures as hedging devices,
there is a risk that the prices of the securities or foreign currency
subject to the futures contracts may not correlate perfectly with the
prices of the securities or currency in the Fund's portfolio. This may
cause the futures contract and any related options to react differently to
market changes than the portfolio securities or foreign currency. In
addition, the Adviser could be incorrect in its expectations about the
direction or extent of market factors such as stock price movements or
foreign currency exchange rate fluctuations. In these events, the Fund may
lose money on the futures contract or option.

When a Fund purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures
contracts (less any related margin deposits), will be deposited in a
segregated account with the Fund's custodian or the broker, to
collateralize the position and thereby insure that the use of such futures
contract is unleveraged. When the Fund sells futures contracts, it will
either own or have the right to receive the underlying future or security,
or will make deposits to collateralize the position as discussed above.

HIGH YIELD SECURITIES. The issuers of debt obligations having speculative
characteristics may experience difficulty in paying principal and interest when
due in the event of a downturn in the economy or unanticipated corporate
developments. The market prices of such securities (commonly known as "junk
bonds") may become increasingly volatile in periods of economic uncertainty.
Moreover, adverse publicity or the perceptions of investors over which the
Adviser has no control, whether or not based on fundamental analysis, may
decrease the market price and liquidity of such investments. Although the
Adviser will attempt to avoid exposing each Fund to such risks, there is no
assurance that it will be successful or that a liquid secondary market will
continue to be available for the disposition of such securities. International
Fund, Core Equities Fund and Fixed Income Fund may purchase or hold not more
than 5% of its net assets in securities rated below investment grade (but not
lower than the sixth highest rating). Growth Opportunity Fund may purchase or
hold not more than 5% or its assets in convertible debt securities regardless of
their ratings. Municipal Bond Fund will not invest in securities rated below
investment grade.

The market for unrated securities may not be as liquid as the market for rated
securities, which may result in depressed prices for the Funds in the disposal
of such nonrated securities. There is no established secondary market for many
of these securities. The Adviser cannot anticipate whether these securities
could be sold other than to institutional investors. There is frequently no
secondary market for the resale of those debt obligations that are in default.
The limited market for these securities may affect the amount actually realized
by each Fund upon such sale. Such sale may result in a loss to each Fund. There
are certain risks involved in applying credit ratings as a method of evaluating
high yield securities. For example, while credit rating agencies evaluate the
safety of principal and interest payments, they do not evaluate the market risk
of the securities and the securities may decrease in value as a result of credit
developments.

Lower rated and nonrated securities tend to offer higher yields than higher
rated securities with the same maturities because the creditworthiness of the
obligors of lower rated securities may not have been as strong as that of other
issuers. Since there is a general perception that there are greater risks
associated with the lower-rated securities in each Fund, the yields and prices
of such securities tend to fluctuate more with changes in the perceived quality
of the credit of their obligors. In addition, the market value of high yield
securities may fluctuate more than the market value of higher rated securities
since high yield securities tend to reflect short-term market developments to a
greater extent than higher rated securities, which fluctuate primarily in
response to the general level of interest rates, assuming that there has been no
change in the fundamental credit quality of such securities. High yield
securities are also more sensitive to adverse economic changes and events
affecting specific issuers than are higher rated securities. Periods of economic
uncertainty can be expected to result in increased market price volatility of
the high yield securities. High yield securities may also be directly and
adversely affected by variables such as interest rates, unemployment rates,
inflation rates and real growth in the economy and may be more susceptible to
variables such as adverse publicity and negative investor perception than are
more highly rated securities, particularly in a limited secondary market. Lower
rated securities generally involve greater risks of loss of income and principal
than higher rated securities. The obligors of lower rated securities possess
less creditworthy characteristics than the obligors of higher rated securities,
as is evidenced by those securities that have experienced a downgrading in
rating or that are in default. The evaluation of the price of such securities is
highly speculative and volatile. As such, these evaluations are very sensitive
to the latest available public information relating to developments concerning
such securities.

ILLIQUID AND RESTRICTED SECURITIES. The Funds may purchase securities which are
subject to legal or contractual delays, restrictions, and costs on resale.
Because of time limitations, the Funds might not be able to dispose of these
securities at reasonable prices or at times advantageous to the Fund. The Fund
intends to limit the purchase of restricted securities which have not been
determined by the Adviser to be liquid, together with other securities
considered to be illiquid, including repurchase agreements providing for
settlement in more than seven days after notice, to not more than 15% of its
assets.

INVERSE FLOATERS. Certain securities issued by agencies of the U.S. government
(agency securities) that include a class bearing a floating rate of interest
also may include a class whose yield floats inversely against a specified index
rate. These "inverse floaters" are more volatile than conventional fixed income
or floating rate classes of an agency security and the yield thereon, as well as
the value thereof, will fluctuate in inverse proportion to changes in the index
on which interest rate adjustments are based. As a result, the yield on an
inverse floater class of an agency security will generally increase when market
yields (as reflected by the index) decrease and decrease when market yields
increase. The extent of the volatility of inverse floaters depends on the extent
of anticipated changes in market rates of interest. Generally, inverse floaters
provide for interest rate adjustments based upon a multiple of the specified
interest index, which further increases their volatility. The degree of
additional volatility will be directly proportional to the size of the multiple
used in determining interest rate adjustments.

LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, a Fund
may lend portfolio securities to securities broker-dealers or financial
institutions if: (1) the loan is collateralized in accordance with applicable
regulatory requirements including collateralization continuously at no less than
100% by marking to market daily, (2) the loan is subject to termination by a
Fund at any time, (3) a Fund receives reasonable interest or fee payments on the
loan, (4) a Fund is able to exercise all voting rights with respect to the
loaned securities and (5) the loan will not cause the value of all loaned
securities to exceed one-third of the value of a Fund's assets.

If the borrower fails to maintain the requisite amount of collateral, the loan
automatically terminates and a Fund can use the collateral to replace the
securities while holding the borrower liable for any excess of replacement cost
over the value of the collateral. As with any extension of credit, there are
risks of delay in recovery and in some cases even loss of rights in collateral
should the borrower of the securities fail financially. The International Fund
does not currently intend to lend portfolio securities in excess of 5% of its
total assets. The Core Equities Fund, Growth Opportunity Fund, Fixed Income Fund
and Municipal Bond Fund do not currently intend to lend portfolio securities.

MONEY MARKET INSTRUMENTS. The Funds may invest in money market instruments
including obligations of the U.S. government and its agencies and
instrumentalities, other short-term debt securities, commercial paper, bank
obligations and money market mutual funds.

MORTGAGE-BACKED SECURITIES. Fixed Income Fund may invest in mortgage-backed
securities. Generally, homeowners have the option to prepay their mortgages at
any time without penalty. Homeowners frequently refinance high rate mortgages
when mortgage rates fall. This results in the prepayment of mortgage backed
securities, which deprives holders of the securities of the higher yields.
Conversely, when mortgage rates increase, prepayments due to refinancings
decline. This extends the life of mortgage backed securities with lower yields.
As a result, increases in prepayments of premium mortgage backed securities, or
decreases in prepayments of discount mortgage backed securities, may reduce
their yield and price.

This relationship between interest rates and mortgage prepayments makes the
price of mortgage backed securities more volatile than most other types of fixed
income securities with comparable credit risks. Mortgage backed securities tend
to pay higher yields to compensate for this volatility.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS). The following example
illustrates how mortgage cash flows are prioritized in the case of CMOs -
most of the CMOs in which the Fixed Income Fund invests use the same basic
structure: (1) Several classes of securities are issued against a pool of
mortgage collateral. A common structure may contain four classes of
securities. The first three (A, B, and C bonds) pay interest at their
stated rates beginning with the issue date, and the final class (Z bond)
typically receives any excess income from the underlying investments after
payments are made to the other classes and receives no principal or
interest payments until the shorter maturity classes have been retired,
but then receives all remaining principal and interest payments; (2) The
cash flows from the underlying mortgages are applied first to pay interest
and then to retire securities; (3) The classes of securities are retired
sequentially. All principal payments are directed first to the
shortest-maturity class (or A bond). When those securities are completely
retired, all principal payments are then directed to the next
shortest-maturity security (or B bond). This process continues until all
of the classes have been paid off.

Because the cash flow is distributed sequentially instead of pro rata, as
with pass-through securities, the cash flows and average lives of CMOs are
more predictable, and there is a period of time during which the investors
in the longer-maturity classes receive no principal paydowns. The interest
portion of these payments is distributed by the Funds as income, and the
capital portion is reinvested.

MUNICIPAL SECURITIES. Municipal Securities are generally issued to finance
public works such as airports, bridges, highways, housing, hospitals, mass
transpiration projects, schools, streets, and water and sewer works. They are
also issued to repay outstanding obligations, to raise funds for general
operating expenses, and to make loans to other public institutions and
facilities.

Municipal securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

MUNICIPAL LEASES. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities and may be considered illiquid. They may take the form of a
lease, an installment purchase contract, or a conditional sales contract.
Lease obligations may be limited by municipal charter or the nature of the
appropriation for the lease. In particular, lease obligations may be
subject to periodic appropriation. If the entity does not appropriate
funds for future lease payments, the entity cannot be compelled to make
such payments. Furthermore, a lease may provide that the participants
cannot accelerate lease obligations upon default. The participant can only
enforce lease payments as they became due. In the event of a default or
failure of appropriation, unless the participation interests are credit
enhanced, it is unlikely that the participants will be able to obtain an
acceptable substitute source of payment.

VARIABLE RATE MUNICIPAL SECURITIES. The Fund may purchase municipal
securities that have variable interest rates. Variable interest rates are
ordinarily stated as a percentage of a published interest rate, interest
rate index, or some similar standard, such as the 91-day U.S. Treasury
bill rate.

Many variable rate municipal securities are subject to payment of
principal on demand by the Fund usually in not more than seven days. All
variable rate municipal securities will meet the quality standards for the
Fund.

MUNICIPAL BOND INSURANCE. The Municipal Bond Fund may purchase municipal
securities covered by insurance which guarantees the timely payment of
principal at maturity and interest on such securities. These insured
municipal securities are either (1) covered by an insurance policy
applicable to a particular security, whether obtained by the issuer of the
security or by a third party (Issuer-Obtained Insurance) or (2) insured
under master insurance policies issued by municipal bond insurers, which
may be purchased by the Fund. The premiums for the Policies may be paid by
the Fund and the yield on the Fund's investments may be reduced thereby.

The Fund may require or obtain municipal bond insurance when purchasing
municipal securities which would not otherwise meet the Fund's quality
standards. The Fund may also require or obtain municipal bond insurance
when purchasing or holding specific municipal securities, when, in the
opinion of the Fund's Adviser, such insurance would benefit the Fund (for
example, through improvement of portfolio quality or increased liquidity
of certain securities). Issuer-Obtained Insurance policies are
noncancellable and continue in force as long as the municipal securities
are outstanding and their respective insurers remain in business. If a
municipal security is covered by Issuer-Obtained Insurance, then such
security need not be insured by the Policies purchased by the Fund.

PARTICIPATION INTERESTS. The Municipal Bond Fund may purchase participation
interests from financial institutions such as commercial banks, savings
associations, and insurance companies. These participation interests give the
Fund an undivided interest in municipal securities. The financial institutions
from which the Fund purchases participation interests frequently provide or
secure irrevocable letters of credit or guarantees to assure that the
participation interests are of high quality. The Directors will determine that
participation interests meet the prescribed quality standards of the Fund.

PREFERRED STOCKS. Preferred stocks have the right to receive specified dividends
or distributions before the payment of dividends or distributions on common
stock. Some preferred stocks also participate in dividends and distributions
paid on common stock. Preferred stocks may provide for the issuer to redeem the
stock on a specified date. The Fund may treat such redeemable preferred stock as
a fixed income security.

REPURCHASE AGREEMENTS. A repurchase agreement is an instrument under which the
purchaser (i.e., a Fund) acquires a debt security and the seller agrees, at the
time of the sale, to repurchase the obligation at a mutually agreed upon time
and price, thereby determining the yield during the purchaser's holding period.
This results in a fixed rate of return insulated from market fluctuations during
such period. The underlying securities are ordinarily U.S. Treasury or other
government obligations or high quality money market instruments. A Fund will
require that the value of such underlying securities, together with any other
collateral held by the Fund, always equals or exceeds the amount of the
repurchase obligations of the vendor. While the maturities of the underlying
securities in repurchase agreement transactions may be more than one year, the
term of such repurchase agreement will always be less than one year. A Fund's
risk is primarily that, if the seller defaults, the proceeds from the
disposition of underlying securities and other collateral for the seller's
obligation are less than the repurchase price. If the seller becomes bankrupt,
the Fund might be delayed in selling the collateral. Under the Investment
Company Act of 1940, as amended (the "1940 Act"), repurchase agreements are
considered loans. Repurchase agreements usually are for short periods, such as
one week or less, but could be longer. The Funds will not enter into repurchase
agreements of a duration of more than seven days if, taken together with other
illiquid securities, more than 15% of that Fund's net assets would be so
invested. Under normal market conditions, the Funds do not intend to purchase
repurchase agreements in excess of 5% of that Fund's net assets.

SHARES OF OTHER INVESTMENT COMPANIES. The Funds may invest their assets in
securities of other investment companies as an efficient means of carrying out
their investment policies. Investment companies incur certain expenses, such as
management fees, and, therefore, any investment by the Funds in shares of other
investment companies may be subject to such duplicate expenses.

SMALL AND MID CAPITALIZATION STOCKS. Small market companies (Small-Cap
Companies) are those with market capitalizations of $4 billion or less at the
time of Growth Opportunity Fund's investment. Many Small-Cap Companies will have
had their securities publicly traded, if at all, for only a short period of time
and will not have had the opportunity to establish a reliable trading pattern
through economic cycles. Investing in small and mid capitalization stocks may
involve greater risk than investing in large capitalization stocks and more
established companies, since they can be subject to greater volatility. The
price volatility of Small-Cap Companies is relatively higher than larger, more
mature companies. The greater price volatility of Small-Cap Companies may result
from the fact that there may be less market liquidity, less information publicly
available or few investors who monitor the activities of these companies.
Further, in addition to exhibiting greater volatility, the stocks of Small-Cap
Companies may, to some degree, fluctuate independently of the stocks of large
companies. That is, the stocks of Small-Cap Companies may decline in price as
the price of large company stocks rise or vice versa. In addition, the market
prices of these securities may exhibit more sensitivity to changes in industry
or general economic conditions. Some Small-Cap Companies will not have been in
existence long enough to experience economic cycles or to know whether they are
sufficiently well managed to survive downturns or inflationary periods. Further,
a variety of factors may affect the success of a company's business beyond the
ability of its management to prepare or compensate for them, including domestic
and international political developments, government trade and fiscal policies,
patterns of trade and war or other military conflict which may affect particular
industries or markets or the economy generally.

Mid capitalization companies (Mid-Cap Companies) are those with market
capitalizations between $1 billion and $4 billion. The risks associated with
investments in Mid-Cap Companies are similar to those associated with Small-Cap
Companies as discussed above.

SHORT SALES. Core Equities Fund may make short sales. A short sale occurs when a
borrowed security is sold in anticipation of a decline in its price. If the
decline occurs, shares equal in number to those sold short can be purchased at
the lower price. If the price increases, the higher price must be paid. The
purchased shares are then returned to the original lender. Risk arises because
no loss limit can be placed on the transaction. When the Fund enters into a
short sale, assets equal to the market price of the securities sold short or any
lesser price at which the Fund can obtain such securities, are segregated on the
Fund's records and maintained until the Fund meets its obligations under the
short sale.

The Fund will not sell securities short unless it (1) owns, or has a right to
acquire, an equal amount of such securities, or (2) has segregated an amount of
its other assets equal to the lesser of the market value of the securities sold
short or the amount required to acquire such securities. The segregated amount
will not exceed 25% of the Fund's net assets. While in a short position, the
Fund will retain the securities, rights, or segregated assets. Short selling may
accelerate the recognition of gains.

U.S. GOVERNMENT SECURITIES. The Funds may invest in U.S. government securities
which include:

o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;

o notes, bonds, and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;

o notes bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and

o notes, bonds and discount notes of other U.S. government instrumentalities
supported by the credit of the instrumentalities.

Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government are backed by the full faith and credit of the U.S.
Treasury. No assurances can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These

instrumentalities are supported by:

o the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;

o the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or

o the credit of the agency or instrumentality.

TEMPORARY INVESTMENTS. Each Fund may maintain up to 100% of its assets in Money
Market Instruments for temporary, defensive purposes. This reserve position
provides flexibility in meeting redemptions, expenses, and the timing of new
investments, and serves as a short-term defense during periods of unusual market
volatility. The Money Market Instruments for the Core Equities, Growth
Opportunity and Fixed Income Funds include obligations of the U.S. government
and its agencies and instrumentalities, other short-term debt securities which
are rated in the two top categories by Moody's or S&P or, if unrated, are of
comparable quality as determined by the Adviser, commercial paper, bank
obligations and money market mutual funds. The Money Market Instruments for
International Fund include domestic and foreign government obligations, bank
obligations, commercial paper and short-term securities which are rated in the
top two categories by Moody's or S&P or, if unrated, are of comparable quality
as determined by the Adviser. The Money Market Instruments for Municipal Bond
Fund include taxable or tax-exempt obligations of the U.S. government and its
agencies and instrumentalities, short-term debt securities of municipal or
corporate issuers, domestic and foreign government obligations, bank
obligations, commercial paper and short-term securities which are rated in the
two top categories by Moody's or S&P or, if unrated, of comparable quality as
determined by the Adviser. Although Municipal Bond Fund is permitted to take
temporary, taxable investments, there is no current intention of generating
income subject to Federal regular income tax.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term corporate
debt instruments that have variable or floating interest rates and provide a
Fund with the right to tender the security for repurchase at its stated
principal amount plus accrued interest. Such securities typically bear interest
at a rate that is intended to cause the securities to trade at par. The interest
rate may float or be adjusted at regular intervals (ranging from daily to
annually), and is normally based on an interest rate index or a published
interest rate. Many variable rate demand notes allow a Fund to demand the
repurchase of the security on not more than seven days prior notice. Other notes
only permit a Fund to tender the security at the time of each interest rate
adjustment or at other fixed intervals.

WARRANTS. Warrants give a Fund the option to buy the issuer's stock or other
equity securities at a specified price. The Fund may buy the designated shares
by paying the exercise price before the warrant expires. Warrants may become
worthless if the price of the stock does not rise above the exercise price by
the expiration date. Rights are the same as warrants, except they are typically
issued to existing stockholders. The Fund's do not intend to purchase warrants
and rights in excess of 5% of each Fund's total assets.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. These transactions are made to
secure what is considered to be an advantageous price or yield. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices. Other than
normal transaction costs, no fees or expenses are incurred. However, liquid
assets of a Fund are segregated on a Fund's records at the trade date in an
amount sufficient to make payment for the securities to be purchased. These
assets are marked to market daily and are maintained until the transaction has
been settled.

ZERO COUPON BONDS. Fixed Income Fund may invest in zero coupon bonds. These
are bonds which are sold at a discount to their stated value and do not pay any
periodic interest.

INVESTMENT RESTRICTIONS

FUNDAMENTAL LIMITATIONS

The following investment limitations are fundamental and cannot be changed
without shareholder approval. The Funds may not:

1. Purchase securities on margin or borrow money, except (a) from banks for
extraordinary or emergency purposes (not for leveraging or investment) or
(b) by engaging in reverse repurchase agreements, provided that (a) and (b)
in the aggregate do not exceed an amount equal to one-third of the value of
the total assets of a Fund less its liabilities (not including the amount
borrowed) at the time of the borrowing, and further provided that 300% asset
coverage is maintained at all times, and except that a deposit or payment by
such Fund of initial or variation margin in connection with futures
contracts or related options transactions is not considered the purchase of
a security on margin.

2. Lend portfolio securities of value exceeding in the aggregate one-third of
the market value of a Fund's total assets less liabilities other than
obligations created by these transactions;

3. Mortgage, pledge or hypothecate any assets except that a Fund may pledge not
more than one-third of its total assets to secure borrowings made in
accordance with paragraph 1 above. With respect to Core Equities Fund,
Growth Opportunity Fund, Fixed Income Fund and Municipal Bond Fund, initial
or variation margin for futures contracts will not be deemed to be pledges
of a Fund's assets.

4. Act as an underwriter of securities of other issuers, except insofar
as a Fund may be deemed an underwriter under the 1933 Act in disposing of
a portfolio security.

5. Purchase or otherwise acquire interests in real estate, real estate mortgage
loans or interests, including limited partnership interests, in oil, gas or
other mineral exploration, leasing or development programs.

6. Purchase or acquire commodities, commodity contracts or futures except for
International Fund which may purchase and write options on foreign
currencies or enter into forward delivery contracts for foreign currencies
and may also purchase foreign index contracts, and Core Equities Fund,
Growth Opportunity Fund, Fixed Income Fund and Municipal Bond Fund may enter
into financial futures contracts.

7. Issue senior securities, except insofar as the Funds may be deemed to have
issued a senior security in connection with any permitted borrowing.

8. With respect to Core Equities Fund, Growth Opportunity Fund, International
Fund, and Fixed Income Fund, will not invest 25% or more of the value of its
total assets in any particular industry or groups of related industries; and
Municipal Bond Fund will not invest 25% or more of its total assets in any
one industry or in industrial development bonds or other securities, the
interest on which is paid from reverse as of similar type projects.

9. Participate on a joint, or a joint and several, basis in any securities
trading account.

NON-FUNDAMENTAL LIMITATIONS

The following are investment restrictions that may be changed by a vote of the
majority of the Board of Directors. The Funds will not:

1. Invest more than 15% of the market value of the Funds' net assets in
illiquid investments including repurchase agreements maturing in more than
seven days.

2. Invest in securities of other investment companies, except (a) with respect
to International Fund, the Fund may purchase securities of other investment
companies which meet the investment objectives of the Fund and then only up
to 5% of the Fund's net assets, except as they may be acquired as part of a
merger, consolidation or acquisition of assets and further except as
permitted by Section 12(d) of the 1940 Act or by the Securities and
Exchange Commission; and (b) with respect to Core Equities Fund, Growth
Opportunity Fund, Fixed Income Fund and Municipal Bond Fund, (i) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company, (ii) not more than 10% of the
value of its total assets will be invested in the aggregate in securities
of investment companies as a group, and (iii) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Fund, except as such securities may be acquired as part of a merger,
consolidation or acquisition of assets and further, except as may be
permitted by Section 12(d) of the 1940 Act or by the Securities and
Exchange Commission. Each Fund will limit its investments in the securities
of other investment companies consistent with the Fund's investment
policies.

3. Purchase securities while borrowings exceed 5% of its total assets.

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

If a percentage restriction (except paragraph 3 of the fundamental restrictions)
is adhered to at the time an investment is made, a later change in percentage
resulting from changes in the value of a Fund's investment securities will not
be considered a violation of a Fund's restrictions.

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?

OFFICERS AND DIRECTORS

The Board of Directors is responsible for managing the Corporation's business
affairs and for exercising all the Corporation's powers except those reserved
for the shareholders. Information about each Board member is provided below and
includes the following: name, address, birthdate, present position(s) held with
the Corporation, principal occupations for the past five years and total
compensation received as a Director of the Corporation for its most recent
fiscal year. The Corporation is comprised of five funds and is the only
investment company in the Fund Complex. Unless otherwise indicated, the address
of each Director and officer is Old Westbury Funds, Inc., c/o Federated
Administrative Services, Federated Investors Tower, Pittsburgh, PA 15222-3779.

As of February 1, 1999, all Directors and officers as a group owned less
than 1% of each Fund's outstanding shares.

- ------------------------ ---------------------------------------------------------------- ----------------
NAME OCCUPATIONS FOR PAST 5 YEARS AGGREGATE
(BIRTHDATE) COMPENSATION
ADDRESS FROM
POSITION WITH CORPORATION

CORPORATION

ROBERT M. KAUFMAN Chairman of the Board and Director; Partner, Proskauer Rose $8,000
November, 11 1929 LLP, Attorneys at Law.
1585 Broadway

New York, NY 10036

Director

- ------------------------ ---------------------------------------------------------------- ----------------
- ------------------------ ---------------------------------------------------------------- ----------------
HOWARD D. GRAVES Visiting Professor, Lyndon B. Johnson School of Public $8,000
August 15, 1939 Affairs, University of Texas at Austin (Since 1998); Director
8316 Jancy Drive of Military Education Programs, University of Texas at Austin
Austin, TX 78750 (1997-1998); Associate, The International Foundation,

Washington, DC (Since 1997); Adviser, Voyager Extended

Director Learning, Inc. (Since 1997); Lecturer, IMPAC, Inc. (Since
1997); Director; Chairman of the Board, Recycling Holdings,
Inc. (1996-1997); Director, Recycling Holdings, Inc.
(1995-1996); and Superintendent, United States Military
Academy, West Point, New York (Lieutenant General, U.S. Army)

(from 1991 to 1996).

- ------------------------ ---------------------------------------------------------------- ----------------
- ------------------------ ---------------------------------------------------------------- ----------------
EDWARD C. GONZALES Vice Chairman, Treasurer, and Trustee, Federated Investors; $0
October 22, 1930 Vice President, Federated Advisers, Federated Management,

Federated Research, Federated Research Corp., Federated Global

President, Treasurer Research Corp. and Passport Research, Ltd.; Executive Vice
and Principal President and Director, Federated Securities Corp.; Trustee,
Financial Officer Federated Shareholder Services Company; Trustee or Director of

funds distributed by Federated Securities Corp. and Edgewood
Services, Inc.; President, Executive Vice President and
Treasurer of funds distributed by Federated Securities Corp.

and Edgewood Services, Inc.

- ------------------------ ---------------------------------------------------------------- ----------------
- ------------------------ ---------------------------------------------------------------- ----------------
EUGENE P. BEARD Vice Chairman - Finance and Operations, The Interpublic Group $6,250
(birthdate)March 17, of Companies, Inc.

1937

Director

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

- ------------------------ ---------------------------------------------------------------- ----------------
JOHN R. WHITMORE Senior Adviser, Bessemer Trust Company, N.A.; President and $0

November 19, 1933 Chief Executive Officer of Bessemer Group, Inc. and
Director subsidiaries of Bessemer Trust Company, N.A. (1975-1998).

- ------------------------ ---------------------------------------------------------------- ----------------
- ------------------------ ---------------------------------------------------------------- ----------------
C. CHRISTINE THOMSON Vice President and Assistant Treasurer of funds distributed by $0
September 1, 1957 Federated Securities Corp. and Edgewood Services, Inc.

Vice President and
Assistant Treasurer

- ------------------------ ---------------------------------------------------------------- ----------------
- ------------------------ ---------------------------------------------------------------- ----------------
JOSEPH S. MACHI Vice President, Federated Administrative Services; Director, $0
May 22, 1962 Private Label Management, Federated Investors; Vice President

and Assistant Treasurer of certain funds for which Federated

Vice President and Securities Corp. and Edgewood Services, Inc. are the principal
Assistant Treasurer distributors.

- ------------------------ ---------------------------------------------------------------- ----------------
- ------------------------ ---------------------------------------------------------------- ----------------
C. GRANT ANDERSON Corporate Counsel, Federated Investors. $0
November 6, 1940

Secretary

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

As of February 10, 1999, the following shareholders of record owned 5% or more
of a Fund's outstanding shares:

- -------------------------------------------- ------------------------ -----------------
SHAREHOLDER FUND PERCENT OWNED

- -------------------------------------------- ------------------------ -----------------
- -------------------------------------------- ------------------------ -----------------
Nadoit & Co. c/o Bessemer Trust Company Core Equities Fund 97.43%
100 Woodbridge Center Drive Growth Opportunity Fund 98.65%
Woodbridge, NJ 07095 International Fund 97.53%

Fixed Income Fund 83.04%
Municipal Bond Fund 93.75%

P.O. Box 2477
Milwaukee, WI 53202

- -------------------------------------------- ------------------------ -----------------
</TABLE>

INVESTMENT ADVISER

The Adviser conducts investment research and makes investment decisions for the
Funds. The Funds' investment adviser is Bessemer Trust Company, N.A., a national
banking association.

The Adviser shall not be liable to the Corporation, the Funds, or any Fund
shareholder for any losses that may be sustained in the purchase, holding, or
sale of any security or for anything done or omitted by it, except acts or
omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Corporation.

ADMINISTRATOR

Federated Administrative Services, a subsidiary of Federated Investors, Inc.,
provides all management and administrative services reasonably necessary for
each Fund, other than those provided by the Adviser, subject to the supervision
of the Board of Directors for a fee at an annual rate as specified below:

- ------------------ ------------------------------
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE ASSETS OF THE CORPORATION

FEE

- ------------------ ------------------------------
.150% on the first $250 million

- ------------------ ------------------------------
- ------------------ ------------------------------
.125% on the next $250 million

- ------------------ ------------------------------
- ------------------ ------------------------------
.100% on the next $250 million

- ------------------ ------------------------------
- ------------------ ------------------------------
.075% on assets in excess of $750

million

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

The administrative fee received during any fiscal year shall be at least
$75,000 per Fund. Federated Administrative Services may choose voluntarily to
reimburse a portion of its fee at any time.

The functions performed by FAS as administrator include, but are not limited to
the following:

o preparation, filing and maintenance of the Corporation's governing
documents, minutes of Directors' meetings and shareholder meetings;

o preparation and filing with the SEC and state regulatory authorities the
Corporation's registration statement and all amendments, and any other
documents required for the Funds to make a continuous offering of their
shares;

o preparation, negotiation and administration of contracts on behalf of the
Fund; o supervision of the preparation of financial reports; o preparation and
filing of federal and state tax returns; o assistance with the design,
development and operation of a Fund; and o providing advice to the Funds and
Corporation's Directors.

CUSTODIAN

Bessemer Trust Company (New Jersey) is the Funds' custodian. Pursuant to its
agreement with the Funds, it is responsible for maintaining the books and
records of each Fund's securities and cash and marketing each Fund's accounting
and portfolio transaction records.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Fundamental Shareholder Services, Inc. is the Funds' transfer and dividend
disbursing agent.

INDEPENDENT PUBLIC ACCOUNTANTS

Deloitte & Touche LLP are the independent public accountants for the Funds.

BROKERAGE TRANSACTIONS

The Adviser makes each Fund's portfolio decisions and determines the broker to
be used in each specific transaction with the objective of negotiating a
combination of the most favorable commission and the best price obtainable on
each transaction (generally defined as best execution). When consistent with the
objective of obtaining best execution, brokerage may be directed to persons or
firms supplying investment information to the Adviser or portfolio transactions
may be effected by the Adviser. To the extent that such persons or firms supply
investment information to the Adviser for use in rendering investment advice to
a Fund, such information may be supplied at no cost to the Adviser and,
therefore, may have the effect of reducing the expenses of the Adviser in
rendering advice to that Fund. While it is impossible to place an actual dollar
value on such investment information, its receipt by the Adviser probably does
not reduce the overall expenses of the Adviser to any material extent.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best execution, the Adviser may
consider sales of shares of a Fund as a factor in the selection of brokers to
execute portfolio transactions for the Funds.

The investment information provided to the Adviser is of the type described in
Section 28(e) of the Securities Exchange Act of 1934 and is designed to augment
the Adviser's own internal research and investment strategy capabilities.
Research services furnished by brokers through which each Fund effects
securities transactions are used by the Adviser in carrying out its investment
management responsibilities with respect to all its clients' accounts. There may
be occasions where the transaction cost charged by a broker may be greater than
that which another broker may charge if the Adviser determines in good faith
that the amount of such transaction cost is reasonable in relation to the value
of brokerage and research services provided by the executing broker. The Adviser
may consider the sale of shares of a Fund by brokers including the Distributor
as a factor in its selection of brokers of Fund transactions.

A Fund may deal in some instances in securities which are not listed on a
national securities exchange but are traded in the over-the-counter market. It
may also purchase listed securities through the third market. Where transactions
are executed in the over-the-counter market or third market, that Fund will seek
to deal with the primary market makers; but when necessary in order to obtain
best execution, it will utilize the services of others. In all cases, each Fund
will attempt to negotiate best execution.

For the fiscal year ended, October 31, 1998, the Fund's Adviser directed
brokerage transactions to certain brokers due to research services they
provided. The Fund paid $78,552 in brokerage commissions for these transactions.

Although investment decisions for the Funds are made independently from those of
the other accounts managed by the Adviser, investments of the type the Funds may
make may also be made by those other accounts. When the Funds and one or more
other accounts managed by the Adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the Adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or received by
the Funds or the size of the position obtained or disposed of by the Funds. In
other cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to benefit the Funds.

DISTRIBUTION AND SERVICE PLAN

The Corporation has adopted a distribution and service plan (the Plan) for the
Funds pursuant to Rule 12b-1 of the Investment Company Act of 1940. Pursuant to
the Plan, the Funds entered into a distribution agreement and a shareholder
servicing agreement with the Funds' distributor, Edgewood Services, Inc.
(Edgewood) and a shareholder servicing agreement with Bessemer Trust Company,
N.A. (Bessemer). Under the shareholder servicing agreement, Bessemer may receive
payments from the Funds to permit it to make payments to broker-dealers for
providing shareholder services. Bessemer is permitted (i) to receive a payment
from the Funds 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. Under its shareholder servicing agreement, Edgewood receives
payments from the Funds' to permit it to make payments to broker-dealers for
providing shareholder services.

The distribution agreement with Edgewood provides for reimbursement to Edgewood
by the Funds for its distribution, promotional and advertising costs incurred in
connection with the distribution of the Funds' shares.

In addition, each Fund will pay for telecommunications expenses incurred by the
distributor in carrying out its obligations under the distribution agreement and
shareholder servicing agreement and for costs incurred for preparing, printing
and delivering the Funds' prospectus to existing shareholders and preparing and
printing subscription application forms for shareholder accounts.

FEES PAID BY THE FUNDS FOR SERVICES

FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998
<TABLE>
<CAPTION>

12B-1 FEES

- ---------------------------------------------------------------- ---------------------------------------
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
FUND NAME ADVISORY BROKERAGE ADMINISTRATIVE DISTRIBUTION SHAREHOLDER OTHER
FEE/ FEE COMMISSIONS FEE/ FEE PLAN FEE SERVICING SERVICES
WAIVED WAIVED FEE/ FEE FEE
WAIVED
<S> <C> <C> <C> <C> <C> <C>
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
CORE EQUITIES FUND $86,185/ $94,504 $18,469/ $6,330 $30,785 $0
1 $86,185 $1,343
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
GROWTH OPPORTUNITY $800,868/ $446,604 $150,174/ $4,134 $250,274 $362
FUND $64,114 $30,043
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
INTERNATIONAL FUND $1,207,447/ $814,629 $231,936/ $13,988 $386,545 $1,279
$0 $52,373
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
FIXED INCOME FUND 2 $8,353/ $0 $2,784/ $6,240 $4,641 $0
$8,353 $158
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
MUNICIPAL BOND $17,420/ $0 $5,807/ $5,550 $9,681 $0
FUND 3 $17,420 $408
- -------------------- ------------ -------------- --------------- ------------- ------------- -----------
1 For the period from March 2, 1998 (commencement of operations). 2 For the
period from March 12, 1998 (commencement of operations). 3 For the period from
March 6, 1998 (commencement of operations).

FOR THE FISCAL YEAR ENDED OCTOBER 31, 1997

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

- ----------------------------------------------------------------
- -------------------- ------------ -------------- ---------------
FUND NAME ADVISORY BROKERAGE ADMINISTRATIVE
FEE/ FEE COMMISSIONS FEE/ FEE
WAIVED WAIVED

- -------------------- ------------ -------------- ---------------
- -------------------- ------------ -------------- ---------------
GROWTH OPPORTUNITY $82,117/ $187,672 $15,397/
FUND4 $82,117 $2,533
- -------------------- ------------ -------------- ---------------
- -------------------- ------------ -------------- ---------------
INTERNATIONAL FUND $1,381,951/ $678,497 $266,388/
$1,978 $40,776
- -------------------- ------------ -------------- ---------------
4 For the period from February 28, 1997 (commencement of operations).

</TABLE>

FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996

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

- -------------------- ------------ -------------- ---------------
- -------------------- ------------ -------------- ---------------
INTERNATIONAL FUND $990,632/ $462,315 $175,182/ $0
$29,346
- -------------------- ------------ -------------- ---------------

HOW DO THE FUNDS MEASURE PERFORMANCE?

The Funds may advertise each Fund's share performance by using the Security and
Exchange Commission's (SEC) standard method for calculating performance
applicable to all mutual funds. The SEC also permits this standard performance
information to be accompanied by non-standard performance information.

Unless otherwise stated, any quoted share performance reflects the effect of
non-recurring charges, such as maximum sales charges, which, if excluded would
increase the total return and yield. The performance of shares depends upon such
variables as: portfolio quality; average portfolio maturity; type and value of
portfolio securities; changes in interest rates; changes or differences in the
Fund's expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings and
offering price per share fluctuate daily. Both net earnings and offering price
per share are factors in the computation of yield and total return.

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.

The average annual total return for a Fund's shares is the average compounded
rate of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable value
is computed by multiplying the number of Shares owned at the end of the period
by the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.

When shares of a Fund are in existence for less than a year, the Fund may
advertise cumulative total return for that specific period of time, rather than
annualizing the total return.

YIELD

The yield of a Fund's shares is calculated by dividing: (i) the net investment
income per share earned by the shares over a thirty-day period by (ii) the
maximum offering price per share on the last day of the period. This number is
then annualized using semi-annual compounding. This means that the amount of
income generated during the thirty-day period is assumed to be generated each
month over a 12-month period and is reinvested every six months. The
tax-equivalent yield of Municipal Income Fund's shares is calculated similarly
to the yield, but is adjusted to reflect the taxable yield that shares would
have had to earn to equal the actual yield, assuming a specific tax rate. The
yield and tax-equivalent yield do not necessarily reflect income actually earned
by shares because of certain adjustments required by the SEC and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.

To the extent financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in a Fund's
shares, the Fund's share performance is lower for shareholders paying those
fees.

AVERAGE ANNUAL TOTAL RETURNS

Total returns shown for the one-year, five-year and since inception periods
ended October 31, 1998.

- ----------------------- -------------- -------------- --------------- ------------- --------------
FUND CORE INTERNATIONAL GROWTH FIXED MUNICIPAL
EQUITIES FUND FUND OPPORTUNITY INCOME FUND BOND FUND

(inception date) (March 2, (October 22, FUND (March 12, (March 6,
1998) 1993) (February 28, 1998) 1998)

1997)
<S> <C> <C> <C> <C> <C>
- ----------------------- -------------- -------------- --------------- ------------- --------------
- ----------------------- -------------- -------------- --------------- ------------- --------------
One Year Return N/A (10.20)% (10.10)% N/A N/A
Five Year Return N/A 1.60% N/A N/A N/A
Since Inception Return 0.10% 1.80% 3.70% 9.30% 6.20%
- ----------------------- -------------- -------------- --------------- ------------- --------------

</TABLE>

TAX EQUIVALENCY TABLE

Set forth below is a sample of a tax-equivalency table that may be used in
advertising and sales literature for the Municipal Bond Fund. This table is for
illustrative purposes only and is not representative of past or future
performance of the Fund. The interest earned by the municipal securities owned
by the Fund generally remains free from regular Federal income tax and is often
free from state and local taxes as well. However, some of the Fund's income may
be subject to the Federal alternative minimum tax and state and/or local taxes.

TAXABLE YIELD EQUIVALENT FOR 1999 MUNICIPAL BOND FUND
<TABLE>
<CAPTION>

FEDERAL INCOME TAX BRACKET: 15.00% 28.00% 31.00% 36.00% 39.60%
Joint Return $1-43,050 $43,051-104,05$104,051-158,550$158,551-283,150 Over
283,150
Single Return $1-25,750 $25,751-62,450$62,451-130,250 $130,251-283,150 Over
283,150
TAX EXEMPT YIELD: TAXABLE YIELD EQUIVALENT:
<S> <C> <C> <C> <C> <C>
1.00% 1.18% 1.39% 1.45% 1.56% 1.66%
1.50% 1.76% 2.08% 2.17% 2.34% 2.48%
2.00% 2.35% 2.78% 2.90% 3.13% 3.31%
2.50% 2.94% 3.47% 3.62% 3.91% 4.14%
3.00% 3.53% 4.17% 4.35% 4.69% 4.97%
3.50% 4.12% 4.86% 5.07% 5.47% 5.79%
4.00% 4.71% 5.56% 5.80% 6.25% 6.62%
4.50% 5.29% 6.25% 6.52% 7.03% 7.45%
5.00% 5.88% 6.94% 7.25% 7.81% 8.28%
5.50% 6.47% 7.64% 7.97% 8.59% 9.11%
6.00% 7.06% 8.33% 8.70% 9.38% 9.93%
6.50% 7.65% 9.03% 9.42% 10.16% 10.76%
7.00% 8.24% 9.72% 10.14% 10.94% 11.59%
7.50% 8.82% 10.42% 10.87% 11.72% 12.42%
8.00% 9.41% 11.11% 11.59% 12.50% 13.25%

</TABLE>

NOTE:THE MAXIMUM MARGINAL TAX RATE FOR EACH BRACKET WAS USED IN CALCULATING THE
TAXABLE YIELD EQUIVALENT. PERFORMANCE COMPARISONS

Advertising and sales literature may include:

o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;

o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;

o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and

o information about the mutual fund industry from sources such as the Investment
Company Institute.

Each Fund may compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.

Each Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

You may use financial publications and/or indices to obtain a more complete view
of share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Funds use in advertising may include:

CDA/WIESENBERGER INVESTMENT COMPANY SERVICES. Mutual fund rankings and data that
ranks and/or compares mutual funds by overall performance, investment
objectives, assets, expense levels, periods of existence and/or other factors.

DOW JONES INDUSTRIAL AVERAGE (DJIA). Represents share prices of selected
blue-chip industrial corporations. The DJIA indicates daily changes in the
average price of stock of these corporations. Because it represents the top
corporations of America, the DJIA index is a leading economic indicator for the
stock market as a whole.

EUROPE, AUSTRALIA, AND FAR EAST INDEX. A standard unmanaged foreign
securities index representing major non-U.S. stock markets, as monitored by
Morgan Stanley Capital International. EAFE returns are in U.S. dollars.

FINANCIAL PUBLICATIONS. The Wall Street Journal, Business Week, Changing Times,
Financial World, Forbes, Fortune and Money magazines, among others--provide
performance statistics over specified time periods.

LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX. Composed of all bonds that are
investment grade (rated Baa or higher by Moody's or BBB or higher by S&P, 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.

LIPPER ANALYTICAL SERVICES, INC. Ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specified period of time.

MOODY'S INVESTORS SERVICE, INC., FITCH IBCA, INC. AND STANDARD & POOR'S.
Various publications.

MORNINGSTAR, INC. An independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUES, which rates more than 1,000 NASDAQ-listed mutual
funds of all types, according to their risk-adjusted returns. The maximum rating
is five stars, and ratings are effective for two weeks.

RUSSELL 2500 INDEX. Measures the performance of the 2,500 smallest companies in
the Russell 3000 Index, which represents approximately 23% of the total market
capitalization of the Russell 3000 Index.

STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS (S&P 500).
Composite index of common stocks in industry, transportation, and financial and
public utility companies. Can be used to compare to the total returns of funds
whose portfolios are invested primarily in common stocks. In addition, the S & P
500 assumes reinvestments of all dividends paid by stocks listed on its index.
Taxes due on any of these distributions are not included, nor are brokerage or
other fees calculated in the S & P figures.

WILSHIRE ASSOCIATES. An on-line database for international financial and
economic data including performance measures for a wide range of securities.

WILSHIRE 2000 EQUITY INDEX. Consists of nearly 2,000 common equity securities,
covering all stocks in the U.S. for which daily pricing is available, and can be
used to compare to the total returns of funds whose portfolios are invested
primarily in common stocks.

The Adviser may also include performance information in such advertisements or
information furnished to current or prospective shareholders not only regarding
the Adviser's performance since Hermoine Davies, the International Fund's
portfolio manager, joined the Adviser in 1986, but also regarding Ms. Davies'
personal investment performance when she was responsible for Japanese
investments and management of the offshore unit trust Pacific Fund of Guinness
Mahon and Co. Ltd. In addition, the Adviser may also include performance
information regarding the Adviser's performance since Harry Rekas, the Growth
Opportunity Fund's portfolio manager, joined the Adviser in 1996, but also
regarding Mr. Rekas' personal investment performance since 1993 when he managed
the Capital Appreciation portfolio of AIG Investment Management Corporation, a
portfolio which was focused on small and mid-capitalization equities. Also, the
Adviser may include performance information regarding the Adviser's performance
since John D. Chadwick, the Core Equities Fund's portfolio manager, Harold S.
Woolley, the Fixed Income Fund's portfolio manager and Bruce A. Whiteford, the
Municipal Bond Fund's portfolio manager joined the Adviser, but also regarding
Mr. Chadwick's personal investment performance while at Kidder Peabody & Co.,
Mr. Woolley's personal investment performance while at Equitable Investment
Management Corp., and Mr. Whiteford's personal investment performance while at
Chase Manhattan Bank, N.A.

ACCOUNT INFORMATION AND PRICING OF SHARES

NET ASSET VALUE

For purposes of determining each Fund's net asset value per share, readily
marketable portfolio securities listed on an exchange are valued, except as
indicated below, at the last sale price reflected at the close of the regular
trading session of the exchange on the business day as of which such value is
being determined. If there has been no sale on such day, the securities are
valued at the mean of the closing bid and asked prices on such day. If no bid or
asked prices are quoted on such day, then the security is valued by such method
as the Board of Directors shall determine in good faith to reflect its fair
market value. Fund securities traded on more than one national securities
exchange are valued at the last sale price on the business day as of which such
value is being determined as reflected on the tape at the close of the exchange
representing the principal market for such securities.

Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Adviser to be
over-the-counter are valued at the mean of the current bid and asked prices from
such sources as the Board of Directors deems appropriate to reflect their fair
value.

United States government obligations and other debt instruments having sixty
days or less remaining until maturity are stated at amortized cost. Debt
instruments having a greater remaining maturity will be valued at the highest
bid price obtained from a dealer maintaining an active market in that security
or on the basis of prices obtained from a pricing service approved as reliable
by the Board of Directors. All other investment assets, including restricted and
not readily marketable securities, are valued under procedures established by
and under the general supervision and responsibility of the Fund's Board of
Directors designed to reflect in good faith the fair value of such securities.

As indicated in the prospectus, the net asset value per share of each Fund's
shares will be determined as of the close of the regular trading session of the
New York Stock Exchange (the "NYSE") on each day that the NYSE is open for
trading. The NYSE annually announces the days on which it will not be open for
trading; the most recent announcement indicates that it will not be open on the
following days: New Year's Day, Martin Luther King Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. However, the NYSE may close on days not included in that
announcement.

TRADING IN FOREIGN SECURITIES

Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its net asset value,
the International Fund values foreign securities at the latest closing price on
the exchange on which they are traded immediately prior to the closing of the
NYSE. Certain foreign currency exchange rates may also be determined at the
latest rate prior to the closing of the NYSE. Foreign securities quoted in
foreign currencies are translated into U.S. dollars at current rates.
Occasionally, events that affect these values and exchange rates may occur
between the times at which they are determined and the closing of the NYSE. If
such events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by the
Directors, although the actual calculation may be done by others.

VOTING RIGHTS

Each share of a Fund gives the shareholder one vote in Director elections and
other matters submitted to shareholders for vote. All Shares of the Corporation
have equal voting rights, except that in matters affecting only a particular
Fund, only shares of that Fund or class are entitled to vote.

Directors may be removed by the Directors or by shareholders at a special
meeting. A special meeting of shareholders will be called by the Directors upon
the written request of shareholders who own at least 10% of the Corporation's
outstanding shares of all series entitled to vote.

HOW ARE THE FUNDS TAXED?

FEDERAL INCOME TAX

Each Fund will be treated as a single, separate entity for Federal income tax
purposes so that income earned and capital gains and losses realized by the
Corporation's other portfolios will be separate from those realized by each
Fund.

Each Fund has elected to be treated as and intends to qualify annually as a
regulated investment company pursuant to the provisions of Subchapter M of the
Internal Revenue Code (the "Code"). The Funds did so qualify for the previous
taxable year. By so qualifying, each Fund generally will not be subject to
Federal income tax to the extent that it distributes its investment company
taxable income and net capital gains in the manner required under the Code. In
addition, the Code subjects regulated investment companies, such as the Funds,
to a non-deductible 4% excise tax in each calendar year to the extent that such
investment companies do not distribute substantially all of their taxable
investment income and capital gain, generally determined on a calendar year
basis and the one year period ending October 31 of each calendar year,
respectively.

Each Fund intends to distribute to its shareholders substantially all of its
investment company taxable income (which includes, among other items, dividends
and interest and the excess, if any, of the net short-term capital gains
(generally including any net option premium income) over net long-term capital
losses). Investment company taxable income will be distributed annually by the
Funds. Each Fund intends to distribute, at least annually, substantially all net
capital gains (the excess of net long-term capital gains over net short-term
capital losses). Shareholders will be advised as to the amount of the capital
gains distribution, which are generally taxable at a maximum rate of 20% for
non-corporate shareholders (25% in the case of certain capital gains
distributions from REITs). In determining amounts of capital gains to be
distributed, any capital loss carryovers from prior years will be applied
against capital gains to reduce the amount of distributions paid. In addition,
any losses incurred in the taxable year subsequent to October 31 will be
deferred to the next taxable year an used to reduce subsequent year
distributions. You may choose whether to receive dividends and distributions in
cash or to reinvest in additional shares of the class in which you are invested
at the next determined net asset value without a sales load, but you will be
subject to tax in the manner described herein even if you choose to have your
dividends and distributions reinvested in additional shares.

Dividends from net investment income or distributions of net realized short-term
securities gains to shareholders generally are taxable as ordinary income
whether received in cash or reinvested in additional shares. Distributions of
net capital gains to shareholders are taxable as capital gains whether received
in cash or reinvested in additional shares.

Special tax rules may apply to a Fund's acquisition of futures contracts,
forward contracts, and options on futures contracts. Such rules may, among other
things, affect whether gains and losses from such transactions are considered to
be short-term or long-term, may have the effect of deferring losses and/or
accelerating the recognition of gains or losses.

It is anticipated that a portion of the ordinary income dividends paid by the
Funds will qualify for the dividends-received deduction available to
corporations. Shareholders will be notified at the end of the year as to the
amount of the dividends that qualify for the dividends received deduction.

The Funds may be required to withhold for Federal income tax ("backup
withholding") 31% of the distributions and the proceeds of redemptions payable
to shareholders who fail to provide a correct taxpayer identification number or
to make required certifications, or where a Fund or shareholder has been
notified by the Internal Revenue Service that the shareholder is subject to
backup withholding. Corporate shareholders and certain other shareholders
specified in the Code are exempt from backup withholding.

Notice as to the tax status of your dividends and distributions is mailed to you
annually. You also will receive periodic summaries of your account. Dividends
and distributions may be subject to state and local taxes. Dividends paid or
credited to accounts maintained by non-resident shareholders may also be subject
to U.S. non-resident withholding taxes. You should consult your tax adviser
regarding specific questions as to Federal, state and local income and
withholding taxes.

FOR MUNICIPAL BOND FUND ONLY

The Fund's policy is to distribute as exempt-interest dividends each year 100%
of its tax-exempt interest income, net of certain deductions. Exempt-interest
dividends are dividends paid by the Fund that are attributable to interest that
is exempt from regular Federal income tax, and are designated by the Fund as
exempt-interest dividends in a written notice mailed to the Fund's shareholders.
The percentage of the total dividends paid by the Fund during any taxable year
that qualifies as exempt-interest dividends will be the same for all
shareholders receiving dividends during the year.

Exempt-interest dividends are to be treated by the Fund's shareholders as items
of interest excludable from their gross income under Section 103(a) of the Code.
The amount of such interest received will have to be disclosed on the
shareholders' Federal income tax returns. A shareholder is advised to consult
its tax advisors with respect to whether exempt-interest dividends retain the
exclusion under Section 103 of the Code is such shareholder would be treated as
a "substantial user" or "related person" under Section 147(a) of the Code with
respect to some or all of the "private activity" bonds, if any, held by the
Fund. If a shareholder receives an exempt-interest dividend with respect to any
share an such share has been held for six months or less, then any loss on the
sale or exchange of such share will be disallowed to the extent of the amount of
such exempt-interest dividend. The Code provides that interest on indebtedness
incurred, or continued, to purchase or carry certain tax-exempt securities such
as shares of the Fund is not deductible. Therefore, among other consequences, a
certain proportion of interest on indebtedness incurred, or continued, to
purchase or carry securities on margin may not be deductible during the period
an investor holds shares of the Fund. For Social Security recipients, interest
on tax-exempt bonds, including exempt-interest dividends paid by the Fund, is to
be added to adjusted gross income for purposes of computing the amount of social
security benefits includible in gross income. Taxpayers are required to include
as an item of tax preference for purposes of the Federal alternative minimum tax
all tax-exempt interest on "private activity" bonds issued after August 7, 1986
(generally, a bond issue in which more than 10% of the proceeds are used in a
non-governmental trade or business) (other than Section 501(c)(3) bonds). This
provision will apply to the portion of the exempt-interest dividends from the
Fund's assets that are attributable to such post-August 7, 1986 private activity
bonds. Corporations are required to increase their alternative minimum taxable
income for purposes of calculating their alternative minimum tax liability by
75% of the amount by which the adjusted current earnings (which will include
tax-exempt interest) of the corporation exceeds the alternative minimum taxable
income (determined without this item). In addition, in certain cases, Subchapter
S corporations with accumulated earnings and profits from Subchapter C years are
subject to a minimum tax on excess "passive investment income" which includes
tax-exempt interest.

The Fund may realize short-term or long-term capital gains or losses from its
portfolio transactions. The Fund may also realize short-term or long-term
capital gains or accrued market discount upon the maturity or disposition of
securities acquired at discounts resulting from market fluctuations. Short-term
capital gains and accrued market discount will be taxable to shareholders as
ordinary income. Any net capital gains (the excess of its net realized long-term
capital gain over its net realized short-term capital loss) will be distributed
annually to shareholders. The Fund will have no tax liability with respect to
distributed net capital gains and the distributions will be taxable to
shareholders as long-term capital gains regardless of how long the shareholders
have held their shares. However, shareholders who at the time of such as net
capital gain distribution have not held their shares for more than 6 months, and
who subsequently dispose of those shares at a loss, will be required to treat
such loss as a long-term capital loss to the extent of the net capital gain
distribution. Distributions of net capital gain will be designated as a "capital
gain dividend" in a written notice mailed to the Fund's shareholders after the
close of the Fund's taxable year. Capital gains realized by corporations are
generally taxed at the same rate as ordinary income. However, long-term capital
gains that have a holding period of more than 12 months realized by
non-corporate shareholders are taxable at a maximum rate of 20%. Corresponding
maximum rate and holding period rules apply with respect to capital gains
distributed by the Fund without regard to the length of time shares have been
held by the holder.

The Fund intends to distribute at least 90% of its investment company taxable
income (taxable income subject to certain adjustments exclusive of the excess of
its net long-term capital gain over its net short-term capital loss) for each
taxable year. These distributions will be taxable to shareholders as ordinary
income. The Fund will be subject to Federal income tax on any undistributed
investment company taxable income. Expenses paid or incurred by the Fund will be
allocated between tax-exempt and taxable income in the same proportion as the
amount of the Fund's tax-exempt income bears to the total of such exempt income
and its gross income (excluding from gross income the excess of capital gains
over capital losses). If the Fund does not distribute at least 98% of its
ordinary income and 98% of its capital gain net income for a taxable year, the
Fund will be subject to a nondeductible 4% excise tax on the excess of such
amounts over the amounts actually distributed.

From time to time, proposals have been introduced before Congress to restrict or
eliminate the Federal income tax exemption for interest on Municipal
Obligations. If such a proposal were introduced and enacted in the future, the
ability of the Fund to pay exempt-interest dividends would be adversely affected
and the Fund would reevaluate its investment objective and policies and consider
changes in the structure.

In South Carolina v. Baker, the United States Supreme Court held that the
Federal government may constitutionally require states to register bonds they
issued and may subject the interest on such bonds to Federal tax if not
registered, and that there is no constitutional prohibition against the Federal
government's taxing the interest earned on state or other municipal bonds. The
Supreme Court's decision affirms the authority of the Federal government to
regulate and control bonds such as the Municipal Obligations and to tax such
bonds in the future. The decision does not, however, affect the current
exemption from regular income taxation of the interest earned on the Municipal
Obligations in accordance with Section 103 of the Code.

FOREIGN INVESTMENTS

Investment income on certain foreign securities purchased by the Funds may be
subject to foreign withholding or other taxes that could reduce the return on
these securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Funds
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of the Funds' assets to be invested within various countries is
uncertain. However, the Funds intend to operate so as to qualify for
treaty-reduced tax rates when applicable.

Distributions from the Funds may be based on estimates of book income for the
year. Book income generally consists solely of the coupon income generated by
the portfolio, whereas tax basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of fixed
income securities denominated in foreign currencies, it is difficult to project
currency effects on an interim basis. Therefore, to the extent that currency
fluctuations cannot be anticipated, a portion of distributions to shareholders
could later be designated as a return of capital, rather than income, for income
tax purposes, which may be of particular concern to simple trusts.

The Funds may invest in the stock of certain foreign corporations which would
constitute a Passive Foreign Investment Company (PFIC). The Funds may be subject
to federal income taxes upon disposition of PFIC investments.

If more than 50% of the value of the Funds' assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Funds may
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of the Funds' foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.

FINANCIAL INFORMATION

The Financial Statements for the fiscal year ended October 31, 1998, are
incorporated herein by reference to the Funds' Annual Report to shareholders
dated October 31, 1998.

APPENDIX

STANDARD AND POOR'S LONG-TERM DEBT RATING DEFINITIONS

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degrees.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB--Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB-rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB-rating.

CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B-rating.

CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.

C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC-debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS

AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA--Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

BAA--Bonds which are rated BAA are considered as medium grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA--Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS

AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.

A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C--Bonds are imminent default in payment of interest or principal.

MOODY'S INVESTORS SERVICE, INC. COMMERCIAL PAPER RATINGS

PRIME-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:

o Leading market positions in well established industries.

o High rates of return on funds employed.

o Conservative capitalization structure with moderate reliance on debt and ample
asset protection.

o Broad margins in earning coverage of fixed financial charges and high internal
cash generation.

o Well established access to a range of financial markets and assured sources of
alternate liquidity.

PRIME-2--Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

STANDARD AND POOR'S COMMERCIAL PAPER RATINGS

A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

FITCH IBCA, INC. COMMERCIAL PAPER RATING DEFINITIONS

FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.

ADDRESSES
<S> <C>
OLD WESTBURY FUNDS, INC. 5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010

Distributor

EDGEWOOD SERVICES, INC. Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

Investment Adviser

BESSEMER TRUST COMPANY, N.A. 630 Fifth Avenue
New York, New York 10111

Custodian

BESSEMER TRUST COMPANY (NEW JERSEY) 100 Woodbridge Center Drive
Woodbridge, New Jersey 07095

Transfer Agent and Dividend Disbursing Agent

FUNDAMENTAL SHAREHOLDER SERVICES, INC. 11 West 25th Street

7th Floor
New York, New York 10010-2001

Independent Auditors

DELOITTE & TOUCHE LLP Two World Financial Center
New York, New York 10281

</TABLE>

Cusip 680414307
Cusip 680414208
Cusip 680414109
Cusip 680414406
Cusip 680414505
G02009-06 (2/99)

A. The graphic presentation displayed here consists of a bar chart representing
the annual total returns of Growth Opportunity Fund as of the calendar year-end
for one yeas.

The `y' axis reflects the "% Total Return" beginning with "-5" and increasing in
increments of 0.5% up to 0%.

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features one distinct vertical bar, shaded in
charcoal, and visually representing by height the total return percentage for
the calendar year stated directly at its base. The calculated total return
percentage for the Fund for the calendar year is stated directly at the top of
the bar, for the calendar year 1998, The percentage noted is: -1.65.

Within the period shown in the Chart, the Fund's highest quarterly return was
18.86%. Its lowest quarterly return was -18.67%.

B. The graphic presentation displayed here consists of a bar chart representing
the annual total returns of International Fund as of the calendar year-end for
each of five years.

The `y' axis reflects the "% Total Return" beginning with "-15" and increasing
in increments of 5% up to 25%.

The `x' axis represents calculation periods from the earliest calendar year end
of the Fund's start of business through the calendar year ended December 31,
1998. The light gray shaded chart features five distinct vertical bars, each
shaded in charcoal, and each visually representing by height the total return
percentages for the calendar year stated directly at its base. The calculated
total return percentage for the Fund for each calendar year is stated directly
at the top of each respective bar, for the calendar years1994 through1998. The
percentages noted are: -11.26, 2.37, 21.29, -1.45, -1.14.

Within the period shown in the Chart, the Fund's highest quarterly return was
16.65%. Its lowest quarterly return was -17.93%.